Peter S. Swinburn - Chief Executive Officer, President and Director Gavin Hattersley - Global Chief Financial Officer and Chief Accounting Officer Stewart F.

Glendinning - Chief Executive Officer Krishnan Anand - Chief Executive Officer of Molson Coors International and President of Molson Coors International David Dunnewald - Vice President of Global Investor Relations Mark Hunter - Chief Executive Officer of Molson Coors Europe and President of Molson Coors Europe

Dara W. Mohsenian - Morgan Stanley, Research Division Bryan D.

Spillane - BofA Merrill Lynch, Research Division Ian Shackleton - Nomura Securities Co. Ltd., Research Division John A.

Faucher - JP Morgan Chase & Co, Research Division Judy E. Hong - Goldman Sachs Group Inc., Research Division Mark D.

Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division Brett Cooper - Consumer Edge Research, LLC Robert E. Ottenstein - ISI Group Inc., Research Division

Thank you, Tracy. Hello, and welcome, everybody, to the Molson Coors Earnings Call, and thank you for joining us today.

With me on the call this morning are Gavin Hattersley, Molson Coors' CFO; Tom Long, CEO of MillerCoors; Stewart Glendinning, CEO of Molson Coors Canada; Mark Hunter, CEO of Molson Coors Europe; Kandy Anand, CEO of Molson Coors International; Sam Walker, Molson Coors' Chief Legal and People Officer; and Dave Dunnewald, Molson Coors' VP of Investor Relations. On the earnings call today, Gavin and I will take you through highlights of our second quarter 2013 results for Molson Coors Brewing Company, along with some perspective on the remainder of 2013.

In the second quarter, Molson Coors delivered double-digit underlying earnings growth and more than 165% growth on a U.S. GAAP basis.

This underlying income growth was driven by earnings accretion from the Central European acquisition that we completed during June last year, along with improved financial performance in our Europe and International businesses and lower quarterly tax rate. We generated strong free cash flow and reduced our net debt by $373 million in the quarter.

We delivered these results despite weaker consumer demand and poor weather across all of our markets. Most of our key brands in core markets gained or held share versus a year ago.

Coors Light achieved mixed results by gaining share of premium lights in the U.S. per ACNielsen and growing strongly in the U.K.

and Mexico, but underperforming the market in Canada. Molson Canadian held share in Canada and got off to a strong start with its national rollout in the Republic of Ireland.

Carling grew share in the U.K. and performed well globally, including in its newest market, Croatia.

Staropramen core brand maintained share in the Czech Republic and grew share strongly across the rest of its markets. Most of our other key brands held or gained market share, including growth for Ozusko, Kamenitza, Blue Moon, Cobra and Doom Bar, which is now the largest on-premise cask ale in the U.K.

despite having no owned public state distribution, which its newest rivals enjoy. Our results also benefited from the introduction of brand and packaging innovations globally and from the strength of our above-premium brands, which gained market share in each of our businesses.

Regionally, in the U.S., we reported solid pricing and strong above-premium sales growth at MillerCoors in the second quarter despite difficult trading conditions. Our strategy to evolve our portfolio to the fast-growing and higher-margin areas of the business is working, as shown by the successful launch of Redd's Apple Ale and the nationwide expansion of Leinenkugel Summer Shandy.

Due to these initiatives, as well as the introduction of Third Shift Amber Lager and continued growth of Blue Moon Belgian White, we have grown our above-premium brand volumes to more than 9% of our portfolio. While we continue to gain share in premium lights in the quarter according to Nielsen data, we are working to restore volume growth.

In Canada, volumes in the quarter were impacted by unfavorable weather conditions across key regions this year, along with cycling the national launch of Coors Light Iced T a year ago. These challenges were partially offset by the introductions of Molson Canadian Wheat, Rickard's Shandy and Molson Canadian Cider.

In Europe, against the backdrop of weak demand and poor weather, we grew share led by strong performances in the U.K., Bulgaria and Croatia. Encouragingly, our share performance in Romania also turned positive in the quarter.

