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Full-year net income attributable to Molson Coors increased 90.2 percent to $720.4 million, while 2009 underlying after-tax income⁽²⁾ increased 40.7 percent to $707.4 million, or $3.81 per diluted share.

"Underlying earnings for our company increased more than 85 percent in the 4^th quarter versus a year ago, driven by a one-time reduction in tax rate. Behind the headline number, our results were affected by weak volumes across all markets, cost inflation in the U.S. and U.K. and brand investments in Canada," said Peter Swinburn, Molson Coors president and chief executive officer.

"Overall consumer demand remains sluggish, and we see these conditions continuing to impact volume and mix in the near term. Our strategy remains consistent, however. We are focused on investing in innovation and our brands and ensuring we maintain a strong balance sheet, so that when market conditions improve we are better positioned to accelerate our growth and capitalize on opportunities.

"Our performance in the quarter and over the past year has benefited from this strategic focus. While our underlying earnings in the 4^th quarter were aided by a one-time reduction in our tax rate, it's important to point out that we grew or held our net pricing and market share in both the U.S. and Canada. Our Canada share performance represented a significant trend improvement from previous quarters. In the U.K., we continued to forgo low-profit volume and share, which helped us drive positive pricing and margins. For the full year, we expanded our brand portfolios in Canada and the U.K., exceeded our goals for cost savings, and maintained price discipline, all of which contributed to a significant increase in our full-year underlying earnings.

"Looking to 2010, we expect volume to remain challenging, especially in the first half, but we are focused on continuing to establish a strong brand base to our business that ensures we not only manage the current market but that we take full advantage of revenue upsides when momentum improves."

Fourth Quarter Highlights

Key operating and financial highlights for the Company's fiscal fourth quarter ended December 26, 2009, compared to the fiscal fourth quarter ended December 28, 2008, include the following:

• Net income attributable to Molson Coors increased 137.0 percent to $222.1 million for the fourth quarter.
• Underlying after-tax income⁽²⁾ increased 85.5 percent to $190.3 million, or $1.02 per diluted share, driven by a lower effective tax rate, positive net pricing, cost savings, and favorable currency movements.
• Underlying pretax income⁽²⁾ decreased 6.0 percent to $124.4 million.
• Fourth quarter 2009 results include the impact of favorable foreign currency movements, which increased consolidated underlying pretax income approximately $10 million versus a year ago.
• Molson Coors worldwide beer volume decreased 4.0 percent, driven by challenging markets, a weak global economy, and the Company's continued strategy in the U.K. to forgo low-margin volume.

Full Year 2009 Highlights

Key operating and financial highlights for the Company's fiscal year ended December 26, 2009, compared to the fiscal year ended December 28, 2008, include the following:

• 2009 net income attributable to MCBC increased 90.2 percent to $720.4 million.
• Underlying after-tax income⁽²⁾ increased 40.7 percent to $707.4 million, or $3.81 per diluted share, driven by a lower effective tax rate, price discipline, and cost reductions.
• Underlying pretax income⁽²⁾ increased 11.9 percent to $718.5 million.
• For the full year, foreign currency movements decreased consolidated 2009 underlying pretax income by approximately $32 million versus a year ago.
• Molson Coors worldwide beer volume decreased 3.0 percent on a pro forma basis.
• As of December 26, 2009, cash and cash equivalents totaled $734 million, and total debt was $1.71 billion.

The Company's full-year 2009 effective tax rate was negative 2 percent on a reported basis and positive 1 percent on an underlying basis. The Company's fourth quarter 2009 effective tax rate for income from continuing operations was negative 65 percent on a reported basis and negative 54 percent on an underlying basis. These tax rates are significantly lower than the Company's anticipated long-term tax rate range of 22 percent to 26 percent due to the favorable resolution of unrecognized tax positions during 2009. The Company estimates that its full-year 2010 effective tax rate will be in the range of 18 percent to 22 percent on an underlying basis.

