Good day, ladies and gentlemen and welcome to the Molson Coors Brewing Company 2007 Second 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. [Operator instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Leo Kiely, President and Chief Executive Officer of Molson Coors Brewing Company. Sir, you may begin.

Thanks, Matt. And hello and welcome everybody and thanks for joining us today. With me on the call are Tim Wolf, our Global CFO;, Kevin Boyce, CEO of Molson Canada; Frits van Paasschen, CEO of Coors Brewing Company; Peter Swinburn, CEO of Coors Brewers Limited; Sam Walker, our Chief Legal Officer; Mike Gannon, our Global Treasurer; Marty Miller, our Global Controller; and Dave Dunnewald, Vice President of Investor Relations. This morning, Tim and I will take you through some highlights of the second quarter for Molson Coors Brewing Company, along with perspective on the back half of 2007. Then we will open it up for questions. In the second quarter of 2007, we achieved double-digit earnings growth by delivering strong top line growth, substantial cost reductions, reduced interest expense and a lower effective tax rate. Let's look at some of the highlights. We grew total company volume led by market share gains in the U.S. and Canada. This represents our first Canada share gain in nearly four years and the achievement of one of our most important goals leading into the merger. Although overall global sales to retail declined 0.7%, due to a softness in the U.K. beer market, our sales to retail in North America grew 1.5% in the second quarter. In fact, the U.K. market on and off-premise channels each declined approximately 7% in the second quarter, driven by some of the wettest weather on record and cycling the 2006 World Cup tournament. We continue our company-wide focus on brand building, and increased revenue per barrel and local currency in all three of our businesses. We captured additional merger synergies and next generation cost savings in the second quarter to bring our year-to-date savings from all cost programs to $78 million. Results from these initiatives allowed us to offset more than 80% of the cost of goods inflation impacting our company in the first half of this year. Both the synergies and next-generation cost reduction programs are on target for our 2007 goals. We successfully brought our new Shenandoah brewery on line in the second quarter, with annualized cash savings of more than $30 million and P&L savings of approximately $14 per year. We increased total company income from continuing operations nearly 45% in the quarter, led by 39% pretax income growth for our U.S. business. Both of these results exclude special and other one-time items. And we reduced our go-forward interest costs and effective tax rate by refinancing $625 million of our debt and refining as company structure. Overall, we are pleased with our company's performance in the second quarter as our teams continue to progress on brand building and taking costs out of the business. So at this point, I will turn it over to Tim to review second quarter financial highlights and trends and then we'll provide some perspective on the balance of 2007 for the company. Timothy?

Thanks Leo and hello everybody. Starting with the second quarter financial highlights for the total company, we reported consolidated sales volume of 11.5 million barrels, up seven-tenth of 1% from a year ago, while total company sales to retail declined seven-tenth of a percent in the second quarter. Volume growth was driven by brand strength in the U.S. and Canada, offset by weak market conditions in Europe. Net sales were $1.68 billion, up 5.9% from the second quarter of last year, while cost of good sold increased 5.1%. Marketing, G&A expense grew 1.9% in the quarter. We achieved income from continuing operations of $176.1 million or $1.94 per diluted share, excluding special and other one-time items in the second quarter, which is up nearly 45% from $121.6 million or $1.40 per share a year ago. These results exclude a gain on the sale of our interest in House of Blues Canada this year and one-time tax benefits and net special charges in both years, which are described in the earnings release we distributed this morning. Foreign exchange movements increased our total company pretax profit by approximately $7 million in the second quarter, driven primarily by a 9% appreciation of the British Pound and a 3% appreciation of the Canadian Dollar versus the U.S. dollar. By the way, all the financial results we share with you today will be in U.S. dollars, unless we indicate otherwise. Please note that all our company earnings discussions today will be for continuing operations, that is, excluding the Kaiser Brazil business that we sold last year in January. In segment performance highlights, starting with Canada, we grew market share more than one-third of a share point versus the prior year. On the strength of this volume growth, along with cost savings initiatives and favorable foreign…

