Executive Summary

    The following table highlights summarized components of our condensed
consolidated summary of operations for the years ended December 28, 2008,
December 30, 2007, and December 31, 2006.

                                                      For the Years Ended
                           December 28,                   December 30,                   December 31,
                               2008         % change          2007         % change       2006(1)(2)
                                          (Volumes in thousands, dollars in millions,
                                             except percentages and per share data)
Volume in barrels                 29,656        (29.0 )%         41,796         (0.0 )%         41,806
Net sales                  $     4,774.3        (22.9 )%  $     6,190.6          5.9 %   $     5,845.0
Income from continuing
operations                 $       400.1        (22.3 )%  $       514.9         37.8 %   $       373.6
Diluted income per
share from continuing
operations                 $        2.16        (23.9 )%  $        2.84         31.5 %   $        2.16


--------------------------------------------------------------------------------
   º (1)

º (2)
º The 53rd week in our fiscal 2006 increased total company sales volume by approximately 600,000 barrels and increased reported pre-tax profit of $472.1 million by approximately $6 million.

The following table highlights summarized components of our sales volume for the years ended December 28, 2008, December 30, 2007 (actual and pro forma) and December 31, 2006.

                                                      For the years ended
                                December 28,     December 30,     December 30,     December 31,
                                    2008             2007             2007             2006
                                   Actual        Pro forma(1)        Actual           Actual
Volume in U.S. barrels (in
thousands):
  Financial volume                     29,656           29,439           41,796           41,806
  Royalty volume                          256              214              214              124

Owned volume                           29,912           29,653           42,010           41,930
  Proportionate share of
  equity investment
  sales-to-retail(2)                   13,781           13,868                -                -

Total worldwide beer volume            43,693           43,521           42,010           41,930

º (2)
º Reflects the addition of MCBC's proportionate share of MillerCoors and Molson Modelo sales-to-retail for the periods presented, adjusted for comparable trading days, including on a pro forma basis for the twenty-six weeks ended December 31, 2007.

Worldwide beer volume is composed of our financial volume, royalty volume and proportionate share of equity investment sales-to-retail. Financial volume represents owned beer brands sold to unrelated external customers within our geographical markets. Royalty beer volume consists of product produced and sold by third parties under various license and contract-brewing agreements. Equity investment sales-to-retail brands volume represents the company's ownership percentage share of volume in its subsidiaries accounted for under the equity method, including MillerCoors and Modelo Molson Imports, L.P.

2008 Key Financial Highlights:

Our performance in 2008 demonstrated that our brand growth strategies and cost-reduction efforts continue to strengthen our competitive capabilities and financial performance. We achieved a few highlights from a year full of challenges-but also transformation and progress-for our company. The following are several critical successes in 2008:

º •
º We made great progress on brand-building, front-line pricing and cost reductions, however we were challenged by commodity inflation, weak industry volume in key markets, and unfavorable foreign currency toward the end of the year.

º •
º The completion of MillerCoors in the U.S. led our transformational moves, and integration is progressing well.

º •
º In Canada, we grew net pricing based on the strength of our strategic brand portfolio and secured the opportunity to grow the Modelo brands across Canada for the long term.

º •
º In the U.K., we grew net pricing for the year, launched Magners draught cider, and began implementing a contract brewing arrangement that will be beneficial for years to come.

º •
º Globally, we

º •
º exceeded all of our cost-savings goals,

º •
º appropriately funded our pensions and reduced the future size and volatility of our pension liabilities,

º •
º created a stronger Global Market Development organization, and

º •
º reduced interest and corporate overhead expenses.

Synergies and other cost savings initiatives

For the full year, we achieved $87 million of savings, which exceeded our 2008 goal by $10 million. These cost reductions include our 42% share of Resources for Growth ("RFG") cost savings initiatives that were carried forward by MillerCoors in the back half of 2008. The benefit MillerCoors' cost savings will generate, which we expect to realize through higher income from the joint venture, which are in addition to the $500 million of committed MillerCoors cost synergies, will enable us to deliver on our overall commitment to cost savings initiatives. Our share of these assumed RFG savings was $6 million in the second half. For the entire RFG program, which began in 2007, we have now delivered $178 million of our total projected $250 million in savings.

