Molson Coors Beverage (TAP) 8-K Other Events

ITEM 1.    FINANCIAL STATEMENTS

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE DATA)

(UNAUDITED)

	Three Months Ended
	March 31, 2016			March 31, 2015
Sales	$	950.8		$	1,003.2
Excise taxes	(293.6		)	(303.2		)
Net sales	657.2			700.0
Cost of goods sold	(414.0		)	(454.8		)
Gross profit	243.2			245.2
Marketing, general and administrative expenses	(250.9		)	(240.6		)
Special items, net	108.6			(8.6		)
Equity income in MillerCoors	142.4			129.3
Operating income (loss)	243.3			125.3
Interest income (expense), net	(47.3		)	(29.2		)
Other income (expense), net	(15.3		)	(2.6		)
Income (loss) from continuing operations before income taxes	180.7			93.5
Income tax benefit (expense)	(20.6		)	(12.8		)
Net income (loss) from continuing operations	160.1			80.7
Income (loss) from discontinued operations, net of tax	(0.5		)	1.9
Net income (loss) including noncontrolling interests	159.6			82.6
Net (income) loss attributable to noncontrolling interests	(0.8		)	(1.5		)
Net income (loss) attributable to Molson Coors Brewing Company	$	158.8		$	81.1
Basic net income (loss) attributable to Molson Coors Brewing Company per share:
From continuing operations	$	0.78		$	0.43
From discontinued operations	—			0.01
Basic net income (loss) attributable to Molson Coors Brewing Company per share	$	0.78		$	0.44
Diluted net income (loss) attributable to Molson Coors Brewing Company per share:
From continuing operations	$	0.78		$	0.42
From discontinued operations	—			0.01
Diluted net income (loss) attributable to Molson Coors Brewing Company per share	$	0.78		$	0.43
Weighted-average shares—basic	203.6			185.8
Weighted-average shares—diluted	204.8			186.9
Amounts attributable to Molson Coors Brewing Company
Net income (loss) from continuing operations	$	159.3		$	79.2
Income (loss) from discontinued operations, net of tax	(0.5		)	1.9
Net income (loss) attributable to Molson Coors Brewing Company	$	158.8		$	81.1

See notes to unaudited condensed consolidated financial statements.

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MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN MILLIONS)

(UNAUDITED)

	Three Months Ended
	March 31, 2016			March 31, 2015
Net income (loss) including noncontrolling interests	$	159.6		$	82.6
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	266.9			(664.3		)
Unrealized gain (loss) on derivative instruments	(19.7		)	18.9
Reclassification of derivative (gain) loss to income	(2.4		)	(1.4		)
Pension and other postretirement benefit adjustments	—			(1.8		)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income	7.0			9.0
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	4.8			2.2
Total other comprehensive income (loss), net of tax	256.6			(637.4		)
Comprehensive income (loss)	416.2			(554.8		)
Comprehensive (income) loss attributable to noncontrolling interests	(0.4		)	(1.5		)
Comprehensive income (loss) attributable to Molson Coors Brewing Company	$	415.8		$	(556.3	)

See notes to unaudited condensed consolidated financial statements.

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MOLSON COORS BREWING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN MILLIONS, EXCEPT PAR VALUE) (UNAUDITED)
	As of
	March 31, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	2,602.9		$	430.9
Accounts receivable, net	456.5			424.7
Other receivables, net	316.4			101.2
Inventories:
Finished	183.2			139.1
In process	17.1			13.0
Raw materials	14.9			18.6
Packaging materials	15.2			8.6
Total inventories	230.4			179.3
Other current assets, net	156.6			122.7
Total current assets	3,762.8			1,258.8
Properties, net	1,588.7			1,590.8
Goodwill	2,028.9			1,983.3
Other intangibles, net	4,984.9			4,745.7
Investment in MillerCoors	2,580.9			2,441.0
Deferred tax assets	23.1			20.2
Notes receivable, net	18.5			19.9
Other assets	222.5			216.6
Total assets	$	15,210.3		$	12,276.3
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities	$	1,153.9		$	1,184.4
Current portion of long-term debt and short-term borrowings	63.5			28.7
Discontinued operations	4.5			4.1
Total current liabilities	1,221.9			1,217.2
Long-term debt	2,973.4			2,908.7
Pension and postretirement benefits	208.9			201.9
Deferred tax liabilities	796.1			799.8
Unrecognized tax benefits	12.4			8.4
Other liabilities	66.9			66.9
Discontinued operations	11.4			10.3
Total liabilities	5,291.0			5,213.2
Commitments and contingencies (Note 15)
Molson Coors Brewing Company stockholders' equity
Capital stock:
Preferred stock, $0.01 par value (authorized: 25.0 shares; none issued)	—			—
Class A common stock, $0.01 par value per share (authorized: 500.0 shares; issued and outstanding: 2.6 shares and 2.6 shares, respectively)	—			—
Class B common stock, $0.01 par value per share (authorized: 500.0 shares; issued: 203.3 shares and 172.5 shares, respectively)	2.0			1.7
Class A exchangeable shares, no par value (issued and outstanding: 2.9 shares and 2.9 shares, respectively)	108.2			108.2
Class B exchangeable shares, no par value (issued and outstanding: 15.4 shares and 16.0 shares, respectively)	581.4			603.0
Paid-in capital	6,550.0			4,000.4
Retained earnings	4,566.5			4,496.0
Accumulated other comprehensive income (loss)	(1,437.9		)	(1,694.9		)
Class B common stock held in treasury at cost (9.5 shares and 9.5 shares, respectively)	(471.4		)	(471.4		)
Total Molson Coors Brewing Company stockholders' equity	9,898.8			7,043.0
Noncontrolling interests	20.5			20.1
Total equity	9,919.3			7,063.1
Total liabilities and equity	$	15,210.3		$	12,276.3

See notes to unaudited condensed consolidated financial statements.

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MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

(UNAUDITED)

	Three Months Ended
	March 31, 2016			March 31, 2015
Cash flows from operating activities:
Net income (loss) including noncontrolling interests	$	159.6		$	82.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	67.5			77.5
Amortization of debt issuance costs and discounts	16.7			1.4
Share-based compensation	6.1			3.2
(Gain) loss on sale or impairment of properties and other assets, net	(110.1		)	(0.7		)
Equity income in MillerCoors	(142.4		)	(129.3		)
Distributions from MillerCoors	142.4			129.3
Equity in net (income) loss of other unconsolidated affiliates	6.5			(1.4		)
Excess tax benefits from share-based compensation	(3.9		)	(6.1		)
Unrealized (gain) loss on foreign currency fluctuations and derivative instruments, net	(4.0		)	1.4
Income tax (benefit) expense	20.6			12.8
Income tax (paid) received	(88.8		)	(34.1		)
Interest expense, excluding interest amortization	50.4			47.8
Interest paid	(46.9		)	(17.9		)
Pension expense	2.0			3.1
Pension contributions paid	(6.7		)	(233.9		)
Change in current assets and liabilities (net of impact of business combinations) and other	(162.9		)	(136.4		)
(Gain) loss from discontinued operations	0.5			(1.9		)
Net cash provided by (used in) operating activities	(93.4		)	(202.6		)
Cash flows from investing activities:
Additions to properties	(71.1		)	(73.7		)
Proceeds from sales of properties and other assets	2.4			3.0
Acquisition of businesses, net of cash acquired	—			(6.3		)
Investment in MillerCoors	(413.7		)	(417.9		)
Return of capital from MillerCoors	283.4			310.4
Other	(6.5		)	(8.7		)
Net cash used in investing activities	(205.5		)	(193.2		)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	2,526.4			—
Exercise of stock options under equity compensation plans	4.2			24.8
Excess tax benefits from share-based compensation	3.9			6.1
Dividends paid	(88.3		)	(76.2		)
Debt issuance costs	(14.2		)	—
Payments on debt and borrowings	(10.3		)	(7.1		)
Proceeds on debt and borrowings	20.9			16.6
Net proceeds from (payments on) revolving credit facilities and commercial paper	2.5			157.8
Change in overdraft balances and other	18.5			1.3
Net cash provided by (used in) financing activities	2,463.6			123.3
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents	2,164.7			(272.5		)
Effect of foreign exchange rate changes on cash and cash equivalents	7.3			(34.5		)
Balance at beginning of year	430.9			624.6
Balance at end of period	$	2,602.9		$	317.6

See notes to unaudited condensed consolidated financial statements.

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MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Summary of Significant Accounting Policies

Unless otherwise noted in this report, any description of "we", "us" or "our" includes Molson Coors Brewing Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments and Corporate. Our reporting segments include: Molson Coors Canada ("MCC" or Canada segment), operating in Canada; MillerCoors LLC ("MillerCoors" or U.S. segment), which is accounted for by us under the equity method of accounting, operating in the United States ("U.S."); Molson Coors Europe (Europe segment), operating in Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Republic of Ireland, Romania, Serbia, Slovakia and the United Kingdom ("U.K."); and Molson Coors International ("MCI"), operating in various other countries. Unless otherwise indicated, information in this report is presented in U.S. dollars ("USD" or "$") and comparisons are to comparable prior periods.

The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"). Such unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 ("Annual Report"), and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Audited Consolidated Financial Statements ("Notes") included in our Annual Report. Our accounting policies did not change in the first quarter of 2016.

The results of operations for the three months ended March 31, 2016, are not necessarily indicative of the results that may be achieved for the full fiscal year.

2. New Accounting Pronouncements

New Accounting Pronouncements Not Yet Adopted

In March 2016, the Financial Accounting Standards Board ("FASB") issued authoritative guidance intended to simplify and improve several aspects of the accounting for share-based payment transactions. The new guidance includes amendments to share-based accounting for income taxes, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified in the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the potential impact on our financial position and results of operations upon adoption of this guidance.

In February 2016, the FASB issued authoritative guidance intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Additionally, this guidance will require disclosures to help investors and other financial statement users to better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The guidance should be applied under a modified retrospective transition approach for leases existing at the beginning of the earliest comparative period presented in the adoption-period financial statements. Any leases that expire before the initial application date will not require any accounting adjustment. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the potential impact on our financial position and results of operations upon adoption of this guidance.

In July 2015, the FASB issued authoritative guidance intended to simplify the measurement of inventory. The amendment requires entities to measure in-scope inventory at the lower of cost and net realizable value, and replaces the current requirement to measure in-scope inventory at the lower of cost or market, which considers replacement cost, net realizable value, and net realizable value less an approximate normal profit margin. This guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2016. The amendment should be applied prospectively with early adoption permitted. We are currently evaluating the potential impact on our financial position and results of operations upon adoption of this guidance, but anticipate that such impact would be minimal.