And in addition, we maintained our share in the Czech Republic. Carling, our largest brand in Europe, grew share and our core plus and premium portfolio performed well, with Staropramen core brand, Coors Light, Doom Bar and Cobra all delivering share growth in the quarter.

The integration of our U.K. and Central Europe businesses continues to progress well, and as you would expect, we are delivering the synergies promised from the Central Europe acquisition and the cost reductions from the U.K.

restructuring. As a result, underlying pretax profit in Europe grew significantly.

In International, we achieved strong Coors Light volume growth in Mexico and introduced Blue Moon in Japan, Carling in China and Staropramen selection in Ukraine during the quarter. In summary, although consumer demand continues to be soft, we continue to see opportunities for ongoing cost reductions, and we are generating cash, paying down debt and focusing the business on profit after capital charge.

With that as an overview, I'll turn it over to Gavin to give second quarter highlights and perspective on the balance of 2013. Gavin?

Thank you, Peter, and hello, everybody. Molson Coors' second quarter underlying after-tax earnings increased 11.4% to $278.6 million or $1.51 per share.

This growth was driven by earnings accretion from our Central Europe acquisition and improved financial performance in Europe and International, along with a lower effective tax rate. This lower tax rate was driven by changes in tax legislation in Canada, which decreased our second quarter effective tax rate by approximately 5 percentage points.

Underlying operating income increased 10%, while pretax income grew 5.6% in the quarter. Worldwide beer volume for Molson Coors increased more than 20% due to the addition of Central Europe results.

As we have in previous quarters, I'll provide an overview of our results, with MillerCoors presented as if it were proportionately consolidated. This is a non-GAAP approach, but we believe it provides a useful view of some key performance metrics for our business.

On this basis, total company net sales increased 7.8% in the second quarter, driven by the inclusion of the Central Europe business. Despite pricing growth across all regions, net sales on a per hectoliter basis decreased 7.4% in the quarter due to the addition of Central Europe sales and a lower net sales per hectoliter rate.

Underlying cost of goods sold per hectoliter decreased 7% due to the addition of Central Europe, which has a lower cost structure than our other businesses, partially offset by higher cost of goods sold per hectoliter in Canada and the United States. Total company gross margin was 41.6%, 30 basis points lower than a year ago, primarily due to higher cost of goods sold in Canada and the U.S.

Despite the addition of Central Europe in MG&A this year, underlying marketing, general and administrative expenses increased only 5%. Underlying operating margin was 17.5%, up 30 basis points from a year ago, driven by positive pricing and cost savings globally.

Our underlying earnings before interest, taxes, depreciation and amortization, or EBITDA, reached $473 million in the second quarter, up 12.5% from a year ago. Year-to-date underlying EBITDA grew 9.6% to $690 million.

Based on investor feedback, we are now providing underlying EBITDA results on a quarterly basis as another useful measure of our financial performance. Please see the earnings release we distributed earlier this morning for a detailed review of our business unit financial results in the quarter.

It's also important to note that our second quarter underlying results exclude some special and other non-core gains, losses and expenses that net to a $7.3 million pretax charge. These exclusions from our U.S.

GAAP results primarily relate to the net effect of unrealized foreign exchange and fair value adjustments associated with the EUR 500 million convertible note issued as part of the Central Europe acquisition, along with integration of added costs in Europe and Corporate. These special and other non-core items are described in detail in this morning's earnings release.

Underlying free cash flow for the first half of this year totaled $366 million. This represents an increase of $30 million over last year, driven by improvements in working capital and the addition of Central Europe operating cash flow, partially offset by the addition of Central Europe capital spending.

Our first half 2013 free cash flow was made up of the following factors: $591 million of operating cash flow, which includes $290 million from MillerCoors; plus $25 million of net addbacks, primarily Central Europe-related financing and integration costs; investing cash outflows were $150 million of capital spending and $100 million of cash invested in MillerCoors. Total debt at the end of the second quarter was $4.57 billion, and cash and cash equivalents totaled $802 million, resulting in net debt of $3.77 billion, approximately $373 million lower than 3 months earlier.

