U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 26, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 0-8251
ADOLPH COORS COMPANY
(Exact name of registrant as specified in its charter)
Colorado 84-0178360
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 279-6565
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock (non-voting), no par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: All voting shares are held by Adolph Coors, Jr. Trust.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of March 18, 1994:
Class A Common Stock - 1,260,000 shares
Class B Common Stock - 36,994,811 shares
<PAGE>
PART I
ITEM 1. Business
(a) General Development of Business
Founded in 1873, Adolph Coors Company ("ACC" or the "Company") through its
principal operating subsidiary, Coors Brewing Company ("CBC" or the
"company"), produces and markets beer and other malt-based beverages. The
Company's business was conducted as a partnership or sole proprietorship
until 1913, when it incorporated under the laws of the State of Colorado.
During the 1980's, the Company developed a number of technology-based
businesses. At the end of 1992, ACC spun off its aluminum, packaging,
ceramics and other technology businesses in a tax-free distribution to
shareholders. The spin-off was accomplished through a dividend of the shares
of common stock in a new public company, ACX Technologies, Inc. ("ACX
Technologies" or "ACXT"). ACXT owns Graphic Packaging Corporation, Golden
Aluminum Company, Coors Porcelain Company (dba Coors Ceramics Company) and a
number of developmental businesses which were formerly owned by ACC.
CBC remains as the single direct subsidiary of ACC. CBC owns Coors
Distributing Company, and a number of smaller subsidiaries, including Ford
Street Management Company; Wannamaker Ditch Company; Rocky Mountain Water
Company; CBC International, Inc.; Coors Energy Company; and Coors
Transportation Company. In 1992, substantially all of the assets of Coors
Energy Company and Coors Transportation Company were sold.
(b) Financial Information About Industry Segments
The Company has continuing operations in a single industry segment, the
production and marketing of beer and other malt-based beverages.
(c) Narrative Description of Business
Coors Brewing Company - General
CBC is engaged in the production and marketing of high quality malt-based
beverage products. CBC has a number of distinctive brands that satisfy
developing consumer demands and trends. The company's malt-based beverage
products include a number of premium, specialty and import beers, a premium
Clearmalt beverage, popular-priced and value-added beers and non-alcoholic
brews. Sales of malt beverage products totaled 19.8 million barrels in 1993,
a 1.3% increase compared to 19.6 million barrels in 1992.
Due to the seasonality of the beer industry, CBC's sales volumes are normally
at their lowest in the first and fourth quarters and highest in the second
and third quarters. The fiscal year of the Company is a 52- or 53-week period
ending on the last Sunday in December.
In 1993, company management focused on the need to balance volume gains with
improved returns to shareholders and a number of steps were taken toward that
end. Highlights for 1993 include the following: additions of new senior
management personnel; profitability improvement initiatives; initial
restructuring of field sales operations to drive decision-making and
accountability closer to the retail level; the announcement and/or
introduction of seven new products; and the announcement of an agreement in
principle to purchase a 500,000 barrel brewery in Spain. The company also
revised its executive compensation plan to strengthen the link between
incentive compensation and improved returns, beginning in 1994.
The profitability improvement initiatives included a reduction in general and
administrative expense accomplished by means of voluntary retirement and
severance packages and other initiatives. The company recorded a
restructuring charge of $109.5 million in the fourth quarter of 1993,
resulting in a net loss for the year. The restructuring charge includes
$70.2 million for voluntary separation incentives and $39.3 million for
workplace redesign, asset write-downs and other expenses related to the
profit improvement initiatives. In addition, other special charges unrelated
to the profit improvement initiatives totalled $13 million, primarily for the
write-down of certain distributor assets and a provision for environmental
enhancements. A total of 679 employees elected to accept one of the
voluntary packages.
Marketing and Operations
Product portfolio: There are 17 products in the CBC brand portfolio. The
company produces and markets 11 products in the premium/super-premium malt
beverage category, including Original Coors, Coors Light, Coors Extra Gold,
Coors Dry, Coors Artic Ice, non-alcoholic Coors Cutter, Zima Clearmalt,
Killian's Irish Red Lager, Winterfest, Eisbock and Castlemaine XXXX. CBC also
distributed a non-alcoholic beverage called Moussy under license with Sibra
Holding S.A., of Switzerland. CBC offers three products in the popular-priced
category: Keystone, Keystone Light and Keystone Dry. In 1993, the company
introduced two value-added beers, Shulers and Shulers Light.
Original Coors, Coors Light, Coors Extra Gold, Coors Dry, Coors Cutter and
the Keystone brands are marketed nationwide. Distribution of Zima is being
expanded nationwide in 1994. With the exception of Coors Artic Ice, Schulers
and Schulers Light, which are in limited introductory markets, other Coors
malt beverage products are sold in most states.
Brand performance: Coors Light is the biggest selling brand in CBC's product
portfolio, accounting for approximately two-thirds of the company's total
sales. Other brands with improved volume in 1993 were Killian's Irish Red
and Zima.
Zima is a clear, lightly carbonated alcohol beverage that offers consumers an
innovative alternative to their traditional alcohol beverage choices. Based
on positive consumer response, Zima, introduced into 3 test markets in the
fall of 1992, was expanded into an additional 30% of the U.S. in April and
October of 1993. In December, CBC announced its plans to expand distribution
of Zima nationally in the first quarter of 1994.
The volume decline of the Original Coors brand moderated in 1993 as this
brand maintained sales to its core group of loyal customers. The company
also gained incremental volume in 1993 from the test marketing of two new,
value-added beers, Shulers and Shulers Light, as well as the U.S.
introduction of Castlemaine XXXX, as part of a joint venture with Lion Nathan
International of New Zealand.
New products/opportunities: CBC has announced plans for the national
expansion of Zima during the first quarter of 1994. The company has also
introduced to nine test markets the first domestically brewed ice beer using
proprietary ice brewing technology licensed from Labatt Breweries of Canada.
Unlike other domestic brewers of ice beer, Coors utilizes a patented ice
machine from the Netherlands that takes beer to its freezing point by
regulating the temperature to about minus four degrees celsius. Named Coors
Artic Ice, this new product is the only U.S.-brewed ice beer to be brewed
cold, shipped cold and sold cold. In order to tap into the fast-growing
popularity of special-occasion brews, UniBev Limited, an arm of CBC that
focuses on the import and specialty beer market, will introduce three new
seasonal beers to complement the well-established Coors Winterfest brand.
Each of these beers -- Eisbock a springtime bock, a summertime wheat beer and
a fall Oktoberfest beer -- will be brewed in limited quantities for their
respective seasons.
Domestic sales: The company's highest volume sales are in the states of
California, Texas, Pennsylvania and a number of eastern states. CBC utilizes
a field sales force made up of regional directors, division managers and area
sales managers to ensure maximum customer contact and satisfaction. Field
staff operated out of four regional offices that offered training, marketing
and merchandising support and customer service. In May of 1993, in an effort
to increase its share of the growing import and specialty beer market, CBC
announced the formation of UniBev Limited, a new arm of the company's
International Import Division. UniBev will provide CBC with a separate
umbrella organization to market specialty, import and licensed beer brands in
the U.S. In early 1994, CBC took the first step in a field restructuring
designed to move accountability and decision making closer to the retail
level. The company has established two test field business units (FBUs) with
accountability for market and bottom line performance in their respective
regions (Texas and California/Hawaii). The company intends to establish more
FBUs over time.
International marketing/partnerships: With domestic beer sales virtually
flat, international markets offer considerable potential to CBC. CBC exports
Coors products to 14 markets outside of the United States, including American
Samoa, the Bahamas, Bahrain, Bermuda, Cayman Islands, France, Greece, Guam,
Ireland, Italy, Panama, Puerto Rico and the U.S. and British Virgin Islands.
In addition, CBC exports its products to approximately 250 U.S. military
bases worldwide.
CBC also has existing licensing agreements with a number of international
brewers. CBC has licensed Molson Breweries of Canada Limited to brew and
distribute Original Coors and Coors Light in Canada and Asahi Breweries Ltd.
to brew and distribute Original Coors in Japan. In early 1994, the company
announced that it had licensed proprietary ice brewing technology from Labatt
Breweries of Canada.
In September 1992, a joint venture between CBC and Scottish & Newcastle
Breweries of Scotland began to brew and distribute Coors Extra Gold in the
United Kingdom. Coors Extra Gold was introduced in Scotland and northwest
England in August 1992, and in 1993 the company expanded distribution into
the rest of the United Kingdom. In June of 1993, CBC announced the launch of
Coors Extra Gold into Ireland; the brand is brewed by Scottish & Newcastle in
the U.K. and distributed under license by Murphy Brewery Ireland Ltd.,
Dublin. In September, CBC announced that it would produce and market
Castlemaine XXXX (an Australian lager) in the U.S. through a joint venture
with Lion Nathan International of New Zealand. CBC also owns the exclusive
North American distribution rights for a non-alcoholic beverage called Moussy
from Sibra Holding S.A., of Switzerland.
Beginning in 1991, CBC took a significant equity position in a foreign
brewing facility through a joint venture with Jinro Limited of the Republic
of Korea. Jinro-Coors Brewing Company is one-third owned by CBC and two-
thirds owned by Jinro Limited. In the second quarter of 1994, Jinro-Coors
will complete construction of a 1.8 million barrel brewery in South Korea.
The new brewery will produce several new local beers and a Coors brand for
Korea's fast-growing beer market.
Late in 1993, CBC signed an agreement in principle with El Aguila S.A., based
in Madrid, Spain, for the purchase of a 500,000-barrel brewery in Zaragoza,
Spain. This is discussed in greater detail below.
Production/packaging capacity: CBC currently has three domestic production
facilities. It owns and operates the world's largest single-site brewery in
Golden, Colorado, a packaging and brewing facility in Memphis, Tennessee, and
a third facility that currently operates as a packaging plant and
distribution facility near Elkton, Virginia (referred to as the Shenandoah
facility). Together, the three facilities provide sufficient brewing and
packaging capacity to meet consumer demand for Coors products into the
foreseeable future.
The Golden, Colorado, brewery is the source for all brands with the Coors
name, except for Coors Cutter, the company's non-alcoholic beverage. The
majority of the company's beer is packaged in Golden. The remainder is
shipped in bulk from the Colorado brewery to the Shenandoah and Memphis
facilities for blending, finishing and packaging. The Memphis facility, which
was purchased from The Stroh Brewery Company in 1990, is currently packaging
all Coors products for export outside of the United States and producing Zima
Clearmalt, Castlemaine XXXX and Coors Cutter. Depending on product mix and
market opportunities, the full utilization of brewing capacity in Memphis may
require incremental upgrades in plant and equipment.
In November, CBC announced that it had signed an agreement in principle with
El Aguila S.A., based in Madrid, Spain, for the purchase of a 500,000-barrel
brewery in Zaragoza, Spain. The purchase is expected to be finalized in the
first half of 1994; no purchase price has been disclosed. Under terms of the
agreement, Coors Extra Gold will be brewed in Zaragoza for distribution in
Spain. Sales and distribution will be handled in Spain by El Aguila. This
arrangement would provide significant cost and other advantages over
exporting beer from U.S. facilities. Fifty-one percent of El Aquila S.A. is
owned by Amsterdam-based Heineken, N.V., the world's second-largest brewer.
The sale is expected to close early in the company's second fiscal quarter.
Other company operations: Significant portions of CBC's aluminum can, glass
bottle and malt requirements are produced in its own facilities. The CBC can
manufacturing facility produces approximately 3.6 billion aluminum cans per
year; the bottle manufacturing plant produces approximately 780 million
bottles per year. Bottles manufactured by the company are made with an
average total recycled content of 35%. To assist in its goal of manufacturing
bottles with 50% recycled content, in 1992 CBC announced its intent to build
a glass recycling facility in Wheat Ridge, Colorado. Construction of the
facility will be completed mid-year in 1994 and should double the amount of
glass the company can recycle annually.
CBC also has its own waste treatment facilities, which process waste from the
company's manufacturing operations as well as municipal waste from the nearby
City of Golden. The company also owns and operates its own power plant.
