SEC Info - Molson Coors Beverage Co. - ‘10-K’ for 12/31/21

Sales

i 12,449.9

i 11,723.8

i 13,009.1

Excise taxes

( i 2,170.2)

( i 2,069.8)

( i 2,429.7)

Net sales

i 10,279.7

i 9,654.0

i 10,579.4

Cost of goods sold

( i 6,226.3)

( i 5,885.7)

( i 6,378.2)

Gross profit

i 4,053.4

i 3,768.3

i 4,201.2

Marketing, general and administrative expenses

( i 2,554.5)

( i 2,437.0)

( i 2,728.0)

Special items, net

( i 44.5)

( i 1,740.2)

( i 708.8)

Operating income (loss)

i 1,454.4

( i 408.9)

i 764.4

Other income (expense), net

Interest expense

( i 260.3)

( i 274.6)

( i 280.9)

Interest income

i 2.0

i 3.3

i 8.2

Other pension and postretirement benefits (costs), net

i 46.4

i 30.3

i 2.9

Other income (expense), net

( i 3.5)

i 6.0

( i 14.7)

Total other income (expense), net

( i 215.4)

( i 235.0)

( i 284.5)

Income (loss) before income taxes

i 1,239.0

( i 643.9)

i 479.9

Income tax benefit (expense)

( i 230.5)

( i 301.8)

( i 233.7)

Net income (loss)

i 1,008.5

( i 945.7)

i 246.2

Net (income) loss attributable to noncontrolling interests

( i 2.8)

( i 3.3)

( i 4.5)

Net income (loss) attributable to Molson Coors Beverage Company

i 1,005.7

( i 949.0)

i 241.7

Net income (loss) attributable to Molson Coors Beverage Company per share:

Basic

i 4.63

( i 4.38)

i 1.12

Diluted

i 4.62

( i 4.38)

i 1.11

Weighted-average shares outstanding:

Basic

i 217.1

i 216.8

i 216.6

Dilutive effect of share-based awards

i 0.5

i —

i 0.3

Diluted

i 217.6

i 216.8

i 216.9

Anti-dilutive securities excluded from computation of diluted EPS

i 1.8

i 2.7

i 1.3

See notes to consolidated financial statements.

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

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN MILLIONS)

For the Years Ended

Net income (loss) including noncontrolling interests

i 1,008.5

( i 945.7)

i 246.2

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

( i 28.4)

i 113.6

i 177.6

Reclassification of cumulative translation adjustment to income (loss)

i 7.5

i —

Unrealized gain (loss) on derivative instruments

i 37.4

( i 85.7)

( i 84.2)

Reclassification of derivative (gain) loss to income

i 5.5

( i 0.4)

i 0.5

Pension and other postretirement benefit adjustments

i 118.4

( i 39.9)

( i 39.8)

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

i 5.4

( i 5.2)

i 19.7

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

i 15.5

i 14.2

( i 10.6)

Total other comprehensive income (loss), net of tax

i 161.3

( i 3.4)

i 63.2

Comprehensive income (loss)

i 1,169.8

( i 949.1)

i 309.4

Comprehensive (income) loss attributable to noncontrolling interests

( i 2.3)

( i 5.5)

( i 5.1)

Comprehensive income (loss) attributable to Molson Coors Beverage Company

i 1,167.5

( i 954.6)

i 304.3

See notes to consolidated financial statements.

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

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT PAR VALUE)


	As of
	December 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	i 637.4	$	i 770.1
Accounts and other receivables:
Trade, less allowance for doubtful accounts of $ i 19.0 and $ i 18.1, respectively	i 662.7		i 549.6
Affiliate receivables	i 16.2		i 8.4
Other receivables, less allowance for doubtful accounts of $ i 2.5 and $ i 2.4, respectively	i 200.5		i 129.1
Inventories, less allowance for obsolete inventories of $ i 25.8 and $ i 22.0, respectively	i 804.7		i 664.3
Other current assets, net	i 457.2		i 297.3
Total current assets	i 2,778.7		i 2,418.8
Properties, less accumulated depreciation of $ i 3,507.2 and $ i 3,416.4, respectively	i 4,192.4		i 4,250.3
Goodwill	i 6,152.6		i 6,151.0
Other intangibles, less accumulated amortization of $ i 1,406.3 and $ i 1,206.5, respectively	i 13,286.8		i 13,556.1
Other assets	i 1,208.5		i 954.9
Total assets	$	i 27,619.0	$	i 27,331.1
Liabilities and equity
Current liabilities:
Accounts payable and other current liabilities (includes affiliate payables of $ i 4.1 and $ i 0.5, respectively)	$	i 3,107.3	$	i 2,889.5
Current portion of long-term debt and short-term borrowings	i 514.9		i 1,020.1
Total current liabilities	i 3,622.2		i 3,909.6
Long-term debt	i 6,647.2		i 7,208.2
Pension and postretirement benefits	i 654.4		i 763.2
Deferred tax liabilities	i 2,704.6		i 2,381.6
Other liabilities	i 326.5		i 447.2
Total liabilities	i 13,954.9		i 14,709.8
Commitments and contingencies (Note 18)	i		i
Molson Coors Beverage Company stockholders' equity
Capital stock:
Preferred stock, $ i i 0.01 / par value (authorized: i i 25.0 / shares; i i none / issued)	i —		i —
Class A common stock, $ i i 0.01 / par value (authorized: i i 500.0 / shares; issued and outstanding: i i 2.6 / shares and i i 2.6 / shares, respectively)	i —		i —
Class B common stock, $ i i 0.01 / par value (authorized: i i 500.0 / shares; issued: i 210.1 shares and i 209.8 shares, respectively)	i 2.1		i 2.1
Class A exchangeable shares, no par value (issued and outstanding: i i 2.7 / shares and i i 2.7 / shares, respectively)	i 102.2		i 102.3
Class B exchangeable shares, no par value (issued and outstanding: i i 11.1 / shares and i i 11.1 / shares, respectively)	i 417.8		i 417.8
Paid-in capital	i 6,970.9		i 6,937.8
Retained earnings	i 7,401.5		i 6,544.2
Accumulated other comprehensive income (loss)	( i 1,006.0)		( i 1,167.8)
Class B common stock held in treasury at cost ( i 9.5 shares and i 9.5 shares, respectively)	( i 471.4)		( i 471.4)
Total Molson Coors Beverage Company stockholders' equity	i 13,417.1		i 12,365.0
Noncontrolling interests	i 247.0		i 256.3
Total equity	i 13,664.1		i 12,621.3
Total liabilities and equity	$	i 27,619.0	$	i 27,331.1

See notes to consolidated financial statements.

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

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

For the Years Ended

Cash flows from operating activities:

Net income (loss) including noncontrolling interests

i 1,008.5

( i 945.7)

i 246.2

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

Depreciation and amortization

i 786.1

i 922.0

i 859.0

Amortization of debt issuance costs and discounts

i 6.7

i 8.1

i 13.6

Share-based compensation

i 32.1

i 24.2

i 8.5

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

i 9.1

i 1,553.5

i 614.7

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

( i 233.8)

( i 111.4)

i 18.9

Income tax (benefit) expense

i 230.5

i 301.8

i 233.7

Income tax (paid) received

( i 227.0)

( i 127.0)

( i 57.0)

Interest expense, excluding amortization of debt issuance costs and discounts

i 253.6

i 266.0

i 272.4

Interest paid

( i 256.2)

( i 271.9)

( i 285.0)

Change in current assets and liabilities (net of impact of business combinations) and other:

Receivables

( i 137.6)

i 160.8

i 38.5

Inventories

( i 143.9)

( i 46.2)

( i 17.7)

Payables and other current liabilities

i 285.5

( i 50.1)

( i 53.0)

Other assets and other liabilities

( i 40.1)

i 11.6

i 4.5

Net cash provided by (used in) operating activities

i 1,573.5

i 1,695.7

i 1,897.3

Cash flows from investing activities:

Additions to properties

( i 522.6)

( i 574.8)

( i 593.8)

Proceeds from sales of properties and other assets

i 26.0

i 158.8

i 115.9

Other

( i 13.3)

i 2.4

i 44.6

Net cash provided by (used in) investing activities

( i 509.9)

( i 413.6)

( i 433.3)

Cash flows from financing activities:

Exercise of stock options under equity compensation plans

i 4.6

i 4.1

i 1.6

Dividends paid

( i 147.8)

( i 125.3)

( i 424.4)

Payments on debt and borrowings

( i 1,006.6)

( i 918.9)

( i 1,586.2)

Proceeds on debt and borrowings

i —

i 1.5

i 3.0

Net proceeds from (payments on) revolving credit facilities and commercial paper

i 1.4

i —

( i 4.7)

Other

( i 23.8)

( i 31.8)

i 3.7

Net cash provided by (used in) financing activities

( i 1,172.2)

( i 1,070.4)

( i 2,007.0)

Cash and cash equivalents:

Net increase (decrease) in cash and cash equivalents

( i 108.6)

i 211.7

( i 543.0)

Effect of foreign exchange rate changes on cash and cash equivalents

( i 24.1)

i 35.0

i 8.5

Balance at beginning of year

i 770.1

i 523.4

i 1,057.9

Balance at end of year

i 637.4

i 770.1

i 523.4

See notes to consolidated financial statements. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for supplementary cash flow data.

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

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

AND NONCONTROLLING INTERESTS

(IN MILLIONS)

Molson Coors Beverage Company Stockholders' Equity

Common stock

Exchangeable

Accumulated
other

Common Stock
held in

Non

issued

shares issued

Paid-in-

Retained

comprehensive

treasury

controlling

Total

Class A

Class B

Class A

Class B

capital

earnings

income (loss)

Class B

interests

Balance as of December 31, 2018

i 13,735.8

i —

i 2.0

i 103.2

i 557.6

i 6,773.1

i 7,692.9

( i 1,150.0)

( i 471.4)

i 228.4

Exchange of shares

i —

—

( i 0.7)

i 0.2

i 0.5

—

Shares issued under equity compensation plan

( i 8.3)

—

i 0.1

—

( i 8.4)

—

Amortization of share-based compensation

i 8.3

—

i 8.3

—

Purchase of noncontrolling interest

i 0.6

—

i 0.1

—

i 0.5

Deconsolidation of VIE

( i 1.7)

—

( i 1.7)

Net income (loss) including noncontrolling interests

i 246.2

—

i 241.7

—

i 4.5

Other comprehensive income (loss), net of tax

i 63.2

—

i 62.6

—

i 0.6

Adoption of lease accounting standard

i 32.0

—

i 32.0

—

Reclassification of stranded tax effects

i —

—

i 74.8

( i 74.8)

—

Contributions from noncontrolling interests

i 34.1

—

i 34.1

Distributions and dividends to noncontrolling interests

( i 12.7)

—

( i 12.7)

Dividends declared

( i 424.4)

—

( i 424.4)

—

Balance as of December 31, 2019

i 13,673.1

i —

i 2.1

i 102.5

i 557.8

i 6,773.6

i 7,617.0

( i 1,162.2)

( i 471.4)

i 253.7

Exchange of shares

i —

—

( i 0.2)

( i 140.0)

i 140.2

—

Shares issued under equity compensation plan

( i 0.5)

—

( i 0.5)

—

Amortization of share-based compensation

i 24.2

—

i 24.2

—

Acquisition of business and purchase of noncontrolling interest

( i 0.2)

—

i 0.3

—

( i 0.5)

Net income (loss) including noncontrolling interests

( i 945.7)

—

( i 949.0)

—

i 3.3

Other comprehensive income (loss), net of tax

( i 3.4)

—

( i 5.6)

—

i 2.2

Contributions from noncontrolling interests

i 16.3

—

i 16.3

Distributions and dividends to noncontrolling interests

( i 18.7)

—

( i 18.7)

Dividends declared

( i 123.8)

—

( i 123.8)

—

Balance as of December 31, 2020

i 12,621.3

i —

i 2.1

i 102.3

i 417.8

i 6,937.8

i 6,544.2

( i 1,167.8)

( i 471.4)

i 256.3

Exchange of shares

i —

—

( i 0.1)

—

i 0.1

—

Shares issued under equity compensation plan

i 0.6

—

i 0.6

—

Amortization of share-based compensation

i 32.1

—

i 32.1

—

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

Molson Coors Beverage Company Stockholders' Equity

Common stock

Exchangeable

Accumulated
other

Common Stock
held in

Non

issued

shares issued

Paid-in-

Retained

comprehensive

treasury

controlling

Total

Class A

Class B

Class A

Class B

capital

earnings

income (loss)

Class B

interests

Purchase of noncontrolling interest

( i 0.2)

—

i 0.3

—

( i 0.5)

Net income (loss) including noncontrolling interests

i 1,008.5

—

i 1,005.7

—

i 2.8

Other comprehensive income (loss), net of tax

i 161.3

—

i 161.8

—

( i 0.5)

Contributions from noncontrolling interests

i 3.2

—

i 3.2

Distributions and dividends to noncontrolling interests

( i 14.3)

—

( i 14.3)

Dividends declared

( i 148.4)

—

( i 148.4)

—

Balance as of December 31, 2021

i 13,664.1

i —

i 2.1

i 102.2

i 417.8

i 6,970.9

i 7,401.5

( i 1,006.0)

( i 471.4)

i 247.0

See notes to consolidated financial statements.

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

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. i Basis of Presentation and Summary of Significant Accounting Policies

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments. As of December 31, 2021, we changed the names of our reporting segments to the Americas and EMEA&APAC segments (formerly named the North America segment and Europe segment, respectively) to better reflect the geographic locations encompassed within the reportable segments. This change to our segment names had no impact on the composition of our segments, our financial position, results of operations, cash flow or segment level results previously reported. Our Americas segment operates in the U.S., Canada and various countries in the Caribbean, Latin and South America, and our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific.

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

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

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

Cybersecurity Incident

During March 2021, we experienced a systems outage that was caused by a cybersecurity incident. We engaged leading forensic information technology firms and legal counsel to assist our investigation into the incident and we restored our systems after working to get the systems back up as quickly as possible. Despite these actions, we experienced delays and disruptions to our business, including brewery operations, production and shipments. This incident caused us to not produce or ship as much as we otherwise would have in the first quarter of 2021. Subsequently, in the balance of 2021, we made progress recovering from the incident with increased shipments and have operationally recovered as of December 31, 2021. In addition, we incurred certain incremental one-time costs of $ i 2.4 million for the year ended December 31, 2021 related to consultants, experts and data recovery efforts, net of insurance recoveries.

Coronavirus Global Pandemic

Starting at the end of the first quarter of 2020, the coronavirus pandemic has had a material adverse effect on our operations, liquidity, financial condition and results of operations. In 2021, we saw improvements in the marketplace related to the coronavirus global pandemic as on-premise locations began to re-open around the world at varying degrees, despite setbacks in certain markets related to the outbreak of new variants. The extent to which our operations will continue to be impacted by the coronavirus pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including the level of governmental or societal orders or restrictions on public gatherings and on-premise venues, including any vaccine mandates or testing requirements, the severity and duration of the coronavirus pandemic by market, including outbreaks of variants, changes in consumer behavior, the rate of vaccination and the efficacy of vaccines against the coronavirus and related variants. We continue to actively monitor the ongoing evolution of the coronavirus pandemic and resulting impacts to our business.

During 2020, we recorded charges of $ i 15.5 million within cost of goods sold related to temporary "thank you" pay for certain essential Americas segment brewery employees. Additionally, in order to support and demonstrate our commitment to the continued viability of the many bars and restaurants which were negatively impacted by the coronavirus pandemic, during the first quarter of 2020, we initiated temporary keg relief programs in many of our markets. We committed to provide customers with reimbursements for untapped kegs that met certain established return requirements in conjunction with the voluntary programs. As a result, during 2020, we recognized a reduction to net sales of $ i 30.3 million reflecting estimated sales returns and reimbursements through these keg relief programs.

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

We continue to monitor the impacts on our customers’ liquidity and capital resources and therefore our ability to collect, or the timeliness of collection of our accounts receivable. While these receivables are not concentrated in any specific customer and our allowance on these receivables factors in expected credit loss, continued disruption and declines in the global economy could result in difficulties in our ability to collect and require increases to our allowance for doubtful accounts. As of December 31, 2021 and December 31, 2020, our allowance for trade receivables was approximately $ i 19 million and $ i 18 million, respectively, and allowance activity was immaterial during the year ended December 31, 2021.

In response to the ongoing impacts of the coronavirus pandemic, various governmental authorities globally announced relief programs, which among other items, provided temporary deferrals of non-income based tax payments, which positively impacted our operating cash flows in 2020. These temporary net tax payment deferrals of approximately $ i 25 million and $ i 130 million as of December 31, 2021 and December 31, 2020, respectively, were primarily included within accounts payable and other current liabilities on our audited consolidated balance sheets. Of the $ i 130 million of temporary net tax payment deferrals as of December 31, 2020, approximately $ i 105 million was repaid during the year ended December 31, 2021, with approximately $ i 25 million outstanding as of December 31, 2021. The majority of the remaining balance is expected to be paid during the year ended December 31, 2022.

We protected and supported our liquidity position in response to the global economic uncertainty created by the coronavirus pandemic. Beginning with the second quarter of 2020 through the second quarter of 2021, our board of directors suspended our regular quarterly dividends on our Class A and Class B common and exchangeable shares. A quarterly dividend was reinstated in the third quarter of 2021.

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

Revitalization Plan

On October 28, 2019, we initiated a revitalization plan designed to allow us to invest across our portfolio to drive long-term, sustainable success. The revitalization plan established Chicago, Illinois as our Americas segment operational headquarters. We closed our office in Denver, Colorado and consolidated certain administrative functions into our other existing office locations. As of January 1, 2020, we changed our name to Molson Coors Beverage Company and changed our management structure to i two segments - Americas and EMEA&APAC. We began to incur charges related to these restructuring activities during the fourth quarter of 2019 and we recognized severance and retention charges of $ i 4.0 million, $ i 35.6 million and $ i 41.2 million during the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively. As of December 31, 2021, the revitalization plan restructuring charges were substantially complete.

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

i Principles of Consolidation

Our consolidated financial statements include our accounts and our majority-owned and controlled domestic and foreign subsidiaries, as well as certain VIEs for which we are the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions used to determine certain amounts that affect the financial statements are reasonable, based on information available at the time they are made. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.

Revenue Recognition

Our net sales represent the sale of beer, malt beverages and other adjacencies, net of excise tax. Sales are stated net of incentives, discounts and returns. Sales of products are for cash or otherwise agreed upon credit terms. Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution and shipping terms. Where our products are sold under consignment arrangements, revenue is not recognized until control has transferred, which is when the product is sold to the end customer. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. The cost of various programs, such as price promotions, rebates and coupons, are treated as a reduction of sales. In certain of our markets where

legally permitted, we make cash payments to customers such as slotting or listing fees, or payments for other marketing or promotional activities. These cash payments are recorded as a reduction of revenue unless we receive a distinct good or service. Specifically, a good or service is considered distinct when it is separately identifiable from other promises in the contract, we receive a benefit from the good or service, and the benefit is separable from the sale of our product to the customer.

Certain payments made to customers are conditional on the achievement of volume targets, marketing commitments, or both. If paid in advance, we record such payments as prepayments and amortize them over the relevant period to which the customer commitment is made (generally up to i five years). When the payment is not for a distinct good or service, or fair value cannot be reasonably estimated, the amortization of the prepayment or the cost as incurred is recorded as a reduction of revenue. Where a distinct good or service is received and fair value can be reasonably estimated, the cost is included as marketing, general and administrative expenses. The amounts deferred are reassessed regularly for recoverability over the contract period and are impaired where there is objective evidence that the benefits will not be realized or the asset is otherwise not recoverable. Separately, as discussed below, we analyze whether these advance payments contain a significant financing component for potential adjustment to the transaction price.

Our primary revenue generating activity represents the sale of beer and other malt beverages to customers, including both domestic and exported product sales. Our customer could be a distributor, retail or on-premise outlet, depending on the market. The majority of our revenues are generated from brands that we own and brew ourselves, however, we also import or brew and sell certain non-owned partner brands under licensing and related arrangements. In addition, primarily in the U.K., we sell other beverage companies' products to on-premise customers to provide them with a full range of products for their retail outlets. We refer to this as the "factored brand business." Sales from this business are included in our net sales and cost of goods sold when ultimately sold. In the factored brand business, we normally purchase inventory, which includes excise taxes charged by the vendor, take orders from customers for such brands, negotiate with the customers on pricing and invoice customers for the product and related costs of delivery. In addition, we incur the risk of loss at times we are in possession of the inventory and for the receivables due from the customers. Revenues for owned brands, partner and imported brands, as well as factored brands are recognized at the point in time when control is transferred to the customer as discussed above.

Other Revenue Generating Activities

We contract manufacture for other brewers in some of our markets. These contractual agreements require us to brew, package and ship certain brands to these brewers, who then sell the products to their own customers in their respective markets. Revenues under contract brewing arrangements are recognized when our obligation related to the finished product is fulfilled and control of the product transfers to these other brewers.

We also have licensing agreements with third party partners who brew and distribute our products in various markets across our segments. Under these agreements, we are compensated based on the amount of products sold by our partners in these markets at an agreed upon royalty rate or profit percentage. We apply the sales-based royalty practical expedient to these licensing arrangements and recognize revenue as product is sold by our partners at the agreed upon rate.

Disaggregation of Revenue

We have evaluated our primary revenue generating activities under the disaggregation disclosure criteria outlined within the guidance and concluded that disclosure at the geographical segment level depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. We have also evaluated our other revenue generating activities and concluded that these activities are immaterial for separate disclosure. See Note 3, "Segment Reporting," for disclosure of revenues by geographic segment.

Variable Consideration

Our revenue generating activities include variable consideration which is recorded as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors' sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, and coupons and mail-in rebates offered to the end consumer. The determination of the reduction of the transaction price for variable consideration requires that we make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recorded. We estimate this variable consideration, including analyzing for a potential constraint on variable consideration, by taking into account factors such as the nature of the promotional activity, historical information and current trends, availability of actual results, and expectations of customer and consumer behavior.

We do not have standard terms that permit return of product; however, in certain markets where returns occur we estimate the amount of returns as variable consideration based on historical return experience and adjust our revenue

accordingly. Products that do not meet our high quality standards are returned by the customer or recalled and destroyed and are recorded as a reduction of revenue. The reversal of revenue is recorded upon determination that the product will be recalled and destroyed. We estimate the costs required to facilitate product returns and record them in cost of goods sold as required.

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

Significant Financing Component and Costs to Obtain Contracts

In certain of our businesses where such practices are legally permitted, we make loans or advanced payments to retail outlets that sell our brands. For arrangements that do not span greater than one year, we apply the practical expedient available under ASC 606 and do not adjust the transaction price for the effects of a potential significant financing component. We further analyze arrangements that span greater than one year on an ongoing basis to determine whether a significant financing component exists. No such arrangements existed during the years ended December 31, 2021 or December 31, 2020.

Advance payments to customers, where legally permitted, are deferred and amortized as a reduction to revenue over the expected period of benefit and tested for recoverability as appropriate. All other costs to obtain and fulfill contracts are expensed as incurred based on the nature, significance and expected benefit of these costs relative to the contract.

Contract Assets and Liabilities

We continually evaluate whether our revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. i i i i No / / / such assets or liabilities existed as of December 31, 2021 or December 31, 2020. Separately, trade accounts receivable, including affiliate receivables, approximates receivables from contracts with customers.

