Cost of goods sold (COGS) per hectoliter increased approximately 13 percent in local currency, driven by fixed-cost deleverage from lower volumes, input inflation, higher pension expense, a mix shift toward higher-cost packages and brands, and the impact of cycling positive accounting and employee-related adjustments from 2011 that did not repeat in 2012, partially offset by strong cost savings.

Marketing general and administrative (MG&A) expense decreased nearly 17 percent in local currency, resulting from lower marketing and sales investments, partially related to fewer NHL opportunities, along with the benefit of general and administrative savings initiatives.

United States Business (MillerCoors) (2)

Molson Coors underlying U.S. segment pretax income decreased 5.4 percent to $80.9 million in the quarter.

MillerCoors Operating and Financial Highlights

MillerCoors underlying net income for the quarter, excluding special items, decreased 4.2 percent to $185.8 million, driven by increased marketing investment.

MillerCoors domestic STRs declined 1.1 percent, on a trading-day-adjusted basis. Domestic sales-to-wholesalers (STWs) decreased 1.3 percent.

Domestic net revenue per hectoliter, which excludes contract brewing and company-owned-distributor sales, grew 2.9 percent primarily due to strong net pricing and favorable mix. Total company net revenue per hectoliter, including contract brewing and company-owned distributor sales, increased by 2.9 percent. Third-party contract brewing volumes were down 0.4 percent.

COGS per hectoliter increased 1.6 percent driven by commodity inflation and packaging innovation, partially offset by cost savings.

MG&A expense increased 6.4 percent, driven primarily by increased marketing investments.

Depreciation and amortization expenses for MillerCoors in the fourth quarter were $70.3 million, and additions to tangible and intangible assets totaled $178.5 million.

Central Europe Business – Pro Forma (3)

Central Europe underlying pretax income decreased 12.2 percent to $12.9 million in the quarter. In local currency, underlying pretax income decreased 5 percent, driven primarily by the volume impact of year-on-year destocking of distributor inventories in Serbia and Romania. Unfavorable foreign currency movements reduced earnings approximately $1 million versus the pro forma quarter a year earlier.

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