Last week, we used some of our cash on hand to pay off $575 million of convertible notes, which we issued in 2007 and mature in July 30 this year. In order to drive returns on capital and total shareholder return, as we discussed in New York in June, we continue to roll out and embed our profit after capital charge, or PACC model, across the company.

Looking forward to the full year for 2013, we are reducing our effective tax rate guidance to a range of 13% to 17%, a 3 percentage-point reduction, primarily as a result of the onetime benefit of tax law changes in Canada in the second quarter. These tax law changes had been under discussion for 10 years and were finally enacted towards the end of June.

Our rate guidance range for the second half of this year is 16% to 20%, assuming no additional tax law changes, settlement of tax orders or adjustments to our uncertain tax positions. We continue to expect our underlying effective tax rate to move towards a range of 20% to 24% over the medium term.

We are adjusting downward our cost of goods sold per hectoliter guidance for our Europe business, which we now anticipate will be down low single-digits for the full year in local currency and for our International business, which we also expect to be down low single-digits for the year. Our full year forward guidance is unchanged from last quarter for the following metrics: underlying free cash flow, which is still $700 million, plus or minus 10%; define benefit pension expense and contributions, which are expected to be approximately $50 million of expense and $150 million of cash contributions including our 42% of MillerCoors; capital spending of about $330 million for the year; Corporate MG&A expense of approximately $105 million, excluding foreign exchange movements; consolidated net interest expense of approximately $170 million; and cost of goods sold per hectoliter for our other 2 businesses, such that the U.S.

outlook continues to be up at a low single-digit rate and Canada is up mid single-digits on a local currency basis. At this point, I'll turn it back over to Peter for regional outlook, wrap-up and the Q&A.

Peter?

Thanks, Gavin. In the U.S., our net revenue per hectoliter growth remained solid, but volume has been challenged.

We will continue to put emphasis on growing the above-premium part of our portfolio while addressing the Premium Light volume declines. In respect of above-premium, we are pleased with the contribution from Redd's Apple Ale on top of that achieved by Leinenkugel Summer Shandy and Blue Moon.

We plan to introduce Redd's Strawberry Ale in the fall. In Canada, the second quarter results benefited from lower marketing sales spending, which we expect to reverse in the second half.

Molson Canadian has performed well on the back of a very well-received Canadian passport creator. And we have some work to do on Coors Light.

Meanwhile, in above-premium, we are expanding the reach of Six Pints and continue to see good growth from the Rickard's brand family. In Europe, despite expected industry softness, we will be increasing our MG&A spending against a strong brand and innovation program.

Carling Cider in the U.K. is now benefiting from heavyweight marketing support.

Carling Zest is growing strongly, and Carling Coolers are being tested by an exclusive launch in Asda-Walmart, building on the success of beer mixes in Central Europe. In Hungary, we have extended our Borsodi brand with the introduction of Borsodi Super Dry.

In the Czech Republic, we are establishing a new non-alcohol category via the launch of Brewers Lemonade. Alongside the innovation agenda, we have also expanded the existing portfolio with the introduction of Carling into Croatia and Molson Canadian into Ireland, both of which are performing well.

Our International business continues to focus on growth behind a solid portfolio of Coors Light, Carling and Staropramen. In the second half of 2013, our International business will include the negative impact of transferring our Carling travel and export businesses to the Europe segment, as well as no longer cycling losses in the China joint venture.

As we stated during our Investor Day in June, we continue to expect our International business to achieve profitability in 2016 while continuing -- or contributing to the top line growth of the overall business. And finally, here are the most recent volume trends for each of our businesses early in the third quarter.

In the U.S. for the 4 weeks ending July 27, STRs increased low single-digits driven by improved Premium Light trends, which were due in part to the timing of the July 4 holiday load-in, which shifted some volume from June to July.