Thanks, Tim. Looking ahead, we will remain focused on building strong brands to grow the top line and reducing costs in each of our businesses to provide additional resources for growth. We'll also experience some cost of goods and other prior year comparison impacts that I want to highlight for those of you who model our business. In Canada, we continue to focus on brand building and cost reductions. Our first priority remains investment for growth. We are focused on building the company's strategic brands and driving innovation behind those brands. In particular, we will leverage our innovation on Coors Light, driven by our Sub Zero cold draught dispense systems, new SKUs, and the introduction of the cold certified can. Further, we have extended innovation across our portfolio with the introduction of Creemore Traditional Pilsner and new programming on our partner import brand portfolio. Our marketing team remains focused on continuing Rickard's momentum and stabilizing Molson Canadian. Strategies will include leveraging the introduction of Rickard's White, which is adding incremental volume to the trademark, as well as new programming and SKUs for the Molson Canadian brand. For the month of July, our Canada sales to retail increased at a low single-digit rate, although it is important to note that July's results are not necessarily indicative of third quarter performance. Due to year-over-year differences in our fiscal calendar, we expect third quarter sales volume to be lower than sales to retail. On costs in Canada, we continue our focus on productivity across the business, including merger synergies and other cost saving initiatives in operations and G&A, to reinvest in our brands and offset inflation. Based on current commodity rates, we now expect underlying full year cost of goods per barrel to increase at a low to mid single-digit rate in local…

[Operator Instructions]. Our first question comes from Judy Hong, Goldman Sachs. Judy Hong - Goldman Sachs & Co.: Hi. First, juts a couple of questions on Canada. If you could just update us on the competitive landscape, particularly in places where you've seen discounting activity pick up a little bit and then just in terms of your effort to stabilize Molson Canadian; in the quarter it was down again the mid single-digit pace. If you can just talk about whether you are seeing any sort of tangible progress on that effort?

Yes, so first if you look at the discounting, as you asked, it varies from province to province, region to region if you like. Historically, we've spent most of our time talking about Ontario and that is the biggest market, so I'd say that the second quarter has been pretty aggressive from all companies not just the majors, but also the local players as well and historically in our market, the first half of the year is a little bit heavier in discounting than the second half of the year. So, it's been competitive. We did get some pricing through earlier in the year, but by and large, the pricing has been dealt back. In terms of Molson Canadian, we are seeing some stabilization in Ontario; we have a little bit of a weaker western part; we have some new areas that we are investigating to the back half; but clearly the segment that Molson Canadian participates in the premium segment is being attacked by outside and when you look at the growth, a really fantastic growth that we are getting on Coors Light, that to a degree is affecting our Molson Canadian brand in the most part of Canada. Judy Hong - Goldman Sachs & Co.: Okay. And then secondly, just in the U.S., can you just clarify where the distributor inventories level is at the end of the second quarter, because in the quarter I think the shipments were ahead of SCR and then you ended the first quarter with higher distributor inventory. So can you just help us understand where we are and then how we should think about that either being reverse for the balance of the year or any other factors to consider?

Yes, sure this is Frits van Paasschen. The short answer to your question is our inventories are essentially flat compared to a year ago. The slightly more technical answer to the question is, if you look at our sales versus removal the first three quarters of the year, there is a lot of noise in that data. Now whether you not used that as comparison in order to determine or try to derive your own inventory levels. And I say that because we have the affect of the 53rd week, we have the fact that the 4th of July span two quarter, we have the Memphis build up and frankly, we had some pretty strong momentum in the marketplace. But as you look into the third quarter, you will see a shift where our sales will be below removals as opposed to what it had been in the first two quarters. Judy Hong - Goldman Sachs & Co.: Okay and then just finally, on the free cash for generation, looking at next year 10 I guess is it now appropriate to think about the pension being fully funded that you really don't get the incremental pension income... pension contribution next year so you really get a much bigger swing into next year than we were previously expecting?