Shipping and Handling

Freight costs billed to customers for shipping and handling are recorded as revenue. Shipping and handling expense related to costs incurred to deliver product are recognized within cost of goods sold. We account for shipping and handling activities that occur after control has transferred as a fulfillment cost as opposed to a separate performance obligation, and the costs of shipping and handling are recognized concurrently with the related revenue.

Excise Taxes

Excise taxes remitted to tax authorities are government-imposed excise taxes on beer. Excise taxes are shown in a separate line item in the consolidated statements of operations as a reduction of sales. Excise taxes are recognized as a current liability within accounts payable and other current liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority.

i Cost of Goods Sold

Our cost of goods sold includes costs we incur to make and ship beer and other malt beverages. These costs include brewing materials, such as barley, hops and various grains. Packaging materials, such as glass bottles, aluminum cans, cardboard and paperboard are also included in our cost of goods sold. Additionally, our cost of goods sold include both direct and indirect labor, shipping and handling including freight costs, utilities, maintenance costs, warehousing costs, purchasing and receiving costs, depreciation, promotional packaging, other manufacturing overheads and costs to purchase factored and other non-owned brands from suppliers, as well as the estimated cost to facilitate product returns.

Marketing, General and Administrative Expenses

Our marketing, general and administrative expenses include media advertising (television, radio, digital, print), tactical advertising (signs, banners, point-of-sale materials) and promotion costs on both local and national levels within our operating segments. The creative portion of our advertising activities is expensed as incurred. Production costs of advertising and promotional materials are expensed when the advertising is first run. Included in marketing, general and administrative expenses is total marketing and advertising expenses which were approximately $ i 1.1 billion, $ i 0.9 billion and $ i 1.2 billion in 2021, 2020 and 2019, respectively. Marketing, general and administrative expenses also included integration costs of $ i 25 million in 2019. There were i i no / integration costs recorded in 2021 or 2020 as the activity related to the acquisition of the remaining portion of MillerCoors, which occurred on October 11, 2016 (the "Acquisition"), was completed by the end of 2019.

This classification also includes general and administrative costs for functions such as finance, legal, human resources and information technology, along with integration costs as noted above. These costs primarily consist of labor and outside services, as well as bad debt expense related to our allowance for doubtful accounts. Unless capitalization is allowed or required

by U.S. GAAP, legal costs are expensed when incurred. These costs also include our marketing and sales organizations, including labor and other overheads. This line item additionally includes amortization costs associated with intangible assets, as well as certain depreciation costs related to non-production equipment and share-based compensation.

Share-based compensation is recognized using a straight-line method over the vesting period of the awards. We include estimated forfeitures expected to occur when calculating share-based compensation expense. Our share-based compensation plan and the awards within it contain provisions that accelerate vesting of awards upon change in control, retirement, disability or death of eligible employees and directors. Our share-based awards are considered vested when the employee's retention of the award is no longer contingent on providing service, which for certain awards can result in immediate recognition for awards granted to retirement-eligible individuals or accelerated recognition for awards granted to individuals that will become retirement eligible within the stated vesting period. Also, if less than the stated vesting period, we recognize these costs over the period from the grant date to the date retirement eligibility is achieved.

Special Items, net

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

•infrequent or unusual items,

•impairment or asset abandonment-related losses,

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

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

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

Interest Expense, net

Our interest costs are associated with borrowings to finance our operations and acquisitions. Interest earned on our cash and cash equivalents across our business is recorded as interest income.

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

i Other Income (Expense)

Our other income (expense) classification primarily includes gains and losses associated with activities not directly related to our operations. For instance, aggregate unrealized and realized foreign exchange gains and losses resulting from the remeasurement and settlement of foreign-denominated monetary assets and liabilities, as well as certain gains or losses on sales of non-operating assets and the mark-to-market activity associated with warrants and other equity securities are classified in this line item. These gains and losses are reported in the operating segment in which they occur; however, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities remain unallocated. The initial recording of foreign-denominated transactions are classified based on the nature of the transaction, with the unrealized or realized foreign exchange gains or losses resulting from the subsequent remeasurement of the monetary asset or liability, and its ultimate settlement, classified in other income (expense).

Income Taxes

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets, liabilities, and certain unrecognized gains and losses recorded in accumulated other comprehensive income (loss). We apply the intraperiod tax allocation rules to allocate our provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income (loss), when we meet the criteria prescribed by U.S. GAAP.

When cash is available after satisfying working capital needs and all other business obligations, we may distribute such cash from a foreign subsidiary to its U.S. parent and record the tax impact associated with the distribution. However, to the extent current earnings of our foreign operations exist and are not otherwise distributed or planned to be distributed, such earnings accumulate. These accumulated earnings are considered permanently reinvested in our foreign operations. We currently would not expect the aggregate of these permanently reinvested earnings, which are largely in deficit positions for U.S. tax purposes, to result in any material U.S. taxes, if distributed.

The tax benefit from an uncertain tax position is recognized only if it is determined that the tax position will more likely be sustained based on its technical merits. We measure and record the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Interest, penalties and offsetting positions related to unrecognized tax benefits are recognized as a component of income tax expense. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.

i Other Comprehensive Income (Loss)

OCI represents income and losses for the reporting period, including the related tax impacts, which are excluded from net income (loss) and recognized directly within AOCI as a component of equity. OCI also includes amounts reclassified to income during the reporting period that were previously recognized within AOCI. Amounts remaining within AOCI are expected to be reclassified out of AOCI in the future, at which point they will be recognized within the consolidated statement of operations as a component of net income (loss). We recognize OCI related to the translation of assets and liabilities of our foreign subsidiaries which are denominated in currencies other than USD, unrealized gains and losses on the effective portion of our derivatives designated in cash flow hedging relationships and derivative and non-derivative instruments designated in net investment hedging relationships, actuarial gains and losses and prior service costs related to our pension and other post-retirement benefit plans, as well as our proportionate share of our equity method investments' OCI. Additionally, when we do not have the expectation or intent to cash settle certain of our intercompany note receivable and note payable positions in the foreseeable future, the remeasurement of these instruments is recorded as a component of foreign currency translation adjustments within OCI. We release stranded tax effects from AOCI using either a specific identification approach or portfolio approach based on the nature of the underlying item.

Earnings Per Share

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, PSUs and stock options. The dilutive effects of our potentially dilutive securities are calculated using the treasury stock method. Our calculation of weighted-average shares includes Class A common stock and Class B common stock, and Class A exchangeable shares and Class B exchangeable shares. All classes of stock have in effect the same dividend rights and share equitably in undistributed earnings. Holders of Class A common stock receive dividends only to the extent dividends are declared and paid to holders of Class B common stock. See Note 8, "Stockholders' Equity" for further discussion of the Class A common stock and Class B common stock and Class A exchangeable shares and Class B exchangeable shares. We have no unvested outstanding equity share awards that contain non-forfeitable rights to dividends.

Dividends

Dividends per share paid to shareholders were $ i 0.68, $ i 0.57 and $ i 1.96 during the years ended December 31, 2021, 2020 and 2019, respectively. In response to the global economic uncertainty created by the coronavirus pandemic, our Board of Directors suspended our regular quarterly dividend on our Class A and Class B common and exchangeable shares in May 2020. A quarterly dividend was reinstated during the third quarter of 2021.

Cash and Cash Equivalents

Cash consists of cash on hand and bank deposits. Cash equivalents represent highly liquid investments with original maturities of three months or less. Our cash deposits are maintained with multiple, reputable financial institutions.

Non-Cash Activity

Non-cash activity includes non-cash issuances of share-based awards, as well as non-cash investing activities related to movements in our guarantee of indebtedness of certain equity method investments. See Note 4, "Investments" and Note 13 , "Share-Based Payments" for further discussion. We also had other non-cash activities related to capital expenditures incurred but not yet paid of $ i 206.6 million, $ i 171.9 million and $ i 214.9 million during 2021, 2020 and 2019, respectively.

In June 2021, we rolled forward our July 2021 $ i 250.0 million forward starting interest rate swap to May 2022 through a cashless settlement. The unrealized loss on the 2021 forward starting interest rate swap at the time of the transaction was factored into the effective interest rate assigned to the new May 2022 forward starting interest rate swap. See Note 16, "Derivative Instruments and Hedging Activities" for further details.

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

Accounts Receivable and Notes Receivable

We record accounts and notes receivable at net realizable value. This carrying value includes an appropriate allowance for estimated uncollectible amounts to reflect any loss anticipated on the accounts and notes receivable balances. We calculate this allowance based on our country-specific history of write-offs, level of past-due accounts based on the contractual terms of the receivables and our relationships with and the economic status of our customers, which may be impacted by current macroeconomic and regulatory factors specific to the country of origin. This methodology takes into consideration historical loss experience and current and forecasted changes in cash flows based on internal and external information.

In the U.K., loans are extended to a portion of the retail outlets that sell our brands. We establish an allowance through a provision for loan losses charged against earnings and recorded in marketing, general and administrative expenses. Loan balances that are written off are recorded against the allowance as a write-off. Activity within the allowance for credit losses was immaterial for fiscal years 2021, 2020 and 2019.

i Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out ("FIFO") method. We regularly assess the shelf-life of our inventories and reserve for those inventories when it becomes apparent the product will not be sold within our freshness specifications.

i Other current assets

Other current assets include prepaid assets, maintenance and operating supplies, promotion materials and derivative assets that are expected to be recognized or realized within the next i 12 months. Maintenance and operating supplies include our inventories of spare parts, which are kept on hand for repairs and maintenance of machinery and equipment. The majority of spare parts within our business include motors, fillers and other components that are required to maintain a normal level of production in the event that expected maintenance and/or repairs are required. These parts are inventoried within current assets as they are reasonably expected to be used during the normal operating cycle of the business and are reserved for excess and obsolescence, as appropriate. The allowance for obsolete supplies was $ i 18.3 million and $ i 16.4 million as of December 31, 2021, and December 31, 2020, respectively.

Properties

Properties are stated at original cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets, which are reviewed periodically and have the following ranges: buildings and improvements: i 20- i 40 years; machinery and equipment: i 3- i 25 years; furniture and fixtures: i 3- i 10 years; returnable containers: i 2- i 15 years; and software: i 3- i 5 years. Land is not depreciated, and construction in progress is not depreciated until ready for service. Costs of enhancements or modifications that substantially extend the capacity or useful life of an asset are capitalized and depreciated accordingly. Ordinary repairs and maintenance are expensed as incurred. When property is sold or otherwise disposed of, the cost and accumulated depreciation are removed from our consolidated balance sheets and the resulting gain or loss, if any, is reflected in our consolidated statements of operations. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset (or asset group) may not be recoverable. Our asset groups are generally identified at the segment level with the exception of certain craft breweries or other locations which may operate on a more stand-alone basis, such as our Truss LP joint venture. During the year ended December 31, 2021, we did not identify any triggering events related to our asset groups which required performance of an impairment test.

Returnable containers are recorded at acquisition cost and consist of returnable bottles, kegs, pallets and crates that are both in our direct control within our breweries, warehouses and distribution facilities and those that we indirectly control in the market through our agreements with our customers and other brewers and for which a deposit is received. The deposits received on our returnable containers in the market are recorded as deposit liabilities, included as current liabilities within accounts payable and other current liabilities in the consolidated balance sheets. We estimate that the loss, breakage and deterioration of our returnable containers is comparable to the depreciation calculated on an estimated useful life of up to i 4 years for bottles, i 5 years for pallets, i 7 years for crates, and i 15 years for returnable kegs. We also own and maintain other equipment in the market related to delivery of our products to end consumers, for example on-premise dispense equipment and refrigeration units. This equipment is recorded at acquisition cost and depreciated over lives of up to i 7 years, depending on the market, reflecting the use of the equipment, as well as the loss and deterioration of the asset.

The costs of acquiring or developing internal-use computer software, including directly-related payroll costs for internal resources, are capitalized and classified within properties. Software maintenance and training costs are expensed in the period incurred. Implementation costs incurred in hosting arrangements that are service contracts are capitalized within other assets and are immaterial.

Properties held under finance lease are depreciated using the straight-line method over the estimated useful life or the lease term, whichever is shorter, and the related depreciation is included in depreciation expense. Finance lease assets for which ownership is transferred at the end of the lease, or there is a purchase option that we are reasonably certain to exercise, are amortized over the useful life that would be assigned if the asset were owned.

i Goodwill and Other Intangible Assets

Goodwill is allocated to the reporting unit in which the business that created the goodwill resides. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. As of the date of the completion of our 2021 impairment testing, we have concluded that we have i two reporting units, Americas and EMEA&APAC. See further discussion in Note 10, "Goodwill and Intangibles."

As required, we evaluate the carrying value of our goodwill and indefinite-lived intangible assets for impairment at the reporting unit level at least annually or when an interim triggering event occurs that would indicate that impairment may have taken place. Our annual test is performed as of the first day of our fiscal fourth quarter. We continuously monitor the performance of our other definite-lived intangible assets and evaluate for impairment when evidence exists that certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Significant judgments and assumptions are required in such impairment evaluations. Definite-lived intangible assets are stated at cost less accumulated amortization. Amortization is recorded using the straight-line method over the estimated lives of the assets as this approximates the pattern in which the assets economic benefits are consumed.

i Equity Method Investments

We apply the equity method of accounting to 20% to 50% owned investments where we exercise significant influence or VIEs for which we are not the primary beneficiary. We use the cumulative earnings approach for determining cash flow presentation of cash distributions received from equity method investments. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions exceed our portion of the cumulative equity in the net earnings of the equity method investment, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows. See Note 4, "Investments" for further information regarding our equity method investments.

There are no related parties that own interests in our equity method investments as of December 31, 2021.

Derivative Hedging Instruments

We use derivatives as part of our normal business operations to manage our exposure to fluctuations in interest rates, foreign currency exchange, commodity prices, production and packaging material costs and for other strategic purposes related to our core business. We enter into derivatives for risk management purposes only, including derivatives designated in hedge accounting relationships as well as those derivatives utilized as economic hedges. We do not enter into derivatives for trading or speculative purposes. We recognize our derivatives on the consolidated balance sheets as assets or liabilities at fair value and are classified in either current or non-current assets or liabilities based on each contract's respective unrealized gain or loss position and each contract's respective maturity. Our policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements. Further, our current derivative agreements do not allow us to net positions with the same counterparty and therefore, we present our derivative positions gross in our consolidated balance sheets.

Changes in fair values of outstanding cash flow and net investment hedges are recorded in OCI, until earnings are affected by the variability of cash flows of the underlying hedged item or the sale of the underlying net investment, respectively. Effective cash flow hedges offset the gains or losses recognized on the underlying exposure in the consolidated statements of operations, or for net investment hedges, the foreign exchange translation gain or loss recognized in AOCI. Changes in fair value of outstanding fair value hedges and the offsetting changes in fair value of the hedged item are recognized in earnings. Changes in fair value of the derivative attributable to components allowed to be excluded from the assessment of hedge effectiveness are deferred in AOCI and recognized in earnings over the life of the hedge.

We record realized gains and losses from derivative instruments in the same financial statement line item as the hedged item/forecasted transaction. Changes in unrealized gains and losses for derivatives not designated in a hedge accounting relationship are recorded directly in earnings each period and are also recorded in the same financial statement line item as the hedged item/forecasted transaction. Cash flows from the settlement of derivatives, including both economic hedges and those designated in hedge accounting relationships, appear in the consolidated statements of cash flows in the same categories as the cash flows of the hedged item unless the instruments are deemed to contain an other-than-insignificant financing element, in which case the cash flows related to this instrument will be classified as financing activities.

In accordance with authoritative accounting guidance, we do not record the fair value of derivatives for which we have elected the Normal Purchase Normal Sale ("NPNS") exemption. We account for these contracts on an accrual basis, recording realized settlements related to these contracts in the same financial statement line items as the corresponding transaction.

Leases

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

We enter into contractual arrangements for the utilization of certain non-owned assets, primarily real estate and equipment, which are evaluated as finance or operating leases upon commencement, and are accounted for accordingly. Specifically, under ASC 842, a contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. For all contractual arrangements deemed to be leases (other than short-term leases), as of the lease commencement date, we recognize on the consolidated balance sheet a liability for our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use.

For leases that qualify as short-term leases, we have elected, for all classes of underlying assets, to not apply the balance sheet recognition requirements of ASC 842, and instead, we recognize the lease payments in the consolidated statements of operations on a straight-line basis over the lease term. We have also made the election, for our existing real estate and equipment classes of underlying assets, to account for lease and non-lease components as a single lease component.

Our leases have remaining lease terms of up to approximately i 17 years. Certain of our lease agreements contain options to extend or early terminate the agreement. The lease term used to calculate the right-of-use ("ROU") asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these determinations, we generally conclude that the exercise of renewal options would not be reasonably certain in determining the lease term at commencement. Assumptions made at the commencement date are re-evaluated upon occurrence of certain events requiring a lease modification. Additionally, for certain equipment leases involving groups of similar leased assets with similar lease terms, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities.

The discount rate used to calculate the present value of the future minimum lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use our incremental borrowing rate relative to the leased asset in all other cases.

Certain of our leases include variable payments, primarily for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets. These variable payments are excluded from the measurement of our lease assets and liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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

Pension and Postretirement Benefits

We maintain retirement plans for the majority of our employees. We offer different types of plans within each segment, including defined benefit plans, defined contribution plans and OPEB plans. Each plan is managed locally and in accordance with respective local laws and regulations. Our equity investments, BRI and BDL, maintain defined benefit, defined contribution and OPEB plans as well.

We recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability in the consolidated balance sheets. The funded status of a plan, measured as the difference between the fair value of plan assets and the projected benefit obligation, and the related net periodic pension cost are calculated using a number of significant actuarial assumptions. Changes in net periodic pension cost and funding status may occur in the future due to changes in these assumptions.

We use the fair value approach to calculate the market-related value of pension plan assets used to determine net periodic pension cost, which includes measuring the market-related value of plan assets at fair value for purposes of determining the expected return on plan assets and amount of gain or loss subject to amortization.

Projected benefit obligation is the actuarial present value as of the measurement date of all benefits attributed by the plan benefit formula to employee service rendered before the measurement date using assumptions as to future compensation levels and years of service if the plan benefit formula is based on those future compensation levels and years of service. Accumulated benefit obligation is the actuarial present value of benefits (whether vested or unvested) attributed by the plan benefit formula to employee service rendered before the measurement date and based on employee service and compensation, if applicable, prior to that date. Accumulated benefit obligation differs from projected benefit obligation in that it includes no assumption about future compensation levels and years of service.

We employ the corridor approach for determining each plan's potential amortization from AOCI of deferred gains and losses, which occur when actual experience differs from estimates, into our net periodic pension and postretirement benefit cost. This approach defines the "corridor" as the greater of 10% of the projected benefit obligation or 10% of the market-related value of plan assets and requires amortization of the excess net gain or loss that exceeds the corridor over the average remaining service periods of active plan participants. For plans closed to new entrants and the future accrual of benefits, the average remaining life expectancy of all plan participants (including retirees) is used.

Fair Value Measurements

The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate fair value as recorded due to the short-term nature of these instruments. In addition, the carrying amounts of our trade loan receivables, net of allowances, approximate fair value. The fair value of derivatives is estimated by discounting the estimated future cash flows utilizing observable market interest, foreign exchange and commodity rates adjusted for non-performance credit risk associated with our counterparties (assets) or with MCBC (liabilities), as appropriate. Additionally, the fair value of warrants is estimated using the Black-Scholes valuation model. See Note 16, "Derivative Instruments and Hedging Activities" for additional information. Based on current market rates for similar instruments, the fair value of long-term debt is presented in Note 11, "Debt."

U.S. GAAP guidance for fair value includes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Our financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy.

The three levels of the hierarchy are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are less active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (market corroborated inputs).

Level 3—Unobservable inputs that reflect the assumptions that we believe market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.

Foreign Currency

Assets and liabilities recorded in foreign currencies that are the functional currencies for the respective operations are translated at the prevailing exchange rate at the balance sheet date. Translation adjustments resulting from this process are reported as a separate component of OCI. Gains and losses from foreign currency transactions are included in earnings for the period. Revenue and expenses are translated at the average exchange rates during the respective period throughout the year.

Subsequent Events

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

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

2. i New Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes. This guidance eliminated certain exceptions to the general approach to the income tax accounting model and added new guidance to reduce the complexity in accounting for income taxes. We adopted this guidance in the first quarter of 2021, which did not have a material impact on our financial statements.

In March 2020, the FASB issued authoritative guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance, March 12, 2020 through December 31, 2022. The guidance permits a company to elect certain optional expedients and exceptions when affected by the changes in reference rate reform. We have elected to adopt optional expedients impacting our derivative instruments with maturity dates extending beyond the expected discontinuance date of LIBOR. In addition, in October 2021, we amended our revolving credit facility to replace LIBOR with designated replacement rates for any future borrowings denominated in EUR or GBP. The adoption of, and future elections under Accounting Standard Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, did not and are not expected to have a material impact on our accounting policies or consolidated financial statements. We will continue to evaluate the impact of reference rate reform on our other contracts and assess the impacts of adopting incremental portions of this guidance on our financial statements.

New Accounting Pronouncements Not Yet Adopted

In November 2021, the FASB issued authoritative guidance intended to provide consistent and transparent disclosures around government assistance by requiring disclosures of the type of government assistance, our accounting for the government assistance and the effect on our financial statements. This guidance is effective for us in our annual report for the year ended December 31, 2022. We can either adopt the amendments in this guidance prospectively or retrospectively. We are currently evaluating the impact of this guidance and do not expect it will have a material impact on our financial statements as the guidance impacts disclosures only.

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

3. i Segment Reporting

i Our reporting segments are based on the key geographic regions in which we operate and include the Americas and EMEA&APAC segments. Our Americas segment operates in the U.S., Canada and various countries in Latin and South America and our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries and certain countries within the Middle East, Africa and Asia Pacific. We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated” below.

Reporting Segments

Americas

The Americas segment consists of our production, marketing and sales of our brands and other owned and licensed brands in the U.S., Canada and various countries in Latin and South America. We have contract brewing agreements to brew, package and ship products for Pabst and TYC, and a contract brewing agreement with Labatt USA Operating Co, LLC to brew and package certain Labatt brands for export. We have an agreement with Heineken that grants us the right to import, market, distribute and sell certain Heineken products in Canada.

The Americas segment also includes BRI, our joint venture arrangement related to the distribution and retail sale of beer in Ontario, and BDL, our joint venture arrangement related to the distribution of beer in the western provinces. Additionally, in the third quarter of 2020, we formed TYC, a joint venture equally owned by MCBC and DGY West that, pursuant to an operating agreement, was formed to expand commercialization of Yuengling's brands for any new market expansion outside of Yuengling's then i 22-state footprint and New England in the U.S. During the third quarter of 2021, TYC commenced retail operations with its first product sales in the state of Texas. BRI, BDL and TYC are all accounted for as equity method investments.

EMEA&APAC

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

Unallocated

"Unallocated" activity primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances related to financing and other treasury-related activities, and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides. Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment and all other components remain unallocated.

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated sales in 2021, 2020 or 2019. Consolidated net sales represent sales to third-party external customers less excise taxes. Inter-segment transactions impacting net sales and income (loss) before income taxes eliminate upon consolidation and are primarily related to the Americas segment sales to, and royalties received from, the EMEA&APAC segment.

