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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 companys 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. c. 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.

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. Explain each item briefly. b.Calculate net operating assets (NOA) for 2013 and 2012. 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. 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 BRTWING COMPANY AND SURSIDEARIES CONSOLIDATKD STATIEMENTS OF OPERAIIONS (IN MILLIONS, EXCEPT PER SIIARE DATA) For the YcArs Ended Deoemher 31,2013 Decemier 29,2012 Decemher 31,2011 Bxcise taxes Net sales Cost of goods sold 1,793.5 1,698.5 352.5 (2,049.1 (1,019.0) 457.9 Grogs psofit. . Equity income in Millet Coors 539.0 510.9 Other ituoone (expense), net inerea expense. Inferest income otier 10.7 151.2 6545 570.5 ncome less) from contbiing opecations beford inicomp faxcs lncome tax beneit (expense Total ofher income (axpense), net 119 77421 Net incomc (lote) fromcontnuing operations :3- . .2.0 Inccme (loss) from discuntinued operations, net of tax Net incoe (noss) including noaconitrlling ineresis- 439:1677.1 676.3 365 572.5 LoBs: Not (income loss attributable to noncontrolling intercsts 0.8) 443.0:$ Basic net income (loss) attributablc to Molson Coors Brewing Copuny per sherc: m cantinuing opcrations From discontimued operations Basic fiet fncome loss athihutao BrewingCompanyper share S Diluted net income (lass) atfributable to Molsan Coars Brewing Company per ahare: 2.4 Promi continiatrng tede inoe(lons initbutable to Moli Trom diacontinzed operadons 0,0 3.08, . 0.01 36 180.8 184.9 Amounts attributable to Motsoni Cors Brewing Cumpany 415 Inoome (loss) trom discontinued operations, net of tax Nat tnss attibutable to Molsgm Coars BroingCoiapany 2.3 6763 See notes to consolidated inancial statetnents. MOLSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (N MULIONS) Fen the Years Ended December 31,2013 ece Decamber 29, 2012 439 f. S 677.1 Net income (loss) ineludingnoncontrolling interests Othar comprehensive income (los), net of tax: :.:: Foreign currency translation adjustments . 07.7) . (6.1 32)(264) 2198) Unrcalized gain (loss) on derivative instramentx- Relaiicaion of dctivalive (gain) lose to inoie Amortization ok not prior service (benetit) cost and net actuarial (gain) loss o Ownership share of unconsolidated subsidiaries other comprchensive income 240.7 (189.6) 30.9 10.2 ihcome 81.2 192.9 765.4 loss) 155.3 594.4 598.3 Tutalothar comprehensiveincome(loss),net oftax.. ,' Less: Comprekiensive ncome loss) atributable to zaoncontrolling iaterests Comprchensive incorne (loss) attributable to Molson Coors Brewing Compary 376,3 (D.8 375,5 760.2 $ Soe notes to consolidated financial statements. 70 MOLSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN MILLIONS) As of December 31,2013 Dccember 29, 2012 Assets Current asscts: Cash and cash equivalnts Accounts and notes receivable: S4423 624.0; Tad le slowa nefordoubtful accounts of$13.6and$13.4, respectively 't.. .. ". AMliates Current notcs rcociveble end othcr rcccivabics, loss allowaace for doubtfal auvgnts ofsi.i and s1.^ respeetvely.. 1 " ,%" ...-572: 1244. 31399i 6083 52.2 30.8 929 Finied In process Raw materials* Packaging materials 133.2 - 23.3 36.9 11.9 20.3 43.5 10.2 213.9 28.3 89.2 39.2 1,748.0 1,995.9 Totalinvtorie Maintenance and operating supplies, less allowaace for obsolete supplies of S6.8 and $7.2, respectively Otber current asss 205.3 : 82.1 1,537.7 29.6 Deferred tax assets 50.4 Total cutrent asscts Properties, less accurmalated depreciation of $1,458.7 and $1,224.6, rospectively Goudwill Other intangibles, less accumulated amortization of $513.7 and $497.2, respectively lavestment in MillerCoors Defered tax assets Notes reaeivable, less allowanco for doubtil accounts of$28 and S4.0, respectively Other essets Total assets 1,970.1 2,418.72453.1 6,825.1 7,234.8 2,431.8 125.4 26.3 196.9 2,506.5 38.3 23.6 260.1 15,580.1, s 16212 71 MOSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continuecf) (IN MILLIONS, EXCEPT PAR VALUE) As of Decemher 31, 2013 December 29, 2012 Liabilities and equity Current liabilities: ir. A counts pay ble dat er cu . 1 : etifliabili ies(includes affiliate payable am in s ofS22.3 d S34 l, 13364 s 1,186.9 respoctively) Derivative hedging instruments Deleried tax liabities Current portion ofLong-torm debt and shet-tem bomowings 138: 586.9 152.3 1,245,6 2,142.1 3.2130 2,598.7 3,422.5 833.0 222:2 948.5 Total cRTTent liabilities Pension and postrotirement benefits 462.6 Deivatve hedging ase 911.4 .92.7 173 6,916.3 Deferred tax liabititics Unrecognized taxbn Other liabilities Discontimied operations Total liabilitics Comimitiment's and contingen 1 Molson Coors Brewing Compary stookholders equity 93.9 1L 8,220.6 Preferred stock, mopar value (authorized: 25.0 shar cs; notei Class A commion' stock, $o.oi par value (autharized: 500.0 shares; issued and outstanding: 2.6 shas and 2.6 shares, respectively) Class B cmmon stouk, $0.01 par valuo (authorized: 500.0 shares; issued: 167.2 shares and 164.2 shares, respectively)... ',' Class ^ exchangeable shares; no par value (issued and outstanding: 29 shares and 29 shares, 108,5 110.2 Claas B exchangeabic shars, no par value (issued aud outstanding: 19.0 shares and 193 shares, 714.1 3,147.6 . 724.4 Peid-in capital Retained eamings Accumulated otber comprch (loss) Cluss B commom stock held in treasury at cost (7.5 shares and 7.5 sbares, respectively) 4233.2 3,623.6 1549 .3,900.5 (321.1 8,638.9 * 24.9 8,663.8 4 15.580,1$ (321.1) 7,966.9 24.7 7,991.6 16,212.2 Total Molson Coors Browing Company stookholdors cquity Noncontrolling interests Toal equity Total liabilities and equity Sec notes to consolidated financial statements. 