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In May 2014, the FASB issued authoritative guidance related to new accounting requirements for the recognition of revenue from contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services. In March 2016, the FASB issued guidance intended to provide interpretive clarifications related to the principal versus agent considerations in the new revenue recognition standard. This guidance clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB issued further amendments intended to reduce the cost and complexity surrounding identifying performance obligations and to improve the operability and understandability of the licensing implementation guidance. The new standard and related amendments are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that annual reporting period. Upon adoption of the new standard, the use of either a full retrospective or cumulative effect transition method is permitted. We have not yet selected a transition method and are currently evaluating the potential impact on our financial position and results of operations upon adoption of this guidance.

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 condensed consolidated financial statements.

3. Segment Reporting

Our reporting segments are based on the key geographic regions in which we operate, which are the basis on which our chief operating decision maker evaluates the performance of the business. Our reporting segments consist of Canada, the U.S., Europe and MCI. Corporate is not a segment and primarily includes interest and certain other general and administrative costs that are not allocated to any of the operating segments. No single customer accounted for more than 10% of our consolidated sales for the three months ended March 31, 2016, and March 31, 2015, respectively. Net sales represent sales to third-party external customers. Inter-segment transactions impacting sales revenues and income (loss) from continuing operations before income taxes are insignificant (other than those with MillerCoors, see Note 4, "Investments" for additional detail) and eliminated in consolidation.

The following table presents net sales by segment:

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions)
Canada	$	268.0		$	313.5
Europe	358.7			357.9
MCI	31.0			29.1
Corporate	0.4			0.4
Eliminations(1)	(0.9		)	(0.9		)
Consolidated	$	657.2		$	700.0

(1) Represents inter-segment sales from the Europe segment to the MCI segment.

The following table presents income (loss) from continuing operations before income taxes by segment:

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions)
Canada	$	146.6		$	30.9
U.S.	142.4			129.3
Europe	(1.2		)	(4.1		)
MCI	(2.3		)	(5.4		)
Corporate	(104.8		)	(57.2		)
Consolidated	$	180.7		$	93.5

Income (loss) from continuing operations before income taxes includes the impact of special items. Refer to Note 6, "Special Items" for further discussion.

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The following table presents total assets by segment:

	As of
	March 31, 2016		December 31, 2015
	(In millions)
Canada	$	4,909.1	$	4,560.6
U.S.	2,580.9		2,441.0
Europe	4,891.1		4,807.5
MCI	143.4		133.7
Corporate(1)	2,685.8		333.5
Consolidated	$	15,210.3	$	12,276.3

(1) On February 3, 2016, we received proceeds of $2.5 billion, net of issuance costs from our January 26, 2016, equity offering of 29.9 million shares of our Class B common stock. See Note 16, "Pending Acquisition" for further discussion.

4. Investments

Our investments include both equity method and consolidated investments. Those entities identified as variable interest entities ("VIEs") have been evaluated to determine whether we are the primary beneficiary. The VIEs included under "Consolidated VIEs" below are those for which we have concluded that we are the primary beneficiary and accordingly, consolidate these entities. None of our consolidated VIEs held debt as of March 31, 2016, or December 31, 2015. We have not provided any financial support to any of our VIEs during the year that we were not previously contractually obligated to provide. Amounts due to and due from our equity method investments are recorded as affiliate accounts payable and affiliate accounts receivable.

Authoritative guidance related to the consolidation of VIEs requires that we continually reassess whether we are the primary beneficiary of VIEs in which we have an interest. As such, the conclusion regarding the primary beneficiary status is subject to change, and we continually evaluate circumstances that could require consolidation or deconsolidation. As of March 31, 2016, and December 31, 2015, our consolidated VIEs are Cobra Beer Partnership, Ltd. ("Cobra U.K.") and Grolsch U.K. Ltd. ("Grolsch"). Our unconsolidated VIEs are Brewers Retail Inc. ("BRI") and Brewers' Distributor Ltd. ("BDL").

In June 2015, our equity method investment, BRI, entered into a Canadian Dollar ("CAD") 150 million revolving credit facility with Canadian Imperial Bank of Commerce (“CIBC”), maturing one year after issuance, with one-year renewal options subject to approval by CIBC. In conjunction with the issuance of the revolving credit facility, we and two additional shareholders of BRI were each required to guarantee BRI’s obligations under the facility, with our proportionate share of the guarantee totaling 45.9%. As a result of this guarantee, we have a current liability of $30.4 million and $16.9 million as of March 31, 2016, and December 31, 2015, respectively. The carrying value of the guarantee equals its fair value, which considers an adjustment for our own non-performance risk and is considered a Level 2 measurement. The offset to the guarantee liability was recorded as an adjustment to our equity method investment balance. The guarantee liability was calculated based on our proportionate 45.9% share of BRI’s total revolving credit facility outstanding balance at March 31, 2016. The resulting change in equity investment balance during the year due to movements in the guarantee represents a non-cash investing activity.

In 2015, we, along with the other owners of BRI and the Province of Ontario, agreed to revise the ownership structure of BRI. The new BRI shareholder agreement (“New Shareholder Agreement”) incorporating these changes became effective at the beginning of 2016, at which time BRI converted all existing capital stock into a new share class, as well as created a separate share class to facilitate new and existing brewer participation and governance. While governance and board of director participation continues to have the ability to fluctuate based on market share relative to the other owners, our equity interest has become fixed under the New Shareholder Agreement. We have evaluated the changes within the New Shareholder Agreement from a primary beneficiary perspective and concluded that we will continue to account for BRI as an equity method investment as control of BRI continues to be shared under the New Shareholder Agreement.

Equity Investments

Investment in MillerCoors

As discussed in Note 16, "Pending Acquisition", on November 11, 2015, we entered into a purchase agreement to acquire all of SABMiller’s 58% economic interest and 50% voting interest in MillerCoors and all trademarks, contracts and other assets primarily related to the Miller brand portfolio outside of the U.S. and Puerto Rico as described in the Purchase Agreement (the

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"Acquisition"). Following the closing of the pending Acquisition, the Company will own 100% of the outstanding equity and voting interests of MillerCoors. See further details regarding the pending Acquisition in Note 16, "Pending Acquisition".

Summarized financial information for MillerCoors is as follows:

Condensed Balance Sheets

	As of
	March 31, 2016		December 31, 2015
	(In millions)
Current assets	$	951.0	$	800.5
Non-current assets	9,044.3		9,099.5
Total assets	$	9,995.3	$	9,900.0
Current liabilities	$	1,002.8	$	1,180.1
Non-current liabilities	1,346.7		1,407.0
Total liabilities	2,349.5		2,587.1
Noncontrolling interests	22.4		20.1
Owners' equity	7,623.4		7,292.8
Total liabilities and equity	$	9,995.3	$	9,900.0

The following represents our proportionate share in MillerCoors' equity and reconciliation to our investment in MillerCoors:

	As of
	March 31, 2016			December 31, 2015
	(In millions, except percentages)
MillerCoors owners' equity	$	7,623.4		$	7,292.8
MCBC economic interest	42		%	42		%
MCBC proportionate share in MillerCoors equity	3,201.8			3,063.0
Difference between MCBC contributed cost basis and proportionate share of the underlying equity in net assets of MillerCoors(1)	(655.9		)	(657.0		)
Accounting policy elections	35.0			35.0
Investment in MillerCoors	$	2,580.9		$	2,441.0

(1) Our net investment in MillerCoors is based on the carrying values of the net assets contributed to the joint venture which is less than our proportionate share of underlying equity (42%) of MillerCoors (contributed by both Coors Brewing Company ("CBC") and Miller Brewing Company ("Miller")). This basis difference, with the exception of certain non-amortizing items (goodwill, land, etc.), is being amortized as additional equity income over the remaining useful lives of the contributed long-lived amortizing assets.

Results of Operations

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions)
Net sales	$	1,816.1		$	1,774.6
Cost of goods sold	(1,033.0		)	(1,076.2		)
Gross profit	$	783.1		$	698.4
Operating income(1)	$	336.5		$	309.3
Net income attributable to MillerCoors(1)	$	335.3		$	304.6

(1) Results for the three months ended March 31, 2016, include special charges related to the planned closure of the Eden, North Carolina, brewery, including $35.9 million of accelerated depreciation in excess of normal depreciation associated with the brewery, and $1.0 million of other charges.

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The following represents our proportionate share in net income attributable to MillerCoors reported under the equity method of accounting:

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions, except percentages)
Net income attributable to MillerCoors	$	335.3		$	304.6
MCBC economic interest	42		%	42		%
MCBC proportionate share of MillerCoors net income	140.8			127.9
Amortization of the difference between MCBC contributed cost basis and proportionate share of the underlying equity in net assets of MillerCoors	1.1			1.1
Share-based compensation adjustment(1)	0.5			0.3
Equity income in MillerCoors	$	142.4		$	129.3

(1) The net adjustment is to eliminate all share-based compensation impacts related to pre-existing SABMiller plc equity awards held by former Miller employees employed by MillerCoors, as well as to add back all share-based compensation impacts related to pre-existing MCBC equity awards held by former MCBC employees who transferred to MillerCoors.

The following table summarizes our transactions with MillerCoors:

	Three Months Ended
	March 31, 2016		March 31, 2015
	(In millions)
Beer sales to MillerCoors	$	2.0	$	2.8
Beer purchases from MillerCoors	$	9.9	$	9.1
Service agreement costs and other charges to MillerCoors	$	0.7	$	0.6
Service agreement costs and other charges from MillerCoors	$	0.1	$	0.4

As of March 31, 2016, and December 31, 2015, we had $8.3 million and $7.6 million of net payables due to MillerCoors, respectively.

Consolidated VIEs

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

	As of
	March 31, 2016				December 31, 2015
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Grolsch	$	7.8	$	3.8	$	6.9	$	3.3
Cobra U.K.	$	33.6	$	0.5	$	30.2	$	0.9

5. Share-Based Payments

We continue to have only one incentive compensation plan, the MCBC Incentive Compensation Plan (the "Incentive Compensation Plan"), as of March 31, 2016, and all outstanding awards fall under the Incentive Compensation Plan. During the three months ended March 31, 2016, and March 31, 2015, we recognized share-based compensation expense related to the following Class B common stock awards to certain directors, officers and other eligible employees, pursuant to the Incentive Compensation Plan: restricted stock units ("RSUs"), deferred stock units ("DSUs"), performance share units ("PSUs") and stock options. Additionally, we recognized share-based compensation expense related to performance units ("PUs") during the three months ended March 31, 2015. These awards fully vested in the first quarter of 2015 and no further PU's have since been issued. The settlement amount of the PSUs is determined based on market and performance metrics, which include our total shareholder return performance relative to the S&P 500 and specified internal performance metrics designed to drive greater shareholder return. PSU compensation expense is based on a fair value assigned to the market metric using a Monte Carlo

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model, which will remain constant throughout the vesting period of three years, and a performance multiplier, which will vary due to changing estimates of the performance metric condition.

