Molson Coors Reports Higher Net Sales and Lower Underlying After-Tax Income for the First Quarter 20

Molson Coors Reports Higher Net Sales and Lower Underlying After-Tax Income for the First Quarter 2013

Results driven by Central Europe acquisition related volume, net sales and debt service costs in seasonally low profit quarter, as well as increased brand investments and poor weather

First Quarter 2013 Highlights⁽¹⁾

• Worldwide beer volume: 11.9 million hectoliters, up 20.3%

• Net sales: $828.5 million, up 19.8%

• Underlying after-tax income: $54.6 million, down 36.0% ($0.30 per diluted share)

• Net income from continuing operations attributable to MCBC: $36.5 million, down 54.0% ($0.20 per diluted share)

DENVER & MONTREAL--(BUSINESS WIRE)-- Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) today reported a 20.3 percent increase in first quarter worldwide beer volume and 19.8 percent higher net sales in the first quarter of 2013 due to the June 2012 acquisition of the company's new Central Europe ("CE") operations. Underlying after-tax income declined 36.0 percent for the first quarter 2013, driven by the addition of Central Europe-related debt service costs and operating results this year, in a seasonally low profit quarter. Also contributing to lower income were unfavorable foreign exchange movements, increased brand investments, and poor weather in key markets this year. Net income from continuing operations attributable to MCBC (a U.S. GAAP earnings measure) decreased 54.0 percent due to the same factors affecting underlying earnings, as well as an unrealized net loss related to fair value and foreign exchange movements associated with our EUR 500 million convertible note.

Molson Coors president and chief executive officer Peter Swinburn said, "Our first quarter numbers include the effect of the Central Europe acquisition that we completed in the middle of last year. Because of this addition, we recorded volume and sales increases but a post-tax income decline. The decline was driven by Central Europe debt servicing costs being allocated against our lowest earnings quarter of the year in that region, along with foreign exchange losses and increased marketing spend across the rest of the business. Weather affected volumes in all our markets. Against this backdrop, we grew share in Europe, saw relatively flat share in the U.S., and lost share in Canada. Our innovation programs got off to a fast start and reflect a pipeline that is both full and exciting."

Swinburn added, "In the first quarter, we maintained strong focus and investment levels on our core brands, as well as introducing new brands and other innovations in each of our businesses. In the balance of 2013, our focus will continue to be on the three pillars of our growth strategy, and particularly the first one, which is to grow profitably in our core businesses through brands and innovation. We also intend to pay down debt. In combination with disciplined cash use, our growth strategy is designed to drive long-term profit, cash flow and total return for our shareholders."

Foreign Exchange

The Company's first quarter results include the impact of unfavorable foreign currency movements from the Euro, Canadian Dollar and British Pound, which decreased underlying pretax income by approximately $6 million.

Effective Income Tax Rates

The Company's first quarter effective income tax rate was 8 percent on a reported basis and 12 percent on an underlying basis as a result of one-time benefits.

Debt

Total debt at the end of the first quarter was $4.65 billion, and cash and cash equivalents totaled $512 million, resulting in net debt of $4.14 billion.

First Quarter Business Segment Results

The following are the Company's first quarter 2013 results by business segment:

United States Business (MillerCoors)⁽²⁾

Molson Coors underlying U.S. segment equity income decreased 1.3 percent to $117.4 million in the quarter.

MillerCoors Operating and Financial Highlights

MillerCoors underlying net income for the quarter, excluding special items, decreased 1.2 percent to $271.9 million, driven by lower beer volumes, commodity inflation, and increased marketing investment to support the launch of Redd's Apple Ale and Third Shift Amber Lager.

MillerCoors domestic sales to retailers (STRs, trading-day adjusted) declined 3.3 percent for the quarter. Domestic sales to wholesalers (STWs) decreased 2.5 percent. Domestic net revenue per hectoliter, which excludes contract brewing and company-owned-distributor sales, grew 4.0 percent primarily due to strong net pricing and favorable sales mix, representing the largest increase since first quarter 2009. Total company net revenue per hectoliter, including contract brewing and company-owned distributor sales, increased 3.6 percent. Third-party contract brewing volumes were up 3.2 percent.

COGS per hectoliter increased 3.7 percent driven by commodity inflation, brand and packaging innovation and lower volume. Marketing, general and administrative (MG&A) expense increased 3.5 percent, driven primarily by increased marketing investments in support of the national launches of Redd's Apple Ale and Third Shift Amber Lager.

