Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Molson Coors Brewing Company 2011 Second Quarter Earnings Call. [Operator Instructions] Before we get started, I want to paraphrase the company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from what the company projects today, so please refer to its most recent 10-K and 10-Q filings for a more complete description of factors that could affect these projections. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Regarding any non-U.S. GAAP measures that may be discussed during the call and from time to time by the company's executives in discussing the company's performance, please visit the company's website, www.molsoncoors.com. Again, that is www.molsoncoors.com, and click on the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results. Now I would like to turn the call over to Mr. Peter Swinburn, President and CEO of Molson Coors. Please go ahead, sir.

Thank you, Michelle. Hello, welcome, everybody, and thanks for joining us today. So with me on the call this morning are Stewart Glendinning, Molson Coors CFO; Tom Long, CEO of MillerCoors; Dave Perkins, CEO of Molson Coors Canada; Mark Hunter, CEO of Molson Coors U.K.; Kandy Anand, President of Molson Coors International; Sam Walker, Molson Coors Chief Legal Officer; Bill Waters, Molson Coors Controller; and Dave Dunnewald, Molson Coors VP of Investor Relations. On the earnings call today, Stewart and I will take you through highlights of our second quarter 2011 results for Molson Coors Brewing Company, along with some perspective on the balance of 2011. In the second quarter, our company underlying after-tax earnings decreased about 1% as positive beer pricing and cost reductions in our core businesses and favorable foreign exchange were offset by the impact of weak economic conditions, commodity inflation and investments in our International businesses. As we mentioned during our annual New York Investor Day in March, our growth strategies rest on 3 pillars: Maximizing the profitable growth opportunities in our core markets; accelerating our push into new and emerging markets to grow our brands globally; and looking for M&A opportunities that meet our criteria for generating shareholder value. We can [indiscernible] with our results for our core markets, we faced challenges in 2 main fronts in the second quarter. Volumes for the industry on our businesses were weak due to struggling economies, high unemployment among our core demographic base and high fuel prices. Our Canada and U.K. businesses cycled particularly difficult volume comparisons from a year ago, which negatively impacted results this year. Input inflation, including fuel, packaging materials and agricultural commodities has driven our 2011 cost of goods per hectoliter forecast in all of our businesses higher than we anticipated just 6 months…

Thanks, Peter. Hello, everyone. In second quarter financial highlights, Worldwide beer volume for Molson Coors declined 2.8%, driven by continued industry volume weakness in Canada, the U.S. and the U.K. Nonetheless, total company net sales increased 5.7% due to foreign currency movements, along with higher pricing and positive sales mix and international growth. Net sales per hectoliter increased 8.9% in the quarter. On the bottom line, underlying after-tax income of $231.6 million or $1.23 per diluted share was 1.2% lower than a year ago, driven by lower sales volumes, higher commodity inflation and investments in our international businesses, largely offset by positive pricing, continued cost reductions and favorable foreign currency movements. It is important to note that our second quarter underlying earnings excludes some special and other noncore gains, losses and expenses, the net to an $11.3 million pretax charge. These adjustments to our U.S. GAAP results are described in detail in the earnings release we distributed this morning. In segment performance highlights, starting with Canada. Underlying pretax income decreased 4.5% to $139.9 million. Increased pricing, MG&A reductions and favorable foreign currency were more than offset by mid-single-digit volume declines and the resulting fixed cost deleverage. These results included $5 million benefit from a 6% year-over-year increase in the Canadian dollar versus the U.S. dollar. Sales-to-retail or STRs declined 4.2% in the second quarter due to continued industry weakness and competitive price discounting in key regions. Our market share declined approximately 3/4 of a point from a year ago, which was partially, driven by a challenging comparison versus the second quarter last year, when we grew market share more than 1.5 points. Net sales per hectoliter increased 2.2% in local currency due equally to continued positive pricing and the addition of North American Breweries contract brewing sales. Cost of goods…