The following table summarizes share-based compensation expense and includes share-based compensation related to pre-existing MCBC equity awards held by former MCBC employees that have transferred to MillerCoors:

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions)
Pretax compensation expense	$	6.7		$	3.2
Tax benefit	(1.9		)	(0.8		)
After-tax compensation expense	$	4.8		$	2.4

The increase in expense in the first quarter of 2016 was primarily driven by performance metrics increasing the fair value of our PSUs.

As of March 31, 2016, there was $48.0 million of total unrecognized compensation expense from all share-based compensation arrangements granted under the Incentive Compensation Plan, related to unvested awards. This compensation expense is expected to be recognized over a weighted-average period of 2.2 years.

The following table represents non-vested RSUs, DSUs and PSUs as of March 31, 2016, and the activity during the three months ended March 31, 2016:

	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, 2015	0.6		$56.23	0.5		$57.01
Granted	0.1		$85.65	0.1		$90.49
Vested	(0.2	)	$41.58	(0.2	)	$43.10
Forfeited	—		$—	—		$—
Non-vested as of March 31, 2016	0.5		$67.83	0.4		$72.57

The weighted-average fair value per unit for the non-vested PSUs is $98.80 as of March 31, 2016.

The following table represents the summary of stock options and stock-only stock appreciation rights ("SOSARs") outstanding as of March 31, 2016, and the activity during the three months ended March 31, 2016:

	Shares outstanding	Weighted-average exercise price per share	Weighted-average remaining contractual life (years)	Aggregate intrinsic value
	(In millions, except per share amounts and years)
Outstanding as of December 31, 2015	1.3	$49.49	4.8	$	58.0
Granted	0.1	$90.38
Exercised	(0.2)	$44.35
Forfeited	—	$—
Outstanding as of March 31, 2016	1.2	$54.20	5.3	$	52.4
Exercisable at March 31, 2016	1.0	$47.90	4.4	$	48.7

The total intrinsic values of stock options exercised during the three months ended March 31, 2016, and March 31, 2015, were $7.7 million and $19.9 million, respectively. During the three months ended March 31, 2016, and March 31, 2015, cash received from stock option exercises was $4.2 million and $24.8 million, respectively, and the total excess tax benefit from these stock option exercises and other awards was $3.9 million and $6.1 million, respectively.

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The fair value of each option granted in the first quarter of 2016 and 2015 was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Three Months Ended
	March 31, 2016	March 31, 2015
Risk-free interest rate	1.40%	1.70%
Dividend yield	1.81%	2.20%
Volatility range	23.16%-24.64%	21.65%-29.90%
Weighted-average volatility	23.53%	23.71%
Expected term (years)	5.2	5.7
Weighted-average fair market value	$16.65	$13.98

The risk-free interest rates utilized for periods throughout the contractual life of the stock options are based on a zero-coupon U.S. 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 value of the market metric for each PSU granted in the first quarter of 2016 and 2015 was determined on the date of grant using a Monte Carlo model to simulate total shareholder return for MCBC and peer companies with the following weighted-average assumptions:

	Three Months Ended
	March 31, 2016	March 31, 2015
Risk-free interest rate	1.04%	1.06%
Dividend yield	1.81%	2.20%
Volatility range	14.10%-77.11%	12.73%-62.28%
Weighted-average volatility	23.68%	21.53%
Expected term (years)	2.8	2.8
Weighted-average fair market value	$90.49	$74.42

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

As of March 31, 2016, there were 6.5 million shares of the Company's Class B common stock available for issuance as awards under the Incentive Compensation Plan.

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6. 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. The table below summarizes special items recorded by segment:

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions)
Employee-related restructuring charges
Europe	$	(1.6	)	$	(1.2	)
Impairments or asset abandonment charges
Canada - Asset abandonment(1)	1.1			—
Europe - Asset abandonment(2)	2.3			11.8
Unusual or infrequent items
Europe - Flood loss (insurance reimbursement), net	—			(2.0		)
Other (gains) losses
Canada - Gain on sale of asset(1)	(110.4		)	—
Total Special items, net	$	(108.6	)	$	8.6

(1) As a result of the ongoing strategic review of our Canadian supply chain network, in October 2015, we entered into an agreement to sell our Vancouver brewery for CAD 185.0 million, with the intent to use the proceeds from the sale to help fund the construction of an efficient and flexible brewery in British Columbia. The sale was fully completed on March 31, 2016, resulting in a $110.4 million gain, which was recorded as a special item in the first quarter. The net cash proceeds, which remained in trust following the completion of the sale, were received on April 1, 2016. Accordingly, other receivables, net on the unaudited condensed consolidated balance sheet as of March 31, 2016, includes CAD 183.1 million ($140.8 million) of net proceeds from the sale of the brewery. This amount represents a non-cash investing activity on the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2016.

Further, in conjunction with the sale, we agreed to leaseback the existing property to continue operations on an uninterrupted basis, while the new brewery is being constructed, for a cost of approximately CAD 5 million per annum. During the first quarter of 2016, we also incurred accelerated depreciation charges in excess of normal depreciation of $1.1 million related to equipment that continues to be owned by the Company and utilized during the leaseback period to support ongoing operations. We currently plan to dispose of this equipment following the brewery closure. We expect to incur additional special charges, including estimated accelerated depreciation charges of approximately CAD 18 million, through final closure of the brewery, which is currently anticipated to occur at the end of 2018.

We have evaluated this transaction pursuant to the accounting guidance for sale-leaseback transactions, and concluded that the relevant criteria had been met for full gain recognition.

(2) As part of our continued strategic review of our European supply chain network, in the first quarter of 2016 we incurred $2.3 million of charges associated with the closure of our Burton South, Plovdiv and Alton breweries, of which $1.9 million represents accelerated depreciation charges in excess of our normal depreciation. During the first quarter of 2015, we incurred $11.8 million of accelerated depreciation in excess of our normal depreciation associated with the Alton brewery.

We expect to incur additional future accelerated depreciation in excess of our normal depreciation of approximately GBP 8 million related to the Burton South brewery through the third quarter of 2017. We do not expect to incur future accelerated depreciation on the Alton and Plovdiv breweries. We may recognize other charges or benefits related to these brewery closures, which cannot currently be estimated and will be recorded within special items.

Restructuring Activities

We have continued our ongoing assessment of our supply chain strategies across our segments in order to align with our cost saving objectives. As part of this strategic review, which began in 2014, we have started closing certain breweries including the Alton and Plovdiv breweries and the planned closures of the Vancouver and Burton South breweries. As a result of these restructuring activities, we have reduced employment levels by approximately 369 employees, of which approximately 297 and 72 relate to 2015 and 2014 restructuring programs, respectively. Consequently, we recognized severance and other employee related charges, which we have recorded as special items within our unaudited condensed consolidated statements of

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operations. We will continue to evaluate our supply chain network and seek opportunities for further efficiencies and cost savings, and we therefore may incur additional restructuring related charges in the future.

The accrued restructuring balances represent expected future cash payments required to satisfy the remaining severance obligations to terminated employees, the majority of which we expect to be paid in the next 12 to 33 months. The table below summarizes the activity in the restructuring accruals by segment:

	Canada			Europe			MCI			Corporate		Total
	(In millions)
Total at December 31, 2015	$	2.3		$	5.6		$	1.3		$	—	$	9.2
Charges incurred	—			—			—			—		—
Payments made	(0.1		)	(0.3		)	(1.3		)	—		(1.7		)
Changes in estimates	—			(1.6		)	—			—		(1.6		)
Foreign currency and other adjustments	0.1			(0.1		)	—			—		—
Total at March 31, 2016	$	2.3		$	3.6		$	—		$	—	$	5.9

	Canada			Europe			MCI		Corporate			Total
	(In millions)
Total at December 31, 2014	$	3.8		$	11.5		$	—	$	0.2		$	15.5
Charges incurred	—			—			—		—			—
Payments made	(1.4		)	(0.6		)	—		(0.2		)	(2.2		)
Changes in estimates	—			(1.2		)	—		—			(1.2		)
Foreign currency and other adjustments	(0.3		)	(0.6		)	—		—			(0.9		)
Total at March 31, 2015	$	2.1		$	9.1		$	—	$	—		$	11.2

7. Other Income and Expense

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions)
Bridge loan commitment fees(1)	$	(18.4	)	$	—
Gain (loss) from other foreign exchange and derivative activity, net	3.7			(2.6		)
Other, net	(0.6		)	—
Other income (expense), net	$	(15.3	)	$	(2.6	)

(1) During the first quarter of 2016, we recognized amortization of commitment fees and other financing costs incurred in connection with our bridge loan agreement entered into subsequent to the announcement of the pending Acquisition of MillerCoors. See Note 16, "Pending Acquisition" for further discussion.

8. Income Tax

Our effective tax rates for the first quarter of 2016 and 2015 were approximately 11% and 14%, respectively. Our effective tax rates were significantly lower than the federal statutory rate of 35% primarily due to lower effective income tax rates applicable to our foreign businesses, driven by lower statutory income tax rates and tax planning impacts on statutory taxable income, as well as the impact of discrete items. The decrease in the effective tax rate for the first quarter of 2016 versus the first quarter of 2015 is primarily driven by tax benefits recognized from transaction-related costs resulting from the pending Acquisition, as well as favorable tax treatment associated with the sale of the Vancouver brewery. This decrease is partially offset by lower net discrete tax benefits recognized in 2016 versus 2015. Specifically, our total net discrete tax benefit was $1.8 million in the first quarter of 2016, versus a $4.5 million net discrete tax benefit recognized in the first quarter of 2015.

Our tax rate is volatile and may move up or down with changes in, among other things, the amount and source of income or loss, our ability to utilize foreign tax credits, changes in tax laws and the movement of liabilities established for uncertain tax positions as statutes of limitations expire or positions are otherwise effectively settled. There are proposed or pending tax law changes in various jurisdictions that, if enacted, may have an impact on our effective tax rate.