72 MOLSON COORS BREWING COAEPANY AND SUBSIDIARIES NOTHS TO CONSOLDATKI)FINANCIAL STATEMENTS (XCERPTS) 1. Basis of Presentation aud Summary of Significant Accounting Pulicies Revenue Recognition Our net sales represent the sale ofbeer and other malt beverages (including adjacencies, such as cider) net of excise taxes, the vast majority of which are hrunds that we own and brew ourselves. We impart or brew and sell oertain non-owned partner brands under licensiag and related arrangements. In addition we contract manufacture for other brewers in some of our markets, Rovenuc is rccognized when the significent risks amd rewards of ownership, inclrding the risk ofloss, are transferred to the custotmer ur distributor deponding upon the method of distcibution and siipping terms. The cost of various programs, such as price promotious, rebates asd coopon programs are treated as a reduction of salcs. In certain of our markets, alotting or listing fees arc paid to customers and are also treated as a reduction ofsalcs, Sales of proiucts are for cash or otherwise agteed upon credit terms. Sales are stated net uf incentives, discounls and returns. We du tot have standard terms that pcrmit retun of product; howevr, ncertain makets where retums occT wo estimate the amomt of retuns based on ns unca retum expericacc d ad ust our revenuc accordingry. Pr doc s t at do not incet our nigh quality standards are rotumcd by to customer or recalled and destroyed and are recorded as a reduction ofrevc The revet a oftevenue srco de upun determina 20n tat he product wilE bert alled Hnd destroycd. We estimate the costs required to facilitate product returns and record them in cost ofgoods 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 oustomers to provide them with a fiull range ofproaucts for thcir rctail outlcts. We rcter to this ahc"factored brand busincse." Salcs trom this businces arc included in our net salcs and cost of goods sold when ultimately sold, but the relatcd volume is not included in our reported sales volumes. In the factorecd brand businc, we normally purchaso inventory, which inchudes excise taxes charged by the vendor, take orders from customers for such brauds, and invoicc customers fur the prodact and related costs of dclivcry. In accondance witih goidanco pertaining to reporting revcnue gross as a principal versus net as an agent, sales under thc factord brands are reported un u gtuss income basis. Payments made o customers e oondit2on 1 on the achievement ofvo umc argets, mar co mg commitment or both fpadm advanoc wcrccord such peymeats as prepayments and amorlize lhem in the coisolidated statemenis ofoperations over the relevaat period to which the cuslomer commitmenti adc up to fiv ye ns where dere is no sufficianty separate Identifiable benefit and the payment is linked vom mes, or fair value cannot be established tite am rtization ofthe prepayment or te cost as mcurrea is ncluded in salce discounts as Toduction to sales and whom tharc arc specific marketing activities commaments the cost meluded as marketing genera d aummi trative ex enses. T he umoun urpilulized re reas es ed regularly or ircovcrability over the vontract period and are impaired where there is objective evidence hal the benefits will nol be reallzed ur thea is otherwise nol I he UK., loans are extended to a portion of the retail outlets that sell our brands. We reclassify a portion ofbeer revenue to interest inoome to reflecta market rate of intorest on these loans. In fiscal years 2013, 2012 and 2011, thcse amonnts were $4.9 million, $5.7 million, and $6.3 milion, respectively, incladed in the Europe segmeat. xcise Taxes Exciso taxes collccted from customers and remitted to tax authoritics are govermmet-imposod cxciso taxcs on boer shinments. Excise taxes on heer shipments are shown in a separate line item in the consolidated statements ofopis as a reductiun ofsales. Sules taxes collected from caslomers are recognized as a liability, with the liability subsequently reduced when fhe taxes are renitted to the tax authority Cost of Goods Sold Our cost of goods sold inchades costs we incur to make and ship heer. These costs include brewing materials, such as barley, hops and various grains. Packaging materials, including glass buttles, 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, promotionl packaging, other manufacturing ovorhoads and costs to purcbase factored brands from suppliers, as well as the estimated cost to facilitate product returns. Marketing, General and Administrative Expenses Our marketing, general aad administrative exponses include media advertising (television, radio, print), tactical advertising (signs, banners, point-of- Sale matferiats) and promotion costs on both local and natioual levels within our operating segments. The creative portion of our advertising activities is axpebsod as incurred. Production costs of advertising and promotional materials aro expensed when the advertising is first run. Advertising expense was $458.5 tnillion, $423.5 million and $398.8 million for fiscal years 2013, 2012 and 2011, respcctively. Prepaid advertising costs of $13.8 million current assets in the consolidatod balamce shcets at December 31, 2013, end December 29, 2012, respectively and S23.9 million, wece included in othcr consist primarily of labor and outside scrvices, as well a bad debt expens required by U.S. GAAP, legal costs are expensed when incured. al overheads. This line item additionelly includes emortization costs essociated with intangible assets, as well as ceriain depreciation costs related to non- This classification includes general and administative costs for fiunctions such as finance, legal, human resourocs and information technology, which U.S. GAAP, legal costs are expensed when incurred. These costs also include our marketing and sales organizations, inclading labor and other se related to our allownce for doubtlul accounts. Unless capitalization is allowed or using a straight-line mcthnd over the vesti eriod f the awerds. Certain share-based compensation plans that aoceferate vesting of awards upon change in comrol, retirement, disability ar death of cligible esployees and director, our share-bascd retention of the awand is no lunger contingent on providing service, which for certain awards can result in awards are considered vested when the employee's immediate recognition for awards granted to retirement-cligible individuals or eaccelcrated recognition for awards granted to individuals that will b rotirement eligible within the stated vesting period. Also, if loss than dhe stated voeling period, we recognizo those costs over the perniod fhorn the grant date to the date retirement eligibility is achieved. We reprt the benofits uf tax deductions in excess of reeoghized compensation cost as a reducing net operating cash flows and inareasing net fincing cash lows. SpeclalItems nt charges incurTed or benefits rlzed at we do not believe to be indicative of our core operations; specifically, such items are considered to be one of the tollowing: infrequent or unusual items, . itnpairment or asset abandonment-related