Depreciation and amortization expenses for MillerCoors in the first quarter were $69.7 million, and additions to tangible and intangible assets totaled $55.7 million.

Canada Business

Canada underlying pretax income decreased 18.9 percent to $37.3 million in the quarter. In local currency, Canada underlying pretax income decreased 17 percent, driven by the impact of lower volume and higher brand investments captured in COGS. A 2 percent decrease in the Canadian dollar versus the U.S. dollar drove an approximate $1 million negative impact in the quarter.

STRs decreased 1.4 percent in the first quarter partially due to a weak Canadian market, which was impacted by the substantial increase in beer excise tax rates in Quebec last November and cycling favorable weather last year. First quarter sales volume for Molson Coors Canada decreased 1.9 percent. Net sales per hectoliter increased 1 percent in local currency driven by continued positive pricing.

Cost of goods sold (COGS) per hectoliter increased nearly 6 percent in local currency, driven by fixed-cost deleverage from lower volumes, a $4 million reclassification of promotional expense from MG&A to COGS, and a mix shift toward higher-cost brands and packages. Strong cost savings offset input inflation in the quarter. MG&A expense decreased 3 percent in local currency due to lower employee-related costs and the reclassification of promotional expenses to COGS.

Europe Business - Pro Forma⁽³⁾

Europe underlying pretax income improved $8.6 million to a loss of $3.8 million on a pro forma basis, driven by positive net pricing and lower MG&A costs. Unfavorable foreign currency movements reduced Europe results approximately $3 million versus the pro forma quarter a year earlier.

Europe sales volume decreased 1 percent due to poor weather in March across the region, along with competitive value-brand activity in Romania and Hungary. Volume and profit performance was particularly strong in the U.K. Europe net sales per hectoliter increased nearly 5 percent in local currency due to positive pricing and sales mix.

COGS per hectoliter increased approximately 5 percent in local currency, driven by adverse channel mix with a higher proportion of sales in the off-premise channel this year, along with higher factored (non-owned) beverage volumes sold in U.K. MG&A expenses decreased approximately 4 percent in local currency due to year-over-year differences in the timing of marketing spending, along with reductions in general and administration expenses.

International Business⁽⁴⁾

The International segment posted an underlying pretax loss of $6.1 million in the first quarter, an improvement of $2.5 million from a year ago due to lower marketing expense, the net positive impact of business transfers between our Europe and International segments, the elimination of losses in our China joint venture, which was deconsolidated in the third quarter of 2012, and a strong performance in our Latin America export business.

Total International sales volume, including royalty volume, increased 64 percent due to the inclusion of the Central Europe export business this year, along with growth in our India business. Net sales per hectoliter decreased 14 percent, driven by negative foreign exchange impacts, primarily the weakening of the Japanese Yen, and the addition of Central Europe sales at lower net sales per hectoliter.

Cost of goods per hectoliter decreased approximately 15 percent, driven by foreign exchange movements and the addition of the Central Europe export business, which has a lower cost structure than our other businesses. International MG&A expense decreased 15 percent.

Corporate

Underlying Corporate pretax expenses totaled $81.5 million for the first quarter. This $29.3 million increase was primarily due to the addition of approximately $21 million of net interest expense this year related to financing our Central Europe acquisition, along with accelerated incentive compensation expense and approximately $4 million of unrealized foreign exchange losses, both of which are expected to be much less significant factors in the balance of 2013.

Special and Other Non-Core Items

The following special and other non-core items have been excluded from underlying pretax earnings.

During the quarter, Molson Coors special items resulted in a $1.5 million pretax charge, driven by $4.9 million of restructuring charges in Canada, Europe, and Corporate, $0.8 million of other employee-related charges, partially offset by the release of a $4.2 million non-income-related tax reserve in Europe.

Other non-core items resulted in a $20.4 million pretax charge, which was due to a $19.8 million unrealized loss primarily related to fair value and foreign exchange movements of our EUR 500 million convertible note, $1.8 million of Central Europe acquisition and integration related costs, partially offset by $1.2 million of other non-core gains.

2013 First Quarter Conference Call

Molson Coors Brewing Company will conduct an earnings conference call with financial analysts and investors at 11:00 a.m. Eastern Time today to discuss the Company's 2013 first quarter results. The Company will provide a live webcast of the earnings call.