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9. Earnings Per Share ("EPS")

Basic EPS was 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, PUs, PSUs, stock options and SOSARs. The dilutive effects of our potentially dilutive securities are calculated using the treasury stock method. The following summarizes the effect of dilutive securities on diluted EPS:

	Three Months Ended
	March 31, 2016			March 31, 2015
	(In millions, except per share amounts)
Amounts attributable to Molson Coors Brewing Company:
Net income (loss) from continuing operations	$	159.3		$	79.2
Income (loss) from discontinued operations, net of tax	(0.5		)	1.9
Net income (loss) attributable to Molson Coors Brewing Company	$	158.8		$	81.1
Weighted-average shares for basic EPS	203.6			185.8
Effect of dilutive securities:
RSUs, DSUs, PUs and PSUs	0.8			0.5
Stock options and SOSARs	0.4			0.6
Weighted-average shares for diluted EPS	204.8			186.9
Basic net income (loss) attributable to Molson Coors Brewing Company per share:
From continuing operations	$	0.78		$	0.43
From discontinued operations	—			0.01
Basic net income (loss) attributable to Molson Coors Brewing Company per share	$	0.78		$	0.44
Diluted net income (loss) attributable to Molson Coors Brewing Company per share:
From continuing operations	$	0.78		$	0.42
From discontinued operations	—			0.01
Diluted net income (loss) attributable to Molson Coors Brewing Company per share	$	0.78		$	0.43
Dividends declared and paid per share	$	0.41		$	0.41

For the three months ended March 31, 2016, and March 31, 2015, no anti-dilutive securities were excluded from the computation of the effect of dilutive securities on diluted EPS.

Class B Common Stock Equity Issuance

On February 3, 2016, we completed an underwritten public offering of our Class B common stock, which increased the number of Class B common shares issued and outstanding by 29.9 million shares. See Note 16, "Pending Acquisition" for further details.

Share Repurchase Program

In February 2015, we announced that our board of directors approved and authorized a new program to repurchase up to $1.0 billion of our Class A and Class B common stock. During the last three quarters of 2015, we purchased approximately 2 million shares of our Class B common stock under three separate share repurchase agreements (“ASRs”) for an aggregate of approximately $150 million. We reflected each ASR as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as forward contracts indexed to our own common stock. Each ASR met all of the applicable criteria for equity classification, and therefore, was not accounted for as a derivative instrument. As a result of the pending Acquisition, we have suspended the share repurchase program and thus, there have been no common shares repurchased in 2016.

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10. Goodwill and Intangible Assets

The following summarizes the change in goodwill for the three months ended March 31, 2016:

	Canada		Europe		MCI			Consolidated
	(In millions)
Balance at December 31, 2015	$	551.4	$	1,408.7	$	23.2		$	1,983.3
Business acquisition and disposition(1)	—		—		(0.6		)	(0.6		)
Foreign currency translation	35.4		10.9		(0.1		)	46.2
Balance at March 31, 2016	$	586.8	$	1,419.6	$	22.5		$	2,028.9

(1) The goodwill adjustment for the three months ended March 31, 2016, reflects the final purchase price accounting adjustment associated with the April 1, 2015, acquisition of Mount Shivalik Breweries Ltd. ("Mount Shivalik"), a regional brewer in India.

The following table presents details of our intangible assets, other than goodwill, as of March 31, 2016:

	Useful life	Gross		Accumulated amortization			Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	3 - 50	$	1,171.5	$	(241.7	)	$	929.8
License agreements and distribution rights	3 - 28	137.6		(91.6		)	46.0
Other	2 - 8	28.3		(27.3		)	1.0
Intangible assets not subject to amortization:
Brands	Indefinite	3,212.7		—			3,212.7
Distribution networks	Indefinite	777.9		—			777.9
Other	Indefinite	17.5		—			17.5
Total		$	5,345.5	$	(360.6	)	$	4,984.9

The following table presents details of our intangible assets, other than goodwill, as of December 31, 2015:

	Useful life	Gross		Accumulated amortization			Net
	(Years)	(In millions)
Intangible assets subject to amortization:
Brands	3 - 50	$	1,121.8	$	(226.1	)	$	895.7
License agreements and distribution rights	3 - 28	135.1		(87.1		)	48.0
Other	2 - 8	29.9		(28.6		)	1.3
Intangible assets not subject to amortization:
Brands	Indefinite	3,052.2		—			3,052.2
Distribution networks	Indefinite	731.0		—			731.0
Other	Indefinite	17.5		—			17.5
Total		$	5,087.5	$	(341.8	)	$	4,745.7

The changes in the gross carrying amounts of intangibles from December 31, 2015, to March 31, 2016, are primarily driven by the impact of foreign exchange rates, as a significant amount of intangibles are denominated in foreign currencies.

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Based on foreign exchange rates as of March 31, 2016, the estimated future amortization expense of intangible assets is as follows:

Fiscal year	Amount
	(In millions)
2016 - remaining	$	30.1
2017	$	29.3
2018	$	27.7
2019	$	27.7
2020	$	27.6

Amortization expense of intangible assets was $9.6 million and $7.8 million for the three months ended March 31, 2016, and March 31, 2015, respectively, and is presented within marketing, general and administrative expenses on the unaudited condensed consolidated statements of operations.

We completed our required annual goodwill and indefinite-lived intangible impairment testing as of October 1, 2015, the first day of our fourth quarter, and concluded there were no impairments of goodwill within our Europe, Canada or India reporting units or impairments of our indefinite-lived intangible assets.

Reporting Units and Goodwill

The operations in each of the specific regions within our Canada, Europe and MCI segments are considered components based on the availability of discrete financial information and the regular review by segment management. We have concluded that the components within the Canada and Europe segments each meet the criteria as having similar economic characteristics and therefore have aggregated these components into the Canada and Europe reporting units, respectively. Additionally, we determined that the components within our MCI segment do not meet the criteria for aggregation, and therefore, the operations of our India business constitute a separate reporting unit at the component level.

Our 2015 annual goodwill impairment testing determined our Europe and Canada reporting units to be at risk of failing step one of the goodwill impairment test. Specifically, the fair value of the Europe and Canada reporting units were estimated at approximately 9% and 20% in excess of carrying value, respectively, as of the October 1, 2015, testing date. The fair value of the India reporting unit was deemed to approximate the carrying value of the reporting unit due to purchase price accounting performed as of April 1, 2015, for the Mount Shivalik acquisition, which comprises the majority of the India reporting unit.

Indefinite-Lived Intangibles

Our Molson core brand intangible asset continues to be at risk of future impairment with a fair value estimated at approximately 3% in excess of its carrying value as of the impairment testing date of October 1, 2015. The fair value of the Molson core brands continues to face significant competitive pressures and challenging macroeconomic conditions in the Canada market. These challenges continue to be offset by anticipated cost savings initiatives and supply chain optimization, including the monetization and optimization of our Vancouver brewery location. As of March 31, 2016, the Molson core brand intangible had a carrying value of $2,334.6 million. The value of our other indefinite-lived intangibles continued to be sufficiently in excess of their carrying values as of the October 1, 2015, testing date.

We utilized Level 3 fair value measurements in our impairment analysis of our indefinite-lived intangible assets, which utilizes an excess earnings approach to determine the fair values of the assets as of the testing date. The future cash flows used in the analysis are based on internal cash flow projections based on our long range plans and include significant assumptions by management as noted below.

Key Assumptions

The Europe reporting unit goodwill and the Molson core brand intangible asset are at risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including prolonged, or further weakening of, adverse economic conditions or significant unfavorable changes in tax, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analyses. For testing purposes, management's best estimates of the expected future results are the primary driver in determining the fair value. Current projections used for our Europe reporting unit testing reflect continued challenging environments in the future followed by growth resulting from a longer term recovery of the macroeconomic environment, as well as the benefit of anticipated cost savings and specific brand-building and innovation activities. Our Molson core brand projections also reflect a continued challenging environment that has been adversely impacted by a weak economy across all industries, as well as

16

weakened consumer demand driven by increased competitive pressures, partially offset by anticipated cost savings and specific brand-building and innovation activities. 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 annual goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of 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 intangibles may include such items as: (i) a decrease in expected future cash flows, specifically, a decrease in sales volume and increase in costs that could significantly impact our immediate and long-range results, a decrease in sales volume driven by a prolonged weakness in consumer demand or other competitive pressures adversely affecting our long-term volume trends, a continuation of the trend away from core brands in certain of our markets, especially in markets where our core brands represent a significant portion of the market, unfavorable working capital changes and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a recession or worsening of the overall European economy), (iii) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (iv) sensitivity to market multiples; and (v) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.

Based on known facts and circumstances, we evaluate and consider other 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.

While historical performance and current expectations have resulted in fair values of our reporting units 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.

Definite-Lived Intangibles

Regarding definite-lived intangibles, we continuously monitor the performance of the underlying asset for potential triggering events suggesting an impairment review should be performed. No such triggering events were identified in the first quarter of 2016.

Subsequent Events

In the fourth quarter of 2015, a newly elected government in the state of Bihar, India announced plans to ban the sale of "country" liquor and limit the sale of other forms of alcohol, such as beer, to certain government owned outlets, effective beginning April 1, 2016. On April 5, 2016, four days after the start of the ban on "country" liquor, the government of the state of Bihar announced immediate changes to the ban, implementing a complete prohibition of the sale and consumption of all forms of alcohol. The prohibition only impacts our operations in the state of Bihar, while our other operations in India, including our Mount Shivalik operations, are not impacted. The expected length of the prohibition is currently unclear and we are assessing options to mitigate the adverse impact of the prohibition, such as exporting to other states, potential alternative business operations and seeking legal remediation. Based on foreign exchange rates as of March 31, 2016, asset classes at risk for future impairment include goodwill of $22.5 million for the India reporting unit, only a portion of which is associated with cash flows in Bihar; properties, net of accumulated depreciation, of $13.9 million; certain current assets of $9.1 million; and intangible assets of $1.1 million.

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11. Debt

Debt obligations

Our total borrowings as of March 31, 2016, and December 31, 2015, were comprised of the following:

	As of
	March 31, 2016			December 31, 2015
	(In millions)
Senior notes:
CAD 500 million 3.95% Series A notes due 2017	$	384.5		$	361.3
CAD 400 million 2.25% notes due 2018	307.6			289.0
CAD 500 million 2.75% notes due 2020	384.5			361.3
$300 million 2.0% notes due 2017(1)	300.5			300.6
$500 million 3.5% notes due 2022(1)	517.1			517.8
$1.1 billion 5.0% notes due 2042	1,100.0			1,100.0
Less: unamortized debt discounts and debt issuance costs	(20.8		)	(21.3		)
Total long-term debt (including current portion)	2,973.4			2,908.7
Less: current portion of long-term debt	—			—
Total long-term debt	$	2,973.4		$	2,908.7
Short-term borrowings:
Cash pool overdrafts(2)	38.8			18.7
Short-term facilities(3)	10.7			7.5
Other short-term borrowings	14.0			2.5
Total short-term borrowings	$	63.5		$	28.7

(1) During the fourth quarter of 2015, we settled our interest rate swaps that were in fair value hedge accounting relationships related to these notes at which time we ceased adjusting the carrying value of the related notes for the fair value movements of these swaps and began amortizing the cumulative adjustments to interest expense over the remaining term of the respective note. At the time of settlement, cumulative adjustments to the carrying value of the notes were $0.7 million and $18.1 million related to the $300 million and $500 million notes, respectively. See Note 12 of the Notes included in our Annual Report for additional detail.

