Welcome to the Molson Coors Brewing Company Fourth Quarter 2013 Earnings Follow-Up Session Conference Call. Before we begin, I will 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 it in 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 measurements 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, and click the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in the U.S. dollars. The company also encourages investors to read SAB Miller plc news releases and trading statements that include financial and other information relating to its MillerCoors joint venture. I will now turn our call over to Dave Dunnewald, Global Vice President of Investor Relations for Molson Coors.

Thanks, Ryan. I really appreciate it. Hello, and welcome, everybody. On behalf of Molson Coors Brewing Company, thank you for joining us today for our fourth quarter 2013 follow-up earnings conference call. Our goal on this call is to address as many additional earnings-related questions as possible, following our regular earnings conference call, with Peter Swinburn and Gavin Hattersley and our business unit CEOs earlier today. We will use a standard question-and-answer format and we anticipate that the call will last less than an hour. So let's get started with an introduction of the team with me on the call. We have Kevin Kim, Investor Relations Manager; Spencer Schurr, Finance Forecasting Manager; Katie Walter, Senior Analyst of Forecasting; Jason Charpentier, Treasury Director; Brian Tabolt, Senior Director of Technical Accounting and SEC Reporting; and Mark Saks, VP of Tax. As Peter Swinburn mentioned at our regular earnings call earlier today, in the fourth quarter, Molson Coors increased underlying pretax earnings 6.5%, expanded pretax margins and generated substantial underlying EBITDA and free cash flow. Underlying after-tax income declined less than 1% due to a higher tax rate in the quarter. For full year 2013, we grew underlying after-tax earnings and EBITDA and exceeded our targets for cost savings, cash generation and debt reduction. The funded status of our pension plans improved by $448 million, including our portion of MillerCoors, and we paid down $114 million of cross-currency net liabilities. Regionally, our U.S. business improved results, especially late in the year; Europe performed well in a difficult environment; Canada struggled; and international made significant progress toward its goal of profitability in 2016. Particular challenges included Miller Lite in the U.S. and Coors Light in Canada, along with commercial performance in Serbia. Nonetheless, our focus on building our core brands, growing the above-premium segment…

[Operator Instructions] Your first question comes from the line of Ian Shackleton from Nomura.

A couple of questions. Going back to the Tradeteam arrangement that disappeared, the commentary was that will lead to best commercial terms. Is it going to be long-term margin benefit in terms of logistic costs coming down from the previous levels you have in Europe?

Yes. That's a good question, Ian. Really one of the primary drivers that -- for -- essentially changing our situation with distribution with Tradeteam in the U.K. was, essentially, to improve the rates and therefore the improving ongoing economics of the situation for us. Spencer did allude to that earlier, we do expect better rates.

Yes. So, I mean, for FY '14, there will be some benefit coming through in Europe and the U.K. from that.

The anticipation is for ongoing benefits, that's correct.

And just going on to the Miller brand situation in -- this Miller brand situation in Canada, $80 million write off, and I think, last December you had about $70 million on the balance sheet, which mathematically is about, the sort of 25%. Simple view, is that saying you think that there's 75% chance of keeping the contract?

Fair question. I would say no, it's not a, I call it, a direct indication of what we think the probabilities of keeping or not keeping the contract. Really, the asset value on our books is driven by a range of probability-weighted scenarios. Then when we take those in total, we've cited that there was appropriate value of that tangible asset downward.

Okay. Okay. So I mean the accounting value shifted a little bit in the last year, but you've had to -- you've written off $18 million what is probably a little bit less than $70 million as the starting point. Is that right?

I'm sorry, say that again, Ian?

I said the $70 million was from the December 2012 balance sheet. And obviously, we would've expected it would moderate slightly through the year. So it will be a slightly low number anyway at December 30, even if you did not have the write off.

Yes. Okay. So, actually, Brian has got a more specific number on that one. Do you want to share that with them?

Yes. So the amortization expense is approximately $10 million per annum. So the balance prior to the impairment would have been circa $1 million.

Great. And final question for me, just thinking about the free cash flow guidance that has been lower than '13. Is it another factor the fact you're going to have more cash restructuring costs this year, particularly in Canada? Is that something that's probably the reconciliation there?

So when we look at our, essentially, forecast and, therefore, target for free cash flow for the year, there are a lot of factors that go into that. And yes, I guess, to the extent that there's cash used for restructuring and that will be part of it. However, keep in mind that in 2013, we had some substantial restructuring going on in various parts of the business. So I would not call that a major driver of the change and the difference between 2013 and 2012. And also one other point, the actual restructuring costs are excluded from our underlying free cash flow calculation. I guess that's your main answer right there.

So the main -- just coming back to the sort of main reconciliation to -- cash flow will be effectively targeted to almost 200 million light. I mean it's mainly the working capital as a swing factor here.

Yes, that is the biggest single factor. We do have a bit of a CapEx increase in Canada, which we talked about on the earlier call. So -- but, yes, primarily it's related to working capital.

Your next question comes from the line of Brett Cooper from Consumer Edge Research.

