What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-20 compared with 2023-02-21 · 170 added, 212 removed, 341 unchanged (53% of the section changed)

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

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

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

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

For over two centuries, we have been brewing beverages that unite people to celebrate all life’s moments.

From our core power brands Coors Light , Miller Lite, Coors Banquet, Molson Canadian, Carling and Ožujsko to our above premium brands including Madri, Staropramen, Blue Moon Belgian White and Leinenkugel’s Summer Shandy, to our economy and value brands like Miller High Life and Keystone , we produce many beloved and iconic beer brands.

While our Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well, including flavored beverages like Vizzy Hard Seltzer , spirits like Five Trail whiskey as well as non-alcoholic beverages.

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

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Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2022 Form 10-K, filed with the SEC on February 21, 2023, which is available free of charge on the SEC's website at www.sec.gov and our corporate website at www.molsoncoors.com.

Changes to our Consolidated Results 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 statements of operations for the years ended December 31, 2021 and December 31, 2020 were reclassified to reflect this change in presentation only.

Our Fiscal Year

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Cost Inflation

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

While cost inflation was high in all of our markets during the year ended December 31, 2022, the impact to COGS on a percentage basis was higher for our EMEA&APAC segment than our Americas segment.

In addition, consumers in certain markets in our EMEA&APAC segment were impacted by local inflation leading to a reduction in their discretionary purchases.

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

In addition to the cost increases that commenced in the second half of 2021, the Russian invasion of Ukraine in February 2022 caused and continues to cause a negative impact on the global economy, driving further increases to, among other things, the cost of transportation, energy and materials.

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

In the Americas, we are taking steps to reduce the impact by shipping more beverages via rail to decrease the impacts of higher freight costs.

In EMEA&APAC, we are taking steps to find alternative fuel and energy sources to reduce the potential impact of the loss or disruption of the energy sources or suppliers in Europe due to supply shortages as a result of the Russia-Ukraine conflict.

We have established a governance regime to continually monitor this situation.

Alternative sources of fuel have been implemented or are in the process of being implemented throughout our operations in the U.K.

We have increased fuel stock levels where feasible and we have been drawing on new gas pipelines and fuel sources in the Baltics, Bulgaria-Greece, North Sea and Norway.

We are also experiencing increased materials costs due to overall cost inflation.

Specifically, the volatility of aluminum prices, inclusive of Midwest Premium and tariffs, continued to significantly impact our results for the year ended December 31, 2022.

To the extent materials, transportation and energy prices continue to fluctuate, and if we are unable to mitigate the impact of supply chain constraints and inflationary pressures through price increases or other measures, our results of operations and financial condition could be materially adversely impacted.

Even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brand, reputation and sales.

If our competitors maintain or substantially lower their prices, we may lose customers or mark down prices to match them.

Our profitability may be impacted by prices that do not offset the inflationary pressures, which may impact gross margins.

In addition, even if we increase the prices of our products in response to increases in the cost of commodities or other cost increases, we may not be able to sustain our price increases or customers may trade down to cheaper alternatives.

We have continued to incur significant cost inflation, including materials and manufacturing expenses, which negatively impacted our results of operations for the year ended December 31, 2023, although we experienced moderation in the second half of the year.

While cost inflation has been high in all of our markets, the impact to COGS on a percentage basis was higher for our EMEA&APAC segment than our Americas segment.

In addition, consumers in certain markets in our EMEA&APAC segment continued to be impacted by local inflation leading to a reduction in their discretionary purchases.

In 2024, we expect inflationary pressures to moderate and improve from those experienced over the last year.

To the extent materials and manufacturing 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.

Coronavirus Global Pandemic

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

We observed improvements in the marketplace related to the coronavirus global pandemic as on-premise locations began to re-open, with varying degrees of restrictions, across the world beginning in the second quarter of 2021.

A new variant of coronavirus, Omicron, created additional uncertainty and negatively impacted our on-premise business at the end of 2021 and into the first quarter of 2022 when we started to see progressive improvements in our on-premise channel.

Thus, while an improvement from 2021, the coronavirus global pandemic continued to have a negative impact to our financial results for the year ended December 31, 2022.

However, the margin impact of the coronavirus pandemic improved during the year ended December 31, 2022 when compared to the year ended December 31, 2021 primarily as a result of the progressive improvements in the on-premise channel.

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 continued or prolonged future outbreaks of variants, changes in consumer behavior, the rate of vaccination and the efficacy of vaccines against coronavirus and related variants.

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

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 as quickly as possible.

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

This incident caused a shift in production and shipments from the first quarter of 2021 to the balance of fiscal year 2021.

Revitalization Plan

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

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

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

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

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

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

There were no material changes to our restructuring activities since December 31, 2021.

See Part II—Item 8 Financial Statements and Supplementary Data Note 17, "Other Operating Income (Expense), net" and Note 6, "Goodwill and Intangibles" for further discussion of the impacts of this plan.

If our competitors maintain or substantially lower their prices, we may lose customers or be forced to lower prices to remain competitive.

Our profitability may be impacted by prices that do not offset the inflationary pressures, which would negatively impact gross margins.

Premiumization of our Portfolio

In 2021, in order to support the overall premiumization of our portfolio, we strategically de-prioritized and rationalized certain non-core SKUs predominantly in the economy segment.

In 2021, in order to support continued premiumization of our portfolio, we strategically de-prioritized and rationalized certain non-core SKUs predominantly in the economy segment.

While we rationalized certain non-core economy SKUs, we retained key economy brands allowing us to maintain a portfolio for all socio-economic demographics.

We believe the premiumization of our portfolio will drive sustainable net sales and earnings growth but result in potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifts towards a higher composition of above premium products.

We believe the continued premiumization of our portfolio will drive sustainable net sales and earnings growth but result in potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifts towards a higher composition of above premium products.

Items Affecting Americas Segment Results of Operations

Truss Impairment and Sale

During the first quarter of 2022, we recognized an impairment loss of $28.6 million related to the Truss joint venture asset group of which $12.1 million was attributable to the noncontrolling interest.

Additionally, during the third quarter of 2023, we sold our controlling interest in Truss and recognized a loss of $11.1 million.