(2) As of March 31, 2016, we had $38.8 million in bank overdrafts and $48.4 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $9.6 million. As of December 31, 2015, we had $18.7 million in bank overdrafts and $39.6 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $20.9 million.

(3) We had total outstanding borrowings of $10.7 million and $7.5 million under our two JPY overdraft facilities as of March 31, 2016, and December 31, 2015, respectively. In addition, we have GBP and CAD lines of credit under which we had no borrowings as of March 31, 2016, or December 31, 2015.

Debt Fair Value Measurements

We utilize market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates. As of March 31, 2016, and December 31, 2015, the fair value of our outstanding long-term debt (including current portion) was $3,079.3 million and $2,883.4 million, respectively. All senior notes are valued based on significant observable inputs and classified as Level 2 in the fair value hierarchy. The carrying values of all other outstanding long-term borrowings and our short-term borrowings approximate their fair values and are also classified as Level 2 in the fair value hierarchy.

Financing of Pending Acquisition

In connection with the pending Acquisition announced during the fourth quarter of 2015, we entered into a 364-day bridge loan agreement by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent. The bridge loan agreement provides for a 364-day bridge loan facility of up to $9.3 billion which has been subsequently reduced to $6.8 billion by the net proceeds received from our equity offering in the first quarter of 2016. In connection with the bridge

18

loan, during the first quarter of 2016 and fourth quarter of 2015, we paid commitment fees of $13.5 million and $49.2 million, respectively, which have been deferred within other current assets as of March 31, 2016, and December 31, 2015, and are being amortized to other income (expense) over the 364-day term. Additionally, on December 16, 2015, we also entered into a term loan agreement by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent. The term loan agreement provides for total term loan commitments of $1.5 billion in a 3-year tranche and $1.5 billion in a 5-year tranche, for an aggregate principal amount of $3.0 billion. In connection with the term loan, during the year ended December 31, 2015, we paid issuance fees of $8.3 million, which have been deferred within other assets as of March 31, 2016, and December 31, 2015, and are being amortized to interest expense over the respective 3-year and 5-year term of each loan. Additionally, during the first quarter of 2016 we paid other costs associated with the bridge loan and term loan of $5.7 million. For the three months ended March 31, 2016, $1.8 million was recorded to interest expense related to amortization of issuance costs as well as other financing costs associated with the term loan. For the three months ended March 31, 2016, $18.4 million was recorded to other income (expense) related to amortization of commitment fees as well as other financing costs associated with the bridge loan. As of March 31, 2016, and December 31, 2015, there were no outstanding borrowings on the bridge loan or the term loan. The unamortized deferred balance will be reclassified as a direct deduction from the carrying amount of the debt once we have borrowed under the term loan. See Note 16, "Pending Acquisition" for further details regarding the pending Acquisition.

Other

As of March 31, 2016, and December 31, 2015, we had $750 million available to draw under our $750 million revolving multi-currency credit facility, as there were no outstanding borrowings on the revolving credit facility nor was there any outstanding commercial paper. As part of our anticipated financing for the pending Acquisition, we amended our $750 million revolving multi-currency credit facility during the fourth quarter of 2015 to increase the maximum leverage ratio to 5.75x debt to EBITDA effective following the completion of the pending Acquisition, with a decline to 3.75x debt to EBITDA in the fourth year following the closing of the pending Acquisition.

Under the terms of each of our debt facilities, we must comply with certain restrictions. These include restrictions on priority indebtedness (certain threshold percentages of secured consolidated net tangible assets), leverage thresholds, liens, and restrictions on certain types of sale lease-back transactions and transfers of assets. As of March 31, 2016, and December 31, 2015, we were in compliance with all of these restrictions and have met all debt payment obligations.

12. Accumulated Other Comprehensive Income (Loss) ("AOCI")

	MCBC shareholders
	Foreign currency translation adjustments			Gain (loss) on derivative instruments			Pension and postretirement benefit adjustments			Equity method investments			Accumulated other comprehensive income (loss)
	(In millions)
As of December 31, 2015	$	(769.9	)	$	14.5		$	(589.1	)	$	(350.4	)	$	(1,694.9	)
Foreign currency translation adjustments	243.7			—			—			—			243.7
Unrealized gain (loss) on derivative instruments	—			(21.6		)	—			—			(21.6		)
Reclassification of derivative (gain) loss to income	—			(2.6		)	—			—			(2.6		)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income	—			—			7.9			—			7.9
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—			—			—			5.5			5.5
Tax benefit (expense)	23.6			2.1			(0.9		)	(0.7		)	24.1
As of March 31, 2016	$	(502.6	)	$	(7.6	)	$	(582.1	)	$	(345.6	)	$	(1,437.9	)

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Reclassifications from AOCI to income:

	Three Months Ended
	March 31, 2016			March 31, 2015
	Reclassifications from AOCI						Location of gain (loss) recognized in income
	(In millions)
Gain/(loss) on cash flow hedges:
Forward starting interest rate swaps	$	(0.9	)	$	(0.3	)	Interest expense, net
Foreign currency forwards	(1.9		)	(2.4		)	Other income (expense), net
Foreign currency forwards	5.4			4.7			Cost of goods sold
Total income (loss) reclassified, before tax	2.6			2.0
Income tax benefit (expense)	(0.2		)	(0.6		)
Net income (loss) reclassified, net of tax	$	2.4		$	1.4
Amortization of defined benefit pension and other postretirement benefit plan items:
Prior service benefit (cost)	$	(0.2	)	$	(0.1	)	(1)
Net actuarial gain (loss)	(7.7		)	(11.2		)	(1)
Total income (loss) reclassified, before tax	(7.9		)	(11.3		)
Income tax benefit (expense)	0.9			2.3
Net income (loss) reclassified, net of tax	$	(7.0	)	$	(9.0	)
Total income (loss) reclassified, net of tax	$	(4.6	)	$	(7.6	)

(1) These components of AOCI are included in the computation of net periodic pension and other postretirement benefit cost. See Note 14, "Pension and Other Postretirement Benefits" for additional details.

13. Derivative Instruments and Hedging Activities

Our risk management and derivative accounting policies are presented in Notes 1 and 16 of the Notes included in our Annual Report and did not significantly change during the first quarter of 2016. As noted in Note 16 of the Notes included in our Annual Report, due to the nature of our counterparty agreements, and the fact that we are not subject to master netting arrangements, we are not able to net positions with the same counterparty and, therefore, present our derivative positions on a gross basis in our unaudited condensed consolidated balance sheets. Except as noted below, our significant derivative positions have not changed considerably since year-end.

Swaptions

During the first quarter of 2016, we entered into swaption agreements with a total notional amount of $855.0 million to economically hedge a portion of our anticipated permanent long-term debt issuance with which we expect to partially fund the pending Acquisition. We paid upfront premiums of $37.8 million for the option to enter into and exercise swaps with a forward starting effective date. These swaptions are not designated in hedge accounting relationships as the hedges were entered into in association with the pending Acquisition and, accordingly, all mark-to-market fair value adjustments are reflected within interest expense. We intend to terminate and settle these swaptions upon maturity or immediately prior to the completion of the associated pending debt issuance in the event that occurs prior to maturity.

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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. The table below summarizes our derivative assets and liabilities that were measured at fair value as of March 31, 2016, and December 31, 2015.

				Fair value measurements as of March 31, 2016
	Total at March 31, 2016			Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
	(In millions)
Foreign currency forwards	$	19.5		$	—	$	19.5		$	—
Commodity swaps	(20.3		)	—		(20.3		)	—
Swaptions	16.7			—		16.7			—
Total	$	15.9		$	—	$	15.9		$	—

				Fair value measurements as of December 31, 2015
	Total at December 31, 2015			Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
	(In millions)
Foreign currency forwards	$	44.1		$	—	$	44.1		$	—
Commodity swaps	(21.4		)	—		(21.4		)	—
Total	$	22.7		$	—	$	22.7		$	—

As of March 31, 2016, we had no significant transfers between Level 1 and Level 2. New derivative contracts transacted during the three months ended March 31, 2016, were all included in Level 2.

Results of Period Derivative Activity

The tables below include the year-to-date results of our derivative activity in the unaudited condensed consolidated balance sheets as of March 31, 2016, and December 31, 2015, and the unaudited condensed consolidated statements of operations for the three months ended March 31, 2016, and March 31, 2015.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheet (in millions):

	March 31, 2016
			Asset derivatives			Liability derivatives
	Notional amount		Balance sheet location	Fair value		Balance sheet location	Fair value
Derivatives designated as hedging instruments:
Foreign currency forwards	$	329.1	Other current assets	$	17.5	Accounts payable and other current liabilities	$	(1.4	)
			Other non-current assets	6.2		Other liabilities	(2.7		)
Total derivatives designated as hedging instruments				$	23.7		$	(4.1	)
Derivatives not designated as hedging instruments:
Commodity swaps	$	140.1	Other current assets	$	0.4	Accounts payable and other current liabilities	$	(12.5	)
			Other non-current assets	0.4		Other liabilities	(8.6		)
Foreign currency forwards	$	28.7	Other current assets	—		Accounts payable and other current liabilities	(0.1		)
Swaptions	$	855.0	Other current assets	16.7		Accounts payable and other current liabilities	—
Total derivatives not designated as hedging instruments				$	17.5		$	(21.2	)

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	December 31, 2015
			Asset derivatives			Liability derivatives
	Notional amount		Balance sheet location	Fair value		Balance sheet location	Fair value
Derivatives designated as hedging instruments:
Foreign currency forwards	$	300.3	Other current assets	$	28.4	Accounts payable and other current liabilities	$	—
			Other non-current assets	15.7		Other liabilities	—
Total derivatives designated as hedging instruments				$	44.1		$	—
Derivatives not designated as hedging instruments:
Commodity swaps	$	120.3	Other current assets	$	0.4	Accounts payable and other current liabilities	$	(12.5	)
			Other non-current assets	0.2		Other liabilities	(9.5		)
Total derivatives not designated as hedging instruments				$	0.6		$	(22.0	)

The Pretax Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations (in millions):

For the Three Months Ended March 31, 2016
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative (effective portion)			Location of gain (loss) reclassified from AOCI into income (effective portion)	Amount of gain (loss) recognized from AOCI on derivative (effective portion)			Location of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
Forward starting interest rate swaps	$	—		Interest expense, net	$	(0.9	)	Interest expense, net	$	—
Foreign currency forwards	(21.6		)	Other income (expense), net	(1.9		)	Other income (expense), net	—
				Cost of goods sold	5.4			Cost of goods sold	—
Total	$	(21.6	)		$	2.6			$	—

For the Three Months Ended March 31, 2015
Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivative (effective portion)			Location of gain (loss) reclassified from AOCI into income (effective portion)	Amount of gain (loss) recognized from AOCI on derivative (effective portion)			Location of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
Forward starting interest rate swaps	$	(15.7	)	Interest expense, net	$	(0.3	)	Interest expense, net	$	—
Foreign currency forwards	21.5			Other income (expense), net	(2.4		)	Other income (expense), net	—
				Cost of goods sold	4.7			Cost of goods sold	—
Total	$	5.8			$	2.0			$	—

For the Three Months Ended March 31, 2015
Derivatives and non-derivative financial instruments in net investment hedge relationships	Amount of gain (loss) recognized in OCI (effective portion)		Location of gain (loss) reclassified from AOCI into income (effective portion)	Amount of gain (loss) recognized from AOCI (effective portion)		Location of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
Cross currency swaps	$	15.5	Interest expense, net	$	—	Interest expense, net	$	0.4
Total	$	15.5		$	—		$	0.4

For the Three Months Ended March 31, 2015
Derivatives in fair value hedge relationships	Amount of gain (loss) recognized in income		Location of gain (loss) recognized in income
Interest rate swaps	$	9.0	Interest expense, net
Total	$	9.0

We expect net gains of approximately $12 million (pretax) recorded in AOCI at March 31, 2016, 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 at March 31, 2016, is three years.