MillerCoors is progressing towards its stated goal of $500 million of synergies in the first three years of combined operations. Since combining operations, MillerCoors has delivered $28 million in synergies. The timing to achieve MillerCoors' original goal of $50 million in synergies in the first twelve months of operations has accelerated, and MillerCoors now expects to realize $128 million of synergies by June 30, 2009. By the end of calendar year 2009, MillerCoors expects to achieve a total of $238 million in synergies surpassing its original forecast of $225 million. While the timing of synergy delivery has accelerated, MillerCoors' goal remains $500 million in three years.

Components of our Statement of Operations

Net sales-Our net sales represent almost exclusively the sale of beer and other malt beverages, the vast majority of which are brands that we own and brew ourselves. We import or brew and sell certain non-owned partner brands under licensing and related arrangements. We also sell certain "factored" brands, as a distributor, to on-premise customers in the United Kingdom.

Cost of goods sold-Our cost of goods sold includes costs we incur to make and ship beer. These costs include brewing materials, such as barley, hops, various grains and other key brewing materials purchased. Packaging materials, including costs for glass bottles, aluminum and steel cans, cardboard and paperboard are also included in our cost of goods sold. Our cost of goods sold also include both direct and indirect labor, freight costs, utilities, maintenance costs, depreciation, and other manufacturing overheads, as well as the cost to purchaser of "factored" brands from suppliers.

Marketing, general and administrative-These costs include media advertising (television, radio, print), tactical advertising (signs, banners, point-of-sale materials) and promotion costs planned and executed on both local and national levels within our operating segments. These costs also include our marketing and sales organizations, including labor and other overheads. This classification also include general and administrative costs for functions such as finance, legal, human resources and information technology, which consist primarily of labor and outside services. Last, this line item includes amortization costs associated with intangible assets, as well as certain depreciation costs related to non-production equipment.

Special Items-These are infrequent and/or unusual items which affect our statement of operations, and are discussed in each segment's Results of Operations discussion.

Equity income in MillerCoors- This item represents our proportionate share for the period of the undistributed net income (loss) of our investment in MillerCoors accounted for under the equity method. Such amount typically reflects adjustments similar to those made in preparing consolidated

statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets upon the formation of MillerCoors.

Interest expense, net-Interest costs associated with borrowings to finance our operations are classified here. Interest income in the U.K. segment is associated with trade loans receivable from customers.

Debt extinguishment costs-The costs are associated with payments to settle the notes at fair value given interest rates at the time of extinguishment, incentive payments to note holders for early tendering of the notes, and a write-off of the proportionate amount of unamortized discount and issuance fees associated with the extinguished debt.

Other income (expense)-This classification includes primarily gains and losses associated with activities not directly related to brewing and selling beer. For instance, gains or losses on sales of non-operating assets, our share of income or loss associated with our ownership in the Montréal Canadiens hockey club, and certain foreign exchange gains and losses are classified here.

Discussions of statement of operations line items such as minority interests and discontinued operations are discussed in detail elsewhere in MD&A and in the Notes to Part II-Financial Statements and Supplementary Data, Item 8.

Depreciation

Depreciation and amortization expense decreased from 2008 versus 2007 excluding special items, as a result of the formation of MillerCoors. There were no other material factors contributing to the reduction in depreciation and amortization expense as experienced in 2007.

We realized a 6% decrease related to depreciation and amortization expense of assets in 2007 versus 2006 excluding special items, due to the net effect of five factors:

º •
º We evaluated the estimated useful lives of a substantial portion of our property, plant and equipment on a global basis, in light of improvements in maintenance, new technology and changes in expected patterns of usage. The lengthening of certain depreciable asset lives as a result of this evaluation resulted in a reduction of our consolidated depreciation expense for the full year 2007.

º •
º Substantial existing assets became fully depreciated, so expense related to these assets was significantly lower in 2007 than 2006.

º •
º Adding packaging capacity in our Toronto and Shenandoah facilities during 2006 and brewing capacity in our Shenandoah facility in the first half of 2007.

º •
º Installing cold dispense units in pubs and restaurants in the U.K. resulted in a year over year increase.