In Canada, our sales-to-retail for the first 4 weeks of the quarter decreased at a low single-digit rate. In Europe, our sales volume increased at a low single-digit rate in the first month of the quarter.

And in the 4 -- first 4 weeks of the quarter, our International sales volume, including royalty volume, decreased at a low double-digit rate. As always, please keep in mind that these numbers represent only a portion of the current quarter and trends could change in the weeks ahead.

To summarize our discussion today, in the second quarter our company delivered double-digit underlying earnings growth driven by earnings accretion from the Central Europe acquisition and improved financial performance in our Europe and International businesses, along with a lower tax rate. We are also generating strong underlying EBITDA and free cash flow, and reduced our net debt by $373 million in the quarter.

We delivered these results despite weak consumer demand across all of our markets. As we discussed 2 months ago during our New York Investor Day, we are focused on the drivers that matter in our business: driving strong core brand performance, leveraging our value-added innovation pipelines, increasing our share of the above-premium market, capturing significant sustainable cost savings and allocating cash by our disciplined tax-centered process that builds long-term shareholder value.

In the remainder of the year, we expect consumer demand to remain weak. Despite this, we plan to increase our marketing investment behind our core brands and innovation in order to drive long-term returns for our shareholders.

Now before we start the Q&A portion of the call, a quick comment. Our prepared remarks will be on our website for your reference within a couple of hours this afternoon.

Also, at 2 p.m. Eastern Time today, Dave Dunnewald will host a follow-up conference call, which is an opportunity for you to ask additional questions regarding our quarterly results.

This call will also be available for you to hear via webcast on our website. So at this point, Tracy, we would like to open it up for questions.

Some more clarity on what drove Canadian volume softness from an industry standpoint in the quarter. I'm assuming weather had an impact, but were there other factors there?

Because I'm surprised the volumes are still so weak in July, with the easy comp there and improved weather. And then also, can you just discuss if there's been any change that you've seen in terms of the level of competitive pressure coming from the value segment?

Yes. So let me just headline it, and Stewart can give you more detail.

I mean, the second quarter last year was a strong quarter in Canada. Volumes were up.

So from that point of view, it was a difficult comp, plus the fact that we did benefit from the launch of Coors Light Iced T, as we highlighted in the second quarter of last year. So we were tracking that as well.

And that certainly had an impact on our second quarter figures. But Stewart, do you want to go into more detail?

Yes, happy to do that, Peter. I mean, look, I think if you looked at the beer industry, June was an appalling month in beer volumes, and broader alcohol was -- other wines and spirits were more or less flat, but beer itself was down across the country, and that was primarily driven by a weakness in weather.

If you just looked at our volumes, we were off for the year, if you look at industry number we use, we're off by about 100,000 hectoliters for the year, about 1/2 of that was Coors Light Iced T. So hopefully, that gives you a little perspective.

Value segment, Stewart?

Sorry?

Value segment.

Yes. So value segment, how did value segment operate for us, value is a place where actually historically we've underperformed.

I'd say, as I looked at the second quarter, I'm pleased to say we grew share of value. Value itself was flat, but our share of the segment grew.

Okay. And also, can you talk about the value segment as a percent of industry volume and if you're seeing any changes there?

And then just on the pricing environment, in general, it was the weakest result we've seen from you guys in a few years. So can you separate out kind of price and mix in terms of the impact on the quarter and how pronounced some of the discounting you're seeing is, and what you're seeing from a promotional standpoint by region?

Sure. So first, on value, because value was close to flat, value did gain share of beer in total, and we gained a share of value.

With respect to NSR, so break it into 2 pieces. On a net price basis, we were positive by almost 1%.

Across the country, we saw a pricing pressure in Atlantic and Québec, primarily very competitive markets, continue to be that -- to see pricing pressure about through the end of the quarter. I can comment on that piece.

What -- I think if you then looked at the remaining impacts, you'll find there were really several impacts. First of all, we saw a loss of premium overall, so there was a segment impact on the market.