These losses were recorded within other operating income (expense), net.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" and Part II—Item 8 Financial Statements and Supplementary Data, Note 3 , " Investments " for further information.

Goodwill Impairment

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Keystone Litigation

During the year ended December 31, 2022, we recorded an accrued liability of $56.6 million within MG&A related to probable losses as a result of the ongoing Keystone litigation case including associated interest.

During the first quarter of 2022, we accrued a liability of $56.0 million within MG&A related to probable losses as a result of the ongoing Keystone litigation case.

During the years ended December 31, 2023 and December 31, 2022 we accrued $1.9 million and $0.6 million, respectively, in associated interest related to this accrued liability.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further information.

Impairment of an Asset Group

During the first quarter of 2022, we recognized an impairment loss of $28.6 million related to the Truss joint venture asset group within other operating income (expense), net, of which $12.1 million was attributable to the noncontrolling interest.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" for further information.

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

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

Irwindale, California Brewery Sale

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

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

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

We recorded charges related to the Irwindale brewery closure as further discussed in Part II—Item 8 Financial Statements and Supplementary Data Note 17, "Other Operating Income (Expense), net"

Items Affecting EMEA&APAC Segment Results of Operations

Staropramen Brands Impairment

During the fourth quarter of 2023, we recorded a partial impairment charge of $160.7 million to our indefinite-lived intangible asset related to the Staropramen family of brands within the EMEA&APAC segment as a result of our annual impairment analysis.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for further information.

Russia-Ukraine Conflict

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As a result, we suspended exports of all our brands to Russia and subsequently terminated the license to produce any of our brands in Russia.

Out of an abundance of caution, at the commencement of the conflict, production and sales of our brands in Ukraine under license arrangements were halted as a result of the dangerous environment in the country due to the conflict.

We anticipate entering into a new license contract within Ukraine in early 2023.

Until then, we plan to export to Ukraine from the Czech Republic.

We had less than 0.2% of our 2021 consolidated net sales, less than 1% of our 2021 EMEA&APAC net sales and no physical assets in Russia and Ukraine before the conflict began.

While not material to our Company, the Russia-Ukraine conflict negatively impacted our net sales for the year ended December 31, 2022.

In addition, the Russia-Ukraine conflict has caused a negative impact to the global economy which has impacted our Company, driving further increases to the cost of materials, transportation and energy.

See the risk factor related to this conflict at Part I.—Item 1A.

While not material to our consolidated net sales, the Russia-Ukraine conflict negatively impacted our EMEA&APAC segment net sales for the years ended December 31, 2023 and December 31, 2022.

In addition, the Russia-Ukraine conflict has caused a negative impact to the global economy which has impacted our Company, driving further increases to materials and manufacturing expenses as discussed in more detail above.

See risk factors related to this conflict at Part I.—Item 1A.

"Risk Factors ".

Fiscal Year 2020 Goodwill Impairment

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

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

India Impairment & Sale

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

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

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

The sale of the remaining portion of our India business was subsequently completed during the first quarter of 2022 and resulted in an insignificant loss on disposal recorded in other operating income (expense), net.

Consolidated Results of Operations

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Other operating income (expense), net (162.7) 321.5 % (38.6) (13.3) % (44.5)

Equity income (loss) 4.7 N/M — N/M —

Operating income (loss) 157.5 (89.2) % 1,454.4 N/M (408.9)

Equity income (loss) 12.0 155.3 % 4.7 N/M —

Operating income (loss) 1,438.2 813.1 % 157.5 (89.2) % 1,454.4

Total non-operating income (expense), net (185.7) (15.6) % (220.0) 2.1 % (215.4)

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Net income (loss) 956.4 N/M (186.5) N/M 1,008.5

Net (income) loss attributable to noncontrolling interests 11.2 N/M (2.8) (15.2) % (3.3)

Net (income) loss attributable to noncontrolling interests (7.5) N/M 11.2 N/M (2.8)

Net income (loss) attributable to MCBC $ 948.9 N/M $ (175.3) N/M $ 1,005.7

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For the year ended December 31, 2023, foreign currency movements had the following impacts on our USD consolidated results:

• Net sales - Unfavorable impact of $298.0 million (unfavorable impact for EMEA&APAC and Americas of $249.0 million and $49.0 million, respectively).

• Cost of goods sold - Favorable impact of $211.7 million (favorable impact for EMEA&APAC, Americas and Unallocated of $169.4 million, $36.3 million and $6.0 million, respectively).

• MG&A - Favorable impact of $83.4 million (favorable impact for EMEA&APAC and Americas of $66.8 million and $16.6 million, respectively).

• Income (loss) before income taxes - Unfavorable impact of $15.1 million (unfavorable impact for EMEA&APAC and Americas of $14.0 million and $2.6 million, respectively, partially offset by the favorable impact for Unallocated of $1.5 million).

The impacts of foreign currency movements on our consolidated USD results described above for the year ended December 31, 2022 were primarily due to the strength of the USD as compared to the GBP and CAD.

• Net sales - Favorable impact of $9.5 million (favorable impact for EMEA&APAC of $56.0 million, partially offset by the unfavorable impact for Americas of $46.5 million).

• Cost of goods sold - Favorable impact of $1.0 million (favorable impact for Americas and Unallocated of $34.9 million and $1.8 million, respectively, partially offset by the unfavorable impact for EMEA&APAC of $35.7 million).

• MG&A - Favorable impact of $1.3 million (favorable impact for Americas of $14.2 million, partially offset by the unfavorable impact for EMEA&APAC of $12.9 million).

• Income (loss) before income taxes - Favorable impact of $9.1 million (favorable impact for Unallocated of $15.9 million, partially offset by the unfavorable impact for EMEA&APAC and Americas of $5.3 million and $1.5 million, respectively).

The impacts of foreign currency movements on our consolidated USD results described above for the year ended December 31, 2023 were primarily due to the strength of the USD as compared to the CAD partially offset by the weakening of the USD as compared to all currencies throughout Europe in which we operate.

Included in these amounts are both translational and transactional impacts of changes in foreign exchange rates.

