Molson Coors Beverage Company
Q3 2008 Earnings Call Transcript

Published: 5 Nov 2008

[Operator:]

Good day, ladies and gentlemen, and welcome to the Molson Coors Brewing Company 2008 third quarter earnings conference call. At this time all lines are in a listen-only mode. Later we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touch-tone telephone. 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. Please refer to its most recent 10k, 10q and proxy 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. Regarding any non-US GAAP measures that may be discussed during the call, please visit the company’s website www.molsoncoors.com for a reconciliation of these measures to the nearest US GAAP results. I would now like to turn the conference over to your host, Mr. Peter Swinburn, President and Chief Executive Officer of Molson Coors Brewing Company. Sir, you may begin.

[Peter Swinburn:]

Thanks very much. Welcome to everybody and thanks very much for joining us today. With me on the call are Stewart Lindening, the Molson Coors’ CFO, Leo Kiley, CEO of Miller Coors, Gavin Hattersley, CFO of Miller Coors, Kevin Boyce, CEO of Molson Canada, Mark Hunter, CEO of Coors Brewers Limited, Sam Walker, Molson Coors’ Chief Legal Officer, Bill Waters, Molson Coors’ Comptroller, and Dave Dunnewald, Molson Coors’ Vice President of Investor Relations. On the call today Stewart and I will take you through some highlights of our third quarter 2008 results for Molson Coors Brewing Company along with some perspective on the balance of the year. As part of this review we will share our first financial results for Miller Coors. Then we’ll open it up for questions. Before we discuss our specific financial performance, I want to share a few highlights related to our third quarter performance. First, with the current state of the global economy and financial markets Molson Coors is in an enviable position. We have a brand-led company with a solid track record of building great beer brands in all of our major markets. We are a solid cash-generating business with no significant debt maturing before 2010. Our balance sheet is strong after paying down substantial debt during the past several years. We have a track record of delivering cost savings on or ahead of our commitments. We are more than half way through our $250 million resource [unclear] growth initiative, and Miller Coors is off to a great start on its $500 million synergies program. Second, the Miller Coors integration is progressing well with the first-quarter of combined financial results coming in ahead of expectations and more than 28% growth in underlying earnings versus the pro forma results a year ago. Miller Coors announced today that it is accelerating its three-year synergy savings targets by six months versus the original commitment when the venture was announced more than a year ago. The third point I’d like to make is that our Canada business is performing well. Competitive price discounting in Quebec, along with continued steep commodity inflation, however, held back our Canada profit performance in the quarter. As always, we remain focused on long-term brand building, but in the short term we have had to take actions to protect our share. Fourth, the UK businesses grew market share and net sales [unclear] on the strength of our brands despite facing a daunting array of industry challenges. This team also successfully implemented an interim price increase at the end of September. Finally, during the third quarter we accumulated an approximate 5% economic exposure to Foster’s via a cash-settled totally tuned swap undertaken with Deutsche Bank as our swap counter-party. We recorded this swap in our financial statements for the third quarter, including a market-to-market gain of $13.6 million in our corporate other income. This is an interesting market that we’ve been studying for some time, and we view this as an attractive opportunity. Foster’s operates in a profitable market. The exposure was available to us at an attractive price, and it represents a prudent and appropriate level of exposure with low carrying costs and plenty of flexibility. At this point I’ll turn it over to Stewart to review the third quarter financial results and trends, and then we’ll cover the outlook for the fourth quarter of 2008.

[Stewart Lindening:]

Thanks, Peter, and hello everyone. I’ll start with the third quarter financial highlights. Our underlying pre-tax income increased 4.4% driven by the strength of our brands and cost reductions. On the bottom line, underlying after-tax income of $175.8 million, or 95 cents per diluted share, was 1.5% higher than the third quarter a year ago. We will discuss our earnings performance today primarily in terms of underlying income, a common performance measure that excludes special and other one-time items from our US GAAP results. Also unless otherwise indicated, all financial results we share with you today will be in US dollars. It’s important to note that our third quarter underlying earnings excludes some one-time gains and expenses, particularly related to the formation of Miller Coors and the Foster’s swap position, as well as $24.8 million of net special charges. These adjustments to our US GAAP results are described in detail in the earnings release we distributed this morning. Foreign exchange movements decreased our total company pre-tax profit by approximately $3 million in the third quarter on an underlying basis driven by a 7% year-over-year depreciation of the British pound versus the US dollar. In segment performance highlights, starting with Canada, underlying pre-tax income of $151 million in the third quarter was 8.1% lower than a year ago. This profit decline was driven by three factors

