What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-21 compared with 2022-02-23 · 1069 added, 1203 removed, 1084 unchanged (68% of the section changed)

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Index to Financial Statements Page

Consolidated Financial Statements:

Management's Report

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Note 2, "New Accounting Pronouncements"

Note 3, "Segment Reporting"

Note 3 , "Investments"

Note 5, "Other Income and Expense"

Note 6, "Income Tax"

Note 7, "Special Items"

Note 8, "Stockholders' Equity"

Note 4 , "Inventories"

Note 5 , "Properties"

Note 6 , "Goodwill and Intangible Assets"

Note 7, "Accounts Payable and Other Current Liabilities"

Note 8 , "Leases"

Note 9 , "Debt"

Note 12, "Inventories"

Note 13, "Share-Based Payments"

Note 14, "Accumulated Other Comprehensive Income (Loss)"

Note 15, "Employee Retirement Plans and Postretirement Benefits"

Note 1 0 , "Derivative Instruments and Hedging Activities"

Note 17, "Accounts Payable and Other Current Liabilities"

Note 1 1 , "Employee Retirement Plans and Postretirement Benefits"

Note 12 , "Income Tax"

Note 1 3 , "Commitments and Contingencies"

Note 19, "Leases"

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Note 1 4 , "Stockholders' Equity"

Note 1 5 , "Accumulated Other Comprehensive Income (Loss)"

Note 1 6 , "Share-Based Payments"

Note 17, "Other Operating Income (Expense), net"

Note 18 , "Segment Reporting"

MANAGEMENT'S REPORT

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February 21, 2023 February 21, 2023

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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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As described in Notes 1 and 6 to the consolidated financial statements, the Company’s goodwill balance related to the Americas reporting unit as of December 31, 2022 is $5,292 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 carrying value of goodwill is evaluated for impairment at the reporting unit level at least annually or when an interim triggering event occurs that may indicate potential impairment.

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

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 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;

The evaluation involves comparing the reporting unit’s fair value to its carrying value.

If the fair value exceeds its respective carrying value, then management would conclude that no impairment has occurred.

If the 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.

As a result of the annual impairment test, management concluded that the carrying value of the Americas reporting unit exceeded its fair value resulting in an impairment loss of $845 million.

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

Fair value determinations require considerable judgment by management 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 the reporting unit may include the following, as disclosed by management, (i) 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;

or (iii) significant unfavorable changes in income tax rates, environmental or other regulations, including interpretations thereof, terminal growth rate, market multiples and / or weighted average cost of capital.

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 developing the fair value estimate 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 growth rates for sales, terminal growth rate, market multiples, and weighted average cost of capital;

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

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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;

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

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

Evaluating the significant assumptions related to growth rates for sales involved evaluating whether the significant 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 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.

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 terminal growth rate, market multiples, and weighted average cost of capital significant assumptions.

/s/ PricewaterhouseCoopers LLP

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

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Marketing, general and administrative expenses ( 2,618.8 ) ( 2,554.5 ) ( 2,437.0 )

Special items, net ( 44.5 ) ( 1,740.2 ) ( 708.8 )

Goodwill impairment ( 845.0 ) — ( 1,484.3 )

Other operating income (expense), net ( 38.6 ) ( 44.5 ) ( 255.9 )

Equity income (loss) 4.7 — —

Operating income (loss) 157.5 1,454.4 ( 408.9 )

Other income (expense), net

Interest expense ( 250.6 ) ( 260.3 ) ( 274.6 )

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Other pension and postretirement benefits (costs), net 36.6 46.4 30.3

Other income (expense), net ( 3.5 ) 6.0 ( 14.7 )

Total other income (expense), net ( 215.4 ) ( 235.0 ) ( 284.5 )

Other non-operating income (expense), net ( 10.3 ) ( 3.5 ) 6.0

Total non-operating income (expense), net ( 220.0 ) ( 215.4 ) ( 235.0 )

Income (loss) before income taxes ( 62.5 ) 1,239.0 ( 643.9 )

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Diluted 216.9 217.6 216.8

Anti-dilutive securities excluded from computation of diluted EPS 1.8 2.7 1.3

See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Foreign currency translation adjustments ( 329.8 ) ( 28.4 ) 113.6

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

Reclassification of cumulative translation adjustment 12.1 7.5 —

Unrealized gain (loss) on derivative instruments 153.8 37.4 ( 85.7 )

Reclassification of derivative (gain) loss to income 5.5 ( 0.4 ) 0.5

Pension and other postretirement benefit adjustments 118.4 ( 39.9 ) ( 39.8 )

Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement 5.4 ( 5.2 ) 19.7

Reclassification of derivative (gain) loss to income (loss) 9.4 5.5 ( 0.4 )

Net change in pension and other postretirement benefit assets and liabilities ( 59.6 ) 118.4 ( 39.9 )

Pension and other postretirement prior service (benefit) cost and net actuarial (gain) loss amortization and settlements to income (loss) ( 1.6 ) 5.4 ( 5.2 )

Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) 13.8 15.5 14.2

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See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Trade, less allowance for doubtful accounts of $ 13.2 and $ 19.0 , respectively

Affiliate receivables 16.2 8.4

Other receivables, less allowance for doubtful accounts of $ 2.5 and $ 2.4 , respectively

Other receivables 126.4 200.5

Inventories, less allowance for obsolete inventories of $ 41.1 and $ 25.8 , respectively

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Total current assets 2,638.0 2,778.7

Properties, less accumulated depreciation of $ 3,507.2 and $ 3,416.4 , respectively

4,192.4 4,250.3

Properties, net 4,222.8 4,192.4

Goodwill 5,291.9 6,152.6

Other intangibles, less accumulated amortization of $ 1,406.3 and $ 1,206.5 , respectively

13,286.8 13,556.1

Other intangibles, net 12,800.1 13,286.8

Other assets 915.5 1,208.5

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Current liabilities

Accounts payable and other current liabilities (includes affiliate payables of $ 4.1 and $ 0.5 , respectively)

$ 3,107.3 $ 2,889.5

Accounts payable and other current liabilities $ 2,978.3 $ 3,107.3

Current portion of long-term debt and short-term borrowings 397.1 514.9

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See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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Share-based compensation 33.6 32.1 24.2

Goodwill impairment 845.0 — 1,484.3

(Gain) loss on sale or impairment of properties and other assets, net 18.6 9.1 69.2

Unrealized (gain) loss on foreign currency fluctuations and derivative instruments, net 236.4 ( 233.8 ) ( 111.4 )

Equity (income) loss ( 4.7 ) — —

Income tax (benefit) expense 124.0 230.5 301.8

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Dividends paid ( 329.3 ) ( 147.8 ) ( 125.3 )

Payments for purchases of treasury stock ( 51.5 ) — —

Payments on debt and borrowings ( 509.1 ) ( 1,006.6 ) ( 918.9 )

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Net cash provided by (used in) financing activities ( 889.5 ) ( 1,172.2 ) ( 1,070.4 )

Cash and cash equivalents:

Net increase (decrease) in cash and cash equivalents ( 108.6 ) 211.7 ( 543.0 )

Effect of foreign exchange rate changes on cash and cash equivalents ( 24.8 ) ( 24.1 ) 35.0

Net increase (decrease) in cash and cash equivalents ( 37.4 ) ( 132.7 ) 246.7

Balance at beginning of year 637.4 770.1 523.4

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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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Amortization of share-based compensation 24.2 — — — — 24.2 — — — —

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

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

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

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

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

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

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

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

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

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

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

Net income (loss) including noncontrolling interests 1,008.5 — — — — — 1,005.7 — — 2.8

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Contributions from noncontrolling interests 3.2 — — — — — — — — 3.2

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

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

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Amortization of share-based compensation 33.6 — — — — 33.6 — — — —

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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 ( 1.4 ) — — — — 0.3 — — — ( 1.7 )

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Other comprehensive income (loss), net of tax ( 201.9 ) — — — — — — ( 199.5 ) — ( 2.4 )

Share repurchase program ( 51.5 ) — — — — — — — ( 51.5 ) —

Contributions from noncontrolling interests 8.1 — — — — — — — — 8.1

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See notes to consolidated financial statements.

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MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

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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 reporting segments include Americas and EMEA&APAC.

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."

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods.

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods, and 2022, 2021 and 2020 refers to the twelve months ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively.

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.

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

Changes to our Consolidated Statement of Operations

As of December 31, 2022, we modified our presentation of the consolidated statements of operations to replace the former "Special items, net" line item with "Other operating income (expense), net." In addition, goodwill impairment, which had previously been included in "Special items, net," has been reclassified to a separate line titled "Goodwill impairment." The consolidated statement of operations for the years ended December 31, 2021 and December 31, 2020 were reclassified to reflect this change in presentation only.

Cost Inflation

We have been experiencing significant cost inflation, including higher material, transportation and energy costs, which negatively impacted our results of operations during the year ended December 31, 2022.

We expect cost inflation to continue to have a negative impact on our results of operations in 2023 and possibly beyond.

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

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

Management's Discussion and Analysis, "Items Affecting Reported Results" for further discussion.

For considerations of the effects of cost inflation to our goodwill and indefinite-lived intangible assets, see Note 6, "Goodwill and Intangible Assets."

Coronavirus Global Pandemic

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 have been actively monitoring the impact of the coronavirus pandemic since it started at the end of the first quarter of 2020.

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, but not limited to, 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 future 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.

At the onset of the pandemic, during the first quarter of 2020, we initiated temporary keg relief programs in many of our markets which were negatively impacted.

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.

Additionally, 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.

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.

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.

The remaining was repaid 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.

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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

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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.

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 and $ 35.6 million during the years ended December 31, 2021 and December 31, 2020, 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.

See Note 17, "Other Operating Income (Expense), net" for further discussion of the impacts of this plan.

Government Assistance

We receive government assistance in the form of tax credits and grants, including tax credits from government agencies in certain jurisdictions around job creation and retention, as well as capital investment initiatives.

This includes, but is not limited to, refundable and non-refundable property and income tax credits in various state and other local jurisdictions.

We recognize amounts received from government assistance programs, including tax credits and grants, as a reduction to MG&A expenses in our consolidated financial statements, when it is probable we will receive the funds and have met the conditions, if any, required by the government assistance program.

If we receive the government assistance at a point in time for services to be completed over time, the cash received is initially recorded in our consolidated balance sheet as other liabilities, and amortized as an offset to MG&A expenses over the service period of the agreement.

No programs are individually material nor are the programs material in the aggregate.

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 where

legally permitted, 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.

Specifically, a good or service is considered distinct when it is separately identifiable from other promises in the contract, we receive a benefit from the good or service, and the benefit is separable from the sale of our product to the customer.

Specifically, a good or service is considered distinct when it is separately identifiable from other promises in the contract, we

receive a benefit from the good or service and the benefit is separable from the sale of our product to the customer.

Certain payments made to customers are conditional on the achievement of volume targets, marketing commitments or both.

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When the payment is not for a distinct good or service, or fair value cannot be reasonably estimated, the amortization of the prepayment or the cost as incurred is recorded as a reduction of revenue.

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

Where a distinct good or service is received and fair value can be reasonably estimated, the cost is included as MG&A 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.

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Our customer could be a distributor, retail or on-premise outlet, depending on the market.

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

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., we sell other beverage companies' products to on-premise customers to provide them with a full range of products for their retail outlets.

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In the factored brand business, we normally purchase inventory, which includes excise taxes charged by the vendor, take orders from customers for such brands, negotiate with the customers on pricing and invoice customers for the product and related costs of delivery.

In addition, we incur the risk of loss at times we are in possession of the inventory and for the receivables due from the customers.

In addition, we incur the risk of loss when we are in possession of the inventory and for the receivables due from the customers.

Revenues for owned brands, partner and imported brands, as well as factored brands are recognized at the point in time when control is transferred to the customer as discussed above.

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We contract manufacture for other brewers in some of our markets.

These contractual agreements require us to brew, package and ship certain brands to these brewers, who then sell the products to their own customers in their respective markets.

These contractual agreements require us to brew, package and ship certain brands for these brewers, who then sell the products to their own customers in their respective markets.

Revenues under contract brewing arrangements are recognized when our obligation related to the finished product is fulfilled and control of the product transfers to these other brewers.

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We have evaluated our primary revenue generating activities under the disaggregation disclosure criteria outlined within the guidance and concluded that disclosure at the geographical segment level depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors.

We have also evaluated our other revenue generating activities and concluded that these activities are immaterial for separate disclosure.

We have also evaluated our other revenue generating activities and concluded that these activities are not material for separate disclosure.

See Note 18, "Segment Reporting," for disclosure of revenues by geographic segment.

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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

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

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

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

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.

For the years ended December 31, 2022, 2021 and 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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We further analyze arrangements that span greater than one year on an ongoing basis to determine whether a significant financing component exists.

No such arrangements existed during the years ended December 31, 2021 or December 31, 2020.

No such arrangements existed during the years ended December 31, 2022, 2021 and 2020.

Advance payments to customers, where legally permitted, are deferred and amortized as a reduction to revenue over the expected period of benefit and tested for recoverability as appropriate.

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Excise taxes are shown in a separate line item in the consolidated statements of operations as a reduction of sales.

Excise taxes are recognized as a current liability within accounts payable and other current liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority.

In the consolidated balance sheets, excise taxes are generally recognized as a current liability within accounts payable and other current liabilities, with the liability subsequently reduced when the taxes are remitted to the tax authority.

In cases where excise taxes are prepaid, they are recorded within other current assets.

Cost of Goods Sold

Our cost of goods sold includes costs we incur to make and ship beer and other malt beverages.

Our cost of goods sold includes costs we incur to make and ship beer and other beverages.

These costs include brewing materials, such as barley, hops and various grains.

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Marketing, General and Administrative Expenses

Our marketing, general and administrative expenses include media advertising (television, radio, digital, print), tactical advertising (signs, banners, point-of-sale materials) and promotion costs on both local and national levels within our operating segments.

Our MG&A expenses include marketing expenses, including the direct costs related to the selling of a product or brand, media advertising (television, radio, digital, print), tactical advertising (signs, banners, point-of-sale materials) and promotion costs on both local and national levels within our operating segments.

The creative portion of our advertising activities is expensed as incurred.

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

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.

Included in MG&A is total marketing and advertising expenses which were approximately $ 1.0 billion, $ 1.1 billion and $ 0.9 billion in 2022, 2021 and 2020, respectively.

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

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

Unless capitalization is allowed or required by U.S.

GAAP, legal costs are expensed when incurred.

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We include estimated forfeitures expected to occur when calculating share-based compensation expense.

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

Our share-based compensation

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

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

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

Special Items, 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;

Other Operating Income (Expense), net

Our other operating income (expense) items represent charges incurred or benefits realized that we believe are significant to our current operating results warranting separate classification;

specifically, such items are considered to be one of the following:

• infrequent or unusual items,

• impairment or asset abandonment-related losses,

• restructuring charges and other atypical employee-related costs, or

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

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

• restructuring charges, including atypical employee-related charges, asset abandonment-related losses, fees on termination of significant operating agreements and other related exit or disposal charges;

• intangible and tangible asset impairments, excluding goodwill;

• gains and (losses) on disposal of investments;

• other significant items deemed to warrant separate classification within operating income

These items classified as other operating income (expense) are not necessarily non-recurring, however, they are generally deemed to be incremental to income earned or costs incurred by us in conducting normal operations.

Interest Expense, net

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We capitalize interest cost as a part of the original cost of acquiring certain fixed assets if the cost of the capital expenditure and the expected time to complete the project are considered significant.

Other Income (Expense)

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

Other Non-Operating Income (Expense), net

Our other non-operating income (expense), net 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 and other equity securities are classified in this line item.

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however, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities remain unallocated.

The initial recording of foreign-denominated transactions are classified based on the nature of the transaction, with the unrealized or realized foreign exchange gains or losses resulting from the subsequent remeasurement of the monetary asset or liability, and its ultimate settlement, classified in other income (expense).

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets, liabilities, and certain unrecognized gains and losses recorded in accumulated other comprehensive income (loss).

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets, liabilities and certain unrecognized gains and losses recorded in AOCI.

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 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.

tax purposes, to result in any material U.S.

taxes, if distributed.

The tax benefit from an uncertain tax position is recognized only if it is determined that the tax position will more likely be sustained based on its technical merits.

The tax benefit from an uncertain tax position is recognized only if it is determined that the tax position will more likely than not be sustained based on its technical merits.

We measure and record the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Interest, penalties and offsetting positions related to unrecognized tax benefits are recognized as a component of income tax expense.

Interest, penalties and offsetting positions related to unrecognized tax benefits are recognized as a component of income tax expense with interest and penalties being recorded to the provision (benefit) for income taxes in our Consolidated Statement of Operations.