º •
º Purchase of the keg population in the U.K. increased depreciation in the Europe segment.

Income Taxes

Our full year effective tax rates were approximately 20%, 1% and 17% in 2008, 2007 and 2006, respectively. Our 2008, 2007 and 2006 effective tax rates were significantly lower than the federal statutory rate of 35% primarily due to the following factors, lower effective income tax rates applicable to our Canadian and U.K. businesses, and one time benefits from revaluing our deferred tax assets and liabilities to give effect to reductions in foreign income tax rates and tax law changes.

Discontinued Operations

The Company's former Brazil business, Kaiser, is reported as a discontinued operation due to the sale of an 83% controlling interest in the business in 2006. See Part II-Financial Statements and Supplementary Data, Item 8 Note 4 "DISCONTINUED OPERATIONS" to the Consolidated Financial Statements for further discussion.

The loss from discontinued operations of $12.1 million for the year ended 2008 is associated with adjustments to the indemnity liabilities due to changes in estimates and foreign exchange losses.

The net loss from discontinued operations of $17.7 million for the year ended 2007 is composed of the following components:

º •
º A net loss of $20.4 million associated with adjustments to the indemnity liabilities due to changes in estimates and foreign exchange losses.

º •
º A gain of $2.7 million due to an income tax adjustment related to the sale of Kaiser.

In conjunction with this transaction, the purchaser (FEMSA) assumed $63 million of financial debt and assumed contingent liabilities of approximately $260 million, related primarily to tax claims, subject to our indemnification. As a result, we have a level of continuing potential exposure to these contingent liabilities of Kaiser, as well as previously disclosed but less than probable unaccrued claims. While we believe that all significant contingencies were disclosed as part of the sale process and adequately reserved for on Kaiser's financial statements, resolution of contingencies and claims above reserved or otherwise disclosed amounts could, under some circumstances, result in additional cash outflows for Molson Coors because of transaction-related indemnity provisions. We have recorded these indemnity liabilities at fair value and have a carrying value at December 28, 2008, and December 30, 2007, of $133.2 million and $155.0 million, respectively. Due to the uncertainty involved with the ultimate outcome and timing of these contingencies, there could be significant adjustments in the future.

Results of Operations

Our Canada segment consists primarily of Molson's beer business, including the production and sale of the Molson brands, Coors Light and other licensed brands, in Canada. Effective, January 1, 2008, Molson and Grupo Modelo, S.A.B. de C.V. established a joint venture, Modelo Molson Imports, L.P. ("MMI"), to import, distribute, and market the Modelo beer brand portfolio across all Canadian provinces and territories. Under this arrangement, Molson's sales teams are responsible for promoting and selling the brands across Canada on behalf of the joint venture. The alliance will enable Grupo Modelo to effectively utilize the resources and capabilities of Molson to achieve greater distribution coverage in the Western provinces of Canada. The MMI joint venture is accounted for using the equity method. The Canada segment also includes our arrangements related to the distribution of beer in Ontario and the Western provinces, through Brewers Retail, Inc. ("BRI") a consolidated joint venture, and Brewers' Distributor Ltd. ("BDL") a joint venture accounted for under the equity method.

See "Outlook for 2009" for discussion of forward looking trends regarding the Canada segment.

                                                         Fiscal year ended
                             December 28,                   December 30,                   December 31,
                               2008(1)        % change        2007(1)        % change        2006(1)
                                  (Volumes in thousands, dollars in millions, except percentages)
Volume in barrels(2)                 7,554         (4.4 )%          7,901         (0.6 )%          7,946

Net sales                    $     1,864.4         (2.6 )%  $     1,913.3          6.7 %   $     1,793.6
Cost of goods sold                  (980.8 )       (0.4 )%         (984.9 )       11.5 %          (883.6 )

   Gross profit                      883.6         (4.8 )%          928.4          2.0 %           910.0
Marketing, general and
administrative expenses             (421.3 )       (5.9 )%         (447.6 )        1.7 %          (440.0 )
Special items, net                   (10.9 )        N/M             (75.2 )        N/M                 -

   Operating income                  451.4         11.3 %           405.6        (13.7 )%          470.0
Other income, net                      7.0          N/M              21.7          N/M              13.3

   Earnings before income
   taxes                     $       458.4          7.3 %   $       427.3        (11.6 )%  $       483.3

º (1)
º 52-weeks reflected in 2008 and 2007 versus 53-weeks included in 2006.