Thank you, Stewart. So by way of regional outlook, in Canada, having now cycled last year's Winter Olympics and several new brand launches, we anticipate easier volume comparisons in the second half of this year. More important, our brand portfolio is the strongest it has been in many years, and we continue to build on this strength. We are investing behind our recent brand expansions, while continuing to drive consumer relevance for Coors Light and Molson Canadian through successful programming, such as our Red Leaf campaign. In the U.S., we continue our keen focus on premium lights, crafts and imports. Execution and distribution continue to be a major focus area for 2011, and we're investing heavily behind our programs, including multicultural outreach. We also remain focused on core brand innovations. Coors Light super cold activation packaging is resonating well with consumers, and we are supporting it with retail programs and national advertising. Miller Lite will continue its taste for positioning with new TV spots placed during prime sports programs. We are driving a strong focus on Hispanic soccer with Miller Lite's sponsorship of the Gold Cup tournament and the Chivas Mexican team sponsorship. We are also driving Craft and Import growth through Tenth and Blake. In Blue Moon and Leinenkugel, we have 2 of the largest and fastest-growing craft beer brands in the U.S. market. Our Leinenkugel Summer Shandy and its summer sample pack are helping to win this summer, and we continue to increase Blue Moon momentum with additional television and a focus on seasonals. In the U.K., our team continues to make substantial progress in improving underlying profitability through the expansion of our brand portfolio and our value ahead of volume strategy. During the second quarter, we grew market share for the third quarter in a row. With…

[Operator Instructions] Your first question comes from Judy Hong from Goldman Sachs.

First, I guess, Canada, I just wanted to get a little bit more perspective as we think about, if you look at 2Q, your volume and market share was down, your costs are coming in higher and your pricing is lagging inflation. So just wondering what gets better in the back half, if any?

All right. Thanks, Judy. It's Dave. So what we saw in Q2 was the continuation of the economic pressures that we felt recently. Certainly, gas prices and competition from other alcohol beverage is putting pressure on. Weather was a factor in Q2 as well. So we see that. Now as you think through the balance of the year on the industry, the only thing I'd point out is that last year, in the first 7 months of the year 2010, we did have 6 months that were essentially flat or up. So we had a strong performance in the first part of the year. In the last 5 months of the year, 4 of the 5 months were down at the industry level. So as Peter said, we're cycling something different going forward than we have seen on a year-to-date basis. On market share, we gave up about half of our gain in Q2 from the 1.5 points that we picked up last year. As I look at the market share result, I actually feel pretty good about it. I look at on a sequential basis, Q2 versus Q1, we actually grew our share marginally. And when I look at our innovation and our core brand programs, they're working well for us. So innovation in the quarter delivered about 3 share points for us. That's on the high end of what we've seen over the last year or so. So feel good there. Canadian trademark share was at last year's level in Q2 and we had strong pricing behind the brand. So we're feeling good there. We've got some new programming out on Canadian, including the Red Leaf program with a positive reaction. And then on Coors Light, our share was off slightly. But Coors Light was really the key beneficiary of that major spike in Q2 of last year. Again, we're seeing good brand equity scores on the brand. Our pricing was strong. So feeling good there. Last year, our market share performed particularly well through the end of August. Once we get into comps from September through to December, it is easier for us. So I just give you that perspective.

Just in terms of -- I mean, I guess the comparisons do get easier, both from a market share perspective and for the industry as a whole. But just in terms of the competitive backdrop and the discounting activity you're seeing, is it your sense that, that would also moderate in the back half and that gives you a little bit more comfort as well?

Well, yes, hard for me to predict what will happen in the back half. What I would say in Q2 is the market was very competitive. We did see a step up in discounting compared to the first quarter. I think small brewers were especially active. Consumers continue to respond obviously to the special offers. But nonetheless, we saw an increase in our NSR per hectoliter in the quarter despite that environment. And as I say, our brands performed where we'd like to see them performing.

Okay. And then Peter and Stewart, just a couple of questions on capital allocation. First, on the share buyback announcement this morning, should we think that this may be an indication that, perhaps, the M&A opportunities might be a little bit more limited at least in the near term? And then Stewart, you talked about the $400 million cost currency swap that's out of money or that expires in 2012 and that's out of money. Can you just help us on how we think about the impact on your cash flow for 2012?