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Other Derivatives (in millions):

For the Three Months Ended March 31, 2016
Derivatives not in hedging relationships	Location of gain (loss) recognized in income on derivative	Amount of gain (loss) recognized in income on derivative
Commodity swaps	Cost of goods sold	$	(1.6	)
Foreign currency forwards	Other income (expense), net	(0.1		)
Swaptions	Interest expense, net	(21.1		)
Total		$	(22.8	)

For the Three Months Ended March 31, 2015
Derivatives not in hedging relationships	Location of gain (loss) recognized in income on derivative	Amount of gain (loss) recognized in income on derivative
Commodity swaps	Cost of goods sold	$	(0.6	)
Foreign currency forwards	Other income (expense), net	1.2
Total		$	0.6

14. Pension and Other Postretirement Benefits("OPEB")

	For the Three Months Ended
	March 31, 2016								March 31, 2015
	Pension			OPEB		Consolidated			Pension			OPEB			Consolidated
	(In millions)
Net periodic pension and OPEB cost:
Service cost - benefits earned during the year	$	1.8		$	0.6	$	2.4		$	2.6		$	0.5		$	3.1
Interest cost on projected benefit obligation	31.9			1.3		33.2			34.4			1.5			35.9
Expected return on plan assets	(39.5		)	—		(39.5		)	(44.1		)	—			(44.1		)
Amortization of prior service cost (benefit)	0.2			—		0.2			0.2			(0.1		)	0.1
Amortization of net actuarial loss (gain)	7.7			—		7.7			11.2			—			11.2
Curtailment (gain) loss	—			—		—			(1.0		)	—			(1.0		)
Less: expected participant contributions	(0.1		)	—		(0.1		)	(0.2		)	—			(0.2		)
Net periodic pension and OPEB cost	$	2.0		$	1.9	$	3.9		$	3.1		$	1.9		$	5.0

During the three months ended March 31, 2016, employer contributions to the defined benefit pension plans were $6.7 million. Total 2016 employer contributions to the defined benefit plans are expected to be approximately $10 million, based on foreign exchange rates as of March 31, 2016. MillerCoors, BRI and BDL contributions to their defined benefit pension plans are not included above, as they are not consolidated in our financial statements.

15. Commitments and Contingencies

Discontinued Operations

Kaiser

In 2006, we sold our entire equity interest in our Brazilian unit, Cervejarias Kaiser Brasil S.A. ("Kaiser") to FEMSA Cerveza S.A. de C.V. ("FEMSA"). The terms of the sale agreement require us to indemnify FEMSA for certain exposures related to tax, civil and labor contingencies arising prior to FEMSA's purchase of Kaiser. In addition, we provided an indemnity to FEMSA for losses Kaiser may incur with respect to tax claims associated with certain previously utilized purchased tax credits. The discontinued operations balances within the current and non-current liabilities of our unaudited condensed consolidated balance sheets consist entirely of our estimates of these liabilities. These liabilities are denominated in Brazilian Reais and are therefore subject to foreign exchange gains or losses, which are recognized in the discontinued operations section

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of the unaudited condensed consolidated statements of operations. There have been no changes in the underlying liabilities since December 31, 2015; therefore, all changes in the current and non-current liabilities of discontinued operations during the first quarter of 2016 are due to fluctuations in foreign exchange rates from December 31, 2015, to March 31, 2016. During the three months ended March 31, 2016, and March 31, 2015, we recognized losses of $0.5 million and gains of $1.9 million, respectively, from discontinued operations associated with foreign exchange gains and losses related to indemnities we provided to FEMSA. Our exposure related to the tax, civil and labor indemnity claims is capped at the amount of the sales price of the 68% equity interest of Kaiser, which was $68.0 million. Separately, the maximum potential claims amount remaining for the purchased tax credits was $97.4 million, based on foreign exchange rates as of March 31, 2016.

Future settlement procedures and related negotiation activities associated with these contingencies are largely outside of our control. 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.

Guarantees

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. As of March 31, 2016, and December 31, 2015, accounts payable and other current liabilities in the unaudited condensed consolidated balance sheets includes $30.4 million and $16.9 million, respectively, related to the guarantee of the indebtedness of our equity method investments. See Note 4, "Investments" for further detail. Additionally, related to our previous ownership in the Montréal Canadiens, we guarantee its obligations under a ground lease for the Bell Centre Arena (the "Ground Lease Guarantee"). Upon sale of our interest, the new owners agreed to indemnify us in connection with the liabilities we may incur under the Ground Lease Guarantee and provided us with a CAD 10 million letter of credit to guarantee such indemnity. This transaction did not materially affect our risk exposure related to the Ground Lease Guarantee, which continues to be recognized as a liability on our unaudited condensed consolidated balance sheets. Other liabilities in the unaudited condensed consolidated balance sheets include $4.7 million as of March 31, 2016, and $4.4 million as of December 31, 2015, related to the Ground Lease Guarantee, both of which are classified as non-current.

Litigation, Other Disputes and Environmental

Related to litigation, other disputes and environmental issues, we have accrued an aggregate of $12.3 million as of March 31, 2016, and $13.1 million as of December 31, 2015. We believe that any reasonably possible losses in excess of the amounts accrued are immaterial to our unaudited condensed consolidated financial statements, except as noted below.

In addition to the specific cases discussed below, we are involved in other disputes and legal actions arising in the ordinary course of our business. While it is not feasible to predict or determine the outcome of these proceedings, in our opinion, based on a review with legal counsel, other than as discussed below, none of these disputes or legal actions are expected to have a material impact on our business, consolidated financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.

During the fourth quarter of 2014, first quarter of 2015 and first quarter of 2016, we received assessments from a local country regulatory authority related to indirect tax calculations in our Europe operations during the 41 month period prior to receipt of the most recent assessment. The aggregate amount of the assessments received is approximately $114 million, based on foreign exchange rates at March 31, 2016. While we intend to vigorously challenge the validity of these assessments and defend our position regarding the method of calculation, if the assessments, as issued, are ultimately upheld, they could materially affect our results of operations. Specifically, if fully upheld, we would be required to record a charge at the high-end of the below range of loss, and this charge and on-going implications to our tax calculations would negatively impact our current and future operating income, respectively. Based on the assessments received and related impacts, we estimate a current range of loss of zero to approximately $121 million, based on foreign exchange rates at March 31, 2016. We continue to apply the methodology challenged in the assessments while the regulatory appeal process remains ongoing, and, as a result, the related range of loss is expected to increase until ultimately resolved. We continue to follow the required regulatory procedures in order to proceed with our appeal of the assessments. We currently believe this appeal process will take several months to reach a formal conclusion. No provision is currently recorded for these assessments or the related range of loss. 

While we cannot predict the eventual aggregate cost for environmental and related matters in which we are currently involved, we believe that any payments, if required, for these matters would be made over a period of time in amounts that would not be material in any one year to our results from operations, cash flows or our financial or competitive position. We believe adequate reserves have been provided for losses that are probable and estimable.

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Litigation and Other Disputes

On December 12, 2014, a notice of action captioned David Hughes and 631992 Ontario Inc. v. Liquor Control Board of Ontario ("LCBO"), Brewers Retail Inc., Labatt Breweries of Canada LP, Molson Coors Canada and Sleeman Breweries Ltd. No. CV-14-518059-00CP was filed in Ontario, Canada in the Ontario Superior Court of Justice. BRI and its owners, including Molson Coors Canada, as well as the LCBO are named as defendants in the action. The plaintiffs allege that The Beer Store (retail outlets owned and operated by BRI) and LCBO improperly entered into an agreement to fix prices and market allocation within the Ontario beer market to the detriment of licensees and consumers. The plaintiffs seek to have the claim certified as a class action on behalf of all Ontario beer consumers and licensees and, among other things, damages in the amount of CAD 1.4 billion. We note that The Beer Store operates according to the rules established by the Government of Ontario for regulation, sale and distribution of beer in the province. Additionally, prices at The Beer Store are independently set by each brewer and are approved by the LCBO on a weekly basis. As such, we currently believe the claim has been made without merit, and we intend to vigorously assert and defend our rights in this lawsuit.

Environmental

Canada

Our Canada brewing operations are subject to provincial environmental regulations and local permit requirements. Our Montréal and Toronto breweries have water treatment facilities to pre-treat waste water before it goes to the respective local governmental facility for final treatment. We have environmental programs in Canada including organization, monitoring and verification, regulatory compliance, reporting, education and training, and corrective action.

We sold a chemical specialties business in 1996. We are still responsible for certain aspects of environmental remediation, undertaken or planned, at those chemical specialties business locations. We have established provisions for the costs of these remediation programs.

United States

We were previously notified that we are or may be a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act or similar state laws for the cleanup of sites where hazardous substances have allegedly been released into the environment. We cannot predict with certainty the total costs of cleanup, our share of the total cost, the extent to which contributions will be available from other parties, the amount of time necessary to complete the cleanups or insurance coverage.

Lowry

We are one of a number of entities named by the Environmental Protection Agency ("EPA") as a PRP at the Lowry Superfund site. This landfill is owned by the City and County of Denver ("Denver") and is managed by Waste Management of Colorado, Inc. ("Waste Management"). In 1990, we recorded a pretax charge of $30 million, a portion of which was put into a trust in 1993 as part of a settlement with Denver and Waste Management regarding the then-outstanding litigation. Our settlement was based on an assumed remediation cost of $120 million (in 1992 adjusted dollars). We are obligated to pay a portion of future costs, if any, in excess of that amount.