The company continues to explore opportunities to improve asset utilization,
including the divestiture of non-core assets and continuing improvement in
capacity utilization through innovative joint ventures and alliances.
Brewing Company subsidiaries: Coors Distributing Company (CDC) is CBC's
largest subsidiary. CDC owns and operates distributorships in four markets
across the United States. As part of CBC's corporate restructuring, CDC
recently sold three of its company-owned distributorships. Together, CDC
operations in 1993 accounted for approximately 5% of the company's total beer
sales.
In late 1992, Coors Energy Company (CEC) became a subsidiary of CBC. During
1992, CEC sold substantially all of its oil and gas exploration and
production assets. CEC retained a transmission pipeline to bring natural gas
to various company facilities in Colorado and, through a subsidiary,
continues to operate a gas transmission pipeline to provide for the natural
gas needs of CBC's Shenandoah facility. CEC also operates an ash disposal
site for the company's use in Colorado.
Also in 1992, Coors Transportation Company (CTC) sold substantially all of
its assets and operations.
Other subsidiary operations of CBC include Ford Street Management Company (a
distributor development company); Wannamaker Ditch Company and Rocky Mountain
Water Company, (which carry processed water from Clear Creek to various Coors
reservoirs).
Raw Materials
CBC uses all-natural ingredients in the production of its malt beverages. In
addition, the company has one of the longest beer brewing cycles in the
industry. CBC adheres to strict formulation and quality standards in
selecting its raw materials.
Barley, rice, starch, hops: CBC uses a proprietary strain of barley
developed by the company's agronomists in all its malt beverage products.
Virtually all of this barley is grown on irrigated farmland in the western
United States under contractual agreements with area farmers. As part of the
1993 restructuring, CBC consolidated some of its barley operations to achieve
improved efficiencies.
Rice and refined cereal starch, which are considered to be interchangeable in
CBC's brewing process, are purchased from several suppliers. Both foreign and
domestic hops are purchased from various suppliers. The 1993 restructuring
plan included reductions in commodities inventories.
Water: CBC utilizes naturally filtered water from underground aquifers to
brew malt beverages at its Golden, Colorado, facility. Water from private
deep wells is used for final blending and packaging operations for malt
beverages packaged at plants located outside Colorado. Water quality and
composition were primary factors in all facility site selections. Water from
the company's sources in Golden, Memphis and Shenandoah is soft, with the
required balance of minerals and dissolved solids to brew quality pilsner
beers. CBC continually monitors the quality of all the water used in its
brewing and packaging processes for compliance with the company's own
stringent quality standards as well as federal and state water standards. CBC
owns water rights believed to be adequate to meet all of the company's
present requirements for both brewing and industrial uses; however, it
continues to acquire water rights and add water reservoir capacity to provide
for long-term strategic growth plans and to sustain brewing operations in the
event of a prolonged drought.
Packaging materials: During 1993, approximately 56% of Coors malt beverage
products were packaged in aluminum cans, which were primarily supplied by
CBC's aluminum can manufacturing plant. Additional aluminum cans for Coors
malt beverage products packaged at the Memphis plant were purchased from an
outside supplier.
Glass bottles were used to package approximately 27% of Coors malt beverage
products in 1993. A significant portion of all bottle requirements was
produced in CBC's bottle manufacturing plant; CBC has two other qualified
suppliers under contract to supply glass bottles. The remainder of the malt
beverages sold during 1993 were packaged in quarter- and half-barrel
stainless steel kegs and two different sizes of a plastic sphere called "The
Party Ball," an innovative package introduced by CBC in 1988.
In 1993, most of the secondary packaging for Coors products, including bottle
labels and paperboard products, were supplied by Graphic Packaging
Corporation, an ACX Technologies subsidiary. A second supplier provided
corrugated boxes. Supply contracts with ACX Technologies companies: In
preparing for the spin-off of ACX Technologies, CBC negotiated market-based,
long-term supply contracts with ACXT subsidiaries to ensure an uninterrupted
supply of raw materials and packaging materials including aluminum.
CBC believes it has sufficient access to raw materials and packaging
materials to meet its production requirements in the foreseeable future.
Transportation/Distribution
The number and geographical location of CBC's brewing operations require its
malt beverage products to be shipped farther than competitors' products.
Major competitors have multiple breweries and therefore incur lower
transportation costs than CBC incurs to deliver its products to their
respective distributors. By packaging some of its products in Memphis and
Shenandoah, CBC is able to achieve more efficient product distribution and a
reduction of freight costs for certain markets.
Transportation: During 1993, 28% of total Coors products sold were shipped
in CBC's insulated rail tank cars from Golden to be packaged at the
Shenandoah and Memphis plants. CBC's Golden facilities are served by
Burlington Northern, Inc., which transports approximately 76% of Coors malt
beverage products packaged at the Golden facility the 14 miles from Golden to
Denver. From there, they are shipped by various railroad lines to
distributors throughout the country. CBC is able to maintain the high rail
volume through the use of 24 satellite redistribution centers strategically
located throughout the country. These centers, operated by public warehouse
companies and CBC, transfer Coors malt beverage products from railcars for
shipment to distributors. In 1993, approximately 86% of total railcar volume
from Golden moved through this channel.
The railcars assigned to CBC by the shipping railroads are specially built
and insulated to maintain temperature control en route. A national rail
strike of any duration could therefore substantially impair CBC's ability to
transport Coors products to its markets and cause a shortage of Coors malt
beverage products to a greater degree than would be experienced by
competitors with multiple breweries. This situation would be intensified by
low inventories maintained at distributors to assure the freshness of Coors
malt beverage products. Although an extended shutdown of the Burlington
Northern, Inc. rail spur at Golden could adversely affect CBC's business, CBC
believes that such an interruption of service is unlikely. In addition, the
satellite redistribution system reduces the potential impact of interrupted
rail service.
The remaining 24% of CBC volume packaged in Golden is shipped by truck and
intermodal (piggyback) directly to distributors. Transportation vehicles are
refrigerated or insulated to keep Coors malt beverage products at proper
temperatures until they are delivered to distributor locations.
Distribution: Delivery to retail markets in the United States is
accomplished through a national network of 600 independent distributors and
4 distributors owned and operated by CBC's subsidiary, CDC. Some distributors
have multiple branches. The total number of distributor locations, including
branch operations, is 668. No single distributor accounted for more than 5%
of 1993 barrel sales.
In order to ensure the highest product quality, CBC has one of the industry's
most extensive distributor monitoring programs. This program is designed to
ensure that guidelines for proper refrigeration and rotation of Coors malt
beverage products at both the wholesale and retail levels are followed.
Distributors are responsible for maintaining proper rotation of the products
at retail accounts and are required to replace Coors malt beverage products
at their own expense if sales to consumers have not occurred within the
prescribed time period.
Competition
The beer industry in the United States is highly competitive. Coors malt
beverage products compete with numerous super-premium, premium, low-calorie,
popular-priced, value-added, non-alcoholic and imported brands produced by
national, regional, local and international brewers. CBC is the nation's
third largest brewer and, according to Beer Marketer's Insights (BMI)
estimates, CBC accounted for approximately 10% of the total 1993 U.S. brewing
industry shipments of malt beverages.
CBC's major competitors include Anheuser-Busch Companies, Inc. (through its
subsidiary Anheuser-Busch, Inc.), Philip Morris, Inc. (through its subsidiary
Miller Brewing Company), The Stroh Brewery Company, G. Heileman Brewing, and
S & P Company.
Because approximately 85% of CBC's volume comes from premium, higher-margin
products, CBC competes most directly with Anheuser-Busch (approximately 44%
market share) and Miller (approximately 22% share), the dominant players in
the industry. In 1993, price promotions and price discounting continued to
erode net price realizations for brewers; industry trade publications
estimate that well over 40% of premium products were sold on discount
industry wide. It is anticipated that competitive price/discount activity
will continue for all brewers in 1994, especially in California and select
markets in the Pacific Northwest.
For the past few years, price realizations for brewers have increased well
below inflation levels. CBC has responded to pricing pressures in two ways.
On the cost side, CBC has implemented aggressive cost-management initiatives
and close scrutiny of company functions and programs to ensure strategic
alignment with company objectives and optimum asset utilization. On the
revenue side, CBC continues to seek and exploit opportunities to maintain a
strong premium position in the marketplace.
CBC is well-positioned in the malt beverage industry, with strong, quality
brands in the fastest-growing categories. The company, however, does face
significant competitive disadvantages related to economies of scale. In
addition to lower transportation costs achieved by major competitors with
multiple breweries, these larger brewers also recognize economies of scale in
advertising expenditures. CBC, in an effort to achieve and maintain national
advertising exposure, must spend substantially more per barrel of beer sold
than its major competitors. This level of advertising expenditures is
necessary for CBC to hold and increase its share of the U.S. beer market.
Capital Expansion
CBC has sufficient brewing and packaging capacity to fulfill projected volume
requirements in the foreseeable future. In 1993, the company spent
approximately $120 million to upgrade the Memphis facility to support the
Zima expansion, to perform routine maintenance in all plants and to make
incremental capital upgrades to all production facilities. The company
expects its capital expenditures for 1994 to be approximately $193 million.
Capital spending in 1994 will be primarily focused on new facilities, repair
and upkeep and return on investment projects.
Research and Development
CBC is continually engaged in research and development programs and has
developed various improvements in raw materials, processes and packaging
systems and in the development of innovative, quality products. Approximately
$13 million was spent on research and development in 1993. Although CBC owns
a number of patents, it does not consider its business to be dependent upon
any one or related group of such patents.
CBC's research and development expenditures are primarily devoted to new
product and package development, its brewing process and ingredients, brewing
equipment, improved manufacturing techniques for packaging supplies and
environmental improvements in the company's processes and packaging
materials. The focus of these programs is to improve the quality and value
of its malt beverage products while reducing costs through more efficient
processing and packaging techniques, equipment design and improved varieties
of raw materials. CBC's research and development dollars are strategically
applied to short-term, and long-term opportunities.
Regulations
Federal, state and local laws and regulations govern the operations of
breweries; the federal government and all states in which Coors malt beverage
products are distributed regulate trade practices, advertising and marketing
practices, relationships with distributors and related matters. Governmental
entities also levy various taxes, license fees and other similar charges and
may require bonds to ensure compliance with applicable laws and regulations.
CBC anticipates a number of regulatory issues in 1994 that could impact
business operations, including potential increases in state and federal
excise taxes, restrictions on the advertising and sale of alcohol beverages,
new packaging regulations and others.
Federal excise taxes on malt beverages are presently $18.00 per barrel. State
excise taxes are also levied at rates that ranged in 1993 from a high of
$32.65 per barrel in Alabama to a low of $0.62 per barrel in Wyoming. In
1993, Coors paid $364.8 million in federal and state excise taxes. For 1994,
the Clinton Administration has indicated a desire to exempt brewers from an
increase in federal excise taxes; however, an increase in federal excise
taxes is still subject to Congressional debate. A substantial increase in
federal excise taxes would have a negative impact on the entire industry and
could have a material effect on company sales, profitability, and cash flow.
CBC is vigorously opposed to any additional increases in federal and/or state
excise taxes and will work diligently to ensure that its view is adequately
represented in the ongoing debate.
Environment
See Management's Discussion and Analysis.
Energy
CBC uses both coal and natural gas as primary sources of energy. Coal is
used as the primary fuel in CBC's steam generation system and is supplied
from outside sources. Natural gas was supplied by public utilities and
various natural gas purchase contracts during the year. The company also has
fuel oil and propane available as alternate sources of energy. CBC does not
anticipate future supply problems for these natural resources.
Employees
The Company has approximately 6,200 full-time employees. Approximately 1,685
employees are salaried. In 1993, 679 employees left the company under a
voluntary separation program.
Foreign Operations
The company's foreign operations and export sales are not a material part of
its business. However, the company is committed to expanding its foreign
operations through equity participation arrangements, licensing agreements
and export sales.