[Peter Swinburn:]

Thanks. In 2008, we remain focused on building strong brands, reducing costs to meet our businesses, and generating cash. In Canada, as with our other global markets, we have a consistent track record and advise in and grow our brands. Recent price increases across the Canadian provinces were expected to offset some of the price discounting activity we have been experiencing. Across all of our markets, we will remain competitive, while growing our strategic brands over the long term, and we are well-positioned across all brand segments, with at least one strategic brand achieving double digit growth in each category. In the US, Miller Coors began its brewing optimization project to shift volume and brew both Miller and Coors products round its expanded network of eight major breweries. The projects will be phased in over the next 18 months. In the US, Miller Coors began its brewing optimization project to shift volume and brew both Miller and Coors products round its expanded network of eight major breweries. The projects will be phased in over the next 18 months. These moves will reduce shipping distances and deliver products to market quicker which will generate substantial savings. The company continues to integrate its information systems to enable robust data sharing and analysis within the commercial enterprising to further improve efficiencies. The Miller Coors’ employee selection process is nearly in completion and the full sales organization selection process will be complete by November. Finally, the demand creation team is engaged in a complete review of the brand portfolio. With a goal of sharpening the positioning and focus behind every major US brand, with the first results due with the Miller Coors distributer convention in March. In the UK, we anticipate a challenging trading environment to continue in the balance of the EURO due to the weakening UK economy. We do however; expect our UK business to continue to benefit from the Magnus-Cider agreement, recent supplier renegotiations and our contract brewing arrangement. Moreover, we are committed to the pricing growth to at least cover the substantial cost of inflation we are seeing. Consequently, we implemented an additional price increase earlier this fall. Our following are the most recent volume results for each of our businesses early in the third quarter. In Canada, our comparable sales to retails in October were virtually unchanged versus a year ago. In the first five weeks of the fourth quarter, our UK sales to retail have decreased at a low double digit rate, driven by the retail load in ahead of our late September price increase. Excluding the effect of this inventory load, our FTRs in the first five weeks decreased at a mid-single digit rate from a year ago. Regarding cost reductions, we are on track to meet or exceed our goals in 2008. Looking at the cost outlook by business, in Canada, we anticipate that our reported cost of goods per barrel in local currency will increase at a mid-single digit rate on both a reported and a comparable basis for full year 2008. Comparable 2008 costs of goods in Canada, excludes the impact of the new Modelar Molson joint venture accounting, the loss of the Foster’s US contract, an $8 million full year benefit of cycling between 2007 foreign currency adjustments and the impact of export sales to Miller Coors. Our UK team is targeting substantial sales savings as part of the resources for growth program driven by head-count reductions, supplier negotiations, and improvements in supply chain efficiencies. We are also reviewing opportunities to further reduce overhead costs. We continue to expect full year 2008 UK cost of goods per barrel to increase at a mid-single digit rate in local currency. To summarize our results in discussion today, we are really pleased with the overall position and direction of Molson Coors, especially in the current economic and global environment. Our businesses are performing well within the context of their market challenges. In particular, Molson Coors is off to a great start toward becoming an even stronger and more competitive business in the US. Clearly, we are hopeful that recent moderation and key global commodity prices is sustainable, a change that over time could help to offset the recent and favorable impact of foreign exchange movements. Regardless of the volatility of the global and financial markets and commodities, the fundamental of our business remains strong, and we are very excited about the future of Molson Coors Brewing and Co. Now, before we start the Q and A portion of the call, a quick comment. Our preparatory remarks will be on our Web site for your reference in a couple of hours this afternoon. Also at 3 p.m. Eastern Time today, our Investor Relation Team, lead by Dave Dunnewald, will host a follow up conference call, essentially a working session for analysts and investors who have additional questions regarding our quarterly results. That will also be available for you to hear by webcast and recorded replay on our Web site. So at this point, Matt, we’d like to open it up for questions, please.

[Operator:]

Thank you. Ladies and gentlemen, if you’d like to ask a question at this time, please press the one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from Camille Gaduaralla from UBS.