The second one was, as mentioned already, we saw stronger value performance at value having lower NSR, so that mix resulted in lower NSR. We saw a shift to some of our larger packs.

And then, of course, we saw lower volumes in Ontario, and the combination of those drove the balance of the NSR negative.

Just a -- I guess a follow-up on Canada, just where do we stand now on trade inventories in the quarter? And because it looked like your sales-to-wholesalers ran a little bit ahead of sales-to-retailers, so is there any residual effect in the second half as we look at shipments?

Well, I think if you looked at -- yes, certainly, I think if you looked at the difference between the volumes that were our fiscal volumes versus our industry volumes, you'll see a bigger spread there. That is primarily related to Ontario, and it relates to the way in which the LCBO accounts for shipments coming from Europe.

So there is a small amount there. I won't speak to the exact volumes.

But as we're modeling out the second half, would we see some lag between what you'll shift versus what the sales-to-retailer will be in Canada?

Again, we won't give any forward guidance on that. But again, I have explained the difference between the fiscal volumes and that adjustment for industry.

And now I just would say, just sorry, just if you go back, just more commentary on that. If you look back over time, you will see historically in our numbers a difference between those.

I just think if you looked at this particular quarter, you will see that the gap is a little bit higher.

Okay. Great.

And Gavin, just on the tax rate, is the cash tax rate for the quarter or for the year going to resemble your P&L tax rate? And I guess, does your free cash flow at all for the year get flattered by the lower tax rate?

Now Bryan, our underlying free cash flow goal that we've got out there of $700 million, plus or minus 10%, is inclusive of any cash tax payments. And we've left that unchanged from our earlier guidance.

This one-off change in the Canadian tax law is essentially a noncash item.

I was very interested in the change guidance on the COGS for Europe and International. I just wonder if you could just give a little bit more description.

Is this low barley cost coming through, or is this something you expect to see in the other divisions as hedging runs out, perhaps going into next year?

I'll pass that on to Gavin here.

Yes, hi, Ian. As you know, there are a number of factors that drive the cost of goods sold.

In these 2 instances, there had been some geographic mix changes by country, as well as brand and pack mix changes. The commodities which we use vary by country as well, and they're not the same in Canada as they are, for example, in Europe.

And you will have seen and know that certain commodity prices have reduced worldwide. This has had a favorable impact on some of our unhedged positions.

Our cost savings program is also on track, and remember that we did say in New York that for the first 2 to 3 years, we would be at the higher end of our $40 million to $60 million guidance. And finally, we have had some positive leverage in some parts of the world, specifically in this case, the U.K.

And just as a follow-up. When we think about that cost going to improve when coming at the high end of the $40 million to $60 million, certainly for this year, does that build as the year goes on, because I'm mindful of this that this is only announced back in June really to us?

I think the way I'd answer that is by guiding you towards our cost of goods sold guidance, which we've got out there, Ian. And to your earlier question, we will be giving guidance on 2014.

We would only be doing that, I think, after the fourth quarter earnings results.

I just want to talk a little bit about the shift in marketing spending timing. And I guess I was wondering how much of this is sort of you guys responding to what's obviously a difficult category and choosing to put money to work at different times of the year?

How much of this -- is there a sales curve accounting impact here in terms of the weaker volumes, particularly given the difficult comp? Just so is -- so we can get an idea in terms of how to model this out, how much is -- you guys being choiceful, for lack of a better word, versus maybe just how some of the volume shipments worked out and the allocations behind that?

Okay. I think simplistically, I mean, we just have a difference in year-over-year timing of spend in the first half, and we expect that to rectify itself.

A lot of this is driven by introduction of brands and what we want to do with our core brands as well. I think the best thing I can do, to be honest with you, is to steer you towards Gavin's guidance on MG&A expense, which he's given.

And so I think that's going to be as good as anything, to be honest with you.

Okay. But that means there's no real response here in terms of the weakness in the category.

It simply is related to programs moving in and out quarter-to-quarter, year-over-year?

Yes, that would be right.