ITEM 2. Properties
The company's major facilities are set out below: <PAGE>
<TABLE>
<CAPTION>
Facility Location Product
<S> <C> <C>
Brewery/Packaging Golden, Colorado Malt Beverages/Packaged
Malt Beverages
Packaging Elkton, Virginia Packaged Malt Beverages
Brewery/Packaging Memphis, Tennessee Malt Beverages/Packaged
Malt Beverages
Can and End Plants Golden, Colorado Aluminum Cans and Ends
Bottle Plant Wheat Ridge, Colorado Glass Bottles
Distribution Warehouse Anaheim, California Wholesale Beer Distribution
Distribution Warehouse Boise, Idaho Wholesale Beer Distribution
Distribution Warehouse Denver, Colorado Wholesale Beer Distribution
Distribution Warehouse Norman, Oklahoma Wholesale Beer Distribution
Distribution Warehouse Oklahoma City, Oklahoma Wholesale Beer Distribution
/TABLE
<PAGE>
The original brewery site at Golden, which is approximately 2,400 acres,
contains brewing, packaging and can manufacturing facilities, as well as
gravel deposits and water-storage facilities. All of the Company's
facilities are well maintained and suitable for their respective operations.
In 1993, CBC estimates the brewing facilities operated at approximately 84%
of the 1994 brewing capacity and the packaging facilities operated at
approximately 75% of the 1994 packaging capacity. Annual production capacity
can vary due to product mix, packaging mix and seasonality.
The company owns 2,600 acres of land in Rockingham County, Virginia, where
the Shenandoah facility is located, and 131 acres in Shelby County,
Tennessee, where the Memphis plant is located.
CEC continues to own a transmission pipeline to bring natural gas from
certain wells for use at various company facilities in Colorado, and through
a subsidiary, will continue to operate a gas transmission pipeline to provide
for the natural gas needs of the Shenandoah facility.
ITEM 3. Legal Proceedings
In January 1992, ACC and CBC (as well as two former affiliates that are now
subsidiaries of ACXT) were sued by TransRim Enterprises (USA) Ltd. in Federal
District Court for the District of Colorado. ACC, CBC and their former
affiliates are parties to a joint defense agreement concerning defense of the
case and allocation of liability, if any. TransRim alleges that the
defendants misused confidential information and breached an implied contract
to proceed with a joint venture project to build and operate a paper board
mill. TransRim initially claimed damages totaling $159 million based on a
number of theories, some of which have been removed from the case on
defendants' summary judgment motion. TransRim seeks damages for unjust
enrichment from alleged savings to CBC in purchases of paper board from other
suppliers. The matter is scheduled for trial beginning in late April 1994.
Management believes that ACC and CBC have meritorious defenses and that the
ultimate outcome will not have a material impact on the Company's financial
position or results of operations.
In 1992, CBC appealed to the U.S. Circuit Court of appeals for the First
Circuit seeking a review of a ruling of the U.S. District Court for the State
of New Hampshire. The District Court had upheld a 1991 U.S. Bankruptcy Court
Order awarding damages of $10 million, plus interest and attorneys' fees, to
a former beer distributor. In the fourth quarter of 1993, CBC entered into a
settlement of this matter and a related case. The settlement was within the
amount of reserves previously established for the matter.
See the Environment section of the Management's Discussion and Analysis for a
discussion of the Company's obligation for potential remediation costs at the
Lowry Landfill Superfund site and related legal proceedings.
The Company is party to numerous other legal proceedings arising from its
business operations. No single such proceeding, and no group of such similar
matters, is expected to result in liability that would be material to the
Company's consolidated financial position, however, the cost of a proceeding
may be material to the results of operations in any given period.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter ended December 26, 1993.
<PAGE>
PART II
ITEM 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
Adolph Coors Company Class B common stock is traded on the over-the-counter
market and is included in the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market System (NMS) listings, under the
symbol "ACCOB." Daily stock prices are listed in major newspapers, generally
alphabetically under "CoorsB."
The approximate number of record security holders by class of stock at March
18, 1994, is listed below:<PAGE>
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
<S> <C>
Preferred Stock, non-voting None issued
Class A Common Stock, voting, All shares of this class are
$1.00 par value held by the Adolph Coors, Jr. Trust
Class B Common Stock, non-voting,
no par value 5,751
/TABLE
<PAGE>
The range of the high and low quotations and the dividends paid per share for
each quarter of the past two years are shown below:<PAGE>
<TABLE>
<CAPTION>
1993
---------------------------------------
Market Price
----------------
High Low Dividends
------ ----- ---------
<S> <C> <C> <C>
First Quarter 17 1/8 15 1/2 $ 0.125
Second Quarter 18 5/8 16 $ 0.125
Third Quarter 21 3/4 17 7/8 $ 0.125
Fourth Quarter 23 1/8 15 $ 0.125
</TABLE>
<TABLE>
<CAPTION>
1992
---------------------------------------
Market Price
----------------
High Low Dividends
------ ----- ---------
<S> <C> <C> <C>
First Quarter 22 1/4 17 7/8 $ 0.125
Second Quarter 20 5/8 17 $ 0.125
Third Quarter 20 5/8 18 $ 0.125
Fourth Quarter 22 7/8 15 1/2 $ 0.125
/TABLE
<PAGE>
ITEM 6. Selected Financial Data
Following is selected financial data for ACC for the six years ended
December 26, 1993:<PAGE>
<TABLE>
<CAPTION>
(In thousands, except per share data) 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Barrels of Beer Sold 19,828 19,569 19,521 19,297 17,698 16,534
- ------------------------------------------------------------------------------------------------------------------------
Summary of Operations
Net sales $1,581,811 $1,550,788 $1,529,986 $1,478,287 $1,367,718 $1,273,745
- ------------------------------------------------------------------------------------------------------------------------
Cost of goods sold $1,036,864 $1,035,544 $1,039,207 980,766 909,339 825,071
Marketing, general and administrative 454,130 429,573 434,141 398,889 386,991 369,006
Research and project development 13,008 12,370 14,252 10,196 10,853 11,125
Special charges 122,540 -- 29,599 30,000 41,670 --
- ------------------------------------------------------------------------------------------------------------------------
Total operating expenses $1,626,542 $1,477,487 $1,517,199 $1,419,851 $1,348,853 $1,205,202
- ------------------------------------------------------------------------------------------------------------------------
Operating income (loss) ( 44,731) 73,301 12,787 58,436 18,865 68,543
Other (income) expense - net 12,099 14,672 4,403 5,903 2,546 (6,471)
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes ( 56,830) 58,629 8,384 52,533 16,319 75,014
Income tax expense (benefit) ( 14,900) 22,900 (8,700) 20,300 9,100 28,700
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations ($41,930) $ 35,729 $ 17,084 $ 32,233 $ 7,219 $ 46,314
- ------------------------------------------------------------------------------------------------------------------------
Per share of common stock ($ 1.10) $0.95 $0.46 $0.87 $0.20 $1.26
Income (loss) from continuing operations
as a percentage of net sales ( 2.6%) 2.3% 1.1% 2.2% 0.5% 3.6%
- ------------------------------------------------------------------------------------------------------------------------
Financial Position
Working capital $ 7,197 $ 112,302 $ 110,433 $ 201,043 $ 193,590 $ 196,687
Properties - net $ 884,102 $ 904,915 $ 933,692 $1,171,800 $1,012,940 $1,033,012
Total assets** $1,350,944 $1,373,371 $1,844,811 $1,761,664 $1,530,783 $1,570,765
Long-term debt $ 175,000 $ 220,000 $ 220,000 $ 110,000 $ -- $ --
Other long-term liabilities $ 34,843 $ 52,291 $ 53,321 $ 58,011 $ 16,138 $ 19,367
Shareholders' equity** $ 631,927 $ 685,445 $1,099,420 $1,091,547 $1,060,900 $1,062,064
Net book value per share of
common stock** 16.54 18.17 29.33 29.20 28.75 29.00
Total debt to total capitalization 26.3% 24.3% 19.5% 9.2% 2.0% 1.7%
Return on average shareholders'
equity (6.4%) (0.2%) 2.3% 3.6% 1.2% 4.5%
======================================================================================================================
Other Information
Dividends $ 19,003 $ 18,801 $ 18,718 $ 18,591 $ 18,397 $ 18,311
Per share of common stock $0.50 $0.50 $0.50 $0.50 $0.50 $0.50
Average number of common shares
outstanding 37,989 37,561 37,413 37,148 36,781 36,621
Gross profit $ 544,947 $ 515,244 $ 490,779 $ 497,521 $ 458,379 $ 448,674
Capital Expenditures $ 120,354 $ 115,450 $ 241,512 $ 183,368 $ 149,616 $ 157,995
Depreciation, depletion and
amortization $ 118,955 $ 114,780 $ 108,367 $ 98,081 $ 122,439 $ 111,432
Full-time employees 6,200 7,100 7,700 7,000 6,800 6,900
Total taxes $ 401,667 $ 437,089 $ 405,789 $ 251,606 $ 236,740 $ 236,683
Market price range of common stock:
High $23 1/8 $22 7/8 $24 1/4 $27 3/8 $24 3/8 $21
Low $15 $15 1/2 $17 3/8 $17 1/8 $17 3/8 $16 1/2
</TABLE>
*Numbers in italics reflect continuing operations only.
**Reflects the dividend of ACX Technologies, Inc. to shareholders during
1992. See Note 2 to Consolidated Financial Statements.<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Comparison of Financial Results Fiscal Years 1993, 1992, and 1991
ADOLPH COORS COMPANY
Consolidated results including 1993 restructuring and other special charges
and 1992 discontinued operations
1993 Consolidated Results: During 1993, Adolph Coors Company (ACC or the
"Company") was the holding company for a single subsidiary, Coors Brewing
Company (CBC or the "company"). CBC produces and markets quality malt-based
beverages.
During 1993, company management focused on the need to balance volume gains
with improved returns to shareholders. A number of steps were taken to
improve profitability and performance. As a direct result of those
initiatives, the company recorded restructuring and other special charges of
$122.5 million in the fourth quarter, which resulted in a net loss for the
year. The restructuring charge, which totaled $109.5 million pretax, includes
$70.2 million for voluntary separation incentives designed to reduce the
company's white collar work force, as well as $39.3 million for workplace
redesign, asset write-downs and other expenses related to the profit
improvement initiatives. As a part of the voluntary separation incentives,
643 employees elected to leave the company. The actions taken related to this
charge, when fully implemented, are expected to generate annual pretax
savings of more than $30 million. In addition, these actions position the
company to compete more efficiently and effectively in an increasingly
competitive business environment. Other special charges unrelated to the
profit improvement initiatives totaled $13 million, primarily for the write-
down of certain distributor assets and a provision for environmental
enhancements.
For the 52-week fiscal year ended December 26, 1993, ACC reported a net loss
of $41.9 million, or $1.10 per share, compared to a net loss of $2.0 million,
or $0.05 per share in 1992. The net loss was the result of the restructuring
and other special charges and the 1993 retroactive increase of one percent in
the federal corporate income tax rate. The restructuring and other charges
had an impact of $1.98 per share. Before the restructuring and other special
charges, the impact of the tax rate increase was an after-tax charge of $3.2
million, or $0.08 per share, related to the revaluation of the deferred
income tax liability and the change in the current year's tax provision.
1992 Consolidated Results: In 1992, the Company's net loss of $2.0 million
decreased significantly from net income of $25.5 million, or $0.68 per share
in 1991. Consolidated earnings in 1992 were reduced by a loss from
discontinued operations of $29.4 million (related to the spin-off of ACX
Technologies, Inc.), as well as the net after-tax expense of $8.3 million for
the adoption of new accounting standards for employee postretirement benefits
(FAS 109) and income taxes (FAS 106).
At the end of 1992, ACC significantly restructured its operations by spinning
off its diversified technology businesses into a new, public company, ACX
Technologies, Inc. (NASDAQ:ACXT). The results of ACXT are reported as
discontinued operations in the consolidated financial statements for all
periods presented, except as noted.
COORS BREWING COMPANY
Industry Overview*
The domestic brewing industry is subject to a number of challenging trends,
including a lack of volume growth, intense price competition and the threat
of increased excise taxes at the state and federal levels.
Although sales of malt-based beverages accounted for a major share
(approximately 87%) of all U.S. alcohol beverage sales, total industry
volume, based on domestic tax paid shipments, has declined from 181.6 million
barrels in 1991 to an estimated 180.2 million barrels estimated for 1993.