The following tables represent consolidated net sales, interest expense, interest income and reconciliations of amounts shown as income (loss) before income taxes to income (loss) attributable to MCBC. Income (loss) before income taxes includes the impact of special items; refer to Note 7, "Special Items" for further discussion. Additionally, integration costs of $ i 25 million were recorded within marketing, general and administrative expenses for 2019, primarily within our Americas segment. i i No / integration costs were recorded in the years ended December 31, 2021 or 2020.

Year ended December 31, 2021

Americas

EMEA&APAC

Unallocated

Inter-segment net sales eliminations

Consolidated

(In millions)

Net sales

i 8,485.0

i 1,802.3

i —

( i 7.6)

i 10,279.7

Interest expense

( i 1.4)

( i 5.8)

( i 253.1)

i —

( i 260.3)

Interest income

i —

i 0.2

i 1.8

i —

i 2.0

Income (loss) before income taxes

i 1,176.5

i 32.9

i 29.6

i —

i 1,239.0

Income tax benefit (expense)

( i 230.5)

Net income (loss)

i 1,008.5

Net (income) loss attributable to noncontrolling interests

( i 2.8)

Net income (loss) attributable to MCBC

i 1,005.7

Year ended December 31, 2020

Americas

EMEA&APAC

Unallocated

Inter-segment net sales eliminations

Consolidated

(In millions)

Net sales

i 8,237.0

i 1,431.9

i —

( i 14.9)

i 9,654.0

Interest expense

( i 2.6)

( i 5.7)

( i 266.3)

i —

( i 274.6)

Interest income

i 0.2

i 0.3

i 2.8

i —

i 3.3

Income (loss) before income taxes

i 1,080.5

( i 1,603.7)

( i 120.7)

i —

( i 643.9)

Income tax benefit (expense)

( i 301.8)

Net income (loss)

( i 945.7)

Net (income) loss attributable to noncontrolling interests

( i 3.3)

Net income (loss) attributable to MCBC

( i 949.0)

Year ended December 31, 2019

Americas

EMEA&APAC

Unallocated

Inter-segment net sales eliminations

Consolidated

(In millions)

Net sales

i 8,618.2

i 1,986.4

i —

( i 25.2)

i 10,579.4

Interest expense

i 2.8

( i 6.2)

( i 277.5)

i —

( i 280.9)

Interest income

i —

i 0.5

i 7.7

i —

i 8.2

Income (loss) before income taxes

i 645.0

i 102.4

( i 267.5)

i —

i 479.9

Income tax benefit (expense)

( i 233.7)

Net income (loss)

i 246.2

Net (income) loss attributable to noncontrolling interests

( i 4.5)

Net income (loss) attributable to MCBC

i 241.7

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


	Assets				Depreciation and amortization						Capital expenditures
	As of December 31,				For the years ended December 31,						For the years ended December 31,
	2021		2020		2021		2020		2019		2021		2020		2019
	(In millions)
Americas	$	i 23,653.5	$	i 23,375.6	$	i 601.4	$	i 743.0	$	i 676.9	$	i 405.0	$	i 461.4	$	i 450.7
EMEA&APAC	i 3,965.5		i 3,955.5		i 184.7		i 179.0		i 182.1		i 117.6		i 113.4		i 143.1
Consolidated	$	i 27,619.0	$	i 27,331.1	$	i 786.1	$	i 922.0	$	i 859.0	$	i 522.6	$	i 574.8	$	i 593.8

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

For the years ended

(In millions)

Net sales to unaffiliated customers

United States and its territories

i 7,168.7

i 7,016.1

i 7,244.9

Canada

i 1,188.4

i 1,111.6

i 1,231.3

United Kingdom

i 959.1

i 663.7

i 1,119.1

Other foreign countries(1)

i 963.5

i 862.6

i 984.1

Consolidated net sales

i 10,279.7

i 9,654.0

i 10,579.4

(1)Reflects net sales within certain countries in Europe, Latin America, South America, the Middle East, Africa and Asia. No individual country has total net sales exceeding 10% of the total consolidated net sales.

/ i

The following table presents net properties and operating ROU assets by geographic location. See Note 19, "Lease" for further information on our operating ROU assets and Note 9, "Properties " for further information on our net properties.


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Net properties and operating ROU assets
United States and its territories	$	i 2,294.1	$	i 2,457.1
Canada	i 1,114.6		i 974.8
United Kingdom	i 383.2		i 398.9
Other foreign countries(1)	i 519.6		i 555.7
Consolidated net properties and operating ROU assets	$	i 4,311.5	$	i 4,386.5

(1)Reflects net properties and operating ROU assets within certain countries in Europe, Latin America, South America, Africa and Asia. No individual country has total net properties or operating ROU assets exceeding i 10% of the total consolidated net properties or operating ROU assets, respectively.

4. i Investments

Our investments include both equity method and consolidated investments. Those entities identified as 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, we have consolidated these entities. None of our consolidated VIEs held debt as of December 31, 2021 or December 31, 2020. We have not provided any financial support to any of our VIEs during 2021 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. See below under "Affiliate Transactions" for further details.

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. Our consolidated VIEs are Cobra Beer Partnership, Ltd. ("Cobra U.K."), RMMC, RMBC and Truss, as well as other immaterial entities. Our unconsolidated VIEs are BRI, BDL and TYC, as well as other immaterial investments.

Both BRI and BDL have outstanding third-party debt which is guaranteed by their respective shareholders. As a result, we have a guarantee liability of $ i 38.1 million and $ i 38.2 million recorded as of December 31, 2021 and December 31, 2020, respectively, which is presented within accounts payable and other current liabilities on the consolidated balance sheets and represents our proportionate share of the outstanding balance of these debt instruments. The carrying value of the guarantee liability equals 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 respective equity method investment within the consolidated balance sheets. The resulting change in our equity method investments during the year due to movements in the guarantee represents a non-cash investing activity.

Equity Method Investments

BRI

BRI is a beer distribution and retail network for the Ontario region of Canada, with majority of the ownership residing with Molson Canada 2005, Labatt Breweries of Canada LP (a subsidiary of ABI) and Sleeman Breweries Ltd. (a subsidiary of Sapporo International). BRI charges its owners administrative fees that are designed so the entity operates on a cash neutral basis. This administrative fee is based on costs incurred, net of other revenues earned, and is allocated in accordance with the operating agreement to its owners based on volume of products. Contractual provisions cause participation in governance and other interests to fluctuate based on this calculated market share requiring frequent primary beneficiary evaluations. However, based on the existing structure, control is shared, and remains shared through such changes, and therefore we do not anticipate becoming the primary beneficiary in the foreseeable future. We consider BRI an affiliate.

We have an obligation to proportionately fund BRI's operations. As a result of this obligation, we continue to record our proportional share of BRI's net income or loss and OCI activity, including when we have a negative equity method balance. As of December 31, 2021 and December 31, 2020, we had a positive equity method investment balance of $ i 43.9 million and $ i 31.9 million, respectively. See "Affiliate Transactions" below for BRI affiliate due to and due from balances as of December 31, 2021 and December 31, 2020, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BRI offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).

BDL

BDL is a distribution operation owned by Molson Canada 2005 and Labatt Breweries of Canada LP (a subsidiary of ABI) that, pursuant to an operating agreement, acts as an agent for the distribution of their products in the western provinces of Canada. The i two owners share equal voting control of this business. We consider BDL an affiliate.

BDL charges the owners administrative fees that are designed so the entity operates at break-even profit levels. This administrative fee is based on costs incurred, net of other revenues earned, and is allocated in accordance with the operating agreement to the owners based on volume of products. Our investment in BDL was $ i 33.2 million and $ i 27.0 million as of December 31, 2021 and December 31, 2020, respectively. See "Affiliate Transactions" section below for BDL affiliate due to and due from balances as of December 31, 2021 and December 31, 2020, respectively, related to trade receivables and payables for sales to external customers and costs incurred by BDL offset by administrative fees charged and paid by MCBC (which may be in a payable or receivable position depending on the amount under or over charged).

Other

In the third quarter of 2020, we formed TYC, a joint venture equally owned by MCBC and DGY West that, pursuant to an operating agreement, was formed to expand commercialization of Yuengling's brands for any new market expansion outside of Yuengling's then i 22-state footprint and New England in the U.S. During the third quarter of 2021, TYC commenced retail operations with its first product sales in the state of Texas. We have concluded that TYC is a VIE for which we are not the primary beneficiary, and therefore is accounted for as an equity method investment.

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

Our equity method investments are not considered significant for disclosure of financial information on either an individual or aggregated basis and there were no significant undistributed earnings as of December 31, 2021 or December 31, 2020, for any of these companies.

Affiliate Transactions

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

Amounts due from affiliates

Amounts due to affiliates

(In millions)

BRI

i 3.3

i 6.0

i 0.4

i —

BDL

i 6.2

i 2.1

i 3.1

i —

Other

i 6.7

i 0.3

i 0.6

i 0.5

Total

i 16.2

i 8.4

i 4.1

i 0.5

Consolidated VIEs

Rocky Mountain Metal Container

RMMC, a Colorado limited liability company, is a joint venture with Ball Corporation in which we hold a i 50% interest. Our U.S. business has a can and end supply agreement with RMMC. Under this agreement, we purchase substantially all of the output of RMMC. RMMC manufactures cans and ends at our facilities, which RMMC is operating under a use and license agreement. As RMMC is a limited liability company (“LLC”), the tax consequences flow to the joint venture partners.

Rocky Mountain Bottle Company

RMBC, a Colorado limited liability company, is a joint venture with Owens-Brockway Glass Container, Inc. in which we hold a i 50% interest. Our U.S. business has a supply agreement with RMBC under which we agree to purchase output approximating the agreed upon annual plant capacity of RMBC. RMBC manufactures bottles at our facilities, which RMBC is operating under a lease agreement. As RMBC is an LLC, the tax consequences flow to the joint venture partners.

Cobra U.K.

We hold a i 50.1% interest in Cobra U.K., which owns the worldwide rights to the Cobra beer brand (with the exception of the Indian sub-continent, owned by Cobra India). The noncontrolling interest is held by the founder of the Cobra beer brand. We consolidate the results and financial position of Cobra U.K., and it is reported within our EMEA&APAC segment.

Truss

On October 4, 2018, a wholly-owned subsidiary within our Canadian business completed the formation of Truss LP, an independent Canadian joint venture with HEXO to pursue opportunities to develop, produce and market non-alcoholic, cannabis-infused beverages in Canada. Truss is structured as a standalone company with its own board of directors and an independent management team. We maintain a i 57.5% controlling interest in Truss, which is a VIE that is consolidated. Truss subleases the location of its production facility in Belleville, Ontario from HEXO.

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

As of

Total Assets

Total Liabilities

Total Assets

Total Liabilities

(In millions)

RMMC/RMBC

i 204.9

i 19.1

i 239.3

i 17.9

Other

i 70.8

i 14.8

i 93.4

i 18.0

Grolsch Deconsolidation

In 2019, we received termination notices of our Grolsch U.K. Ltd. ("Grolsch") joint venture arrangement, as well as the related brewing and distribution agreements for the Grolsch brands in the U.K. and Ireland. We therefore reassessed our status as the primary beneficiary of the joint venture and concluded that we were no longer able to exert control over the operations or direction of the joint venture or otherwise influence the activities that most significantly impact the economics of the entity. As a result, we deconsolidated the joint venture and recorded an aggregate immaterial loss on the deconsolidation and termination of the Grolsch business in special items, net, in the consolidated statements of operations in 2019.

5. i Other Income and Expense i

For the years ended

(In millions)

Gain (loss) from other foreign exchange and derivative activity, net

( i 7.4)

i 2.8

( i 20.4)

Other, net(1)

i 3.9

i 3.2

i 5.7

Other income (expense), net

( i 3.5)

i 6.0

( i 14.7)

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

6. i Income Tax

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

For the years ended

(In millions)

Domestic

i 1,307.5

i 1,151.7

i 1,136.1

Foreign

( i 68.5)

( i 1,795.6)

( i 656.2)

Total

i 1,239.0

( i 643.9)

i 479.9

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

For the years ended

(In millions)

Current

Federal

i 43.5

i 79.0

i 69.1

State

i 7.1

i 5.2

i 9.4

Foreign

( i 1.0)

i 111.4

i 46.7

Total current tax (benefit) expense

i 49.6

i 195.6

i 125.2

Deferred

Federal

i 163.5

i 101.9

i 128.3

State

i 70.4

i 19.5

i 22.2

Foreign

( i 53.0)

( i 15.2)

( i 42.0)

Total deferred tax (benefit) expense

i 180.9

i 106.2

i 108.5

Total income tax (benefit) expense

i 230.5

i 301.8

i 233.7

i A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:

For the years ended

($ in millions)

Statutory federal income tax rate

i 21.0

i 260.2

i 21.0

( i 135.2)

i 21.0

i 100.8

State income taxes, net of federal benefits

i 4.7

i 57.8

( i 1.7)

i 11.0

i 3.4

i 16.4

Effect of foreign tax rates

( i 5.5)

( i 68.3)

i 3.5

( i 22.3)

( i 21.2)

( i 101.8)

Effect of foreign tax law and rate changes

i 1.6

i 19.6

( i 0.9)

i 6.0

i —

Effect of unrecognized tax benefits

( i 6.2)

( i 76.3)

( i 26.1)

i 167.9

i 3.7

i 18.0

Change in valuation allowance

( i 0.1)

( i 1.1)

i 1.3

( i 8.4)

i 6.0

i 28.8

Goodwill impairment

( i 0.2)

( i 2.9)

( i 41.4)

i 266.8

i 36.5

i 175.3

Other, net

i 3.3

i 41.5

( i 2.6)

i 16.0

( i 0.7)

( i 3.8)

Effective tax rate / Tax (benefit) expense

i 18.6

i 230.5

( i 46.9)

i 301.8

i 48.7

i 233.7

The decrease to the effective tax rate for fiscal year 2021 when compared to the statutory rate is primarily due to the release of $ i 73 million of reserves for unrecognized tax benefit positions recognized in the third quarter of 2021. The reserve release included amounts for an income tax audit settlement, net of changes in estimates associated with prior period uncertain tax positions, as well as amounts for the expiration of statutes of limitations. Additionally, during the second quarter of 2021, the U.K. government enacted, and royal assent was received for, legislation to increase the corporate income tax rate from 19% to 25%. Remeasurement of our deferred tax liabilities under the higher income tax rate resulted in the recognition of additional discrete tax expense of approximately $ i 18 million in the second quarter of 2021.

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

of which a majority related to nondeductible goodwill. Additionally, during the second quarter of 2020 we recognized approximately $ i 135 million of tax expense following the enactment of the final U.S. tax hybrid regulations.

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

Additionally, our foreign businesses operate in jurisdictions with statutory income tax rates that differ from the U.S. Federal statutory rate. Specifically, the statutory income tax rates in the countries in Europe in which we operate range from i 9% to i 25.8%, and Canada has a combined federal and provincial statutory income tax rate of approximately i 26%.


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Non-current deferred tax assets
Compensation-related obligations	$	i 54.8	$	i 60.9
Pension and postretirement benefits	i 24.5		i 102.4


Derivative instruments	i —		i 76.5
Tax credit carryforwards	i 38.3		i 56.2
Tax loss carryforwards	i 359.0		i 331.6


Accrued liabilities and other	i 97.7		i 75.5

Valuation allowance	( i 60.7)		( i 62.2)
Total non-current deferred tax assets	$	i 513.6	$	i 640.9
Non-current deferred tax liabilities:
Fixed assets	i 422.4		i 358.3
Partnerships and investments	i 29.7		i 19.6

Intangible assets	i 2,539.7		i 2,396.9
Derivative instruments	i 19.5		i —

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

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

The overall increase in net deferred tax liabilities of $ i 363.8 million in 2021 was due to the $ i 236.5 million increase in deferred tax liabilities and the decrease in deferred tax assets of $ i 127.3 million. The increase in deferred tax liabilities was primarily due to the amortization of goodwill and indefinite-lived intangible assets for U.S. tax purposes due to the Acquisition. The decrease in the deferred tax assets was due to changes in our unrealized commodity mark to market and pension temporary differences and decreases in our tax credit carryforwards, partially offset by increases in our tax loss carryforwards and future deductible temporary differences generated in 2021. Additionally, our deferred tax balances are impacted by foreign exchange rates, as a significant amount of our deferred tax assets and liabilities are denominated in foreign currency.

Our deferred tax valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards from operations in various jurisdictions. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results and the availability of prudent and feasible tax planning strategies. Based on this analysis, we have determined that the valuation allowances recorded in each period presented are appropriate.

We have deferred tax assets for U.S. tax carryforwards that expire between 2022 and 2041 of $ i 71.4 million as of December 31, 2021, and that expired between 2021 and 2040 of $ i 62.4 million as of December 31, 2020. We have U.S. tax losses that may be carried forward indefinitely of $ i 14.0 million and $ i 19.9 million as of December 31, 2021 and December 31, 2020, respectively. We have foreign tax loss carryforwards that expire between 2022 and 2041 of $ i 286.5 million as of December 31, 2021, and that expired between 2021 and 2040 of $ i 283.5 million as of December 31, 2020. We have foreign tax losses that may be carried forward indefinitely of $ i 25.4 million and $ i 22.0 million as of December 31, 2021 and December 31, 2020, respectively.


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Domestic net non-current deferred tax liabilities	$	i 1,825.9	$	i 1,542.8
Foreign net non-current deferred tax assets	i 180.2		i 105.7
Foreign net non-current deferred tax liabilities	i 852.0		i 696.8
Net non-current deferred tax liabilities	$	i 2,497.7	$	i 2,133.9

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

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

For the years ended

(In millions)

Balance at beginning of year

i 235.7

i 72.4

i 51.6

Additions for tax positions related to the current year

i 28.6

i 22.8

i 18.1

Additions for tax positions of prior years

i —

i 132.1

i —

Reductions for tax positions related to the current year

( i 24.1)

i —

Reductions for tax positions of prior years

( i 48.9)

( i 1.6)

i —

Settlements

( i 161.8)

( i 0.4)

i —

Release due to statute expirations

( i 3.4)

i —

( i 0.8)

Foreign currency adjustment

i 1.9

i 10.4

i 3.5

Balance at end of year

i 28.0

i 235.7

i 72.4

Our remaining unrecognized tax benefits as of December 31, 2021, relate to tax years that are currently open to examination. Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued.

During the third quarter of 2021, an income tax audit settlement, which included the resolution of the impact of the final hybrid regulations recorded in the second quarter of 2020, was reached with taxing authorities. The settlement, along with changes to other unrecognized positions resulted in the net reduction of our unrecognized tax benefit position by approximately $ i 250 million, including interest, in the third quarter of 2021. The cash tax payment associated with the settlement, after application of available net operating losses, was made in the fourth quarter of 2021 which totaled approximately $ i 125 million. As of the fourth quarter of 2021, we do not anticipate material changes to our remaining unrecognized tax benefit position within the next 12 months.

For the years ended

(In millions)

Reconciliation of unrecognized tax benefits balance

Estimated interest and penalties

i 0.1

i 11.4

i 2.9

Unrecognized tax positions

i 28.0

i 235.7

i 72.4

Total unrecognized tax benefits

i 28.1

i 247.1

i 75.3

Presented net against non-current deferred tax assets

i 26.7

i 142.1

i 68.4

Current (included in accounts payable and other current liabilities)

i —

i 98.0

i —

Non-current (included within other liabilities)

i 1.4

i 7.0

i 6.9

Total unrecognized tax benefits

i 28.1

i 247.1

i 75.3

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

i 18.6

i 87.7

i 72.4

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

We file income tax returns in most of the federal, state and provincial jurisdictions in the U.S., Canada and various countries in Europe. Tax years through 2013 are closed in the U.S. In Canada, tax years through 2016 are closed or have been effectively settled through examination except for issues relating to intercompany cross-border transactions. The statute of limitations for intercompany cross-border transactions is closed through tax year 2012. Tax years through 2013 are closed for most European jurisdictions in which we operate, with statutes of limitations varying from i 3 to i 7 years for most jurisdictions.

7. i 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. i

For the years ended

(In millions)

Employee-related charges

Restructuring

i 11.7

i 67.6

i 52.4

Impairments or asset abandonment charges

Americas - Asset abandonment(1)

i 14.6

i 115.8

i 38.8

Americas - Impairment losses(2)

i —

i 39.6

i 671.7

EMEA&APAC - Asset abandonment(3)

i 10.6

i 3.7

i 1.2

EMEA&APAC - Impairment losses(4)

i 13.5

i 1,516.2

i 12.2

Termination fees and other (gains) losses

Americas(5)

i 0.4

( i 2.0)

( i 68.3)

EMEA&APAC(6)

( i 6.3)

( i 0.7)

i 0.8

Total Special items, net

i 44.5

i 1,740.2

i 708.8

(1)In January 2020, we announced plans to cease production at our Irwindale, California brewery and entered into an option agreement with Pabst, granting Pabst an option to purchase our Irwindale, California brewery, including plant, equipment and machinery and the underlying land for $ i 150 million, subject to adjustment as further specified in the option agreement. Pursuant to the option agreement on May 4, 2020, Pabst exercised its option to purchase the Irwindale brewery and the purchase was completed in the fourth quarter of 2020. Production at the Irwindale brewery ceased during the third quarter of 2020.

Charges associated with the brewery closure for the years ended December 31, 2020 and 2019 totaled $ i 117.7 million and $ i 15.8 million, respectively, excluding the fourth quarter of 2020 gain on sale of the brewery of $ i 2.1 million. The charges for the year ended December 31, 2020 primarily consisted of accelerated depreciation in excess of normal depreciation of $ i 96.0 million and employee related costs of retention and severance of $ i 16.5 million. The employee related costs of retention and severance are included in the restructuring line above. The charges for fiscal year 2019 primarily consisted of accelerated depreciation in excess of normal depreciation of $ i 8.0 million and employee related costs of retention and severance of $ i 1.1 million.

We incurred asset abandonment charges, related to the accelerated depreciation in excess of normal depreciation for the year ended December 31, 2019 as a result of the Vancouver brewery closure which occurred in the third quarter of 2019. In addition, during the years ended December 31, 2021, 2020 and 2019, we incurred accelerated depreciation in excess of normal depreciation related to the Montreal brewery closure which occurred during the fourth quarter of 2021.

(2)Of the $ i 39.6 million of impairment losses recognized in the Americas segment for the year ended December 31, 2020, we recorded aggregate impairment losses of $ i 17.0 million related to certain regional craft brand definite-lived intangible assets during the fourth quarter of 2020. The estimates and assumptions used to determine the fair value represent Level 3 measurements and additional impairment losses may be recognized in the future. The remaining $ i 22.6 million of impairments recognized in 2020 were related to definite-lived tangible assets associated with these regional craft brands.

Of the $ i 671.7 million of impairment losses recognized in the Americas segment in fiscal year 2019, we recorded $ i 668.3 million of goodwill impairment losses related to the Americas reporting unit. See Note 10, "Goodwill and Intangible Assets" for further discussion.

(3)We incurred asset abandonment charges in our EMEA&APAC segment in fiscal year 2021 primarily related to accelerated depreciation in excess of normal depreciation for our Burtonwood and Japan locations. Asset abandonment charges in our EMEA&APAC segment in fiscal year 2020 primarily related to the closure of a small brewery in Europe as a result of the ongoing impacts of the coronavirus pandemic. Further, as a result of our continued strategic review of our European supply chain network, during 2020 and 2019, we incurred charges related to the closure of our Burton South brewery and Alton brewery.