[Camille Gaduaralla:]

Hi, thank you. Could you give us a little more detail on the Vancouver Brewery, how your progress is, and when you expect it to be 100% up and running. Then, what type of savings can we see coming out of that?

[Peter Swinburn:]

It’s up and running now. We’re running the line in and the line is fully installed, and the savings are primarily going to be in the area - in the short term, at least - of reduced transportation from our Toronto Brewery. So you should begin seeing that very soon.

[Camille Gaduaralla:]

So you’ve got about a 2% minimal cost in the third quarter, but that’s something that we probably shouldn’t worry about right?

[Peter Swinburn:]

Two percent. You may see a little bit of it in the fourth quarter, and not all of that is directly attributable to Vancouver, because obviously fuel has gone up, but you will see some reduction, yes.

[Camille Gaduaralla:]

OK, thank you.

[Operator:]

Thank you. Our next question comes from Judy Hong with Goldman Sachs.

[Judy Hong:]

Thank you. Kevin, I’m hoping to get a bit more color in terms of your cost profit performance in Canada in the quarter. If you can quantify how much of the decline was really won off the items versus the heightened level of discounting that you’ve mentioned? And can you just talk about what’s really driving the higher discounting activity in the third quarter and it sounds like you talked about the fourth quarter trends being a bit of a moderation from a discounting activity perspective. So if you could just go through that in more details I’d appreciate it.

[Kevin Boyce:]

OK, Judy, let’s start with one-time versus ongoing. The numbers that we’ve quoted are all our ongoing business. We’ve eliminated the one-time. So then if you focus in on the various markets, I’d say in the short term there have been price increases in both Quebec, Ontario and Alberta as well, earlier in September. That will begin - we’re seeing in Ontario not just the price increase of the premium brands, but we have seen over the last six weeks movement up on the products that are the value brands, which is encouraging. And that continues today. So we’re very encouraged by that. I’d say Quebec - although pricing has been taken certainly to date in this quarter - it remains pretty competitive in that market, and if you go back in time this is really - it happens from time to time in our market place where certain markets get overheated and it usually works its way through in a period of time, but this summer was, starting in the second quarter but really into the summer was a particularly aggressive time amongst all competitors in the marketplace.

[Judy Hong:]

Just to clarify, Kevin, you sensed that none of the items were one-time, but some of the items that impacted last year were like the House of Blues equity earnings and the Foster’s earnings being included in the last year’s. How much of that really rules the 8% decline in the Canadian profit in the quarter?

[Kevin Boyce:]

Sorry, I was really referring to the cost inflation and the discounting. There were a couple of items but they were - without giving you the specifics - they were fairly minor in the overall scheme of things. The major items were the price discounting and the inflation.

[Judy Hong:]

OK, and then Peter, The 5% equity exposure that you have on Foster’s

[Peter Swinburn:]

Thanks, Judy. The two issues aren’t really related. We’ve used a pretty efficient vehicle in terms of actually going to our 5%. We’re not using cash in regards to our prudent sort of exposure, which is pretty limited. We just think the 5% represents a sensible position given our covenant to our banner sheet. In regards to how we use our cash in terms of buying back shares

[Judy Hong:]

OK, thank you.

[Operator:]

Thank you. Our next question comes from Christine Farkas of Merrill Lynch.

[Christine Farkas:]

Thank you very much. A couple of follow ups if I could. Kevin, first on Canada, you talked about early fourth quarter STRs being unchanged, so that’s a deceleration. Do you think that’s on the back of stronger pricing in Ontario and perhaps Quebec, or are you seeing maybe some trade down impact, either away from or towards other categories? What are you seeing there in the early part of the quarter?

[Kevin Boyce:]

I’d say from an industry perspective, the 3.1 was a pretty heated industry and reflected a couple things. It reflected in Quebec a bit of an inventory build, to be honest, and it also reflected early in the quarter. You may recall last quarter I spoke about the timing of the Canada Day holiday, so adjusting for that I think it’s really the third quarter that’s a little bit inflated rather than the fourth quarter. I characterize October as okay, not bad, not great, but in an industry where historically we’ve been at about 1% growth, flat for us is probably a pretty good performance given all the circumstances in the marketplace right now.

[Christine Farkas:]

Did you give us an indication of how much currency impacted the Canadian results this quarter?

[Kevin Boyce:]

No, we didn’t, but it was virtually negligible.