losses, restructuring charges and other atypical employeo-rclated costs, or fees an termination of significant operating agreetnents and gains (losses) on disposal of invostments. Although we believe t tae not indicative of our core operatsions, the itens classified as spacial items are not necesserily non-Tecuring. Equity Income in MillerCoors Our equity income in MillerCoors ropresent ts our proportionato share for the period of thenet income of our investment in MillerCoors acunted for Such amount typically rellects adjustments to eliminate intercompany gains and losses, end to amortize, if appropriate, any under the equity method. difference botwcen cost and underlying equity in net asscts upon the formation ofMillerCoors. Interest Expense, net nterest eamed on our cash and cash equivalents acrosB our our operations. In addition toi trade loans receivable from customers, primerily in the U.K. As noted ahove, this includes Our interest costs are associated with boowings tofin busineas, interest isoome in the Eurupe segment is associated with i a purtion of boer revenue which is reclasified to isterest income to reflect a murket rate of interest on fhcse losns. We capitalize interest cost as a pert of the certain Sixed assels if the cost of the capital axpenditure and the expected time to complcte the project aro considered signiticant. Other Income (Expease) Our other incame (expense) casification primarly includes gains and sones associated with acdvities not directly relatod to brewing and salling bear. For instanoe, certuin gains or lasses on foreign exchange and on sales of n on-operating asscts are ciessifiod in this lino itcm. Income Taxes Doferred income taxes are provided for the temporary differences between the financial reporting basis and the tax besis of our asscts, Habilitics, ani certain unrecognized gains and losses recordod in accumulated other oomprehensive income (loss). We provide for faxes that may be payable if undistrib enrmings of overseas subsidiaries wore to be renited to the U.S., except for those eamings sat we consider to be permanently roinvested. Iaterest, penaldies oitsetting positions related to unrecognized tax benefits are recognized as a component of income tax expense. O primarily the result of uncertainties regurding the fiuture realizatiod of recorded tax benefits an tax loss curryforwards from our consolidated balance sheot includes our investament in Tradeteam of $17.7 million. During the fiscal ycars ended 2013, 2012 and 2011, we reoognized equity earnings from our Tradetoam investment of S4.6 million, $6.0 mitlion and S6.4 million, respoctively, which are recarded within cost of goods sold r deferred tax valuatiun allowacs ete (2) We incurred costs in connection with the issuanoe and subsequent termination of the bridge loan agreement entered into concurrent with the announcement of the Acquisition during the second quarter of 2012. See Noto 13, "Debt for further discussion. n connection with of 2012. As a result of a aogative foreign exchange moveonent between tho Euro and USD prior to using these proceeds to fund the Acqpisition, we realizod a foreign exchange los oa our Euro cash holdings. e Acquisition, we used te proceeds fom our issuance of he $1.9 billion senior notes to purchase Buros in die seeus quarter (4) During 2010, we settled the majority of our Poster's Group Limited's ("oster's (ASXFGL) total rctnn swaps, which we used to gain an economie interest exposure to Foster's stock, and related option contracts, which we used to limit our exposure to fuure changos in Foster's stock price. Tho remaining total return swaps and related optians matured in January of 201 (5) Included in this amount are losscs of $2.4 million and $23.8 million for 2013 and 2012, respectively, rulated to forcign currenoy movements on foreign-denominatod financing instruments enterod into in conjunction with the finanuing and the closing of the Acquisition. Addnionally, we recorded a rnet loss of $4.9 million during 2013, related to foreign cesh positions and foreign excbange comtracts entered into to hodge our risk associated withthe paymeat of this forcign-denomiated debt. Sce Note 13, "Debt" and Noto 17, "Derivative Fastruments and IHedging Activitics for further discussian of financing and hedging sctivitics rolated to the Acquisition. Additiunally, we rccorded losses of $0.5 million, S1.4 million and $6.9 million relafed to other forcign exchaage and derivative aciivity during 2013, 2012 and 2011, respectively (6)SeNote 17, "Derivative Iostrumets and Hcdging Activities" under "Cross Currency Swaps" sub-heading for further discussion. 7. Income Tax Our income (loss) from continuing operations before income tuxcs on which the provision for income taxes was conputed is as follows: for the years e eded December 31,2013 Decamber 29,2012 Clal trillions) Docember 31,2011 Domestic 809.7: S 155.2 712.8. S (120.7 592.1$ 7.2 654.5 $ 774.2 Income tex expensc (bencfit) inchudes the following curent and deierodprovisons: For the years ended Deecmber 29, 2012 December 31, 2013 Decembea 31,2011 Federal Stato 39.1 $ 11.8 50.7 45.5 $ 29.8 8.3 28.2 82.0 5.0 60.5 t. Total current tax expense (benefit)04- Deferred: 101.6 $ 59:6479 S-58. 82.3) 84.0 . 5 Fedeul 6.3 183 2.1 Foreign Total deferred tex expense (benefit) Total inoome ta expanse (bnefi) from continuing opecationis (17.6) 72.5 $ 154.5 99.4 The decrease in incurne tax exs in 2013 was primarily diriven by the net foreign deferred tax benctits. These foreign deferrod tx benefits largely rcsulted from the rclcasc of valualion ellowances in Canada, as further discussed below, as well as docreases in deferred tax liabilities reluted to certain assets that erc impaired in 2013. Our income tux cxpense vazies from the amount expectod by applying the statntory federal corporate tax rate to income as follows: Tor the years ended December 31, 2013 Docember 29, 2012 December 31,2011 Sisttory Federal incone tax rate Stato incoe taxes, net of federal benefits Kffeot of forcign taxi rete 1.4% (24.53 Effect of foreign tax law and rate changes 0.5% 6.8% (0.4)% ct ofunrecognized tax benefits- Changc in valuation atlowance Other, net Effective tax rate ,t..TST.7" "..,.. . . 