Business Context and Reporting Period
This Form 8-K, dated June 30, 2008, reports the consummation of a joint venture between Molson Coors Brewing Company and SABMiller plc (via Miller Brewing Company) to form MillerCoors LLC. The transaction, effective July 1, 2008, combines the U.S. and Puerto Rico beer operations of both companies. Molson Coors will hold a 42% interest in the new entity, while Miller holds 58%.
Key Financial Metrics
The filing provides historical financial data for Molson Coors' U.S. operating segment, which is being contributed to the joint venture. Complete pro forma financial statements for the combined entity are not yet available and will be filed in an amendment within 71 days.
| Period | Molson Coors Consolidated (in millions) | U.S. Operating Segment (in millions) |
|---|---|---|
| Year Ended Dec 30, 2007 - Net Sales | $6,190.6 | $2,765.0 |
| Year Ended Dec 30, 2007 - Income Before Tax/Minority | $534.4 | $285.8 |
| As of Dec 30, 2007 - Total Assets | $13,451.6 | $2,830.6 |
| 13 Weeks Ended Mar 30, 2008 - Net Sales | $1,356.6 | $650.0 |
| 13 Weeks Ended Mar 30, 2008 - Income Before Tax/Minority | $46.0 | $69.9 |
| As of Mar 30, 2008 - Total Assets | $12,796.4 | $2,990.5 |
Starting with the quarter ended September 28, 2008, Molson Coors will deconsolidate its U.S. beer business and account for its 42% investment in MillerCoors using the equity method.
Material Changes and Governance
- Joint Venture Structure: MillerCoors LLC is governed by a Board of Directors with five members appointed by Molson Coors and five by Miller. Peter H. Coors is the initial Chairman, and Graham Mackay is the initial Vice Chairman.
- Management: Leo Kiely (former Molson Coors CEO) is the initial CEO of MillerCoors for a two-year term. Tom Long (former Miller CEO) is the initial President and Chief Commercial Officer and is expected to succeed Kiely.
- Restrictions: Coors and Miller are prohibited from transferring their interests for five years. Neither party may seek to acquire the other for ten years.
- Change of Control: Specific rights are triggered if either parent company changes control, including rights to convert interests, acquire additional economic ownership, or replace the CEO.
Outlook, Risks, and Unusual Items
- Executive Departure: Timothy V. Wolf departed as Molson Coors CFO on June 30, 2008, to become MillerCoors Chief Integration Officer. He received a separation payment of $1,601,250.
- Guarantees: Molson Canada 2005 guaranteed Molson Coors' obligations under existing credit agreements and indentures.
- Financial Reporting: The filing explicitly states that pro forma income statements depicting the joint venture formation are not available at this time due to the unavailability of Miller Brewing Company's financial statements for the contributed business.
Investor Verification Checklist
- Verify the upcoming 8-K/A filing (due within 71 days) for complete pro forma financial statements and audited financials of Miller Brewing Company.
- Monitor the transition of financial reporting from consolidation to the equity method starting in the quarter ended September 28, 2008.
- Review the Amended and Restated Operating Agreement (Exhibit 10.1) for specific details on approval rights and dissolution triggers.
- Confirm the long-term strategic implications of the 10-year non-acquisition clause between Molson Coors and SABMiller.