[Christine Farkas:]

Okay, great. Looking at the segment of the US or other, there was about 98,000 barrels sold under US title. Is that a timing issue? Is that Puerto Rico? What is that number, and are we going to see something like that going forward?

[Kevin Boyce:]

Is that question directed at me, Christine?

[Christine Farkas:]

No, Kevin, just in general on your statements or on the Molson Coors statement. I realize that the US numbers are pulled through the equity income, but there is now a small segment of other - what is that number?

[Kevin Boyce:]

Well, we had one day of earnings prior to the commencement of the JV. The JV essentially commenced one day into this quarter, so that $4 million represents the profit for that particular day.

[Christine Farkas:]

Okay. You didn’t talk about early fourth quarter STRs for the US business. Is that something you can cover on this call?

[Leo Kiley:]

This is Leo. There’s a lot of noise in our October numbers. We do have October numbers there that were up marginally on sales to retail, but it really has more to do with pricing and buy-ins ahead of pricing market-to-market. I think the trend changed and, as you know, one month doesn’t make a quarter.

[Christine Farkas:]

No, it doesn’t. Okay, that’s helpful. Thanks so much.

[Operator:]

Thank you. Our next question comes from Mark Swartzberg from Stifel Nicolaus.

[Mark Swartzberg:]

Thanks. Kevin, I have a couple of questions relating to Canada. I’m trying to put the picture together, looking out beyond the next quarter. You’re seeing cross margins start to decline. You’re saying that pricing is picking up but the volume leverage is slowing down a bit, so is there any reason not to think gross margin will continue to be down year-on-year over the next few quarters given the relationship between price and the cost pressures? That’s a local currency question. Then I have another question when we bring that back into US dollars.

[Kevin Boyce:]

There are a number of things you’ve referred to. First, I think when you reflect on the third quarter it’s been a really strong volume quarter with some cost inflation issues. As you look at commodity prices there was a lag as commodity prices went up, and there will be a lag as commodity prices are coming down. There are a number of other factors in there. We’re very hopeful that this trend will continue and that we’ll benefit from that. That’s the first comment. I think in the very short term the question about volume and things is reflected in the first month of this quarter. As I said to Christine, there is some loading in Quebec on the price increase that I mentioned. That will work its way through, so I wouldn’t assume it’s necessarily going to be a flat quarter. We’re hopeful that it will be what it’s historically been at about 1%. Going forward, cogs in local currency will be our challenge in order to get to flat, but there’s some work ahead of us in order to be able to deliver on that. It’s a challenge we are taking on.

[Mark Swartzberg:]

Is that something you think you can achieve? You say it’s a challenge, but is that something you’re targeting in 2009 or is it going to take longer than that?

[Kevin Boyce:]

Some of it will depend on what’s going to happen in commodities, to be honest, because in the past, if you just look in this quarter 7% would be very hard to offset. It depends on how much that moderates.

[Mark Swartzberg:]

Okay, There is obviously an issue with the way the Canadian dollar has performed over the last month or so. I have two questions in that regard. If we assume, for illustration purposes, that your currency neutral profits are flat next year, operating income flat, what is structurally there? Let’s say for illustration the Canadian dollar is down 15% year-on-year versus the US dollar next year on average, what is structurally in place to cause that scenario to not produce a 15% US dollar profit decline? Have you done anything hedgewise that might add to any structural protections you have? That’s a translation to US dollar profit question. I’m going to turn that over to Stewart, if that’s okay with you.

[Stewart Lindening:]

Yeah, let me address this. As we’ve covered in previous quarters, we really don’t get into the details or the specifics of our hedging. I can point, however, to the fact that there is an important moderating factor which is the fact that we have a substantial amount of our long-term debt denominated in Canadian dollars. That presents a natural hedge for us.

[Mark Swartzberg:]

That’s nice, but is there anything on top of that? Relative to the size of the operating income the interest expense is relatively small.

[Stewart Lindening:]

I can’t really give you guys any more details than that. I’m sorry.

[Mark Swartzberg:]

Okay, thank you.

[Operator:]

Our next question comes from Bryan Spillane with Banc of America.

[Bryan Spillane:]

Good morning. Peter, I just wanted to get back on Judy’s question relative to the Foster’s swap. If I understand the logic behind buying the instrument, it’s basically making an assumption that the Foster’s stock price is going to go up, so the question is why would Molson Coors be making that assumption? What other step is there that might be involved strategically beyond just taking a flier on the Foster’s shares?