Yes, July this is Tim. I am presuming you are talking about cash flow specifically and as you can see from this year and the last few years... last two years since the merger we have put a lot of money into the pension plans, no question about it. I will share a little bit more detail on this in Boston. But we are at a point now where we feel really good about the funded status of all 3 of pension plans obviously we're responsible for all 3. With that said, I think that the amount of cash contribution we place under the pensions can moderate. Obviously this year 2007 is... will has been a very, very heavy CapEx year, the purchase of the CAG, the completion of the Mountain brewery, the completion of Shenandoah, a very, very appropriately aggressive roll out of cold dispense units in the U.K. that Leo mentioned and so we are looking forward to a very strong delivering on the promise so to speak cash flow for 2008 and again all go into that, and don't forget also in 2007 we have the additional pension contribution, we settled it last year when we closed Memphis, this is the year we have to pay the pipe that actually make the cash contributions. So all in, when you think about all the cash that we have this year I think the critical point of underlying free cash performance of Molson Coors is better than ever and we are rolling into 2008 with really good momentum. Judy Hong - Goldman Sachs & Co.: Great, thank you.

Yes, you are welcome.

Thank you. O our next question comes from Robert Van Brugge from Sanford Bernstein.

Good afternoon.

Hello Robert.

Question about U.K. pricing, certainly it was lot better than what we had seen in previous quarters. Do you expect this trend to halt, in other words, are your competitors following on the price increases at this point?

Hi Robert, this is Peter Swinburn. We're actually showing sort of improving trends on pricing over last four quarters, so it is something of a continuum. Obviously, the comparisons with last year weren't as tough because of the pretty aggressive pricing around World Cup. As far as the competitor is concerned, really there's just lot of volatility in the marketplace. We've made it clear from the outset that it's... we will try as best as we can to play the part of the profit optimization roots as far as both volume and pricing is concerned and certainly this quarter we seem to record it more right than wrong but we'll continue to take the judgment calls and obviously move forward to the year, but so far so good I think.

Okay, great, thanks.

Thanks Robert.

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

Thanks operator, good morning everyone.

Hi Mark.

Hi Mark.

I guess Kevin, two questions on Canada on a local currency basis. Firstly, on Coors Light, was pricing net sales per barrel for the brand up in the quarter year-on-year?

Yes, it was.

Can you give us some idea of how much?

Net sales per barrel; I'd say very low single-digit.

Okay, great. And then same thing with Molson Canadian. It sounds like it was down, was it down low single-digit, down mid single-digit, what level of decline in terms of current local currency was it down?

In terms of the net sales per barrel or absolute?

Yes, net sales per barrel local currency.

It was probably up a touch.

Up at touch.

Yes.

Okay. And you feel like both those brands because of the first half being a little more competitive, you'll see a little bit of an improvement in the second half?

Well it's always hard to tell, but if you look historically at the industry, a lot of the push if you like has come in the earlier part of the year, but I guess it depends on the plans that everybody has and where they are relative to their targets.

Great. And those numbers were total region, right?

Total country, yes.

Great, thank Kevin.

Okay.

Thanks Mark.

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

Actually, all my questions has been answered, thank you.

Thanks Christine.

Thanks Christine.

Thank you. Our next question comes from Bryan Spillane from Banc of America.

Hey, good morning guys.

Hey Bryan.

Couple of question; first Tim, if you could just touch on working capital and I may have missed this in your prepared remarks, but just working capital in the quarters seemed awful high?

Yes, absolutely and it was high obviously building inventories, gabbled off a bunch of it, but we had timing difference in payables and receivables in the U.K. Obviously, there is a big, big swing there, given the size of some of our customers there. We have higher bonus payments this year than last year. Last year, they were meager, this year they were stronger. So there is a higher payments there. So we have lot of working capital movement the wrong way in the second quarter, but again I had focused you and others on the underlying performance, virtually all of the working capital use if you will, in my mind it's timing and if anything if you look at how Shenandoah is operating, how our plants were operating, how are Canadian supply chain will work pre and post Edmonton closure, if anything are objective will be to cycle tighter faster useless working capital and I think we've got the plans and direction in place to do just that.

Okay. And then a follow up on Judy's question on pension. On the P&L next year given the amount that you put into your pension now, will pension expense become a point of positive leverage next year?

Well if what you are asking is, we are seeking pension income? The answer is no.

Okay.