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

We calculate the impact of foreign exchange by translating our current period local currency results at the average exchange rates used to translate the financial statements in the comparable prior year period during the respective period throughout the year and comparing that amount with the reported amount for the period.

The impact of transactional foreign currency gains and losses, including the impact of undesignated foreign currency forwards, is recorded within other non-operating income (expense), net in our consolidated statements of operations.

Financial volume represents owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), as well as contract brewing, wholesale/factored non-owned volume and company-owned distribution volume.

This metric is presented on a STW basis to reflect the sales from our operations to our direct customers, generally distributors.

This metric is presented on an STW basis to reflect the sales from our operations to our direct customers, generally distributors.

We believe this metric is important and useful for investors and management because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers.

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Factored volume in our EMEA&APAC segment is the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K.

As part of the revitalization plan strategy to grow our above premium portfolio and expand beyond the beer aisle, in late 2021 we de-prioritized and rationalized certain non-core SKUs, predominantly in the economy segment.

This strategy was intended to drive sustainable net sales growth and earnings growth, despite potential volume declines due to the rationalization or certain SKUs and as the portfolio mix shifted toward a higher composition of above premium products.

The following table highlights the drivers of change in net sales for the year ended December 31, 2022 versus December 31, 2021, by segment (in percentages).

Financial Volume Price and Sales Mix Currency Total

Consolidated (2.1) % 9.1 % (2.9) % 4.1 %

Americas (5.4) % 8.6 % (0.5) % 2.7 %

EMEA&APAC 8.1 % 17.0 % (13.8) % 11.3 %

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

We also utilize net sales per hectoliter and cost of goods sold per hectoliter, as well as the year over year changes in such metrics, as key metrics for analyzing our results.

These metrics are calculated as net sales and cost of goods sold, respectively, per our consolidated statements of operations divided by financial volume for the respective period.

We believe these metrics are important and useful for investors and management because they provide an indication of the trends in pricing and sales mix on our net sales and the trends of sales mix and other cost impacts such as inflation on our cost of goods sold.

In late 2021 we de-prioritized and rat ionalized certain non-core SKUs, predominantly in the economy segment, in order to focus our strategy on growing our above premium portfolio and expanding beyond the beer aisle.

This strategy was intended to drive sustainable net sales growth and earnings growth, despite potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifted toward a higher composition of above premium products.

The strategy of premiumization, growing our above premium portfolio and expanding beyond the beer aisle continues to be a focus under the Acceleration Plan that was announced in the fourth quarter of 2023.

The following table highlights the drivers of the change in net sales and net sales per hectoliter for the year ended December 31, 2023 compared to December 31, 2022 (in percentages):

Financial Volume Price and Sales Mix Currency Total

Consolidated (0.5) % 5.2 % 1.8 % 6.5 %

Americas (2.0) % 4.0 % 1.0 % 3.0 %

EMEA&APAC 3.9 % 15.7 % 6.3 % 25.9 %

Net sales per hectoliter on a financial volume basis in local currency increased 9.3% for the year ended December 31, 2022, compared to prior year, primarily due to positive net pricing and favorable sales mix driven by portfolio premiumization and favorable channel mix.

Financial volumes declined 2.1% for the year ended December 31, 2022, compared to prior year, primarily due to industry softness in the Americas, cycling the rebuild of U.S.

distributor inventory levels in the prior year, and the impacts of the Québec labor strike, partially offset by growth in Western Europe due to less onerous coronavirus pandemic restrictions.

Consolidated net sales 1.8 % 7.5 % 0.1 % 9.4 %

Consolidated net sales per hectoliter N/A 7.3 % 0.1 % 7.4 %

Net sale s increased 9.4% for the year ended December 31, 2023, compared to prior year driven by favorable price and sales mix, higher financial volumes and favorable foreign currency impacts.

Financial volume s increased 1.8% for the year ended December 31, 2023, compared to prior year, primarily due to higher financial volumes in the Americas segment, partially offset by lower EMEA&APAC financial volumes.

Price and sales mix favorably i mpacted net sales and net sales per hectoliter for the year ended December 31, 2023, by 7.5% and 7.3%, respectively, primarily due to increased net pricing including the rollover benefit in the first three quarters due to taking several price increases in the prior year, as well as favorable sales mix.

Favorable sales mix was driven by geographic m ix due to higher volumes in the Americas segment and lower contract brewing volume related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

A discussion of currency impacts on net sales is included in the "Foreign currency impact on results" section above.

Cost of goods sold

Cost of goods sold per hectoliter in local currency increased 19.0% for the year ended December 31, 2022, compared to prior year, primarily due to changes in our unrealized mark-to-market commodity positions which accounted for approximately 40% of the increase and is recorded as Unallocated.

In addition, the increase was also impacted by cost inflation, mainly on materials, transportation and energy costs, mix impacts from portfolio premiumization, higher factored volumes and volume deleverage, partially offset by lower depreciation expense and cost savings programs.

Cost of goods sold increased 4.1% for the year ended December 31, 2023, compared to prior year, primarily due to higher cost of goods sold per hectoliter and higher financial volumes.

Cost of goods sold per hectoliter increased 2.2% for the year ended December 31, 2023, compared to prior year, primarily due to cost inflation related to materials and manufacturing expenses and unfavorable mix, partially offset by changes in our unrealized mark-to-market commodity derivative positions of $126.9 million, cost savings and volume leverage.

Marketing, general and administrative expenses

MG&A increased 2.5% for the year ended December 31, 2022, compared to prior year, primarily due to the cycling of lower people-related costs in the prior year and the recording of a $56.6 million accrued liability related to potential losses as a result of the ongoing Keystone litigation case including associated interest, partially offset by favorable impacts from foreign currency movements and reductions in marketing spend on non-core and discontinued brands.

MG&A expenses increased 6.2% for the year ended December 31, 2023, compared to prior year, primarily due to higher incentive compensation expense and increased marketing investment on core and innovation brands, partially offset by cycling the recording of a $56.0 million accrued liability in the prior year related to potential losses as a result of the ongoing Keystone litigation case.

Goodwill Impairment

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for detail of

our goodwill impairments.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for detail of our goodwill impairments.