[Peter Swinburn:]

There are two points that are really important. Why have we got this? I think that’s pretty straightforward as far as we’re concerned. The Australian market has been interesting to us. We’ve studied it for quite awhile. Foster’s is interesting. We had the opportunity to get into an economic exposure at an entry price that, to us, was very attractive. We didn’t want to put the business in a position where we had an over-exposure. We haven’t done that. What we’ve done, I think, is pretty prudent and sensible within that context. That’s the background.

[Bryan Spillane:]

So it’s fair to think that there is a strategic reason to do this.

[Peter Swinburn:]

Yeah, I don’t want to misrepresent the Foster’s management, but I think they said that they were in a very fluid situation. We’ll continue to review our position, and whatever we do we’ll do in the best interest of our shareholders. I would caution that we could take the view that we could stay where we are, we could move forward, or we might move backward and out. Whatever we do will be in the best interest of our shareholders.

[Bryan Spillane:]

Okay. Just to be clear, right now there’s been no cash outlay for this swap?

[Peter Swinburn:]

I’ll pass it over to Stewart.

[Stewart Lindening:]

The economic exposures via the swap don’t require any up-front cash. Obviously, the gain and loss moves up in direct relation to the stock. One of the benefits of that, apart from not having a lot of cash out the door, is the fact that we don’t have a big Australian denominated investment that would be subjected to movements in the Australian currency rates.

[Bryan Spillane:]

Stewart, just to follow up on Mark’s question on foreign exchange. In the seat that we’re in the best we can do without knowing whether you’ve done anything to hedge the translation is to just simply do the arithmetic on currency translation against whatever we’re forecasting for currency-neutral profits in the UK and Canada, offsetting it with the natural hedge you have on the interest. If you were doing the arithmetic sitting in our seats, is there something else you would do differently?

[Stewart Lindening:]

I can’t say that I would direct you to do things differently. I can tell you that we’re not really in a position to discuss the specific hedging strategy that we’ve undertaken. You will have to do the calculations as you would normally.

[Bryan Spillane:]

Okay, great.

[Operator:]

Thank you. Our next question comes from Carlos Levoy from Credit Suisse

[Carlos Levoy:]

Good morning, everyone. I want to very quickly follow up on those questions on Foster’s. Do you foresee having any role, either in the Board of Directors at Foster’s or any operational link-ups beyond what you already have with the brand?

[Peter Swinburn:]

No, we don’t see that presently, Carlos. We have the economic exposure that we’ve announced today, and we’ll just continue to review what happens with Foster’s strategically. And we continue to review what happens with the Foster’s strategic review and what their management does.

[Carlos Levoy:]

Thank you.

[Peter Swinburn:]

Thank you.

[Operator:]

Thank you. Again, if you have a question please press the one key at this time. Our next question comes from Todd Duvak from Bank of America.

[Todd Duvak:]

Yes, good afternoon. Had a question for you on I guess your category exposure. Obviously you’re focused on the beer category. Are you interested in getting into other spirits categories or alcoholic beverages categories, like wine, like Foster’s also has?

[Peter Swinburn:]

That’s not in our strategic game plan, Todd, no.

[Todd Duvak:]

And then, just kind of following up on that

[Peter Swinburn:]

That obviously depends on what sort of business we were talking about. But we’re in a very comfortable position at the moment. We’ve got a strong balance sheet, we’re throwing off cash, and anything that we do anywhere will have to be short term agreed to. It will be prudent and it will be in the best interest of our share holders.

[Todd Duvak:]

And I guess just to follow up on that. Your leverage and your balance sheet, as you mentioned, are in a very strong position right now. Could you envision a situation in which you would do something similar to what Conor Riccard did, and forego your investment credit rating for a strategic acquisition?

[Peter Swinburn:]

Again, that’s just pure speculation. I can’t get into that at all, Todd, I’m afraid.

[Todd Duvak:]

OK, not a problem.

[Peter Swinburn:]

OK, cheers, thanks very much.

[Operator:]

Thank you. Again if you have a question please press the one key at this time. We have a follow up from Christine Farkas.

[Christine Farkas:]

Thanks so much. I just want to clarify based on your earlier statements about not pursuing a share buy-back at this time. Is that strictly based on the challenges of the current market and accessing capital, or is it because you might think you’d rather keep these dollars earmarked for other strategic initiatives? I mean it was always part of your plan to really study that return in the form of a buy-back, so I’m curious what’s changed.