Total industry volume, including non-alcohol brews, import and export
products has grown from 196.0 million barrels in 1991 to an estimated 198.3
million barrels in 1993. Domestic sales of malt-beverages, excluding imports,
have increased less than one-half of one percent over the same time period.
Non-alcohol brews, imports and specialty brews account for the fastest
growing segments in the industry.
More than 90% of domestic volume is attributable to the top six domestic
brewers, Anheuser-Busch, Inc.(44% share), Miller Brewing Company (22% share),
Coors Brewing Company (10% share), The Stroh Brewery Company (7-8% share), G.
Heileman Brewing (5% share), and S & P Company (3-4% share). In order to
protect market share in a flat market, many brewers are resorting to intense
price competition and product discounting. For the past few years, price
gains for brewers have been well below inflation levels, and it is expected
that they will continue to be limited by ongoing competition and price
discounting. Analysts have stated that more than 40% of premium beers are now
sold on discount. Analysts have also noted a recent trend toward consumer
trading-down, e.g. consumers buying lower-priced beers rather than premium
products, especially in markets with weaker economies. Some brewers have
responded by introducing private label beers, and, according to analysts,
some brewers have initiated a form of direct store delivery.
Finally, public discussion continues regarding the possibility of another
increase in federal beer excise taxes. If this increase occurs, it is
expected to have a significant impact on the entire industry, and could have
a material impact on the company's sales, earnings and cash flow.
While these trends bear watching and create intense competitive challenges
for all brewers, CBC has managed to achieve increases in volume and net sales
for the past nine consecutive years. A critical mission of the company's
marketing department is to create steadily increasing equity in each brand.
In addition, the company is committed to and strongly supports the three-tier
distribution system. Due, in part, to its strong position in premium beer
sales, the company continues to be in a good position to generate cash
internally. The company's focus is to achieve a balance of volume growth and
improved returns to investors as it moves forward.
*Industry and competitive information was compiled from the following
industry sources: Beer Marketer's Insights, The Maxwell Consumer Report and
various securities analyst reports. While Coors believes the sources are
reliable, the company cannot guarantee the absolute accuracy of these numbers
and estimates, or undertake to advise readers of any change in estimated
figures.
Financial Results from Continuing Operations 1993, 1992 and 1991
Excludes 1993 restructuring and other special charges and 1992 impact of
discontinued operations.<PAGE>
<TABLE>
<CAPTION>
Trend summary: percentage increase/(decrease) 1993, 1992 and 1991
===================================================================================
1993 vs 1992 1992 vs 1991 1991 vs 1990
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Volume 1.3% 0.2% 1.2%
- ----------------------------------------------------------------------------------
Industry growth* 0.2% (0.5%) (2.3%)
*see above
- -----------------------------------------------------------------------------------
Net sales 2.0% 1.4% 3.5%
- ------------------------------------------------------------------------------------
Average net price
increase 1.1% 1.7% 2.4%
- ------------------------------------------------------------------------------------
Gross profit 5.8% 5.0% (1.4%)
- ------------------------------------------------------------------------------------
Cost of goods
sold 0.1% (0.4%) 6.0%
- -------------------------------------------------------------------------------------
Marketing,
general and
administrative 5.7% (1.1%) 8.8%
- -------------------------------------------------------------------------------------
Advertising
expense 8.8% (6.1%) 8.9%
- -------------------------------------------------------------------------------------
/TABLE
<PAGE>
Barrel sales: Coors Brewing Company has achieved increases in sales volume
for the past three years. Coors increased volume 1.3% in 1993, 0.2% in 1992
and 1.2% in 1991 vs prior year. CBC shipped 19.8 million barrels of malt-
based beverages in 1993, compared with 19.6 million in 1992 and 19.5 million
in 1991. These increases occurred during a period when overall annual volume
increases for the industry were less than one-half of a percent. Volume gains
in 1993 are related to strong sales of CBC products in the premium and super-
premium categories, which accounted for approximately 85% of the company's
volume sales. The volume gain in 1992 was attributable to strong sales of
Coors Light, sales of specialty malt beverages, including Killian's,
Winterfest and Coors Cutter, and the introduction of Zima Clearmalt.
Net Sales: Net sales for CBC have also increased in each of the past three
years. In 1993, CBC reported net sales of $1.58 billion, up 2% from the $1.55
billion reported in 1992. Net sales in 1992 were up 1.4%, from the $1.53
billion reported in 1991. While analysts noted a consumer trend toward
"trading down" (e.g. choosing popular-priced products instead of
premium-priced products), CBC's volume growth in 1993 came from premium and
specialty products.
Gross Profit: Gross profit has improved slightly during the past three years.
Gross profit as a percent of net sales was 34.5% in 1993, 33.2% in 1992 and
32.1% in 1991. In 1993, the improvements were primarily a result of increased
volume, operational efficiencies and lower aluminum costs. The increase also
reflects the divestiture of lower-margin activities associated with the
company's transportation and energy businesses. Factors contributing to the
1992 increase were a significant reduction in asset abandonments offset by
increased satellite redistribution center costs and an increase in LIFO
expense.
Operating Income: Excluding the restructuring and other special charges in
1993, results from discontinued operations in 1992 and a charge in 1991
related to the write-down of energy assets, operating income increased 6.1%
in 1993, following a 72.9% increase in 1992. In 1993, higher operating income
was the result of increased volume and improved brand mix, as well as
aggressive efforts to reduce manufacturing and raw materials costs. The
increase in 1992 is attributable to aggressive cost management initiatives
and reduced operating expense.
Marketing, general and administrative expense increased 5.7% in 1993, to $454
million from $430 million in 1992. The 1993 increase was primarily
attributable to increased marketing and promotional spending in support of
CBC's expansion of Zima Clearmalt to approximately one-third of the U.S. In
1992, marketing, general and administrative expenses were down 1.1% compared
with 1991. The 1992 decrease is primarily attributable to reductions in
marketing and advertising expenditures. In 1993 the company ratio of MG&A
expense to net sales was approximately 28.7% compared with 27.7% in 1992 and
28.4% in 1991.
Advertising expense: CBC spent $273 million on advertising in 1993, compared
with $251 million in 1992 and $267 million in 1991. The majority of the 8.8%
increase in advertising in 1993 reflects increased spending in support of the
Zima rollout. The company is committed to focusing its resources on those
programs that provide the best return on investment, especially Coors Light,
Coors Extra Gold in priority markets, Killian's and new products with
demonstrated potential, such as Zima.
Research and development costs were materially unchanged. Research and
development expense was $13.0 million in 1993, $12.4 million in 1992 and
$14.3 million in 1991. The ratio of R&D expense as a percentage of net sales
was 0.8% in 1993, 0.8% in 1992 and 0.9% in 1991.
Non-operating expense: Non-operating expense decreased to $12.1 million from
$14.7 million in 1992. The decrease was primarily related to a decrease in
net interest expense attributable to an increase in invested cash and higher
interest income. Non-operating expenses of $14.7 million in 1992 increased
from $4.4 million in 1991. This increase is primarily related to increased
interest expense because of a decline in interest capitalized.
Effective tax rate: Excluding the restructuring and other special charges,
the Company's effective tax rate in 1993 increased to 48.9% from 39.1% in
1992. This increase was primarily the result of the retroactive increase of
1% in the federal corporate income tax rate for the year, the related
revaluation of the Company's deferred income tax liability, and an increase
in non-deductible foreign losses. The Company's effective tax rate in 1991
was 103.8%. Changes in the effective tax rate between 1992 and 1991 resulted
largely from the resolution of certain income tax contingencies and the
reversal of accumulated deferred taxes related to a write-down of assets in
1991 at Coors Energy Company.
<PAGE>
Liquidity and Financial Position:
The Company's primary sources of liquidity are cash provided from operating
activities and external borrowings. The Company continues to be in a strong
position to generate cash internally. The Company's 1993 net cash position
increased 107%, to $82.2 million in 1993 from $39.7 million in 1992. Net cash
increased 170% percent in 1992 from $14.7 million in 1991.
Cash Flow:
Net cash provided/used by operations: Including the 1993 restructuring charge
and other special charges and discontinued operations, net cash provided by
operations was $168.5 million, $155.8 million and $164.1 million for the
years ended 1993, 1992 and 1991 respectively. The 1993 increase in cash from
operations was primarily due to higher depreciation, lower accounts
receivable and notes receivable, higher accounts payable and higher accrued
expenses (primarily related to restructuring and special charges).
The decrease in cash from operations in 1992 compared to 1991 is primarily
due to a reduction in current liabilities.
Net cash provided/used by investing activities (including capital
expenditures): In 1993, the Company spent $119.3 million on investing
activities, compared with $140.4 million in 1992 and $349.8 million in 1991.
Capital expenditures increased 4% in 1993 following a 52% reduction in 1992.
Capital expenditures totalled $120.4 million in 1993, $115.5 million in 1992
and $241.5 million in 1991. In 1993, capital expenditures were made to
expand capacity in Memphis for Zima, routine maintenance and incremental
upgrades to all production facilities. Major expenditures by the Company in
1992 were for increased brewing and packaging capacity at the Memphis plant,
converting to smaller diameter can ends at the Golden plant and routine
repair, upkeep and safety-compliance projects. In 1991, the Company's
additions to properties totaled $241.5 million. Major expenditures were for
improvements to CBC's brewing and packaging facilities in Memphis, Tennessee,
and Golden, Colorado, and expansion of packaging capacity at CBC's Shenandoah
facility.
Net cash provided/used by financing activities: The Company used $6.6
million of cash in financing activities in 1993. The net cash outflow was
primarily to pay dividends, partially offset by the exercise of stock options
net of related notes receivable and the proceeds from long-term debt. Net
cash provided by financing activities in 1992 resulted from the spin-off of
ACXT, offset by the payment of short-term borrowings and the payment of
dividends. Net cash provided by financing activities in 1991 resulted from
the issuance of long-term debt and short-term borrowings.
Capital resources:
Debt Securities: Debt securities were issued to the public for the first time
in the Company's history in 1990. A shelf registration was filed with the
Securities and Exchange Commission for $300 million of senior debt
securities. As of December 26, 1993, $220 million of medium-term notes were
outstanding. The medium-term notes will mature between 1994 and 1999. Fixed
interest rates on these notes range between 8.3% and 9.3%. During 1993, the
Company entered into a $5 million financing agreement with the City of Wheat
Ridge, Colorado for the expansion of its glass recycling facility. The bonds
mature in 2013 and currently carry a variable rate of interest. With the
$220 million of medium-term notes outstanding and the $5 million of bonds
outstanding, the Company's debt-to-total-capitalization ratio was 26.3% at
the end of 1993, compared with 24.3% in 1992 and 19.5% at the end of 1991.
The current repayment schedule for the notes issued is $50 million in 1994,
$44 million in 1995, $36 million in 1996, $19 million in 1997, $31 million in
1998 and $40 million in 1999.
Revolving lines of credit: In addition to the medium-term notes, the Company
has an unsecured, committed, short-term revolving line of credit totaling
$100 million. As of December 26, 1993, all $100 million was available.
Projected 1994 demands on cash/capital: The use of long-term financing and
of committed line of credit arrangements to finance capital expansion
projects and short-term working capital requirements will vary depending on
opportunities in the marketplace.
Outlook:
In 1993, progress was made on a number of strategic improvement initiatives,
including: 1) improving overhead efficiency and effectiveness, 2) generating
cash for reinvestment, 3) restructuring field operations and pursuing market
opportunities, 4) optimizing logistics and 5) improving production
performance.
Strategic priorities for 1994 will be to improve leadership standards for
Coors Brewing Company, re-engineer the company's customer focus, continue to
drive quality and productivity in operations and address strategic and market
opportunities.
In 1994, the brewing industry will continue to be a very competitive
environment. Company management expects minimal average price increases for
1994, as well as continued discounting in major markets. CBC also expects
continued spending in support of the Zima national expansion, especially in
the first half. Depending on the success of ice beers in domestic markets,
CBC may increase spending to support an Artic Ice expansion. However, barring
an increase in federal excise taxes and the related potential impact on the
industry, company management believes that CBC will continue to achieve
moderate volume gains. CBC is also working diligently to continue to improve
cost and asset management. Company management is working toward the goal of
improved returns on invested capital in line with industry averages within
the next few years.