I'll take the first part of that, Judy. I'll let Stewart take the second part. I'd really refer back to the New York conference with the analysts that we had in early March, and I think we laid out pretty clearly that what we wanted was to -- or certainly laid out pretty clearly we wanted flexibility in terms of the cash we'd hold on hand. We're comfortable, we do that. We wanted to make sure that we got a balance sheet in good order and we feel much better about what we've done around pensions and liabilities that we had on our balance sheet a couple of years ago. We did say that we really, when we look at cash, we continue to look at our use of cash to the extent that it can actually drive shareholder value. This is one way of giving value back to shareholders. It's not the only way. We will continue to look for M&A opportunities, but only if they actually drive the shareholder value that we would expect them to drive. So really, our position hasn't changed. And really, I think we flagged pretty clearly in New York what we would do if we didn't have any opportunities on the M&A front. And that's what we're doing. So I think we've been pretty consistent from the announcement and the clarity that we try to give in York and what we've actually done.

Good. Thank you, Peter. Judy, I'd just say I really echo Peter's point there, but this preserves flexibility for us going forward. And we think it's an excellent way to continue to try to drive shareholder value. On the swap itself, I called out in the script that we're looking at a number of alternatives. But I think the most likely scenario is that you'll see this be a combination of some settlement of a portion of the liability and some portion that gets extended. This will basically allow us to take that up over time. It will potentially subject us to movements up or down as in any hedging program, and will allow us to take into account tax considerations as well. Bottom line is it's a period of years, Judy. That's how you should look at that.

Okay. And then the tax rate coming in lower for this year, is there any change to your long-term tax rate at this point?

We continue to expect that our long-term guidance will remain the same at 22% to 26%. We're expecting the benefit of some one-time benefits in the back half of the year that could push our tax rate down.

Our next question comes from Jeff Farmer from Jefferies. Jeffrey Farmer - Jefferies & Company, Inc.: I think several months ago you pointed to a few 100 basis points of additional margin expansion in the MillerCoors segment over the next few years. I realize that's a ways out. But if we just think about this for a second, if the U.S. economic backdrop that we're seeing right now carries deep into 2012, is that number still realistic or in play in your mind?

This is Dave Dunnewald. That's actually SABMiller guidance, and so we'll leave it to them to comment on that. Jeffrey Farmer - Jefferies & Company, Inc.: Okay. Okay. Fair enough. And then just following up real quick on Canada as it relates to you mentioned innovation driving 3 points of growth. Are you willing to sort of talk about the brands that are driving that and the sustainability you think you'll see moving into the back half of '11?

Yes, I mean, the innovation is fairly broad based. In the past 6 months, we've rolled M, Molson M out to Ontario and the West. We've got Molson Canadian 67 Sublime and Miller Chill lemon in the flavored area and Rickard's Blonde, and those are building on top of the Keystone brands. And we've actually got fairly solid performance across the group of new brands. And you were far enough into this now that I'm actually feeling pretty good about the way the brands are performing and the staying power that they're showing. Jeffrey Farmer - Jefferies & Company, Inc.: Okay. And then just quick follow-up on Canada. You talked about this. But just following up on the competitive discounting, realizing that you can't predict what happens on the back half of '11. But was that competitive discounting intensifying as you moved through the 2Q?

It was fairly stable through Q2. And I would say it was a step-up rather than a dramatic shift in the environment that we're seeing. Clearly, there is some response to the volume softness. But I'd characterize it as more of a step-up.

Your next question comes from Mark Swartzberg from Stifel, Nicolaus. Mark Swartzberg - Stifel, Nicolaus & Co., Inc.: I guess, Dave, on Canada, also on a -- probably a little bit more on the price discounting you're seeing. Could you talk a little bit more about the regions where you're seeing the discounting and how you think it affects the outlook for pricing across Canada beyond looking into the second half and into 2012?

Yes, Mark. There's not much regional variation in what we're seeing, which actually is encouraging. I mean, this isn't like something that we saw 3 years ago in Québec where you get a fairly severe situation in a region. So we're seeing that step up across the country as, presumably, people go after volume. And I'm not very alarmed by it. I think given the circumstances with the industry contacts, it's a fairly predictable reaction to that. Mark Swartzberg - Stifel, Nicolaus & Co., Inc.: Great. And are you seeing it both from your major competitor in the lower-end products? Or is it more weighted towards the lower-end products?

No, it's across the portfolios, actually. I mean, as you look at the various brewers across the country, I mean, whether it's mainstream or above premium, you're seeing temporary discounting behavior. In the value segment, the prices tend to be fairly stable. Mark Swartzberg - Stifel, Nicolaus & Co., Inc.: Got it. Great. And then, yes, Peter or Stewart, on the share repo news, for the sake of modeling, any thoughts on how we should put it into our models over the next few years? I guess you're saying some of it is going to come in the second half. Is it reasonable to think ratably? I realize you don't know what deals you're going to do, but can you give us some sense of pace here?