For the full year 2009, Molson Coors achieved $92 million of cost savings as part of its now-completed Resources for Growth (RFG) cost savings program. Over the past three years, the Company has delivered $270 million in cost savings through the RFG program, which significantly exceeded the Company's commitment of $250 million. In the fourth quarter alone, the Company delivered $24 million of RFG cost reductions.

MillerCoors achieved $62 million in synergies in the fourth quarter, largely due to non-organizational changes and some continued organizational saving. Molson Coors' 42 percent share of these synergies is $26 million. MillerCoors delivered $245 million in synergies in 2009, bringing the total to $273 million since beginning operations on July 1, 2008, surpassing its original commitment of $225 million. MillerCoors will continue to aggressively optimize production across its breweries over the next few months to realize synergy commitments.

MillerCoors also delivered incremental cost savings of $26 million in 2009, which are part of its $200 million of second-generation cost savings that are expected to be delivered by the end of 2012. Molson Coors' 42 percent share of these additional synergies is $11 million. These cost savings are additional to the original $500 million synergy commitment.

Molson Coors Brewing Company's total worldwide beer volume was 12.1 million hectoliters in the quarter, 4.0 percent lower versus the prior year, as shown in Table 1 below. Full year 2009 Molson Coors worldwide volume decreased 3.0 percent versus a year ago on a pro forma basis to 50.0 million hectoliters, as shown in Table 2 below.

Business Segments

Following are the Company's 2009 fourth quarter results by business segment:

Canada Business

Canada underlying pretax income in local currency declined 12 percent versus a year ago, excluding the impact of foreign currency hedges in Other Income. Lower production costs were more than offset by increases in brand investments, higher incentive compensation expense, and the impact of deconsolidating our interest in the beer stores in Ontario, known as Brewers Retail Inc.,or BRI. Net pricing was virtually unchanged, and market share increased slightly versus the prior year. In U.S. dollars, Canada underlying earnings of $94.5 million in the 4^th quarter decreased 5.3%, which reflects the benefit of a 15% year-over-year increase in the Canadian dollar versus the U.S. dollar. The stronger Canadian dollar this year increased Canada segment underlying income by approximately $11 million in the quarter.

Canada sales-to-retail (STRs) for the calendar quarter ended December 31^st decreased 1.2% versus a year ago. Coors Light continued to show growth, and the Company's new product launches are exceeding expectations, while the Molson Canadian, Dry and Export brands declined versus prior year. The Canada beer industry STRs declined an estimated 1.9 percent in the calendar fourth quarter. As a result, estimated Molson Coors Canada market share increased about one quarter of a share point versus a year ago, driven by portfolio-building innovations and investments.

Canada sales volume was 2.1 million hectoliters in the fourth quarter, unchanged from a year ago. Comparable⁽³⁾ net sales per hectoliter were virtually unchanged in local currency versus a year ago, as favorable front-line pricing was offset by continued price discounting activity.

Cost of goods sold per hectoliter decreased approximately 3 percent on a comparable basis in local currency, driven by declines in commodity and packaging material input costs and savings from the Resources for Growth initiatives, partially offset by increases in distribution and pension costs and ongoing product mix shifts.

Comparable marketing, general and administrative expenses increased 14.2% in local currency, driven by higher brand and innovation investments as well as an increase in incentive compensation expense.

Underlying Other Income, which excludes a one-time $46 million gain on the sale of the Company's interest in Montreal Canadiens, decreased $8.0 million in the fourth quarter due to lower Canadiens equity income this year, along with cycling prior-year gains from foreign currency hedges.

United States Business (MillerCoors)⁽⁴⁾

Molson Coors underlying U.S. segment pretax income declined 8.9 percent to $51.2 million in the fourth quarter, as weak U.S. beer industry conditions drove lower volumes and significant cost deleverage in the MillerCoors business. These negative factors were partly offset by favorable pricing, synergies delivery, and reductions in marketing, general and administrative costs in the fourth quarter.