Earlier in the year, I think you guys gave guidance that marketing spend will be up $30 million or more than $30 million in the year. Can you give us a number of what that was?

We might be able to give you a little bit of guidance around that. Let's see, that was on a full year basis. As we roll through the year, let's just say that our marketing and sales spending was roughly in line with our expectations.

Okay. And I assume there's no way I can get one -- or your expectations for '14?

Not at this point, no. You know our philosophy, right? I mean, we intend to invest behind our brands, innovation above premium and core brands are the primary focus. And we have a bias to invest when we have good ideas and good opportunities to drive those brands. So we've generally had, not only a strong level of investment, but generally, unless there's a -- there was a, how do you say it, something duplicative. For example, if you put 2 businesses together, something like that. Or there are other situations where there may be a way to cut marketing and sales spending and still maintain the impact. With the exception of those situations, generally, we've had similar or moderately increasing marketing and sales spend over a longer period of time.

Okay. Is there any way that you could give us the pension expense breakout by region, just for modeling purposes? I know you gave the overall number today, I was just trying to put that through your regions.

Let's see, there will be more of that information in the 10-K, if I recall correctly.

We don't have it by region.

Oh, yes. Okay, Brian is correcting me, we don't have it by region in the K. We've -- but you do have visibility or you will have visibility when we file it over the next -- in the next few days. That's the anticipated filing time. A visibility to MillerCoors and then the pensions -- the rest of the company essentially.

Yes, I'm sorry. But were the numbers that were given out today, were those inclusive or exclusive of MillerCoors?

Those are including MillerCoors.

42% of MillerCoors or all of it?

42%.

Okay. Last question for me is just, would you be willing to give us a breakdown of savings either in '13 or, ideally, expectation '14, between cost of goods sold and SG&A?

Yes. So what I'd tell you is that the savings in 2013 lean toward MG&A. And we expect that as we move further into some of the cost savings initiatives that we have going on, those will migrate so that they lean a bit more toward COGS in the future, over the coming years, so to speak. And by the way, the cost savings will also tend to migrate toward Canada this year, relative to last year when they were more heavily centered in the U.K.

[Operator Instructions] Your next question comes from the line of Michael Luddy from Goldman Sachs.

Just on the calendar shift impact that we saw this quarter, are there any other quarters that you would want to call out for 2014 that are impacted by that?

No, that's the big one. Brian is saying he's not aware of any other significant ones. You have minor shift because the days don't line up exactly or whatever. But the number of days should be essentially consistent through the year. And now, at the end of 2014, we will have a period that's slightly -- 3 days shorter than the fourth quarter of 2013. So that will be a comparison challenge, I guess. So that's the main issue to be aware of.

Got it. And then on Europe, can you just give a little bit more color on, I guess, both the top line and the rest of that business? I guess which are you -- I guess the market was down about 3% on volume this year, are you still thinking that it's going to be a down market, broadly, for you in 2014? Is there any major variance in pricing outlook by region? And then also, I just want to get a little bit more color on why COGS per hectoliter are going down.

Yes. Okay, so a few questions there. On Europe outlook volume or, call it, performance of the market, no, I'm not going to provide a crystal ball on that one. As you know, the eurozone has been very challenged, particularly over the last 2 years. What I can say is that our business, within the context of that very difficult situation, has actually performed relatively well. I mean, you can see that show up in the share numbers and the profit numbers and the pricing numbers and so on. So pricing actually has been -- has held up despite the difficult situation there. You've seen some negative mix in Europe, and that is driven mostly by -- I mean a little bit of channel mix going on there. But, primarily, it's more geographic as in when our sales tend to -- the total sales mix by country, if it increases in places where the revenue per hectoliter, for example, is not as favorable, then you will see a negative mix impact on the NSR line. However, one other effect of that, aside from just tight cost control, is the cost of goods also has -- can have an advantage there, too. Because in the markets where NSR is lower, in some cases, the cost of goods are also lower. And for some pack types, the same thing could be said. It's lower NSR, but it's also lower COGS in a particular market or in a particular channel, the same -- you can get the same effect.

Got it. And then could you just remind me one more time on your leverage target, is it on debt to EBITDA or net debt to EBITDA?

It is underlying -- oh, sorry. Leverage target. Yes. Well, we have to look at a number of different targets when we talk about leverage. The 2 that we generally talked about are the most conservative one, which is the S&P kind of leverage ratio. And that would include lots of liabilities beyond debt. And there we've talked about getting that ratio in the range of bellow 3x adjusted EBITDA, as S&P called it. And then from -- but actually, the most commonly used metric is net debt, which you referred to. And that one we're getting in the range of just south of 2 -- 2x underlying EBITDA. That's the goal on that one. And they kind of move in tandem, if you know what I mean, because they have different denominators and different numerators.

We have no further questions in queue.

Okay. Great. Well, thank you. Okay. Thanks, Ryan. In closing, we'd like to thank all of you for your interest in Molson Coors and for joining us today. If you have additional questions that we did not cover during our time this afternoon, please call Kevin Kim or me on our direct lines or at the main number here at Molson Coors, which is (303) 927-BEER or 927-2337. Thank you again, and have a great day.