º (2)
º Volumes represent net sales of MCBC owned brands and partner brands.

Foreign currency impact on results

Our Canada segment (as stated in USD) was unfavorably impacted by a 0.5% year-over-year decrease in the value of the CAD against the USD in 2008 versus 2007. The Canada segment benefited from a 7% year-over-year increase in the value of CAD against USD in 2007 versus 2006.

Volume and net sales

With the completion of the MillerCoors joint venture, our net sales and cost of goods sold related to products sold by Molson in Canada for U.S. distribution, which were previously treated as inter-company transactions and eliminated upon consolidation, are now included in Canada segment results. The sales volume continues to be excluded from our Canada results, as this volume is reported by MillerCoors. This reporting had the effect of increasing net sales per barrel by approximately 5% to 6% and increasing cost of goods sold per barrel approximately 9% to 10% in the third and fourth quarter 2008, with minimal impact on gross profit.

For the fifty-two weeks ended December 28 2008, sales volume in Canada decreased by 4.4% to 7.6 million barrels versus prior year volume of 7.9 million barrels for the 52 weeks ended December 30, 2007. This decline is entirely the result of excluding our reported Modelo volumes in 2008 with the creation of our joint venture. Excluding this factor, full year sales volume of 7.6 million barrels increased 0.1% on a comparable basis versus prior year.

Our Canada comparable sales to retail ("STRs") for 2008 increased 0.8% versus the prior calendar year driven by mid-single-digit growth of our strategic brands lead by Coors Light and Carling, which experienced double-digit growth compared to the prior year. In addition, the Rickard's and Creemore brands, as well as our partner import brands, all grew at high single-digit rates on a full year basis. These increases were partially offset by declines in non-strategic brands and other premium brands.

Canada industry volumes grew an estimated 1.1% in 2008 compared to the prior calendar year. As a result, Molson experienced a slight market share decrease on a full year comparable basis. This

decrease was driven by softness in the Québec market, partially offset by strong performance in the Ontario and Atlantic markets.

On a full year basis, 2008 net sales revenue declined $48.9 million or 2.6% versus prior year.

For the full year 2008, net sales revenue was $246.84 per barrel, an increase of 1.9% over 2007 net sales revenue of $242.15 per barrel. Excluding the effects of a U.S. production contract with Foster's that was terminated in the fourth quarter 2007, the Modelo Molson joint venture and the impact of sales to MillerCoors as disclosed above, net sales per barrel increased 2.3% as a result of higher net pricing and favorable sales mix of our products, including sales increases of our higher-revenue per barrel partner-import brands.

For the 52 weeks ended December 30, 2007, sales volume in Canada decreased by 0.6% to 7.9 million barrels versus prior year volume of 7.95 million barrels for the fifty-three weeks ended December 31, 2006. Excluding the effects associated with the change in the volume reporting policy, sales volume for 2007 of 8.2 million barrels decreased 1.6% versus prior year volume of 8.3 million barrels for the 53 weeks ended December 31, 2006. The 53rd week in 2006 delivered approximately 130,000 barrels, accounting for all of the year-over-year decrease. In addition, the termination of the Foster's U.S. production contract early in the fourth quarter 2007, drove a further sales volume reduction in 2007. Excluding the impact of the 53rd week in 2006 and the volume reductions attributable to Foster's and other exported volume, comparable sales volume in Canada increased by approximately 1.5% or 110,000 barrels.

Our Canada STRs for 2007 increased 1.0% versus the prior calendar year driven by mid-single-digit growth of our Molson strategic brands, lead by Coors Light, which experienced double-digit growth compared to the prior year. In addition, the Rickard's, Creemore and Carling brands, and our partner import brands, all grew at double-digit rates on a full year basis. These increases were partially offset by declines in non-strategic brands and other premium brands.