Waste Management provides us with updated annual cost estimates through 2032. We review these cost estimates in the assessment of our accrual related to this issue. We use certain assumptions that differ from Waste Management's estimates to assess our expected liability. Our expected liability (based on the $120 million threshold being met) is based on our best estimates available.

The assumptions used are as follows:

• trust management costs are included in projections with regard to the $120 million threshold, but are expensed only as incurred;

• income taxes, which we believe are not an included cost, are excluded from projections with regard to the $120 million threshold;

• a 2.5% inflation rate for future costs; and

• certain operations and maintenance costs were discounted using a 2.2% risk-free rate of return.

Based on these assumptions, the present value and gross amount of the costs at March 31, 2016, are approximately $3.4 million and $6.2 million, respectively. We did not assume any future recoveries from insurance companies in the estimate of our liability, and none are expected.

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Considering the estimates extend through the year 2032 and the related uncertainties at the site, including what additional remedial actions may be required by the EPA, new technologies and what costs are included in the determination of when the $120 million is reached, the estimate of our liability may change as further facts develop. We cannot predict the amount of any such change, but additional accruals in the future are possible.

Other

In prior years, we were notified by the EPA and certain state environmental divisions that we are a PRP, along with other parties, at the Cooper Drum site in southern California, the East Rutherford and Berry's Creek sites in New Jersey and the Chamblee and Smyrna sites in Georgia. Certain former non-beer business operations, which we discontinued use of and subsequently sold, were involved at these sites. Potential losses associated with these sites could increase as remediation planning progresses.

We are aware of groundwater contamination at some of our properties in Colorado resulting from historical, ongoing, or nearby activities. There may also be other contamination of which we are currently unaware.

Europe and MCI

We are subject to the requirements of governmental and local environmental and occupational health and safety laws and regulations within each of the countries in which we operate. Compliance with these laws and regulations did not materially affect our first quarter of 2016 capital expenditures, results of operations or our financial or competitive position, and we do not anticipate that they will do so during the remainder of the year.

In September 2015, the Environment Agency (“EA”) in the U.K. charged one of our subsidiaries with causing or contributing to a sewage fungus problem in a freshwater drain near the Alton brewery, which we closed in the second quarter of 2015. This dispute was settled in the first quarter of 2016 for an immaterial amount.

16. Pending Acquisition

On November 11, 2015, Anheuser-Busch InBev SA/NV’s (“ABI”) announced it had entered into a definitive agreement to acquire SABMiller plc (“SABMiller”). The resulting transaction (“ABI/SABMiller transaction”) is currently expected to be finalized in the second half of 2016 subject to ABI and SABMiller shareholder approval and various global regulatory approvals. Concurrently, on November 11, 2015, we entered into a purchase agreement (the “Purchase Agreement”) with ABI to acquire, contingent upon the closing of the acquisition of SABMiller by ABI pursuant to the ABI/SABMiller transaction, all of SABMiller’s 58% economic interest and 50% voting interest in MillerCoors and all trademarks, contracts and other assets primarily related to the Miller brand portfolio outside of the U.S. and Puerto Rico for $12.0 billion in cash, subject to downward adjustment as described in the Purchase Agreement. Following the closing of the pending Acquisition, the Company will own 100% of the outstanding equity and voting interests of MillerCoors. Further, as we plan to elect to treat the Acquisition as an asset acquisition for U.S. tax purposes, we expect to receive substantial cash tax benefits for the first 15 years after completion. The pending Acquisition is based on the terms and subject to the conditions set forth in the Purchase Agreement. On March 25, 2016, we executed an amendment to the Purchase Agreement that establishes certain rights and assets that were unintentionally omitted from the Purchase Agreement and clarifies certain other items.

The pending Acquisition is expected to be financed through a combination of cash on hand, including proceeds received from our first quarter 2016 equity issuance, as well as future debt issuances. Specifically, in connection with the pending Acquisition, on December 16, 2015, MCBC entered into a $9.3 billion, 364-day bridge loan agreement by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent. Additionally, on December 16, 2015, MCBC also entered into a $3.0 billion term loan agreement by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent. See Note 11, "Debt" for details regarding the financing entered into during 2015.

On February 3, 2016, we received proceeds of $2.5 billion, net of issuance costs from our January 26, 2016, equity offering of 29.9 million shares of our Class B common stock. The shares issued had a par value of $0.01 per share totaling $0.3 million, and an impact to paid-in capital of $2.5 billion. The issuance reduced the commitment on our bridge loan to $6.8 billion, of which MCBC currently expects to replace with $6.7 billion of permanent long-term financing between now and the consummation of the pending Acquisition. The bridge loan, term loan and proceeds from the equity offering are sufficient to fund the $12.0 billion purchase price and $300 million of estimated fees and expenses to be incurred related to the pending Acquisition. Related to this expected long-term financing, we entered into swaptions in January 2016 with a total notional of $855.0 million to hedge a portion of our anticipated long-term debt issuance. Refer to Note 13, "Derivative Instruments and Hedging Activities" for further details. Additionally, in order to maximize the yield on the cash received from the equity issuance, while maintaining the ability to readily access these funds, MCBC has strategically invested the proceeds in various

26

fixed rate deposit and money market accounts with terms of three months or less. For the three months ended March 31, 2016, we received interest income of $2.5 million on these deposits.

At this time, we anticipate the pending Acquisition will close in the second half of 2016, subject to necessary regulatory approvals and contingent on the successful closing of the ABI/SABMiller transaction.

17. Supplemental Guarantor Information

For purposes of this Note 17, "Parent Guarantor and 2012 Issuer" shall mean MCBC. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of each of our Canada and U.S. segments.

SEC Registered Securities

On May 3, 2012, MCBC issued $1.9 billion of senior notes, in a registered public offering, consisting of $300 million 2.0% senior notes due 2017, $500 million 3.5% senior notes due 2022, and $1.1 billion 5.0% senior notes due 2042. These senior notes are guaranteed on a senior unsecured basis by the Subsidiary Guarantors. Each of the Subsidiary Guarantors is 100% owned by the Parent Guarantor. The guarantees are full and unconditional and joint and several. See Note 11, "Debt" for additional details.

None of our other outstanding debt is publicly registered, and it is all guaranteed on a senior and unsecured basis by the Parent Guarantor and Subsidiary Guarantors. These guarantees are full and unconditional and joint and several. See Note 11, "Debt" for details of all debt issued and outstanding as of March 31, 2016.

Presentation

We have recast our presentation of the guarantor financial information to reflect the release of Molson Coors Brewing Company (UK) Limited, our primary UK operating entity, Golden Acquisition and Molson Coors Holdings Limited as subsidiary guarantors of our debt obligations, evidenced by the supplemental indentures dated May 13, 2016.

The following information sets forth the condensed consolidating statements of operations for the three months ended March 31, 2016, and March 31, 2015, condensed consolidating balance sheets as of March 31, 2016, and December 31, 2015, and condensed consolidating statements of cash flows for the three months ended March 31, 2016, and March 31, 2015. Investments in subsidiaries are accounted for under the equity method; accordingly, entries necessary to consolidate the Parent Guarantor and all of our guarantor and non-guarantor subsidiaries are reflected in the eliminations column. In the opinion of management, separate complete financial statements of MCBC and the Subsidiary Guarantors would not provide additional material information that would be useful in assessing their financial composition.

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MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2016

(IN MILLIONS)

(UNAUDITED)

AS RECAST FOR CHANGE IN GUARANTORS

	Parent Guarantor and 2012 Issuer			Subsidiary Guarantors			Subsidiary Non Guarantors			Eliminations			Consolidated
Sales	$	6.6		$	375.9		$	595.3		$	(27.0	)	$	950.8
Excise taxes	—			(84.0		)	(209.6		)	—			(293.6		)
Net sales	6.6			291.9			385.7			(27.0		)	657.2
Cost of goods sold	—			(163.7		)	(270.4		)	20.1			(414.0		)
Gross profit	6.6			128.2			115.3			(6.9		)	243.2
Marketing, general and administrative expenses	(47.0		)	(79.8		)	(131.0		)	6.9			(250.9		)
Special items, net	—			109.3			(0.7		)	—			108.6
Equity income (loss) in subsidiaries	215.8			(113.4		)	149.3			(251.7		)	—
Equity income in MillerCoors	—			142.4			—			—			142.4
Operating income (loss)	175.4			186.7			132.9			(251.7		)	243.3
Interest income (expense), net	(39.9		)	69.2			(76.6		)	—			(47.3		)
Other income (expense), net	(18.3		)	4.6			(1.6		)	—			(15.3		)
Income (loss) from continuing operations before income taxes	117.2			260.5			54.7			(251.7		)	180.7
Income tax benefit (expense)	41.6			(85.4		)	23.2			—			(20.6		)
Net income (loss) from continuing operations	158.8			175.1			77.9			(251.7		)	160.1
Income (loss) from discontinued operations, net of tax	—			—			(0.5		)	—			(0.5		)
Net income (loss) including noncontrolling interests	158.8			175.1			77.4			(251.7		)	159.6
Net (income) loss attributable to noncontrolling interests	—			—			(0.8		)	—			(0.8		)
Net income (loss) attributable to MCBC	$	158.8		$	175.1		$	76.6		$	(251.7	)	$	158.8
Comprehensive income (loss) attributable to MCBC	$	415.8		$	408.8		$	99.4		$	(508.2	)	$	415.8

28

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2015

(IN MILLIONS)

(UNAUDITED)

AS RECAST FOR CHANGE IN GUARANTORS

	Parent Guarantor and 2012 Issuer			Subsidiary Guarantors			Subsidiary Non Guarantors			Eliminations			Consolidated
Sales	$	4.9		$	433.2		$	595.1		$	(30.0	)	$	1,003.2
Excise taxes	—			(94.0		)	(209.2		)	—			(303.2		)
Net sales	4.9			339.2			385.9			(30.0		)	700.0
Cost of goods sold	—			(206.9		)	(272.2		)	24.3			(454.8		)
Gross profit	4.9			132.3			113.7			(5.7		)	245.2
Marketing, general and administrative expenses	(28.1		)	(88.6		)	(129.6		)	5.7			(240.6		)
Special items, net	—			—			(8.6		)	—			(8.6		)
Equity income (loss) in subsidiaries	104.2			(109.1		)	40.4			(35.5		)	—
Equity income in MillerCoors	—			129.3			—			—			129.3
Operating income (loss)	81.0			63.9			15.9			(35.5		)	125.3
Interest income (expense), net	(17.2		)	72.7			(84.7		)	—			(29.2		)
Other income (expense), net	(1.3		)	(2.4		)	1.1			—			(2.6		)
Income (loss) from continuing operations before income taxes	62.5			134.2			(67.7		)	(35.5		)	93.5
Income tax benefit (expense)	18.6			(29.5		)	(1.9		)	—			(12.8		)
Net income (loss) from continuing operations	81.1			104.7			(69.6		)	(35.5		)	80.7
Income (loss) from discontinued operations, net of tax	—			—			1.9			—			1.9
Net income (loss) including noncontrolling interests	81.1			104.7			(67.7		)	(35.5		)	82.6
Net (income) loss attributable to noncontrolling interests	—			—			(1.5		)	—			(1.5		)
Net income (loss) attributable to MCBC	$	81.1		$	104.7		$	(69.2	)	$	(35.5	)	$	81.1
Comprehensive income (loss) attributable to MCBC	$	(556.3	)	$	(505.4	)	$	(293.7	)	$	799.1		$	(556.3	)