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.

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OCI also includes amounts reclassified to income during the reporting period that were previously recognized within AOCI.

Amounts remaining within AOCI are expected to be reclassified out of AOCI in the future, at which point they will be recognized within the consolidated statement of operations as a component of net income (loss).

We recognize OCI related to the translation of assets and liabilities of our foreign subsidiaries which are denominated in currencies other than USD, unrealized gains and losses on the effective portion of our derivatives designated in cash flow hedging relationships and derivative and non-derivative instruments designated in net investment hedging relationships, actuarial gains and losses and prior service costs related to our pension and other post-retirement benefit plans, as well as our proportionate share of our equity method investments' OCI.

Amounts remaining within AOCI are expected to be

reclassified out of AOCI in the future, at which point they will be recognized within the consolidated statement of operations as a component of net income (loss).

We recognize OCI related to the translation of assets and liabilities of our foreign subsidiaries which are denominated in currencies other than the USD, unrealized gains and losses on the effective portion of our derivatives designated in cash flow hedging relationships and derivative and non-derivative instruments designated in net investment hedging relationships, actuarial gains and losses and prior service costs related to our pension and other post-retirement benefit plans, as well as our proportionate share of our equity method investments' OCI.

Additionally, when we do not have the expectation or intent to cash settle certain of our intercompany note receivable and note payable positions in the foreseeable future, the remeasurement of these instruments is recorded as a component of foreign currency translation adjustments within OCI.

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Earnings Per Share

Basic EPS was computed using the weighted-average number of shares of common stock outstanding during the period.

Basic EPS is computed using the weighted-average number of shares of common stock outstanding during the period.

Diluted EPS includes the additional dilutive effect of our potentially dilutive securities, which include RSUs, DSUs, PSUs and stock options.

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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.

Anti-dilutive securities excluded from the computation of diluted EPS for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 were 3.1 million, 1.8 million and 2.7 million shares, respectively.

On November 10, 2022, our Company's Board of Directors declared a cash dividend of $ 0.38 per share, paid on December 15, 2022, to shareholders of Class A and Class B common stock of record on December 2, 2022.

Shareholders of exchangeable shares received the CAD equivalent of dividends declared on Class A and Class B common stock, equal to CAD 0.50 per share.

During the year ended December 31, 2022, dividends declared to eligible shareholders totaled $ 1.52 per share, with the CAD equivalent totaling CAD 1.95 per share.

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.

During the year ended December 31, 2021, dividends declared to eligible shareholders totaled $ 0.68 per share, with the CAD equivalent totaling CAD 0.84 per share.

During the year ended December 31, 2020, dividends declared to eligible shareholders totaled $ 0.57 per share, with the CAD equivalent totaling CAD 0.75 per share.

Share Repurchase Program

On February 17, 2022, our Company's 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 the program primarily intended to offset annual employee equity award grants.

During the year ended December 31, 2022, we repurchased 995,000 shares under the share repurchase program at a weighted average price of $ 51.70 per share, including brokerage commissions, for an aggregate value of $ 51.5 million.

Cash and Cash Equivalents

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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.

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.

Non-cash investing activities includes movements in our guarantee of indebtedness of certain equity method investments of $ 2.3 million, $ 0.4 million and $ 0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

See Note 3, "Investments" for further discussion.

We also had other non-cash activities related to capital expenditures incurred but not yet paid of $ 234.3 million, $ 206.6 million and $ 171.9 million during the years ended December 31, 2022, 2021 and 2020, respectively.

In addition, we had non-cash activities related to our non-cash issuances of share-based awards.

See Note 16, "Share-Based Payments" for further details.

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

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See Note 10, "Derivative Instruments and Hedging Activities" for further details.

As of December 31, 2022, we had a recorded non-cash transaction related to the establishment of an accrued liability of $ 56.6 million as the best estimate of the probable loss in the Keystone litigation case based on the jury verdict including associated interest.

See Note 13, "Commitments and Contingencies" for further details.

Other than the activity mentioned above and the supplemental non-cash activity related to the recognition of leases discussed in Note 8, "Leases," there was no other significant non-cash activity in 2022, 2021 and 2020.

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This methodology takes into consideration historical loss experience and current and forecasted changes in cash flows based on internal and external information.

In the U.K., loans are extended to a portion of the retail outlets that sell our brands.

We establish an allowance through a provision for loan losses charged against earnings and recorded in marketing, general and administrative expenses.

Loan balances that are written off are recorded against the allowance as a write-off.

Activity within the allowance for credit losses was immaterial for fiscal years 2021, 2020 and 2019.

Inventories are stated at the lower of cost or net realizable value.

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We regularly assess the shelf-life of our inventories and reserve for those inventories when it becomes apparent the product will not be sold within our freshness specifications.

In addition, we reserve for those inventories associated with discontinued SKUs or instances where we change our packaging.

Other current assets

Other current assets include prepaid assets, maintenance and operating supplies, promotion materials and derivative assets that are expected to be recognized or realized within the next 12 months.

Other current assets include prepaid assets, implementation costs incurred on cloud computing arrangements, maintenance and operating supplies, promotion materials and derivative assets that are expected to be recognized or realized within the next 12 months.

Maintenance and operating supplies include our inventories of spare parts, which are kept on hand for repairs and maintenance of machinery and equipment.

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20 - 40 years;

machinery and equipment:

3 - 25 years;

furniture and fixtures:

3 - 10 years;

returnable containers:

2 - 15 years;

production and office equipment 3 - 25 years;

and software:

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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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Software maintenance and training costs are expensed in the period incurred.

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

Implementation costs incurred in hosting arrangements that are service contracts are capitalized within other assets and are not material.

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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See further discussion in Note 6, "Goodwill and Intangibles."

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

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

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

As required, we evaluate the carrying value of our goodwill at the reporting unit level and indefinite-lived intangible assets for impairment at least annually or when an interim triggering event occurs that may indicate potential impairment.

Our annual test is performed as of the first day of our fiscal fourth quarter, October 1.

The testing of goodwill and indefinite-lived intangible assets uses estimates and assumptions affected by factors such as economic and industry conditions along with changes in operating performance.

The evaluation involves comparing the reporting unit or indefinite-lived intangible asset's fair value to its carrying value.

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

If the carrying value exceeds its fair value, we would recognize an impairment loss in an amount equal to the excess up to the total amount of goodwill allocated to that reporting unit or balance of the respective indefinite-lived intangible asset.

We continuously monitor the performance of our other definite-lived intangible assets and evaluate for impairment when evidence exists that certain triggering 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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Amortization is recorded using the straight-line method over the estimated lives of the assets as this approximates the pattern in which the assets economic benefits are consumed.

Goodwill impairments are recorded to the "Goodwill impairment" line item on the consolidated statement of operations whereas impairments of intangible assets are recorded in the "Other operating income (expense), net" line item.

Equity Method Investments

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

We apply the equity method of accounting to investments that we do not control but 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 investments.

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We do not enter into derivatives for trading or speculative purposes.

We recognize our derivatives on the consolidated balance sheets as assets or liabilities at fair value and are classified in either current or non-current assets or liabilities based on each contract's respective unrealized gain or loss position and each contract's respective maturity.

We recognize our derivatives on the consolidated balance sheets as assets or liabilities at fair value and classify them in either current or non-current assets or liabilities based on each contract's respective unrealized gain or loss position and each contract's respective maturity.

Our policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements.

Further, our current derivative agreements do not allow us to net positions with the same counterparty and therefore, we present our derivative positions gross in our consolidated balance sheets.

Changes in fair values of outstanding cash flow and net investment hedges are recorded in OCI, until earnings are affected by the variability of cash flows of the underlying hedged item or the sale of the underlying net investment, respectively.

respectively.

Effective cash flow hedges offset the gains or losses recognized on the underlying exposure in the consolidated statements of operations, or for net investment hedges, the foreign exchange translation gain or loss recognized in AOCI.

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We account for these contracts on an accrual basis, recording realized settlements related to these contracts in the same financial statement line items as the corresponding transaction.

We account for leases in accordance with Accounting Standards Codification (“ASC”) Topic 842, Leases, which we adopted on January 1, 2019, electing not to adjust comparative periods presented and applying a modified retrospective transition approach as of the effective date of adoption.

We enter into contractual arrangements for the utilization of certain non-owned assets, primarily real estate and equipment, which are evaluated as finance or operating leases upon commencement and are accounted for accordingly.

Specifically, under ASC 842, a contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration.

Specifically, under Accounting Standards Codification (“ASC”) Topic 842, Leases, a contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration.

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

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

For all contractual arrangements deemed to be leases (other than short-term leases, which have a duration of one year or less), 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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Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease-related expense is recorded within either cost of goods sold or marketing, general and administrative expenses on the consolidated statements of operations, depending on the function of the underlying leased asset, with the exception of interest on finance lease liabilities, which is recorded within interest expense on the consolidated statements of operations.

Lease-related expense is recorded within either cost of goods sold or MG&A expenses on the consolidated statements of operations, depending on the function of the underlying leased asset, with the exception of interest on finance lease liabilities, which is recorded within interest expense on the consolidated statements of operations.

Pension and Postretirement Benefits

We maintain retirement plans for the majority of our employees.

We offer different types of plans within each segment, including defined benefit plans, defined contribution plans and OPEB plans.

We offer different types of plans within each segment,

including defined benefit plans, defined contribution plans and OPEB plans.

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

Our equity investments, BRI and BDL, maintain defined benefit, defined contribution and 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.

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

The funded status of a plan, measured as the difference between the fair value of plan assets and the projected benefit obligation, and the related net periodic pension cost are calculated using a number of significant actuarial assumptions.

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The fair value of derivatives is estimated by discounting the estimated future cash flows utilizing observable market interest, foreign exchange and commodity rates adjusted for non-performance credit risk associated with our counterparties (assets) or with MCBC (liabilities), as appropriate.

Additionally, the fair value of warrants is estimated using the Black-Scholes valuation model.

See Note 10, "Derivative Instruments and Hedging Activities" for additional information.

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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.

On February 20, 2023, the Company's Board of Directors declared a quarterly dividend of $ 0.41 per share, to be paid on March 17, 2023, to shareholders of Class A and Class B common stock of record on March 3, 2023.

Shareholders of exchangeable shares will receive the CAD equivalent of dividends declared on Class A and Class B common stock.

New Accounting Pronouncements

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 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.

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 was effective for all entities upon issuance on March 12, 2020 through December 31, 2022.

Accounting Standards Update ("ASU") 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , defers the expiration date of Topic 848 to December 31, 2024 to realign with the revised cessation date for LIBOR.

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

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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):

The partial adoption of, and future elections under 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):

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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.

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 method of accounting for the government assistance and the effect on our financial statements.

We adopted this guidance in our annual report for the year ended December 31, 2022.

None of the programs in which we receive government assistance are individually material nor are they material in the aggregate.

See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for additional information on our government assistance.

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.

In September 2022, the FASB issued authoritative guidance intended to provide consistent and transparent disclosures for a buyer in a supplier finance program by requiring disclosures of key program terms, the amount of obligations that have been confirmed as valid with the finance provider that are deemed outstanding as of the end of the period, a description of the financial line item in which this unpaid balance resides and a rollforward of the obligations including the amount of obligations confirmed and paid.

This guidance, with the exception of the rollforward disclosure requirement, is effective for us starting with the first quarter of 2023 and is required to be applied retrospectively.

The rollforward disclosure requirement is effective for us in our annual report for the year ending December 31, 2024 and is required to be applied prospectively.

While early adoption of this guidance is permitted, we plan to adopt as required with all information except for the rollforward disclosure requirement to be disclosed starting with the first quarter of 2023.

We expect the guidance to have an impact on disclosures only as the guidance does not impact recognition or measurement of such programs.

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 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

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 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.

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated sales in 2021, 2020 or 2019.

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

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.

Income (loss) before income taxes includes the impact of special items;

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

Additionally, integration costs of $ 25 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

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

(In millions)

Net sales $ 8,485.0 $ 1,802.3 $ — $ ( 7.6 ) $ 10,279.7

Interest expense ( 1.4 ) ( 5.8 ) ( 253.1 ) — ( 260.3 )

Interest income — 0.2 1.8 — 2.0

Income (loss) before income taxes $ 1,176.5 $ 32.9 $ 29.6 $ — $ 1,239.0

Income tax benefit (expense) ( 230.5 )

Net income (loss) 1,008.5

Net (income) loss attributable to noncontrolling interests ( 2.8 )

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

Year ended December 31, 2020

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

(In millions)

Net sales $ 8,237.0 $ 1,431.9 $ — $ ( 14.9 ) $ 9,654.0

Interest expense ( 2.6 ) ( 5.7 ) ( 266.3 ) — ( 274.6 )

Interest income 0.2 0.3 2.8 — 3.3

Income (loss) before income taxes $ 1,080.5 $ ( 1,603.7 ) $ ( 120.7 ) $ — $ ( 643.9 )

Income tax benefit (expense) ( 301.8 )

Net income (loss) ( 945.7 )

Net (income) loss attributable to noncontrolling interests ( 3.3 )

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

Year ended December 31, 2019

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

(In millions)

Net sales $ 8,618.2 $ 1,986.4 $ — $ ( 25.2 ) $ 10,579.4

Interest expense 2.8 ( 6.2 ) ( 277.5 ) — ( 280.9 )

Interest income — 0.5 7.7 — 8.2

Income (loss) before income taxes $ 645.0 $ 102.4 $ ( 267.5 ) $ — $ 479.9

Income tax benefit (expense) ( 233.7 )

Net income (loss) 246.2

Net (income) loss attributable to noncontrolling interests ( 4.5 )

Net income (loss) attributable to MCBC $ 241.7

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

Assets Depreciation and amortization Capital expenditures

As of December 31, For the years ended December 31, For the years ended December 31,

2021 2020 2021 2020 2019 2021 2020 2019

(In millions)

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

The following table presents net sales by geography, based on the location of the customer.

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

Net sales to unaffiliated customers

United States and its territories $ 7,168.7 $ 7,016.1 $ 7,244.9

Canada 1,188.4 1,111.6 1,231.3

United Kingdom 959.1 663.7 1,119.1

Other foreign countries (1)

963.5 862.6 984.1

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

(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 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 and operating ROU assets

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

Canada 1,114.6 974.8

United Kingdom 383.2 398.9

Other foreign countries (1)

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.

1 unchanged sentence

The VIEs included under "Consolidated VIEs" below are those for which we have concluded that we are the primary beneficiary and accordingly, we have consolidated these entities.

None of our consolidated VIEs held debt as of December 31, 2021 or December 31, 2020.

Our consolidated VIEs held $ 5.0 million of debt as of December 31, 2022 and none as of December 31, 2021.

We have not provided any financial support to any of our VIEs during 2022 that we were not previously contractually obligated to provide.

3 unchanged sentences

As such, the conclusion regarding the primary beneficiary status is subject to change and we continually evaluate circumstances that could require consolidation or deconsolidation.

Our consolidated VIEs are Cobra Beer Partnership, Ltd.

consolidated VIEs are Cobra Beer Partnership, Ltd.

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

25 unchanged sentences

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.

During the third quarter of 2021, TYC commenced retail operations with its first product sales in the state of Texas and in the fourth quarter of 2022, TYC announced that it will expand into three new markets consisting of Kansas, Oklahoma and Missouri.

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.

18 unchanged sentences

Rocky Mountain Bottle Company

RMBC, a Colorado limited liability company, is a joint venture with Owens-Brockway Glass Container, Inc.

in which we hold a 50 % interest.

RMBC, a Colorado limited liability company, is a joint venture with Owens-Brockway Glass Container, Inc in which we hold a 50 % interest.

business has a supply agreement with RMBC under which we agree to purchase output approximating the agreed upon annual plant capacity of RMBC.

4 unchanged sentences

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.

Truss is a joint venture with HEXO, created to pursue opportunities to develop, produce and market non-alcoholic, cannabis-infused beverages in Canada.

Truss is structured as a standalone company with its own board of directors and an independent management team.

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

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

Truss subleased the location of its production facility in Belleville, Ontario from HEXO for a portion of the year ended December 31, 2022 and directly from a third party landlord for the remaining portion of the year.

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

4 unchanged sentences

Other $ 43.3 $ 16.1 $ 70.8 $ 14.8

Grolsch Deconsolidation

In 2019, we received termination notices of our Grolsch U.K.

("Grolsch") joint venture arrangement, as well as the related brewing and distribution agreements for the Grolsch brands in the U.K.

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 in special items, net, in the consolidated statements of operations in 2019.

Other Income and Expense

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

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

Other, net (1)

Other income (expense), net $ ( 3.5 ) $ 6.0 $ ( 14.7 )

(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.