Accounting Changes:
The results of operations for 1992 include the adoption of certain accounting
rule changes. In 1992, the Company adopted FAS 106, "Employers Accounting
for Postretirement Benefits Other Than Pensions," and the financial results
for 1992 reflect the adoption. The transition effect of adopting FAS 106 on
the immediate recognition basis resulted in a charge of $38.8 million to 1992
earnings, net of approximately $23.4 million of income tax effects. The
ongoing effect of adopting the new standard increased 1992 net periodic
postretirement benefit cost by $5.2 million.
Also in 1992, the Company adopted FAS 109, "Accounting for Income Taxes,"
retroactive to the first quarter, and the financial results for 1992 reflect
that adoption as well. The adoption increased 1992 earnings by $30.5 million
because of the reversal of excess deferred income tax liability balances.
The Company will adopt FAS 112, "Employers' Accounting for Postemployment
Benefits," in fiscal year 1994. We believe the impact will not be material.
Environmental:
A top priority of the Company is to ensure compliance with all federal, state
and local environmental protection laws and regulations. Compliance with the
provisions of federal, state and local environmental laws and regulations did
not have a material effect upon the capital expenditures, earnings or
competitive position of the Company during 1993.
The Company also continues its commitment to programs directed toward
efficient use of resources, waste reduction and pollution prevention.
Programs currently underway include recycling initiatives, down weighting of
product packages and increasing the recycled content of product packaging
materials, paper and other supplies. A new recycled glass processing facility
at Coors Glass Manufacturing in Wheat Ridge, Colorado, scheduled to open in
May 1994, will result in greater recycled content in CBC beer bottles by
doubling recycled material processing capacity. A number of employee task
forces throughout the company continually seek effective alternatives for
hazardous materials and work to develop innovative technologies to reduce
emissions and waste. In addition, the Company has a provision for
environmental enhancements.
The Company was one of numerous parties notified by the Environmental
Protection Agency (EPA) that it was a generator "Potentially Responsible
Party" (PRP) for the Lowry Landfill Superfund site. Lowry is a legally
permitted landfill owned by the City and County of Denver that accepted waste
materials resulting from a variety of sources from the 1960's until 1980.
These materials were disposed of in accordance with procedures established by
the City and County of Denver with the oversight of the Colorado Department
of Health. During the fourth quarter of 1990, the Company recorded a special
pretax charge of $30 million related to potential cleanup costs for the Lowry
site.
In December 1991, the Company was named with 37 other defendants in a lawsuit
filed in U.S. District Court. The original plaintiff was the City and County
of Denver, later joined by Waste Management of Colorado, Inc., and Chemical
Waste Management, Inc. In May 1993, the Court approved a Settlement Agreement
between the Company and the plaintiffs to resolve the Company's CERCLA
liabilities at Lowry. Under the agreement, the Company agreed to initial
payments based upon an assumed present value of $120 million in total site
remediation costs. The agreement provides for the Company to pay a varying
share of costs if the total is in excess of this amount. The Company does
not believe that significant cost overruns are likely. The EPA has recently
proposed remediation requirements for the site with projected costs within
the total assumed for settlement purposes.. The Company pays its funds into
a trust to be applied to site remediation and operating and maintenance
costs. The payments are made in annual installments and began in 1993. None
of these payments are expected to be material to the Company's cash flow or
financial position. The terms should not result in any adjustment to the $30
million reserve established in 1990.
In addition, the Company has filed suit against certain of its former and
current insurance carriers, seeking past defense costs and investigation,
study and remediation costs. Settlements have been reached with two
insurance carriers. Litigation against the others is continuing.
The Company has been notified that it is or may be a PRP under CERCLA or
similar state laws with respect to the clean-up of other sites where
hazardous substances have allegedly been released into the environment. The
Company cannot predict with certainty the total costs of clean-up, its share
of the total costs or the extent to which contribution will be available from
other parties, the amount of time necessary to complete the clean-ups, or
insurance coverage. However, based on investigations to date, the Company
believes that any liability would not be material to the financial condition
of the Company with respect to these sites. There can be no certainty,
however, that the Company will not be named as a PRP at additional Superfund
sites in the future or that the costs associated with those additional sites
will not be material.
In the course of a comprehensive internal audit of air emissions, CBC
environmental personnel discovered previously unidentified emissions related
to the evaporation of ethanol and the release of other volatile organic
compounds at various points in the beer production and packaging processes.
The Colorado Department of Health was kept informed throughout the audit.
During 1992 and the first quarter of 1993, CBC reported audit results to the
Colorado Department of Health and filed for the necessary permits to cover
identified emissions. In February and June 1993, CBC received two Notices of
Violation (NOV) from the Colorado Department of Health related to these
emissions. In July 1993, CBC was issued a Compliance Order by the Colorado
Department of Health associated with the first NOV issued in February 1993.
CBC appealed the Compliance Order to the Colorado Air Quality Control
Commission.
In February 1994, a Settlement Agreement was reached between CBC and the
Colorado Department of Health. The agreement resolves all issues contained
in both NOVs and the Compliance Order and terminates CBC's appeal. The
settlement included a penalty payment of $100,000 and an Economic Benefit
payment of $137,000. The settlement also established a timetable for CBC to
meet Reasonably Available Control Technology (RACT) requirements. These
requirements will result in new control equipment for two sources. There is
a stipulated penalty of $125,000 if the proper controls are not completed
according to the timetable. Under the settlement, the company also agreed to
reduce other emissions, relinquish 70 tons of emission credits and accept
permit changes to reduce allowable emissions from the power plant in Golden.
The agreement will result in additional capital spending in 1994 and 1995;
total costs to meet RACT requirements and other emission requirements in
Golden are estimated to be approximately $2 million. CBC facilities at
Memphis and Shenandoah are working with local regulatory authorities to
resolve similar, yet considerably smaller, concerns. The Company believes
the ultimate resolution of this matter at all facilities will not have a
material impact on its consolidated results of operations or financial
position.
While it is impossible to predict the eventual aggregate cost to the Company
for environmental and related matters, management believes that the payments
for these matters will be made over a period of years in amounts which would
not be material in any one year to the consolidated results of operations or
to the financial or competitive position of the Company. The Company
believes adequate accruals have been recorded for losses that are reasonably
possible. Furthermore, as the Company continues to focus attention on
resource conservation, waste reduction and pollution prevention, it is the
Company's belief that potential future liabilities will be reduced.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Consolidated Financial Statements:
Report of Independent Accountants
Consolidated Statement of Income for each of the three years
ended December 26, 1993
Consolidated Balance Sheet at December 26, 1993
and December 27, 1992
Consolidated Statement of Cash Flows for each of the three
years ended December 26, 1993
Consolidated Statement of Shareholders' Equity
for each of the three years ended December 26, 1993
Notes to Consolidated Financial Statements
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Adolph Coors Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Adolph
Coors Company and its subsidiaries at December 26, 1993 and December 27,
1992, and the results of their operations and their cash flows for each of
the three years in the period ended December 26, 1993, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 5 and 8 to the consolidated financial statements, the
Company adopted Statements of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," and No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," in 1992.
PRICE WATERHOUSE
Denver, Colorado
March 4, 1994
<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the years ended
----------------------
December 26, December 27, December 29,
1993 1992 1991
------------ ------------ ------------
(In thousands, except per share data)
<S> <C> <C> <C>
Sales $1,946,592 $1,911,775 $1,890,865
Less - federal and state beer excise tax 364,781 360,987 360,879
--------- --------- ---------
Net sales 1,581,811 1,550,788 1,529,986
--------- --------- ---------
Costs and expenses:
Cost of goods sold 1,036,864 1,035,544 1,039,207
Marketing, general and administrative 454,130 429,573 434,141
Research and project development 13,008 12,370 14,252
Special charge (Note 9) 122,540 -- 29,599
--------- --------- ---------
Total operating expenses 1,626,542 1,477,487 1,517,199
--------- --------- ---------
Operating Income (Loss) (44,731) 73,301 12,787
Other Income (Expense):
Interest income 2,580 255 770
Interest expense (15,780) (16,014) (5,564)
Miscellaneous-net 1,101 1,087 391
--------- --------- ---------
Total other income (expense) (12,099) (14,672) (4,403)
Income (loss) before income taxes (56,830) 58,629 8,384
Income tax expense (benefit) (Note 5) (14,900) 22,900 (8,700)
-------- --------- ---------
Income (loss) from continuing operations (41,930) 35,729 17,084
Net Income (loss) from discontinued
operations (Note 2) -- (29,415) 8,433
-------- --------- ---------
Income (loss) before cumulative effect of
change in accounting principles (41,930) 6,314 25,517
Cumulative effect of change in accounting
for postretirement benefits (net of tax) -- (38,800) --
Cumulative effect of change in accounting
for income taxes -- 30,500 --
-------- --------- ---------
Net income (loss) $ (41,930) $ (1,986) $ 25,517
======== ========= =========
Per share of common stock:
Income (loss) from continuing operations $ (1.10) $ 0.95 $ 0.46
Net income (loss) from discontinued
operations -- (0.78) 0.22
--------- --------- --------
Income (loss) before cumulative effect
of change in accounting principles (1.10) 0.17 0.68
Cumulative effect of change in accounting
for postretirement benefits -- (1.03) --
Cumulative effect of change in accounting
for income taxes -- 0.81 --
-------- --------- --------
Net income (loss) per share of common
stock $ (1.10) $ (0.05) $ 0.68
========= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 26, December 27,
1993 1992
------------ ------------
(In thousands)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 82,211 $ 39,669
Accounts and notes receivable,
less allowance for doubtful accounts
of $409 in 1993 and $12 in 1992 75,967 108,607
Inventories:
Finished 56,878 45,472
In process 24,402 25,252
Raw materials 56,370 62,749
Packaging materials 9,581 18,859
--------- ----------
Total inventories 147,231 152,332
Prepaid expenses and other assets 50,188 58,525
Deferred tax asset (Note 5) 28,151 22,598
--------- ----------
Total current assets 383,748 381,731
--------- ----------
Properties, at cost, less accumulated
depreciation, depletion and amortiza-
tion of $1,118,292 in 1993
and $1,019,159 in 1992 (Note 3) 884,102 904,915
Excess of cost over net assets of businesses
acquired, less accumulated amortization
of $2,768 in 1993 and $2,387 in 1992 12,826 13,454
Other assets 70,268 73,271
--------- ---------
Total assets $1,350,944 $1,373,371
</TABLE> ========= =========
See accompanying notes to consolidated financial statements.<PAGE>
<TABLE>
<CAPTION>
December 26, December 27,
Liabilities and Shareholders' Equity 1993 1992
----------- -----------
(In thousands)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 50,000 $ --
Accounts payable 121,376 107,426
Accrued salaries and vacations 41,798 36,794
Taxes, other than income taxes 43,928 46,647
Federal and state income taxes (Note 5) 4,157 4,154
Accrued expenses and other liabilities 115,292 74,408
--------- ---------
Total current liabilities 376,551 269,429
--------- ---------
Long-term debt (Note 4) 175,000 220,000
Deferred tax liability (Note 5) 53,430 79,727
Postretirement benefits (Note 8) 79,193 66,479
Other long-term liabilities 34,843 52,291
Total liabilities 719,017 687,926
--------- ---------
Shareholders' equity (Note 6):
Capital stock:
Preferred stock, non-voting, $1 par
value, 25,000,000 shares authorized
and no shares issued -- --
Class A common stock, voting, $1
par value, authorized and issued
1,260,000 shares 1,260 1,260
Class B common stock, non-voting,
no par value, 100,000,000 shares authorized
and 46,200,000 shares issued 11,000 11,000
---------- ---------
Total capital stock 12,260 12,260
---------- ---------