29

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF MARCH 31, 2016

(IN MILLIONS)

(UNAUDITED)

AS RECAST FOR CHANGE IN GUARANTORS

	Parent Guarantor and 2012 Issuer			Subsidiary Guarantors			Subsidiary Non Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	2,416.5		$	41.8		$	144.6	$	—		$	2,602.9
Accounts receivable, net	0.2			112.2			344.1		—			456.5
Other receivables, net	88.0			167.0			61.4		—			316.4
Total inventories	—			94.3			136.1		—			230.4
Other current assets, net	44.0			46.0			66.6		—			156.6
Intercompany accounts receivable	—			261.8			—		(261.8		)	—
Total current assets	2,548.7			723.1			752.8		(261.8		)	3,762.8
Properties, net	21.9			572.2			994.6		—			1,588.7
Goodwill	—			239.8			1,789.1		—			2,028.9
Other intangibles, net	—			3,139.9			1,845.0		—			4,984.9
Investment in MillerCoors	—			2,580.9			—		—			2,580.9
Net investment in and advances to subsidiaries	9,323.8			3,173.3			5,151.7		(17,648.8		)	—
Deferred tax assets	39.9			2.5			0.1		(19.4		)	23.1
Other assets, net	13.2			119.8			108.0		—			241.0
Total assets	$	11,947.5		$	10,551.5		$	10,641.3	$	(17,930.0	)	$	15,210.3
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities	$	81.3		$	333.2		$	739.4	$	—		$	1,153.9
Current portion of long-term debt and short-term borrowings	—			—			63.5		—			63.5
Discontinued operations	—			—			4.5		—			4.5
Intercompany accounts payable	53.1			69.1			139.6		(261.8		)	—
Total current liabilities	134.4			402.3			947.0		(261.8		)	1,221.9
Long-term debt	1,901.7			1,071.7			—		—			2,973.4
Pension and postretirement benefits	3.4			191.3			14.2		—			208.9
Deferred tax liabilities	—			222.6			592.9		(19.4		)	796.1
Other liabilities	10.3			26.7			42.3		—			79.3
Discontinued operations	—			—			11.4		—			11.4
Intercompany notes payable	—			—			5,114.6		(5,114.6		)	—
Total liabilities	2,049.8			1,914.6			6,722.4		(5,395.8		)	5,291.0
MCBC stockholders' equity	9,898.8			13,750.4			3,898.4		(17,648.8		)	9,898.8
Intercompany notes receivable	(1.1		)	(5,113.5		)	—		5,114.6			—
Total stockholders' equity	9,897.7			8,636.9			3,898.4		(12,534.2		)	9,898.8
Noncontrolling interests	—			—			20.5		—			20.5
Total equity	9,897.7			8,636.9			3,918.9		(12,534.2		)	9,919.3
Total liabilities and equity	$	11,947.5		$	10,551.5		$	10,641.3	$	(17,930.0	)	$	15,210.3

30

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2015

(IN MILLIONS)

(UNAUDITED)

AS RECAST FOR CHANGE IN GUARANTORS

	Parent Guarantor and 2012 Issuer			Subsidiary Guarantors			Subsidiary Non Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	146.4		$	106.2		$	178.3		$	—		$	430.9
Accounts receivable, net	—			120.4			304.3			—			424.7
Other receivables, net	8.7			33.5			59.0			—			101.2
Total inventories	—			61.6			117.7			—			179.3
Other current assets, net	45.6			22.4			54.7			—			122.7
Intercompany accounts receivable	—			3,796.7			5.5			(3,802.2		)	—
Total current assets	200.7			4,140.8			719.5			(3,802.2		)	1,258.8
Properties, net	20.4			578.7			991.7			—			1,590.8
Goodwill	—			225.3			1,758.0			—			1,983.3
Other intangibles, net	—			2,954.2			1,791.5			—			4,745.7
Investment in MillerCoors	—			2,441.0			—			—			2,441.0
Net investment in and advances to subsidiaries	12,394.3			3,459.1			4,765.1			(20,618.5		)	—
Deferred tax assets	37.7			—			0.1			(17.6		)	20.2
Other assets, net	14.0			115.4			107.1			—			236.5
Total assets	$	12,667.1		$	13,914.5		$	10,133.0		$	(24,438.3	)	$	12,276.3
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities	$	72.7		$	332.0		$	779.7		$	—		$	1,184.4
Current portion of long-term debt and short-term borrowings	—			—			28.7			—			28.7
Discontinued operations	—			—			4.1			—			4.1
Intercompany accounts payable	3,652.6			70.6			79.0			(3,802.2		)	—
Total current liabilities	3,725.3			402.6			891.5			(3,802.2		)	1,217.2
Long-term debt	1,902.1			1,006.6			—			—			2,908.7
Pension and postretirement benefits	3.3			184.3			14.3			—			201.9
Deferred tax liabilities	—			215.7			601.7			(17.6		)	799.8
Other liabilities	6.5			25.1			43.7			—			75.3
Discontinued operations	—			—			10.3			—			10.3
Intercompany notes payable	—			0.5			4,758.8			(4,759.3		)	—
Total liabilities	5,637.2			1,834.8			6,320.3			(8,579.1		)	5,213.2
MCBC stockholders' equity	7,031.0			16,837.4			3,793.1			(20,618.5		)	7,043.0
Intercompany notes receivable	(1.1		)	(4,757.7		)	(0.5		)	4,759.3			—
Total stockholders' equity	7,029.9			12,079.7			3,792.6			(15,859.2		)	7,043.0
Noncontrolling interests	—			—			20.1			—			20.1
Total equity	7,029.9			12,079.7			3,812.7			(15,859.2		)	7,063.1
Total liabilities and equity	$	12,667.1		$	13,914.5		$	10,133.0		$	(24,438.3	)	$	12,276.3

31

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2016

(IN MILLIONS)

(UNAUDITED)

AS RECAST FOR CHANGE IN GUARANTORS

	Parent Guarantor and 2012 Issuer			Subsidiary Guarantors			Subsidiary Non Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(162.2	)	$	147.5		$	(78.7	)	$	—		$	(93.4	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties	(7.2		)	(21.5		)	(42.4		)	—			(71.1		)
Proceeds from sales of properties and other assets	—			1.3			1.1			—			2.4
Investment in MillerCoors	—			(413.7		)	—			—			(413.7		)
Return of capital from MillerCoors	—			283.4			—			—			283.4
Other	—			—			(6.5		)	—			(6.5		)
Net intercompany investing activity	—			(66.1		)	—			66.1			—
Net cash provided by (used in) investing activities	(7.2		)	(216.6		)	(47.8		)	66.1			(205.5		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net	2,526.4			—			—			—			2,526.4
Exercise of stock options under equity compensation plans	4.2			—			—			—			4.2
Excess tax benefits from share-based compensation	3.9			—			—			—			3.9
Dividends paid	(80.5		)	—			(7.8		)	—			(88.3		)
Debt issuance costs	(14.2		)	—			—			—			(14.2		)
Payments on debt and borrowings	—			—			(10.3		)	—			(10.3		)
Proceeds on debt and borrowings	—			—			20.9			—			20.9
Net proceeds from (payments on) revolving credit facilities and commercial paper	—			—			2.5			—			2.5
Change in overdraft balances and other	(0.3		)	—			18.8			—			18.5
Net intercompany financing activity	—			—			66.1			(66.1		)	—
Net cash provided by (used in) financing activities	2,439.5			—			90.2			(66.1		)	2,463.6
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents	2,270.1			(69.1		)	(36.3		)	—			2,164.7
Effect of foreign exchange rate changes on cash and cash equivalents	—			4.7			2.6			—			7.3
Balance at beginning of year	146.4			106.2			178.3			—			430.9
Balance at end of period	$	2,416.5		$	41.8		$	144.6		$	—		$	2,602.9

32

MOLSON COORS BREWING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015

(IN MILLIONS)

(UNAUDITED)

AS RECAST FOR CHANGE IN GUARANTORS

	Parent Guarantor and 2012 Issuer			Subsidiary Guarantors			Subsidiary Non Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(77.7	)	$	157.0		$	(281.9	)	$	—		$	(202.6	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties	(3.8		)	(22.4		)	(47.5		)	—			(73.7		)
Proceeds from sales of properties and other assets	—			0.4			2.6			—			3.0
Acquisition of businesses, net of cash acquired	—			—			(6.3		)	—			(6.3		)
Investment in MillerCoors	—			(417.9		)	—			—			(417.9		)
Return of capital from MillerCoors	—			310.4			—			—			310.4
Other	—			0.1			(8.8		)	—			(8.7		)
Net intercompany investing activity	—			(90.2		)	(59.1		)	149.3			—
Net cash provided by (used in) investing activities	(3.8		)	(219.6		)	(119.1		)	149.3			(193.2		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options under equity compensation plans	24.8			—			—			—			24.8
Excess tax benefits from share-based compensation	6.1			—			—			—			6.1
Dividends paid	(67.9		)	—			(8.3		)	—			(76.2		)
Payments on long-term debt	—			—			(7.1		)	—			(7.1		)
Proceeds from short-term borrowings	—			—			16.6			—			16.6
Net proceeds from (payments on) revolving credit facilities and commercial paper	127.8			—			30.0			—			157.8
Change in overdraft balances and other	(0.1		)	(0.2		)	1.6			—			1.3
Net intercompany financing activity	—			59.1			90.2			(149.3		)	—
Net cash provided by (used in) financing activities	90.7			58.9			123.0			(149.3		)	123.3
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and cash equivalents	9.2			(3.7		)	(278.0		)	—			(272.5		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(13.3		)	(21.2		)	—			(34.5		)
Balance at beginning of year	40.9			173.2			410.5			—			624.6
Balance at end of period	$	50.1		$	156.2		$	111.3		$	—		317.6

33