6.0 % 12.8 % 26,1 % 12.8 % Our fiscal year effective tax rate was approximately 13% rn 2013, 26% in 2012 and 13% in 2011 Our effective tax rates were gnit cantly lower than the federal statutory rate of 35% prim arily due to the pact of lower e e tivo mcome tex rat s applicable tu our f regn businesses and tax planning. In addition, a part of tho Acquisition, the statutory t x rates in the countries of Central urope, reng g f on 9% to 20% m which we began ng b stress druve the 2013 and 2012 change in the eftoct of foreign tax rates versus 2011. The 2012 foreign tax law and rate change impact, primadly reltes to thc more sed statutory corporato t come tax rate in Serbia from 10% to 15%, e o tive January 1 2013 en a bed n 2012 As a result of e impact of the rate tax basis of intangible and other assets purohased in the Acquisition, we iacreased our defond tax liability by s38.3 million in the fourth qurter of 2012. We recorded additional tax expense in 2012 due to increases in our kaluation aiowaoe saied tn capital loss catryforwards and operating losses in sevcral of our jurisdictions. See fiurther discssion balow The table bclow summarizes aur dofcrred tax assets and liabilitics: As of Dccamber 31, 2013 December 29, 2012 Current defeered tax assets Compensation related obligations Foreign cxchonge Accrued liabilities and other Tax loss carryforwards Valuation allowancc Balance shcct reserves arid accruals Other 1.2 49.4 53.5 Total curent doferred tax assots Curreht deferred tax liabilities: 79:3 Partsership investmcnts Balance shoet reserves and accruals 160.9 151.6 4.5 9 TotaL czen deferred tax liabilitics Net current deferred tax assets Net current deferrcd tax liabilities 167.0 156.0 87.7 S 13.1 97 (6) In Devember of 2013, we sold our inferest in the MC. Sihai joint ventare in Caina and reoognized a gain of S6.0miltion. The gain oonsists of the non-cash release of the $5.4 milion liability representing the fair value of our remaiving investment upon deconsolidation of the joint venture in 2012, as well as S0.6 million of procceds received for out interest in the joint venture. We also recognizod legal aund related fees in relation to the sale of $1.2 milion cduring 2013. In the second quarter of 2012, we recognizcd impairment cbarges of S10.4 million related to goodwill and definite-lived intangible assets in otrr MC Sihui jaint ventare in China, and in the third quarter of 2012, we deconsolidated the joint venture and rocognized an impairment loss of $27.6 million upon deconsolidatian. Soe Note 5, "Investments" for further discussion of the deconsolidation and subsequent sale of the joint venture. (7)During 2012, we received irusurance pruceeds in excess of expenses incured related to flood damages at our Torouto offices. During 2011, we incurred expenses in excess of insurance proceeds related to these damages. (8)Vuring the second quarter oF20El, werecognized a $2.0 milion gain resulting from a reduction of our guarantee of BRI debt obligations. During the second quarter of2011, we recognized a $7.6 million loss related to te oorreotion ofan m mate al e or in prior periods in to Canada segment, resulting from the performance of a fixed ssset count thnt reduced properties by $13.9million in 2011. Tho adjastmeat also resulted in an increase to goodwill of $6.3 million for the assets identified as not present as of the Merger date. The impact of the crror and the related correction in 2011 was not material to any prior annual or interim finanoial steterments and was not material to tke fisoal year results for 2011, (0) During 2009, we established a non-incomo-relatod tax reservc of $10.4 million that wss recorded ss a spccial item. Our estimates indicated a range of possible loss relative to this reserve of zero to S22.3 million, inelusivce ofpotontial penaities and interest. The amounts recorded in 2013, 2012 and 2011 represent the relcase of this resarve as a resalt of a change in estimate. As a result, the remaining amount of this non-income-related tax reserve was fully released in 2013. (11) Duing 2013, wc recordcd losscs and rolated net costs of 35.4 milion in our Europe business related to significant flooding in Czcch Republiu in the second quarter of 2013. These losses were of sct by $7.4 mitiion insurance procccds cived in 2013 t2) Upon to mmation ofour Tradeteam distribution agreements and subsequent termination of the jort venture and sale of our 49.9% Tradeteam to DHL., we recognizcd a loss of $13.2 million in Docember 2013. See Note 5, "Investments" for Further discussion nterest n In addition to the previously mentioned termination-rolated items recorded in special items, in the fourth quarter of 2013 we received teemination notifcations from Modolo and Hoimoken related to ourMMI joint venture agreement and contract-brewing agreement, respectively. Upon temination of the MMi jonl vealure, which is expected to occur at the end of the day on February 28, 2014, we expect to recognize terrnination fee income of CAD 70.0 million, net of tbe remaining carrying value of the definite-lived intangible asset, within special iterms. See Note 5, "Tnvestments" for frther discussion. Additionally wo havo a contract brewing and kegging agreemeat with Heineken wherehy we prouoe and package the Foster's and Kronenbourg brands in the U.K. In Deuetmber 2013, we entered imto an agrcement with Heineken to early tenninate this amangement. As a result af the termination, Heineken has agreed to pay us an aggregate early ternination payment of GBP 13.0milion during and chrough the end of the transitian period, concluding on April 30, 2015, which will be wcognizod within special items. Restructuring Activitles In 2012, we introduced several initiatives focuscd on inarcasing our efficiencies and rcducing costs across all furtetions of the business in order to develop a more competitive supply chain and global cost structurc. Inludcd in these initiatives is a long-term focus on recucing labor unei gencral ovcrhead costs through restructuring activitics. Wa view these restrueturing activitics as actions to allow u to eet Dur long-tenm gnowth targets by generaling firture cost savings within cost of guods sod and general and administrative expenses and incluc organizatiotal changes that strengthcn our business ani accelerate efticiencies within our operational structure. As a result ofthosc restructuring ueiviis, wo havc rcdaccd headcount by appruximately 910 employees, of which 310 and 600 rclato to 2013 and 2012 activities, respoctivcly. Consequestly, we recognized scvcrance and othec employee relaled chagcs during 2013 and 2012, waica we have Tecorded es special itcms wthin our corusolidated statements of operations. As e ontinually evaluate our