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

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

Domestic $ 1,307.5 $ 1,151.7 $ 1,136.1

Foreign ( 68.5 ) ( 1,795.6 ) ( 656.2 )

Total $ 1,239.0 $ ( 643.9 ) $ 479.9

The components of the provision for income taxes are as follows:

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

Federal $ 43.5 $ 79.0 $ 69.1

State 7.1 5.2 9.4

Foreign ( 1.0 ) 111.4 46.7

Total current tax (benefit) expense $ 49.6 $ 195.6 $ 125.2

Federal $ 163.5 $ 101.9 $ 128.3

State 70.4 19.5 22.2

Foreign ( 53.0 ) ( 15.2 ) ( 42.0 )

Total deferred tax (benefit) expense $ 180.9 $ 106.2 $ 108.5

Total income tax (benefit) expense $ 230.5 $ 301.8 $ 233.7

A reconciliation from the U.S.

statutory federal income tax rate to the effective income tax rate is as follows:

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

($ in millions)

Statutory federal income tax rate 21.0 % $ 260.2 21.0 % $ ( 135.2 ) 21.0 % $ 100.8

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

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 — % —

Effect of unrecognized tax benefits ( 6.2 ) % ( 76.3 ) ( 26.1 ) % 167.9 3.7 % 18.0

Change in valuation allowance ( 0.1 ) % ( 1.1 ) 1.3 % ( 8.4 ) 6.0 % 28.8

Goodwill impairment ( 0.2 ) % ( 2.9 ) ( 41.4 ) % 266.8 36.5 % 175.3

Other, net 3.3 % 41.5 ( 2.6 ) % 16.0 ( 0.7 ) % ( 3.8 )

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 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 25.8 %, and Canada has a combined federal and provincial statutory income tax rate of approximately 26 %.

December 31, 2022 December 31, 2021

(In millions)

Non-current deferred tax assets

Compensation-related obligations $ 54.8 $ 60.9

Pension and postretirement benefits 24.5 102.4

Derivative instruments — 76.5

Tax credit carryforwards 38.3 56.2

Tax loss carryforwards 359.0 331.6

Accrued liabilities and other 97.7 75.5

Valuation allowance ( 60.7 ) ( 62.2 )

Total non-current deferred tax assets $ 513.6 $ 640.9

Non-current deferred tax liabilities:

Fixed assets 422.4 358.3

Partnerships and investments 29.7 19.6

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 liabilities $ 2,497.7 $ 2,133.9

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.

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.

The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized.

We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results and the availability of prudent and feasible tax planning strategies.

Based on this analysis, we have determined that the valuation allowances recorded in each period presented are appropriate.

We have deferred tax assets for U.S.

tax carryforwards that expire between 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 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.

December 31, 2021 December 31, 2020

(In millions)

Domestic net non-current deferred tax liabilities $ 1,825.9 $ 1,542.8

Foreign net non-current deferred tax assets 180.2 105.7

Foreign net non-current deferred tax liabilities 852.0 696.8

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

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:

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

Balance at beginning of year $ 235.7 $ 72.4 $ 51.6

Additions for tax positions related to the current year 28.6 22.8 18.1

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 ) —

Settlements ( 161.8 ) ( 0.4 ) —

Release due to statute expirations ( 3.4 ) — ( 0.8 )

Foreign currency adjustment 1.9 10.4 3.5

Balance at end of year $ 28.0 $ 235.7 $ 72.4

Our remaining unrecognized tax benefits as of December 31, 2021, relate to tax years that are currently open to examination.

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns;

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

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

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

Reconciliation of unrecognized tax benefits balance

Estimated interest and penalties $ 0.1 $ 11.4 $ 2.9

Unrecognized tax positions 28.0 235.7 72.4

Total unrecognized tax benefits $ 28.1 $ 247.1 $ 75.3

Presented net against non-current deferred tax assets $ 26.7 $ 142.1 $ 68.4

Current (included in accounts payable and other current liabilities) — 98.0 —

Non-current (included within other liabilities) 1.4 7.0 6.9

Total unrecognized tax benefits $ 28.1 $ 247.1 $ 75.3

Amount of unrecognized tax benefits that would impact the effective tax rate, if recognized (1)

$ 18.6 $ 87.7 $ 72.4

(1) Amounts exclude the potential effects of valuation allowances, which may fully or partially offset the impact to the effective tax rate.

We file income tax returns in most of the federal, state and provincial jurisdictions in the U.S., Canada and various countries in Europe.

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

In Canada, tax years through 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 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.

tax purposes, to result in any material U.S.

taxes, if distributed.

Special Items

We have incurred charges or realized benefits that either we do not believe to be indicative of our core operations, or we believe are significant to our current operating results warranting separate classification.

As such, we have separately classified these charges (benefits) as special items.

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

Employee-related charges

Restructuring $ 11.7 $ 67.6 $ 52.4

Impairments or asset abandonment charges

Americas - Asset abandonment (1)

14.6 115.8 38.8

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

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) 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 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.

The employee related costs of retention and severance are included in the restructuring line above.

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

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 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.

(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.

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 EMEA&APAC segment.

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

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

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.

We also recorded impairment losses related to definite-lived intangible assets in India of $ 6.1 million.

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

(5) During 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.

(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 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.

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.

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 during such periods as a result of the coronavirus pandemic.

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.

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.

Americas EMEA&APAC Total

(In millions)

Balance as of December 31, 2018 $ 24.5 $ 1.1 $ 25.6

Charges incurred and changes in estimates 43.4 9.0 52.4

Payments made ( 25.5 ) ( 5.6 ) ( 31.1 )

Foreign currency and other adjustments 0.2 — 0.2

Balance as of December 31, 2019 $ 42.6 $ 4.5 $ 47.1

Charges incurred and changes in estimates 59.1 8.5 67.6

Payments made ( 77.3 ) ( 11.1 ) ( 88.4 )

Foreign currency and other adjustments 0.1 0.1 0.2

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

Charges incurred and changes in estimates 10.1 1.6 11.7

Payments made ( 23.7 ) ( 2.0 ) ( 25.7 )

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

Balance as of December 31, 2021 $ 10.9 $ 1.5 $ 12.4

Stockholders' Equity

Changes to the number of shares of capital stock issued were as follows:

issued Exchangeable

shares issued

Class A Class B Class A Class B

(Share amounts in millions)

Balance as of December 31, 2018 2.6 205.4 2.8 14.8

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

Balance as of December 31, 2019 2.6 205.7 2.7 14.8

Shares issued under equity compensation plans — 0.4 — —

Shares exchanged for common stock — 3.7 — ( 3.7 )

Balance as of December 31, 2020 2.6 209.8 2.7 11.1

Shares issued under equity compensation plans — 0.3 — —

Balance as of December 31, 2021 2.6 210.1 2.7 11.1

Exchangeable Shares

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

("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.

in February 2005, if the holder had elected to receive shares of Molson Coors common stock.

Exchangeable shareholders receive the CAD equivalent of dividends declared on Class A and B common stock on the date of declaration.

Holders of exchangeable shares also receive, through a voting trust, the benefit of Molson Coors voting rights, entitling the holder to one vote on the same basis and in the same circumstances as one corresponding share of Molson Coors common stock.

Voting Rights

Each holder of record of Class A common stock, Class B common stock, Class A exchangeable shares and Class B exchangeable shares is entitled to one vote for each share held, without the ability to cumulate votes on the election of directors.

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.

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.

Conversion Rights

The Certificate provides for the right of holders of Class A common stock to convert their stock into Class B common stock on a one-for-one basis at any time.

The exchangeable shares are exchangeable at any time, at the option of the holder on a one -for-one basis for corresponding shares of Molson Coors common stock.

Therefore, a portion of our authorized and unissued Class A and Class B common shares are reserved to meet exchange requirements.

Finished goods $ 269.1 $ 351.5

Work in process 71.9 71.8

Raw materials 290.4 271.2

Packaging materials 161.5 110.2

Inventories, net $ 792.9 $ 804.7

December 31, 2022 December 31, 2021

2 unchanged sentences

Buildings and improvements 1,205.5 1,225.1

Machinery and equipment 4,547.1 4,537.7

Returnable containers 414.0 414.8

Furniture and fixtures 311.4 295.9

Production and office equipment 4,897.3 4,858.5

Software 533.3 507.1

Natural resource properties 3.8 3.8

Construction in progress 497.4 335.2

Other 395.3 417.8

Total properties cost 7,884.7 7,699.6

1 unchanged sentence

Properties, net $ 4,222.8 $ 4,192.4

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

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.

As of December 31, 2022, we modified the presentation of the subcategories of properties.

The presentation of the subcategories of properties as of December 31, 2021 have been reclassified to conform to the presentation used as of December 31, 2022.

Depreciation expense was $ 476.7 million, $ 568.1 million and $ 702.0 million in the years ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively.

The decrease in depreciation expense for the year ended December 31, 2022 compared to 2021 was primarily due to assets becoming fully depreciated during the year, favorable impacts from foreign currency movements and a decrease in accelerated depreciation recorded as a result of certain facility closures.

Goodwill and Intangible Assets

EMEA&APAC (1)(2)

Changes in Goodwill (In millions)

The changes in the gross carrying value of goodwill and accumulated impairment losses are presented in the table below by segment.

Americas EMEA&APAC (1)

(In millions)

Gross carrying value of goodwill $ 6,846.4 $ 1,569.1 $ 8,415.5

Accumulated impairment losses ( 695.4 ) ( 1,569.1 ) ( 2,264.5 )

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

Impairments — ( 1,484.3 ) ( 1,484.3 )

Foreign currency translation 4.4 ( 0.5 ) 3.9

Foreign currency translation, net 1.6 — 1.6

Gross carrying value of goodwill 6,852.9 1,517.2 8,370.1

Accumulated impairment losses ( 700.3 ) ( 1,517.2 ) ( 2,217.5 )

Balance as of December 31, 2021 $ 6,152.6 $ — $ 6,152.6

Foreign currency translation 1.6 — 1.6

Impairments ( 845.0 ) — ( 845.0 )

Foreign currency translation, net ( 15.7 ) — ( 15.7 )

Gross carrying value of goodwill 6,790.4 1,387.6 8,178.0

Accumulated impairment losses ( 1,498.5 ) ( 1,387.6 ) ( 2,886.1 )

Balance as of December 31, 2022 $ 5,291.9 $ — $ 5,291.9

(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, 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, 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.

(1) The EMEA&APAC goodwill balance was fully impaired during the year ended December 31, 2020.

Subsequent changes in the gross carrying value of goodwill and accumulated impairment loss balances are due to fluctuations in foreign exchange rates, which are presented net in the table above, as well as an immaterial write-off related to the disposal of our India entity in 2022.

The following table presents details of our intangible assets, other than goodwill, as of December 31, 2022:

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Amortization expense of intangible assets was $ 208.1 million, $ 218.0 million and $ 220.0 million for the years ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively.

This expense is primarily presented within marketing, general and administrative expenses in our consolidated statements of operations.

This expense is primarily presented within MG&A in our consolidated statements of operations.

Annual 2022 Impairment Assessment

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.

We completed our required annual goodwill and indefinite-lived intangible asset impairment testing as of October 1, 2022, the first day of our fourth quarter, using a combination of a discounted cash flow analysis and market approach in the determination of fair value and concluded that the carrying value of the Americas reporting unit was in excess of its fair value amount such that an impairment loss of $ 845.0 million was recorded to the "Goodwill impairment" line item on the consolidated statements of operations.

Due to the partial impairment of the Americas reporting unit goodwill, the remaining goodwill balance related to this reporting unit is still considered to be at risk for future impairments as further discussed below.

Prior to the quantitative goodwill impairment test, we tested the recoverability of the indefinite-lived and definite-lived intangible assets and other long-lived assets within our Americas reporting unit and concluded no impairments were noted.

The decline in the fair value of the Americas reporting unit in the current year was largely impacted by macroeconomic factors including an increase to the discount rate as a result of the recent rising interest rate environment as well as reductions in management forecasts and expectations due primarily to cost inflation pressures in the near to medium term and a softening beer market in certain markets in which we operate.

Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was 8.75 % based on market-specific factors as compared to 8.25 % used as of the October 1, 2021 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 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 ongoing impacts of the coronavirus pandemic and cost inflation on our reporting units.

Due to the partial impairment charge, the reporting unit is still considered to be at risk of future impairment.

We continue to focus on building on the strength of our iconic core brands, growing our above premium portfolio and expanding beyond the beer aisle.

While progress has been made on this strategy, including the increasing proportion of our above premium portfolio over the last several years and the strengthening of our core brands, the growth targets included in management’s forecasted future cash flows are inherently at risk given that the strategies are still in progress.

In addition, these growth targets have been

adjusted to align with current expectations of the beer industry environment and broader macroeconomic conditions such as cost inflation for certain inputs, which could continue to put pressure on achieving key margin and cash flow projections into the future.

Additionally, 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 ongoing impacts of cost inflation, further increases to interest rates, and other external industry factors impacting our business.

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., 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.

The fair value of the Coors brands in the Americas, the Miller brands in the U.S., the Carling brands in the U.K.

and Staropramen brands in EMEA&APAC all exceed their respective carrying values by over 15.0 % as of the annual testing date and therefore are not considered at risk for potential future impairment.

We utilized Level 3 fair value measurements in our impairment analysis of our indefinite-lived intangible assets.

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, 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 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.

As a result, there can be no assurance that the estimates and assumptions made for purposes of the goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of the future.

As a result, there can be no assurance that the estimates and assumptions made for purposes of the goodwill and indefinite-lived intangible asset impairment tests will prove to be an accurate prediction of the future, and if our assumptions are not realized, it is possible that impairment charges may need to be recorded in the future.

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, 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;

(i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives or increase in costs driven by inflation or other factors 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 (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.

Based on known facts and circumstances, we evaluate and consider recent events and uncertain items, as well as related potential implications, as part of our annual assessment and incorporate into the analyses as appropriate.

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 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 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.

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 cost inflation and the lingering coronavirus pandemic and the potential impacts either may have on our immediate or long range results.

We also continuously monitor 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.

Substantial changes in any of these inputs could lead to a material impairment.

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 inflation or 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.

Annual 2021 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

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 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.

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 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.

We completed our required annual goodwill and indefinite-lived intangible asset impairment analysis as of October 1, 2021 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 was considered to be at risk for future impairments with only 6 % cushion of fair value in excess of carrying value.

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 assets or definite-lived intangible assets.

Definite-Lived Intangible Assets and Other Long-Lived Assets

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

As noted above, we tested the recoverability of the indefinite-lived and definite-lived intangible assets and other long-lived assets within our Americas reporting unit prior to the annual quantitative goodwill impairment test, with no impairment noted.

During the first quarter of 2022, we identified a triggering event related to the Truss joint venture asset group within our Americas segment and recognized an impairment loss of $ 28.6 million, of which $ 12.1 million was attributable to the noncontrolling interest.

The asset group was measured at fair value primarily using a market approach with Level 3 inputs.

See Note 17, "Other Operating Income (Expense), net" for further details on impairment losses recorded.

No other material triggering events were identified in either 2022 or 2021 related to definite-lived intangible assets or other long-lived assets.

Accounts Payable and Other Current Liabilities

December 31, 2022 December 31, 2021

(In millions)

Accounts payable and accrued trade payables $ 2,068.2 $ 2,098.1

Accrued compensation 249.2 243.7

Accrued excise and other non-income related taxes 239.9 242.6

Accrued interest 87.6 91.4

Returnable container deposit liabilities 116.8 114.9

Operating leases 44.7 45.4

Accounts payable and other current liabilities $ 2,978.3 $ 3,107.3

(1) Includes current liabilities related to derivatives, income taxes, pensions and other postretirement benefits, guarantee liabilities for some of our equity method investments and various other accrued expenses.

For the years ended December 31, 2022, December 31, 2021 and December 31, 2020, lease expense (including immaterial short-term and variable lease costs) was as follows.

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Operating lease expense $ 72.5 $ 73.2 $ 71.4

Finance lease expense 9.5 10.4 11.5

Total lease expense $ 82.0 $ 83.6 $ 82.9

Supplemental cash flow information related to leases for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 was as follows.