Paid-in capital 54,928 48,557
Retained earnings 584,444 645,377
Other 40 --
---------- ---------
651,672 706,194
Less - treasury stock, at cost,
Class B shares, 9,260,779 in
1993 and 9,733,481 in 1992 19,745 20,749
---------- ---------
Total shareholders' equity 631,927 685,445
---------- ---------
Commitments and contingencies
(Notes 6,7,8,9 and 10)
Total liabilities and shareholders' equity $1,350,944 $1,373,371
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended
-----------------------
December 26, December 27, December 29,
1993 1992 1991
----------- ----------- -----------
(In thousands)
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) $ (41,930) $ (1,986) $ 25,517
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion and
amortization 118,955 114,780 108,367
Change in accumulated deferred
income taxes (26,297) (49,010) (23,727)
Loss on sale or abandonment of
properties 20,387 3,736 36,362
Change in current assets and current
liabilities:
Accounts and notes receivable 32,632 7,101 (18,723)
Inventories 5,101 (5,806) (33,545)
Prepaid expenses and other assets 2,784 818 (4,763)
Accounts payable 13,950 (13,972) 8,085
Federal and state income taxes 3 387 (10,442)
Accrued expenses and other
liabilities 42,390 (12,368) 27,484
Change in deferred items 812 (2,550) 368
Postretirement benefits (Note 8) 12,714 66,479 --
Other (13,008) (5,243) 1,174
Other - discontinued operations -- 53,410 47,991
-------- -------- ---------
Net cash provided by operating
activities 168,493 155,776 164,148
-------- -------- ---------
Cash flows from investing activities:
Additions to properties (120,354) (115,450) (241,512)
Proceeds from sale of properties 2,268 26,091 7,834
Change in other intangible assets -- (2,413) (7,213)
Other (1,238) 6,404 9,875
Other - discontinued operations -- (55,035) (118,765)
-------- -------- ---------
Net cash (used by)
investing activities (119,324) (140,403) (349,781)
--------- -------- ---------
Cash flows from financing activities:
Net change in short-term borrowings 12 (46,300) 46,300
Proceeds from long-term debt 5,000 -- 110,000
Exercise of stock options, net of
related notes receivable 7,375 4,960 1,605
Dividends paid (19,003) (18,801) (18,718)
Other (11) 14 (26)
Other - discontinued operations -- 69,708 (2,561)
-------- -------- ---------
Net cash provided (used)
financing activities (6,627) 9,581 136,600
-------- -------- ---------
Cash and cash equivalents:
Net increase (decrease) in cash
and cash equivalents 42,542 24,954 (49,033)
Balance at beginning of year 39,669 14,715 63,748
--------- --------- ---------
Balance at end of year $ 82,211 $ 39,669 $ 14,715
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Common stock
issued Paid-in Retained Treasury
Class A Class B capital earnings stock Other Total
---------------- ------- -------- -------- ----- -----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 30, 1990 $1,260 $11,000 $42,423 $1,057,473 $ (21,413) $ 804 $1,091,547
Exercise of stock options, including
$163 income tax benefit and
reduced by $937 of related loans
outstanding to employees (Note 6) 1,423 182 1,605
Deferred compensation and other 254 (21) (764) (531)
Net income 25,517 25,517
Cash dividends-$0.50 per share (18,718) (18,718)
----- ------ ------ --------- -------- ------- ----------
Balance at December 29, 1991 1,260 11,000 44,100 1,064,272 (21,252) 40 1,099,420
Exercise of stock options, including
$384 income tax benefit and increased
by $805 of payments on related loans
outstanding to employees (Note 6) 4,457 503 4,960
Deferred compensation and other (321) (321)
Net loss (1,986) (1,986)
Cash dividends-$0.50 per share (18,801) (18,801)
Distribution to shareholders of
ACX Technologies, Inc. (Note 2) (398,108) 281 (397,827)
----- ------ ------ ------- -------- ----- ---------
Balance at December 27, 1992 1,260 11,000 48,557 645,377 (20,749) -- 685,445
Exercise of stock options, including
$895 income tax benefit and increased
$132 of payments on related loans
outstanding to employees (Note 6) 6,371 1,004 7,375
Other 40 40
Net loss (41,930) (41,930)
Cash dividends-$0.50 per share (19,003) (19,003)
----- ------ ------ ---------- --------- ----- ----------
Balance at December 26, 1993 $1,260 $11,000 $54,928 $ 584,444 $ (19,745) $ 40 $ 631,927
===== ====== ====== ========= ========= ===== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:
Summary of Accounting Policies
Fiscal year: The fiscal year of the Company is a 52- or 53-week period ending
on the last Sunday in December. Fiscal years for the financial statements
included herein ended December 26, 1993, December 27, 1992 and December 29,
1991.
Principles of consolidation: The consolidated financial statements include
the accounts of Adolph Coors Company, its sole direct subsidiary, Coors
Brewing Company (CBC), and all subsidiaries of CBC (collectively referred to
as "the Company"). All significant intercompany accounts and transactions
have been eliminated. Certain reclassifications were made to 1991 amounts to
conform with current presentation.
Inventories: Inventories are stated at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for substantially all
inventories. Current cost, as determined principally on the first-in, first-
out method, exceeded LIFO cost by $46,705,000 and $52,959,000 at December 26,
1993, and December 27, 1992, respectively. During 1993, total inventory
costs and quantities were reduced, resulting in a LIFO liquidation, the
effect of which was not material.
Properties: Land, buildings and equipment are capitalized at cost. For
financial reporting purposes, depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets.
Accelerated depreciation methods are generally used for income tax purposes.
Expenditures for new facilities and improvements that substantially extend
the capacity or useful life of an asset are capitalized. Start-up costs
associated with manufacturing facilities, but not related to construction,
are expensed as incurred. Ordinary repairs and maintenance are expensed as
incurred (Note 3).
Interest capitalized, expensed and paid was as follows:<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27, December 29,
1993 1992 1991
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Interest costs
Continuing operations $20,580 $21,631 $13,648
Discontinued operations -- $ 6,044 $ 3,939
Interest capitalized
Continuing operations $(4,800) $(5,617) $(8,084)
Discontinued operations -- $(1,456) $(8,914)
Interest expensed
Continuing operations $15,780 $16,014 $ 5,564
Discontinued operations -- $ 4,588 $(4,975)
Interest paid $20,172 $23,339 $14,312
/TABLE
<PAGE>
Excess of cost over net assets of businesses acquired: The excess of cost
over the net assets of businesses acquired in transactions accounted for as
purchases is being amortized on a straight-line basis, generally over a 40-
year period.
Hedging transactions: The Company periodically enters into forward, future
and option contracts for foreign currency and commodities to hedge its
exposure to exchange rates and price fluctuations for raw materials and fixed
assets used in the production of beer. The gains and losses on these
contracts are deferred and recognized in cost of sales as part of the product
cost.
Concentration of credit risk: The majority of the accounts receivable
balances as of December 26, 1993, and December 27, 1992, were from malt
beverage distributors. The Company secures substantially all of this credit
risk with purchase money security interests in inventory and proceeds,
personal guarantees and/or letters of credit.
Statement of cash flows: The Company defines cash equivalents as highly
liquid investments with original maturities of 90 days or less. Income taxes
paid were $15,367,000 in 1993, $26,167,000 in 1992 and $29,183,000 in 1991.
Net Income per common share: Net income per common share is based on the
weighted average number of shares of common stock outstanding during each
year. Except for voting, both classes of common stock have the same rights
and privileges.
Environmental expenditures: Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations, which do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments and/or remedial
efforts are probable and the costs can be reasonably estimated.
NOTE 2:
Discontinued Operations
In May 1992, the board of directors of the Company authorized development of
a plan to distribute to its shareholders its ceramics, aluminum, packaging
and technology-based developmental businesses (the Technology Businesses).
On August 12, 1992, the Company formed ACX Technologies, Inc. (ACXT or ACX
Technologies) to own the Technology Businesses. On December 27, 1992, the
Company distributed to its shareholders the common stock of ACXT.
Accordingly, the results of ACXT and the Technology Businesses are reported
as discontinued operations in these consolidated financial statements for all
periods presented except as noted. Each holder of record of the Company's
common stock on December 16, 1992, received one share of ACXT common stock
for every three shares of Adolph Coors Company common stock held as of such
date. ACXT stock is publicly traded on the over-the-counter market under the
symbol "ACXT."
The loss from discontinued operations for the year ended December 27, 1992,
was $29,415,000 or $0.78 per share. The 1992 results included approximately
$7,200,000, or $0.19 per share, for transaction costs associated with the
spin-off and a fourth quarter pretax charge of $13,700,000, or $0.36 per
share, related to restructuring of operations primarily at Coors Ceramics
Company and Golden Technologies Company, Inc. Discontinued operations for
1992 also included the operating results of the Technology Businesses and
ACXT's adoption of the new accounting standards for postretirement benefits
and income taxes. Net income from discontinued operations for the year ended
December 29, 1991, was $8,433,000, or $0.22 per share.
Historical marketing, general and administrative expenses for the Technology
Businesses, which included costs incurred directly by and for the Technology
Businesses, plus a reasonable portion of other shared historical corporate
expenses, were allocated to discontinued operations.
Interest expense in 1992 and 1991 was allocated based on short-term
borrowings up to $75,000,000, which is approximately the amount of outside
debt owed by ACXT immediately after the distribution. Interest expense on
the short-term borrowings was based on interest rates ranging from 3.1% to
6.9% resulting in interest costs of $6,044,000 and $3,939,000 for the years
ended December 27, 1992, and December 29, 1991, respectively. Interest
expense was capitalized based on construction in progress balances rather
than on actual interest expense allocated.
The following summarizes the results of operations for discontinued
operations:
<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27, December 29,
1993 1992 1991
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Outside sales $ -- $ 413,969 $ 387,436
---------- ---------- -----------
Income (loss) before income taxes $ -- $ (24,215) $ 14,833
Income tax expense (benefit) -- (7,200) 6,400
---------- ---------- -----------
Income (loss) before cumulative effect
of change in accounting principles -- (17,015) 8,433
Cumulative effect of change in accounting
for postretirement benefits (net of tax) -- (13,200) --
Cumulative effect of change in accounting
for income taxes -- 800 --
---------- ---------- ----------
Net income (loss) from discontinued
operations $ -- $ (29,415) $ 8,433
========== ========== ===========
/TABLE
<PAGE>
NOTE 3:
Properties
The cost of properties and related accumulated depreciation, depletion and
amortization consists of the following:
<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27,
1993 1992
------------ ------------
(In thousands)
<S> <C> <C>
Land and improvements $ 93,436 $ 92,611
Buildings 427,111 409,181
Machinery and equipment 1,394,156 1,338,296
Natural resource properties 22,386 25,195
Construction in progress 65,305 58,791
--------- ---------
2,002,394 1,924,074
Less-accumulated depreciation, depletion
and amortization 1,118,292 1,019,159
--------- ---------
Net properties $ 884,102 $ 904,915
========== =========
/TABLE
<PAGE>
NOTE 4:
Debt
During 1993, the Company entered into a $5 million financing agreement with
the City of Wheat Ridge, Colorado for the construction of a glass recycling
plant. The financing agreement obligates the Company to pay the principal,
interest, and premium, if any, on the City of Wheat Ridge, Colorado
Industrial Development Bonds (Adolph Coors Company Project) Series 1993. The
bonds mature in 2013. They are currently variable rate securities with
interest payable on the first of March, June, September and December. The
weighted average interest rate during 1993 was 2.7%.
As of December 26, 1993, the Company had issued $220 million of unsecured
medium-term notes. All notes have interest due semi-annually in April and
October at fixed interest rates ranging from 8.3% to 9.3% per annum. The
repayment schedule for the notes issued is $50 million in 1994, $44 million
in 1995, $36 million in 1996, $19 million in 1997, $31 million in 1998 and
$40 million in 1999.
The Company has an unsecured committed short-term credit arrangement
totalling $100 million, and as of December 26, 1993, all $100 million was
available. This line of credit is negotiated annually. This credit
arrangement is subject to the Company maintaining certain financial ratios,
and the only restriction for withdrawal is that the Company meet specific
covenant criteria. As of December 26, 1993, the Company also had uncommitted
credit arrangements available, of which nothing was outstanding. The Company
pays no commitment fees for these uncommitted arrangements, which are on a
funds-available basis. Interest rates are negotiated at the time of
borrowing.