Other operating income (expense), net

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Total non-operating income (expense), net

Total non-operating expense, net increased 2.1% for the year ended December 31, 2022, compared to prior year primarily due to higher pension and OPEB non-service costs and unfavorable transactional impacts of changes in foreign exchange rates, partially offset by lower interest expense driven by the repayment of debt as a result of our continued deleveraging actions.

Total non-operating expense, net decreased 15.6% for the year ended December 31, 2023, compared to prior year primarily due to lower net interest expense driven by higher interest income as well as the repayment of debt as a result of our continued deleveraging actions and the favorable impact of transactional foreign currency impacts, partially offset by lower pension and OPEB non-service net benefit.

Income taxes benefit (expense)

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Effective tax rate 24 % (198) % 19 %

The decrease in our effective tax rate for the year ended December 31, 2022 compared to the prior year was primarily due to the impact of (i) 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, and (ii) $18 million of tax expense recognized in 2021, which related to the remeasurement of our deferred tax liabilities following an announced corporate income tax rate increase in the U.K.

from 19% to 25%.

These decreases to the effective tax rate were partially offset by the release of $73 million of reserves for unrecognized tax positions as a result of an effective settlement reached on a tax audit during 2021.

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

The increase in our effective tax rate for the year ended December 31, 2023 compared to the prior year 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.

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

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

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into U.S.

The IRA includes a new corporate alternative minimum tax of 15% on the adjusted financial statement income (“AFSI”) of corporations with average AFSI exceeding $1.0 billion over a three-year period.

The alternative minimum tax is effective for the Company beginning in fiscal year 2023, and any impact to our consolidated financial statements, including cash flow, tax expense and effective tax rate, will depend on several factors, most specifically our AFSI and any future administrative guidance.

Additionally, the IRA imposes an excise tax of 1% on stock repurchases, effective January 1, 2023.

The impact of this excise tax will be dependent on the extent of our share repurchases in future periods.

While we continue to evaluate the new tax law, we do not believe it will have a material impact to the Company in the near future.

The OECD and EU have proposed changes to the existing tax laws of member countries.

For instance, the OECD has introduced model rules for a new 15% global minimum tax framework, as well as a proposal on the allocation of profit among tax jurisdictions in which companies operate.

In December 2022, the EU member states agreed to incorporate the 15% global minimum tax into their respective domestic laws effective for fiscal years beginning on or after December 31, 2023.

Additionally, several non-EU countries, including the U.K., have recently proposed and/or adopted legislation consistent with the OECD global minimum tax framework.

We are continuing to evaluate the potential impact on future periods which could affect our effective tax rate.

Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 12, "Income Tax" for additional details regarding our effective tax rate.

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The program was focused on building our capabilities and reorganizing to support our commercial revitalization strategy.

Total cost savings delivered in 2022, 2021 and 2020 totaled approximately $115 million, $220 million and $270 million, respectively.

Depreciation and Amortization

Depreciation and amortization expense decreased 12.9% for the year ended December 31, 2022, primarily due to assets becoming fully depreciated during the year, favorable impacts from foreign currency movements and a decrease in accelerated depreciation expense recorded as a result of certain facility closures.

Total cost savings delivered in 2022 and 2021 totaled approximately $115 million and $220 million, respectively.

While we have not announced a formal cost savings program after the completion of this program in 2022, we continue to generate cost savings through initiatives in the normal course of business.

Segment Results of Operations

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

(2) Excludes royalty volume of 2.719 million hectoliters, 2.507 million hectoliters and 2.052 million hectoliters for 2022, 2021 and 2020, respectively.

Net sales and volume

Net sales per hectoliter on a financial volume basis in local currency increased 9.1% for the year ended December 31, 2022, compared to the prior year, primarily due to positive net pricing and favorable sales mix driven by portfolio premiumization.

Financial volumes decreased 5.4% for the year ended December 31, 2022, compared to prior year, primarily due to industry softness, cycling the rebuild of U.S.

distributor inventory levels in the prior year and the impacts of the Québec labor strike.

(2) Excludes royalty volume of 2.683 million hectoliters, 2.719 million hectoliters and 2.507 million hectoliters for the years ended December 31, 2023, 2022 and 2021, respectively.

The following table highlights the drivers of the change in net sales and net sales per hectoliter for the year ended December 31, 2023 compared to December 31, 2022 (in percentages):

Financial Volume Price and Sales Mix Currency Total

Americas net sales 3.6 % 5.1 % (0.5) % 8.2 %

Americas net sales per hectoliter N/A 5.0 % (0.6) % 4.4 %

Net sale s increased 8.2% for the year ended December 31, 2023, compared to prior year, driven by favorable price and sales mix as well as higher financial volumes, partially offset by unfavorable foreign currency impacts.

Financial volumes increased 3.6% for the year ended December 31, 2023, compared to prior year, primarily due to an increase in U.S.

domestic shipments driven by volume growth in our core brands and higher shipments in Canada mainly attributed to cycling the prior year impacts of the Québec labor strike, partially offset by lower Latin America volumes.

The increase in U.S.

volume was driven in part by the continued shifts in consumer purchasing behavior largely within the premium beer segment.

Price and sales mix favorably im pacted net sales and net sales per hectoliter for the year ended December 31, 2023, by 5.1% and 5.0%, respectively, primarily due to increased net pricing including the rollover benefit in the first three quarters of the year of several price increases taken in the previous year and favorable sales mix as a result of lower contract brewing volume related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

A discussion of currency impacts on net sales is included in the "Foreign currency impact on results" section above.

Income (loss) before income taxes

Income (loss) before income taxes decreased 73.4% for the year ended December 31, 2022, compared to prior year, primarily due to a partial goodwill impairment charge of $845 million, cost inflation, mainly on materials, transportation and energy costs, lower financial volumes and higher MG&A spend, partially offset by positive net pricing, favorable sales mix and lower depreciation expense.

Income before income taxes improved 400.7% for the year ended December 31, 2023, compared to prior year, primarily due to cycling a non-cash partial goodwill impairment charge of $845.0 million, increased net pricing, higher financial volumes, lower logistics expenses, partially offset by cost inflation related to materials and manufacturing expenses and higher MG&A expense.