Yes, Mark, I really can't. I mean, what we said is that we're going to do it opportunistically. We've laid out the 3-year period, but it will largely depend on how we think that's going to drive shareholder value. So I'm sorry, but I can't give you more than that.

Your next question comes from John Faucher from JPMorgan. John Faucher - JP Morgan Chase & Co: And just a quick follow-up on Mark's question. I mean, by opportunistically and looking at best way to drive shareholder value, basically, it sounds like you're just saying, look, if the stock is down, then we'll be more aggressive. But it's not going to be sort of an in the market everyday type of thing, correct?

We really don't want to get into the details of exactly how we plan to trade. That's counterproductive. What I will say is, look, we're sitting on $1.2 billion worth of cash. And we continue to generate cash. This is a company that generates a lot of cash. We're going to have the flexibility to do all of the things that we need to do with using a varied pace depending on what the opportunities that present themselves to us. And that's the best way really I can give, bearing in mind also that we'll be paying dividends over that same timeframe. John Faucher - JP Morgan Chase & Co: Got it. Okay. And then a separate question. I think you guys talked about some marketing spending in the U.K. shifting out of the second quarter. And I think we saw a similar thing, and they talked about this on the MillerCoors call in terms of some of the NFL-related spending shifting. So I guess, it seems like the spending shift was most likely budgeted in something planned ahead of time and it doesn't sound like it's a response to continued tough category trend. Is that a fair statement? And as you shift some of that spending into the back half of the year, should we -- can you get a payoff that quickly where maybe that helps drive a little better volume going forward?

So you're absolutely right, they were planned. As far as the U.K. is concerned, we had a major SAP implementation. So really, all of our efforts were placed on making sure that, that went through smoothly. And it seems we had a great job there. So we did plan for most of the activity in the U.K. to be back loaded. You'll get some benefit on the top line from that activity because there are some new product innovation, but obviously, you won't get a bottom line benefit from new products in such a short period of time. For the established brands, such as Carling, then yes, we would expect the impact of the expenditure to be reflected in better performance. On the U.S., it was more a structural thing where we've lost the NFL and we had first half spending on that last year. That's really being translated more to the NHL now on the second half of the year. But again, Tom, you're on the line, if you want to expand on that, please do.

No. I think you covered it precisely. Thank you, Peter.

Your next question comes from James Watson from HSBC.

First question is just back to Canada for a second. Wanted to know about the price gaps versus your competitors, both your primary competitors and the smaller competitors. Just how are they right now compared to historical ranges? And seeing that you guys took up pricing a little bit, if the price gap is getting larger, does this take-away from some of your flexibility to make moves in the market?

Yes, James, we haven't left the price gaps relative to any major competitors change appreciably. So we've remained competitive. Certainly, there has been some increased aggression from smaller brewers that it's difficult to fully keep pace with. But I wouldn't characterize it as a really significant widening of gaps. I mean, we continue to do promotional activity by region, by channel and by pack site that keeps us in the ballpark of competitiveness. We watch the price and volume balance, and then make sure that our brands are able to perform for us. So I think the challenge for us that we need to watch is just that gap relative to some of the smaller players.

And on the international MG&A, you guys talked about an additional spend on MG&A there for the rest of the year. I was just wondering is that behind the brands that you've already bought. And then is that something that we can look to going forward into 2012 that there's just going to be a higher sort of base level of spending to build up these new opportunities internationally?

Jim, this is Kandy. Yes, these are behind the new brands as we mentioned in our release. It's behind our India Cobra acquisition, our cycling of a continued -- of our general JV as well as the Modelo brands that came out as superior [ph] in Japan. So these are ongoing MG&A increases. But I want to emphasize what Peter said in his remarks, which is the net effect of these on the bottom line of the company is not significant because it also comes with increased gross profit.

Just to expand on that a little bit. We're actually very pleased the way the international program is going. Although more opportunities have presented themselves in the short term than we expected, we've been able to take advantage of that. And as we said in the script, it's already contributing 15% of our net sales of revenue growth and we've been pretty clear about what we expect this section or this sector to do for the business going forward. So it's something that is for the future, but we're very pleased with the way with the progress that's being made in that arena.