NOTE 5:
Income Taxes
In 1992, the Company and its subsidiaries adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes". The
transition effect of adopting FAS 109 resulted in a $30.5 million increase in
net income reflected as the cumulative effect of a change in accounting
principle in 1992. The 1991 amounts are reflected under Accounting
Principles Board Opinion No. 11 (APB 11).
The provision for income taxes charged to continuing operations was as
follows:
<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27,
1993 1992
------------ ------------
(In thousands)
<S> <C> <C>
Current provision:
Federal $ 14,479 $ 20,193
State 2,471 3,827
-------- --------
Total current tax expense 16,950 24,020
-------- --------
Deferred:
Federal (27,890) (1,025)
State ( 3,960) (95)
-------- -------
Total deferred tax (benefit) (31,850) (1,120)
-------- -------
Total income tax expense (benefit) $ (14,900) $ 22,900
======== =======
/TABLE
<PAGE>
The deferred tax assets (liabilities) are composed of the tax effect of the
following:
<PAGE>
<TABLE>
<CAPTION>
As of
-----------------------
December 26, December 27,
1993 1992
------------ -----------
(In thousands)
<S> <C> <C>
Tax in excess of
book depreciation and
amortization $ (125,157) $ (117,823)
(Gain) loss on sale or write-down of (3,032) 1,168
assets
Deferred compensation and other
employee related 12,192 13,055
Change in balance sheet reserves
and accruals 37,356 8,679
Environmental accruals 11,606 10,783
Alternative minimum tax 9,155 2,066
Capitalized interest (2,155) (2,699)
Other employee postretirement
benefits (Note 8) 31,065 25,557
State deferred taxes, net of federal
income tax benefit 648 704
Other - net 3,043 1,381
--------- --------
Net deferred tax liability $ (25,279) $ (57,129)
========= =========
/TABLE
<PAGE>
In 1992, the Company's income tax expense for discontinued operations
differed from the federal statutory rate of 34% because of non-deductible
expenses of 8.8% and other items (similar to those below) of 4.5%. The
effective rate was 29.7%.
Income taxes as reflected in the Consolidated Statement of Income differ from
the amounts computed by applying the statutory federal corporate tax rate to
income as follows:
<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27,
1993 1992
------------ ------------
<S> <C> <C>
Expected tax rate (35.0%) 34.0%
State income taxes
(net of federal income
tax benefit) (1.7) 3.7
Revaluation of deferred income tax
liability 4.4 --
Unremitted earnings of foreign
joint venture 2.6 --
Non-deductible expenses and losses 2.7 --
Other - net 0.8 1.4
--------- ---------
Effective tax rate (26.2%) 39.1%
========= =========
/TABLE
<PAGE>
The 1991 amounts are reflected under APB 11. The provision for income taxes
applicable to continuing operations was as follows:
<PAGE>
<TABLE>
<CAPTION>
For the year ended
---------------------
December 29,
1991
------------
(In thousands)
<S> <C>
Current provision:
Federal $ 15,557
State 3,010
--------
Total current tax expense 18,567
Total deferred tax (benefit) (27,267)
--------
Total income tax (benefit) $ (8,700)
========
/TABLE
<PAGE>
Certain items of income and expense are recognized in different periods for
tax and financial reporting purposes. The income tax effects of these timing
differences are provided at current rates in the period in which the amounts
are reflected in the Consolidated Statement of Income. The principal sources
of these differences and the tax effects of each are as follows:
<PAGE>
<TABLE>
<CAPTION>
For the year ended
---------------------
December 29,
1991
------------
(In thousands)
<S> <C>
Tax in excess of book
depreciation and amortization $ 1,161
Loss on sale or write-down of assets (24,251)
Pension and other employee benefits (3,827)
Intangible drilling and development costs 774
Excess of tax over book interest deduction
on capital projects 1,177
Reclassification of prior year taxes and
alternative minimum tax (2,094)
Other - net (207)
-------
Total deferred tax (benefit) - net $(27,267)
=======
/TABLE
<PAGE>
The reconciliation of income tax expense to the amount computed by applying
the U.S. federal statutory income tax rate to pretax income is summarized as
follows:
<PAGE>
<TABLE>
<CAPTION>
For the year ended
--------------------
December 29,
1991
--------------
<S> <C>
Expected tax rate 34.0%
State income taxes (net of federal
income tax benefit) 6.2
Non-deductible expenses and losses 4.8
Resolution of certain income tax contingencies (44.1)
Reversal of accumulated deferred
taxes related to write-down of assets (107.3)
Other - net 2.6
----------
Effective tax rate (103.8%)
==========
/TABLE
<PAGE>
The Internal Revenue Service (IRS) has completed its examination of the
Company's federal income tax returns through 1985. The IRS is currently
examining the fiscal years 1986 through 1990. In the opinion of management,
adequate accruals have been provided for all income tax matters and related
interest.
The Company and ACX Technologies have entered into a tax sharing agreement
that provides for, among other things, the treatment of tax matters for
periods prior to the distribution date and responsibility for adjustments as
a result of audits by taxing authorities and is designed to preserve the
status of the distribution as a tax-free distribution.
NOTE 6:
Stock Option and Restricted Stock Award Plans
Under the Company's stock option plans, officers and other key employees may
be granted options each of which allows for the purchase of shares of the
Company's common stock. The option price on outstanding options is equal to
the fair market value of the stock at the date of grant. The 1983 non-
qualified Adolph Coors Company Stock Option Plan, as amended, provides for
options to be granted at the discretion of the board of directors. These
options expire 10 years from date of grant. No options have been granted
under this plan since 1989. At this time, the board of directors has decided
not to grant additional options under this plan. The Non-Qualified Equity
Incentive Plan (NQEI Plan) that became effective January 1, 1990, provides
for two types of grants: restricted stock awards and stock options. The
stock options have a term of 10 years with exercise prices equal to market on
the day of the grant. One-third of the stock option grant is vested in each
of the three successive years after the date of grant. Vesting in the
restricted stock awards is over a three-year period from the date of grant.
All restricted shares outstanding as of December 27, 1992, became fully
vested because of the spin-off. The compensation cost associated with these
awards is amortized to expense over the vesting period. In 1991, the Company
adopted an Equity Compensation Plan for Non-Employee Directors (EC Plan).
The EC Plan provides for two grants of the Company's stock; the first grant
is automatic and equals 20% of the Director's annual retainer and the second
grant is elective and covers the balance of the retainer. The compensation
cost associated with the EC Plan is amortized over the Director's term. In
1992, all grants under the restricted stock plan were accelerated to fully
vest because of the spin-off.
Changes in stock options are as follows:
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Price range
Shares per share
- --------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 30, 1990 1,788,400 $14.50-$30.50
Granted 154,800 $19.38
Cancelled (53,200) $21.25-$24.63
Exercised (85,500) $14.50-$21.75
- --------------------------------------------------------------------------------
Outstanding at December 29, 1991 1,804,500 $14.50-$30.50
Adjustment due to ACX Technologies, Inc. spin-off (147,400) --
Granted -- --
Cancelled (90,600) $14.50-$30.50
Exercised (276,100) $13.00-$24.63
- --------------------------------------------------------------------------------
Outstanding at December 27, 1992 1,290,400 $13.00-$30.50
Granted 83,000 $16.44-$16.50
Cancelled (60,100) $13.24-$21.35
Exercised (465,000) $10.82-$18.36
- --------------------------------------------------------------------------------
Outstanding at December 26, 1993 848,300 $10.82-$22.75
================================================================================
Options exercisable at:
December 27, 1992 1,156,100
December 26, 1993 841,300
================================================================================
</TABLE>
<PAGE>
Common stock reserved for options, and restricted stock awards totaled
2,331,800 shares as of December 26, 1993, and 1,864,100 shares as of December
27, 1992.
In January 1993, the number and exercise price of all options outstanding at
the time of the ACX Technologies spin-off were adjusted to compensate for the
economic value of the options as a result of the distribution to
shareholders. The options of officers who transferred to ACX Technologies
were cancelled. The net effect of these adjustments decreased the number of
options outstanding by 147,400.
NOTE 7:
Employee Retirement Plans
The Company maintains several defined benefit pension plans for the majority
of its employees. Benefits are based on years of service and average base
compensation levels over a period of years. Plan assets consist primarily of
equity, real estate and interest-bearing investments. The Company's funding
policy is to contribute annually not less than the ERISA minimum funding
standards, nor more than the maximum amount which can be deducted for federal
income tax purposes. Total expense for these plans, as well as a savings and
investment (thrift) plan, was $39,873,000 in 1993, $20,282,000 in 1992 and
$14,635,000 in 1991. The 1993 increase in plan expense resulted primarily
from the offering of the early retirement program and plan changes. Included
in the 1993 service cost is $16.5 million which was the result of the early
retirement program. That 1993 expense has been included in restructuring
costs (Note 9).
<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27, December 29,
1993 1992 1991
------------ ------------ ------------
(In thousands)
<S> <C> <C> <C>
Service cost-benefits earned during
the year $ 27,089 $ 10,873 $ 8,291
Interest cost on projected benefit
obligations 24,332 20,818 18,479
Actual (gain) loss on plan assets (35,329) (9,748) (38,637)
Net amortization and deferral 16,929 (7,639) 21,639
------- ------- --------
Net pension expense $ 33,021 $ 14,304 $ 9,772
======= ======= =======
/TABLE
<PAGE>
The funded status of the pension plans and amounts recognized in the
Consolidated Balance Sheet are as follows:
<PAGE>
<TABLE>
<CAPTION>
As of
-----------------------
December 26, December 27,
1993 1992
------------ ------------
(In thousands)
<S> <C> <C>
Actuarial present value of accumulated plan benefits,
including vested benefits of $273,589 in 1993 and
$185,351 in 1992 $290,318 $194,750
------- -------
Projected benefit obligations for
service rendered to date $380,594 $268,435
Plan assets available for benefits 253,526 202,809
------- -------
Plan assets less than projected benefit obligations 127,068 65,626
Unrecognized net loss (94,416) (46,315)
Prior service cost not yet recognized (25,402) (19,237)
Unrecognized net asset being recognized over 15 years 10,872 12,561
------- -------
Net accrued pension liability $ 18,122 $ 12,635
======== =======
</TABLE>
<PAGE>
Significant assumptions used in determining the valuation of the projected
benefit obligations as of the end of 1993, 1992 and 1991 were:
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- ----
<S> <C> <C> <C>
Settlement rate 7.25% 8.75% 8.75%
Increase in compensation levels 5.00% 5.75% 5.75%
Rate of return on plan assets 9.50% 10.50% 10.50%
/TABLE
<PAGE>
NOTE 8:
Non-Pension Postretirement Benefits
The Company has defined benefit postretirement plans that provide medical
benefits and life insurance for retirees and eligible dependents. The plans
are not funded.
In 1992, the Company adopted Statement of Financial Accounting Standards No.
106 (FAS 106), "Employers' Accounting for Postretirement Benefits Other Than
Pensions". This statement required the recognition of postretirement
benefits expense on an accrual basis during the employee's active working
career and the recognition of a minimum liability for the amount of unfunded
accumulated postretirement benefit obligation.
The transition effect of adopting FAS 106 in 1992 resulted in an after-tax
charge to 1992 earnings of $52 million, $13.2 million of which is included in
results of discontinued operations, for the year ended December 27, 1992.
The on-going effect of adopting the new standard increased net periodic
postretirement pretax benefit cost by $5.6 million in 1993 and by $7.4
million in 1992, $1.6 million of which is included in results of discontinued
operations.
This obligation was determined by the application of the terms of medical and
life insurance plans, together with relevant actuarial assumptions and health
care cost trend rates ranging ratably from 12% in 1992 to 5.25% in the year
2006. The effect of an annual 1% increase in trend rates would increase the
accumulated postretirement benefit obligation by approximately $10.5 million
and $5.8 million in 1993 and 1992, respectively. The effect of a 1% increase
in trend rates also would have increased the ongoing annual cost by $1
million and $1.1 million in 1993 and 1992, respectively. The discount rate
used in determining the accumulated postretirement benefit obligation was
7.25% and 8.75% at December 26, 1993 and December 27, 1992, respectively.