MillerCoors Operating and Financial Highlights

For the quarter, underlying net income attributable to MillerCoors, excluding special items, decreased 21.6 percent to $106.1 million versus the prior-year comparable quarter. The difference in trend between MillerCoors income and Molson Coors U.S. segment income is due to an increase in share-based compensation expense for MillerCoors in the fourth quarter of 2009, driven by strong appreciation in the SABMiller stock price versus a year ago. This increase in expense is attributable to higher mark-to-market values for stock-based grants existing prior to the formation of MillerCoors and not the issuance of new grants. Share-based compensation expense related to the SABMiller stock price is excluded from Molson Coors U.S. segment income.

MillerCoors domestic sales-to-retailers (STRs) declined 3.6 percent primarily due to poor industry and economic conditions. In a weak industry, MillerCoors held market share in the quarter. Domestic sales-to-wholesalers (STWs) declined 4.2 percent driven by lower sales-to-retailers and a reduction in contract brewing volumes.

MillerCoors total net revenue decreased 1.6 percent to $1.712 billion versus the prior-year. Excluding contract brewing and company-owned distributor sales, net sales revenue decreased 2.1 percent to $1.585 billion. Third-party contract brewing volumes declined 4.1 percent. Pricing remained strong in the fourth quarter, as domestic net revenue per hectoliter, excluding contract brewing and company-owned distributor sales, increased 2.3 percent.

Cost of goods sold per hectoliter increased 5.6 percent versus the prior year, as savings from MillerCoors cost performance initiatives were more than offset by significant increases in brewing and packaging material costs, including glass and aluminum, along with volume-related cost deleverage.

Marketing, general and administrative costs decreased 2.7 percent, primarily due to synergies and other cost savings. This decrease would have been approximately 6 percent excluding the impact of increased share-based compensation expense, driven by strong SABMiller stock price appreciation versus a year ago.

Depreciation and amortization expenses for MillerCoors in the fourth quarter were $76 million, and additions to tangible and intangible assets totaled $118 million.

United Kingdom Business

U.K. underlying pretax earnings in local currency increased nearly 15 percent versus a year ago. This strong performance was driven by positive results from the strategic actions our U.K. team has taken in the past year, including leveraging our contract brewing arrangement and brand-building efforts, which allowed us to forgo low-margin volume. These earnings drivers were partially offset by lower volume and higher incentive compensation expense in the quarter. On a reported basis, fourth quarter U.K. underlying pretax income was $36.8 million, an increase of 20.3 percent versus the same quarter last year. These results include the benefit of a 4 percent appreciation of the British Pound versus the U.S. Dollar, which increased U.K. earnings by approximately $2 million in the quarter.

U.K. owned-brand volume decreased 9.3 percent during the quarter due to declining industry volume and the Company's strategy to forgo low-margin volume. The U.K. beer industry volume declined approximately 4 percent in the fourth quarter.

Comparable net sales per hectoliter of owned products increased 18 percent in local currency, driven by two factors. Higher pricing in all channels and positive sales mix drove 10 percent and 8 percent of the increase, respectively.

Comparable cost of goods sold per hectoliter of owned brands increased 12 percent in local currency in the fourth quarter, driven by input cost inflation, adverse brand mix and the deleveraging impact of lower owned-brand volumes, partially offset by a mark-to-market adjustment on natural gas hedges.

Marketing, general and administrative expense increased 11 percent in local currency due to higher incentive compensation, information systems, and Cobra-related sales force costs, partially offset by lower bad-debt expenses in the quarter.

International Markets and Corporate

The underlying pretax loss for International Markets and Corporate was $58.1 million, a 7.0 percent increase versus the fourth quarter of 2008.

The Company's International Markets business grew volume more than 14 percent on a small base, driven by sales in China, Europe, and Latin America. Marketing, general and administrative expense for International Markets was $15.8 million in the quarter, an increase of $5.5 million versus a year ago, due to increased investments in our priority international markets.