A couple of questions. First, just on Canada pricing.

I just wanted to clarify just how you're thinking about your outlook for pricing. Clearly, the trend that we're seeing in terms of value growing, the premium under pressure is not necessarily a new phenomenon, so just in terms of thinking up rate pricing and the mix impact, does it get better from here?

Or do we really see this as kind of an ongoing revenue per hectoliter trend for the next few quarters?

Yes. So, I mean, Judy, of course, we don't give any guidance on our forward-looking revenue.

But I can just tell you that -- a couple of things. First of all, the growth of value, in our case, again I said value is approximately flat in the market.

In our case, we actually grew share values. That was actually a positive.

We saw a good deal of pressure on premium, and I think premium, just in general in the market, was under pressure. Our premium was also under pressure because of pressure that we saw from Coors Light Iced T.

But beyond that, I can't really give you any prediction for the future other than to say that we're focused pretty acutely on Coors Light, and we'd like to see that brand performing better. I will also say that it is a competitive market.

And if you looked across the country, what hasn't changed is the level of pricing competition across all of the regions.

Okay. So the level of competition is pretty intense that sort of limits the pricing side.

And then within your portfolio, your value is outperforming your premium so that the negative mix impact right now is greater than it's been?

Yes, I won't give you, again, any guidance on going forward what the pricing will look like, but you are right that the mix is an impact and the market is competitive. You can certainly see those by looking at the front line pricing that you've seen in supermarkets.

One of the things we called out in our release was the higher costs related to promotional packaging. And you're seeing a lot more promotions where people are including T-shirts or hats or those kinds of things alongside of the beer that a consumer is buying.

Okay. And then, Gavin, just as we think about the rollout of the pack model, can you help us just understand the phasing of that model within the organization?

And sort of in the near term, what kind of an impact we should be focused on, and to the extent that volume really does come in pretty weak and pricing is pretty competitive, does this allow you to have more flex in your P&L to offset some of the headwinds and your profit growth is protected?

Judy, look, I'm not going to give you any forward guidance on profit. But to answer some of your questions, individually, from a pack rollout point of view, we're obviously starting at the top of the organization and cascading it down.

And this year and then early into next year, I would expect us to be through most of the senior management of the organization, and then we'll take a decision on how we roll that out further throughout the organization. We're nicely on track from that perspective.

Obviously, much of what we said in New York in June are the areas we're focusing on. So I think we've talked a lot about working capital, and obviously, that the focus we have on working capital allows us to get to our debt leverage targets, which we have out there to get back to where we were pre-acquisition within 1 to 3 years.

And we have -- and to tell you about those working capital targets, it focuses on our capital efficiency and how we prioritize our spending from a capital point of view, which projects to go after and which not, and it also impacts on the cost side of our business. So without getting into any forward-looking profit statements, I think that's the best way I can answer your question.

And Judy, I don't know whether it helps or not, but the prime metric that we measure ourselves against as a management team is the PACC metric.

Okay. And that's the Molson Coors consolidated level, including MillerCoors JV?

Correct.

Gavin, on the free cash flow view, I'm wondering if there's any particular items that aren't P&L, or at least not directly on the P&L but are more surely on the cash flow here that are going to be kind of incremental headwinds in the second half? And the reason I ask is you've got a pretty healthy amount of free cash flow in the first half, you tend to be a second half-weighted free cash flow company, and yet you're still saying this plus or minus 10% number on the $700 million.

So it seems like we should be looking on the plus side of the $700 million, but there may be things going on that I'm missing.

Mark, look, I will let you decide which side of the $700 million you get, plus or minus. I would just point to some of the factors which impact our working capital -- not working capital, our free cash flow and which we talked about earlier when we set this guidance, and that was that we do have increased pension contributions, our cash taxes are increasing.

And we, on the positive side, we're making steady improvements in our working capital. We are going to have higher capital expenditure and cash interest this year, primarily as a result of the Central Europe acquisition.