(4)During the fourth quarter of 2021, we recognized an impairment loss of $ i 13.5 million related to the held for sale classification of the remaining portion of our India business. During the third quarter of 2020, we recognized an impairment loss of $ i 30.0 million related to the held for sale classification of a disposal group within our India business, representing an insignificant part of our EMEA&APAC segment. The held for sale disposal group was measured at fair value on a nonrecurring basis using Level 3 inputs. The estimated fair value less cost to sell was determined using a market approach, based upon the expected net sales proceeds of the disposal group.

During the fourth quarter of 2020, we recognized goodwill impairment losses on the EMEA&APAC reporting unit of $ i 1,484.3 million. See Note 10, "Goodwill and Intangible Assets" for further discussion. In addition, during the fourth quarter of 2020, we incurred impairment losses as a result of small brewery closures in Europe as a result of the ongoing impact of the coronavirus pandemic.

During the third quarter of 2019, we recorded goodwill impairment losses within the former India reporting unit of $ i 6.1 million. We also recorded impairment losses related to definite-lived intangible assets in India of $ i 6.1 million. See Note 10, "Goodwill and Intangible Assets" for further discussion.

(5)During the second quarter of 2019, we completed the sale of the existing Montreal brewery property for $ i 96.2 million, and recognized a gain of $ i 61.3 million. See Note 19, "Leases" for further discussion.

(6)During 2021, we recognized a gain of $ i 11.4 million related to the sale of land of the former Alton brewery site in the U.K. In addition, we recognized a loss of $ i 2.7 million on the sale of a disposal group within our India business. The loss included the reclassification of the associated cumulative foreign currency translation adjustment losses from AOCI into special items, net at the time of sale. See Note 14, "Accumulated Other Comprehensive Income (Loss)" for further details.

Restructuring Activities

On October 28, 2019, as part of our revitalization plan, we made the determination to establish Chicago, Illinois as our Americas segment operational headquarters, close our office in Denver, Colorado and consolidate certain administrative functions into our other existing office locations. In connection with these consolidation activities, certain impacted employees were extended an opportunity to continue their employment with MCBC in the new organization and locations and, for those not continuing with MCBC, certain of such employees were asked to provide transition assistance and offered severance and retention packages in connection with their termination of service. The restructuring actions related to the revitalization plan were substantially complete as of December 31, 2021. After taking into account all changes in each of the business units, including the EMEA&APAC segment, the revitalization plan has reduced employment levels, in aggregate, by approximately i 600 employees globally.

In connection with these consolidation activities, we incurred cash and non-cash restructuring charges related to severance, retention and transition costs, employee relocation, non-cash asset related costs, lease impairment and exit costs in connection with our office lease in Denver, Colorado, and other transition activities, the majority of which were cash charges that we began recognizing in the fourth quarter of 2019. During 2021, 2020 and 2019, we recognized severance and retention cash charges of $ i 4.0 million, $ i 35.6 million and $ i 41.2 million, respectively, bringing the aggregate of such charges to approximately $ i 81 million in total since the plan was initiated. Employee relocation charges were recognized in the period incurred and totaled $ i 3.4 million and $ i 11.0 million in 2021 and 2020, respectively. Additionally, during 2020 and 2019, we recognized aggregate impairment losses of $ i 7.6 million and $ i 2.1 million, respectively, related to the closure of the office facility in Denver, Colorado, including our lease right-of-use asset, in light of the sublease market outlook during such periods as a result of the coronavirus pandemic. No further impairment was recorded in 2021 due to the signing of sublease agreements during the second quarter of 2021.

In addition to our revitalization plan, our restructuring also includes other strategic exit activities such as the disposal or wind down of certain brewery locations. We continually evaluate our cost structure and seek opportunities for further efficiencies and cost savings as part of ongoing and new initiatives. As such, we may incur additional restructuring related charges or adjustments to previously recorded charges in the future; however, we are unable to estimate the amount of charges at this time.

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

Americas

EMEA&APAC

Total

(In millions)

Balance as of December 31, 2018

i 24.5

i 1.1

i 25.6

Charges incurred and changes in estimates

i 43.4

i 9.0

i 52.4

Payments made

( i 25.5)

( i 5.6)

( i 31.1)

Foreign currency and other adjustments

i 0.2

i —

i 0.2

Balance as of December 31, 2019

i 42.6

i 4.5

i 47.1

Charges incurred and changes in estimates

i 59.1

i 8.5

i 67.6

Payments made

( i 77.3)

( i 11.1)

( i 88.4)

Foreign currency and other adjustments

i 0.1

i 0.2

Balance as of December 31, 2020

i 24.5

i 2.0

i 26.5

Charges incurred and changes in estimates

i 10.1

i 1.6

i 11.7

Payments made

( i 23.7)

( i 2.0)

( i 25.7)

Foreign currency and other adjustments

i —

( i 0.1)

Balance as of December 31, 2021

i 10.9

i 1.5

i 12.4

8. i Stockholders' Equity

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

Common stock
issued

Exchangeable
shares issued

Class A

Class B

Class A

Class B

(Share amounts in millions)

Balance as of December 31, 2018

i 2.6

i 205.4

i 2.8

i 14.8

Shares issued under equity compensation plans

—

i 0.2

—

Shares exchanged for common stock

—

i 0.1

—

( i 0.1)

Shares exchanged for Class B exchangeable shares

—

( i 0.1)

i 0.1

Balance as of December 31, 2019

i 2.6

i 205.7

i 2.7

i 14.8

Shares issued under equity compensation plans

—

i 0.4

—

Shares exchanged for common stock

—

i 3.7

—

( i 3.7)

Balance as of December 31, 2020

i 2.6

i 209.8

i 2.7

i 11.1

Shares issued under equity compensation plans

—

i 0.3

—

Balance as of December 31, 2021

i 2.6

i 210.1

i 2.7

i 11.1

Exchangeable Shares

The Class A exchangeable shares and Class B exchangeable shares were issued by Molson Coors Canada Inc. ("MCCI"), a wholly-owned subsidiary of our Company. The exchangeable shares are substantially the economic equivalent of the corresponding shares of Class A and Class B common stock that a Molson shareholder would have received in the merger of Adolph Coors Company with Molson Inc. in February 2005, if the holder had elected to receive shares of Molson Coors common stock. Exchangeable shareholders receive the CAD equivalent of dividends declared on Class A and B common stock on the date of declaration. Holders of exchangeable shares also receive, through a voting trust, the benefit of Molson Coors voting rights, entitling the holder to i i one / vote on the same basis and in the same circumstances as one corresponding share of Molson Coors common stock.

Voting Rights

Each holder of record of Class A common stock, Class B common stock, Class A exchangeable shares and Class B exchangeable shares is entitled to i i one / vote for each share held, without the ability to cumulate votes on the election of directors. Our Class B common stock has fewer voting rights than our Class A common stock and holders of our Class A common stock have the ability to effectively control or have a significant influence over company actions requiring stockholder approval. Specifically, holders of Class B common stock voting together as a single class have the right to elect i three directors of the

Molson Coors Board of Directors, as well as the right to vote on certain additional matters as outlined in the Restated Certificate of Incorporation (as amended, the “Certificate”), such as merger agreements that require approval under applicable law, sales of all or substantially all of our assets to unaffiliated third parties, proposals to dissolve MCBC, and certain amendments to the Certificate that require approval under applicable law, each as further described and limited by the Certificate. The Certificate also provides that holders of Class A common stock and Class B common stock shall vote together as a single class, on an advisory basis, on any proposal to approve the compensation of MCBC's named executive officers.

Conversion Rights

The Certificate provides for the right of holders of Class A common stock to convert their stock into Class B common stock on a one-for-one basis at any time. The exchangeable shares are exchangeable at any time, at the option of the holder on a i one-for-one basis for corresponding shares of Molson Coors common stock. Therefore, a portion of our authorized and unissued Class A and Class B common shares are reserved to meet exchange requirements.

9. i Properties


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Land and improvements	$	i 355.9	$	i 341.3
Buildings and improvements	i 1,225.1		i 1,074.8
Machinery and equipment	i 4,547.1		i 4,537.7
Returnable containers	i 414.0		i 414.8
Furniture and fixtures	i 311.4		i 295.9
Software	i 507.1		i 466.3
Natural resource properties	i 3.8		i 3.8
Construction in progress	i 335.2		i 532.1
Total properties cost	i 7,699.6		i 7,666.7
Less: accumulated depreciation	( i 3,507.2)		( i 3,416.4)
Properties, net	$	i 4,192.4	$	i 4,250.3

Depreciation expense was $ i 568.1 million, $ i 702.0 million and $ i 637.8 million in 2021, 2020 and 2019, respectively. The decrease in depreciation expense for the year ended December 31, 2021 compared to 2020 was primarily due to the decrease in accelerated depreciation recorded as a result of certain facility closures as well as assets becoming fully depreciated during the year. Accelerated depreciation recorded during the years ended December 31, 2021, 2020 and 2019 was $ i 15.4 million, $ i 112.3 million and $ i 31.7 million respectively. See Note 7, "Special Items" for further discussion.

10. i Goodwill and Intangible Assets

Americas(1)

EMEA&APAC(1)(2)

Consolidated

Changes in Goodwill

(In millions)

Balance as of December 31, 2019

i 6,146.6

i 1,484.8

i 7,631.4

Impairments

i —

( i 1,484.3)

Foreign currency translation

i 4.4

( i 0.5)

i 3.9

Balance as of December 31, 2020

i 6,151.0

i —

i 6,151.0

Foreign currency translation

i 1.6

i —

i 1.6

Balance as of December 31, 2021

i 6,152.6

i —

i 6,152.6

100

(1) On January 1, 2020, we changed our management structure from i four segments and a corporate center to i two reportable segments. Under this new structure we have i two reporting units, Americas and EMEA&APAC.

(2) During 2020, we recognized a goodwill impairment charge of $ i 1,484.3 million to the EMEA&APAC reporting unit recorded in special items, net, in the consolidated statements of operations as a result of continued challenges and declines within the European beer industry brought on by the extended impacts of the continued duration of the global coronavirus pandemic and related outlook of recovery. As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.

The gross amount of goodwill totaled approximately $ i 8.4 billion as of December 31, 2021. Accumulated impairment losses as of December 31, 2021 totaled $ i 2,217.5 million, and are comprised of impairments taken on both the EMEA&APAC and the Americas reporting units as well as our historic India reporting unit which is classified as held for sale in the consolidated balance sheets as of December 31, 2021.

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

Useful life

Gross

Accumulated
amortization

Net

(Years)

(In millions)

Intangible assets subject to amortization:

Brands

i 10 - i 50

i 5,081.8

( i 1,267.1)

i 3,814.7

License agreements and distribution rights

i 15 - i 20

i 206.8

( i 107.2)

i 99.6

Other

i 3 - i 40

i 98.5

( i 32.0)

i 66.5

Intangible assets not subject to amortization:

Brands

Indefinite

i 8,197.9

—

i 8,197.9

Distribution networks

Indefinite

i 800.5

—

i 800.5

Other

Indefinite

i 307.6

—

i 307.6

Total

i 14,693.1

( i 1,406.3)

i 13,286.8

The following table presents details of our intangible assets, other than goodwill, as of December 31, 2020:

Useful life

Gross

Accumulated
amortization

Net

(Years)

(In millions)

Intangible assets subject to amortization:

Brands

i 10 - i 50

i 5,128.4

( i 1,070.6)

i 4,057.8

License agreements and distribution rights

i 15 - i 20

i 206.8

( i 99.5)

i 107.3

Other

i 3 - i 40

i 109.1

( i 36.4)

i 72.7

Intangible assets not subject to amortization:

Brands

Indefinite

i 8,215.7

—

i 8,215.7

Distribution networks

Indefinite

i 795.0

—

i 795.0

Other

Indefinite

i 307.6

—

i 307.6

Total

i 14,762.6

( i 1,206.5)

i 13,556.1

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

101

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


Year	Amount
	(In millions)
2022	$	i 211.1
2023	$	i 210.1
2024	$	i 208.8
2025	$	i 208.7
2026	$	i 190.2

Amortization expense of intangible assets was $ i 218.0 million, $ i 220.0 million, and $ i 221.2 million for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively. This expense is primarily presented within marketing, general and administrative expenses in our consolidated statements of operations.

Annual 2021 Impairment Assessment

We completed our required annual goodwill and indefinite-lived intangible asset impairment testing as of October 1, 2021, the first day of our fourth quarter, and concluded that the fair value of the Americas reporting unit was determined to be in excess of its carrying amount and no goodwill impairment charge was required. While the Americas reporting unit did not have an impairment of goodwill, it is considered to be at risk for future impairments as further discussed below.

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

The fair value of the Americas reporting unit was estimated at approximately i 6% in excess of carrying amount, as of the October 1, 2021 testing date, and therefore the reporting unit is considered to be at risk of future impairment. The fair value of the Americas reporting unit in the current year is still largely impacted by the continued perceived risk of realizing management's revitalization efforts and the ongoing impacts from the coronavirus pandemic. The fair value as of the 2021 test was further impacted by assumptions related to increased cost inflation pressures in the medium term. Additionally, an increase to the discount rate as a result of the recent interest rate environment adversely affected the results of our impairment testing. Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was i 8.25% based on market-specific factors, as compared to i 8.00% used as of the October 1, 2020 annual testing date. In the Americas segment, we continue to build on the strength of our iconic core brands, grow our above premium portfolio, and expand beyond the beer aisle. While the preliminary results of executing on these strategies are promising, including the increasing proportion of our above premium portfolio in the current year, the growth targets included in management’s forecasted future cash flows are inherently at risk given that the strategies are still in progress. Further, the uncertainty around the ongoing impacts of the coronavirus pandemic including governmental or societal impositions on bars and restaurants and restrictions on public gatherings that limit many on-premise locations to operate at full capacity if at all have negatively impacted the forecasted future cash flows of the reporting unit. Lastly, cost inflation for certain inputs could put pressure on achieving key margin and cash flow projections into the future.

As of the October 1, 2021 testing date, the fair value of our Americas reporting unit was determined to be in excess of its carrying value, although considered to be at risk of future impairment. The fair value determinations are sensitive to further unfavorable changes in forecasted cash flows, macroeconomic conditions, market multiples or discount rates that could negatively impact future analyses, including the ongoing impacts of the coronavirus pandemic and cost inflation on our reporting units. The key assumptions used to derive the estimated fair values of our reporting units represent Level 3 measurements.

Indefinite-Lived Intangible Assets

The fair value of the indefinite-lived Miller brands in the U.S., Coors brands in the Americas and Carling brand in the U.K. are all sufficiently in excess of their respective carrying values as of the annual testing date.

The fair value of the Staropramen brand increased versus the prior year and is sufficiently in excess of its carrying value as of the annual testing date. The increase in the fair value of the Staropramen brand was a result of the progressive reopening throughout Europe, but more impactfully Western Europe, during the year and the related improvement to expected future cash flows based on our long-range plan for this brand.

102

We utilized Level 3 fair value measurements in our impairment analysis of certain indefinite-lived intangible brand assets, including the Coors and Miller brands in the Americas and the Staropramen and Carling brands in EMEA&APAC. An excess earnings approach is used to determine the fair values of these assets as of the testing date. 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. Separately, we performed a qualitative assessment of our water rights indefinite-lived intangible assets in the U.S. to determine whether it was more likely than not that the fair values of these assets were greater than their respective carrying amounts. Based on this qualitative assessment, we determined that a full quantitative analysis was not necessary.

Key Assumptions

As of the date of our annual impairment test, performed as of October 1, 2021, the Americas reporting unit goodwill balance is at risk of future impairment in the event of significant unfavorable changes in the forecasted cash flows (including company-specific risks like the performance of our above-premium and beyond the beer aisle transformation efforts and overall market performance of new innovations like hard seltzers, along with macro-economic risks like the continued prolonged weakening of economic conditions related to the coronavirus pandemic as well as cost inflation, or significant unfavorable changes in tax rates, environmental or other regulations, including interpretations thereof), terminal growth rates, market multiples and/or weighted-average cost of capital utilized in the discounted cash flow analysis. For testing purposes of our reporting units, management's best estimates of the expected future results are the primary driver in determining the fair value. Current projections used for our Americas reporting unit testing reflect growth assumptions associated with our revitalization plan to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities all of which are intended to benefit the projected cash flows of the business. These cash flow assumptions are tempered somewhat by the impacts the coronavirus pandemic has had on our overall business and specifically our more profitable on-premise business.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of the future. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units and indefinite-lived intangible assets may include such items as: (i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives or increase in costs that could significantly impact our immediate and long-range results, a prolonged weakness in consumer demand or other competitive pressures adversely affecting our long-term volume trends, a continuation of the trend away from core brands in certain of our markets, especially in markets where our core brands represent a significant portion of the market, unfavorable working capital changes and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates such as increased corporate income tax rates (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples; and (vi) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.

Based on known facts and circumstances, we evaluate and consider recent events and uncertain items, as well as related potential implications, as part of our annual assessment and incorporate into the analyses as appropriate. These facts and circumstances are subject to change and may impact future analyses. For example, we continue to monitor the challenges within the beer industry for further weakening or additional systemic structural declines, as well as for adverse changes in macroeconomic conditions such as the coronavirus pandemic and cost inflation that could significantly impact our immediate and long-range results and could lead to a material impairment. Additionally, we are monitoring the impacts that the coronavirus pandemic and cost inflation have on the market inputs used in calculating our discount rates, including risk-free rates, equity premiums and our cost of debt, which could result in a meaningful change to our weighted-average cost of capital calculation, as well as the market multiples used in our impairment assessment. Furthermore, increased volatility in the equity and debt markets or other country specific factors, including, but not limited to, extended or future government intervention in response to the pandemic, could also result in a meaningful change to our weighted-average cost of capital calculation and other inputs used in our impairment assessment. Separately, the Ontario government in Canada adopted a bill that, if enacted, could adversely impact the existing terms of the beer distribution and retail systems in the province, as further described in Note 18, "Commitments and Contingencies".

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

103

Annual 2020 Impairment Assessment

We completed our required annual goodwill and indefinite-lived intangible asset impairment analysis as of October 1, 2020, and concluded there were no impairments of goodwill within our Americas reporting unit but it was considered to be at risk for future impairments. Further, we recognized a goodwill impairment charge of $ i 1,484.3 million to the EMEA&APAC reporting unit, recorded in special items, net, in the consolidated statement of operations. The impairment charge was primarily due to continued challenges and declines within the European beer industry, the largest market of our EMEA&APAC reporting unit, brought on by the extended impacts of the continued duration of the global coronavirus pandemic and related outlook of recovery as well as an increase in the discount rate used for fair value estimation of the reporting unit. As of the year ended December 31, 2020, the EMEA&APAC reporting unit was fully impaired.

In addition, we also evaluated the indefinite-lived and definite-lived intangible assets within our EMEA&APAC reporting unit, prior to recording the goodwill impairment, and concluded that an insignificant impairment was required for a definite-lived intangible asset but i no impairments were required for the indefinite-lived intangible assets; however, the Staropramen indefinite-lived intangible asset was considered to be at risk of future impairment as of the year ended December 31, 2020.

Reporting Unit Changes and Interim 2020 Impairment Testing

During 2020, we changed our management structure from a corporate center and i four segments to i two segments - Americas and EMEA&APAC. As a result of the changes, we re-evaluated our historical reporting unit conclusions and consolidated our previously separate U.S. and Canada reporting units into a single Americas reporting unit effective January 1, 2020. Further, during 2020, we completed an interim impairment assessment for our former U.S. and Canada reporting units as of January 1, 2020 immediately prior to the reporting unit change, as well as an impairment assessment of the combined Americas reporting unit immediately after the change, and determined that no impairments existed. Additionally, as the changes resulted in the combination of our U.S. and Canada reporting units into a single Americas reporting unit, no further reallocation of goodwill was required.

Additionally, as a result of the structural changes discussed above, including the centralization of the brand management and strategy for our Coors brands across the Americas segment, we have aggregated our Coors brand indefinite-lived intangible asset in the U.S. and Coors Light distribution agreement indefinite-lived intangible asset in Canada into a single unit of accounting for the purpose of testing for impairment, effective January 1, 2020. During 2020, we completed an interim impairment assessment for each individual indefinite-lived intangible asset immediately prior to aggregation, and determined that no impairments existed.

Definite-Lived Intangible Assets

Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed. In 2021, we considered whether any triggering events have occurred related to definite lived intangibles during the current year. It was noted that in the second quarter of 2021, consistent with our revitalization plan, management made the decision to discontinue select economy SKUs and brands. It was determined that although these specific brand family line extensions had been discontinued, the brand family itself was still being used and produced. Additional evaluation was performed on these specific definite-lived brand intangible assets with no triggering events noted at the asset group level and no changes in useful life of the brand intangible assets deemed necessary. In 2020, we recognized impairment losses on some of our definite-lived intangible assets related to certain regional craft breweries in the Americas and EMEA&APAC. Impairment losses on the Grolsch brand and distribution agreement definite-lived intangible assets and the brand intangible asset related to our historical India business were recognized in 2019. See Note 7, "Special Items" for further details on these impairment losses.

104

11. i Debt

Debt Obligations


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Long-term debt:
CAD i 500 million i 2.84% notes due July 2023(1)(2)	$	i 395.7	$	i 392.9
CAD i 500 million i 3.44% notes due July 2026(1)(2)	i 395.7		i 392.9
$ i 1.0 billion i 2.1% notes due July 2021(3)	i —		i 1,000.0
$ i 500 million i 3.5% notes due May 2022(4)(5)	i 500.9		i 503.7
$ i 2.0 billion i 3.0% notes due July 2026(1)	i 2,000.0		i 2,000.0
$ i 1.1 billion i 5.0% notes due May 2042(5)	i 1,100.0		i 1,100.0
$ i 1.8 billion i 4.2% notes due July 2046(1)	i 1,800.0		i 1,800.0
EUR i 800 million i 1.25% notes due July 2024(1)	i 909.6		i 977.3
Finance leases	i 67.2		i 64.0
Other	i 30.7		i 33.8
Less: unamortized debt discounts and debt issuance costs	( i 44.6)		( i 50.3)
Total long-term debt (including current portion)	i 7,155.2		i 8,214.3
Less: current portion of long-term debt	( i 508.0)		( i 1,006.1)
Total long-term debt	$	i 6,647.2	$	i 7,208.2


Short-term borrowings:

Short-term borrowings(6)	$	i 6.9	$	i 14.0
Current portion of long-term debt	i 508.0		i 1,006.1
Current portion of long-term debt and short-term borrowings	$	i 514.9	$	i 1,020.1

(1)On July 7, 2016, MCBC issued approximately $ i 5.3 billion senior notes with portions maturing from July 15, 2019 through July 15, 2046 ("2016 USD Notes"), and EUR i 800 million senior notes maturing July 15, 2024 ("2016 EUR Notes"), and Molson Coors International L.P., completed a private placement of CAD i 1.0 billion senior notes maturing July 15, 2023, and July 15, 2026 ("2016 CAD Notes"), in order to partially fund the financing of the Acquisition (2016 USD Notes, 2016 EUR Notes and 2016 CAD Notes, collectively, the "2016 Notes"). These issuances resulted in total proceeds of approximately $ i 6.9 billion, net of underwriting fees and discounts of $ i 36.5 million and $ i 17.7 million, respectively. Total debt issuance costs capitalized in connection with these notes including underwriting fees, discounts and other financing related costs, were approximately $ i 65 million and are being amortized over the respective terms of the 2016 Notes. The 2016 Notes began accruing interest upon issuance, with semi-annual payments due on the 2016 USD Notes and 2016 CAD Notes in January and July beginning in 2017, and annual interest payments due on the 2016 EUR Notes in July beginning in 2017.