Corporate general and administrative expense was $25.7 million in the fourth quarter, an increase of $2.5 million, driven by higher incentive compensation this year.

Corporate net interest expense was $25.6 million in the fourth quarter, an increase of $2.0 million compared to a year ago, with approximately $3.6 million of this increase attributable to foreign currency movements, partially offset by the deconsolidation of BRI.

In the quarter, Corporate other expense of $23.3 million was driven by a one-time mark-to-market loss related to the Foster's cash-settled total-return swap.

Special and Other One-Time Items

The following special and other one-time items have been excluded from underlying earnings.

During the fourth quarter 2009, the Company reported net special charges of $11.1 million pretax, which was composed primarily of a non-income-related tax reserve of $10.4 million and restructuring charges of $0.6 million in the U.K.

Other one-time items in the quarter included a $46.0 million gain on the sale of the Montreal Canadiens Hockey Club in Canada other income, partially offset by a $24.3 million non-cash mark-to-market loss related to the cash-settled total-return swap the Company arranged with respect to Foster's common stock in 2008, and a $0.5 million environmental reserve, both in Corporate other expense. The Company's underlying results also exclude a $17.5 million tax benefit from an income-tax rate change in Ontario in the fourth quarter.

During the fourth quarter of 2009, MillerCoors reported special charges totaling $3.9 million, which include relocation and severance expenses related to the integration of MillerCoors. This equates to $1.6 million at Molson Coors' 42 percent economic ownership share.

Discontinued Operations

The Company reports results associated with its former Brazilian business, Cervejarias Kaiser ("Kaiser"), as discontinued operations. The Company reported a gain of $3.9 million from discontinued operations during the quarter due to the impact of favorable foreign exchange movements on the Kaiser indemnity estimates.

2009 Fourth Quarter and Year-End Earnings 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 2009 fourth quarter and year-end 2009 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 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 May 3, 2010. The Company will post this release and related financial statements on its website today.

Footnotes:

⁽¹⁾ All $ amounts are in U.S. Dollars, unless otherwise indicated.

⁽²⁾ The Company calculates non-GAAP underlying income by excluding special and other one-time items from the nearest U.S. GAAP earnings measure. To calculate underlying income in the fourth quarter of 2009, the Company excluded one-time items, particularly related to MillerCoors, the Foster's cash-settled total-return swap, and the sale of the Company's share of the Montreal Canadiens Hockey Club, as well as net special charges of $11.1 million pretax. For further details, please see the section "Special and Other One-Time Items", along with tables for reconciliations to the nearest U.S. GAAP measures.

⁽³⁾ Except where otherwise indicated, comparable Canada results exclude the sales and costs related to exporting beer to MillerCoors, as well as the reporting effects of the deconsolidation of Brewers Retail Inc. (BRI) in Ontario on March 1, 2009.

⁽⁴⁾ 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, are 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 8).

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the federal securities laws, and language indicating trends, such as "trend improvements," "progress," "anticipated," "expected," "improving sales trends" and "on track." It also includes financial information, of which, as of the date of this press release, the Company's independent auditors have not completed their review.Although the Company believes that the assumptions upon which the financial information and 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 projections and expectations are disclosed in the Company's filings with the Securities and Exchange Commission. These factors include, among others, changes in consumer preferences and product trends; price discounting by major competitors; failure to realize the anticipated cost savings and other benefits from MillerCoors; failure to realize anticipated results from synergy initiatives; and increases in costs generally.All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. 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 Measures

Pretax and after-tax underlying income should be viewed as a supplement to -- not a substitute for -- our results of operations presented on the basis of accounting principles generally accepted in the United States. We believe that underlying income performance is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to evaluate our performance without regard to items such as special items, which can vary substantiallyfrom company to company depending upon accounting methods and book value of assets and capital structure. Our management uses underlying income as a measure of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and in communications with the board of directors, stockholders, analysts and investors concerning our financial performance.

SOURCE: Molson Coors

Molson Coors
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Colin Wheeler, 303-927-2443
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