Segment Reporting

Our reporting segments are based on the key geographic regions in which we operate, which are the basis on which our chief operating decision maker evaluates the performance of the business.

Reporting Segments

United States

The U.S. segment consists of our production, marketing and sales of our brands and other owned and licensed brands in the U.S. Prior to the completion of the Acquisition on October 11, 2016, MillerCoors was a limited liability company that we jointly owned with SABMiller and which operated in the U.S. and Puerto Rico. See Note 4, "Acquisition and Investments" for further discussion. Effective January 1, 2017, the results of the MillerCoors Puerto Rico business, which were previously reported as part of the U.S. segment, are reported within the International segment. We have not recast historical results for these changes on the basis of materiality.

Canada

The Canada segment consists of our production, marketing and sales of our brands and other owned and licensed brands in Canada. The Canada 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. Both BRI and BDL are accounted for as equity method investments.

We have an agreement with Heineken N.V. ("Heineken") that grants us the right to import, market, distribute and sell Heineken products. Additionally, we had an agreement with SABMiller that granted us the right to brew or import, market, distribute and sell certain Miller brands in Canada which was terminated effective March 2015 and as a result, beginning in the second quarter of 2015, we discontinued distributing these Miller brands in Canada; however, as a result of the Acquisition, beginning October 11, 2016, these Miller brands returned to our Canada business. We also contract brew and package certain Labatt and Asahi brands for the U.S. market.

Europe

The Europe segment consists of our production, marketing and sales of our brands as well as a number of smaller regional brands in the U.K., Republic of Ireland and Central Europe. As a result of the Acquisition, a portion of the operating results of the international Miller brand portfolio are reported in the Europe segment. Additionally, effective January 1, 2017, European markets including Sweden, Spain, Germany, Ukraine and Russia, which were previously reported under our International segment, are reported within our Europe segment. Our European business also has licensing agreements and distribution agreements with various other brewers.

In 2015, we terminated our agreement with Carlsberg whereby it held the exclusive distribution rights for the Staropramen brand in the U.K and we paid Carlsberg an early termination payment of GBP 19.0 million ($29.4 million at payment date) to obtain the exclusive distribution rights of the Staropramen brand in the U.K. Separately, in December 2013, we entered into an agreement with Heineken to early terminate our contract brewing and kegging agreement with Heineken under which we produced and packaged the Foster's and Kronenbourg brands in the U.K. As a result of the termination, Heineken agreed to pay us an aggregate early termination payment of GBP 13.0 million. The full amount of the termination payment ($19.4 million upon recognition) was included as income within special items during the year ended December 31, 2015.

International

The objective of the International segment is to grow and expand our business and brand portfolio in new and existing markets, including emerging markets, outside the U.S., Canada, and Europe segments. The focus of the International segment includes Latin America (the Caribbean, Central America, Mexico and South America), Europe (excluding U.K, Ireland and Central Europe, as they are a part of the Europe segment), Asia Pacific and Africa. With the recent acquisition of the Miller brands globally, International has expanded its reach into new attractive markets. Additionally, as a result of the Acquisition, effective January 1, 2017, European markets including Sweden, Spain, Germany, Ukraine and Russia, which were previously reported under our International segment, are reported within our Europe segment while the results of the MillerCoors Puerto Rico business, which were previously reported as part of the U.S. segment, are reported within the International segment.

Our Latin America business expands the reach of our brands through a combination of export models and license agreements in markets such as Chile, Dominican Republic, Honduras, Mexico, Panama, Paraguay and Puerto Rico. Our operations in the Asia Pacific region includes markets such as Australia, China, India, Japan and South Korea. Our India business produces, markets and sells our products, while in Japan our products are imported and sold through independent wholesalers. In Australia, we have appointed a local partner that distributes locally produced and imported products. In South Korea, we previously operated under a TSA agreement with ABI and are now operating under an export model and sell our brands through an independent distributor. Our Africa business includes South Africa and Zambia, where we operate under license agreements for the brewing and distribution of our products.

Corporate

Corporate is not a reportable segment and primarily includes interest and certain other general and administrative costs that are not allocated to any of the operating segments. The majority of these corporate costs relate to worldwide administrative functions, such as corporate affairs, legal, human resources, information technology, finance, internal audit, insurance and risk management, global growth, supply chain and commercial initiatives, as well as acquisition, integration and financing costs associated with the Acquisition. Additionally, Corporate includes the results of our water resources and energy operations in Colorado as well as 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.

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated sales in 2017, 2016 or 2015. Consolidated net sales represent sales to third-party external customers less excise taxes. Inter-segment transactions impacting net sales revenues and income (loss) from continuing operations before income taxes eliminate in consolidation and, for fiscal year 2017 are U.S. segment sales of $117.8 million to our International segment and $33.7 million to our Canada segment, as well as approximately $15 million of Canada inter-segment sales to the U.S.

The following tables represent consolidated net sales, interest expense, interest income and reconciliations of amounts shown as income (loss) from continuing operations before income taxes to income (loss) from continuing operations attributable to MCBC. Income (loss) from continuing operations before income taxes includes the impact of special items; refer to Note 7, "Special Items" for further discussion. Income (loss) from continuing operations before income taxes and income tax benefit (expense) for 2016 and 2015 have been revised to reflect the retrospective application of our change in accounting policy as discussed in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies". Additionally, various costs associated with the Acquisition, including its related financing, were recorded in 2017 and 2016; refer to Note 4, "Acquisition and Investments" for details.



	Year ended December 31, 2017
	U.S.		Canada		Europe⁽¹⁾		International			Corporate			Inter-segment net sales eliminations			Consolidated
	(In millions)
Net sales	$	7,505.7	$	1,458.0	$	1,940.7	$	264.0		$	0.9		$	(166.5	)	$	11,002.8
Interest expense	13.1		—		—		—			(362.4		)	—			(349.3		)
Interest income	—		—		3.6		—			2.4			—			6.0
Income (loss) from continuing operations before income taxes	$	1,392.9	$	212.8	$	281.0	$	(19.7	)	$	(485.3	)	$	—		$	1,381.7
Income tax benefit (expense)																53.2
Net income (loss) from continuing operations																1,434.9
Net (income) loss attributable to noncontrolling interests																(22.2		)
Net income (loss) from continuing operations attributable to MCBC																$	1,412.7

(1)

In the first quarter of 2017, the largest food and retail company in Croatia, Agrokor, announced that it was facing significant financial difficulties that raised doubt about the collectibility of certain of our outstanding receivables with its direct subsidiaries. These subsidiaries are customers of ours within the Europe segment and, therefore, we are closely monitoring the situation. Specifically, Agrokor has entered into active discussions with local regulators, financial institutions and other creditors to stabilize and restructure its business and sustain ongoing operations. As a result, we recorded a provision for an estimate of uncollectible receivables during 2017. As of December 31, 2017, our gross accounts receivable related to Agrokor was approximately $8 million, with an associated provision for estimated uncollectible receivables of $6 million, based on foreign exchange rates as of December 31, 2017. Separately, we released an indirect tax loss contingency, which was initially recorded in the fourth quarter of 2016, for a benefit of approximately $50 million during the first quarter of 2017; see Note 19, "Commitments and Contingencies" for details.



	Year ended December 31, 2016
	U.S.⁽¹⁾		Canada			Europe⁽²⁾		International			Corporate			Inter-segment net sales eliminations			Consolidated
	(In millions)
Net sales	$	1,566.6	$	1,425.7		$	1,760.2	$	163.6		$	1.0		$	(32.1	)	$	4,885.0
Interest expense	—		—			—		—			(271.6		)	—			(271.6		)
Interest income	—		—			3.6		—			23.6			—			27.2
Income (loss) from continuing operations before income taxes	$	3,570.4	$	(125.6	)	$	149.7	$	(39.7	)	$	(497.9	)	$	—		$	3,056.9
Income tax benefit (expense)																	(1,055.2		)
Net income (loss) from continuing operations																	2,001.7
Net (income) loss attributable to noncontrolling interests																	(5.9		)
Net income (loss) from continuing operations attributable to MCBC																	$	1,995.8

(1)

Prior to October 11, 2016, MCBC’s 42% share of MillerCoors' results of operations was reported as equity income in MillerCoors in the consolidated statements of operations. As a result of the Acquisition, beginning October 11, 2016, MillerCoors' results were fully consolidated into MCBC’s consolidated financial statements. The above table reflects this treatment accordingly. Also included in net income from continuing operations attributable to MCBC is a net special items gain of approximately $3.0 billion related to the fair value remeasurement of our pre-existing 42% interest in MillerCoors over its carrying value, as well as the reclassification of the loss related to MCBC's historical AOCI on our 42% interest in MillerCoors. Refer to Note 4, "Acquisition and Investments" for further discussion.


(2)	During the fourth quarter of 2016, we recorded a charge of approximately $50 million within excise taxes due to assessments received from a local country regulatory authority in Europe related to indirect tax calculations. See Note 19, "Commitments and Contingencies" for further discussion.



	Year ended December 31, 2015
	U.S.		Canada		Europe			International			Corporate			Inter-segment net sales eliminations		Consolidated
	(In millions)
Net sales	$	—	$	1,511.5	$	1,914.9		$	144.5		$	1.0		(4.4	)	$	3,567.5
Interest expense	—		—		—			—			(120.3		)	—		(120.3		)
Interest income	—		—		3.9			—			4.4			—		8.3
Income (loss) from continuing operations before income taxes	$	516.3	$	296.7	$	(83.7	)	$	(24.8	)	$	(248.4	)	—		$	456.1
Income tax benefit (expense)																(61.5		)
Net income (loss) from continuing operations																394.6
Net (income) loss attributable to noncontrolling interests																(3.3		)
Net income (loss) from continuing operations attributable to MCBC																$	391.3

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,
	2017		2016⁽¹⁾		2017		2016		2015		2017		2016		2015
	(In millions)
U.S.⁽²⁾	$	19,353.6	$	19,844.7	$	485.7	$	105.7	$	—	$	351.5	$	105.4	$	—
Canada	4,835.7		4,206.8		131.2		98.4		117.3		99.9		72.2		77.3
Europe	5,522.0		4,673.7		182.3		175.7		186.5		131.6		144.4		173.7
International	294.8		302.8		9.6		5.1		3.9		2.3		4.9		10.0
Corporate	240.8		313.5		4.0		3.5		6.7		14.3		14.9		14.0
Consolidated	$	30,246.9	$	29,341.5	$	812.8	$	388.4	$	314.4	$	599.6	$	341.8	$	275.0


(1)	The allocation of total assets by segment as of December 31, 2016, has been adjusted for a reclassification between Corporate and International to reflect certain assets acquired in the Acquisition that have been subsequently allocated to International for segment reporting.


(2)	For the year ended December 31, 2016, represents MillerCoors' activity for the post-Acquisition period of October 11, 2016, through December 31, 2016.

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



	For the years ended
	December 31, 2017		December 31, 2016		December 31, 2015
	(In millions)
Net sales to unaffiliated customers:
United States and its territories⁽¹⁾	$	7,493.6	$	1,622.4	$	94.1
Canada	1,358.4		1,344.4		1,421.1
United Kingdom	1,172.8		1,071.4		1,224.6
Other foreign countries⁽²⁾	978.0		846.8		827.7
Consolidated net sales	$	11,002.8	$	4,885.0	$	3,567.5

(1)


(2)	Reflects net sales from the individual countries within our Central European operations (included in our Europe segment), as well as our International segment, for which no individual country has total net sales exceeding 10% of the total consolidated net sales.

The following table presents net properties by geographic location:



	As of
	December 31, 2017		December 31, 2016
	(In millions)
Net properties:
United States and its territories	$	3,025.0	$	3,065.4
Canada	673.0		583.1
United Kingdom	392.6		348.1
Other foreign countries⁽¹⁾	583.1		510.8
Consolidated net properties	$	4,673.7	$	4,507.4


(1)	Reflects net properties within the individual countries included in our Central European operations (included in our Europe segment), as well as our International segment, for which no individual country has total net properties exceeding 10% of the total consolidated net properties.