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Cash paid for amounts included in the measurements of lease liabilities

Operating cash flows for operating leases $ 52.5 $ 56.8 $ 53.2

Operating cash flows for finance leases $ 3.6 $ 4.5 $ 7.6

Financing cash flows for finance leases $ 4.4 $ 3.6 $ 34.5

Supplemental non-cash information on right-of-use assets obtained in exchange for new lease liabilities

Operating leases $ 63.9 $ 34.0 $ 28.5

Finance leases $ 3.8 $ 7.5 $ 5.4

Supplemental balance sheet information related to leases as of December 31, 2022 and December 31, 2021 was as follows:

December 31, 2022 December 31, 2021

Balance Sheet Classification (In millions)

Operating Leases

Operating lease right-of-use assets Other assets $ 132.7 $ 119.1

Current operating lease liabilities Accounts payable and other current liabilities $ 44.7 $ 45.4

Non-current operating lease liabilities Other liabilities 99.3 87.8

Total operating lease liabilities $ 144.0 $ 133.2

Finance Leases

Finance lease right-of-use assets Properties, net $ 50.2 $ 61.5

Current finance lease liabilities Current portion of long-term debt and short-term borrowings $ 5.3 $ 4.6

Non-current finance lease liabilities Long-term debt 56.2 62.6

Total finance lease liabilities $ 61.5 $ 67.2

The weighted-average remaining lease term and discount rate as of December 31, 2022 are as follows:

Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate

Operating leases 4.9 4.0 %

Finance leases 10.8 6.3 %

Based on foreign exchange rates as of December 31, 2022, maturities of lease liabilities were as follows:

Operating Leases Finance Leases

(In millions)

2023 $ 50.0 $ 8.6

2024 34.6 8.5

2025 26.6 8.1

2026 18.5 11.4

Thereafter 21.1 45.1

Total lease payments $ 159.0 $ 86.8

interest ( 15.0 ) ( 25.3 )

Present value of lease liabilities $ 144.0 $ 61.5

Executed leases that have not yet commenced as of December 31, 2022 are not material except for master railcar leases with total undiscounted payments of $ 54.6 million expected to commence in 2023.

Debt Obligations

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Long-term debt

$ 500 million 3.5 % notes due May 2022 (1)(2)

CAD 500 million 2.84 % notes due July 2023 (3)(4)

$ 395.7 $ 392.9

EUR 800 million 1.25 % notes due July 2024 (3)

CAD 500 million 3.44 % notes due July 2026 (3)(4)

$ 2.0 billion 3.0 % notes due July 2026 (3)

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

$ 2.0 billion 3.0 % notes due July 2026 (1)

2,000.0 2,000.0

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1,800.0 1,800.0

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

Finance leases 61.5 67.2

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Current portion of long-term debt and short-term borrowings $ 397.1 $ 514.9

(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").

These issuances resulted in total proceeds of approximately $ 6.9 billion, net of underwriting fees and discounts of $ 36.5 million and $ 17.7 million, respectively.

Total debt issuance costs capitalized in connection with these notes including underwriting fees, discounts and other financing related costs, were approximately $ 65 million and are being amortized over the respective terms of the 2016 Notes.

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.

(1) We repaid our $ 500 million 3.5 % USD notes upon maturity on May 1, 2022 using a combination of commercial paper borrowings and cash on hand.

(2) 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.

Approximately $ 1.1 billion of senior notes remained outstanding as of December 31, 2022, and the total remaining debt issuance costs capitalized in connection with these notes, including the underwriting fees and discounts, were $ 8.7 million and are being amortized over the term of the 2042 notes.

(3) 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").

Approximately $ 3.8 billion remained outstanding as of December 31, 2022.

At the same time in 2016, MCBC also issued 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").

All senior notes were issued in order to partially fund the financing of the Acquisition (2016 USD Notes, 2016 EUR Notes and 2016 CAD Notes, collectively, the "2016 Notes").

Debt issuance costs capitalized in connection with these notes including underwriting fees, discounts and other financing related costs, were $ 31 million as of December 31, 2022 and are being amortized over the respective and remaining terms of the 2016 Notes.

(4) 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.

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 above, 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 0.6 % on the 2016 CAD Notes.

See Note 10, "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.

(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.

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.

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.

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.

(5) As of December 31, 2022, we had $ 15.9 million in bank overdrafts and $ 49.7 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $ 33.8 million.

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.

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.

The JPY facilities were early terminated in the first quarter of 2022.

As of December 31, 2021, we had $ 3.9 million of outstanding borrowings under our JPY facilities.

In addition, we have CAD, GBP and USD overdraft facilities under which we had no outstanding borrowings as of December 31, 2022 or December 31, 2021.

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

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 %

• JPY 100 million overdraft facility at Japan short-term Prime rate

See Note 13, "Commitments and Contingencies" for further discussion related to letters of credit.

• CAD unlimited overdraft facility at CAD Prime plus 0.50 %

4 unchanged sentences

As of December 31, 2022 and December 31, 2021, the fair value of our outstanding long-term debt (including current portion of long-term debt) was approximately $ 5.9 billion and $ 7.7 billion, respectively.

The decline in the fair value of our debt was primarily driven by rising interest rates, lower notional outstanding and foreign currency impacts.

All senior notes are valued based on significant observable inputs and classified as Level 2 in the fair value hierarchy.

3 unchanged sentences

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

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

During 2022, we utilized borrowings from this facility in order to fund the repayment of debt upon maturity, for working capital and for general purposes.

We had no borrowings drawn on this revolving credit facility and no commercial paper borrowings as of December 31, 2022 and December 31, 2021.

Debt Covenants

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.

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.

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.

The maximum leverage ratio as of December 31, 2022 is 4.00 x net debt to EBITDA (as defined in the revolving credit facility agreement), through maturity of the credit facility.

As of December 31, 2022 and December 31, 2021, we were in compliance with all of these restrictions and covenants, have met such financial ratios, and have met all debt payment obligations.

All of our outstanding senior notes as of December 31, 2022 rank pari-passu.

3 unchanged sentences

Total $ 6,515.1

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

The aggregate principal debt maturities in the table above excludes Other and Finance leases.

The future maturities of finance leases are disclosed in Note 8, "Leases."

For the years ended

4 unchanged sentences

Interest expensed $ 250.6 $ 260.3 $ 274.6

December 31, 2021 December 31, 2020

(In millions)

Finished goods $ 351.5 $ 266.7

Work in process 71.8 72.7

Raw materials 271.2 242.2

Packaging materials 110.2 82.7

Inventories, net $ 804.7 $ 664.3

Share-Based Payments

We have one share-based compensation plan, the MCBC Incentive Compensation Plan (the "Incentive Compensation Plan"), as of December 31, 2021 and all outstanding awards fall under this plan.

Incentive Compensation Plan

We issue the following types of awards related to shares of Class B common stock to certain directors, officers, and other eligible employees, pursuant to the Incentive Compensation Plan:

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 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.

Prior to vesting, RSUs have no voting rights.

DSU awards, under the Directors' Stock Plan pursuant to the Incentive Compensation Plan, are elections made by non-employee directors of MCBC that enable them to receive all or one-half of their annual cash retainer payments in our stock.

The DSU awards are issued at the market value equal to the price of our stock at the date of the grant.

The DSUs are paid in shares of stock upon termination of service.

Prior to vesting, DSUs have no voting rights.

In 2021, 2020 and 2019, we granted a small number of DSUs with a weighted-average market value of $ 49.33 , $ 37.53 and $ 56.68 per share, respectively.

PSU awards are granted with a target value established at the date of grant and vest upon completion of a service requirement.

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 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.

Stock options are granted with an exercise price equal to the market value of a share of Class B common stock on the date of grant.

Stock options have a term of ten years and generally vest over three years .

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 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

December 31, 2021 December 31, 2020 December 31, 2019

(In millions)

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

Tax benefit ( 5.5 ) ( 4.3 ) ( 1.6 )

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

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.

This total compensation expense is expected to be recognized over a weighted-average period of 1.8 years.

RSUs and DSUs PSUs

Units Weighted-average

grant date fair value per unit Units Weighted-average grant date fair value per unit

(In millions, except per unit amounts)

Non-vested as of December 31, 2020 1.0 $ 56.21 0.7 $ 58.12

Granted 0.6 $ 45.88 0.4 $ 45.71

Vested ( 0.2 ) $ 68.89 — $ —

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 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.

Stock options

Awards Weighted-

exercise price per unit Weighted-

life (years) Aggregate

(In millions, except per share amounts and years)

Outstanding as of December 31, 2020 1.8 $ 66.32 4.5 $ 0.2

Granted 0.3 $ 44.97

Exercised ( 0.1 ) $ 44.10

Expired ( 0.1 ) $ 78.49

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

Expected to vest as of December 31, 2021 0.7 $ 49.27 8.1 $ 0.4

Exercisable as of December 31, 2021 1.2 $ 70.61 3.0 $ 0.2

The total intrinsic values of exercises during 2021, 2020 and 2019 were $ 0.9 million, $ 0.8 million and $ 0.6 million, respectively.

Total tax benefits realized, including excess tax benefits, from share-based awards vested or exercised during 2021, 2020 and 2019 was $ 2.0 million, $ 3.1 million and $ 4.5 million, respectively.

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, 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:

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

Risk-free interest rate 0.79 % 0.91 % 2.46 %

Dividend yield 3.11 % 4.40 % 4.16 %

Volatility range 30.84 % - 42.44 %

25.09 % - 26.31 %

24.46 % - 24.60 %

Weighted-average volatility 33.74 % 25.40 % 24.48 %

Expected term (years) 5.6 5.5 5.3

Weighted-average fair value $ 10.06 $ 6.70 $ 9.20

The risk-free interest rates utilized for periods throughout the contractual life of the stock options are based on a zero-coupon U.S.

Department of Treasury security yield at the time of grant.

Expected volatility is based on a combination of historical and implied volatility of our stock.

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 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

December 31, 2021 December 31, 2020 December 31, 2019

Risk-free interest rate 0.24 % 0.84 % 2.49 %

Dividend yield N/A N/A 4.17 %

Volatility range 23.00 % - 44.71 %

15.21 % - 45.75 %

13.82 % - 42.46 %

Weighted-average volatility 35.46 % 26.02 % 24.97 %

Expected term (years) 2.8 2.8 2.8

Weighted-average fair market value $ 45.71 $ 52.60 $ 53.31

The risk-free interest rates utilized for periods throughout the expected term of the PSUs are based on a zero-coupon U.S.

Department of Treasury security yield at the time of grant.

Expected volatility is based on historical volatility of our stock as well as the stock of our peer firms, as shown within the volatility range above, for a period from the grant date consistent with the expected term.

The expected term of PSUs is calculated based on the grant date to the end of the performance period.

Accumulated Other Comprehensive Income (Loss)

MCBC stockholders' equity

adjustments Gain (loss) on

instruments Pension and

postretirement

adjustments Equity method

investments Accumulated

comprehensive

income (loss)

Derivative Instruments and Hedging Activities

Overview and Risk Management Policies

We use derivatives as part of our normal business operations to manage our exposure to fluctuations in interest rates, foreign currency, commodity price risk and for other strategic purposes related to our core business.

We have established policies and procedures that govern the risk management of these exposures.

Our primary objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and prices.

To achieve our objectives, we enter into a variety of financial derivatives, including foreign currency exchange, commodity, interest rate, cross currency swaps as well as options.

We also enter into physical hedging agreements directly with our suppliers to manage our exposure to certain commodities.

Counterparty Risk

While, by policy, the counterparties to any of the financial derivatives we enter into are major institutions with investment grade credit ratings of at least A- by Standard & Poor's (or the equivalent) or A3 by Moody's, we are exposed to credit-related losses in the event of non-performance by counterparties.

This credit risk is generally limited to the unrealized gains in such contracts, should any of these counterparties fail to perform as contracted.

We have established a counterparty credit policy and guidelines that are monitored and reported to management to assist in managing this risk.

As an additional measure, we utilize a portfolio of institutions either headquartered or operating in the same countries that we conduct our business.

In calculating the fair value of our derivative balances, we also record an adjustment to recognize the risk of counterparty credit and our own non-performance risk, as appropriate.

Price and Liquidity Risks

We base the fair value of our derivative instruments upon market rates and prices.

The volatility of these rates and prices are dependent on many factors that cannot be forecasted with reliable accuracy.

The current fair values of our contracts could differ significantly from the cash settled values with our counterparties.

As such, we are exposed to price risk related to

unfavorable changes in the fair value of our derivative contracts.

We may be forced to cash settle all or a portion of our derivative contracts before the expected settlement date upon the occurrence of certain contractual triggers including a change of control, termination event or other breach of agreement.

This could have a negative impact on our liquidity.

For derivative contracts that we have designated as hedging instruments, early cash settlement would result in the timing of our hedge settlement not being matched to the cash settlement of the forecasted transaction or firm commitment.

We may also decide to cash settle all or a portion of our derivative contracts before the expected settlement date through negotiations with our counterparties, which could also impact our cash position.

Due to the nature of our counterparty agreements, we are not able to net positions with the same counterparty across business units.

Thus, in the event of default, we may be required to early settle all out-of-the-money contracts, without the benefit of netting the fair value of any in-the-money positions against this exposure.

We do not receive and are not required to post collateral unless a change of control event occurs.

This termination event would give either party the right to early terminate all outstanding swap transactions in the event that the other party consolidates, merges with, or transfers all or substantially all of its assets to, another entity, and the creditworthiness of the surviving entity that has assumed such party's obligations is materially weaker than that of such party .

As of December 31, 2022, we did not have any collateral posted with any of our counterparties.

Derivative Accounting Policies

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.

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.

We also consider whether any provisions in our contracts represent embedded derivative instruments as defined in authoritative accounting guidance and apply the appropriate accounting.

Hedge Accounting Policies

We formally document all relationships receiving hedge accounting treatment between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking hedge transactions pursuant to prescribed guidance.

We also formally assess effectiveness both at the hedge's inception and on an ongoing basis, specifically whether the derivatives that are used in hedging transactions have been highly effective in mitigating the risk designated as being hedged and whether those hedges may be expected to remain highly effective in future periods.

Specific to net investment hedges, we have elected to use the spot-to-spot methodology to assess effectiveness.

We discontinue hedge accounting prospectively when (1) the derivative is no longer highly effective in offsetting changes in the cash flows of a forecasted future transaction;

(2) the derivative expires or is sold, terminated, or exercised;

(3) it is no longer probable that the forecasted transaction will occur;

(4) management determines that designating the derivative as a hedging instrument is no longer appropriate;

or (5) management decides to cease hedge accounting.

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 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.

Significant Derivative/Hedge Positions

Net Investment Hedges

Foreign Denominated Debt

In 2016, we issued EUR 800 million senior notes maturing July 15, 2024 to partially fund the Acquisition.

Concurrent with the issuance of these notes, we simultaneously designated the principals as net investment hedges of our investment in our Europe business in order to hedge a portion of the foreign currency translational impacts and, accordingly, record the changes in the carrying value due to fluctuations in the spot rate to AOCI.

See Note 9, "Debt" for further discussion.

Cross Currency Swaps

In 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.

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.

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

During 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.

We have designated these contracts as cash flow hedges.

As a result, the unrealized mark-to-market gains or losses are recorded to AOCI until termination at which point the realized gain or loss of these swaps at issuance of the hedged debt are 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 was incremental to our existing May 2022 forward starting interest rate swap that was executed in 2018, both of which were hedging our forecasted debt issuance expected to occur during 2022.

In late April 2022, the forward starting interest rate swaps associated with the $ 500 million 3.5 % notes that we repaid upon maturity on May 1, 2022 were terminated and settled.

The immaterial loss on settlement of the swaps was recorded through interest expense during the second quarter of 2022.

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.

The swaps had an effective date of September 2015 and a termination date of September 2025 mirroring the terms of the initially forecasted CAD debt issuance.

Under these agreements we were required to early terminate these swaps at the approximate time we issued the previously forecasted debt.

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 portions of the 2016 CAD Notes up to the full 10-year term of the interest rate swap agreements.

The remaining unamortized portion of the loss in AOCI as of December 31, 2022 was $ 10.9 million.

Foreign Currency Forwards

We have financial foreign exchange forward contracts in place to manage our exposure to foreign currency fluctuations.

We hedge foreign currency exposure related to certain royalty agreements, exposure associated with the purchase of production inputs and imports that are denominated in currencies other than the functional entity's local currency and other foreign exchanges exposures.

These contracts have been designated as cash flow hedges of forecasted foreign currency transactions.

We use foreign currency forward contracts to hedge these future forecasted transactions up to a 60 month horizon.

Commodity Swaps and Options

We have financial commodity swap and option contracts in place to hedge changes in the prices of natural gas, aluminum, including surcharges relating to our aluminum exposures, corn, barley and diesel.

These contracts allow us to swap our floating exposure to changes in these commodity prices for a fixed rate.

These contracts are not designated in hedge accounting relationships.

As such, changes in fair value of these derivatives are recorded in cost of goods sold in the consolidated statements of operations.

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.

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.

At that time, we reclassify the gain or loss from Unallocated to the operating segment, allowing our operating segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility.