Canada industry volumes grew an estimated 0.9% in 2007 compared to the prior calendar year. As a result, Molson experienced a slight market share increase on a full year basis, fueled by share growth over the key summer selling period and the strength of our strategic brands.

On a full year basis, 2007 net sales revenue grew $119.6 million or 6.7% versus prior year with approximately 2% growth in local currency on a per barrel basis.

For the full year 2007, net sales revenue was $242.15 per barrel, an increase of 7.3% over 2006 net sales revenue of $225.72 per barrel. Excluding the effects associated with the change in the volume reporting policy, net sales revenue was $234.66 per barrel, an increase of 8.4% over 2006 net sales revenue of $216.57. An approximate 7% appreciation in the value of CAD against USD during the year increased net sales revenue by approximately $114 million or $14.00 per barrel. Net pricing contributed half of the remaining increase with the year over year impact of modest general price increases being partially offset by increased price discounting in Québec and Ontario. Improved sales mix from increased import sales, which are at higher than average retail prices, and decreased export sales, which are at lower than average retail prices, accounted for the remaining net increase. The decrease in export sales can be attributed to the termination of our Foster's US production contract in the fourth quarter of 2007.

Cost of goods sold and gross profit

Full year 2008 cost of goods sold per barrel increased 3.3% in local currency versus 2007. Excluding current year impacts of the termination of the Foster's contract, the changes associated with

MMI and sales to MillerCoors, cost of goods sold per barrel increased 7.4% on a comparable basis in local currency. The underlying cost of goods increase was due to the net effect of three factors:

º •
º Higher commodity, packaging material and other input costs drove a 6% increase, combined with a 1% increase due to higher fuel and distribution costs,

º •
º These inflationary increases were partially offset by a 2.5% decrease from our Resources for Growth cost savings initiatives, and

º •
º Finally, an increase of about 3% was due to the ongoing shift in sales mix.

For the full year 2007, cost of goods sold on a per barrel basis was $124.66 per barrel, an increase of 12.1% over 2006 cost of goods sold of $111.20 per barrel. Excluding the effects associated with the change in the volume reporting policy for the full year 2007, cost of goods sold on a per barrel basis was $120.81 per barrel, an increase of 13.2% over 2006 cost of goods sold of $106.70 per barrel. After adjusting for the approximate 7% appreciation in the value of CAD against USD, cost of goods sold increased by slightly less than 7% in 2007 in local currency. Inflationary cost increases across nearly all inputs drove approximately 3% of the increase in cost of goods sold per barrel, but was completely offset by the implementation of synergies and other cost savings initiatives in the year. The impacts of increased import sales, lower export sales due to the Foster's contract termination and non-cash adjustments in both the current and prior years of certain foreign currency positions to their market values account for the increase in cost of goods sold per barrel.

Marketing, general and administrative expenses

For the full year, marketing, general and administrative expenses were $421.3 million, a decrease of $26.3 million or 5.9% lower versus prior year. In local currency total marketing, general, and administrative expenses decreased 7.3% versus the prior year driven by lower intangible amortization, combined with the elimination of all expenses associated with the Modelo brands, which are now managed by MMI.

For the full year 2007, marketing, general and administrative expenses were $447.6 million, an increase of $7.7 million or 1.8% from 2006. In local currency, total marketing, general and administrative expenses decreased by 4% driven by lower general and administrative costs through reduced intangible amortization expense and a focus on more efficient general and administrative spending, including lower employee costs and other cost savings. In addition, 2006 included certain nonrecurring costs including contract costs incurred to achieve longer term information technology synergies, and additional costs associated with the additional week in 2006 results. Promotional spending and brand investments were relatively flat in 2007 compared to the prior year.

Special items, net

The Canada segment recognized $10.9 million of special items expense during 2008. The special items represent costs associated with ongoing Edmonton brewery closing expenses, restructuring activities, and an asset impairment. See

The Canada segment recognized $75.2 million of special items expense during 2007. The special items represent $46.5 million relating to the Edmonton brewery closure, in which significant charges included a $31.9 million impairment charge on the carrying value of the fixed assets and an additional $14.6 million charge for severance and other costs associated with closing the brewery. Current plans are to demolish the building and sell the land, which has a carrying value of . . .