Higher MG&A spend was primarily due to increased marketing investment behind our core and innovation brands and higher incentive compensation expense, partially offset by cycling the recording of a $56.0 million accrued liability related to potential losses as a result of the ongoing Keystone litigation case.

EMEA&APAC Segment

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

(2) Excludes royalty volume of 1.012 million hectoliters, 1.968 million hectoliters and 1.731 million hectoliters for 2022, 2021 and 2020, respectively.

Net sales and volume

Net sales per hectoliter on a financial volume basis in local currency increased 15.7% for the year ended December 31, 2022, compared to prior year, primarily due to favorable sales mix, in part due to the cycling of significant on-premise restrictions that occurred during the first and last quarters of 2021, particularly in the U.K, and positive net pricing.

Financial volumes increased 8.1% for the year ended December 31, 2022, compared to prior year, primarily due to growth in our above premium portfolio and our core brands, including the cycling of significant on-premise restrictions that occurred during the first and last quarters of 2021, particularly in the U.K.

and higher factored volumes.

(2) Excludes royalty volume of 0.935 million hectoliters, 1.012 million hectoliters and 1.968 million hectoliters for the years ended December 31, 2023, 2022 and 2021, respectively.

The following table highlights the drivers of the change in net sales and net sales per hectoliter for the year ended December 31, 2023 compared to December 31, 2022 (in percentages):

Financial Volume Price and Sales Mix Currency Total

EMEA&APAC net sales (3.0) % 14.7 % 2.8 % 14.5 %

EMEA&APAC net sales per hectoliter N/A 15.2 % 2.9 % 18.1 %

Net sales increased 14.5% for the year ended December 31, 2023, compared to prior year driven by favorable price and sales mix as well as favorable foreign currency impacts, partially offset by a decline in financial volumes.

Financial volume s decreased 3.0% for the year ended December 31, 2023, compared to prior year, primarily due to declines in Central and Eastern Europe due to industry softness given the inflationary pressures on the consumer, partially offset by resilient demand and growth in above premium volumes in the U.K.

Price and sales mix favorably impacted net sales and net sales per hectoliter for the year ended December 31, 2023, by 14.7% and 15.2%, respectively, primarily due to increased net pricing including the rollover benefits from price increases taken in the previous year and favorable sales mix driven by geographic mix and premiumization.

A discussion of currency impacts on net sales is included in the "Foreign currency impact on results" section above.

Income (loss) before income taxes

Income (loss) before income taxes increased 85.4% for the year ended December 31, 2022, compared to prior year, primarily due to higher financial volumes, favorable sales mix and positive net pricing, partially offset by cost inflation, mainly on materials, transportation and energy costs, as well as higher MG&A spend.

Higher MG&A spend was primarily due to cost inflation, higher incentive compensation, higher marketing spend to support our brands and the cycling of lower spend in the prior year due to cost mitigation efforts as a result of the pandemic.

Loss before income taxes was $41.1 million for the year ended December 31, 2023, compared to income before income taxes of $61.0 million in the prior year.

The decline was primarily due to the impairment charge of $160.7 million to our indefinite-lived intangible asset related to the Staropramen family of brands, as well as cost inflation on materials, logistics and manufacturing expenses, higher MG&A spend, lower financial volumes as well as the unfavorable impact of foreign currency partially offset by increased net pricing to customers and favorable sales mix.

Unallocated Segment

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

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

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

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

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Total non-operating income (expense), net (179.6) (13.0) % (206.5) (0.2) % (207.0)

Income (loss) before income taxes $ (436.4) N/M $ 29.6 N/M $ (120.7)

Income (loss) before income taxes $ (273.1) (37.4) % $ (436.4) N/M $ 29.6

N/M = Not meaningful

Cost of goods sold

The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for 2022, 2021 and 2020.

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

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Total non-operating income (expense), net

Total non-operating expense, net decreased 0.2% for the year ended December 31, 2022 compared to the prior year primarily due to lower net interest expense partially offset by higher pension and OPEB non-service costs.

Total non-operating expense, net decreased 13.0% for the year ended December 31, 2023 compared to prior year primarily due to lower net interest expense and the favorable impact of transactional foreign currency, partially offset by lower pension and OPEB non-service net benefit.

See Part II - Item 8.

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We continue to monitor world events which may create credit or economic challenges that could adversely impact our profit or operating cash flows and our ability to obtain additional liquidity.

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

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

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and in currencies other than the USD.

As of December 31, 2022, approximate ly 76% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies.

T he recent fluctuations in

foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances.

Cash balances in foreign countries are often subject to additional restrictions and covenants.

As of December 31, 2023, approximately 61% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies.

F luctuations in foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances.

Cash balances in foreign countries are often subject to additional restrictions.

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

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SEC Registered Securities

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC.

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture.

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

subsidiaries reflecting the substantial operations of our Americas segment.

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

The 3.5% senior notes were subsequently repaid in May 2022 upon maturity using a combination of commercial paper borrowings and cash on hand.

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

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

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

These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed on Exhibit 22 of this Annual Report on Form 10-K (the "Subsidiary Guarantors", and together with the Parent Issuer, the "Obligor Group").

"Parent Issuer" in this section is specifically referring to MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture.

These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of this Annual Report on Form 10-K (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group").

Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer.

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Intercompany net costs from non-guarantor subsidiaries $ (360.4)

Net interest expense third parties $ (241.9)

Intercompany net interest income from non-guarantor subsidiaries $ 94.0

Net interest expense, out of which:

Intercompany net interest expense from non-guarantor subsidiaries

Income before income taxes $ 1,311.1

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Intercompany receivables from non-guarantor subsidiaries $ 255.7

Total noncurrent assets $ 20,153.6

Total noncurrent assets, out of which:

Noncurrent intercompany notes receivable from non-guarantor subsidiaries $ 4,178.6

Total current liabilities, out of which:

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Long-term debt $ 5,257.6

Noncurrent intercompany notes payable due to non-guarantor subsidiaries $ 310.9

Cash Flows and Use of Cash

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Cash Flows from Operating Activities

Net cash provided by operating activities of $1,502.0 million for the year ended December 31, 2022 decreased $71.5 million compared to $1,573.5 million for the year ended December 31, 2021.