[Peter Swinburn:]

Not at all, Christine. As you know, we’re building cash. We don’t have a huge amount of cash yet, but we’re in the process of continuing to build cash. And we’ll have a number of options in terms of how we use that cash. So it continues to be one of the options that on the table. It’s not the only one, but it’s on the table. We haven’t taken it off the table. Does that answer the question?

[Christine Farkas:]

That’s a little more clear, thanks a lot.

[Peter Swinburn:]

OK, thanks.

[Operator:]

Thank you. Our next question is a follow-up from Mark Swartzberg.

[Mark Swartzberg:]

Thanks again. Question about the JV Mechanics. If I’m reading the numbers from the press release correctly, the amount of cash that was funneled back up to you at TAP was about $59 million versus equity income of $106.5 million. Is there anything unusual about this particular period, any reason we shouldn’t be thinking that from quarter to quarter at least typically you’re going to be getting all the cash flow back to you? I guess part of the answer has to do with CapEx that occurs there at the JV. But how are you thinking about the relationship between what you get back and what the JV actually generates?

[Peter Swinburn:]

Thanks for that question, Mark. It’s a complicated question only because obviously the JV is going through a period of trying to drive those synergies. We’re been pretty clear that to achieve the $500 million in synergies they’re going to have to spend about $450 million. That doesn’t come in any sort of erasable way. I can tell you from a shareholder, as a shareholder of the JV, we are in a place where we are looking to get the cash from our joint venture as rapidly as possible. We do have a process that we go through each month, which looks to minimize any cash that’s actually held at the JV. So to the extent that we don’t get cash it’s because we’re putting the cash to good use in the joint venture itself to drive those synergies.

[Mark Swartzberg:]

Is there anything contractual there that obliges them or is it all based on mutual concern?

[Peter Swinburn:]

Well I do think we have a fairly clearly laid out set of contracts that explain what the mechanics will be around the cash transfer.

[Mark Swartzberg:]

Great. Thanks, guys.

[Operator:]

Thank you. Our next question is a follow-up from Bryan Spillane.

[Bryan Spillane:]

Thanks. Stuart, just a follow-up on pensions. So this balance sheet for the quarter shows that the pension liability down to $400 million versus 677. I’m assuming that’s the transfer of the US pension plan to the Miller Coors JV?

[Stewart Lindening:]

Yes, that’s correct. You’ll see a lot of obviously big movements in the balance sheet that all relate to stripping that out of our balance sheet and putting it essentially in one line as an investment in the JV.

[Bryan Spillane:]

And then as we’re looking at pension expenses and pension funding going forward

[Stewart Lindening:]

Sure. Let me give you a couple pieces. I mean, it’s hard to give a very precise answer here, because obviously with the current equity performance levels expense and expense will likely be higher next year. It’s very difficult to say precisely what number that will be, and I just can tell you from previous years this stuff moves around a lot, obviously while equity may be down, discount rate is up, and it’s very difficult for me to give you any guidance around that. And my best advice is to wait until year end. As it relates specifically to cash requirements of the pension plans, those are driven mostly by various regulatory bodies. In the case certainly of Canada and UK that’s a bit of a triennial valuation. And depending on where that falls, that may or may not drive increased contributions. And I’d say the last thing, which is a moderating factor for us is that the last couple of years we have been gong through a process of trying to de-risk those pension plans by shifting assets from equity-based instruments into fixed income instruments. So mix all that together and you’ll have to wait really until the end of the year to get a better picture of what that will look like. Bryan, the thing I would add is the de-risking that we did was before the recent sharp declines in the equity markets.

[Bryan Spillane:]

So higher proportionate fixed income before the equity markets went down?

[Stewart Lindening:]

That’s right. If you look at our year-end 10K you’ll see that all of our major plans - call them defined benefit plans - were in the range of half-equities, which was a substantial reduction from before we did the de-risking.

[Bryan Spillane:]

OK, thanks, guys.

[Operator:]

Thank you. Again, if you have a question please press the one key at this time. Gentlemen, I’m showing no further questions.

[Stewart Lindening:]

OK, thanks, Matt. Thank you, everybody for joining us, and thank you for your interest in Molson Coors Brewing Company. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s call. This does conclude the program. You may now disconnect. Everyone, have a great day.