In the fourth quarter of 2018, in connection with the formation of the Truss joint venture, as discussed further in Note 3, "Investments," our joint venture partner, HEXO, issued to our Canadian subsidiary warrants to purchase common shares of HEXO at any time during the three year period following the formation of the joint venture.

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 and until expiration were recorded in other non-operating income (expense), net on the consolidated statements of operations.

Derivative Fair Value Measurements

We utilize market approaches to estimate the fair value of our derivative instruments by discounting anticipated future cash flows derived from the derivative's contractual terms and observable market interest, foreign exchange and commodity rates.

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 tables below summarize our derivative assets and (liabilities) that were measured at fair value as of December 31, 2022 and December 31, 2021.

See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for further discussion related to measuring the fair value of derivative instruments.

Fair Value Measurements as of

December 31, 2022

December 31, 2022 Quoted prices

in active markets

(Level 1) Significant

(Level 2) Significant

(In millions)

As of December 31, 2018 $ ( 758.7 ) $ ( 0.3 ) $ ( 330.7 ) $ ( 60.3 ) $ ( 1,150.0 )

Foreign currency translation adjustments 129.3 — ( 2.5 ) — 126.8

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

Unrealized gain (loss) on derivative instruments — ( 111.3 ) — — (111.3)

Reclassification of derivative (gain) loss to income — 0.6 — — 0.6

Pension and other postretirement benefit adjustments — — ( 43.7 ) — (43.7)

Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement — — 26.5 — 26.5

Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) — — — ( 14.4 ) (14.4)

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 )

Foreign currency translation adjustments 196.0 — ( 1.6 ) — 194.4

Gain (loss) on net investment hedges ( 113.5 ) — — — (113.5)

Unrealized gain (loss) on derivative instruments — ( 113.5 ) — — (113.5)

Reclassification of derivative (gain) loss to income — ( 0.5 ) — — (0.5)

Pension and other postretirement benefit adjustments — — ( 52.9 ) — (52.9)

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

Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) — — — 19.4 19.4

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

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

Unrealized gain (loss) on derivative instruments — 51.1 — — 51.1

Reclassification of derivative (gain) loss to income — 7.5 — — 7.5

Pension and other postretirement benefit adjustments — — 158.6 — 158.6

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

Tax benefit (expense) ( 17.6 ) ( 15.7 ) ( 41.9 ) ( 5.3 ) ( 80.5 )

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

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

federal corporate income tax rate as part of the 2017 Tax Act.

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 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

For the years ended

December 31, 2021 December 31, 2020 December 31, 2019

Reclassifications from AOCI Location of gain (loss)

recognized in income

Interest rate swaps $ 40.0 $ — $ 40.0 $ —

Foreign currency forwards 7.6 — 7.6 —

Commodity swaps and options 69.0 — 69.0 —

Total $ 116.6 $ — $ 116.6 $ —

Fair Value Measurements as of

December 31, 2021

Quoted prices

in active markets

(Level 1) Significant

(Level 2) Significant

(In millions)

Gain/(loss) on cash flow hedges

Forward starting interest rate swaps $ ( 4.8 ) $ ( 2.9 ) $ ( 3.0 ) Interest expense, net

Interest rate swaps ( 170.8 ) — ( 170.8 ) —

Foreign currency forwards ( 1.5 ) — ( 1.5 ) —

Commodity swaps and options 300.9 — 300.9 —

Total $ 128.6 $ — $ 128.6 $ —

As of December 31, 2022 and December 31, 2021, we had no significant transfers between Level 1 and Level 2.

New derivative contracts tran sacted during 2022 were all included in Level 2.

Results of Period Derivative Activity

The following tables include the year-to-date results of our derivative activity in our consolidated balance sheets as of December 31, 2022 and December 31, 2021, and our consolidated statements of operations for the years ended December 31, 2022, December 31, 2021 and December 31, 2020.

Fair Value of Derivative Instruments in the Consolidated Balance Sheets (in millions)

December 31, 2022

Asset derivatives Liability derivatives

Notional amount Balance sheet location Fair value Balance sheet location Fair value

Derivatives designated as hedging instruments:

Interest rate swaps $ 1,000.0 Other non-current assets 40.0 Other liabilities —

Foreign currency forwards $ 176.6 Other current assets 6.2 Accounts payable and other current liabilities ( 0.1 )

Other non-current assets 1.6 Other liabilities ( 0.1 )

Total derivatives designated as hedging instruments $ 47.8 $ ( 0.2 )

Derivatives not designated as hedging instruments:

Commodity swaps (1)

$ 525.2 Other current assets $ 86.1 Accounts payable and other current liabilities $ ( 14.1 )

Other non-current assets 7.4 Other liabilities ( 10.4 )

Commodity options (1)

$ 19.7 Other current assets 0.8 Accounts payable and other current liabilities ( 0.8 )

Total derivatives not designated as hedging instruments $ 94.3 $ ( 25.3 )

December 31, 2021

Asset derivatives Liability derivatives

Notional amount Balance sheet location Fair value Balance sheet location Fair value

Derivatives designated as hedging instruments:

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 )

Foreign currency forwards $ 170.8 Other current assets 0.5 Accounts payable and other current liabilities ( 2.4 )

Other non-current assets 0.6 Other liabilities ( 0.2 )

Total derivatives designated as hedging instruments $ 1.1 $ ( 173.4 )

Derivatives not designated as hedging instruments:

Commodity swaps (1)

$ 722.1 Other current assets $ 225.1 Accounts payable and other current liabilities $ ( 1.1 )

Other non-current assets 77.1 Other liabilities ( 0.3 )

Commodity options (1)

$ 68.2 Other current assets 1.0 Accounts payable and other current liabilities ( 0.9 )

Total derivatives not designated as hedging instruments $ 303.2 $ ( 2.3 )

(1) Notional includes offsetting buy and sell positions, shown in terms of absolute value.

Buy and sell positions are shown gross in the asset and/or liability position, as appropriate.

The Pretax Effect of Cash Flow Hedge Accounting on Other Comprehensive Income (Loss), Accumulated Other Comprehensive Income (Loss), and Income (Loss) (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, 2022

Forward starting interest rate swaps $ 198.9 Interest income (expense), net $ ( 14.3 )

Foreign currency forwards 10.8 Cost of goods sold 1.8

Foreign currency forwards 0.8 ( 1.2 ) ( 0.7 ) Other income (expense), net

Total income (loss) reclassified, before tax ( 7.5 ) 0.5 ( 0.6 )

Income tax benefit (expense) 2.0 ( 0.1 ) 0.1

Net income (loss) reclassified, net of tax $ ( 5.5 ) $ 0.4 $ ( 0.5 )

Amortization of defined benefit pension and other postretirement benefit plan items:

Prior service benefit (cost) $ 0.3 $ 0.4 $ ( 0.4 ) Other pension and postretirement benefits (costs), net

Net actuarial gain (loss) and settlement ( 7.4 ) 7.2 ( 26.1 ) Other pension and postretirement benefits (costs), net

Total income (loss) reclassified, before tax ( 7.1 ) 7.6 ( 26.5 )

Income tax benefit (expense) 1.7 ( 2.4 ) 6.8

Net income (loss) reclassified, net of tax $ ( 5.4 ) $ 5.2 $ ( 19.7 )

Other reclassifications from AOCI to Income:

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

Income tax benefit (expense) — — —

Net income (loss) reclassified, net of tax $ ( 7.5 ) $ — $ —

Total income (loss) reclassified, net of tax $ ( 18.4 ) $ 5.6 $ ( 20.2 )

Other non-operating income (expense), net ( 0.4 )

Total $ 209.7 $ ( 12.9 )

For the year ended December 31, 2021

Forward starting interest rate swaps $ 50.7 Interest income (expense), net $ ( 4.8 )

Foreign currency forwards 0.4 Cost of goods sold ( 3.5 )

Other non-operating income (expense), net 0.8

Total $ 51.1 $ ( 7.5 )

For the year ended December 31, 2020

Forward starting interest rate swaps $ ( 110.0 ) Interest income (expense), net $ ( 2.9 )

Foreign currency forwards ( 3.5 ) Cost of goods sold 4.6

Other non-operating income (expense), net ( 1.2 )

Total $ ( 113.5 ) $ 0.5

The Pretax Effect of Net Investment Hedge Accounting on Other Comprehensive Income (Loss), Accumulated Other Comprehensive Income (Loss) and Income (Loss) (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, 2022

EUR 800 million notes due 2024

53.2 Other non-operating income (expense), net —

Total $ 53.2 $ —

For the year ended December 31, 2021

Cross currency swaps $ 8.8 Interest income (expense), net $ 6.1

EUR 800 million notes due 2024

67.7 Other non-operating income (expense), net —

Total $ 76.5 $ 6.1

For the year ended December 31, 2020

Cross currency swaps $ ( 33.2 ) Interest income (expense), net $ 14.2

EUR 800 million notes due 2024

( 80.3 ) Other non-operating income (expense), net —

Total $ ( 113.5 ) $ 14.2

(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, 2022, December 31, 2021 and December 31, 2020, respectively, we did not reclassify any amounts related to net investment hedges from AOCI into earnings.

We expect net gains o f approximately $ 2 million (pretax) recorded in AOCI as of December 31, 2022 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, 2022 is approximately 3 years, as well as those related to our forecasted debt issuances in 2026.

The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations (in millions):

Derivatives not in hedging relationship Location of gain (loss) recognized

in income on derivative Amount of gain (loss) recognized

in income on derivative

For the year ended December 31, 2022

Commodity swaps Cost of goods sold $ 42.6

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 non-operating income (expense), net ( 0.3 )

Total $ 403.2

For the year ended December 31, 2020

Commodity swaps Cost of goods sold $ 28.5

Warrants Other non-operating income (expense), net ( 2.4 )

Employee Retirement Plans and Postretirement Benefits

We maintain retirement plans for the majority of our employees.

Depending on the location and benefit program, we provide either defined benefit pension or defined contribution pension plans to our employees.

Depending on the location and benefit program, we provide either defined benefit pension or defined contribution plans to our employees.

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

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however, those plans are excluded from this disclosure as BRI and BDL are equity method investments and not consolidated.

participates in and makes contributions to multi-employer pension plans.

Contributions to multi-employer pension plans were $ 7.1 million, $ 8.2 million and $ 7.9 million in 2021, 2020 and 2019, respectively.

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

Contributions to multi-employer pension plans were $ 3.6 million, $ 7.1 million and $ 8.2 million for the years ended December 31, 2022, 2021 and 2020, 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 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 no subsidies received in 2021 and immaterial subsidies received in 2020 and 2019.

The benefits paid, including prescription drugs, were $ 33.0 million, $ 33.8 million and $ 33.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

There were no subsidies received for the years ended December 31, 2022 and 2021, and immaterial subsidies received for the year ended December 31, 2020.

Defined Benefit and OPEB Plans

Current Year Pension Transactions

Purchase of an Annuity Contract in Canada

During December 2022, we purchased an annuity contract to transfer all of the pension plan liabilities, approximately $ 185 million of projected benefit obligations as of December 31, 2021, of a certain pension plan and the associated administration of benefits to an insurance company using that plan's assets.

This transaction had no impact on the amount, timing or form of the retirement benefit payments to the affected retirees and beneficiaries.

Because approximately ninety-three percent of plan participants reside in jurisdictions allowing a company to discharge its pension liability, approximately ninety-three percent of the plan's liabilities and associated assets were written off.

The remaining portion of plan assets and plan liabilities are recorded on our balance sheet as a buy-in transaction.

Due to the close proximity to year end, the remaining pension plan assets and liabilities of the plan not discharged were remeasured using updated actuarial assumptions in conjunction with the year-end pension valuation.

Purchase of an Annuity Contract in the United States

During the third quarter of 2022, we purchased an annuity contract to transfer approximately $ 340 million, or approximately twenty percent, of U.S.

qualified pension plan liabilities and the associated administration of benefits to an insurance company using U.S.

qualified pension plan assets.

This transaction had no impact on the amount, timing or form of

the retirement benefit payments to the affected retirees and beneficiaries.

As a result of the transaction, we reduced our U.S.

qualified pension plan liabilities and assets, and remeasured the remaining pension plan assets and obligations using updated actuarial assumptions.

Longevity Swap Insurance Contract

During the second quarter of 2022, the trustees of the Molson Coors U.K.

Pension Plan ("U.K.

Pension Plan") entered into a longevity swap insurance contract with an insurer to alleviate risk in the U.K.

Pension Plan from potential fluctuations in estimated life expectancy of covered participants who made up approximately 950 million GBP, or over fifty percent of the U.K.

Pension Plan obligation as of December 31, 2021.

Under the swap, the U.K.

Pension Plan will be responsible for fixed payments to the insurer based on the assumptions outlined at the execution of the swap related to the estimated life expectancy of the covered participants while the insurer will be responsible for floating payments to the U.K.

Pension Plan based on actual mortality experience of the covered participants.

The longevity swap is accounted for as an asset of the U.K.

Pension Plan and is valued at fair value in conjunction with the annual plan remeasurement on December 31 of each fiscal year.

At execution of the swap, there was no value assigned to the swap due to the longevity swap insurance contract being entered into at market terms.

In addition, no plan remeasurement was triggered at the execution of the contract as the swap does not relieve the U.K.

Pension Plan of primary responsibility for the pension benefit obligation.

As of December 31, 2022, the annual plan remeasurement resulted in an immaterial value of the swap.

We will continue to revalue the swap annually as part of each year-end remeasurement.

Benefit payments to the covered participants will continue to be paid from the U.K.

Pension Plan, and there is no change to any contractual benefits owed to the covered participants by the U.K.

Pension Plan.

Net Periodic Pension and OPEB (Benefit) Cost

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Service cost $ 1.3 $ 5.5 $ 6.8 $ 2.7 $ 6.0 $ 8.7 $ 2.7 $ 6.0 $ 8.7

Service cost $ 2.7 $ 6.0 $ 8.7 $ 2.7 $ 6.0 $ 8.7 $ 4.0 $ 7.0 $ 11.0

Other pension and postretirement (benefit) cost, net

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Net periodic pension and OPEB (benefit) cost $ ( 40.5 ) $ 10.7 $ ( 29.8 ) $ ( 50.9 ) $ 13.2 $ ( 37.7 ) $ ( 31.4 ) $ 9.8 $ ( 21.6 )

(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.

(1) The pension settlement charge recognized for the year ended December 31, 2022 primarily consisted of a settlement loss of $ 8.0 million that was recorded as a result of the annuity purchase for a certain Canadian pension plan described above, partially offset by a settlement gain of $ 5.3 million that was recorded as a result of the annuity purchase for a portion of our U.S.

qualified pension plan described above.

The pension settlement charge recognized for the year ended December 31, 2021 was due to lump sum distributions allowed for under the 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.

Obligations and Changes in Funded Status

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Fair value of plan assets at end of year $ 3,336.8 $ — $ 3,336.8 $ 5,667.5 $ — $ 5,667.5

Funded status:

$ 571.7 $ ( 648.7 ) $ ( 77.0 ) $ 386.9 $ ( 704.7 ) $ ( 317.8 )

Funded (underfunded) status $ 358.8 $ ( 478.3 ) $ ( 119.5 ) $ 571.7 $ ( 648.7 ) $ ( 77.0 )

Amounts recognized in the Consolidated Balance Sheets

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The accumulated benefit obligation for our defined benefit pension plans was approximately $ 3.0 billion and $ 5.1 billion as of December 31, 2022 and December 31, 2021, respectively.

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.

The $ 42.5 million increase in our underfunded status of our aggregate pension and OPEB plans from December 31, 2021 to December 31, 2022 was primarily due to the increase in discount rates from the prior year and the unfavorable asset returns experienced by our funded plans.

As of December 31, 2022 and December 31, 2021, certain defined benefit pension plans in the U.S., Canada and the U.K.

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Total not yet recognized $ 776.1 $ ( 279.0 ) $ 497.1 $ 563.5 $ ( 145.5 ) $ 418.0

Changes in plan assets and benefit obligations recognized in OCI, pretax, were as follows:

Pension OPEB Total

(In millions)

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

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 (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 (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.

Assumptions used in the calculation include the settlement discount rate selected and disclosed at the end of the previous year as well as other assumptions detailed in the table below.

Assumptions used in the calculation include the discount rate selected and disclosed at the end of the previous year as well as other assumptions detailed in the table below.