(2)We entered into forward starting interest rate swap agreements to hedge interest rate volatility for a i 10 year period until they were settled on September 18, 2015. We are amortizing a portion of the resulting loss from AOCI to interest expense over the remaining term of the 2016 CAD Notes, as defined below, up to the full i 10-year term of the interest rate swap agreements. The amortizing loss resulted in an increase in our effective cost of borrowing compared to the stated coupon rates by i 0.60% on the 2016 CAD Notes. See Note 16, "Derivative Instruments and Hedging Activities" for further details on the forward starting interest rate swaps.

(3)We repaid our $ i 1.0 billion i 2.1% notes at maturity on July 15, 2021, using a combination of commercial paper borrowings and cash on hand and also settled the associated cross currency swap. Prior to settlement in July 2021, the cross currency swaps economically converted a portion of the repaid $ i 1.0 billion i 2.1% notes and associated interest to EUR denominated, which resulted in a EUR interest rate received of i 0.71%. See Note 16, "Derivative Instruments and Hedging Activities" for further details.

(4)During 2014, we entered into interest rate swaps to economically convert our fixed rate $ i 500 million i 3.5% notes due 2022 ("$ i 500 million notes") to floating rate debt. As a result of fair value hedge accounting, the carrying value of the

105

$ i 500 million notes included a cumulative adjustment for the change in fair value of $ i 18.1 million at the time of termination of the swaps. Beginning in the fourth quarter of 2015, we began amortizing this cumulative adjustment to interest expense over the remaining term of the $ i 500 million notes and will accordingly decrease the annual effective interest rate for the remaining term by i 0.56%. The fair value adjustments and subsequent amortization have been excluded from the aggregate principal debt maturities table presented below.

The balance of the fair value hedges being amortized over the life of the note were $ i 0.9 million and $ i 3.7 million as of December 31, 2021 and December 31, 2020, respectively. The balance as of December 31, 2021 was included within the current portion of long-term debt and short-term borrowings of the consolidated balance sheet and the balance as of December 31, 2020 was included within long-term debt of the consolidated balance sheet.

(5)On May 3, 2012, we issued approximately $ i 1.9 billion of senior notes with portions maturing in 2017, 2022 and 2042. The issuance resulted in total proceeds, before expenses, of approximately $ i 1.9 billion, net of underwriting fees and discounts of $ i 14.7 million and $ i 4.6 million, respectively. Total debt issuance costs capitalized in connection with these senior notes, including the underwriting fees and discounts, were approximately $ i 18.0 million and are being amortized over the term of the notes.

(6)As of December 31, 2021, we had $ i 3.0 million in bank overdrafts and $ i 123.1 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $ i 120.1 million. As of December 31, 2020, we had $ i 11.0 million in bank overdrafts and $ i 103.7 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $ i 92.7 million.

We had total outstanding borrowings of $ i 3.9 million and $ i 3.0 million under our JPY facilities as of December 31, 2021 and December 31, 2020, respectively. In addition, we have CAD, GBP and USD overdraft facilities under which we had i i no / outstanding borrowings as of December 31, 2021 or December 31, 2020. A summary of our short-term facility availability is presented below. See Note 18, "Commitments and Contingencies" for further discussion related to letters of credit.

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

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

•CAD unlimited overdraft facility at CAD Prime plus i 0.50%

•GBP i 30 million overdraft facility at GBP base rate plus i 1.75%

•USD i 10 million overdraft facility at USD Prime plus i 5%

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

Revolving Credit Facility and Commercial Paper

We maintain a $ i 1.5 billion revolving credit facility with a maturity date of July 7, 2024 that also allows us to issue a maximum aggregate amount of $ i 1.5 billion in commercial paper or make other borrowings at any time at variable interest rates. We use this financing from time to time to leverage cash needs including debt repayments. During 2021, we utilized borrowings from this facility in order to fund the repayment of debt upon maturity, for working capital and general purposes. We had i i no / borrowings drawn on this revolving credit facility and i i no / commercial paper borrowings as of December 31, 2021 and December 31, 2020.

Debt Covenants

On June 19, 2020, we entered into an amendment to our existing revolving credit facility agreement, which among other things, revised the leverage ratios under the financial maintenance covenant for each fiscal quarter ending on or after June 30, 2020 through the maturity of the credit facility. The maximum leverage ratio, as defined by our revolving credit facility agreement as of December 31, 2021 is i 4.00x net debt to EBITDA, through maturity of the credit facility.

106

additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets, and restrictions on mergers, acquisitions, and certain types of sale lease-back transactions. As of December 31, 2021 and December 31, 2020, we were in compliance with all of these restrictions and have met all debt payment obligations. All of our outstanding senior notes as of December 31, 2021 rank pari-passu.

As of December 31, 2021, the aggregate principal debt maturities of long-term debt and short-term borrowings, based on foreign exchange rates as of December 31, 2021, for the next 5 years are as follows:


Year	Amount
	(In millions)
2022	$	i 512.3
2023	i 400.5
2024	i 914.2
2025	i 4.4
2026	i 2,411.9
Thereafter	i 2,895.3
Total	$	i 7,138.6

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

Interest

For the years ended

(In millions)

Interest incurred

i 269.1

i 282.3

i 289.2

Interest capitalized

( i 8.8)

( i 7.7)

( i 8.3)

Interest expensed

i 260.3

i 274.6

i 280.9

12. i Inventories


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Finished goods	$	i 351.5	$	i 266.7
Work in process	i 71.8		i 72.7
Raw materials	i 271.2		i 242.2
Packaging materials	i 110.2		i 82.7
Inventories, net	$	i 804.7	$	i 664.3

13. i Share-Based Payments

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

Incentive Compensation Plan

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

RSU awards are issued based upon the market value equal to the price of our stock at the date of the grant and generally vest over a period of i three years. In 2021, 2020 and 2019, we granted i 0.6 million, i 0.5 million and i 0.5 million RSUs, respectively, with a weighted-average market value of $ i 45.84, $ i 48.99 and $ i 55.03 each, respectively. Prior to vesting, RSUs have no voting rights.

107

DSU awards, under the Directors' Stock Plan pursuant to the Incentive Compensation Plan, are elections made by non-employee directors of MCBC that enable them to receive all or one-half of their annual cash retainer payments in our stock. The DSU awards are issued at the market value equal to the price of our stock at the date of the grant. The DSUs are paid in shares of stock upon termination of service. Prior to vesting, DSUs have no voting rights. In 2021, 2020 and 2019, we granted a small number of DSUs with a weighted-average market value of $ i 49.33, $ i 37.53 and $ i 56.68 per share, respectively.

PSU awards are granted with a target value established at the date of grant and vest upon completion of a service requirement. The settlement amount of the PSUs is determined based on market and performance metrics, which include our total shareholder return performance relative to the stock market index defined by each award and specified internal performance metrics designed to drive greater shareholder return. PSU compensation expense is based on fair values assigned to the market and performance metrics upon grant using a Monte Carlo model, with the market metric remaining constant throughout the vesting period of i three years and the performance metric varying based on a multiplier determined based on changing estimates of the performance metric projected attainment. During 2021, 2020 and 2019, we granted i 0.4 million, i 0.3 million and i 0.3 million PSUs, respectively, each with a weighted-average fair value of $ i 45.71, $ i 52.60 and $ i 53.31, respectively.

Stock options are granted with an exercise price equal to the market value of a share of Class B common stock on the date of grant. Stock options have a term of i ten years and generally vest over i three years. During 2021, 2020 and 2019, we granted i 0.3 million, i 0.4 million and i 0.4 million options, respectively, each with a weighted-average fair value of $ i 10.06, $ i 6.70 and $ i 9.20, respectively.

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

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

For the years ended

(In millions)

Pretax share-based compensation expense

i 32.1

i 24.2

i 8.5

Tax benefit

( i 5.5)

( i 4.3)

( i 1.6)

After-tax share-based compensation expense

i 26.6

i 19.9

i 6.9

As of December 31, 2021, there was $ i 40.6 million of total unrecognized compensation cost from all share-based compensation arrangements granted under the Incentive Compensation Plan, related to unvested awards. This total compensation expense is expected to be recognized over a weighted-average period of i 1.8 years.

RSUs and DSUs

PSUs

Units

Weighted-average
grant date fair value per unit

Units

Weighted-average grant date fair value per unit

(In millions, except per unit amounts)

Non-vested as of December 31, 2020

i 1.0

$ i 56.21

i 0.7

$ i 58.12

Granted

i 0.6

$ i 45.88

i 0.4

$ i 45.71

Vested

( i 0.2)

$ i 68.89

i —

$ i —

Forfeited

( i 0.1)

$ i 49.87

( i 0.1)

$ i 49.44

Adjustment for performance results achieved

i —

$ i —

( i 0.2)

$ i 78.28

Non-vested as of December 31, 2021

i 1.3

$ i 49.23

i 0.8

$ i 49.47

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

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Stock options

Awards

Weighted-
average
exercise price per unit

Weighted-
average
remaining
contractual
life (years)

Aggregate
intrinsic
value

(In millions, except per share amounts and years)

Outstanding as of December 31, 2020

i 1.8

$ i 66.32

i 4.5

i 0.2

Granted

i 0.3

$ i 44.97

Exercised

( i 0.1)

$ i 44.10

Expired

( i 0.1)

$ i 78.49

Outstanding as of December 31, 2021

i 1.9

$ i 63.15

i 4.8

i 0.6

Expected to vest as of December 31, 2021

i 0.7

$ i 49.27

i 8.1

i 0.4

Exercisable as of December 31, 2021

i 1.2

$ i 70.61

i 3.0

i 0.2

The total intrinsic values of exercises during 2021, 2020 and 2019 were $ i 0.9 million, $ i 0.8 million and $ i 0.6 million, respectively. Total tax benefits realized, including excess tax benefits, from share-based awards vested or exercised during 2021, 2020 and 2019 was $ i 2.0 million, $ i 3.1 million and $ i 4.5 million, respectively.

The shares of Class B common stock to be issued under our equity plans are made available from authorized and unissued MCBC Class B common stock. As of December 31, 2021, there were i 5.0 million shares of MCBC Class B common stock available for issuance under the Incentive Compensation Plan.

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

For the years ended

Risk-free interest rate

i 0.79%

i 0.91%

i 2.46%

Dividend yield

i 3.11%

i 4.40%

i 4.16%

Volatility range

i 30.84% - i 42.44%

i 25.09% - i 26.31%

i 24.46% - i 24.60%

Weighted-average volatility

i 33.74%

i 25.40%

i 24.48%

Expected term (years)

i 5.6

i 5.5

i 5.3

Weighted-average fair value

$ i 10.06

$ i 6.70

$ i 9.20

The risk-free interest rates utilized for periods throughout the contractual life of the stock options are based on a zero-coupon U.S. Department of Treasury security yield at the time of grant. Expected volatility is based on a combination of historical and implied volatility of our stock. The expected term of stock options is estimated based upon observations of historical employee option exercise patterns and trends of those employees granted options in the respective year.

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

For the years ended

Risk-free interest rate

i 0.24%

i 0.84%

i 2.49%

Dividend yield

N/A

i 4.17%

Volatility range

i 23.00% - i 44.71%

i 15.21% - i 45.75%

i 13.82% - i 42.46%

Weighted-average volatility

i 35.46%

i 26.02%

i 24.97%

Expected term (years)

i 2.8

Weighted-average fair market value

$ i 45.71

$ i 52.60

$ i 53.31

The risk-free interest rates utilized for periods throughout the expected term of the PSUs are based on a zero-coupon U.S. Department of Treasury security yield at the time of grant. Expected volatility is based on historical volatility of our stock as well as the stock of our peer firms, as shown within the volatility range above, for a period from the grant date consistent with the expected term. The expected term of PSUs is calculated based on the grant date to the end of the performance period.

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14. i Accumulated Other Comprehensive Income (Loss)


	MCBC stockholders' equity
	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, 2018	$	( i 758.7)	$	( i 0.3)	$	( i 330.7)	$	( i 60.3)	$	( i 1,150.0)
Foreign currency translation adjustments	i 129.3		—		( i 2.5)		—		126.8

Gain (loss) on net investment hedges	i 50.3		—		—		—		50.3
Unrealized gain (loss) on derivative instruments	—		( i 111.3)		—		—		(111.3)
Reclassification of derivative (gain) loss to income	—		i 0.6		—		—		0.6
Pension and other postretirement benefit adjustments	—		—		( i 43.7)		—		(43.7)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement	—		—		i 26.5		—		26.5
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—		—		—		( i 14.4)		(14.4)
Tax benefit (expense)	( i 0.1)		i 27.0		( i 2.9)		i 3.8		i 27.8
Net period other comprehensive income (loss)	i 179.5		( i 83.7)		( i 22.6)		( i 10.6)		i 62.6
Reclassification of stranded tax effects (1)	( i 73.3)		( i 3.8)		i 2.3		i —		( i 74.8)
As of December 31, 2019	$	( i 652.5)	$	( i 87.8)	$	( i 351.0)	$	( i 70.9)	$	( i 1,162.2)
Foreign currency translation adjustments	i 196.0		—		( i 1.6)		—		194.4

Gain (loss) on net investment hedges	( i 113.5)		—		—		—		(113.5)
Unrealized gain (loss) on derivative instruments	—		( i 113.5)		—		—		(113.5)
Reclassification of derivative (gain) loss to income	—		( i 0.5)		—		—		(0.5)
Pension and other postretirement benefit adjustments	—		—		( i 52.9)		—		(52.9)
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement	—		—		( i 7.6)		—		(7.6)
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—		—		—		i 19.4		19.4
Tax benefit (expense)	i 30.5		i 27.9		i 15.4		( i 5.2)		i 68.6


As of December 31, 2020	$	( i 539.5)	$	( i 173.9)	$	( i 397.7)	$	( i 56.7)	$	( i 1,167.8)
Foreign currency translation adjustments	( i 85.6)		—		( i 1.2)		—		(86.8)
Reclassification of cumulative translation adjustment to income (2)	i 7.5		—		—		—		7.5
Gain (loss) on net investment hedges	i 76.5		—		—		—		76.5
Unrealized gain (loss) on derivative instruments	—		i 51.1		—		—		51.1
Reclassification of derivative (gain) loss to income	—		i 7.5		—		—		7.5
Pension and other postretirement benefit adjustments	—		—		i 158.6		—		158.6
Amortization of net prior service (benefit) cost and net actuarial (gain) loss to income and settlement	—		—		i 7.1		—		7.1
Ownership share of unconsolidated subsidiaries' other comprehensive income (loss)	—		—		—		i 20.8		20.8
Tax benefit (expense)	( i 17.6)		( i 15.7)		( i 41.9)		( i 5.3)		( i 80.5)


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

(1)Represents the one-time reclassification of stranded tax effects from AOCI to retained earnings resulting from the change in the U.S. federal corporate income tax rate as part of the 2017 Tax Act. This reclassification occurred on January 1, 2019 upon adoption of the associated FASB authoritative guidance.

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

We have significant levels of net assets denominated in currencies other than the USD due to our operations in foreign countries, and therefore we recognize OCI gains and/or losses when those items are translated to USD. The foreign currency translation losses recognized during 2021 were primarily due to the weakening of the GBP, EUR and certain other currencies of our Europe operations versus the USD. The foreign currency translation adjustment gains during 2020 and 2019 were primarily due to the strengthening of the CAD and GBP versus the USD. Additionally, the 2020 foreign currency translation adjustment gains were further impacted by the strengthening of certain other currencies of our Europe operations versus the USD.

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Reclassifications from AOCI to income

For the years ended

Reclassifications from AOCI

Location of gain (loss)
recognized in income

(In millions)

Gain/(loss) on cash flow hedges

Forward starting interest rate swaps

( i 4.8)

( i 2.9)

( i 3.0)

Interest expense, net

Foreign currency forwards

( i 3.5)

i 4.6

i 3.1

Cost of goods sold

Foreign currency forwards

i 0.8

( i 1.2)

( i 0.7)

Other income (expense), net

Total income (loss) reclassified, before tax

( i 7.5)

i 0.5

( i 0.6)

Income tax benefit (expense)

i 2.0

( i 0.1)

i 0.1

Net income (loss) reclassified, net of tax

( i 5.5)

i 0.4

( i 0.5)

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

Prior service benefit (cost)

i 0.3

i 0.4

( i 0.4)

Other pension and postretirement benefits (costs), net

Net actuarial gain (loss) and settlement

( i 7.4)

i 7.2

( i 26.1)

Other pension and postretirement benefits (costs), net

Total income (loss) reclassified, before tax

( i 7.1)

i 7.6

( i 26.5)

Income tax benefit (expense)

i 1.7

( i 2.4)

i 6.8

Net income (loss) reclassified, net of tax

( i 5.4)

i 5.2

( i 19.7)

Other reclassifications from AOCI to Income:

India cumulative translation adjustment resulting from sale of disposal group

( i 7.5)

i —

Special items, net

Income tax benefit (expense)

i —

Net income (loss) reclassified, net of tax

( i 7.5)

i —

Total income (loss) reclassified, net of tax

( i 18.4)

i 5.6

( i 20.2)

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15. i Employee Retirement Plans and Postretirement Benefits

We maintain retirement plans for the majority of our employees. Depending on the location and benefit program, we provide either defined benefit pension or defined contribution pension plans to our employees. Each plan is managed locally and in accordance with respective local laws and regulations. We have defined benefit pension plans in the U.S., U.K. and Canada. Additionally, we offer OPEB plans to a portion of our Canadian, U.S. and Central European employees which are unfunded plans. BRI and BDL maintain defined benefit, defined contribution and postretirement benefit plans as well; however, those plans are excluded from this disclosure as BRI and BDL are equity method investments and not consolidated.

The U.S. participates in and makes contributions to multi-employer pension plans. Contributions to multi-employer pension plans were $ i 7.1 million, $ i 8.2 million and $ i 7.9 million in 2021, 2020 and 2019, respectively. Additionally, the U.S. postretirement health plan qualifies for the federal subsidy under the Medicare Prescription Drug Improvement and Modernization Act of 2003 (“the Act”) because the prescription drug benefits provided under our postretirement health plan for Medicare eligible retirees generally require lower premiums from covered retirees and have lower co-payments and deductibles than the benefits provided in Medicare Part D and, accordingly, are actuarially equivalent to or better than the benefits provided under the Act. The benefits paid, including prescription drugs, were $ i 33.8 million, $ i 33.0 million and $ i 37.6 million in 2021, 2020 and 2019, respectively. There were no subsidies received in 2021 and immaterial subsidies received in 2020 and 2019.

Defined Benefit and OPEB Plans

Net Periodic Pension and OPEB (Benefit) Cost

For the years ended

Pension

OPEB

Consolidated

Pension

OPEB

Consolidated

Pension

OPEB

Consolidated

(In millions)

Service cost:

Service cost

i 2.7

i 6.0

i 8.7

i 2.7

i 6.0

i 8.7

i 4.0

i 7.0

i 11.0

Other pension and postretirement (benefit) cost, net:

Interest cost

i 93.9

i 14.6

i 108.5

i 120.5

i 18.8

i 139.3

i 161.9

i 25.5

i 187.4

Expected return on plan assets, net of expenses

( i 161.6)

i —

( i 161.6)

( i 161.8)

i 0.2

( i 161.6)

( i 217.3)

i 0.5

( i 216.8)

Amortization of prior service (benefit) cost

i 0.4

( i 0.7)

( i 0.3)

i 0.3

( i 0.7)

( i 0.4)

i 1.1

( i 0.7)

i 0.4

Amortization of net actuarial (gain) loss

i 8.7

( i 6.7)

i 2.0

i 7.3

( i 14.5)

( i 7.2)

i 10.4

( i 14.1)

( i 3.7)

Curtailment, settlement or special termination benefit (gain) loss(1)

i 5.4

i —

i 5.4

i —

i 30.5

i —

i 30.5

Expected participant contributions

( i 0.4)

i —

( i 0.4)

i —

( i 0.4)

( i 0.7)

i —

( i 0.7)

Total other pension and postretirement (benefit) cost, net

( i 53.6)

i 7.2

( i 46.4)

( i 34.1)

i 3.8

( i 30.3)

( i 14.1)

i 11.2

( i 2.9)

Net periodic pension and OPEB (benefit) cost

( i 50.9)

i 13.2

( i 37.7)

( i 31.4)

i 9.8

( i 21.6)

( i 10.1)

i 18.2

i 8.1

(1)The pension settlement charge recognized for the year ended December 31, 2021 was due to lump sum distributions allowed for under our U.K. pension plan being in excess of interest cost for the year ended December 31, 2021. Lower interest cost was primarily a result of lower interest rates as of December 31, 2020, which were used to establish the 2021 periodic pension cost, compared to prior years. During the fourth quarter of 2019, we utilized plan assets to purchase buy-out annuity contracts for a portion of our Canadian pension plans and recognized a pension settlement charge of $ i 29.8 million.

112

Obligations and Changes in Funded Status

For the year ended December 31, 2021

For the year ended December 31, 2020

Pension

OPEB

Total

Pension

OPEB

Total

(In millions)

Change in benefit obligation:

Prior year benefit obligation

i 5,571.5

i 704.7

i 6,276.2

i 5,198.6

i 672.5

i 5,871.1

Service cost, net of expected employee contributions

i 2.3

i 6.0

i 8.3

i 2.3

i 6.0

i 8.3

Interest cost

i 93.9

i 14.6

i 108.5

i 120.5

i 18.8

i 139.3

Actual employee contributions

i 0.4

i —

i 0.4

i —

i 0.4

Actuarial (gain) loss

( i 227.4)

( i 37.3)

( i 264.7)

i 460.3

i 43.7

i 504.0

Plan amendments

i —

i 0.8

i —

i 0.8

Benefits paid

( i 293.1)

( i 40.3)

( i 333.4)

( i 316.6)

( i 39.2)

( i 355.8)

Curtailment, settlement and special termination

( i 35.4)

i —

( i 35.4)

( i 0.1)

i —

( i 0.1)

Foreign currency exchange rate change

( i 16.4)

i 1.0

( i 15.4)

i 105.3

i 2.9

i 108.2

Benefit obligation at end of year

i 5,095.8

i 648.7

i 5,744.5

i 5,571.5

i 704.7

i 6,276.2

Change in plan assets:

Prior year fair value of assets

i 5,958.4

i —

i 5,958.4

i 5,542.1

i —

i 5,542.1

Actual return on plan assets

i 55.5

i —

i 55.5

i 614.0

i —

i 614.0

Employer contributions

i 2.2

i 40.3

i 42.5

i 4.8

i 39.7

i 44.5

Actual employee contributions

i 0.4

i —

i 0.4

i —

i 0.4

Curtailment, settlement and special termination

( i 35.4)

i —

( i 35.4)

( i 0.2)

i —

( i 0.2)

Benefits and plan expenses paid

( i 293.1)

( i 40.3)

( i 333.4)

( i 316.6)

( i 39.7)

( i 356.3)

Foreign currency exchange rate change

( i 20.5)

i —

( i 20.5)

i 113.9

i —

i 113.9

Fair value of plan assets at end of year

i 5,667.5

i —

i 5,667.5

i 5,958.4

i —

i 5,958.4

Funded status:

i 571.7

( i 648.7)

( i 77.0)

i 386.9

( i 704.7)

( i 317.8)

Amounts recognized in the Consolidated Balance Sheets:

Other non-current assets

i 622.9

i —

i 622.9

i 492.8

i —

i 492.8

Accounts payable and other current liabilities

( i 4.1)

( i 41.4)

( i 45.5)

( i 4.1)

( i 43.3)

( i 47.4)

Pension and postretirement benefits

( i 47.1)

( i 607.3)

( i 654.4)

( i 101.8)

( i 661.4)

( i 763.2)

Net amounts recognized

i 571.7

( i 648.7)

( i 77.0)

i 386.9

( i 704.7)

( i 317.8)

The accumulated benefit obligation for our defined benefit pension plans was approximately $ i 5.1 billion and $ i 5.6 billion as of December 31, 2021 and December 31, 2020, respectively. The $ i 240.8 million improvement in the net underfunded status of our aggregate pension and OPEB plans from December 31, 2020 to December 31, 2021 was primarily due to the increase in discount rates from prior year and favorable asset returns for certain plans.