I mean this is... our objective is to have I mean, have our operating businesses generating more profit as a result of good investments growing our business. We are a beer company not a pension income company.

Right.

Right? So our job on the pension side is to mitigate risk, moderate and lower the amount of cash we have to put in because our pensions are well funded and returning adequately at a very, very acceptable level of risk. So to me, the way I look at the business I think our CFOs look at the business is pension income is nice, but that's not what we seek to do. We seek to sell more beer, so the going in proposition for 2008 is we will have less, I mean, I'll go into some of this detail next month, but to have less pension income per se and more risk mitigation and less need to put more cash into our pension funds.

Okay great. And then just one last if I could, on the Shenandoah brewery, did you operate... this quarter did you operate it full capacity this summer and then looking ahead, did your cost savings assumptions assume any ramp down in production or in your investment in Golden. I guess meaning, as Shenandoah wraps up, ramps up the full capacity, it leaves open the possibility to start reducing the cost and shrinking your footprint a bit in Golden, is that part of what's in your cost savings estimates going forward?

Yes Bryan, this is Frits. To be clear, Shenandoah is fully up to speed. In fact, it just had a few weeks operating and more than a 100% of what we anticipated its ability to perform, that's both in brewing and in packaging. So we are actually thrilled with the performance of that facility and invite everybody to come down and have a look when hey have a chance. So the first part of your question is, is Shenandoah up and running, absolutely in a great shape. The second part of your question relates to, are there further cost savings coming through Golden? I would answer that a little bit more broadly and that is first of all, as we grow the business, we will continue to have to put out quite a bit of volume through our Golden brewery operations. But having said that we continue to invest in fine ways to make the most of that facility to automate where we can and drive efficiencies and yes, those kinds of savings are absolutely built into our cost projections for the year.

Bryan, this is Tim. Just as a add on to Frits and Dennis Puffer's modesty, I mean, if you look at the way Shenandoah was operating, its about 50%, about 47% of last look, more productive than Golden on a per person per barrel basis. And what they are achieving is by having brewing and packaging capacities in an obviously close proximity. The packaging capacities which already were among the most efficient in the world, are operating at even a higher levels of efficiency. So the story is not completely told yet, in terms of how high is up but I think Frits' and Dennis' teams have done a spectacular job in beginning to squeeze even greater savings of over and apart from just the freight savings out of the Shenandoah decision.

And just to build again on what Tim saying, I want to call you back towards what Leo read in the prepared remarks, which is as we get to the second half of the year, we won't be in the position of anniversarying the Memphis closure from a year ago. So the savings that we have achieved in the first half of the year are certainly better than they will be in the second half.

Okay great, thanks guys.

Thank you. [Operator Instructions]. Our next question comes from Kaumil Gajrawala from UBS.

Hi. Can you talk a little bit about what's behind some of the growth in Keystone and what it... where it is as a percent our portfolio now that its being going double-digits I guess for about 6 months or so?

Yes. There are really 2 drivers to Keystone, right. Now one is we think we have a... we found a real chord with the lower premium drinkers around our positioning smooth even when you are not and based on the substance that we think Keystone is... the Keystone White is the smoothest of the below premium beers and that's a great place to be with the product. But in addition to that, because of the velocities we've enjoyed through that positioning, our distribution growth has been ahead of even what we hoped for and that is one of our stretch objectives for the year. And given the relative share of Keystone Light compared to the other major below premium brands and the consequent lower distribution that we have today with Keystone that distribution growth is an opportunity we see paying off for the next several years. So I don't think its by any means, an accident its a relationship between great positioning and frankly a terrific product and then some very focused efforts around gaining distribution, which we see is a long term opportunity.

It's useful. Could I just maybe drill a little bit deeper, if you could talk about channel a little bit as it relates to Keystone?

We are seeing growth really across channels both in sea store and key accounts in groceries and the growth has been terrific actually for us.

Okay great thank you.

Thank you. Mr. Kiely, I am showing no further questions.

Thanks Matt; thanks everybody for being with us. For those of you who will be Boston, we will see you soon and for those of you who won't, we will track to you at end of third quarter. Thanks for your continued interest in Molson Coors and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Have a great day.