The weighted-average rates used in determining the periodic pension and OPEB cost for the fiscal years 2022, 2021 and 2020 were as follows:

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Weighted-average assumptions:

Settlement discount rate 1.84 % 2.10 % 2.55 % 2.91 % 3.44 % 3.92 %

Discount rate 2.27 % 2.59 % 1.84 % 2.10 % 2.55 % 2.91 %

Rate of compensation increase 2.00 % N/A 2.00 % N/A 2.00 % N/A

Expected return on plan assets (1)

3.03 % N/A 3.24 % N/A 4.38 % N/A

Expected return on plan assets 3.11 % N/A 3.03 % N/A 3.24 % N/A

Health care cost trend rate N/A Ranging ratably from 6.00 % in 2022 to 3.57 % in 2040

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N/A Ranging ratably from 6.25 % in 2020 to 3.57 % in 2040

(1) We develop our EROA assumptions annually with input from independent investment specialists including our actuaries, investment consultants, plan trustee and other specialists.

Each EROA assumption is based on historical data, including historical returns, historical market rates and is calculated for each plan's individual asset class.

The calculation includes inputs for interest, inflation, credit, and risk premium (active investment management) rates and fees paid to service providers.

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.

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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Weighted-average assumptions

Settlement discount rate 2.27 % 2.59 % 1.84 % 2.10 %

Discount rate 5.01 % 4.90 % 2.27 % 2.59 %

Rate of compensation increase 2.00 % N/A 2.00 % N/A

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N/A Ranging ratably from 6.00 % in 2022 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, 2021 from December 31, 2020, is primarily due to increasing interest rates in 2021.

The change to the weighted-average discount rates used for our defined benefit pension plans and postretirement plans as of December 31, 2022 from December 31, 2021, is primarily due to increasing interest rates in 2022 across all plans, with the most significant increase seen in the U.K.

pension plan.

Investment Strategy

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Real estate 5.4 % 5.3 %

Annuities 12.5 % 12.5 %

Annuities and longevity swap 13.8 % 13.8 %

Other 3.5 % 3.2 %

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These payables normally settle within a few business days of the purchase or sale of the respective asset.

The respective assets are included in or removed from our year-end plan assets and categorized in their respective asset categories in the fair value hierarchy below.

We include these items in Level 1 of this hierarchy, as the values are derived from quoted prices in active markets.

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The market values for these funds are based on the net asset values multiplied by the number of shares owned.

• Annuities—Includes non-participating annuity buy-in insurance policies purchased to cover a portion of the plan members.

The fair value of non-participating contracts fluctuates based on changes in the obligation associated with covered plan members.

These values are considered Level 3 due to the use of the significant unobservable inputs used in deriving these assets' fair values.

• Other—Includes derivatives, repurchase agreements, recoverable taxes for taxes paid and awaiting reclaim due to the tax exempt nature of the pension plan, venture capital, and private equity.

• Annuities and Longevity Swap—Includes assets to mitigate risks of certain plans including buy-in annuities and longevity swap insurance contracts.

Non-participating annuity buy-in insurance policies are purchased to mitigate volatility in cash flows associated with a portion of covered plan members.

The fair value of non-participating contracts fluctuate based on changes in the obligation associated with covered plan members.

The longevity swap insurance contract alleviates risk from fluctuations in estimated life expectancy of covered participants.

The fair value of the longevity swap insurance contract is calculated by taking the present value of the expected cash flows from the floating leg on a prevailing market best estimate of mortality, including market views of fees, less the present value of the fixed leg payments that the plan is required to make under the contract including the contractual fees.

The prevailing market best estimate of mortality is determined based on the effect of actual plan mortality experience of covered participants, a revised view on future improvements in mortality rates and a view on how risk fees have changed for this type of contract since inception.

These values are considered Level 3 due to the use of the significant unobservable inputs used in deriving the asset's fair value.

• Other—Includes derivatives, repurchase agreements, recoverable taxes for taxes paid and awaiting reclaim due to the tax exempt nature of the pension plan and private equity.

Derivatives are priced using observable inputs including yields, interest rate curves and spreads.

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Fair value measurements as of December 31, 2022

December 31, 2021 Quoted prices

December 31, 2022

Quoted prices

(Level 1) Significant

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Interest and inflation linked assets 420.6 — 408.0 12.6

Buy-in annuities 708.9 — — 708.9

Collateralized debt securities 0.2 — — 0.2

Annuities and Longevity Swap

Buy-in annuities and longevity swap 461.8 — — 461.8

Repurchase agreements ( 281.2 ) ( 281.2 ) — —

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Fair value measurements as of December 31, 2021

December 31, 2020 Quoted prices

December 31, 2021

Quoted prices

(Level 1) Significant

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The most recent valuation as of June 30, 2022 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.

For the year ended December 31, 2023, we expect to make contributions to our defined benefit pension plans of approximately $ 4 million and benefit payments under our OPEB plans of approximately $ 39 million based on foreign exchange rates as of December 31, 2022.

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.

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Defined Contribution Plans

We offer defined contribution pension plans for the majority of our U.S., Canadian and U.K.

We offer defined contribution plans for the majority of our U.S., Canadian and U.K.

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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As of December 31, 2022, and December 31, 2021, 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

Overview and Risk Management Policies

We have established policies and procedures that govern the risk management of these exposures.

Our primary objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and prices.

To achieve our objectives, we enter into a variety of financial derivatives, including foreign currency exchange, commodity, interest rate, cross currency swaps as well as options.

We also enter into physical hedging agreements directly with our suppliers to manage our exposure to certain commodities.

Counterparty Risk

This credit risk is generally limited to the unrealized gains in such contracts, should any of these counterparties fail to perform as contracted.

We have established a counterparty credit policy and guidelines that are monitored and reported to management according to prescribed guidelines to assist in managing this risk.

As an additional measure, we utilize a portfolio of institutions either headquartered or operating in the same countries that we conduct our business.

In calculating the fair value of our derivative balances, we also record an adjustment to recognize the risk of counterparty credit and our own non-performance risk, as appropriate.

Price and Liquidity Risks

We base the fair value of our derivative instruments upon market rates and prices.

The volatility of these rates and prices are dependent on many factors that cannot be forecasted with reliable accuracy.

The current fair values of our contracts could differ significantly from the cash settled values with our counterparties.

As such, we are exposed to price risk related to unfavorable changes in the fair value of our derivative contracts.

This could have a negative impact on our liquidity.

Due to the nature of our counterparty agreements, we are not able to net positions with the same counterparty across business units.

Thus, in the event of default, we may be required to early settle all out-of-the-money contracts, without the benefit of netting the fair value of any in-the-money positions against this exposure.

We do not receive and are not required to post collateral unless a change of control event occurs.

As of December 31, 2021, we did not have any collateral posted with any of our counterparties.

Derivative Accounting Policies

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.

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.

We also consider whether any provisions in our contracts represent embedded derivative instruments as defined in authoritative accounting guidance and apply the appropriate accounting.

Hedge Accounting Policies

Specific to net investment hedges, we have elected to use the spot-to-spot methodology to assess effectiveness.

We discontinue hedge accounting prospectively when (1) the derivative is no longer highly effective in offsetting changes in the cash flows of a forecasted future transaction;

(2) the derivative expires or is sold, terminated, or exercised;

(3) it is no longer probable that the forecasted transaction will occur;

(4) management determines that designating the derivative as a hedging instrument is no longer appropriate;

or (5) management decides to cease hedge accounting.

Significant Derivative/Hedge Positions

Interest Rate Swaps

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 $ 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.

Separately, on March 15, 2017, we issued an aggregate of EUR 500 million, 0.35 % plus three-month EURIBOR floating rate senior notes due March 15, 2019.

Concurrent with the issuances of both sets of Notes, we simultaneously designated the principals as net investment hedges of our investment in our Europe business in order to hedge a portion of the foreign currency translational impacts and, accordingly, record the changes in the carrying value of the 2016 EUR Notes and 2017 EUR Notes due to fluctuations in the spot rate to AOCI.

In March 2019, we repaid the 2017 EUR Notes.

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 %.

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.

Forward Starting Interest Rate Swaps

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.

We have designated these contracts as cash flow hedges.

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.

The swaps had an effective date of September 2015 and a termination date of September 2025 mirroring the terms of the initially forecasted CAD debt issuance.

Under these agreements we were required to early terminate these swaps at the approximate time we issued the previously forecasted debt.

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.

Foreign Currency Forwards

We have financial foreign exchange forward contracts in place to manage our exposure to foreign currency fluctuations.

These contracts have been designated as cash flow hedges of forecasted foreign currency transactions.

We use foreign currency forward contracts to hedge these future forecasted transactions up to a 60 month horizon.

Commodity Swaps and Options

These contracts allow us to swap our floating exposure to changes in these commodity prices for a fixed rate.

These contracts are not designated in hedge accounting relationships.

As such, changes in fair value of these derivatives are recorded in cost of goods sold in the consolidated statements of operations.

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.

On October 4, 2018, in connection with the formation of the Truss joint venture, as discussed further in Note 4, "Investments," our joint venture partner, HEXO, issued to our Canadian subsidiary a total of 11.5 million warrants to purchase common shares of HEXO at a strike price of CAD 6.00 per share at any time during the three year period following the formation of the joint venture.

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.

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

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 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.

See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for further discussion related to measuring the fair value of derivative instruments.

Fair Value Measurements as of

December 31, 2021

December 31, 2021 Quoted prices

in active markets

(Level 1) Significant

(Level 2) Significant

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

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Interest rate swaps $ ( 170.8 ) $ — $ ( 170.8 ) $ —

Foreign currency forwards ( 1.5 ) — ( 1.5 ) —

Commodity swaps and options 300.9 — 300.9 —

Domestic $ 228.4 $ 1,307.5 $ 1,151.7

Foreign ( 290.9 ) ( 68.5 ) ( 1,795.6 )

Total $ ( 62.5 ) $ 1,239.0 $ ( 643.9 )

Fair Value Measurements as of

December 31, 2020

December 31, 2020 Quoted prices

in active markets

(Level 1) Significant

(Level 2) Significant

The components of the provision for income taxes are as follows:

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Cross currency swaps $ ( 26.5 ) $ — $ ( 26.5 ) $ —

Interest rate swaps ( 221.5 ) — ( 221.5 ) —

Foreign currency forwards ( 4.9 ) — ( 4.9 ) —

Commodity swaps and options 65.2 — 65.2 —

Warrants 0.3 — 0.3 —

Total $ ( 187.4 ) $ — $ ( 187.4 ) $ —

As of December 31, 2021 and December 31, 2020, we had no significant transfers between Level 1 and Level 2.

New derivative contracts transacted during 2021 were all included in Level 2.

Results of Period Derivative Activity

The following tables include the year-to-date results of our derivative activity in our consolidated balance sheets as of December 31, 2021 and December 31, 2020, and our consolidated statements of operations for the years ended December 31, 2021, December 31, 2020 and December 31, 2019.

Fair Value of Derivative Instruments in the Consolidated Balance Sheets (in millions)

December 31, 2021

Asset derivatives Liability derivatives

Notional amount Balance sheet location Fair value Balance sheet location Fair value

Derivatives designated as hedging instruments:

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 )

Foreign currency forwards $ 170.8 Other current assets 0.5 Accounts payable and other current liabilities ( 2.4 )

Other non-current assets 0.6 Other liabilities ( 0.2 )

Total derivatives designated as hedging instruments $ 1.1 $ ( 173.4 )

Derivatives not designated as hedging instruments:

Commodity swaps (1)

$ 722.1 Other current assets $ 225.1 Accounts payable and other current liabilities $ ( 1.1 )

Other non-current assets 77.1 Other liabilities ( 0.3 )

Commodity options (1)

$ 68.2 Other current assets 1.0 Accounts payable and other current liabilities ( 0.9 )

Total derivatives not designated as hedging instruments $ 303.2 $ ( 2.3 )

December 31, 2020

Asset derivatives Liability derivatives

Notional amount Balance sheet location Fair value Balance sheet location Fair value

Derivatives designated as hedging instruments:

Cross currency swaps $ 400.0 Other current assets $ — Accounts payable and other current liabilities $ ( 26.5 )

Other non-current assets — Other liabilities —

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 )

Total derivatives designated as hedging instruments $ 0.3 $ ( 253.2 )

Derivatives not designated as hedging instruments:

Commodity swaps (1)

$ 918.9 Other current assets $ 44.5 Accounts payable and other current liabilities $ ( 20.6 )

Other non-current assets 45.4 Other liabilities ( 4.1 )

Commodity options (1)

$ 16.8 Other current assets — Accounts payable and other current liabilities —

Warrants $ 54.2 Other non-current assets 0.3 Other liabilities —

Total derivatives not designated as hedging instruments $ 90.2 $ ( 24.7 )

(1) Notional includes offsetting buy and sell positions, shown in terms of absolute value.

Buy and sell positions are shown gross in the asset and/or liability position, as appropriate.

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

Forward starting interest rate swaps $ 50.7 Interest income (expense), net $ ( 4.8 )

Foreign currency forwards 0.4 Cost of goods sold ( 3.5 )

Other income (expense), net 0.8

Total $ 51.1 $ ( 7.5 )

For the year ended December 31, 2020

Forward starting interest rate swaps $ ( 110.0 ) Interest income (expense), net $ ( 2.9 )

Foreign currency forwards ( 3.5 ) Cost of goods sold 4.6

Other income (expense), net ( 1.2 )

Total $ ( 113.5 ) $ 0.5

For the year ended December 31, 2019

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 )

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

Cross currency swaps $ 8.8 Interest income (expense), net $ 6.1

EUR 800 million notes due 2024

67.7 Other income (expense), net —

Total $ 76.5 $ 6.1

For the year ended December 31, 2020

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

Cross currency swaps $ 19.8 Interest income (expense), net $ 23.5

EUR 800 million notes due 2024

20.4 Other income (expense), net —

EUR 500 million notes due 2019

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 Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations (in millions):

Derivatives not in hedging relationship Location of gain (loss) recognized

in income on derivative Amount of gain (loss) recognized

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

Commodity swaps Cost of goods sold $ 28.5

Warrants Other income (expense), net ( 2.4 )

For the year ended December 31, 2019

Commodity swaps Cost of goods sold $ ( 26.8 )

Warrants Other income (expense), net ( 17.8 )

Total $ ( 44.6 )

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

Federal $ 146.1 $ 43.5 $ 79.0

State 22.3 7.1 5.2

Foreign ( 17.2 ) ( 1.0 ) 111.4

Total current tax (benefit) expense $ 151.2 $ 49.6 $ 195.6

Federal $ 56.4 $ 163.5 $ 101.9

State ( 26.2 ) 70.4 19.5

Foreign ( 57.4 ) ( 53.0 ) ( 15.2 )

Total deferred tax (benefit) expense $ ( 27.2 ) $ 180.9 $ 106.2

Total income tax (benefit) expense $ 124.0 $ 230.5 $ 301.8

A reconciliation from the U.S.

statutory federal income tax rate to the effective income tax rate is as follows:

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

($ in millions)

Statutory federal income tax rate 21.0 % $ ( 13.1 ) 21.0 % $ 260.2 21.0 % $ ( 135.2 )

State income taxes, net of federal benefits 6.1 % ( 3.8 ) 4.7 % 57.8 ( 1.7 ) % 11.0

Effect of foreign tax rates 92.6 % ( 57.9 ) ( 5.5 ) % ( 68.3 ) 3.5 % ( 22.3 )

Effect of foreign tax law and rate changes ( 0.8 ) % 0.5 1.6 % 19.6 ( 0.9 ) % 6.0

Effect of unrecognized tax benefits ( 20.5 ) % 12.8 ( 6.2 ) % ( 76.3 ) ( 26.1 ) % 167.9

Change in valuation allowance 1.1 % ( 0.7 ) ( 0.1 ) % ( 1.1 ) 1.3 % ( 8.4 )

Goodwill impairment ( 287.0 ) % 179.3 ( 0.2 ) % ( 2.9 ) ( 41.4 ) % 266.8

Other, net ( 10.9 ) % 6.9 3.3 % 41.5 ( 2.6 ) % 16.0

Effective tax rate / Tax (benefit) expense ( 198.4 ) % $ 124.0 18.6 % $ 230.5 ( 46.9 ) % $ 301.8

The decrease in the effective tax rate for fiscal year 2022 when compared to the statutory rate was primarily due to the impact of the $ 845 million partial goodwill impairment, recorded within our Americas segment in the fourth quarter of 2022, which related to goodwill not deductible for tax purposes.

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

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%.

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.

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

Federal statutory rate.

