Pending Acquisition (Tables)

9 Months Ended

Sep. 30, 2016

Business Acquisition, Pro Forma Information [Table Text Block]



	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(In millions)
Net sales	$	2,944.6	$	3,003.0	$	8,515.2	$	8,660.7
Net income from continuing operations attributable to MCBC	$	314.3	$	74.5	$	918.9	$	594.1
Net income attributable to MCBC	$	314.3	$	77.4	$	916.6	$	598.6
Net income from continuing operations attributable to MCBC per share:
Basic	$	1.46	$	0.35	$	4.28	$	2.76
Diluted	$	1.45	$	0.35	$	4.25	$	2.74

For the three and nine months ended September 30, 2016, the following non-recurring charges (benefits) pro forma adjustments were recorded in our pro forma results within the below noted line items to remove the impact from our historical operating results of these non-recurring items directly attributable to the Acquisition. Specifically, in connection with the Acquisition, we incurred financing costs related to our bridge loan which are considered non-recurring as these fees were recorded in addition to the interest expense on our permanent financing. We also incurred fees on our term loan agreement to have the funds available prior to us drawing on the loan which are also therefore considered non-recurring. Further, we incurred losses on the fair value of our swaptions and gains on our foreign currency forwards, both of which were entered into in relation to our anticipated permanent financing and therefore are not considered ongoing costs. Additionally, we recorded interest income and other transaction-related costs that are considered non-recurring.



	Three Months Ended			Nine Months Ended
	September 30, 2016
	(In millions)
Non-recurring charges (benefits)							Location
Other transaction-related costs	$	17.2		$	51.7		Marketing, general and administrative expenses
Bridge loan - amortization of financing costs	$	24.8		$	63.4		Other income (expense)
Foreign currency forwards and transactional foreign currency - net gain	$	(13.8	)	$	(2.2	)	Other income (expense)
Term loan - commitment fee	$	1.9		$	5.6		Interest expense, net
Swaption - realized loss	$	—		$	36.4		Interest expense, net
Interest income earned on money market and fixed rate deposit accounts	$	(10.6	)	$	(17.0	)	Interest income, net

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The purchase consideration was comprised of the following (in millions):



Total cash consideration	$	12,000.0
Replacement share-based awards issued in conjunction with Acquisition⁽¹⁾	50.9
Elimination of MCBC net payable to MillerCoors⁽²⁾	(8.2		)
Total consideration	$	12,042.7
Previously held equity interest in MillerCoors⁽³⁾	6,130.0
Total consideration and value to be allocated to net assets	$	18,172.7


(1)	In connection with the Acquisition, MCBC issued replacement share-based compensation awards to various MillerCoors employees who had awards outstanding under the historical MillerCoors share-based compensation plan. This amount is based on a preliminary valuation estimate and will be updated during the fourth quarter of 2016 upon finalization of fair valuation procedures.


(2)	Represents the estimated net payable owed by MCBC to MillerCoors as of the closing date which became an intercompany payable upon the close of the Acquisition.

(3)

As noted below, the Acquisition is considered a step acquisition, and accordingly, we remeasured the fair value of our pre-existing 42% equity interest in MillerCoors immediately prior to the close as approximately $6.1 billion. This valuation is preliminary, and upon completion of the detailed valuation analyses, there could be a material adjustment to the estimated fair value of our historical 42% interest in MillerCoors. As a result of the remeasurement, we expect to record a gain of approximately $3.5 billion within special items, net during the fourth quarter of 2016, representing the excess of the approximate $6.1 billion estimated fair value of our pre-existing 42% equity interest over its estimated transaction date carrying value of approximately $2.6 billion. Additionally, related to this step-up gain, we expect to record income tax expense and a corresponding deferred tax liability of approximately $1.1 billion during the fourth quarter of 2016. The tax effects of the step-up gain are preliminary and subject to change as the fair valuation procedures on our historical 42% interest are finalized.

Further, in association with the close of the Acquisition, during the fourth quarter of 2016, we expect to record a loss of approximately $500 million within special items, net related to the reclassification of MCBC's historical AOCI related to our 42% interest in MillerCoors, thereby removing the historical balance from our balance sheet. The AOCI loss is related to net unrealized losses on derivative positions historically designated by MillerCoors as cash flow hedges and pension and other postretirement benefit actuarial losses. The associated estimated income tax benefit of approximately $200 million related to this AOCI loss will be recorded as a component of the income tax benefit (expense) line item on the consolidated statement of operations.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table summarizes the estimated preliminary fair values of the assets acquired and liabilities assumed at the Acquisition date (in millions):



Total current assets⁽¹⁾	$	1,006.8
Property, plant and equipment	2,834.0
Other intangible assets⁽²⁾	9,905.0
Other assets⁽³⁾	341.7
Total current liabilities	(1,106.0		)
Pension and postretirement benefits	(1,064.0		)
Other non-current liabilities	(186.1		)
Total identifiable net assets acquired	$	11,731.4
Goodwill attributable to MillerCoors acquisition⁽⁴⁾	5,931.3
Goodwill attributable to international Miller brand portfolio⁽⁵⁾	700.0
Fair value of noncontrolling interests⁽⁶⁾	(190.0		)
Total consideration and value to be allocated to net assets	$	18,172.7

(1)

Includes inventory of $485.7 million, trade receivables of $314.5 million and other receivables of $39.8 million. The fair value of inventories was determined based on the estimated selling price of the inventory less the remaining manufacturing and selling costs and a normal profit margin on those manufacturing and selling efforts. In the fourth quarter of 2016, the estimated step-up in fair value of inventory of approximately $77 million will increase cost of goods sold over approximately one month as the inventory is sold. For all other current assets acquired, the fair values approximate the carrying values.

(2)

The fair value of identifiable intangible assets was estimated using significant assumptions that are not observable in the market and thus represent a Level 3 measurement. The excess earnings approach was primarily used and significant assumptions included the amount and timing of projected cash flows, a discount rate selected to measure the risk inherent in the future cash flows, and the assessment of the asset’s life cycle, including competitive trends and other factors.


(3)	Includes estimated deferred tax assets of approximately $300 million which will ultimately be presented as non-current deferred tax liabilities upon consolidation by MCBC due to jurisdictional netting.

(4)

The goodwill arising from the Acquisition consists largely of improvements to our global scale and agility, operational synergies and acceleration of the MCBC growth strategy. We expect to allocate the majority of the goodwill generated to the U.S. reporting unit, and will complete our preliminary allocation to our other reporting units during the fourth quarter of 2016. Separately, our calculation of tax basis goodwill related to the Acquisition has not yet been completed. However, all of the tax basis goodwill related to the Acquisition of SABMiller’s 58% economic interest in MillerCoors is expected to be deductible for U.S. federal and state tax purposes.


(5)	The preliminary opening balance sheet reflects the estimated consideration related to the Miller global brand portfolio entirely within goodwill as we are not yet able to estimate the allocation of fair value to the net assets acquired. The allocation related to the Miller global brand portfolio is expected to result in value allocated to identifiable intangible assets subject to amortization.

(6)

MillerCoors has jointly held interests in multiple entities that are fully consolidated. The related fair value of the noncontrolling interest in each entity was estimated by applying the market and income valuation approaches. The fair value of MillerCoors' noncontrolling interest was estimated using significant assumptions that are not observable in the market and thus represent a Level 3 measurement.