4. Compute the net operating profit margin (NOPM) and net operating asset turnover (NOAT) components of Molson Coors RNOA for 2013 and 2012. Use the components to explain the change in RNOA from 2013 to 2012. Note: 1) to simplify the analysis, use year-end values for net operating assets rather than averages; 2) use Net sales not Sales to compute ratios.

Molson Coors Brewing Company Case On February 9, 2005, Adolph Coors Company merged with Molson Inc. to from Molsoin Coors Brewing Company. Molson was founded in 1786 in Canada and Coors was founded in 1873 in the US since the beginning, each company has been committed to producing the highest-quality beers. The Molson Coors brands are designed to appeal to a wide range of consumer tastes, styles and price preferences. The company's largest markets are Canada, the United Kingdom. (Source: Company 2013 Form 10-K) A company's performance can be analyzed in many ways. Return on net operating assets (RNOA) is a common metric. Answer the following questions and label your answer well 1. Examine Molson Coors income statements for 2013 and 2012 and the relevant notes to the financial statements a. Identify items that you consider "nonoperating. Explain each item briefly b. Calculate the total after-tax amount of the nonoperating items you identified To simply this calculation, assume that the company's three-year marginal tax rate (federal, state and foreign) of 12% applies to nonoperating items in both years. Note: some nonoperating items are reported net of tax on the income statement. Use the marginal tax only for the items that are reported "before tax" on the income statement Calculate net operating profit after tax (NOPAT) for 2013 and 2012. Hint net operating profit after tax is calculated as net income before the effect of the after-tax amount of nonoperating items. c. 2. Examine Molson Coors balance sheets 2013 and 2012. Footnotes to the financial statements (not included with the case) reveal that the notes receivable (and the current portion thereof) relate to loans made to customers. a. Identify assets and liabilities that you consider "nonoperating." Explairn each item briefly. b Calculate net operating assets (NOA) for 2013 and 2012. 3. Calculate Molson Coors' return on net operating assets (RNOA) for 2013 and 2012 Compare the two returns. Note: to simplify the analysis, use year-end values for net operating assets rather than averages 4. Compute the net operating profit margin (NOPM) and net operating asset tumover NOAT) components of Molson Coors RNOA for 2013 and 2012. Use the components to explain the change in RNOA from 2013 to 2012. Note: 1) to simplify the analysis, use year-end values for net operating assets rather than averages; 2) use "Net sales" not "Sales" to compute ratios MOLSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE DATA) For the Years Ended December 31,2013 December 29, 2012 December 31, 2011 5,999.6:$ (1,793.5) 2,545.6 (1,193.8) (1,698.5) (2,352.5) (1,126.1) (1,654.2) (2,049.1) (1,019.0) 457.9 Excise taxes Net sales Cost of goods sold Marketing, general and administrative expenses Equity income in MillerCoors Other income (cxpense), net 539.0 Operating ingome (loss) 867:4 euse Interest income Total other income (expense) net (275.3) 654:5 . Income (loss) from continuing operations befre income taxes Income tax benefit (expene) (154.5) 570.5 674.8. (99.4 Net income (loss) from continuing operations - Income (loss) from discontimued operations, net of tax Net income (loss) including noncontrolling intersts (5.2) 567.3 $ Less: Net (income) loss attributable to noncontrolling interests 0,8 Not income Toss) atribitable to Molson Coors Brewing Conpany Basic net income (loss) attributable to Molson Coors Brewing Company per share :676.3, 2,44 $365 From continuing operations From discontimued operations B (los attioutable to Molson Coors Breving Company per share s Diluted net income (loss) attributable to Molson Coors Brewing Company per share: Erom continuingoperations From discontinued operations .0.01 .. 0,01 Dilutedt et income(loss)at ib tabletoM ledC Weighted-average sharesbasic hares Bre ingCompany p 184.9 1801864 184.2 Amounts attributable to Molsoni Coors Brewing Company Ne ince (loss) froa continuinig operations Inoome (loss) from discontinued operations, net of tax... cCoss attributable toMolson Coors Browing Company 567.3S 4430S676.3 See notes to consolidated fnancial statetments. MOLSON COORS BREWING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (EXCERPTS) Basis of Presentation and Summary of Significant Accounting Policies 1. Revenue Recognition Our net sales represent the sale of beer and other malt beverages (including adjacencies, such as cider) net of excise taxes, the vast majority of which are brands that we own and brew oursclves. Weimport or brew and sell certain non-owned partner brands under licensing and related arangements. In addition, we contract manufacture for other brewers in some of our markets. Revenue is recognized when the significant risks and rewards of ownership, including the risk of loss, are transferred to the customer or distributor depending upon the method of distribution and shipping terms. The cost of various programs, such as price promotions, rebates and coupon programs are treated as a reduction of sales. In certain of our markets, slotting or listing fees are paid to customers and are also treated as a reduction of sales, Sales of products are for cash or otherwise agreed upon credit terms. Sales are stated nct of incentives, discounts and returns. We do not have standard terms that permit return of product; however, in certain markets where returns occur we estimate the amount of returns based on historical return experience and adjust our revenue accordingly. Products that do not meet our high quality standards are returmed by the customer or recalled and destroyed and are recorded as a reduction of revenue. The reversal of revenue is recorded upon determination that the product will be recalled and destroyed. We estimate the costs required to facilitate product returns and record them ia cost of goods sold as required. In addition