December 31, 2022 December 31, 2021

(In millions)

Accounts payable and accrued trade payables $ 2,098.1 $ 1,732.7

Accrued compensation 243.7 278.5

Accrued excise and other non-income related taxes 242.6 257.6

Accrued interest 91.4 101.4

Container liability 114.9 100.9

Operating leases 45.4 47.1

Accounts payable and other current liabilities $ 3,107.3 $ 2,889.5

Deferred tax assets

Compensation-related obligations $ 44.7 $ 54.8

Pension and postretirement benefits 33.7 24.5

Tax credit carryforwards 39.0 38.3

Tax loss carryforwards 291.1 359.0

Accrued liabilities and other 149.0 97.7

Valuation allowance ( 57.2 ) ( 60.7 )

Deferred tax assets $ 500.3 $ 513.6

Deferred tax liabilities

Fixed assets 358.9 422.4

Partnerships and investments 33.2 29.7

Intangible assets 2,563.2 2,539.7

Derivative instruments 31.5 19.5

Deferred tax liabilities $ 2,986.8 $ 3,011.3

Net deferred tax liabilities $ 2,486.5 $ 2,497.7

The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized.

Based on this analysis, we have determined that the valuation allowances recorded in each period presented are appropriate.

We have deferred tax assets for U.S.

tax loss and credit carryforwards that expire between 2023 and 2042 of $ 70.9 million and U.S.

tax losses that may be carried forward indefinitely of $ 19.6 million.

We have foreign tax loss and credit carryforwards that expire between 2023 and 2042 of $ 196.0 million and foreign tax losses that may be carried forward indefinitely of $ 38.3 million.

The following table presents our net deferred tax liabilities as of December 31, 2022 and December 31, 2021.

December 31, 2022 December 31, 2021

(In millions)

Domestic deferred tax liabilities $ 1,927.7 $ 1,825.9

Foreign deferred tax assets 125.8 180.2

Foreign deferred tax liabilities 684.6 852.0

Net deferred tax liabilities $ 2,486.5 $ 2,497.7

The total foreign deferred tax assets above are presented within other assets on the consolidated balance sheets and domestic and foreign deferred tax liabilities above are presented within deferred tax liabilities on the consolidated balance sheets.

The deferred tax liability amounts as of December 31, 2022 and December 31, 2021 excluded $ 34.0 million and $ 26.7 million, respectively, of unrecognized tax benefits that have been recorded as a reduction of deferred tax assets, which is presented within 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:

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Balance at beginning of year $ 28.0 $ 235.7 $ 72.4

Additions for tax positions related to the current year 15.9 28.6 22.8

Additions for tax positions of prior years 1.9 — 132.1

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

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

Settlements ( 3.7 ) ( 161.8 ) ( 0.4 )

Release due to statute expirations ( 1.3 ) ( 3.4 ) —

Foreign currency adjustment ( 1.5 ) 1.9 10.4

Balance at end of year $ 39.3 $ 28.0 $ 235.7

Our remaining unrecognized tax benefits as of December 31, 2022, relate to tax years that are currently open to examination.

As of December 31, 2022 and December 31, 2021, we have remaining unrecognized tax benefits recorded within other liabilities in our consolidated balance sheets of $ 5.4 million and $ 1.4 million, respectively.

The remaining balance of our unrecognized tax benefits is recorded within deferred tax liabilities in our consolidated balance sheets.

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns;

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

The Company recognizes interest and penalties related to unrecognized tax benefits as part of income taxes on our consolidated statements of operation.

Expense (benefit) recognized on interest and penalties related to unrecognized tax benefits as of December 31, 2022, December 31, 2021, and December 31, 2020 was $( 5.9 ) million, $ 1.4 million and $ 8.5 million, respectively.

If the Company were to prevail on all uncertain tax positions, the reversal of this accrual, inclusive of interest and penalties, would result in a benefit of $ 31.5 million.

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 2022, we do not anticipate material changes to our remaining unrecognized tax benefit position within the next 12 months.

We file income tax returns in most of the federal, state and provincial jurisdictions in the U.S., Canada and various countries in Europe.

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

In Canada, tax years through 2017 are closed or have been 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 2014.

Tax years through 2014 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 current earnings and the associated 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 not considered permanently reinvested in our foreign operations.

The taxes associated with any future repatriation of undistributed earnings are anticipated to be insignificant.

Commitments and Contingencies

1 unchanged sentence

As of December 31, 2022, we had $ 54 million outstanding in letters of credit with financial institutions.

These letters primarily expire throughout 2022 and $ 15.1 million of the letters contain a feature that automatically renews the letter for an additional year if no cancellation notice is submitted.

These letters primarily expire throughout 2023 a nd $ 15 million of the letters contain a feature that automatically renews the letter for an additional year if no cancellation notice is submitted.

These letters of credit are being maintained as security for deferred compensation payments, reimbursements to insurance companies, reimbursements to the trustee for pension payments, deductibles or retention payments made on our behalf, various payments due to governmental agencies, operations of underground storage tanks and other general business purposes and are not included on our consolidated balance sheets.

18 unchanged sentences

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.

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.

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.

The recorded value of the tax, civil and labor indemnity liability was $ 3.2 million as of December 31, 2022, which was classified as non-current.

For the remaining portion of our indemnity obligations, not deemed probable, we continue to utilize probability-weighted scenarios in determining the value of the indemnity obligations.

1 unchanged sentence

The sale agreement requires annual cash settlements relating to the tax, civil and labor indemnities.

Indemnity obligations related to purchased tax credits must be settled upon notification of FEMSA's settlement.

Due to the uncertainty involved with the ultimate outcome and timing of these contingencies, significant adjustments to the carrying values of the indemnity obligations have been recorded to date and additional future adjustments may be required.

These liabilities are denominated in Brazilian Reais and are therefore, subject to foreign exchange gains or losses.

As a result, these foreign exchange gains and losses are the only impacts recorded within other income (expense), net.

As a result, these foreign exchange gains and losses are the only impacts recorded within other non-operating income (expense), net.

The table below provides a summary of reserves associated with the Kaiser indemnity obligations from December 31, 2019 through December 31, 2022:

2 unchanged sentences

Balance as of December 31, 2019 $ 14.2

Changes in estimates —

Foreign exchange impacts ( 3.2 )

Balance as of December 31, 2020 $ 11.0

Changes in estimates —

Foreign exchange impacts ( 0.8 )

Balance as of December 31, 2021 $ 10.2

Changes in estimates —

Foreign exchange impacts 0.6

17 unchanged sentences

Total purchases under our long-term unconditional, non-cancellable supply and distribution contracts in 2022, 2021 and 2020 were approximately $ 0.4 billion , $ 0.4 billion and $ 0.5 billion, respectively.

Litigation and Other Disputes and Environmental

Litigation, Other Disputes and Environmental

Related to litigation, other disputes and environmental issues, we had an aggregate accrued contingent liability of $ 77.0 million and $ 11.3 million as of December 31, 2022 and December 31, 2021, respectively.

While we cannot predict the eventual aggregate cost for litigation, other disputes and environmental matters in which we are currently involved, we believe adequate reserves have been provided for losses that are probable and estimable.

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;

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 audited consolidated financial statements.

2 unchanged sentences

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 and disgorgement of MCBC USA's profit from Keystone sales.

On February 12, 2018, Stone Brewing Company filed a trademark infringement lawsuit in federal court in the Southern District of California against Molson Coors Beverage Company USA LLC ("MCBC USA"), a wholly owned subsidiary of our Company, 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 sought treble damages and disgorgement of MCBC USA's profit from Keystone sales.

MCBC USA subsequently filed an answer and counterclaims against Stone Brewing Company.

On May 31, 2018, Stone Brewing Company filed a motion to dismiss MCBC USA's counterclaims and for a preliminary injunction seeking to bar MCBC USA from continuing to use “STONE” on Keystone Light cans and related marketing materials.

In March 2019, the court denied Stone Brewing Company’s motion for preliminary injunction and its motion to dismiss MCBC USA's counterclaims.

Discovery is closed.

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.

The jury trial began on March 7, 2022.

The jury returned a verdict in which it concluded that trademark infringement had occurred and awarded Stone Brewing Company $ 56.0 million in damages.

The jury also found that no "willful" trademark infringement had occurred.

The trial court subsequently denied Stone Brewing Company’s motion for permanent injunction, motion for disgorgement of profits and motion for treble damages.

Judgment was entered on September 8, 2022.

Both parties filed post-trial motions, including MCBC USA’s renewed motion for judgment as a matter of law or, in the alternative, a new trial and/or remittitur and Stone Brewing Company’s motion for partial new trial of equitable issues.

The court has taken those issues under advisement.

Resolution of the remaining post-trial issues could alter or nullify the judgment.

At the conclusion of these issues, either or both parties could appeal the case to the applicable federal appellate court.

As of December 31, 2022, the Company had a recorded accrued liability of $ 56.6 million within other liabilities on our consolidated balance sheets reflecting the best estimate of probable loss in this case based on the judgment plus associated post-judgment interest.

However, it is reasonably possible that the estimate of the loss could change in the near term based on the progression of the case, including any potential impact of the resolution of remaining post-trial issues, as well as any appeals process.

We will continue to monitor the status of the case and will adjust the accrual in the period in which any significant change occurs which could impact the estimate of the loss for this matter.

Regulatory Contingencies

In December 2018, 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 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.

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.

On April 17, 2020, the U.S.

Department of Treasury appealed this ruling as well as filed a motion for stay of the enforcement of judgment and suspension of claims pending appeal.

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.

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 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 Americas segment.

In June 2019, the Ontario government adopted a bill that, if enacted, would terminate a 10-year Master Framework Agreement that was originally signed in 2015 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.

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

The government has not proclaimed the bill as law and the impacts of the 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 2019 legislation.

The initial term of the Master Framework Agreement does not expire until December 31, 2025, and the Master Framework Agreement contains a provision requiring two-year advance notice of the government's intention to not renew the Master Framework Agreement.

Environmental

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.

18 unchanged sentences

Based on the assumptions utilized, the present value and gross amount of the costs as of December 31, 2022 are approximately $ 5 million and $ 7 million, respectively.

Cost estimates were discounted using a 1.43 % risk-free rate of return.

C ost estimates were discounted using a 3.88 % risk-free rate of return.

We did not assume any future recoveries from insurance companies in the estimate of our liability and none are expected.

8 unchanged sentences

Compliance with these laws and regulations did not materially affect our 2022 capital expenditures, results of operations or our financial or competitive position, and we do not currently anticipate that they will do so in 2023.

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 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 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, 2021, December 31, 2020 and December 31, 2019, lease expense (including immaterial short-term and variable lease costs) was as follows.

Stockholders' Equity

Changes to the number of shares of capital stock issued were as follows:

issued Exchangeable

shares issued

Class A Class B Class A Class B

(Share amounts in millions)

Balance as of December 31, 2019 2.6 205.7 2.7 14.8

Shares issued under equity compensation plans — 0.4 — —

Shares exchanged for common stock — 3.7 — ( 3.7 )

Balance as of December 31, 2020 2.6 209.8 2.7 11.1

Shares issued under equity compensation plans — 0.3 — —

Balance as of December 31, 2021 2.6 210.1 2.7 11.1

Shares issued under equity compensation plans — 0.3 — —

Shares exchanged for common stock — 0.1 — ( 0.1 )

Balance as of December 31, 2022 2.6 210.5 2.7 11.0

Exchangeable Shares

The Class A exchangeable shares and Class B exchangeable shares were issued by Molson Coors Canada Inc., a wholly-owned subsidiary of our Company.

in February 2005, if the holder had elected to receive shares of Molson Coors common stock.

Exchangeable shareholders receive the CAD equivalent of dividends declared on Class A and B common stock on the date of declaration.

Voting Rights

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.

Conversion Rights

The Certificate provides for the right of holders of Class A common stock to convert their stock into Class B common stock on a one-for-one basis at any time.

The exchangeable shares are exchangeable at any time, at the option of the holder on a one -for-one basis for corresponding shares of Molson Coors common stock.

Therefore, a portion of our authorized and unissued Class A and Class B common shares are reserved to meet exchange requirements.

Accumulated Other Comprehensive Income (Loss)

MCBC stockholders' equity

adjustments Gain (loss) on

instruments Pension and

postretirement

adjustments Equity method

investments Accumulated

comprehensive

income (loss)

(In millions)

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

Foreign currency translation adjustments 196.0 — ( 1.6 ) — 194.4

Gain (loss) on net investment hedges ( 113.5 ) — — — ( 113.5 )

Unrealized gain (loss) on derivative instruments — ( 113.5 ) — — ( 113.5 )

Reclassification of derivative (gain) loss to income (loss) — ( 0.5 ) — — ( 0.5 )

Net change in pension and other postretirement benefit assets and liabilities — — ( 52.9 ) — ( 52.9 )

Pension and other postretirement prior service (benefit) cost and net actuarial (gain) loss amortization and settlements to income (loss) — — ( 7.6 ) — ( 7.6 )

Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) — — — 19.4 19.4

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

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 (1)

7.5 — — — 7.5

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

Unrealized gain (loss) on derivative instruments — 51.1 — — 51.1

Reclassification of derivative (gain) loss to income (loss) — 7.5 — — 7.5

Net change in pension and other postretirement benefit assets and liabilities — — 158.6 — 158.6

Pension and other postretirement prior service (benefit) cost and net actuarial (gain) loss amortization and settlements to income (loss) — — 7.1 — 7.1

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

Tax benefit (expense) ( 17.6 ) ( 15.7 ) ( 41.9 ) ( 5.3 ) ( 80.5 )

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

Foreign currency translation adjustments ( 356.1 ) — 1.2 — ( 354.9 )

Reclassification of cumulative translation adjustment (1)

12.1 — — — 12.1

Gain (loss) on net investment hedges 53.2 — — — 53.2

Unrealized gain (loss) on derivative instruments — 209.7 — — 209.7

Reclassification of derivative (gain) loss to income (loss) — 12.9 — — 12.9

Net change in pension and other postretirement benefit assets and liabilities — — ( 78.2 ) — ( 78.2 )

Pension and other postretirement prior service (benefit) cost and net actuarial (gain) loss amortization and settlements to income (loss) — — ( 2.1 ) — ( 2.1 )

Ownership share of unconsolidated subsidiaries' other comprehensive income (loss) — — — 18.7 18.7

Tax benefit (expense) ( 25.7 ) ( 59.4 ) 19.1 ( 4.9 ) ( 70.9 )

As of December 31, 2022 $ ( 875.2 ) $ 32.2 $ ( 335.1 ) $ ( 27.4 ) $ ( 1,205.5 )

(1) As a result of the sale of a disposal group within our India business for the year ended December 31, 2021, the associated cumulative foreign currency translation adjustment was reclassified from AOCI and recognized within other operating income (expense), net.

As a result of the completion of the sale of our non-operating India entity during 2022, the associated cumulative foreign currency translation adjustment was reclassified from AOCI and recognized within other operating income (expense), net.

The foreign currency translation adjustment losses during 2022 were primarily due to the weakening of the CAD, GBP, EUR and certain 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.

foreign currency translation adjustment gains during 2020 were primarily due to the strengthening of the CAD, GBP and certain other currencies of our Europe operations versus the USD.

Reclassifications from AOCI to income

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

Reclassifications from AOCI Location of gain (loss)

recognized in income

(In millions)

Operating lease expense $ 73.2 $ 71.4 $ 71.0

Finance lease expense 10.4 11.5 12.1

Total lease expense $ 83.6 $ 82.9 $ 83.1

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.

Gain/(loss) on cash flow hedges

Forward starting interest rate swaps $ ( 14.3 ) $ ( 4.8 ) $ ( 2.9 ) Interest expense, net

Foreign currency forwards 1.8 ( 3.5 ) 4.6 Cost of goods sold

Foreign currency forwards ( 0.4 ) 0.8 ( 1.2 ) Other non-operating income (expense), net

Total income (loss) reclassified, before tax ( 12.9 ) ( 7.5 ) 0.5

Income tax benefit (expense) 3.5 2.0 ( 0.1 )

Net income (loss) reclassified, net of tax $ ( 9.4 ) $ ( 5.5 ) $ 0.4

Amortization of defined benefit pension and other postretirement benefit plan items

Prior service benefit (cost) $ 0.4 $ 0.3 $ 0.4 Other pension and postretirement benefits (costs), net

Net actuarial gain (loss) and settlement 1.7 ( 7.4 ) 7.2 Other pension and postretirement benefits (costs), net

Total income (loss) reclassified, before tax 2.1 ( 7.1 ) 7.6

Income tax benefit (expense) ( 0.5 ) 1.7 ( 2.4 )

Net income (loss) reclassified, net of tax $ 1.6 $ ( 5.4 ) $ 5.2

Other reclassifications from AOCI to Income

India cumulative translation adjustment resulting from sale of disposal group $ ( 12.1 ) $ ( 7.5 ) $ — Other operating income (expense), net

Net income (loss) reclassified, net of tax $ ( 12.1 ) $ ( 7.5 ) $ —

Total income (loss) reclassified, net of tax $ ( 19.9 ) $ ( 18.4 ) $ 5.6

Share-Based Payments

We have one share-based compensation plan, the MCBC Incentive Compensation Plan (the "Incentive Compensation Plan"), as of December 31, 2022 and all outstanding awards fall under this plan.