The decrease in net cash provided by operating activities was primarily due to the unfavorable timing of working capital and lower net income adjusted for non-cash add-backs, partially offset by lower income taxes paid and lower payments for incentive compensation.

The unfavorable timing of working capital includes the prior year net repayment against various tax payment deferrals programs associated with the coronavirus pandemic.

Net cash provided by operating activities of $2,079.0 million for the year ended December 31, 2023 increased $577.0 million compared to $1,502.0 million for the year ended December 31, 2022.

The increase in net cash provided by operating activities was primarily due to higher net income and the favorable timing of working capital in the Americas across all categories, partially offset by higher income taxes paid.

Cash Flows from Investing Activities

Net cash used in investing activities of $841.7 million for the year ended December 31, 2023 increased $216.6 million compared to $625.1 million for the year ended December 31, 2022.

The increase in net cash used in investing activities was primarily due to higher capital expenditures as a result of significant investment in our Americas breweries, partially offset by higher cash inflows from other investing activities.

The increase in net cash used in investing activities was primarily due to higher acquisitions, lower proceeds from the sales of properties and other assets, as well as higher capital expenditures.

Cash Flows from Financing Activities

Net cash used in financing activities of $889.5 million for the year ended December 31, 2022 decreased $282.7 million compared to $1,172.2 million for the year ended December 31, 2021.

The decrease in net cash used in financing activities was primarily due to lower net debt repayments, partially offset by higher dividend payments and Class B common stock share

Net cash used in financing activities of $981.4 million for the year ended December 31, 2023 increased $91.9 million compared to $889.5 million for the year ended December 31, 2022.

The increase in net cash used in financing activities was primarily due to higher Class B common stock share repurchases, higher dividend payments, partially offset by lower net debt repayments.

Capital Resources, including Material Cash Requirements

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We had total cash and cash equivalents of $868.9 million as of December 31, 2023, compared to $600.0 million as of December 31, 2022.

The decrease in cash and cash equivalents from December 31, 2021 to December 31, 2022 was primarily due to capital expenditures, net debt repayments, including the repayment of our $500 million 3.5% USD notes which matured in May 2022, dividend payments, Class B common stock share repurchases and unfavorable foreign currency impact, partially offset by net cash provided by operating activities and from the sales of properties and other assets.

The increase in cash and cash equivalents from December 31, 2022 to December 31, 2023 was primarily due to the net cash provided by operating activities, partially offset by capital expenditures, net debt repayments, including the repayment of our CAD 500 million 2.84% note which matured in July 2023, dividend payments, Class B common stock share repurchases, as well as cash paid for the acquisition of businesses.

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

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Working Capital

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

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.

We actively manage our working capital to ensure we are able to meet our short-term obligations and to provide more favorable timing of cash inflows.

These efforts include optimizing our inventory levels and managing our payment terms on accounts payable and accounts receivable.

We repaid our CAD 500 million 2.84% notes upon their maturity on July 15, 2023 using cash on hand.

Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for details.

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

As of December 31, 2022, and December 31, 2021, we had $1.5 billion a vailable to draw under our $1.5 billion revolving credit facility, as there were no outstanding revolving credit facility or commercial paper borrowings.

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

On June 26, 2023, we amended and restated our multi-currency revolving credit facility.

Among other things, the term was extended through June 26, 2028, and the borrowing capacity was increased to $2.0 billion.

This $2.0 billion revolving credit facility amended our pre-existing $1.5 billion revolving credit facility, which would have matured on July 7, 2024.

On September 28, 2023, we amended our commercial paper program, which reduces borrowing capacity under the revolving credit facility, to a maximum borrowing capacity of $2.0 billion to borrow at any time at variable interest rates.

The $150.0 million sub-facility available for the issuance of letters of credit remains unchanged.

As of December 31, 2023, we had $2.0 billion available to draw on our $2.0 billion revolving credit facility.

As of December 31, 2023, we had no borrowings drawn on this revolving credit facility and no commercial paper borrowings.

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

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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.

The maximum net debt to EBITDA leverage ratio, as defined by the amended revolving credit facility agreement, was 4.00x as of December 31, 2022 and December 31, 2021.

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 net debt to EBITDA leverage ratio, as defined by the amended and restated revolving credit facility agreement, was 4.00x as of December 31, 2023 which remained unchanged from the requirement as of December 31, 2022.

As of December 31, 2023 and December 31, 2022, 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, 2023 rank pari-passu.

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

See Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for further discussion of our borrowings and available sources of borrowings, including lines of credit.

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

See Part II—Item 8 Financial Statements and Supplementary Data, Note 3, "Investments" and Note 13, "Commitments and Contingencies" for further discussion.

See Part II - Item 8 Financial Statements and Supplementary Data, Note 3, "Investments" and Part II - Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further discussion.

Material Cash Requirements from Contractual and Other Obligations

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Payments due by period

Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years

Total 2024 2025-2026 2027-2028 2029 and thereafter

(In millions)

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See Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" , Note 11, "Employee Retirement Plans and Postretirement Benefits," Note 10, "Derivative Instruments and Hedging Activities," Note 13, "Commitments and Contingencies" and Note 8, "Leases" for additional information.

(1) Represents expected contributions of $4.0 million under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans for all periods presented.

(1) Represents expected contributions of $3.6 million under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans through 2033.

The net underfunded liability as of December 31, 2023 of our defined benefit pension plans (excluding our overfunded plans) and postretirement benefit plans is $38.1 million and $470.6 million, respectively.

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(2) See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further discussion of the majority of the other long-term obligations which includes supply and distribution and advertising and promotions commitments.

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

The remaining balance relates to derivative payments, information technology services, pre-commencement leases, open purchase orders and other commitments.

Other Commercial Commitments

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Total amounts

committed Less than 1 year 1 - 3 years 3 - 5 years More than 5 years

committed 2024 2025-2026 2027-2028 2029 and thereafter

(In millions)

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Credit Rating

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

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

Our current long-term credit ratings are BBB/Stable Outlook, Baa2/Positive Outlook and BBB/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively.

Our short-term credit ratings are A-2, Prime-2 and R-2, respectively.