So I'll steer you to the $700 million plus or minus 10%, Mark, and leave you to make the calculation.

All right, fair enough. And then Stewart, a few questions on Canada.

You called out this asset write-down as a component of the COGS increase. Could you give us a little bit more color on what sort of write-down that is and how enduring it might be, or whether we should expect anything like that on a go-forward basis?

Yes, I mean, I would say, look, it's really a couple of items. We wrote down some obsolete equipment, and we also had some write-offs related to aged product.

So I would say the aged product is something that you see year-over-year, and that the write-off of the obsolete equipment is going to be more sporadic.

Got it. And for clarity on this larger subject of the timing of marketing spend, in Canada, is it right to think that the number is it's the $12 million number you called out in the press release showing up in the second half?

Yes. So we didn't say specifically what would show up in the second half.

We did point to the fact that in the first part of the year, $12 million was affected by phasing. Also important to note that in the fourth quarter of last year, we had lower marketing expense as a result of the NHL strike.

So you'll have to make a guess as to where we're going to end up. But I think with those pieces of information, you're well on to do that.

Okay. And then finally, this July, STR number in Canada, I think you said, what, down low single-digits.

Anything we should know either in terms of promotional activity or mix trends or share trends that is different than what we've seen either year-to-date or in the second quarter numbers?

Yes, I mean, Mark, as you know, of course, we don't normally speak to the third quarter. But so I'd just restrict my comments to the second quarter, and I think I've given you those.

A couple of quick questions. You called out in your press release a significant reduction in G&A costs, specifically in Canada.

Is that just part of the cost savings and we should expect that kind of stuff going forward? And then I have a follow-up on the International side.

Okay. So yes, the answer is those are just part of our normal savings programs.

And there was a smaller component of our cost reduction, which is related to lower incentive comp expense. So that obviously could come back in the future.

But no, those are the 2 pieces.

Okay. And then quickly, on the International side, MG&A was down about $10 million.

Is there any way that you guys can give us a little bit more color on sort of the pieces that drove the decline?

Brett, this is Kandy here. Yes, our MG&A was down 39% due to the impairment and deconsolidation of our China JV in 2012.

We did incur lower overhead expenses. In addition, we specifically reduced our marketing investment in low margin non-China JV business to institute a more controlled spending approach in that market.

And finally, we had lower overhead expenses across all markets during the quarter. That's how it added up.

Okay. But it sounds like those should all continue going forward, is that fair?

No, it's not. The China piece, the deconsolidation, we had the benefit in the first half, we won't get the benefit in the second half.

The China reduction in spend of marketing actually started in the fourth quarter of last year, so you would get 1 quarter benefit of that, and the rest you can assume will continue.

Okay. I mean, I don't know if this is asking too much, but is it, I mean, is it roughly 1/3 each of those buckets or...

That's probably asking a bit too much, yes.

I was wondering if you can give us a sense now, roughly looking at the Coors Light brand, what percentage of the volumes are in Canada, U.S. and International now?

And what the global consolidated volumes did for the quarter?

We probably can if you give us a couple of seconds, Rob.

We don't normally talk about split of Coors Light by territory there.

Yes, but this is Dave Dunnewald. The U.S.

is still by far the largest market for Coors Light. It's the second largest beer and the second largest beer market in the world.

It's the largest beer in Canada, but that's a much smaller market in total volume. Population of Canada is only about 1/10 of the U.S.

So Coors Light, while a very big brand in Canada is not as -- the total volume there is not as big as in the U.S. And then in the U.K, I would say, or in Europe more broadly, but specifically primarily in the U.K., Coors Light is growing very quickly off of a very small base.

Okay. Well, maybe we can follow-up offline.

Can you give us a sense in terms of Europe, to the degree you have it, which countries you gained share? And maybe a little bit more detail country by country in terms of share and volume performance?

I think in the script, we outlined in those countries where we saw the gain share. But Mark, do you want to just go over that again?

Sure. So I won't talk to volume by country, but certainly from a share perspective, we saw share growth through the second quarter in the U.K., Bulgaria, Croatia and very encouragingly, in Romania.