Incentive Compensation Plan

We issue the following types of awards related to shares of Class B common stock to certain directors, officers and other eligible employees, pursuant to the Incentive Compensation Plan:

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 generally vest over a period of three years .

In 2022, 2021 and 2020, we granted 0.5 million, 0.6 million and 0.5 million RSUs, respectively, with a weighted-average market value of $ 52.05 , $ 45.84 and $ 48.99 each, respectively.

Prior to vesting, RSUs have no voting rights.

The DSU awards are issued at the market value equal to the price of our stock at the date of the grant.

The DSUs are paid in shares of stock upon termination of service.

Prior to vesting, DSUs have no voting rights.

In 2022, 2021 and 2020, we granted a small

number of DSUs with a weighted-average market value of $ 51.80 , $ 49.33 and $ 37.53 per share, respectively.

PSU awards are granted with a target value established at the date of grant and vest upon completion of a service requirement.

PSU compensation expense is based on fair values assigned to the market and performance metrics upon grant.

The market metric is based upon a Monte Carlo model, with the market metric remaining constant throughout the vesting period of three years .

The performance metric is based upon the market value equal to the price of our stock at the date of the grant for the 2022 award and a Monte Carlo model for all previous awards, varying based on a multiplier determined based on changing estimates of the performance metric projected attainment.

During 2022, 2021 and 2020, we granted 0.3 million, 0.4 million and 0.3 million PSUs, respectively, each with a weighted-average fair value of $ 62.98 , $ 45.71 and $ 52.60 , respectively.

Stock options are granted with an exercise price equal to the market value of a share of Class B common stock on the date of grant.

Stock options have a term of ten years and generally vest over three years .

During 2022, 2021 and 2020, we granted 0.3 million, 0.3 million and 0.4 million options, respectively, each with a weighted-average fair value of $ 12.16 , $ 10.06 and $ 6.70 , respectively.

Certain RSU and PSU awards granted in 2020 and beyond entitle participants to receive dividends earned during the vesting period, 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

1 unchanged sentence

(In millions)

Cash paid for amounts included in the measurements of lease liabilities:

Operating cash flows from operating leases $ 56.8 $ 53.2 $ 52.2

Operating cash flows from finance leases $ 4.5 $ 7.6 $ 3.8

Financing cash flows from finance leases $ 3.6 $ 34.5 $ 2.8

Supplemental non-cash information on right-of-use assets obtained in exchange for new lease liabilities:

Operating leases $ 34.0 $ 28.5 $ 45.6

Finance leases $ 7.5 $ 5.4 $ 9.2

Supplemental balance sheet information related to leases as of December 31, 2021 and December 31, 2020 was as follows:

December 31, 2021 December 31, 2020

Balance Sheet Classification (In millions)

Operating Leases

Operating lease right-of-use assets Other assets $ 119.1 $ 136.2

Current operating lease liabilities Accounts payable and other current liabilities $ 45.4 $ 47.1

Non-current operating lease liabilities Other liabilities 87.8 106.4

Total operating lease liabilities $ 133.2 $ 153.5

Finance Leases

Finance lease right-of-use assets Properties, net $ 61.5 $ 60.5

Current finance lease liabilities Current portion of long-term debt and short-term borrowings $ 4.6 $ 4.1

Non-current finance lease liabilities Long-term debt 62.6 59.9

Total finance lease liabilities $ 67.2 $ 64.0

The weighted-average remaining lease term and discount rate as of December 31, 2021 are as follows:

Weighted-Average Remaining Lease Term (Years) Weighted-Average Discount Rate

Operating leases 4.1 3.5 %

Finance leases 11.9 6.5 %

Based on foreign exchange rates as of December 31, 2021, maturities of lease liabilities were as follows:

Operating Leases Finance Leases

Pre-tax share-based compensation expense $ 33.6 $ 32.1 $ 24.2

Tax benefit ( 5.9 ) ( 5.5 ) ( 4.3 )

After-tax share-based compensation expense $ 27.7 $ 26.6 $ 19.9

As of December 31, 2022, there was $ 41.6 million of total unrecognized compensation cost from all share-based compensation arrangements granted under the Incentive Compensation Plan related to unvested awards.

This total compensation expense is expected to be recognized over a weighted-average period of 1.8 years.

RSUs and DSUs PSUs

Units Weighted-average

grant date fair value per unit Units Weighted-average grant date fair value per unit

(In millions, except per unit amounts)

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

Granted 0.5 $ 52.03 0.3 $ 62.98

Vested ( 0.4 ) $ 53.91 — $ —

Forfeited ( 0.1 ) $ 49.14 — $ —

Adjustment for performance results achieved — $ — ( 0.2 ) $ 51.80

Non-vested as of December 31, 2022 1.3 $ 49.07 0.9 $ 53.54

The total intrinsic values of RSUs and DSUs vested during 2022, 2021 and 2020 were $ 17.2 million, $ 12.7 million and $ 14.8 million, respectively.

Stock options

Awards Weighted-

exercise price per unit Weighted-

life (years) Aggregate

(In millions, except per share amounts and years)

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

Granted 0.3 $ 52.18

Exercised ( 0.1 ) $ 44.12

Expired ( 0.6 ) $ 75.38

Outstanding as of December 31, 2022 1.5 $ 57.14 6.6 $ 2.1

Expected to vest as of December 31, 2022 0.6 $ 49.49 8.1 $ 1.4

Exercisable as of December 31, 2022 0.9 $ 62.43 5.5 $ 0.7

The total intrinsic values of exercises during 2022, 2021 and 2020 were $ 0.7 million, $ 0.9 million and $ 0.8 million, respectively.

Total tax benefits realized, including excess tax benefits, from share-based awards vested or exercised during 2022, 2021 and 2020 was $ 2.9 million, $ 2.0 million and $ 3.1 million, respectively.

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, 2022, there were 4.9 million shares of MCBC Class B common stock available for issuance under the Incentive Compensation Plan.

The fair value of each option granted in 2022, 2021 and 2020 was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

Risk-free interest rate 1.88 % 0.79 % 0.91 %

Dividend yield 2.86 % 3.11 % 4.40 %

Volatility range 30.91 % - 33.85 %

30.84 % - 42.44 %

25.09 % - 26.31 %

Weighted-average volatility 31.65 % 33.74 % 25.40 %

Expected term (years) 5.7 5.6 5.5

Weighted-average fair value $ 12.16 $ 10.06 $ 6.70

The risk-free interest rates utilized for periods throughout the contractual life of the stock options are based on a zero-coupon U.S.

Department of Treasury security yield at the time of grant.

Expected volatility is based on a combination of historical and implied volatility of our stock.

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 values of the market metric for each PSU granted in 2022, 2021 and 2020 and the performance metric for each PSU granted in 2021 and 2020 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

December 31, 2022 December 31, 2021 December 31, 2020

Risk-free interest rate 1.58 % 0.24 % 0.84 %

Volatility range 22.65 % - 45.30 %

23.00 % - 44.71 %

15.21 % - 45.75 %

Weighted-average volatility 35.93 % 35.46 % 26.02 %

Expected term (years) 2.8 2.8 2.8

Weighted-average fair market value $ 62.98 $ 45.71 $ 52.60

The risk-free interest rates utilized for periods throughout the expected term of the PSUs are based on a zero-coupon U.S.

Department of Treasury security yield at the time of grant.

The expected term of PSUs is calculated based on the grant date to the end of the performance period.

No dividend yield is utilized in the model as participants are entitled to dividends earned during the vesting period of each

respective award.

Other Operating Income (Expense), net

We have recorded incurred charges or realized benefits that we believe are significant to our current operating results warranting separate classification in other operating income (expense), net.

As of December 31, 2022, we modified our presentation of the consolidated statements of operations to replace the former "Special items, net" line item with "Other operating income (expense), net." In addition, goodwill impairment, which had previously been included in "Special items, net," has been reclassified to a separate line titled "Goodwill impairment." The consolidated statements of operations for the years ended December 31, 2021 and December 31, 2020 were reclassified to reflect this change in presentation only.

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Restructuring

Employee-related charges (1)

$ ( 6.0 ) $ ( 11.7 ) $ ( 67.6 )

Asset abandonment and other restructuring costs (2)(3)

( 3.1 ) ( 25.9 ) ( 119.5 )

Intangible and tangible asset impairments, excluding goodwill (4)

( 36.3 ) ( 13.5 ) ( 71.5 )

Gains and (losses) on other disposals (5)

Other operating income (expense), net $ ( 38.6 ) $ ( 44.5 ) $ ( 255.9 )

(1) See the restructuring section within this footnote for a summary of our restructuring activities.

(2) A significant portion of asset abandonment and other restructuring costs consists of accelerated depreciation, which is in excess of normal depreciation.

There was no accelerated depreciation recorded to Other operating income (expense), net for the year ended December 31, 2022 and $ 15.4 million and $ 112.3 million recorded to Other operating income (expense), net for the years ended December 31, 2021 and 2020, respectively.

During the years ended December 31, 2021 and December 31, 2020, we incurred accelerated depreciation related to the Montreal brewery closure which occurred during the fourth quarter of 2021.

In addition, during the year ended December 31, 2021, we incurred accelerated depreciation for our Burtonwood and Japan locations and during the year ended December 31, 2020, we incurred accelerated depreciation for our Irwindale brewery.

(3) In January 2020, we announced plans to cease production at our Irwindale, California brewery.

On May 4, 2020, Pabst exercised its option to purchase the Irwindale brewery, including plant, equipment and machinery and the underlying land for $ 150 million and the transaction was completed in the fourth quarter of 2020.

Charges associated with the brewery closure for the year ended December 31, 2020 totaled $ 117.7 million, 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, of $ 96.0 million and employee related costs of retention and severance of $ 16.5 million.

(4) During the year ended December 31, 2022, we identified a triggering event related to the Truss joint venture asset group within our Americas segment and recognized an impairment loss of $ 28.6 million, of which $ 12.1 million was attributable to the noncontrolling interest.

The asset group was measured at fair value primarily using a market approach with Level 3 inputs.

During the year ended December 31, 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.

During 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 and aggregate impairment losses of $ 22.6 million related to those regional craft brand definite-lived tangible assets in our Americas segment.

The estimates and assumptions used to determine the fair value represent Level 3 measurements.

In addition, 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 EMEA&APAC segment.

The held for sale disposal group was measured at fair value on a

nonrecurring basis using Level 3 inputs.

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

Also in our EMEA&APAC segment, we incurred impairment losses as a result of small brewery closures in Europe as a result of the ongoing impact of the coronavirus pandemic.

See Note 6, "Goodwill and Intangible Assets" for further discussion.

(5) The former Alton brewery site in the U.K.

was divided into tranches with one tranche selling in the third quarter of 2021, resulting in a gain of $ 11.4 million and another tranche selling in the third quarter of 2022 resulting in a gain of $ 4.9 million.

In addition, in 2021 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 other operating income (expense), net at the time of sale.

See Note 15, "Accumulated Other Comprehensive Income (Loss)" for further details.

Restructuring Activities

During the fourth quarter of 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.

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

During 2021 and 2020, we recognized severance and retention cash charges of $ 4.0 million and $ 35.6 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.

Additionally, during 2020, we recognized aggregate impairment losses of $ 7.6 million, 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 during such periods as a result of the coronavirus pandemic.

No further impairment was recorded as a result of signing the 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.

The accrued restructuring balances as of December 31, 2022 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.

Americas EMEA&APAC Total

(In millions)

Balance as of December 31, 2019 $ 42.6 $ 4.5 $ 47.1

Charges incurred and changes in estimates 59.1 8.5 67.6

Payments made ( 77.3 ) ( 11.1 ) ( 88.4 )

Foreign currency and other adjustments 0.1 0.1 0.2

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

Charges incurred and changes in estimates 10.1 1.6 11.7

Payments made ( 23.7 ) ( 2.0 ) ( 25.7 )

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

Balance as of December 31, 2021 $ 10.9 $ 1.5 $ 12.4

Charges incurred and changes in estimates ( 0.5 ) 6.0 5.5

Payments made ( 6.5 ) ( 1.3 ) ( 7.8 )

Foreign currency and other adjustments ( 0.3 ) 0.2 ( 0.1 )

Balance as of December 31, 2022 $ 3.6 $ 6.4 $ 10.0

The charges recognized in the above rollforward of our reserves for restructuring do not include items charged directly to expense such as accelerated depreciation and accelerated amortization and periodic exit costs that are recognized as incurred as they are not reflected in our restructuring and exit cost reserves on our consolidated balance sheets.

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 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.

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

Reporting Segments

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 the Caribbean, Latin and South America.

We have contract brewing agreements to brew, package, market, distribute and/or sell certain products in the Americas as well as joint venture arrangements in Canada to distribute and sell beer in Ontario and the western provinces of Canada.

The EMEA&APAC segment consists of our production, marketing and sales of our primary brands as well as other owned and licensed 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.

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

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated net sales in 2022, 2021 or 2020.

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

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

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

Year ended December 31, 2022

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

(In millions)

Net sales $ 8,711.5 $ 2,005.2 $ — $ ( 15.7 ) $ 10,701.0

Equity income (loss) 4.7 — — — 4.7

Interest expense ( 1.5 ) ( 5.1 ) ( 244.0 ) — ( 250.6 )

Interest income 0.2 0.2 3.9 — 4.3

Income (loss) before income taxes $ 312.9 $ 61.0 $ ( 436.4 ) $ — $ ( 62.5 )

Income tax benefit (expense) ( 124.0 )

Net income (loss) ( 186.5 )

Net (income) loss attributable to noncontrolling interests 11.2

Net income (loss) attributable to MCBC $ ( 175.3 )

Year ended December 31, 2021

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

(In millions)

Net sales $ 8,485.0 $ 1,802.3 $ — $ ( 7.6 ) $ 10,279.7

Interest expense ( 1.4 ) ( 5.8 ) ( 253.1 ) — ( 260.3 )

Interest income — 0.2 1.8 — 2.0

Income (loss) before income taxes $ 1,176.5 $ 32.9 $ 29.6 $ — $ 1,239.0

Income tax benefit (expense) ( 230.5 )

Net income (loss) 1,008.5

Net (income) loss attributable to noncontrolling interests ( 2.8 )

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

Year ended December 31, 2020

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

(In millions)

Net sales $ 8,237.0 $ 1,431.9 $ — $ ( 14.9 ) $ 9,654.0

Interest expense ( 2.6 ) ( 5.7 ) ( 266.3 ) — ( 274.6 )

Interest income 0.2 0.3 2.8 — 3.3

Income (loss) before income taxes $ 1,080.5 $ ( 1,603.7 ) $ ( 120.7 ) $ — $ ( 643.9 )

Income tax benefit (expense) ( 301.8 )

Net income (loss) ( 945.7 )

Net (income) loss attributable to noncontrolling interests ( 3.3 )

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

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

Assets Depreciation and amortization Capital expenditures

As of December 31, For the years ended December 31, For the years ended December 31,

2022 2021 2022 2021 2020 2022 2021 2020

(In millions)

Americas $ 22,242.7 $ 23,653.5 $ 526.9 $ 601.4 $ 743.0 $ 483.5 $ 405.0 $ 461.4

EMEA&APAC 3,625.6 3,965.5 157.9 184.7 179.0 177.9 117.6 113.4

Consolidated $ 25,868.3 $ 27,619.0 $ 684.8 $ 786.1 $ 922.0 $ 661.4 $ 522.6 $ 574.8

The following table presents net sales by geography, based on the location of the customer.

For the years ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Net sales to unaffiliated customers

United States and its territories $ 7,405.6 $ 7,168.7 $ 7,016.1

Canada 1,165.3 1,188.4 1,111.6

United Kingdom 1,166.3 959.1 663.7

Other foreign countries (1)

963.8 963.5 862.6

Thereafter 9.6 54.4

Total lease payments $ 143.9 $ 98.5

interest ( 10.7 ) ( 31.3 )

Present value of lease liabilities $ 133.2 $ 67.2

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.

Consolidated net sales $ 10,701.0 $ 10,279.7 $ 9,654.0

(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 total consolidated net sales.

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

See Note 8, "Leases" for further information on our operating ROU assets and Note 5, "Properties" for further information on our net properties.

December 31, 2022 December 31, 2021

(In millions)

Net properties and operating ROU assets

United States and its territories $ 2,444.6 $ 2,294.1

Canada 1,050.6 1,114.6

United Kingdom 365.4 383.2

Other foreign countries (1)

Consolidated net properties and operating ROU assets $ 4,355.5 $ 4,311.5

(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 total consolidated net properties or operating ROU assets, respectively.

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