to supplying our own brands, the U.K. business (within our Europe segment) sells other beverage companies' products to on-premise customers to provide them with a full range of products for their retail outlets. We refer to this as the "factored brand business." Sales from this business are included in our net sales and cost of goods sold when ultimately sold, but the related volume is not inctuded in our reported sales volumes. In the factored brand business, we normally purchase inventory, which includes excise taxes charged by the vendor, take orders from customers for such brands, and invoice customers for the product and related costs of delivery. In accordance with guidance pertaining to reporting revenue gross as a principal versus net as an agent, sales under the factored brands are reported on a gross income basis. Payments made to customers are conditional on the achievement of volume targets, marketing commitments, or both. Ifpaid in advance, we record such payments as prepayments and amortize them in the consolidated statements of operations over the relevant period to which the customer commitment is made (up to five years). Where there is no sufficiently separate identifiable benefit, and the payment is linked to volumes, or fair value cannot be established, the amortization of the prepayment or the cost as incurred is included in sales discounts as a reduction to sales and where there are specific marketing activities/commitments the cost is included as marketing, general and administrative expenses. The amounts capitalized are reassessed regularly for recoverability over the contract period and are impaired where there is objective evidence that the benefits will not be realized or the asset is otherwise not recovcrablc. In the UK., loans are extended to a portion of the retail outiets that sell our brands. We reclassify a portion of beer revenue to interest income to reflect a market rate of interest on these loans. In fiscal years 2013, 2012 and 2011, these amounts were $4.9 nillion, $5.7 million, and $6.3 million, respectively included in the Europe segment. Excise Taxes Excise taxes collected from customers and remitted to tax authorities are government-imposed excise taxes on beer shipments. Excise taxes on beer shipments are shown in a separate line item in the consolidated statements of operations as a reduction of sales. Sales taxes collected from customers are recognized as a liability, with the liability subsequently reduced when the taxes are remitted to the tax authority Cost of Goods Sold Our cost of goods sold includcs costs we incur to make and ship beer. These costs include brewing materials, such as barley, hops and various grains. Packaging materials, including glass botties, aluminum and steel cans, cardboard and paperboard are also included in our cost of goods sold. Additionally, our cost of goods sold include both direct and indirect labor, shipping and handling including freight costs, utilities, maintenance costs, depreciation, promotional packaging, other manufacturing overheads and costs to purchase factored brands from suppliers, as well as the estimated cost to facilitato product returns. Marketing, General and Administrative Expenses Our marketing, general and administrative expenses include media advertising (television, radio, print), tactical advertising (signs, banners, point-of sale materials) and promotion costs on both local and national levels within our operating segments. The areative portion of our advertising activities is expensed as incurred. Production costs of advertising and promotional materials are expensed when the advertising is first run. Advertising cxpense was $458.5 million, $423.5 million 8. special Items We have incurred charges or recognized gains that we do not believe to be indicative of our core operations. As such, we have separately classified these charges (benefits) as special items. The table below summarizes special items recorded by segment For the years ended December 29, 2012 December 31,2011 December 31, 2013 Restructuring(1) o.1 S 19.8 10.6 14.5 0.4 1.3 2.1 MCI 2.0 Special termination benefits 5.2 2.2 17.9 150.9 5.0 Canada(2) Canada Intangible asset impairment(3) Europe - Asset abaidonment4) Europe Intangible asset impairment(5) Chia impatriment anid related costs 392 I1 lod los inurnice reimbursemen Canada -BRI loan guarantee adjustment(8) Canada-Fixed asset adjustment (9) Europe-Release of non-income-related tax rescrv(10) 0.2. (2.0) :" (2.3) (3.5) (4.2) (2.0) Europe- Flood loss (insurance reimbursement)(U1) Europe -Costs associated with strategic initiatives MCI . Costs associated with outsourcing and other strategic intiatives Europe Tradetean transiactions( 12) MCI Sale of China joint venture(6) 13.2 81.4$ 12.3 200.0 $ Totai Special items, net . (1) Dring 2013, 2012 and 2011, we recognized expenses associated with restructuring programs related to severance and other employee related charges. See further discussion of restructuring activities below pension plans in Canada. See Note 16, "Employee Retirement Plans and Postretirement Benefits" for impact to our defined benefit pension plans. agreement with Miller in Canada. See Note 19, "Commitments and Contingencies" for further discussion. determined that our Home Draft package was not meoting expectations driven by a lack of demand in the U.K. market and as a result, we recognized (2) During 2013, 2012 and 2011, we recognized charges for pension curtailment and special termination benefits related to certain defined benefit (3 During the fourth quarter of 2013, we recognized an impairment charge related to our definite-lived intangible asset associated with our licensing (4)During the second quarter of 2012, we recognized an asset abandonment charge related to tho discontinuation of primary packaging in the U.K. We (5) uing the thind quarter of 2013, we recognized impairment charges related to indefinite-lived intangible assets in Europe. See Note 12, "Goodwill a loss related to the write-off of the Home Draft packaging line, tooling equipment and packaging materials inventory and Intangible Assets" for further discussion. 101