And we held our share in the Czech Republic despite what was a pretty material flooding incident that took place in June in Prague itself. So basically, our bigger markets were -- performed strongly from a share perspective.

I think the interesting thing that we're seeing from a volume point of view is a particular volatility. So if you look at the first quarter in Europe, industry volumes were down about 0.5%.

In the second quarter, they were down almost 6%. That's an industry level based on Nielsen data, and that's despite April and May being pretty strong, so June itself was very soft.

And within that, we're seeing some pretty significant volatility. A lot were driven by weather patterns.

So we are having to obviously make pretty short-term decisions to invest relative to some of the volume volatility that we're seeing. But I think we're managing that very effectively, and the share numbers speak for themselves.

Great. And then just one last question.

I think you hinted at it but just so I'm absolutely clear, what is your expectation for the cash tax rate for this year?

I'm not sure we give out that level of specificity from a cash tax rate point of view. As I said, Robert, it is built into our $700 million plus or minus 10% full year underlying free cash flow guidance.

The only thing that we've said in the past, Robert, is that our cash tax rate, while we're not giving a forecast for a particular year, if you look at it historically, it has been, in recent years, a bit lower than our booked tax rate. And we've said in the past that we expect over time that the cash tax rate will migrate in the direction of or toward the book tax rate.

Stewart, I have a question about just your merchandising plans around the NHL for this upcoming season. First, if you could just describe, I guess, now as you kind of merchandise into the second half of the year and against the straight period last year, is there anything that you're doing differently this year, or that's different than a normal year, just because you've got this anticipation of the season started -- starting versus the strike last year?

And then also, just as you look out merchandising into the NHL for the entire year, is there -- just how does the -- how do the Olympics affect that merchandising? Is there -- are you still sort of marketing against or merchandising against the Olympics while it's going on?

Or is there sort of a window of time there during the season where it's relatively dark?

Yes. So first of all, you'll see a big change in the fourth quarter relative to last year because we just picked up the sponsorship of the NHL last year, but really didn't have anything to activate again since the teams are not playing.

So fundamentally, all of the things that you would normally expect with a premier sponsorship like the NHL, you will see activated in the fourth quarter of this year. Relative to the Olympics, we're still developing some of the plans around the Olympics but we are sponsoring the Canadian Olympic team.

And we expect that the Olympics activities actually will be very complementary to our NHL sponsorship because obviously, they will both be focused on hockey.

Kandy or Peter, now that we don't have the year-on-year noise from China, it sounds like International is not performing to plan. So a, is that accurate, b, what's really going on there, and how -- if we take out the structural noise and look at the trends we're seeing presently in the month of July versus first half, can you give us some flavor about what that sequential trend is?

So I guess my first reaction would be no, it's not accurate, Mark. As far as we're concerned, the International business is smack on plan.

And as I've reiterated in the script, we're absolutely in line with making this business profitable in 2016. So in -- from that point of view, absolutely, yes.

I'll let Kandy speak to some of the trends because some of the volume that we expect, it has been impacted specifically in India because of rain and so on. But Kandy, do you want to take the detail?

Sure. So Mark, as far as the volume is concerned, you saw the large volume growth during this quarter, but that's partly because of the comparison changes we had on the China JV, the inclusion of our Staropramen exports.

As we look at the -- our results as far as the first 4 weeks are concerned, they are negatively impacted by the transfer of the Carling travel and export business to the Europe segment, as well as the fact that we are not selling in our China JV. And these 4 weeks were the last period we sold volume in 2012.

Without these negative impacts, our volume for the last 4 weeks would be up low single-digits. This is despite the weather effects and the business effects in markets like India, which have had unprecedented rain and floods.

Got it. So on an x structural change, the business continues to grow?

That's correct.

That's correct, Mark.

Thank you, Tracy, and thank you, everybody, for joining us today. We look forward to speaking to you again at the end of our third quarter.

Thank you.