[Operator Instructions] Your next question comes from Christine Farkas from Bank of America.

Just picking up with the last point, overseas, the Chinese joint venture, can you comment on ultimate CapEx requirements? Are you happy with the way the distribution agreements or the licensing agreement is working out? And would you look further down the road into building facilities?

So trying and hit all of those points, Christine. First of all, let's split the China business up into 2. We've got this, our legacy Coors Light business. That brand continues to do exceptionally well in China. And we're pleased with its continued progress, and it's absolutely right in line with where we expected it to be and it continues to build equity value. So we're very pleased with that. In terms of the JV, it is going slower than we expected. But a lot of that really has have to do with getting certain commissions and certain licenses. We now have those. And we're in a position where we can put in the CapEx that we always planned to put in, which will allow us to get much more flexibility around the Coors Light brand, of course the number of SKUs that we can produce and improve the margins. So from that point of view, slightly behind the timescale we initially envisaged, but everything is going to plan and we're pleased with that. In terms of the future, we've got enough on our plates at the moment with building the Coors Light brand and also trying to get the JV and the CapEx away. So that's what we're really focused on at the moment. But I will always give myself the out, which is if the right opportunity came up in China and it satisfied all our criteria, we would seriously ask it.

Okay, that's helpful. And then moving to price mix across your segments. I don't think I've missed this, but could you help us with respect to the mix contribution within that revenue per hectoliter growth? So Canada was up 2.2% with respect to revenue per hectoliter. I'm wondering what current line pricing looked like relative to mix?

Yes, so on the Canada NSR per hectoliter, it was, about half of that increase was related to our contract brewing arrangement and half was to stronger pricing. And within that, mix didn't play a role.

Okay. And then in the U.K. and the U.S.?

Yes, so from a U.K. perspective, we've now had 18 quarters of our pricing growth and that Q2 of this year, that was principally driven by the addition of Modelo into our portfolio. We saw a continued pricing in the on-premise unit pricing growth in the off, but a little bit of overall price decline in all 3 because of customer mix. But the principal driver of pricing growth was addition of the Modelo brands into the portfolio.

Tom, do you have a number for -- or Tom or Kandy, for the U.S.?

As far as pricing growth and mix is concerned, mix accelerated in the quarter, either to around 80 basis points of that was mix and the balance would be pricing growth. Mix is slightly stronger in the second quarter than it was in the first.

Okay, that's helpful. And then just the last question maybe it's more anecdotal than anything else because you have given us STRs for the first 4 weeks. But given a strong heat wave across much of the Northeast or into Canada, I'm just wondering is that something that actually helps your volumes or hurts it? Are we seeing just many outdoor activities being canceled? Or are you seeing some benefit to people out and just having to be hydrated?

Broad answer is I've got no idea, but there are probably just as many people that want to go out and drink more as there are people who want to stay in and keep cool. So we'll have to see what the numbers turn out like.

[Operator Instructions] Your next question comes from Brett Cooper from Consumer Edge Research.

A quick question on Canada. If innovation is driving 300 basis points of share gain and your share is down 75 basis points, can you elaborate on what brands are the main drivers of the weakness? What you're doing about it? And then on the innovation side, there was a lot of, I guess, regional launches last year and expansion across Canada. So can you talk about how the innovation is performing within the regions in which they were introduced last year?

Yes, let me just be clear on the 3 share points that innovation accounts for. That is not growth year-over-year. That is the total of our new brands, okay. And so what we're seeing is about the 3 share points from innovation, we're seeing the Molson Canadian trademark stable and then Coors Light off slightly as I mentioned before. On a regional basis, we're seeing a solid contribution from innovation across the regions. I wouldn't want to get into the brand level detail by region. But I would say that as we look across our 4 major regions, we're getting a meaningful contribution from innovation in each, and we're seeing similar trends year-on-year in each.

I have no further questions at this time. I turn the call back over to Mr. Swinburn for closing remarks.

Okay, thank you, Michelle. And thank you, everybody for joining us this morning. I really appreciate your interest in the business, and look forward to speaking to you again at the next earnings results. Thank you.

This concludes today's conference call. You may now disconnect.