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

Capital Expenditures

We incurred $694.7 million, and paid $661.4 million, for capital improvement projects worldwide for the year ended December 31, 2022, excluding capital spending by equity method joint ventures, representing an increase of $136.1 million from the $558.6 million of capital expenditures incurred for the year ended December 31, 2021.

This increase was primarily due to significant investment in our Americas breweries including the completion of a new brewery in Québec, Canada and the sustainability investment in our Golden, Colorado brewery.

We incurred $688.6 million, and paid $671.5 million, for capital improvement projects worldwide for the year ended December 31, 2023, excluding capital spending by equity method joint ventures, representing a decrease of $6.1 million from the $694.7 million of capital expenditures incurred for the year ended December 31, 2022.

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

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Off-Balance Sheet Arrangements

Refer to Part II—Item 8 Financial Statements, Note 13, "Commitments and Contingencies" for discussion of off-balance sheet arrangements.

Refer to Part II—Item 8 Financial Statements and Supplementary Data , Note 13, "Commitments and Contingencies" for discussion of off-balance sheet arrangements.

As of December 31, 2023, we did not have any other material off-balance sheet arrangements.

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Accounting for pension and OPEB plans requires that we make assumptions that involve considerable judgment which are significant inputs in the actuarial models that measure our net pension and OPEB obligations and ultimately impact our earnings.

These include the discount rate, long-term expected rate of return on assets, and plan asset fair value determination,

which are important assumptions used in determining the plans' funded status and annual net periodic pension and OPEB costs.

These include the discount rate, long-term expected rate of return on assets, and plan asset fair value determination, which are important assumptions used in determining the plans' funded status and annual net periodic pension and OPEB costs.

Further assumptions include inflation considerations and health care cost trends.

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As of December 31, 2023, on a weighted-average basis, the discount rates used were 4.74% for our defined benefit pension plans and 4.64% for our OPEB plans.

The change from the weighted-average discount rates of 2.27% for our defined benefit pension plans and 2.59% for our OPEB plans as of December 31, 2021 is primarily due to increasing interest rates in 2022.

The change from the weighted-average discount rates of 5.01% for our defined benefit pension plans and 4.90% for our OPEB plans as of December 31, 2022 was primarily due to a decrease in interest rates at the end of 2023 across all plans.

A 50 basis point change in our discount rate assumptions would have had the following effects on the projected benefit obligation balances as of December 31, 2023 for our pension and OPEB plans:

Impact to projected benefit obligation as of

December 31, 2022

- 50 basis points

Decrease Increase

Decrease in discount rate Increase in discount rate

(In millions)

Projected benefit obligation - unfavorable (favorable)

Unfavorable (favorable) impact to projected benefit obligation as of December 31, 2023

Pension obligation $ 161.2 $ (147.7)

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The assumed long-term expected return on assets is used to estimate the actual return that will occur on each individual funded plan's respective plan assets in the upcoming year.

We determine each plan's EROA with substantial input from independent investment specialists, including our actuaries and other consultants.

We determine each plan's EROA with substantial input from independent investment specialists, including our actuaries and our outsourced investment consultant.

In developing each plan's EROA, we consider current and expected asset allocations, historical market rates as well as historical and expected returns on each plan's individual asset classes.

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Based on the above factors and expected asset allocations, we have assumed, on a weighted-average basis, an EROA of 5.47% for our defined benefit pension plan assets for cost recognition in 2024.

This is an increase from the weighted-average rate of 3.11% we assumed for 2022, primarily due to the significant increase in interest rates throughout 2022 as 65.2% of our portfolio was invested in fixed income securities as of year end.

This is an increase from the weighted-average rate of 4.91% we assumed for 2023, primarily due to the increases seen in interest rates throughout the majority of 2023 causing higher expected future fixed income returns.

We believe that our EROA assumptions are appropriate;

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A 50 basis point change in our expected return on assets assumptions made at the beginning of 2023 would have had the following effects on 2023 net periodic pension and postretirement benefit costs.

Impact to 2022 pension and postretirement benefit costs - 50

basis points (unfavorable) favorable

Decrease Increase

Decrease in expected rate of return Increase in expected rate of return

(In millions)

Description of pension and postretirement plan sensitivity item

Expected return on pension plan assets $ (22.7) $ 23.9

(Unfavorable) favorable impact to the 2023 net periodic pension and postretirement benefit cost

Net periodic pension and postretirement benefit cost $ (14.1) $ 14.1

Fair Value of Plan Assets

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

Equity assets are diversified between domestic and other international investments.

Relative allocations reflect the demographics of the respective plan participants.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Employee Retirement Plans and Postretirement Benefits" for a comparison of target asset allocation percentages to actual asset allocations as of December 31, 2022.

Health Care Cost Trend Rates

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

As of December 31, 2022, the health care trend rates used were ranging ratably from 6.50% in 2023 to 3.57% in 2040, as compared to health care trend rates ranging ratably from 6.00% in 2022 to 3.57% in 2040 as of December 31, 2021.

As of December 31, 2023, the health care trend rates used were ranging ratably from 6.75% in 2024 to 3.57% in 2040, which are in line with our assumed health care trend rates ranging ratably from

6.50% in 2023 to 3.57% in 2040 as of December 31, 2022.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Employee Retirement Plans and Postretirement Benefits" for further information.

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

Our annual impairment test of goodwill and indefinite-lived intangible assets was performed as of October 1, the first day of the last fiscal quarter.

Our annual impairment test of goodwill and indefinite-lived intangible assets is performed as of October 1, the first day of the last fiscal quarter.

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

Significant judgments and assumptions are required in such

impairment evaluations.

Significant judgments and assumptions are required in such impairment evaluations.

As of December 31, 2023, the carrying values of goodwill and intangible assets were approximately $5.3 billion and $12.6 billion, respectively, with the goodwill balance entirely attributed to the Americas reporting unit.

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Additionally, discount rates used in our goodwill analysis are based on weighted-average cost of capital, driven by the prevailing interest rates in geographies where these businesses operate, as well as the credit ratings, financing abilities and opportunities of each reporting unit, among other factors.

