Segment Reporting

9 Months Ended

Sep. 30, 2020

Our reporting segments are based on the key geographic regions in which we operate, and previously included the U.S. segment, Canada segment, Europe segment and International segment. 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, close our office in Denver, Colorado and consolidate 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 consolidates 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.

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.

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

Summarized Financial Information

No single customer accounted for more than 10% of our consolidated sales for the three and nine months ended September 30, 2020 and September 30, 2019. 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 the Europe segment.

The following tables present net sales and income (loss) before income taxes by segment:


	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(In millions)
North America	$	2,252.3	$	2,274.3	$	6,242.2	$	6,607.5
Europe	504.1		574.0		1,128.8		1,503.8
Inter-segment net sales eliminations	(2.9)		(6.7)		(11.3)		(18.1)
Consolidated net sales	$	2,753.5	$	2,841.6	$	7,359.7	$	8,093.2


	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(In millions)
North America(1)	$	400.8	$	(287.4)	$	888.5	$	407.0
Europe(2)	40.9		52.9		(46.9)		57.9
Unallocated(3)	8.7		(74.1)		(148.2)		(191.6)
Consolidated income (loss) before income taxes	$	450.4	$	(308.6)	$	693.4	$	273.3

(1) During the three months ended September 30, 2019, we recorded a goodwill impairment loss in our North America segment of $668.3 million, which was recorded as a special item. See Note 7, "Goodwill and Intangible Assets" for further discussion. During the second quarter of 2019, we completed the sale of our Montreal brewery for $96.2 million, resulting in a $61.3 million gain. Also, during the first quarter of 2019, we received payment and recorded a gain of $1.5 million resulting from a purchase price adjustment related to the historical sale of Molson Inc.’s ownership interest in the Montreal Canadiens, which is considered an affiliate of MCBC.

(2) The decrease during the nine months ended September 30, 2020 was primarily driven by the impacts of the coronavirus pandemic including lower volume and unfavorable channel and geographic mix due to the closure of the on-premise channel in second quarter followed by a reduced consumption after reopening, particularly in the higher margin U.K. business, which has a more significant exposure to the on-premise channel, as well as the estimated keg sales returns and finished goods obsolescence reserves recognized primarily in the first quarter of 2020.

(3) Includes unrealized mark-to-market changes on our commodity hedge positions. We recorded unrealized gains of $64.4 million and $24.7 million during the three and nine months ended September 30, 2020, respectively, compared to unrealized losses of $14.9 million and $12.0 million during the three and nine months ended September 30, 2019, respectively.

Income (loss) before income taxes includes the impact of special items. Refer to Note 5, "Special Items" for further discussion.

The following table presents total assets by segment:


	As of
	September 30, 2020		December 31, 2019
	(In millions)
North America	$	23,118.6	$	23,360.2
Europe	5,556.7		5,499.6
Consolidated total assets	$	28,675.3	$	28,859.8