oost structure amd seek opportunities for further efficiencies and cost savings, wo may incur additilunal restructuring related charges in tihe future, however, are unable to estimate the amount of charges at this timc. 102 MOLSON COORS BRTWING COMPANY AND SURSIDEARIES CONSOLIDATKD STATIEMENTS OF OPERAIIONS (IN MILLIONS, EXCEPT PER SIIARE DATA) For the YcArs Ended Deoemher 31,2013 Decemier 29,2012 Decemher 31,2011 Bxcise taxes Net sales Cost of goods sold 1,793.5 1,698.5 352.5 (2,049.1 (1,019.0) 457.9 Grogs psofit. . Equity income in Millet Coors 539.0 510.9 Other ituoone (expense), net inerea expense. Inferest income otier 10.7 151.2 6545 570.5 ncome less) from contbiing opecations beford inicomp faxcs lncome tax beneit (expense Total ofher income (axpense), net 119 77421 Net incomc (lote) fromcontnuing operations :3- . .2.0 Inccme (loss) from discuntinued operations, net of tax Net incoe (noss) including noaconitrlling ineresis- 439:1677.1 676.3 365 572.5 LoBs: Not (income loss attributable to noncontrolling intercsts 0.8) 443.0:$ Basic net income (loss) attributablc to Molson Coors Brewing Copuny per sherc: m cantinuing opcrations From discontimued operations Basic fiet fncome loss athihutao BrewingCompanyper share S Diluted net income (lass) atfributable to Molsan Coars Brewing Company per ahare: 2.4 Promi continiatrng tede inoe(lons initbutable to Moli Trom diacontinzed operadons 0,0 3.08, . 0.01 36 180.8 184.9 Amounts attributable to Motsoni Cors Brewing Cumpany 415 Inoome (loss) trom discontinued operations, net of tax Nat tnss attibutable to Molsgm Coars BroingCoiapany 2.3 6763 See notes to consolidated inancial statetnents. MOLSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (N MULIONS) Fen the Years Ended December 31,2013 ece Decamber 29, 2012 439 f. S 677.1 Net income (loss) ineludingnoncontrolling interests Othar comprehensive income (los), net of tax: :.:: Foreign currency translation adjustments . 07.7) . (6.1 32)(264) 2198) Unrcalized gain (loss) on derivative instramentx- Relaiicaion of dctivalive (gain) lose to inoie Amortization ok not prior service (benetit) cost and net actuarial (gain) loss o Ownership share of unconsolidated subsidiaries other comprchensive income 240.7 (189.6) 30.9 10.2 ihcome 81.2 192.9 765.4 loss) 155.3 594.4 598.3 Tutalothar comprehensiveincome(loss),net oftax.. ,' Less: Comprekiensive ncome loss) atributable to zaoncontrolling iaterests Comprchensive incorne (loss) attributable to Molson Coors Brewing Compary 376,3 (D.8 375,5 760.2 $ Soe notes to consolidated financial statements. 70 MOLSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN MILLIONS) As of December 31,2013 Dccember 29, 2012 Assets Current asscts: Cash and cash equivalnts Accounts and notes receivable: S4423 624.0; Tad le slowa nefordoubtful accounts of$13.6and$13.4, respectively 't.. .. ". AMliates Current notcs rcociveble end othcr rcccivabics, loss allowaace for doubtfal auvgnts ofsi.i and s1.^ respeetvely.. 1 " ,%" ...-572: 1244. 31399i 6083 52.2 30.8 929 Finied In process Raw materials* Packaging materials 133.2 - 23.3 36.9 11.9 20.3 43.5 10.2 213.9 28.3 89.2 39.2 1,748.0 1,995.9 Totalinvtorie Maintenance and operating supplies, less allowaace for obsolete supplies of S6.8 and $7.2, respectively Otber current asss 205.3 : 82.1 1,537.7 29.6 Deferred tax assets 50.4 Total cutrent asscts Properties, less accurmalated depreciation of $1,458.7 and $1,224.6, rospectively Goudwill Other intangibles, less accumulated amortization of $513.7 and $497.2, respectively lavestment in MillerCoors Defered tax assets Notes reaeivable, less allowanco for doubtil accounts of$28 and S4.0, respectively Other essets Total assets 1,970.1 2,418.72453.1 6,825.1 7,234.8 2,431.8 125.4 26.3 196.9 2,506.5 38.3 23.6 260.1 15,580.1, s 16212 71 MOSON COORS BREWING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continuecf) (IN MILLIONS, EXCEPT PAR VALUE) As of Decemher 31, 2013 December 29, 2012 Liabilities and equity Current liabilities: ir. A counts pay ble dat er cu . 1 : etifliabili ies(includes affiliate payable am in s ofS22.3 d S34 l, 13364 s 1,186.9 respoctively) Derivative hedging instruments Deleried tax liabities Current portion ofLong-torm debt and shet-tem bomowings 138: 586.9 152.3 1,245,6 2,142.1 3.2130 2,598.7 3,422.5 833.0 222:2 948.5 Total cRTTent liabilities Pension and postrotirement benefits 462.6 Deivatve hedging ase 911.4 .92.7 173 6,916.3 Deferred tax liabititics Unrecognized taxbn Other liabilities Discontimied operations Total liabilitics Comimitiment's and contingen 1 Molson Coors Brewing Compary stookholders equity 93.9 1L 8,220.6 Preferred stock, mopar value (authorized: 25.0 shar cs; notei Class A commion' stock, $o.oi par value (autharized: 500.0 shares; issued and outstanding: 2.6 shas and 2.6 shares, respectively) Class B cmmon stouk, $0.01 par valuo (authorized: 500.0 shares; issued: 167.2 shares and 164.2 shares, respectively)... ',' Class ^ exchangeable shares; no par value (issued and outstanding: 29 shares and 29 shares, 108,5 110.2 Claas B exchangeabic shars, no par value (issued aud outstanding: 19.0 shares and 193 shares, 714.1 3,147.6 . 724.4 Peid-in capital Retained eamings Accumulated otber comprch (loss) Cluss B commom stock held in treasury at cost (7.5 shares and 7.5 sbares, respectively) 4233.2 3,623.6 1549 .3,900.5 (321.1 8,638.9 * 24.9 8,663.8 4 15.580,1$ (321.1) 7,966.9 24.7 7,991.6 16,212.2 Total Molson Coors Browing Company stookholdors cquity Noncontrolling interests Toal equity Total liabilities and equity Sec notes to consolidated financial statements. 