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

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

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

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

(i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives or an increase in costs driven by inflation or other factors that could significantly impact our immediate and long-range results 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;

(i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives, including our anticipated innovations or an increase in costs driven by inflation or other factors that could significantly impact our immediate and long-range results 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.

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Annual Goodwill Impairment Test

As of the October 1, 2022 testing date, the carrying value of the Americas reporting unit was determined to be in excess of its fair value such that an impairment loss of $845.0 million was recorded.

As this is a partial impairment of the reporting unit, the reporting unit is still considered to be at risk of future impairment.

Assets are considered to be at heightened risk of future impairment if the fair value does not exceed its respective carrying value by 15.0% or more.

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 industry 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, primarily the recent interest rate environment, as compared to 8.25% used as of the October 1, 2021 annual testing date.

Current projections used for the Americas reporting unit testing reflect growth assumptions associated with our continued 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.

While progress has been made on this strategy, including the increasing proportion of our above premium portfolio in the current year and the strengthening of our core brands, there is not enough historical data yet to comfortably predict future impacts and forecasted future cash flows are inherently at risk given that the strategies are still in progress.

As of the October 1, 2023 testing date, the fair value of the Americas reporting unit was determined to be in excess of its carrying amount and therefore no goodwill impairment charge was recorded.

The Americas reporting unit continues to be at a heightened risk of future impairment as the carrying value exceeds its respective fair value by slightly less than 15%.

The fair value of the Americas reporting unit increased during the current year, primarily due to higher forecasted cash flow projections, with the increases largely impacted by shifts in consumer preferences in the U.S.

market towards our core brands leading to increased volumes, paired with pricing increases put in place starting in late 2022 as well as lower inflation rates than previously expected.

This is partially offset by an increase to the discount rate as a result of the recent rising interest rate environment.

Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was 9.00% based on market-specific factors, as compared to 8.75% used as of the October 1, 2022 annual testing date.

A 50 basis point increase in our discount rate assumption, holding all other assumptions and inputs constant, would not have resulted in an impairment of the Americas reporting unit.

Current projections used for the Americas reporting unit testing reflected growth assumptions associated with our continued plan to consistently grow our core power brand revenue, aggressively premiumize our portfolio, scale and expand beyond beer, invest in our capabilities and invest in our people, communities and planet, all of which are intended to benefit the projected cash flows of the business.

While progress has been made on this strategy, including the strengthening of our core brands, there is not enough historical data yet to adequately predict future impacts and forecasted future cash flows are inherently at risk given that the strategies are still in progress.

In addition, while we have included in our forecasted future cash flows estimates for expected cost inflation and adjusted our volumes to be reflective of the current beer industry trends, there is still inherent risk in achieving our goals.

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

For example, a 50 basis point increase in our discount rate assumptions, which is within a reasonable range of our historical discount rate fluctuations, could have a significant or material impact on the fair value of the Americas reporting unit holding all other assumptions and inputs constant.

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

As of the October 1, 2022 testing date, an impairment loss of $845.0 million was recorded as the carrying value of the Americas reporting unit was determined to be in excess of its fair value.

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

Indefinite-Lived Intangible Assets

The fair values of the Coors brands in the Americas, the Miller brands in the U.S, the Carling brands in the U.K., and the Staropramen brands in EMEA&APAC continue to be sufficiently in excess of their respective carrying values as of the annual testing date, with each having over 15% cushion of fair value over book value.

As of the October 1, 2023 testing date, the carrying value of the Staropramen family of brands in EMEA&APAC was determined to be in excess of its fair value such that an impairment loss of $160.7 million was recorded.

As this is a partial impairment, the intangible asset is considered to be at a heightened risk of future impairment, and the carrying value of the brand was $426.9 million as of December 31, 2023.

The decline in the fair value in the current year was impacted by reductions in management forecasts due to delays and changes in strategic priorities for expansion and distribution of the brand in certain export and license markets, increased optionality for consumers in the premium sector in key markets, and reduced demand in Central and Eastern Europe due to cost inflation pressures on consumers as well as macroeconomic factors including an increase to the discount rate as a result of the recent rising interest rate environment.

The discount rate used in developing our annual fair value estimates for the Staropramen family of brands in the current year was 13.25% based on company specific and market-specific factors, as compared to 11.25% used as of the October 1, 2022 annual testing date.

The current year rate includes elevated risk premiums to account for execution risk of strategic initiatives for the brands, including the launch of brand extensions and geographic expansion of the brands in certain markets, in addition to continued economic uncertainty in Central and Eastern Europe due to the effects of cost inflation and the associated impacts on consumer demand and discretionary spending.

The fair values of the Coors brands in the Americas, the Miller brands in the U.S, and the Carling brands in EMEA&APAC continue to be sufficiently in excess of their respective carrying values as of the annual testing date, with each having over 15% cushion of fair value over book value.

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

The future cash flows used in the analyses are based on internal cash flow projections based on our long range plans and include significant assumptions by management.

The same macroeconomic factors impacting the discount rates of the Americas reporting unit are relevant to the indefinite-lived intangible assets with the Carling and Staropramen brands in EMEA&APAC being further impacted by the effects of cost inflation driven by the Russia-Ukraine conflict and the associated impacts on consumer demand and discretionary spending primarily in Central and Eastern Europe.

A 50 basis point increase in our discount rate assumptions would not have resulted in an impairment of any of our indefinite-lived intangible assets.

A 50 basis point increase in our discount rate assumptions would not have resulted in an impairment of the Coors , Miller or Carling brand indefinite-lived intangible assets.

Definite-Lived Intangible Assets and Other Long-Lived Assets

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

See Pa rt II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" and Note 17, "Other Operating Income (Expense), net" for further details on these impairment losses.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" and Note 17, "Other Operating Income (Expense), net" for further details on these impairment losses.

No other material triggering events were identified in either 2023 or 2022 related to the definite-lived intangible assets or other definite-lived assets.

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In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would decrease income tax expense in the period a determination was made.

Likewise, should we determine that we would not be able to realize all or part of our net

deferred tax asset in the future, an adjustment to the deferred tax asset would increase income tax expense in the period such determination was made.

Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would increase income tax expense in the period such determination was made.

There are proposed or pending tax law changes in various jurisdictions in which we do business.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis