Segment Reporting

12 Months Ended

Dec. 31, 2020

Our reporting segments are based on the key geographic regions in which we operate, and previously included the U.S., Canada, Europe and International segments. As part of our revitalization plan announced in the fourth quarter of 2019, we made the determination to establish Chicago, Illinois as our North American operational headquarters, closed our office in Denver, Colorado and consolidated certain administrative functions into our other existing office locations. In connection with these consolidation activities, effective January 1, 2020, we changed our management structure from a corporate center and four segments to two segments - North America and Europe. The North America segment consolidated the United States, Canada and corporate center, with a centralized North American leadership team, integrated North American supply chain network and centralized marketing and support functions, enabling us to move more quickly with an integrated portfolio strategy. The Europe segment allows for standalone operations, developed and supported by a European-based team, including local leadership, commercial, supply chain and support functions. The previous International segment was reconstituted to more effectively grow our global brands with the Africa and Asia Pacific businesses reporting into the Europe segment and the remaining International business reporting into the North America segment. As a result of these structural changes, the review of discrete financial information by our chief operating decision maker, our President and Chief Executive Officer, is now performed only at the consolidated North America and Europe geographic segment level, which is the basis on which our chief operating decision maker evaluates the performance of the business and allocates resources accordingly.

Historical results have been recast to retrospectively reflect these changes in segment reporting.

Reporting Segments

North America

The North America 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. In the U.S., we have an agreement to brew, package and ship products for Pabst Brewing Company, LLC, and in Canada, we contract brew and package certain Labatt brands for the U.S. market. We also have an agreement with Heineken N.V. ("Heineken") that grants us the right to import, market, distribute and sell certain Heineken products in Canada.

The North America 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. In the third quarter of 2020, we formed The Yuengling Company LLC ("TYC"), a joint venture owned equally by MCBC and DGY West Holdings, LP ("DGY West") that, pursuant to an operating agreement, formed to expand commercialization of Yuengling's brands with operation currently expected to commence in the second half of 2021. BRI, BDL and TYC are all accounted for as equity method investments.

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., Central Europe and various other European countries, along with certain countries within Africa and Asia Pacific. Our European business also has licensing agreements and distribution agreements with various other brewers.

Unallocated

We also have certain activity that is not allocated to our segments, which has been reflected as “Unallocated” below. Specifically, "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 2020, 2019 or 2018. Consolidated net sales represent sales to third-party external customers less excise taxes. Inter-segment transactions impacting net sales revenues and income (loss) before income taxes eliminate upon consolidation and are primarily related to North America segment sales to, and royalties received from, the Europe 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 $25.0 million and $38.8 million for 2019 and 2018, respectively, were recorded within marketing, general and administrative expenses, primarily within our North America segment. No integration costs were recorded in the year ended December 31, 2020.


	Year ended December 31, 2020
	North America		Europe(1)		Unallocated(2)		Inter-segment net sales eliminations		Consolidated(3)
	(In millions)
Net sales	$	8,237.0	$	1,431.9	$	—	$	(14.9)	$	9,654.0
Interest expense	(2.6)		(5.7)		(266.3)		—		(274.6)
Interest income	0.2		0.3		2.8		—		3.3
Income (loss) before income taxes	$	1,080.5	$	(1,603.7)	$	(120.7)	$	—	$	(643.9)
Income tax benefit (expense)									(301.8)
Net income (loss)									(945.7)
Net (income) loss attributable to noncontrolling interests									(3.3)
Net income (loss) attributable to MCBC									$	(949.0)

(1)During the fourth quarter of 2020, we recorded a goodwill impairment loss related to the Europe reporting unit of $1,484.3 million, which was recorded as a special item. See Note 10, "Goodwill and Intangible Assets" for further discussion.

(2)Includes unrealized mark-to-market changes on our commodity hedge positions. We recorded unrealized gains of $107.6 million for the year ended December 31, 2020.

(3)During 2020, the coronavirus pandemic had a material adverse effect on our operations, liquidity, financial condition and results of operations during 2020 due to on-premise closures worldwide. In 2020, we experienced a reduction in volume as a result of the on-premise closures worldwide and due to the keg relief program, experienced a reduction in net sales and an increase in our inventory allowance for obsolete inventory.


	Year ended December 31, 2019
	North America(1)		Europe		Unallocated(2)		Inter-segment net sales eliminations		Consolidated
	(In millions)
Net sales	$	8,618.2	$	1,986.4	$	—	$	(25.2)	$	10,579.4
Interest expense	2.8		(6.2)		(277.5)		—		(280.9)
Interest income	—		0.5		7.7		—		8.2
Income (loss) before income taxes	$	645.0	$	102.4	$	(267.5)	$	—	$	479.9
Income tax benefit (expense)									(233.7)
Net income (loss)									246.2
Net (income) loss attributable to noncontrolling interests									(4.5)
Net income (loss) attributable to MCBC									$	241.7

(1)During the third quarter of 2019, we recorded a goodwill impairment loss to our North America reporting unit of $668.3 million, which was recorded as a special item. See Note 10, "Goodwill and Intangible Assets" for further discussion. During the second quarter of 2019, we completed the sale of our existing Montreal brewery for $96.2 million, resulting in a $61.3 million gain.

(2)Includes unrealized mark-to-market valuation on our commodity hedge positions. We recorded unrealized losses of $0.8 million for the year ended December 31, 2019.


	Year ended December 31, 2018
	North America(1)		Europe		Unallocated(2)		Inter-segment net sales eliminations		Consolidated
	(In millions)
Net sales	$	8,724.4	$	2,070.4	$	—	$	(25.2)	$	10,769.6
Interest expense	8.8		(5.6)		(309.4)		—		(306.2)
Interest income	—		0.5		7.5		—		8.0
Income (loss) before income taxes	$	1,661.9	$	128.6	$	(430.7)	$	—	$	1,359.8
Income tax benefit (expense)									(225.2)
Net income (loss)									1,134.6
Net (income) loss attributable to noncontrolling interests									(18.1)
Net income (loss) attributable to MCBC									$	1,116.5

(1)During the first quarter of 2018, we recorded a gain of $328.0 million related to the Adjustment Amount as defined and further discussed in Note 7, "Special Items."

(2)Includes unrealized mark-to-market valuation on our commodity hedge positions. We recorded unrealized losses of $166.2 million for the year ended December 31, 2018.

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,
	2020		2019		2020		2019		2018		2020		2019		2018
	(In millions)
North America	$	23,375.6	$	23,360.2	$	743.0	$	676.9	$	667.6	$	461.4	$	450.7	$	499.7
Europe	3,955.5		5,499.6		179.0		182.1		189.9		113.4		143.1		152.0
Consolidated	$	27,331.1	$	28,859.8	$	922.0	$	859.0	$	857.5	$	574.8	$	593.8	$	651.7

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


	For the years ended
	December 31, 2020		December 31, 2019		December 31, 2018
	(In millions)
Net sales to unaffiliated customers:
United States and its territories	$	7,016.1	$	7,244.9	$	7,272.1
Canada	1,111.6		1,231.3		1,298.2
United Kingdom	663.7		1,119.1		1,184.6
Other foreign countries(1)	862.6		984.1		1,014.7
Consolidated net sales	$	9,654.0	$	10,579.4	$	10,769.6

(1)Reflects net sales from the individual countries within certain countries in Europe, Latin America, South America, Africa and Asia. 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, 2020		December 31, 2019
	(In millions)
Net properties:
United States and its territories	$	2,393.7	$	2,760.2
Canada	941.9		831.9
United Kingdom	384.2		406.5
Other foreign countries(1)	530.5		547.9
Consolidated net properties	$	4,250.3	$	4,546.5

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