72 MOLSON COORS BREWING COAEPANY AND SUBSIDIARIES NOTHS TO CONSOLDATKI)FINANCIAL STATEMENTS (XCERPTS) 1. Basis of Presentation aud Summary of Significant Accounting Pulicies Revenue Recognition Our net sales represent the sale ofbeer and other malt beverages (including adjacencies, such as cider) net of excise taxes, the vast majority of which are hrunds that we own and brew ourselves. We impart or brew and sell oertain non-owned partner brands under licensiag and related arrangements. In addition we contract manufacture for other brewers in some of our markets, Rovenuc is rccognized when the significent risks amd rewards of ownership, inclrding the risk ofloss, are transferred to the custotmer ur distributor deponding upon the method of distcibution and siipping terms. The cost of various programs, such as price promotious, rebates asd coopon programs are treated as a reduction of salcs. In certain of our markets, alotting or listing fees arc paid to customers and are also treated as a reduction ofsalcs, Sales of proiucts are for cash or otherwise agteed upon credit terms. Sales are stated net uf incentives, discounls and returns. We du tot have standard terms that pcrmit retun of product; howevr, ncertain makets where retums occT wo estimate the amomt of retuns based on ns unca retum expericacc d ad ust our revenuc accordingry. Pr doc s t at do not incet our nigh quality standards are rotumcd by to customer or recalled and destroyed and are recorded as a reduction ofrevc The revet a oftevenue srco de upun determina 20n tat he product wilE bert alled Hnd destroycd. We estimate the costs required to facilitate product returns and record them in cost ofgoods 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 oustomers to provide them with a fiull range ofproaucts for thcir rctail outlcts. We rcter to this ahc"factored brand busincse." Salcs trom this businces arc included in our net salcs and cost of goods sold when ultimately sold, but the relatcd volume is not included in our reported sales volumes. In the factorecd brand businc, we normally purchaso inventory, which inchudes excise taxes charged by the vendor, take orders from customers for such brauds, and invoicc customers fur the prodact and related costs of dclivcry. In accondance witih goidanco pertaining to reporting revcnue gross as a principal versus net as an agent, sales under thc factord brands are reported un u gtuss income basis. Payments made o customers e oondit2on 1 on the achievement ofvo umc argets, mar co mg commitment or both fpadm advanoc wcrccord such peymeats as prepayments and amorlize lhem in the coisolidated statemenis ofoperations over the relevaat period to which the cuslomer commitmenti adc up to fiv ye ns where dere is no sufficianty separate Identifiable benefit and the payment is linked vom mes, or fair value cannot be established tite am rtization ofthe prepayment or te cost as mcurrea is ncluded in salce discounts as Toduction to sales and whom tharc arc specific marketing activities commaments the cost meluded as marketing genera d aummi trative ex enses. T he umoun urpilulized re reas es ed regularly or ircovcrability over the vontract period and are impaired where there is objective evidence hal the benefits will nol be reallzed ur thea is otherwise nol I he UK., loans are extended to a portion of the retail outlets that sell our brands. We reclassify a portion ofbeer revenue to interest inoome to reflecta market rate of intorest on these loans. In fiscal years 2013, 2012 and 2011, thcse amonnts were $4.9 million, $5.7 million, and $6.3 milion, respectively, incladed in the Europe segmeat. xcise Taxes Exciso taxes collccted from customers and remitted to tax authoritics are govermmet-imposod cxciso taxcs on boer shinments. Excise taxes on heer shipments are shown in a separate line item in the consolidated statements ofopis as a reductiun ofsales. Sules taxes collected from caslomers are recognized as a liability, with the liability subsequently reduced when fhe taxes are renitted to the tax authority Cost of Goods Sold Our cost of goods sold inchades costs we incur to make and ship heer. These costs include brewing materials, such as barley, hops and various grains. Packaging materials, including glass buttles, 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, promotionl packaging, other manufacturing ovorhoads and costs to purcbase factored brands from suppliers, as well as the estimated cost to facilitate product returns. Marketing, General and Administrative Expenses Our marketing, general aad administrative exponses include media advertising (television, radio, print), tactical advertising (signs, banners, point-of- Sale matferiats) and promotion costs on both local and natioual levels within our operating segments. The creative portion of our advertising activities is axpebsod as incurred. Production costs of advertising and promotional materials aro expensed when the advertising is first run. Advertising expense was $458.5 tnillion, $423.5 million and $398.8 million for fiscal years 2013, 2012 and 2011, respcctively. Prepaid advertising costs of $13.8 million current assets in the consolidatod balamce shcets at December 31, 2013, end December 29, 2012, respectively and S23.9 million, wece included in othcr consist primarily of labor and outside scrvices, as well a bad debt expens required by U.S. GAAP, legal costs are expensed when incured. al overheads. This line item additionelly includes emortization costs essociated with intangible assets, as well as ceriain depreciation costs related to non- This classification includes general and administative costs for fiunctions such as finance, legal, human resourocs and information technology, which U.S. GAAP, legal costs are expensed when incurred. These costs also include our marketing and sales organizations, inclading labor and other se related to our allownce for doubtlul accounts. Unless capitalization is allowed or using a straight-line mcthnd over the vesti eriod f the awerds. Certain share-based compensation plans that aoceferate vesting of awards upon change in comrol, retirement, disability ar death of cligible esployees and director, our share-bascd retention of the awand is no lunger contingent on providing service, which for certain awards can result in awards are considered vested when the employee's immediate recognition for awards granted to retirement-cligible individuals or eaccelcrated recognition for awards granted to individuals that will b rotirement eligible within the stated vesting period. Also, if loss than dhe stated voeling period, we recognizo those costs over the perniod fhorn the grant date to the date retirement eligibility is achieved. We reprt the benofits uf tax deductions in excess of reeoghized compensation cost as a reducing net operating cash flows and inareasing net fincing cash lows. SpeclalItems nt charges incurTed or benefits rlzed at we do not believe to be indicative of our core operations; specifically, such items are considered to be one of the tollowing: infrequent or unusual items, . itnpairment or asset abandonment-related losses, restructuring charges and other atypical employeo-rclated costs, or fees an termination of significant operating agreetnents and gains (losses) on disposal of invostments. Although we believe t tae not indicative of our core