The Company will also host an online, real-time webcast of an Investor Relations Follow-up Session with financial analysts and institutional investors at 2:00 p.m. Eastern Time. Both webcasts will be accessible via the Company's website, www.molsoncoors.com. Online replays of the webcasts will be available until 11:59 p.m. Eastern Time on August 6, 2013. The Company will post this release and related financial statements on its website today.

Footnotes:

⁽¹⁾ The Company calculates non-GAAP underlying after-tax income by excluding special and other non-core items from the nearest U.S. GAAP performance measure, which is net income from continuing operations attributable to MCBC. For further details regarding these adjustments, please see the section "Special and Other Non-Core Items," along with tables for reconciliations to the nearest U.S. GAAP measures. Unless otherwise indicated, all $ amounts are in U.S. Dollars and all quarterly comparative results are for the Company's fiscal first quarter ended March 30, 2013, compared to the fiscal first quarter ended March 31, 2012. Additionally, all per-hectoliter calculations exclude contract brewing and non-owned factored beverage volume in the denominator but include the financial impact of these sales in the numerator, unless otherwise indicated.

⁽²⁾ MillerCoors, a U.S. joint venture of Molson Coors Brewing Company and SABMiller plc, was launched on July 1, 2008. Molson Coors has a 42 percent economic interest in MillerCoors, which is accounted for using the equity method. Molson Coors' interest in MillerCoors results, along with certain adjustments under U.S. GAAP, is reflected in "Equity Income in MillerCoors." This release includes reconciliation from MillerCoors Net Income to Molson Coors Brewing Company Equity Income in MillerCoors and Non-GAAP U.S. Segment Underlying Pretax Income (see Table 4).

⁽³⁾ Unless otherwise indicated, all $ amounts are in U.S. Dollars, and quarterly comparative results are for Europe's actual fiscal first quarter ended March 30, 2013, compared to the pro forma fiscal first quarter ended March 31, 2012. Pro forma amounts include the actual results of operations for the U.K. combined with the pro forma results of operations for Central Europe, excluding the Central Europe global export and license business, for the periods indicated on each statement. The pro forma statements of operations include adjustments directly attributable to the acquisition of StarBev.

⁽⁴⁾ Beginning July 1, 2012, our Central Europe export and license business ("Central Europe export"), is reported in our MCI segment. For periods prior to this date, this business was included with the Central Europe business, which we acquired on June 15, 2012. Beginning December 30, 2012, with the combination of our U.K. and Central Europe businesses, our Carling travel and export business is reported in our Europe segment. For periods prior to this date, this business was included within the International business.

Overview of Molson Coors

Molson Coors Brewing Company is one of the world's largest brewers. The Company's operating segments include Canada, the United States, Europe, and Molson Coors International (MCI). The Company has a diverse portfolio of owned and partner brands, including signature brands Coors Light, Molson Canadian, Staropramen and Carling. Molson Coors is listed as the beverage industry sector leader on the 2012/2013 Dow Jones Sustainability World Index (W1SGITRD), the most recognized global benchmark of sustainability among global corporations. For more information on Molson Coors Brewing Company, visit the company's web site, www.molsoncoors.com.

Forward-Looking Statements

This press release includes estimates or projections that constitute "forward-looking statements" within the meaning of the U.S.federal securities laws.Generally, the words "believe," expect," intend," anticipate," "project," "will," and similar expressions identify forward-looking statements, which generally are not historic in nature.Although the Company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from the Company's historical experience, and present projections and expectations are disclosed in the Company's filings with the Securities and Exchange Commission ("SEC").These factors include, among others, our ability to successfully integrate StarBev, retain key employees and achieve planned cost synergies; pension plan costs; availability or increase in the cost of packaging materials; our ability to maintain manufacturer/distribution agreements; impact of competitive pricing and product pressures; our ability to implement our strategic initiatives, including executing and realizing cost savings; changes in legal and regulatory requirements, including the regulation of distribution systems; increase in the cost of commodities used in the business; our ability to maintain brand image, reputation and product quality; our ability to maintain good labor relations; changes in our supply chain system; additional impairment charges; the impact of climate change and the availability and quality of water; the ability of MillerCoors to integrate operations and technologies; lack of full-control over the operations of MillerCoors; the ability of MillerCoors to maintain good relationships with its distributors; and other risks discussed in our filings with the SEC, including our Annual Report on Form 10-K for the year-ended December 29, 2012, which are available from the SEC.All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made.We do not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise.

Reconciliations to Nearest U.S. GAAP Measure