Investments (Tables)

9 Months Ended

Sep. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Summarized financial information of MillerCoors

Summarized financial information for MillerCoors is as follows:

Condensed Balance Sheets



	As of
	September 30, 2016		December 31, 2015
	(In millions)
Current assets	$	949.5	$	800.5
Non-current assets	9,221.5		9,099.5
Total assets	$	10,171.0	$	9,900.0
Current liabilities	$	1,102.7	$	1,180.1
Non-current liabilities	1,283.5		1,407.0
Total liabilities	2,386.2		2,587.1
Noncontrolling interests	17.5		20.1
Owners' equity	7,767.3		7,292.8
Total liabilities and equity	$	10,171.0	$	9,900.0

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



	As of
	September 30, 2016			December 31, 2015
	(In millions, except percentages)
MillerCoors owners' equity	$	7,767.3		$	7,292.8
MCBC economic interest	42		%	42		%
MCBC proportionate share in MillerCoors equity	3,262.3			3,063.0
Difference between MCBC contributed cost basis and proportionate share of the underlying equity in net assets of MillerCoors⁽¹⁾	(653.7		)	(657.0		)
Accounting policy elections	35.0			35.0
Investment in MillerCoors	$	2,643.6		$	2,441.0

(1)

Our net investment in MillerCoors is based on the carrying values of the net assets contributed to the joint venture which is less than our proportionate share of underlying equity (42%) of MillerCoors (contributed by both Coors Brewing Company and Miller Brewing Company ("Miller")). This basis difference, with the exception of certain non-amortizing items (goodwill, land, etc.), is being amortized as additional equity income over the remaining useful lives of the contributed long-lived amortizing assets. Due to the closing of the Acquisition on October 11, 2016, we will derecognize the remaining basis difference balance along with our pre-existing equity investment in MillerCoors in the fourth quarter of 2016, with the resulting impact recorded to special items. See Note 16, "Acquisition" for further details.

Results of Operations



	Three Months Ended						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
	(In millions)
Net sales	$	2,007.7		$	2,000.0		$	5,950.5		$	5,977.3
Cost of goods sold	(1,150.8		)	(1,173.9		)	(3,358.3		)	(3,490.6		)
Gross profit	$	856.9		$	826.1		$	2,592.2		$	2,486.7
Operating income⁽¹⁾	$	373.4		$	323.0		$	1,145.6		$	1,125.7
Net income attributable to MillerCoors⁽¹⁾	$	369.2		$	316.5		$	1,134.0		$	1,108.3

(1)

Results include net special charges primarily related to the closure of the Eden, North Carolina, brewery. For the three and nine months ended September 30, 2016, MillerCoors recorded net special charges of $8.3 million and $84.6 million, respectively, including $34.3 million and $103.2 million of accelerated depreciation in excess of normal depreciation associated with the closure of the Eden brewery. Special items during the three and nine months ended September 30, 2016, also include a postretirement benefit curtailment gain related to the closure of Eden of $25.7 million. For the three and nine months ended September 30, 2015, MillerCoors incurred special charges of $28.0 million related to the closure of the Eden brewery, including $21.8 million of accelerated depreciation in excess of normal depreciation.

MCBC's proportional share in MillerCoors of net income reported under the equity method

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



	Three Months Ended						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
	(In millions, except percentages)
Net income attributable to MillerCoors	$	369.2		$	316.5		$	1,134.0		$	1,108.3
MCBC economic interest	42		%	42		%	42		%	42		%
MCBC proportionate share of MillerCoors net income	155.1			132.9			476.3			465.5
Amortization of the difference between MCBC contributed cost basis and proportionate share of the underlying equity in net assets of MillerCoors	1.1			1.0			3.3			3.4
Share-based compensation adjustment⁽¹⁾	(0.5		)	1.4			(0.7		)	1.2
U.S. import tax benefit⁽²⁾	1.2			—			12.3			—
Equity income in MillerCoors	$	156.9		$	135.3		$	491.2		$	470.1


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

(2)

Represents a benefit associated with an anticipated refund to Coors Brewing Company ("CBC"), a wholly-owned subsidiary of MCBC, of U.S. federal excise tax paid on products imported by CBC based on qualifying volumes exported by CBC from the U.S. Due to administrative restrictions outlined within the legislation enacted in 2016, the anticipated refund is not expected to be received until 2018. Accordingly, the anticipated refund amount represents a non-current receivable which has been recorded within other non-current assets on the unaudited condensed consolidated balance sheet as of September 30, 2016.

Summary of transactions with MillerCoors

The following table summarizes our transactions with MillerCoors:



	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(In millions)
Beer sales to MillerCoors	$	2.6	$	2.8	$	7.2	$	8.8
Beer purchases from MillerCoors	$	9.3	$	11.6	$	31.4	$	30.9
Service agreement costs and other charges to MillerCoors	$	0.6	$	0.7	$	1.9	$	2.0
Service agreement costs and other charges from MillerCoors	$	0.7	$	0.2	$	0.9	$	0.8

Schedules of Consolidated Investments

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



	As of
	September 30, 2016				December 31, 2015
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Grolsch	$	5.6	$	0.3	$	6.9	$	3.3
Cobra U.K.	$	16.6	$	0.4	$	30.2	$	0.9

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details