operatsions, the itens classified as spacial items are not necesserily non-Tecuring. Equity Income in MillerCoors Our equity income in MillerCoors ropresent ts our proportionato share for the period of thenet income of our investment in MillerCoors acunted for Such amount typically rellects adjustments to eliminate intercompany gains and losses, end to amortize, if appropriate, any under the equity method. difference botwcen cost and underlying equity in net asscts upon the formation ofMillerCoors. Interest Expense, net nterest eamed on our cash and cash equivalents acrosB our our operations. In addition toi trade loans receivable from customers, primerily in the U.K. As noted ahove, this includes Our interest costs are associated with boowings tofin busineas, interest isoome in the Eurupe segment is associated with i a purtion of boer revenue which is reclasified to isterest income to reflect a murket rate of interest on fhcse losns. We capitalize interest cost as a pert of the certain Sixed assels if the cost of the capital axpenditure and the expected time to complcte the project aro considered signiticant. Other Income (Expease) Our other incame (expense) casification primarly includes gains and sones associated with acdvities not directly relatod to brewing and salling bear. For instanoe, certuin gains or lasses on foreign exchange and on sales of n on-operating asscts are ciessifiod in this lino itcm. Income Taxes Doferred income taxes are provided for the temporary differences between the financial reporting basis and the tax besis of our asscts, Habilitics, ani certain unrecognized gains and losses recordod in accumulated other oomprehensive income (loss). We provide for faxes that may be payable if undistrib enrmings of overseas subsidiaries wore to be renited to the U.S., except for those eamings sat we consider to be permanently roinvested. Iaterest, penaldies oitsetting positions related to unrecognized tax benefits are recognized as a component of income tax expense. O primarily the result of uncertainties regurding the fiuture realizatiod of recorded tax benefits an tax loss curryforwards from our consolidated balance sheot includes our investament in Tradeteam of $17.7 million. During the fiscal ycars ended 2013, 2012 and 2011, we reoognized equity earnings from our Tradetoam investment of S4.6 million, $6.0 mitlion and S6.4 million, respoctively, which are recarded within cost of goods sold r deferred tax valuatiun allowacs ete (2) We incurred costs in connection with the issuanoe and subsequent termination of the bridge loan agreement entered into concurrent with the announcement of the Acquisition during the second quarter of 2012. See Noto 13, "Debt for further discussion. n connection with of 2012. As a result of a aogative foreign exchange moveonent between tho Euro and USD prior to using these proceeds to fund the Acqpisition, we realizod a foreign exchange los oa our Euro cash holdings. e Acquisition, we used te proceeds fom our issuance of he $1.9 billion senior notes to purchase Buros in die seeus quarter (4) During 2010, we settled the majority of our Poster's Group Limited's ("oster's (ASXFGL) total rctnn swaps, which we used to gain an economie interest exposure to Foster's stock, and related option contracts, which we used to limit our exposure to fuure changos in Foster's stock price. Tho remaining total return swaps and related optians matured in January of 201 (5) Included in this amount are losscs of $2.4 million and $23.8 million for 2013 and 2012, respectively, rulated to forcign currenoy movements on foreign-denominatod financing instruments enterod into in conjunction with the finanuing and the closing of the Acquisition. Addnionally, we recorded a rnet loss of $4.9 million during 2013, related to foreign cesh positions and foreign excbange comtracts entered into to hodge our risk associated withthe paymeat of this forcign-denomiated debt. Sce Note 13, "Debt" and Noto 17, "Derivative Fastruments and IHedging Activitics for further discussian of financing and hedging sctivitics rolated to the Acquisition. Additiunally, we rccorded losses of $0.5 million, S1.4 million and $6.9 million relafed to other forcign exchaage and derivative aciivity during 2013, 2012 and 2011, respectively (6)SeNote 17, "Derivative Iostrumets and Hcdging Activities" under "Cross Currency Swaps" sub-heading for further discussion. 7. Income Tax Our income (loss) from continuing operations before income tuxcs on which the provision for income taxes was conputed is as follows: for the years e eded December 31,2013 Decamber 29,2012 Clal trillions) Docember 31,2011 Domestic 809.7: S 155.2 712.8. S (120.7 592.1$ 7.2 654.5 $ 774.2 Income tex expensc (bencfit) inchudes the following curent and deierodprovisons: For the years ended Deecmber 29, 2012 December 31, 2013 Decembea 31,2011 Federal Stato 39.1 $ 11.8 50.7 45.5 $ 29.8 8.3 28.2 82.0 5.0 60.5 t. Total current tax expense (benefit)04- Deferred: 101.6 $ 59:6479 S-58. 82.3) 84.0 . 5 Fedeul 6.3 183 2.1 Foreign Total deferred tex expense (benefit) Total inoome ta expanse (bnefi) from continuing opecationis (17.6) 72.5 $ 154.5 99.4 The decrease in incurne tax exs in 2013 was primarily diriven by the net foreign deferred tax benctits. These foreign deferrod tx benefits largely rcsulted from the rclcasc of valualion ellowances in Canada, as further discussed below, as well as docreases in deferred tax liabilities reluted to certain assets that erc impaired in 2013. Our income tux cxpense vazies from the amount expectod by applying the statntory federal corporate tax rate to income as follows: Tor the years ended December 31, 2013 Docember 29, 2012 December 31,2011 Sisttory Federal incone tax rate Stato incoe taxes, net of federal benefits Kffeot of forcign taxi rete 1.4% (24.53 Effect of foreign tax law and rate changes 0.5% 6.8% (0.4)% ct ofunrecognized tax benefits- Changc in valuation atlowance Other, net Effective tax rate ,t..TST.7" "..,.. . . 