As of December 31, 2021 and December 31, 2020, certain defined benefit pension plans in the U.S., Canada and the U.K. were overfunded as a result of our ongoing de-risking strategy. Information for our defined benefit pension plans that had aggregate accumulated benefit obligations and projected benefit obligations in excess of plan assets is as follows:


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Accumulated benefit obligation	$	i 51.2	$	i 831.4
Projected benefit obligation	$	i 51.2	$	i 831.6
Fair value of plan assets	$	i —	$	i 725.7

Information for OPEB plans with an accumulated postretirement benefit obligation in excess of plan assets has been disclosed above in "Obligations and Changes in Funded Status" as all of our OPEB plans are unfunded.

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Accumulated Other Comprehensive Income (Loss)

Amounts recognized in AOCI not yet recognized as components of net periodic pension and OPEB cost, pretax, were as follows.

As of December 31, 2021

As of December 31, 2020

Pension

OPEB

Total

Pension

OPEB

Total

(In millions)

Net actuarial (gain) loss

i 553.4

( i 142.3)

i 411.1

i 684.6

( i 108.6)

i 576.0

Net prior service (benefit) cost

i 10.1

( i 3.2)

i 6.9

i 10.5

( i 4.0)

i 6.5

Total not yet recognized

i 563.5

( i 145.5)

i 418.0

i 695.1

( i 112.6)

i 582.5

/ i

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

Pension

OPEB

Total

(In millions)

Accumulated other comprehensive (income) loss as of December 31, 2019

i 692.8

( i 172.4)

i 520.4

Amortization of prior service benefit (costs)

( i 0.3)

i 0.7

i 0.4

Amortization of net actuarial gain (loss)

( i 7.3)

i 14.5

i 7.2

Net prior service cost

i 0.8

i —

i 0.8

Current year actuarial (gain) loss

i 8.1

i 44.0

i 52.1

Foreign currency exchange rate change

i 1.0

i 0.6

i 1.6

Accumulated other comprehensive (income) loss as of December 31, 2020

i 695.1

( i 112.6)

i 582.5

Amortization of prior service benefit (costs)

( i 0.4)

i 0.7

i 0.3

Amortization of net actuarial gain (loss)

( i 8.7)

i 6.7

( i 2.0)

Curtailment, settlement or special termination benefit (gain) loss

( i 5.4)

i —

( i 5.4)

Current year actuarial (gain) loss

( i 121.4)

( i 37.2)

( i 158.6)

Foreign currency exchange rate change

i 4.3

( i 3.1)

i 1.2

Accumulated other comprehensive (income) loss as of December 31, 2021

i 563.5

( i 145.5)

i 418.0

Assumptions

Periodic pension and OPEB cost is actuarially calculated annually for each individual plan based on data available and assumptions made at the beginning of each year. Assumptions used in the calculation include the settlement discount rate selected and disclosed at the end of the previous year as well as other assumptions detailed in the table below. i The weighted-average rates used in determining the periodic pension and OPEB cost for the fiscal years 2021, 2020 and 2019 were as follows:

For the years ended

Pension

OPEB

Pension

OPEB

Pension

OPEB

Weighted-average assumptions:

Settlement discount rate

i 1.84%

i 2.10%

i 2.55%

i 2.91%

i 3.44%

i 3.92%

Rate of compensation increase

i 2.00%

N/A

i 2.00%

N/A

i 2.00%

N/A

Expected return on plan assets(1)

i 3.03%

N/A

i 3.24%

N/A

i 4.38%

N/A

Health care cost trend rate

N/A

Ranging ratably from i 6.00% in 2021 to i 3.57% in 2040

N/A

Ranging ratably from i 6.25% in 2020 to i 3.57% in 2040

N/A

Ranging ratably from i 6.5% in 2019 to i 4.5% in 2037

(1)We develop our EROA assumptions annually with input from independent investment specialists including our actuaries, investment consultants, plan trustee and other specialists. Each EROA assumption is based on historical data, including historical returns, historical market rates and is calculated for each plan's individual asset class. The calculation includes inputs for interest, inflation, credit, and risk premium (active investment management) rates and fees paid to service providers. We consider our EROA to be a significant management estimate. Any material changes in the inputs to our

114

methodology used in calculating our EROA could have a significant impact on our reported defined benefit pension plans' expense.

Benefit obligations are actuarially calculated annually at the end of each year based on the assumptions detailed in the table below. Obligations under the OPEB plans are determined by the application of the terms of medical, dental, vision and life insurance plans, together with relevant actuarial assumptions and heath care cost trend rates. The weighted-average rates used in determining the projected benefit obligation for defined pension plans and the accumulated postretirement benefit obligation for OPEB plans, as of December 31, 2021 and December 31, 2020, were as follows.

As of December 31, 2021

As of December 31, 2020

Pension

OPEB

Pension

OPEB

Weighted-average assumptions:

Settlement discount rate

i 2.27%

i 2.59%

i 1.84%

i 2.10%

Rate of compensation increase

i 2.00%

N/A

i 2.00%

N/A

Health care cost trend rate

N/A

Ranging ratably from i 6.00% in 2022 to i 3.57% in 2040

N/A

Ranging ratably from i 6.00% in 2021 to i 3.57% in 2040

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

Investment Strategy

The obligations of our defined benefit pension plans in the U.S., Canada and the U.K. are supported by assets held in trusts for the payment of future benefits. The business segments are obligated to adequately fund these asset trusts. The underlying investments within our defined benefit pension plans include: cash and short-term instruments, debt securities, equity securities, investment funds, and other investments including derivatives, hedge fund of funds and real estate. Investment allocations reflect the customized strategies of the respective plans.

The plans use liability driven investment strategies in managing defined pension benefits. For all defined benefit pension plan assets, the plans have the following primary investment objectives:

(1)optimize the long-term return on plan assets at an acceptable level of risk and manage projected future cash contributions;

(2)maintain a broad diversification across asset classes and among investment managers; and

(3)manage the risk level of the plans' assets in relation to the plans' liabilities.

Each plan's respective allocation targets promote optimal expected return and volatility characteristics given a focus on a long-term time horizon for fulfilling the plans' obligations. All assets are managed by external investment managers with a mandate to either match or outperform their benchmark. The plans use different asset managers in the U.S., U.K. and Canada and each plan's respective asset allocation could be impacted by a change in asset managers.

Our investment strategies for our defined benefit pension plans also consider the funded status for each plan. For defined benefit pension plans that are highly funded, assets are invested primarily in fixed income holdings that have a similar duration to the associated liabilities. For plans with lower funding levels, the fixed income component is managed in a similar manner to the highly funded plans. In addition to this liability-matching fixed income allocation, these plans also contain exposure to return generating assets including: equities, real estate, debt and other investments held with the goal of producing higher returns, which may also have a higher risk profile. These investments are diversified by investing globally with limitations placed on issuer concentration.

Both our U.K. and Canadian plans hedge a portion of the foreign exchange exposure between plan assets that are not denominated in the local plan currency and the local currency as the Canadian and U.K. pension liabilities will be settled in CAD and GBP, respectively.

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Target Allocations

The following compares target asset allocation percentages with actual asset allocations on a weighted-average asset basis as of December 31, 2021. While the actual allocations show a temporary shift away from fixed income securities due to the rising rate environment, the actual allocations remain within our Company defined tolerance levels.


	Target allocations	Actual allocations
Equities	i 8.7%	i 12.9%
Fixed income	i 70.0%	i 64.4%

Real estate	i 5.9%	i 6.2%
Annuities	i 12.5%	i 12.5%
Other	i 2.9%	i 4.0%

Significant Concentration Risks

We periodically evaluate our defined benefit pension plan assets for concentration risks. As of December 31, 2021, we did not have any individual underlying asset position that composed a significant concentration of each plan's overall assets. However, we currently have significant plan assets invested in U.K., U.S. and Canadian government fixed income holdings. A provisional credit rating downgrade for any of these governments could negatively impact the asset values.

Further, as our benefit plans maintain exposure to non-government investments, a significant system-wide increase in credit spreads would also negatively impact the reported plan asset values. In general, equity and fixed income risks have been mitigated by company-specific concentration limits and by utilizing multiple equity managers. We do have significant amounts of assets invested with individual fixed income and hedge fund managers, therefore, the plans use outside investment consultants to aid in the oversight of these managers and fund performance.

Valuation Techniques

We use a variety of industry accepted valuation techniques to value our plan assets. The techniques vary depending upon instrument type. Whenever possible, we prioritize the use of observable market data in our valuation processes. We use market, income and cost approaches to value our plan assets as of period end. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for additional information on our fair value methodologies and accounting policies. We have not changed our fair value techniques used to value plan assets this year.

Major Categories of Plan Assets

As of December 31, 2021, our major categories of plan assets included the following:

•Cash and short-term instruments—Includes cash, trades awaiting settlement, bank deposits, short-term bills and short-term notes. Our "trades awaiting settlement" category includes payables and receivables associated with asset purchases and sales that are awaiting final cash settlement as of year-end due to the use of trade date accounting for our pension plans assets. These payables normally settle within a few business days of the purchase or sale of the respective asset. The respective assets are included in or removed from our year-end plan assets and categorized in their respective asset categories in the fair value hierarchy below. We include these items in Level 1 of this hierarchy, as the values are derived from quoted prices in active markets. Short-term instruments are included in Level 2 of the fair value hierarchy as these are highly liquid instruments that are valued using observable inputs, but their asset values are not publicly quoted.

•Debt securities—Includes various government and corporate fixed income securities, interest and inflation-linked assets such as bonds and swaps, collateralized securities and other debt securities. The majority of the plans' fixed income assets trade on "over the counter" exchanges, which provides observable inputs that are the primary data used to determine each individual investment's fair value. We also use independent pricing vendors, as well as matrix pricing techniques. Matrix pricing uses observable data from other similar investments as the primary input to determine the individual security's fair value. Government and corporate fixed income securities are generally classified as Level 2 in the fair value hierarchy as they are valued using observable inputs. Assets included in our collateralized securities include mortgage backed securities and collateralized mortgage obligations, which are considered Level 3 due to the use of the significant unobservable inputs in deriving these assets' fair values.

116

•Equities—Includes publicly traded common and other equity-like holdings, primarily publicly traded common stock and real estate investment trusts. Equity assets are well diversified between international and domestic investments. We consider equities quoted on public exchanges as Level 1 while other assets that are not quoted on public exchanges but valued using significant observable inputs as Level 2 depending on the individual asset's characteristics.

•NAV per share practical expedient—Includes our debt funds, equity funds, hedge fund of funds, infrastructure funds, real estate fund holdings and private equity funds. The market values for these funds are based on the net asset values multiplied by the number of shares owned.

•Annuities—Includes non-participating annuity buy-in insurance policies purchased to cover a portion of the plan members. The fair value of non-participating contracts fluctuates based on changes in the obligation associated with covered plan members. These values are considered Level 3 due to the use of the significant unobservable inputs used in deriving these assets' fair values.

•Other—Includes derivatives, repurchase agreements, recoverable taxes for taxes paid and awaiting reclaim due to the tax exempt nature of the pension plan, venture capital, and private equity. Derivatives are priced using observable inputs including yields, interest rate curves and spreads. Exchange traded derivatives are typically priced using the last trade price. Repurchase agreements are agreements where our plan has created an asset exposure using borrowed assets, creating a repurchase agreement liability, to facilitate the trade. The assets associated with the repurchase agreement and equity options are included in the other category in the fair value hierarchy, and the corresponding repurchase agreement liability is classified as Level 1 in the hierarchy, as the liability is valued using quoted prices in active markets. When determining the presentation of our target and asset allocations for repurchase agreements, we are viewing the asset type, as opposed to the investment vehicle, and accordingly include the associated assets within fixed income, specifically interest and inflation linked assets. We include recoverable tax items in Level 1 of this hierarchy, as these are cash receivables and the values are derived from quoted prices in active markets. Private equity is included in Level 3 as the values are based upon the use of unobservable inputs.

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Fair Value Hierarchy

The following presents our fair value hierarchy for our defined benefit pension plan assets excluding investments using the NAV per share practical expedient (in millions):

Fair value measurements as of December 31, 2021

Total as of
December 31, 2021

Quoted prices
in active
markets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Cash and cash equivalents

Cash

i 198.4

i —

Trades awaiting settlement

i 2.1

i —

Bank deposits, short-term bills and notes

i 25.5

i —

i 25.5

i —

Debt

Government debt securities

i 751.0

i —

i 751.0

i —

Corporate debt securities

i 142.0

i —

i 142.0

i —

Interest and inflation linked assets

i 1,029.7

i —

i 1,013.8

i 15.9

Annuities

Buy-in annuities

i 708.9

i —

i 708.9

Other

Repurchase agreements

( i 477.4)

i —

Recoverable taxes

i 0.2

i —

Private equity

i 29.7

i —

i 29.7

Total fair value of investments excluding NAV per share practical expedient

i 2,410.1

( i 276.7)

i 1,932.3

i 754.5

The following presents our total fair value of plan assets including the NAV per share practical expedient for our defined benefit pension plan assets:


	Total as of December 31, 2021
	(In millions)
Fair value of investments excluding NAV per share practical expedient	$	i 2,410.1
Fair value of investments using NAV per share practical expedient
Debt funds	i 2,034.2
Equity funds	i 732.1
Real estate funds	i 285.0

Private equity funds	i 65.8
Hedge funds	i 140.3
Total fair value of plan assets	$	i 5,667.5

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The following presents our fair value hierarchy for our defined benefit pension plan assets excluding investments using the NAV per share practical expedient (in millions):

Fair value measurements as of December 31, 2020

Total as of
December 31, 2020

Quoted prices
in active
markets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Cash and cash equivalents

Cash

i 144.6

i —

Trades awaiting settlement

i 16.7

i —

Bank deposits, short-term bills and notes

i 25.0

i —

i 25.0

i —

Debt

Government securities

i 869.6

i —

i 869.6

i —

Corporate debt securities

i 112.7

i —

i 112.7

i —

Interest and inflation linked assets

i 1,059.6

i —

i 1,048.6

i 11.0

Annuities

Buy-in annuities

i 783.9

i —

i 783.9

Other

Repurchase agreements

( i 483.5)

i —

Recoverable taxes

i 0.2

i —

Private equity

i 61.4

i —

i 61.4

Total fair value of investments excluding NAV per share practical expedient

i 2,590.2

( i 322.0)

i 2,055.9

i 856.3

The following presents our fair value hierarchy including the NAV per share practical expedient for our defined benefit pension plan assets:


	Total as of December 31, 2020
	(In millions)
Fair value of investments excluding NAV per share practical expedient	$	i 2,590.2
Fair value of investments using NAV per share practical expedient
Debt funds	i 1,591.4
Equity funds	i 1,418.6
Real estate funds	i 274.4
Private equity funds	i 77.1
Hedge funds	i 6.7
Total fair value of plan assets	$	i 5,958.4

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Fair Value: Level Three Rollforward

The following presents our Level 3 Rollforward for our defined pension plan assets excluding investments using the NAV per share practical expedient:


	Amount
	(In millions)
Balance as of December 31, 2019	$	i 830.2
Total gain or loss (realized/unrealized):
Realized gain (loss)	i 2.1
Unrealized gain (loss) included in AOCI	i 11.0
Purchases, issuances, settlements	( i 12.7)
Foreign exchange translation (loss)/gain	i 25.7
Balance as of December 31, 2020	$	i 856.3
Total gain or loss (realized/unrealized):
Realized gain (loss)	i 0.9
Unrealized gain (loss) included in AOCI	( i 63.3)
Purchases, issuances, settlements	( i 32.8)

Foreign exchange translation (loss)/gain	( i 6.6)
Balance as of December 31, 2021	$	i 754.5

Expected Cash Flows

Defined benefit pension plan contributions in future years will vary based on a number of factors, including actual plan asset returns and interest rates. We fund pension plans to meet the requirements set forth in applicable employee benefits laws. We took and continue to take steps to reduce our exposure to our pension obligations. Such steps include the closure of the U.K. and U.S. pension plans to future earnings of service credit, benefit modifications in certain Canada plans and the entering into of buy-in and buy-out contracts for certain plans. We may also voluntarily increase funding levels to meet financial goals. Our U.K. pension plan is subject to a statutory valuation for funding purposes every i three years. The most recent valuation as of June 30, 2019 indicated that the plan does not have a funding deficit relative to the plan's statutory funding objective, and therefore, no MCBC contributions are currently required.

In 2022, we expect to make contributions to our defined benefit pension plans of approximately $ i 4 million and benefit payments under our OPEB plans of approximately $ i 41 million based on foreign exchange rates as of December 31, 2021. Additionally, we anticipate utilizing approximately $ i 5 million of surplus from certain Canadian defined benefit pension plans to fund employer contributions to certain Canadian defined contribution plans. BRI and BDL contributions to their respective defined benefit pension plans are excluded here, as they are not consolidated in our financial statements. Plan funding strategies are influenced by employee benefits, tax laws and plan governance documents.

Expected future benefit payments for defined benefit pension and OPEB plans, based on foreign exchange rates as of December 31, 2021, are as follows:


Expected benefit payments	Pension		OPEB
	(In millions)
2022	$	i 318.8	$	i 41.4
2023	$	i 312.3	$	i 41.1
2024	$	i 312.6	$	i 41.3
2025	$	i 313.2	$	i 40.8
2026	$	i 313.5	$	i 40.6
2027-2031	$	i 1,567.9	$	i 198.1

Defined Contribution Plans

We offer defined contribution pension plans for the majority of our U.S., Canadian and U.K. employees. The investment strategy for defined contribution plans are determined by each individual participant from the options we have made available as the plan sponsor. U.S. non-union employees are eligible to participate in qualified defined contribution plans which provide

120

for employer contributions ranging from i 5% to i 11% of eligible compensation (certain employees were also eligible for additional employer contributions). In addition, U.S. union employees are eligible to participate in a qualified defined contribution plan which provides for employer contributions based on factors associated with various collective bargaining agreements. The employer contributions to the U.K. plans can range up to i 8% of employee compensation and in Canada plans range from i 4% to i 10%. Both employee and employer contributions are made in cash in accordance with participant investment elections.

We recognized costs associated with defined contribution plans of $ i 77.8 million, $ i 75.5 million and $ i 80.0 million in 2021, 2020 and 2019, respectively.

In addition, we have other deferred compensation and nonqualified defined contribution plans. We have voluntarily funded these liabilities through rabbi trusts. These assets are invested in publicly traded mutual funds whose performance is expected to closely match changes in the plan liabilities. As of December 31, 2021, and December 31, 2020, the plan liabilities were equal to the plan assets and were included in other liabilities and other assets on our consolidated balance sheets, respectively.

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16. i Derivative Instruments and Hedging Activities

Overview and Risk Management Policies

We use derivatives as part of our normal business operations to manage our exposure to fluctuations in interest rates, foreign currency, commodity price risk and for other strategic purposes related to our core business. We have established policies and procedures that govern the risk management of these exposures. Our primary objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and prices.

To achieve our objectives, we enter into a variety of financial derivatives, including foreign currency exchange, commodity, interest rate, cross currency swaps as well as options. We also enter into physical hedging agreements directly with our suppliers to manage our exposure to certain commodities.

Counterparty Risk

While, by policy, the counterparties to any of the financial derivatives we enter into are major institutions with investment grade credit ratings of at least A- by Standard & Poor's (or the equivalent) or A3 by Moody's, we are exposed to credit-related losses in the event of non-performance by counterparties. This credit risk is generally limited to the unrealized gains in such contracts, should any of these counterparties fail to perform as contracted.

We have established a counterparty credit policy and guidelines that are monitored and reported to management according to prescribed guidelines to assist in managing this risk. As an additional measure, we utilize a portfolio of institutions either headquartered or operating in the same countries that we conduct our business. In calculating the fair value of our derivative balances, we also record an adjustment to recognize the risk of counterparty credit and our own non-performance risk, as appropriate.

Price and Liquidity Risks

We base the fair value of our derivative instruments upon market rates and prices. The volatility of these rates and prices are dependent on many factors that cannot be forecasted with reliable accuracy. The current fair values of our contracts could differ significantly from the cash settled values with our counterparties. As such, we are exposed to price risk related to unfavorable changes in the fair value of our derivative contracts.

We may be forced to cash settle all or a portion of our derivative contracts before the expected settlement date upon the occurrence of certain contractual triggers including a change of control, termination event or other breach of agreement. This could have a negative impact on our liquidity. For derivative contracts that we have designated as hedging instruments, early cash settlement would result in the timing of our hedge settlement not being matched to the cash settlement of the forecasted transaction or firm commitment. We may also decide to cash settle all or a portion of our derivative contracts before the expected settlement date through negotiations with our counterparties, which could also impact our cash position.

Due to the nature of our counterparty agreements, we are not able to net positions with the same counterparty across business units. Thus, in the event of default, we may be required to early settle all out-of-the-money contracts, without the benefit of netting the fair value of any in-the-money positions against this exposure.

Collateral

We do not receive and are not required to post collateral unless a change of control event occurs. This termination event would give either party the right to early terminate all outstanding swap transactions in the event that the other party consolidates, merges with, or transfers all or substantially all of its assets to, another entity, and the creditworthiness of the surviving entity that has assumed such party's obligations is materially weaker than that of such party. As of December 31, 2021, we did not have any collateral posted with any of our counterparties.

Derivative Accounting Policies

Overview

Our foreign currency forwards and our forward starting interest rate swaps are designated in hedging relationships as cash flow hedges. Prior to settlements discussed below, our interest rate swaps were designated as fair value hedges and our cross currency swaps were designated as net investment hedges. In certain situations, we may execute derivatives that do not qualify for, or we do not otherwise seek, hedge accounting but are determined to be important for managing risk. For example, our commodity swaps and commodity options are not designated in hedge accounting relationships. These outstanding economic hedges are measured at fair value on our consolidated balance sheets with changes in fair value recorded in earnings. We have historically elected to apply the NPNS exemption to certain contracts, as applicable. These contracts are typically transacted with our suppliers and include risk management features that allow us to fix the price on specific volumes of purchases for

122

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

Hedge Accounting Policies

We formally document all relationships receiving hedge accounting treatment between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking hedge transactions pursuant to prescribed guidance. We also formally assess effectiveness both at the hedge's inception and on an ongoing basis, specifically whether the derivatives that are used in hedging transactions have been highly effective in mitigating the risk designated as being hedged and whether those hedges may be expected to remain highly effective in future periods. Specific to net investment hedges, we have elected to use the spot-to-spot methodology to assess effectiveness.

We discontinue hedge accounting prospectively when (1) the derivative is no longer highly effective in offsetting changes in the cash flows of a forecasted future transaction; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) management determines that designating the derivative as a hedging instrument is no longer appropriate; or (5) management decides to cease hedge accounting.