6.0 % 12.8 % 26,1 % 12.8 % Our fiscal year effective tax rate was approximately 13% rn 2013, 26% in 2012 and 13% in 2011 Our effective tax rates were gnit cantly lower than the federal statutory rate of 35% prim arily due to the pact of lower e e tivo mcome tex rat s applicable tu our f regn businesses and tax planning. In addition, a part of tho Acquisition, the statutory t x rates in the countries of Central urope, reng g f on 9% to 20% m which we began ng b stress druve the 2013 and 2012 change in the eftoct of foreign tax rates versus 2011. The 2012 foreign tax law and rate change impact, primadly reltes to thc more sed statutory corporato t come tax rate in Serbia from 10% to 15%, e o tive January 1 2013 en a bed n 2012 As a result of e impact of the rate tax basis of intangible and other assets purohased in the Acquisition, we iacreased our defond tax liability by s38.3 million in the fourth qurter of 2012. We recorded additional tax expense in 2012 due to increases in our kaluation aiowaoe saied tn capital loss catryforwards and operating losses in sevcral of our jurisdictions. See fiurther discssion balow The table bclow summarizes aur dofcrred tax assets and liabilitics: As of Dccamber 31, 2013 December 29, 2012 Current defeered tax assets Compensation related obligations Foreign cxchonge Accrued liabilities and other Tax loss carryforwards Valuation allowancc Balance shcct reserves arid accruals Other 1.2 49.4 53.5 Total curent doferred tax assots Curreht deferred tax liabilities: 79:3 Partsership investmcnts Balance shoet reserves and accruals 160.9 151.6 4.5 9 TotaL czen deferred tax liabilitics Net current deferred tax assets Net current deferrcd tax liabilities 167.0 156.0 87.7 S 13.1 97 (6) In Devember of 2013, we sold our inferest in the MC. Sihai joint ventare in Caina and reoognized a gain of S6.0miltion. The gain oonsists of the non-cash release of the $5.4 milion liability representing the fair value of our remaiving investment upon deconsolidation of the joint venture in 2012, as well as S0.6 million of procceds received for out interest in the joint venture. We also recognizod legal aund related fees in relation to the sale of $1.2 milion cduring 2013. In the second quarter of 2012, we recognizcd impairment cbarges of S10.4 million related to goodwill and definite-lived intangible assets in otrr MC Sihui jaint ventare in China, and in the third quarter of 2012, we deconsolidated the joint venture and rocognized an impairment loss of $27.6 million upon deconsolidatian. Soe Note 5, "Investments" for further discussion of the deconsolidation and subsequent sale of the joint venture. (7)During 2012, we received irusurance pruceeds in excess of expenses incured related to flood damages at our Torouto offices. During 2011, we incurred expenses in excess of insurance proceeds related to these damages. (8)Vuring the second quarter oF20El, werecognized a $2.0 milion gain resulting from a reduction of our guarantee of BRI debt obligations. During the second quarter of2011, we recognized a $7.6 million loss related to te oorreotion ofan m mate al e or in prior periods in to Canada segment, resulting from the performance of a fixed ssset count thnt reduced properties by $13.9million in 2011. Tho adjastmeat also resulted in an increase to goodwill of $6.3 million for the assets identified as not present as of the Merger date. The impact of the crror and the related correction in 2011 was not material to any prior annual or interim finanoial steterments and was not material to tke fisoal year results for 2011, (0) During 2009, we established a non-incomo-relatod tax reservc of $10.4 million that wss recorded ss a spccial item. Our estimates indicated a range of possible loss relative to this reserve of zero to S22.3 million, inelusivce ofpotontial penaities and interest. The amounts recorded in 2013, 2012 and 2011 represent the relcase of this resarve as a resalt of a change in estimate. As a result, the remaining amount of this non-income-related tax reserve was fully released in 2013. (11) Duing 2013, wc recordcd losscs and rolated net costs of 35.4 milion in our Europe business related to significant flooding in Czcch Republiu in the second quarter of 2013. These losses were of sct by $7.4 mitiion insurance procccds cived in 2013 t2) Upon to mmation ofour Tradeteam distribution agreements and subsequent termination of the jort venture and sale of our 49.9% Tradeteam to DHL., we recognizcd a loss of $13.2 million in Docember 2013. See Note 5, "Investments" for Further discussion nterest n In addition to the previously mentioned termination-rolated items recorded in special items, in the fourth quarter of 2013 we received teemination notifcations from Modolo and Hoimoken related to ourMMI joint venture agreement and contract-brewing agreement, respectively. Upon temination of the MMi jonl vealure, which is expected to occur at the end of the day on February 28, 2014, we expect to recognize terrnination fee income of CAD 70.0 million, net of tbe remaining carrying value of the definite-lived intangible asset, within special iterms. See Note 5, "Tnvestments" for frther discussion. Additionally wo havo a contract brewing and kegging agreemeat with Heineken wherehy we prouoe and package the Foster's and Kronenbourg brands in the U.K. In Deuetmber 2013, we entered imto an agrcement with Heineken to early tenninate this amangement. As a result af the termination, Heineken has agreed to pay us an aggregate early ternination payment of GBP 13.0milion during and chrough the end of the transitian period, concluding on April 30, 2015, which will be wcognizod within special items. Restructuring Activitles In 2012, we introduced several initiatives focuscd on inarcasing our efficiencies and rcducing costs across all furtetions of the business in order to develop a more competitive supply chain and global cost structurc. Inludcd in these initiatives is a long-term focus on recucing labor unei gencral ovcrhead costs through restructuring activitics. Wa view these restrueturing activitics as actions to allow u to eet Dur long-tenm gnowth targets by generaling firture cost savings within cost of guods sod and general and administrative expenses and incluc organizatiotal changes that strengthcn our business ani accelerate efticiencies within our operational structure. As a result ofthosc restructuring ueiviis, wo havc rcdaccd headcount by appruximately 910 employees, of which 310 and 600 rclato to 2013 and 2012 activities, respoctivcly. Consequestly, we recognized scvcrance and othec employee relaled chagcs during 2013 and 2012, waica we have Tecorded es special itcms wthin our corusolidated statements of operations. As e ontinually evaluate our oost structure amd seek opportunities for further efficiencies and cost savings, wo may incur additilunal restructuring related charges in tihe future, however, are unable to estimate the amount of charges at this timc. 102