When we discontinue hedge accounting prospectively, but it continues to be probable that the forecasted transaction will occur in the originally expected period, the existing gain or loss on the derivative remains in AOCI for cash flow hedges and net investment hedges or in the carrying value of the hedged item for fair value hedges and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is probable that a forecasted transaction will no longer occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses in AOCI are recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, we carry the derivative at its fair value on the consolidated balance sheets until maturity, recognizing future changes in the fair value in current period earnings.

Significant Derivative/Hedge Positions

Interest Rate Swaps

In prior years, we entered into interest rate swap agreements to economically convert our fixed rate $ i 500 million i 3.5% notes due in 2022 to floating rate debt. These interest rate swap agreements, which were designated as fair value hedges, were previously voluntarily cash settled, at which time we ceased adjusting the carrying value of the notes for the fair value movements. The cumulative adjustments on the $ i 500 million i 3.5% notes increased the carrying value of the notes and are being amortized as a benefit to interest expense over the expected remaining term of the notes.

Net Investment Hedges

Foreign Denominated Debt

On July 7, 2016, we issued EUR i 800 million senior notes maturing July 15, 2024 to partially fund the Acquisition. Separately, on March 15, 2017, we issued an aggregate of EUR i 500 million, i 0.35% plus three-month EURIBOR floating rate senior notes due March 15, 2019. Concurrent with the issuances of both sets of Notes, we simultaneously designated the principals as net investment hedges of our investment in our Europe business in order to hedge a portion of the foreign currency translational impacts and, accordingly, record the changes in the carrying value of the 2016 EUR Notes and 2017 EUR Notes due to fluctuations in the spot rate to AOCI. In March 2019, we repaid the 2017 EUR Notes. See Note 11, "Debt" for further discussion.

Cross Currency Swaps

Effective March 20, 2019, we entered into cross currency swap agreements having a total notional value of approximately EUR i 353 million ($ i 400 million upon execution) in order to hedge a portion of the foreign currency translational impacts of our European investment. As a result of the swaps, we economically converted a portion of our $ i 1.0 billion i 2.1% senior notes due 2021 and associated interest to EUR denominated, which results in a EUR interest rate to be received at i 0.71%. Upon repayment of the $ i 1.0 billion i 2.1% senior notes at maturity in July 2021, we settled the associated cross currency swap resulting in a net cash payment of $ i 12.7 million, consisting of the final loss on the cross currency swap of $ i 17.6 million partially offset by the final interest received. The settlement of these cross currency swaps were classified as investing activities in our consolidated statement of cash flows.

Separately, effective April 3, 2019, we voluntarily early terminated our $ i 500 million cross currency swaps due in 2020 under which we were receiving EUR interest payments at a rate received of i 0.85%, and concurrently entered into new cross currency swap agreements having a total notional of approximately EUR i 445 million ($ i 500 million upon execution) in order to hedge a portion of the foreign currency translation impacts of our European investment. As a result of the swaps, we economically converted our $ i 500 million i 2.25% senior notes due 2020 and associated interest to EUR denominated, which

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resulted in a EUR interest rate to be received of i 0.68%. The termination of the original $ i 500 million cross currency swaps resulted in cash receipts of approximately $ i 47 million during the second quarter of 2019. Upon repayment of the $ i 500 million i 2.25% senior notes at maturity in March 2020, we settled the associated cross currency swaps resulting in cash receipts of $ i 3.2 million. The settlement of these cross currency swaps were classified as investing activities in our consolidated statement of cash flows.

We had designated each of these cross currency swaps as net investment hedges and accordingly, recorded changes in fair value due to fluctuations in the spot rate to AOCI. The changes in fair value of the swaps attributable to changes other than those due to fluctuations in the spot rate were excluded from the assessment of hedge effectiveness and recorded to interest expense over the life of the hedge.

Forward Starting Interest Rate Swaps

During the third quarter of 2018, we entered into forward starting interest rate swaps with a notional amount totaling $ i 1.5 billion with termination dates of July 2021, May 2022 and July 2026. The swaps had effective dates mirroring the terms of the forecasted debt issuances. Under the agreements, we are required to early terminate these swaps at the time we expect to issue the related forecasted debt. We have designated these contracts as cash flow hedges. As a result, the unrealized mark-to-market gains or losses will be recorded to AOCI until termination at which point the realized gain or loss of these swaps at issuance of the hedged debt will be reclassified from AOCI and amortized to interest expense over the term of the hedged debt.

In June 2021, we early terminated our $ i 250.0 million forward starting interest rate swap that was originally set to terminate in July 2021. This forward starting interest rate swap was rolled forward to May 2022 through a cashless settlement. The new May 2022 forward starting interest rate swap is incremental to our existing May 2022 forward starting interest rate swap that was executed in 2018, both of which are hedging our forecasted debt issuance expected to occur during 2022. At the time of the transaction, there was approximately $ i 33.4 million of unrealized losses recorded in AOCI. Approximately $ i 1.7 million was recorded to interest expense in the second quarter of 2021 when it became probable that one of the forecasted interest payments originally hedged would not occur. The remaining $ i 31.7 million will be amortized to interest expense throughout the term of the respective debt unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time. The new forward starting interest rate swap has an effective date of June 2021, a termination date of May 2022 and an effective interest rate of approximately i 3.22%.

Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows. However, due to an other-than-insignificant financing element in the May 2022 forward starting interest rate swap that was designated in June 2021, the cash flow related to this contract will be classified as financing activities.

In 2015 we entered into forward starting interest rate swaps with a notional of CAD i 600 million in order to manage our exposure to the volatility of the interest rates associated with the future interest payments on the forecasted CAD debt issuances, which ultimately became the 2015 Notes and a portion of the 2016 Notes. The swaps had an effective date of September 2015 and a termination date of September 2025 mirroring the terms of the initially forecasted CAD debt issuance. Under these agreements we were required to early terminate these swaps at the approximate time we issued the previously forecasted debt. We had designated these contracts as cash flow hedges and accordingly, a portion of the CAD i 39.2 million ($ i 29.5 million at settlement) loss on the forward starting interest rate swaps is being reclassified from AOCI and amortized to interest expense over the remaining term of the 2015 Notes, repaid in September 2020, and over a portion of the CAD i 500 million notes due in 2026 up to the full i 10-year term of the interest rate swap agreements.

Foreign Currency Forwards

We have financial foreign exchange forward contracts in place to manage our exposure to foreign currency fluctuations. We hedge foreign currency exposure related to certain royalty agreements, exposure associated with the purchase of production inputs and imports that are denominated in currencies other than the functional entity's local currency, and other foreign exchanges exposures. These contracts have been designated as cash flow hedges of forecasted foreign currency transactions. We use foreign currency forward contracts to hedge these future forecasted transactions up to a i 60 month horizon.

Commodity Swaps and Options

We have financial commodity swap and option contracts in place to hedge changes in the prices of natural gas, aluminum, including surcharges relating to our aluminum exposures, corn, barley and diesel. These contracts allow us to swap our floating exposure to changes in these commodity prices for a fixed rate. These contracts are not designated in hedge accounting relationships. As such, changes in fair value of these derivatives are recorded in cost of goods sold in the consolidated statements of operations. We hedge forecasted purchases of natural gas, aluminum, corn and diesel each up to i 60 months out in the future for use in our supply chain, in line with our risk management policy. Further, we hedge forecasted

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purchases of barley based on crop year and physical inventory management. For purposes of measuring segment operating performance, the unrealized changes in fair value of the swaps not designated in hedge accounting relationships are reported in Unallocated outside of the segment specific operating results until such time that the exposure we are managing is realized. At that time, we reclassify the gain or loss from Unallocated to the operating segment, allowing our operating segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility.

Warrants

On October 4, 2018, in connection with the formation of the Truss joint venture, as discussed further in Note 4, "Investments," our joint venture partner, HEXO, issued to our Canadian subsidiary a total of i 11.5 million warrants to purchase common shares of HEXO at a strike price of CAD i 6.00 per share at any time during the three year period following the formation of the joint venture. The fair value of the warrants at issuance of approximately $ i 45 million was recorded as a non-current asset and as an adjustment to paid-in capital, net of tax. On December 23, 2020, HEXO consolidated its issued and outstanding common shares on the basis of i four old shares for one new share that resulted in the adjustment of the strike price to CAD i 24.00 per share and a reduction in warrants to i 2.9 million. The warrants to acquire common shares of HEXO expired unexercised on October 4, 2021. All changes in the fair value of the warrants subsequent to issuance were recorded in other income (expense), net on the consolidated statements of operations.

Derivative Fair Value Measurements

We utilize market approaches to estimate the fair value of our derivative instruments by discounting anticipated future cash flows derived from the derivative's contractual terms and observable market interest, foreign exchange and commodity rates. The fair values of our derivatives also include credit risk adjustments to account for our counterparties' credit risk, as well as our own non-performance risk, as appropriate. The fair value of our warrants to acquire common shares of HEXO prior to expiration were estimated using the Black-Scholes option-pricing model.

i The tables below summarize our derivative assets and (liabilities) that were measured at fair value as of December 31, 2021 and December 31, 2020. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for further discussion related to measuring the fair value of derivative instruments.

Fair Value Measurements as of
December 31, 2021

Total as of
December 31, 2021

Quoted prices
in active markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In millions)

Interest rate swaps

( i 170.8)

i —

( i 170.8)

i —

Foreign currency forwards

( i 1.5)

i —

( i 1.5)

i —

Commodity swaps and options

i 300.9

i —

i 300.9

i —

Total

i 128.6

i —

i 128.6

i —

Fair Value Measurements as of
December 31, 2020

Total as of
December 31, 2020

Quoted prices
in active markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In millions)

Cross currency swaps

( i 26.5)

i —

( i 26.5)

i —

Interest rate swaps

( i 221.5)

i —

( i 221.5)

i —

Foreign currency forwards

( i 4.9)

i —

( i 4.9)

i —

Commodity swaps and options

i 65.2

i —

i 65.2

i —

Warrants

i 0.3

i —

i 0.3

i —

Total

( i 187.4)

i —

( i 187.4)

i —

As of December 31, 2021 and December 31, 2020, we had no significant transfers between Level 1 and Level 2. New derivative contracts transacted during 2021 were all included in Level 2.

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Results of Period Derivative Activity

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

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

Asset derivatives

Liability derivatives

Notional amount

Balance sheet location

Fair value

Balance sheet location

Fair value

Derivatives designated as hedging instruments:

Interest rate swaps

i 1,500.0

Other current assets

i —

Accounts payable and other current liabilities

( i 67.7)

Other non-current assets

i —

Other liabilities

( i 103.1)

Foreign currency forwards

i 170.8

Other current assets

i 0.5

Accounts payable and other current liabilities

( i 2.4)

Other non-current assets

i 0.6

Other liabilities

( i 0.2)

Total derivatives designated as hedging instruments

i 1.1

( i 173.4)

Derivatives not designated as hedging instruments:

Commodity swaps(1)

i 722.1

Other current assets

i 225.1

Accounts payable and other current liabilities

( i 1.1)

Other non-current assets

i 77.1

Other liabilities

( i 0.3)

Commodity options(1)

i 68.2

Other current assets

i 1.0

Accounts payable and other current liabilities

( i 0.9)

Total derivatives not designated as hedging instruments

i 303.2

( i 2.3)

Asset derivatives

Liability derivatives

Notional amount

Balance sheet location

Fair value

Balance sheet location

Fair value

Derivatives designated as hedging instruments:

Cross currency swaps

i 400.0

Other current assets

i —

Accounts payable and other current liabilities

( i 26.5)

Other non-current assets

i —

Other liabilities

i —

Interest rate swaps

i 1,500.0

Other non-current assets

i —

Accounts payable and other current liabilities

( i 47.7)

Other liabilities

( i 173.8)

Foreign currency forwards

i 181.2

Other current assets

i 0.3

Accounts payable and other liabilities

( i 3.0)

Other non-current assets

i —

Other liabilities

( i 2.2)

Total derivatives designated as hedging instruments

i 0.3

( i 253.2)

Derivatives not designated as hedging instruments:

Commodity swaps(1)

i 918.9

Other current assets

i 44.5

Accounts payable and other current liabilities

( i 20.6)

Other non-current assets

i 45.4

Other liabilities

( i 4.1)

Commodity options(1)

i 16.8

Other current assets

i —

Accounts payable and other current liabilities

i —

Warrants

i 54.2

Other non-current assets

i 0.3

Other liabilities

i —

Total derivatives not designated as hedging instruments

i 90.2

( i 24.7)

(1)Notional includes offsetting buy and sell positions, shown in terms of absolute value. Buy and sell positions are shown gross in the asset and/or liability position, as appropriate.

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The Pretax Effect of Cash Flow Hedge Accounting on Other Comprehensive Income, Accumulated Other Comprehensive Income (Loss), and income (in millions):

Derivatives in cash flow hedge relationships

Amount of gain
(loss) recognized
in OCI on derivatives

Location of gain (loss)
reclassified from AOCI into
income

Amount of gain
(loss) recognized
from AOCI into income on
derivative

For the year ended December 31, 2021

Forward starting interest rate swaps

i 50.7

Interest income (expense), net

( i 4.8)

Foreign currency forwards

i 0.4

Cost of goods sold

( i i 3.5 / )

Other income (expense), net

i i 0.8 /

Total

i 51.1

( i 7.5)

For the year ended December 31, 2020

Forward starting interest rate swaps

( i 110.0)

Interest income (expense), net

( i 2.9)

Foreign currency forwards

( i 3.5)

Cost of goods sold

i i 4.6 /

Other income (expense), net

( i i 1.2 / )

Total

( i 113.5)

i 0.5

For the year ended December 31, 2019

Forward starting interest rate swaps

( i 99.2)

Interest income (expense), net

( i 3.0)

Foreign currency forwards

( i 12.1)

Cost of goods sold

i i 3.1 /

Other income (expense), net

( i i 0.7 / )

Total

( i 111.3)

( i 0.6)

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

Net investment hedge relationships

Amount of gain
(loss) recognized
in OCI

Location of gain (loss) recognized in income (amount excluded from effectiveness testing)

Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)(1)

For the year ended December 31, 2021

Cross currency swaps

i 8.8

Interest income (expense), net

i 6.1

EUR i 800 million notes due 2024

i 67.7

Other income (expense), net

i —

Total

i 76.5

i 6.1

For the year ended December 31, 2020

Cross currency swaps

( i 33.2)

Interest income (expense), net

i 14.2

EUR i 800 million notes due 2024

( i 80.3)

Other income (expense), net

i —

Total

( i 113.5)

i 14.2

For the year ended December 31, 2019

Cross currency swaps

i 19.8

Interest income (expense), net

i 23.5

EUR i 800 million notes due 2024

i 20.4

Other income (expense), net

i —

EUR i 500 million notes due 2019

i 10.1

Other income (expense), net

i —

Total

i 50.3

i 23.5

(1)Represents amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and period amortization is recorded in other comprehensive income.

The cumulative translation adjustments related to our net investment hedges remain in AOCI until the respective underlying net investment is sold or liquidated. During the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively, we did not reclassify any amounts related to net investment hedges from AOCI into earnings.

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We expect net losses of approximately $ i 5 million (pretax) recorded in AOCI as of December 31, 2021 will be reclassified into earnings within the next i 12 months. For derivatives designated in cash flow hedge relationships, the maximum length of time over which forecasted transactions are hedged as of December 31, 2021 is approximately i 4 years, as well as those related to our forecasted debt issuances in 2022 and 2026.

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

Derivatives not in hedging relationship

Location of gain (loss) recognized
in income on derivative

Amount of gain (loss) recognized
in income on derivative

For the year ended December 31, 2021

Commodity swaps

Cost of goods sold

i 403.4

Commodity options

Cost of goods sold

i 0.1

Warrants

Other income (expense), net

( i 0.3)

Total

i 403.2

For the year ended December 31, 2020

Commodity swaps

Cost of goods sold

i 28.5

Warrants

Other income (expense), net

( i 2.4)

Total

i 26.1

For the year ended December 31, 2019

Commodity swaps

Cost of goods sold

( i 26.8)

Warrants

Other income (expense), net

( i 17.8)

Total

( i 44.6)

The gains and losses recognized in income related to our commodity swaps are largely driven by changes in the respective commodity market prices.

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17. i Accounts Payable and Other Current Liabilities


	As of
	December 31, 2021		December 31, 2020
	(In millions)
Accounts payable and accrued trade payables	$	i 2,098.1	$	i 1,732.7
Accrued compensation	i 243.7		i 278.5
Accrued excise and other non-income related taxes	i 242.6		i 257.6
Accrued interest	i 91.4		i 101.4
Container liability	i 114.9		i 100.9
Operating leases	i 45.4		i 47.1
Other(1)	i 271.2		i 371.3
Accounts payable and other current liabilities	$	i 3,107.3	$	i 2,889.5

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

18. i Commitments and Contingencies

Letters of Credit

As of December 31, 2021, we had $ i 62.2 million outstanding in letters of credit with financial institutions. These letters primarily expire throughout 2022 and $ i 15.1 million of the letters contain a feature that automatically renews the letter for an additional year if no cancellation notice is submitted. These letters of credit are being maintained as security for deferred compensation payments, reimbursements to insurance companies, reimbursements to the trustee for pension payments, deductibles or retention payments made on our behalf, various payments due to governmental agencies, operations of underground storage tanks and other general business purposes and are not included on our consolidated balance sheets.

Guarantees and Indemnities

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. As of December 31, 2021 and December 31, 2020, the consolidated balance sheets include liabilities related to these guarantees of $ i 38.1 million and $ i 38.2 million, respectively. See Note 4, "Investments" for further detail.

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. We settled a portion of our tax credit indemnity obligation during 2010. The maximum potential claims amount for the remainder of the purchased tax credits was $ i 62.8 million as of December 31, 2021. Our total estimate of the indemnity liability as of December 31, 2021 was $ i 7.2 million, which is classified as non-current.

Our estimates consider a number of scenarios for the ultimate resolution of these issues, the probabilities of which are influenced not only by legal developments in Brazil but also by management's intentions with regard to various alternatives that could present themselves leading to the ultimate resolution of these issues. The liabilities are impacted by changes in estimates regarding amounts that could be paid, the timing of such payments, adjustments to the probabilities assigned to various scenarios and foreign currency exchange rates. Our indemnity also covers fees and expenses that Kaiser incurs to manage the cases through the administrative and judicial systems.

Additionally, we also provided FEMSA with indemnity related to all other tax, civil, and labor contingencies existing as of the date of sale. In this regard, however, FEMSA assumed their full share of all of these contingent liabilities that had been previously recorded and disclosed by us prior to the sale on January 13, 2006. However, we may have to provide indemnity to FEMSA if those contingencies settle at amounts greater than those amounts previously recorded or disclosed by us. We will be able to offset any indemnity exposures in these circumstances with amounts that settle favorably to amounts previously recorded. Our exposure related to these indemnity claims is capped at the amount of the sales price of the i 68% equity interest of Kaiser, which was $ i 68 million. As a result of these contract provisions, our estimates include not only probability-weighted potential cash outflows associated with indemnity provisions, but also probability-weighted cash inflows that could result from

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favorable settlements, which could occur through negotiation or settlement programs arising from the federal or any of the various state governments in Brazil. The recorded value of the tax, civil and labor indemnity liability was $ i 3.0 million as of December 31, 2021, which is classified as non-current. For the remaining portion of our indemnity obligations, not deemed probable, we continue to utilize probability-weighted scenarios in determining the value of the indemnity obligations.

Future settlement procedures and related negotiation activities associated with these contingencies are largely outside of our control. The sale agreement requires annual cash settlements relating to the tax, civil, and labor indemnities. Indemnity obligations related to purchased tax credits must be settled upon notification of FEMSA's settlement. Due to the uncertainty involved with the ultimate outcome and timing of these contingencies, significant adjustments to the carrying values of the indemnity obligations have been recorded to date and additional future adjustments may be required. These liabilities are denominated in Brazilian Reais and are therefore, subject to foreign exchange gains or losses. As a result, these foreign exchange gains and losses are the only impacts recorded within other income (expense), net.

i The table below provides a summary of reserves associated with the Kaiser indemnity obligations from December 31, 2018, through December 31, 2021:

Total indemnity
reserves

(In millions)

Balance as of December 31, 2018

i 14.7

Changes in estimates

i —

Foreign exchange impacts

( i 0.5)

Balance as of December 31, 2019

i 14.2

Changes in estimates

i —

Foreign exchange impacts

( i 3.2)

Balance as of December 31, 2020

i 11.0

Changes in estimates

i —

Foreign exchange impacts

( i 0.8)

Balance as of December 31, 2021

i 10.2

/ Purchase Obligations

We have various long-term supply contracts and distribution agreements with unaffiliated third parties and our joint venture partners to purchase materials used in production and packaging and to provide distribution services. The supply contracts provide that we purchase certain minimum levels of materials throughout the terms of the contracts. Additionally, we have various long-term non-cancelable commitments for advertising, sponsorships and promotions, including marketing at sports arenas, stadiums and other venues and events. i The future aggregate minimum required commitments under these purchase obligations are shown in the table below based on foreign exchange rates as of December 31, 2021. The amounts in the table do not represent all anticipated payments under long-term contracts. Rather, they represent unconditional, non-cancelable purchase commitments under contracts with remaining terms greater than one year.

Year

Supply and Distribution

Advertising and Promotions

(Amounts in millions)

2022

i 400.2

i 145.6

2023

i 347.3

i 144.4

2024

i 193.5

i 131.8

2025

i 179.7

i 107.3

2026

i 147.9

i 81.5

Thereafter

i 338.2

i 232.1

Total

i 1,606.8

i 842.7

Total purchases under our long-term unconditional, non-cancellable supply and distribution contracts in 2021, 2020 and 2019 were approximately $ i 0.4 billion, $ i 0.5 billion and $ i 1.0 billion, respectively.

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Litigation and Other Disputes and Environmental

Related to litigation, other disputes and environmental issues, we had an aggregate accrued contingent liability of $ i 11.3 million and $ i 17.9 million as of December 31, 2021 and December 31, 2020, respectively. While we cannot predict the eventual aggregate cost for litigation, other disputes and environmental matters in which we are currently involved, we believe adequate reserves have been provided for losses that are probable and estimable. Additionally, as noted below, there are certain loss contingencies that we deem reasonably possible for which a range of loss is not estimable at this time; for all other matters, we believe that any reasonably possible losses in excess of the amounts accrued are immaterial to our audited consolidated financial statements.

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

On February 12, 2018, Stone Brewing Company filed a trademark infringement lawsuit in federal court in the Southern District of California against MCBC USA alleging that the Keystone brand has “rebranded” itself as “Stone” and is marketing itself in a manner confusingly similar to Stone Brewing Company's registered Stone trademark. Stone Brewing Company seeks treble damages and disgorgement of MCBC USA's profit from Keystone sales. MCBC USA subsequently filed an answer and counterclaims against Stone Brewing Company. On May 31, 2018, Stone Brewing Company filed a motion to dismiss MCBC USA's counterclaims and for a preliminary injunction seeking to bar MCBC USA from continuing to use “STONE” on Keystone Light cans and related marketing materials. In March 2019, the court denied Stone Brewing Company’s motion for preliminary injunction and its motion to dismiss MCBC USA's counterclaims. Discovery is closed. The jury trial scheduled to begin November 8, 2021 was continued by the court and has now been reset to begin on March 7, 2022. We intend to vigorously assert and defend our rights in this lawsuit. A range of potential loss is not estimable at this time.

Regulatory Contingencies

In December 2018, the U.S. Department of Treasury issued a regulation that impacted our ability to claim a refund of certain federal duties, taxes, and fees paid for beer sold between the U.S. and certain other countries effective in February 2019. As a result, based on the terms of the regulation, it was the U.S. Department of Treasury's position that future claims would no longer be accepted, and we would be further unable to collect previously claimed, but not yet received, refunds. In January 2020, the United States Court of International Trade issued an opinion and order ruling the challenged portions of this regulation dealing with refunds of certain federal duties, taxes and fees paid with respect to certain imported beer, to the extent of certain exported beer, to be unlawful. On April 17, 2020, the U.S. Department of Treasury appealed this ruling as well as filed a motion for stay of the enforcement of judgment and suspension of claims pending appeal. The U.S. Department of Treasury's motion to stay was denied pending appeal and they were ordered to pay on all claims under the accelerated payment program. On July 23, 2020, the U.S. Department of Treasury filed its opening appellate brief in the United States Court of Appeals for the Federal Circuit. An opposition/response brief was filed on October 1, 2020 and final reply brief was submitted on December 11, 2020. On August 23, 2021, the Federal Circuit Court of Appeals issued its unanimous written opinion affirming the judgment of the Court of International Trade and, on October 14, 2021, issued its Mandate on the judgment. All other appellate deadlines have since passed, the judgment is final and litigation has concluded. As a result, both amounts previously collected on filed claims and the amounts of previously filed claims that have not yet been received are no longer at risk.

In June 2019, the Ontario government adopted a bill that, if enacted, would terminate a 10-year Master Framework Agreement that was originally signed between the previous government administration and Molson Canada 2005, a wholly owned indirect subsidiary of our Company, Labatt Brewing Company Limited, Sleeman Breweries Ltd., and Brewers Retail Inc. in 2015 and dictates the terms of the beer distribution and retail systems in Ontario through 2025. The government has not yet proclaimed the bill as law. The impacts of these potential legislative changes are unknown at this time, but could have a negative impact on the results of operations, cash flows and financial position of the Americas segment. Molson Canada 2005 and the other Master Framework Agreement signatories are prepared to vigorously defend our rights and pursue legal recourse, should the Master Framework Agreement be unilaterally terminated by the enactment of the legislation.

Environmental

When we determine it is probable that a liability for environmental matters or other legal actions exists and the amount of the loss is reasonably estimable, an estimate of the future costs is recorded as a liability in the financial statements. Costs that extend the life, increase the capacity or improve the safety or efficiency of our assets or are incurred to mitigate or prevent

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future environmental contamination may be capitalized. Other environmental costs are expensed when incurred. Total environmental expenditures recognized for 2021, 2020 and 2019 were immaterial to our consolidated financial statements.

Americas

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

In Canada, 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.

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

Lowry

We are one of a number of entities named by the Environmental Protection Agency ("EPA") as a PRP at the Lowry Superfund site in Colorado. 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 $ i 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 $ i 120 million (in 1992 adjusted dollars). We are obligated to pay a portion of future costs 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. Our expected liability is based on our best estimates available.

Based on the assumptions utilized, the present value and gross amount of the costs as of December 31, 2021 are approximately $ i 6 million and $ i 6 million, respectively. Cost estimates were discounted using a i 1.43% risk-free rate of return. We did not assume any future recoveries from insurance companies in the estimate of our liability, and none are expected.

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 we are required to cover, 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 East Rutherford and Berry's Creek sites in New Jersey and the Chamblee site 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.

EMEA&APAC

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 2021 capital expenditures, results of operations or our financial or competitive position, and we do not currently anticipate that they will do so in 2022.

19. i i Leases /

Montreal Brewery Sale and Leaseback Transaction

In June 2019, we completed the sale of our Montreal brewery for $ i 96.2 million, resulting in a $ i 61.3 million gain, which was recorded as a special item for the year ended December 31, 2019. In conjunction with the sale, we agreed to lease back the

132

existing property to continue operations on an uninterrupted basis for a period up to i 5 years with early termination options at our discretion, while our new brewery in Longueuil, Québec was being constructed. Accordingly, for the year ended December 31, 2019, we recorded operating lease right-of-use assets and liabilities of approximately CAD i 6 million assuming a lease term that is coterminous with the construction of our new brewery, which began operations during the fourth quarter of 2021. However, due to the uncertainty inherent in our estimates, the term of the brewery lease is subject to reassessment. Once the existing property has been entirely redeveloped by the purchaser, we plan to lease a minor portion of the future space for administrative and other purposes. We evaluated this transaction pursuant to the accounting guidance for sale and leaseback transactions and concluded that the relevant criteria were met for full gain recognition upon completion of the transaction in the second quarter of 2019.

Lease Financial Information

For the years ended December 31, 2021, December 31, 2020 and December 31, 2019, lease expense (including immaterial short-term and variable lease costs) was as follows.

For the years ended

(In millions)

Operating lease expense

i 73.2

i 71.4

i 71.0

Finance lease expense

i 10.4

i 11.5

i 12.1

Total lease expense

i 83.6

i 82.9

i 83.1

We recorded impairment losses on certain right-of-use assets, primarily related to our Denver, Colorado office lease, during 2020 and 2019 as discussed in Note 7, "Special Items."

i Supplemental cash flow information related to leases for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 was as follows.

For the years ended

(In millions)

Cash paid for amounts included in the measurements of lease liabilities:

Operating cash flows from operating leases

i 56.8

i 53.2

i 52.2

Operating cash flows from finance leases

i 4.5

i 7.6

i 3.8

Financing cash flows from finance leases

i 3.6

i 34.5

i 2.8

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

Operating leases

i 34.0

i 28.5

i 45.6

Finance leases

i 7.5

i 5.4

i 9.2

133

Supplemental balance sheet information related to leases as of December 31, 2021 and December 31, 2020 was as follows:

As of

Balance Sheet Classification

(In millions)

Operating Leases

Operating lease right-of-use assets

Other assets

i 119.1

i 136.2

Current operating lease liabilities

Accounts payable and other current liabilities

i 45.4

i 47.1

Non-current operating lease liabilities

Other liabilities

i 87.8

i 106.4

Total operating lease liabilities

i 133.2

i 153.5

Finance Leases

Finance lease right-of-use assets

Properties, net

i 61.5

i 60.5

Current finance lease liabilities

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

i 4.6

i 4.1

Non-current finance lease liabilities

Long-term debt

i 62.6

i 59.9

Total finance lease liabilities

i 67.2

i 64.0

The weighted-average remaining lease term and discount rate as of December 31, 2021 are as follows:


	Weighted-Average Remaining Lease Term (Years)	Weighted-Average Discount Rate
Operating leases	i 4.1	i 3.5%
Finance leases	i 11.9	i 6.5%

/ i i

Based on foreign exchange rates as of December 31, 2021, maturities of lease liabilities were as follows:


	Operating Leases		Finance Leases
	(In millions)
2022	$	i 49.8	$	i 8.4
2023	i 37.0		i 8.1
2024	i 22.2		i 8.2
2025	i 14.7		i 7.8
2026	i 10.6		i 11.6
Thereafter	i 9.6		i 54.4
Total lease payments	$	i 143.9	$	i 98.5
Less: interest	( i 10.7)		( i 31.3)
Present value of lease liabilities	$	i 133.2	$	i 67.2

/ /

Executed leases that have not yet commenced as of December 31, 2021 are immaterial except for a railcar lease with total undiscounted payments of $ i 27.7 million expected to commence in 2022.

134

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021 to provide reasonable assurance that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such disclosure controls and procedures that, by their nature, can only provide reasonable assurance regarding management's control objectives. Also, we have investments in certain unconsolidated entities that we do not control or manage.

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Our Chief Executive Officer and our Chief Financial Officer, with assistance from other members of management, assessed the effectiveness of our internal control over financial reporting as of December 31, 2021, based on the framework and criteria established in Internal Control—Integrated Framework (2013 Framework), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2021.

An independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2021, as stated in their report which appears in Part II—Item 8 Financial Statements and Supplementary Data.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION

None.

135

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Incorporated by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2021.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2021.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2021.

Equity Compensation Plan Information

The following table summarizes information about the Incentive Compensation Plan as of December 31, 2021. All outstanding awards shown in the table below relate to our Class B common stock.


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (Column A)	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column A)
Equity compensation plans approved by security holders(1)	4,107,607	$63.15	4,951,399
Equity compensation plans not approved by security holders	—	N/A	—
Total	4,107,607	$63.15	4,951,399

(1)Under the Incentive Compensation Plan, we may issue RSUs, DSUs, PSUs and stock options. The number of securities to be issued upon exercise of outstanding awards includes 1,326,786 RSUs and DSUs, 867,721 PSUs (assuming the target award is met) and 1,913,100 options outstanding as of December 31, 2021. See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Share-Based Payments" for further discussion. Outstanding RSUs, DSUs and PSUs do not have exercise prices and therefore have been disregarded for purposes of calculating the weighted-average exercise price.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2021.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2021.

136

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)Financial Statements, Financial Statement Schedules and Exhibits

The following are filed or incorporated by reference as a part of this Annual Report on Form 10-K:

(1)Management's Report

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the years ended December 31, 2021, December 31, 2020 and December 31, 2019

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, December 31, 2020 and December 31, 2019

Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021, December 31, 2020 and December 31, 2019

Consolidated Statements of Stockholders' Equity and Noncontrolling Interests for the years ended December 31, 2021, December 31, 2020 and December 31, 2019

Notes to Consolidated Financial Statements

(2)Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2021, December 31, 2020 and December 31, 2019

(3)Exhibit list

Restated Certificate of Incorporation of Molson Coors Beverage Company, as amended to date.

Exhibit Number

Document Description

Form

Exhibit

Filing Date

3.1

10-K

3.1

Fourth Amended and Restated Bylaws of Molson Coors Beverage Company.

3.2

8-K

3.2

January 2, 2020

4.1.1

Specimen Class A Common Stock Certificate

10-K

4.1.1

Specimen Class B Common Stock Certificate

4.1.2

10-K

4.1.2

Indenture, dated as of May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.1

8-K

4.1

First Supplemental Indenture, dated as of May 3, 2012, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.2

8-K

4.2

Second Supplemental Indenture, dated as of June 15, 2012, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.3

10-Q

4.8

August 8, 2012

4.2.4

Third Supplemental Indenture, dated as of May 13, 2016, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

8-K

4.3

June 28, 2016

137

Fourth Supplemental Indenture, dated as of August 19, 2016, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

Exhibit Number

Document Description

Form

Exhibit

Filing Date

4.2.5

10-Q

4.9

Fifth Supplemental Indenture, dated as of September 30, 2016, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.6

10-Q

4.10

Sixth Supplemental Indenture, dated as of October 11, 2016, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.7

10-K

4.2.7

Seventh Supplemental Indenture, dated as of January 11, 2018, to the Indenture dated May 3, 2012, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.8

10-K

4.1.8

Eighth Supplemental Indenture, dated as of August 31, 2020, to the Indenture dated May 3, 2012, by and among Molson Coors Beverage Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.2.8

10-Q

4.1

Form of 3.500% Senior Notes due 2022.

4.3

8-K

4.2

Form of 5.000% Senior Notes due 2042.

4.4

8-K

4.2

Registration Rights Agreement, dated as of February 9, 2005, by and among Adolph Coors Company, Pentland Securities (1981) Inc., 4280661 Canada Inc., Nooya Investments Ltd., Lincolnshire Holdings Limited, 4198832 Canada Inc., BAX Investments Limited, 6339522 Canada Inc., Barleycorn Investments Ltd., DJS Holdings Ltd., 6339549 Canada Inc., Hoopoe Holdings Ltd., 6339603 Canada Inc., and The Adolph Coors, Jr. Trust dated September 12, 1969.

4.5

8-K

99.2

February 15, 2005

4.6.1

Indenture, dated as of July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

8-K

4.1

First Supplemental Indenture, dated as of July 7, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee and paying agent.

4.6.2

8-K

4.2

Second Supplemental Indenture, dated as of July 7, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.6.3

8-K

4.3

Third Supplemental Indenture, dated as of August 19, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.6.4

10-Q

4.14

Fourth Supplemental Indenture, dated as of September 30, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.6.5

10-Q

4.15

138

Fifth Supplemental Indenture, dated as of October 11, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

Exhibit Number

Document Description

Form

Exhibit

Filing Date

4.6.6

10-K

4.5.6

Sixth Supplemental Indenture, dated as of January 11, 2018, to the Indenture dated July 7, 2016, by and among Molson Coors Brewing Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.6.7

10-K

4.8.7

Seventh Supplemental Indenture, dated as of August 31, 2020, to the Indenture dated July 7, 2016, by and among Molson Coors Beverage Company, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee.

4.6.8

10-Q

4.3

Form of 1.250% Senior Notes due 2024.

4.7

8-K

4.2

Form of 3.000% Senior Notes due 2026.

4.8

8-K

4.3

Form of 4.200% Senior Notes due 2046.

4.9

8-K

4.3

Indenture, dated as of July 7, 2016, by and among Molson Coors International LP, Molson Coors Brewing Company, as parent, the subsidiary guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.1

8-K

4.9

First Supplemental Indenture, dated as of July 7, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors International LP, Molson Coors Brewing Company, as parent, the subsidiary guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.2

8-K

4.10

Second Supplemental Indenture, dated as of August 19, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors International LP, the guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.3

10-Q

4.7

Third Supplemental Indenture, dated as of September 30, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors International LP, the guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.4

10-Q

4.8

Fourth Supplemental Indenture, dated as of October 11, 2016, to the Indenture dated July 7, 2016, by and among Molson Coors International LP, the guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.5

10-K

4.11.5

Fifth Supplemental Indenture, dated as of January 11, 2018, to the Indenture dated July 7, 2016, by and among Molson Coors International LP, the guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.6

10-K

4.14.6

Sixth Supplemental Indenture, dated as of August 31, 2020, to the Indenture dated July 7, 2016, by and among Molson Coors International LP, the guarantors named therein and Computershare Trust Company of Canada, as trustee.

4.10.7

10-Q

4.4

Form of 2.840% Senior Notes due 2023.

4.11

8-K

4.10

Form of 3.440% Senior Notes due 2026.

4.12

8-K

4.10

Description of Registrant's Securities.

4.13

10-K

4.18

Amended and Restated Molson Coors Brewing Company Directors' Stock Plan effective May 31, 2012.

10.1

10-Q

10.7

August 8, 2012

139

Amended and Restated Molson Coors B everage Company Incentive Compensation Plan.

Exhibit Number

Document Description

Form

Exhibit

Filing Date

10.2.1

8-K

10.1

May 28, 2021

10.2.2

Form of Long-Term Incentive Performance Share Unit Award Agreement pursuant to the Amended and Restated Molson Coors Brewing Company Incentive Compensation Plan for awards granted prior to 2020 .

10-K

10.2.2

Form of Restricted Stock Unit Agreement pursuant to the Amended and Restated Molson Coors Brewing Company Incentive Compensation Plan for awards granted prior to 2020 .

10.2.3

10-K

10.2.3

Form of Directors DSU Award Statement pursuant to the Amended and Restated Molson Coors Brewing Company Incentive Compensation Plan.

10.2.4

10-K

10.2.4

Form of Directors RSU Award Statement pursuant to the Amended and Restated Molson Coors Brewing Company Incentive Compensation Plan for awards granted prior to 2020 .

10.2.5

10-Q

10.6

November 7, 2008

10.2.6

Form of Stock Option pursuant to the Amended and Restated Molson Coors Brewing Company Incentive Compensation Plan.

10-K

10.7.8

February 12, 2015

10.2.7

Form of Long-Term Incentive Performance Share Unit Award Agreement pursuant to the Amended and Restated Molson Coors Beverage Company Incentive Compensation Plan for awards granted beginning in 2020.

10.2.8

Form of Restricted Stock Unit Agreement pursuant to the Amended and Restated Molson Coors Beverage Company Incentive Compensation Plan for awards granted beginning in 2020.

10.2.9

Form of Director Restricted Stock Unit Agreement pursuant to the Amended and Restated Molson Coors Beverage Company Incentive Compensation Plan for awards granted beginning in 2020.

10.2.10

Form of Nonqualified Stock Option pursuant to the Amended and Restated Molson Coors Beverage Company Incentive Compensation Plan for awards granted beginning in 2020 .

10.2.11

Form of Cash-Settled Restricted Stock Unit Agreement pursuant to the Amended and Restated Molson Coors Beverage Company Incentive Compensation Plan for awards granted beginning in 2020.

10.3

Form of Executive Continuity and Protection Program Letter Agreement.

10-Q

10.7

May 11, 2005

10.4

Molson Coors Brewing Company Amended and Restated Change in Control Protection Program dated as of July 18, 2019.

8-K

10.1

July 24, 2019

10.5.1

Credit Agreement, dated as of July 7, 2017, by and among Molson Coors Brewing Company, the borrowing subsidiaries party thereto, CitiBank, N.A., as administrative agent and a U.S. issuing bank, Bank of America, N.A., as a U.S. issuing bank, The Bank of Tokyo Mitsubishi UFJ, LTD. as a U.S. issuing bank, Citigroup Global Markets, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and The Bank of Tokyo Mitsubishi UFJ, Ltd. as joint lead arrangers and joint bookrunners, and Bank of America, N.A. and The Bank of Tokyo Mitsubishi UFJ, Ltd. as Co-Syndication Agents.

8-K

10.1

July 13, 2017

140

Amendment No. 1 and Extension Agreement, dated as of July 19, 2018, by and among Molson Coors Brewing Company, Molson Coors Brewing Company (UK) Limited, Molson Canada 2005, Molson Coors Canada Inc. and Molson Coors International LP, the lenders party thereto, and Citibank, N.A., as administrative agent.

Exhibit Number

Document Description

Form

Exhibit

Filing Date

10.5.2

8-K

10.1

July 19, 2018

10.5.3

Extension Agreement, dated as of July 7, 2019, by and among Molson Coors Brewing Company, the Lenders party thereto, and Citibank, N.A., as Administrative Agent.

8-K

10.1

July 8, 2019

10.5.4

Amendment No. 2, dated as of June 19, 2020, by and among Molson Coors Beverage Company, Molson Coors Brewing Company (UK) Limited, Molson Canada 2005, Molson Coors Canada Inc. and Molson Coors International LP, the lenders party thereto, and Citibank, N.A., as administrative agent.

8-K

10.1

June 22, 2020

10.5.5

Amendment No. 3 to the Credit Agreement, dated as of October 5, 2021, by and among Molson Coors Beverage Company, Molson Coors Brewing Company (UK) Limited, Molson Canada 2005, Molson Coors Canada, Inc., Molson Coors International LP and Citibank, N.A., as administrative agent.

8-K

10.1

October 7, 2021

10.5.6

Subsidiary Guarantee Agreement, dated as of July 7, 2017, by and among Molson Coors Brewing Company, the subsidiaries named on Schedule I thereto, and Citibank, N.A., as administrative agent.

8-K

10.2

July 13, 2017

10.5.7

Supplement No. 1, dated as of January 11, 2018, to the Subsidiary Guarantee Agreement, dated July 7, 2017, by and among Molson Coors Brewing Company, the subsidiaries named on Schedule I thereto, and Citibank, N.A., as administrative agent.

10-K

10.8.3

Supplement No. 2, dated as of January 14, 2019, to the Subsidiary Guarantee Agreement, dated July 7, 2017, by and among Molson Coors Brewing Company, the subsidiaries named on Schedule I thereto, and Citibank, N.A., as administrative agent.

10.5 .8

10-K

10.7.5

February 12, 2019

10.5.9

Supplement No. 3, dated as of August 31, 2020, to the Subsidiary Guarantee Agreement, dated July 7, 2017, by and among Molson Coors Beverage Company, the subsidiaries named on Schedule I thereto, and Citibank N.A., as administrative agent.

10-Q

10.1

Form of Commercial Paper Dealer Agreement.

10.6

8-K

10.3

July 13, 2017

10.7.1

Dealer Agreement dated May 21, 2020 by and between Molson Coors Brewing Company (UK) Limited, Molson Coors Beverage Company, Lloyds Bank Corporate Markets PLC, as arranger, and Lloyds Bank Corporate Markets PLC, as dealer.

8-K

10.1

May 26, 2020

10.7.2

Deed of Guarantee dated May 21, 2020 by Molson Coors Beverage Company in favor of the holders thereunder.

8-K

10.2

May 26, 2020

10.8

Offer Letter, dated as of November 22, 2016, by and between Molson Coors Brewing Company and Tracey Joubert.

8-K

10.1

November 25, 2016

10.9

Molson Coors Deferred Compensation Plan, as amended and restated effective January 1, 2018.

8-K

10.1

May 25, 2018

10.10

Directors Service Agreement, dated as of April 20, 2020, by and between Molson Coors Brewing Company (UK) Limited and Simon Cox.

10-Q

10.2

July 29, 2021

10.11

Secondment Letter, dated as of December 5, 2014, by and between Molson Coors Brewing Company (UK) Limited and Simon Cox.

10-Q

10.2

May 1, 2019

141

Offer Letter, dated as of July 30, 2019, by and between Molson Coors Brewing Company and Gavin D.K. Hattersley.

Exhibit Number

Document Description

Form

Exhibit

Filing Date

10.12

8-K

10.1

July 31, 2019

10.13

Executive Employment Offer Letter, dated November 17, 2019, by and between Molson Coors Brewing Company and E. Lee Reichert.

10-Q

10.2

April 30, 2020

10.14

Executive Employment Offer Letters, dated November 17, 2019 and January 12, 2019, by and between Molson Coors Brewing Company and Michelle St. Jacques.

10-Q

10.3

April 30, 2020

10.15

Option Agreement, dated as of January 6, 2020, by and among MillerCoors LLC, MillerCoors USA LLC and Pabst Brewing Company, LLC.

10-Q

10.1

April 30, 2020

Subsidiaries of the Registrant.

Molson Coors Beverage Company List of Parent Issuer and Guarantor Subsidiaries.

23.1

Consent of Independent Registered Public Accounting Firm.

31.1

Section 302 Certification of Chief Executive Officer.

31.2

Section 302 Certification of Chief Financial Officer.

Written Statement of Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document**

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

* Represents a management contract or compensatory plan or arrangement.

** Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders' Equity and Noncontrolling Interests, (vi) the Notes to Consolidated Financial Statements, and (vii) document and entity information.

(b)Exhibits

The exhibits included in Item 15(a)(3) above are filed or incorporated by reference pursuant to the requirements of Item 601 of Regulation S-K.

(c)Other Financial Statement Schedules

142

SCHEDULE II

MOLSON COORS BEVERAGE COMPANY AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

(IN MILLIONS)

Balance at
beginning
of year

Additions
charged to
costs and
expenses

Deductions

Foreign
exchange
impact

Balance at
end of year

Allowance for doubtful accounts—trade accounts receivable

Year ended:

i 18.1

i 6.2

( i 4.7)

( i 0.6)

i 19.0

i 12.1

i 12.8

( i 7.4)

i 0.6

i 18.1

i 14.5

i 7.0

( i 9.3)

( i 0.1)

i 12.1

Allowance for obsolete supplies and inventory

Year ended:

i 38.4

i 109.9

( i 103.8)

( i 0.4)

i 44.1

i 22.2

i 70.6

( i 54.3)

( i 0.1)

i 38.4

i 25.4

i 34.8

( i 38.2)

i 0.2

i 22.2

Deferred tax valuation account

Year ended:

i 62.2

i 14.8

( i 16.2)

( i 0.1)

i 60.7

i 73.8

i 31.8

( i 43.4)

i —

i 62.2