The 1993 increase in plan expense resulted principally from an early
retirement program. Included in the 1993 service cost is $7.7 million which
was the result of the early retirement program. That 1993 expense has been
included in Restructuring Costs (See Note 9).
Net periodic postretirement benefit cost included the following:
<PAGE>
<TABLE>
<CAPTION>
For the years ended
-----------------------
December 26, December 27,
1993 1992
------------ ------------
(In thousands)
<S> <C> <C>
Service cost-benefits attributed to service
during the period $ 10,163 $ 2,526
Interest cost on accumulated postretirement
benefit obligation 5,311 4,859
Amortization of net gain (239) --
Return on plan assets -- --
------- ------
Net periodic postretirement benefit cost $ 15,235 $ 7,385
======= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The funded status was as follows:
As of
--------------------------
December 26, December 27,
1993 1992
------------ ------------
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 43,254 $ 9,829
Fully eligible active plan participants 16,737 13,275
Other active plan participants 35,008 44,931
-------- --------
Total 94,999 68,035
Plan assets at fair value -- --
-------- --------
Accumulated postretirement obligation in
excess of plan assets 94,999 68,035
Unrecognized net loss (18,273) --
Unrecognized prior service cost 4,578 --
-------- --------
Accrued postretirement benefit obligation
in the Consolidated Balance Sheet $ 81,304 $ 68,035
======== ========
/TABLE
<PAGE>
NOTE 9:
Special Charges
Fourth quarter results for 1993 include several special charges. These
special charges are shown as a separate item in the accompanying Consolidated
Statement of Income and resulted in a pretax charge of $122.5 million, or
$1.98 per share after income tax. A restructuring charge, which totalled
$109.5 million, or $1.77 per share after income tax, resulted from the
Company's announcement in July 1993, of a restructuring program designed to
reduce costs, improve operating efficiencies and increase shareholder value.
The restructuring charge includes $70.2 million for voluntary severance and
early retirement incentives designed to reduce the Company's white-collar
work force, as well as $39.3 million for workplace redesign, asset write-
downs and other expenses related to profit improvement initiatives.
Substantially all of the payments for voluntary severance and early
retirement incentives occurred in 1993. Of the $39.3 million, approximately
$22 million relates to workplace redesign and other expenses related to
profit improvement initiatives, and approximately $17.3 million relates to
asset write-downs. Other special charges unrelated to the profit improvement
initiatives totalled $13 million for the write-down of certain distributor
assets and a provision for environmental enhancements.
Fourth quarter results for 1991 include a non-cash pretax charge of $29.6
million related to asset write-downs at Coors Energy Company. Certain assets
of Coors Energy Company were evaluated for disposition, and the net book
value of these assets was adjusted to estimated fair market value. The
impact of the asset write-down on 1991 earnings was $9.9 million, or $0.26
per share, and reflects a tax benefit from the reversal of deferred taxes
previously recorded at higher tax rates.
NOTE 10:
Commitments and Contingencies
It is the policy of the Company to act as a self-insurer for certain
insurable risks consisting primarily of employee health insurance programs,
workers' compensation and general liability contract deductibles.
In 1993, CBC entered into a five-year supply contract to purchase substantial
amounts of packaging raw materials from two subsidiaries of ACX Technologies.
These contracts are for pre-determined quantities and based on market
pricing.
In January 1992, ACC and CBC (as well as two former affiliates that are now
subsidiaries of ACXT) were sued by TransRim Enterprises (USA) Ltd. in Federal
District Court for the District of Colorado. ACC, CBC and their former
affiliates are parties to a joint defense agreement concerning defense of the
case and allocation of liability, if any. TransRim alleges that the
defendants misused confidential information and breached an implied contract
to proceed with a joint venture project to build and operate a paper board
mill. TransRim initially claimed damages totaling $159 million based on a
number of theories, some of which have been removed from the case on a
defendants' summary judgment motions. TransRim seeks damages for unjust
enrichment from alleged savings to CBC in purchases of paper board from other
suppliers. The matter is scheduled for trial beginning in April 1994.
Management believes that ACC and CBC have meritorious defenses and that the
ultimate outcome will not have a material impact on the Company's financial
position and results of operations.
In 1992, CBC appealed to the U.S. Circuit Court of Appeals for the First
Circuit seeking a review of a ruling of the U.S. District Court for the State
of New Hampshire. The District Court had upheld a 1991 U.S. Bankruptcy Court
order awarding damages of $10 million, plus interest and attorneys' fees, to
a former beer distributor. In the fourth quarter of 1993, CBC entered into a
settlement of this matter and a related case. The settlement was within the
amount of reserves previously established for the matter.
In 1993, CBC continued to perform under an agreement, established in 1990, to
purchase 5.4 billion aluminum can bodies over an indefinite period of time
with no annual minimum purchase requirement. The contract may be terminated
by either party pursuant to the occurrence of certain events.
In 1993, a subsidiary of CBC continued to participate in an agreement to
purchase coal for CBC's steam generation facility. The agreement runs for a
five-year period beginning in 1990 and requires the purchase of a minimum of
330,000 tons of coal per contract year.
In July 1991, the Company became aware that Mutual Benefit Life Insurance
Company (MBLIC) had been placed under the control of the State of New Jersey.
The Company is a holder of several life insurance policies and annuities
through MBLIC. The cash surrender value under these policies, net of
outstanding loans, approximates $5,952,000. Policyholders have been notified
that all claims, benefits and annuity payments will continue to be paid in
full; however, at this time policyholders are able to only partially redeem
their policies for cash.
In 1991, CBC entered into an agreement with Colorado Baseball Partnership
1993, Ltd. for an equity investment and multi-year signage and advertising
package. This commitment, totalling approximately $30,000,000, was finalized
upon the awarding of a National League baseball franchise to Colorado in
1991. The initial investment as a limited partner has been paid.
During the fourth quarter of 1991, the Company was named with 37 other
defendants in a lawsuit filed in U.S. District Court. The plaintiffs were
the City and County of Denver, Waste Management of Colorado, Inc., and
Chemical Waste Management, Inc. The suit sought recovery of $20,000,000 in
Lowry costs and a declaratory judgment that defendants are liable for all
prior and future site costs.
In 1993, the Company reached an agreement with the plaintiffs to resolve the
Company's CERCLA liabilities at Lowry. The initial payments are based upon
an assumed present value of $120,000,000 in total site remediation costs.
The agreement provides for the Company to pay a varying share of costs if the
total is in excess of this amount. The Company does not believe that
significant cost overruns are likely. Under the agreement, the Company pays
its funds into a trust to be applied to site remediation and operating and
maintenance costs. The payments are made in annual installments beginning in
1993. None of these payments are expected to be material to the Company's
cash flow or financial position. The terms did not result in any adjustment
to the $30,000,000 reserve established in 1990.
The Company also is named as defendant in various actions and proceedings
arising in the normal course of business. In all of these cases, the Company
is denying the allegations and is vigorously defending against them and, in
some instances, has filed counterclaims. Although the eventual outcome of
the various lawsuits cannot be predicted, it is management's opinion these
suits will not result in liabilities to such extent that they would
materially affect the Company's financial position.
NOTE 11:
Quarterly Financial Information (Unaudited)
The following summarizes selected quarterly financial information for each of
the two years in the period ended December 26, 1993. The third quarter is a
16-week period; all other fiscal quarters are 12 weeks.
As described in Note 9, income from continuing operations in the fourth
quarter of 1993 was reduced by special pretax charges of $122,540,000, or
$1.98 per share.
Income from continuing operations in the fourth quarter of 1992 was reduced
by asset write-downs totaling $1,845,000, or $0.05 per share, a $1,747,000,
or $0.05 per share adjustment to inventories and a $1,717,000, or $0.05 per
share, adjustment due to change in accounting estimates.
Income from discontinued operations in the fourth quarter of 1992 was reduced
by a pretax charge of $13,700,000, or $0.36 per share, related to the
restructuring of certain operations at ACXT subsidiaries.
<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
QUARTERLY FINANCIAL STATEMENT (UNAUDITED)
First Second Third Fourth Year
------- ------ ----- ------ ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
1993
Net sales $295,983 $412,868 $535,627 $ 337,333 $1,581,811
------- -------- ------- -------- ---------
Cost of goods sold 198,905 257,539 349,149 231,271 1,036,864
Marketing, general and administrative 82,747 115,803 158,288 97,292 454,130
Research and project development 2,602 2,833 4,506 3,067 13,008
Special charges including
restructuring charge -- -- -- 122,540 122,540
Other (income) expense-net 3,374 2,904 3,696 2,125 12,099
------- ------- -------- ------- ---------
Total costs and expenses 287,628 379,079 515,639 456,295 1,638,641
------- ------- -------- ------- ---------
Income (loss) before income taxes 8,355 33,789 19,988 (118,962) (56,830)
Income tax expense (benefit) 3,700 14,900 10,400 (43,900) (14,900)
------- ------- ------- -------- ---------
Net income (loss) $ 4,655 $ 18,889 $ 9,588 $ (75,062) $ (41,930)
======= ======= ======= ======== ==========
Per share of common stock:
Net income (loss) per share of common stock $ 0.12 $ 0.50 $ 0.25 $ (1.97) $ (1.10)
======== ======= ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth Year
------- ------ ----- ------ ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
1992
Net sales $285,840 $408,714 $516,992 $ 339,242 $1,550,788
-------- ------- -------- -------- ----------
Cost of goods sold 189,780 262,212 338,270 245,282 1,035,544
Marketing, general and administrative 90,803 116,749 128,884 93,137 429,573
Research and project development 3,081 3,060 3,367 2,862 12,370
Other (income) expense-net 2,870 3,955 3,822 4,025 14,672
------- ------- -------- -------- ---------
Total costs and expenses 286,534 385,976 474,343 345,306 1,492,159
------- ------- -------- -------- ---------
Income (loss) before income taxes (694) 22,738 42,649 (6,064) 58,629
Income tax expense (benefit) (100) 7,800 17,800 (2,600) 22,900
------- ------- ------- -------- ---------
Income (loss) from continuing operations (594) 14,938 24,849 (3,464) 35,729
Net income (loss) from discontinued operations (12,101) 3,324 (1,404) (19,234) (29,415)
------- ------- ------- -------- ---------
Net Income (loss) before cumulative effect of
change in accounting principles (12,695) 18,262 23,445 (22,698) 6,314
Cumulative effect of change in accounting for
postretirement benefits (net of tax) (38,800) -- -- -- (38,800)
Cumulative effect of change in accounting for
income taxes 30,500 -- -- -- 30,500
------- ------- ------- -------- ----------
Net income (loss) $(20,995) $ 18,262 $ 23,445 $ (22,698) $ (1,986)
======= ======= ======= ======== =========
Per share of common stock:
Income (loss) from continuing operations $ (0.02) $ 0.40 $ 0.66 $ (0.09) $ 0.95
Net income (loss) from discontinued operations (0.32) 0.09 (0.04) (0.51) (0.78)
------- ------- ------- -------- ---------
Net Income (loss) before cumulative effect of
change in accounting principles (0.34) 0.49 0.62 (0.60) 0.17
Cumulative effect of change in accounting for
postretirement benefits (1.03) -- -- -- (1.03)
Cumulative effect of change in accounting for
income taxes 0.81 -- -- -- 0.81
------- ------- ------- -------- ---------
Net income (loss) per share of common stock $ (0.56) $ 0.49 $ 0.62 $ (0.60) $ (0.05)
======== ======= ======= ======== ==========
</TABLE>
<PAGE>
ITEM 9. Disagreements on Accounting and Financial Disclosure
Within the last two fiscal years there have been no changes in the Company's
independent accounting firm or disagreements on accounting and financial
statement disclosure matters.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
(a) Directors
JOSEPH COORS (Age 76) is presently Vice Chairman of Adolph Coors Company and
has served in such capacity since 1975. He has served as a Director since
1942. He retired from day-to-day operations in December 1987. He serves as
chairman of the Compensation Committee and is a member of the Executive
Committee and the Audit Committee. He is also a Director of CBC and ACXT.
PETER H. COORS (Age 47) has served as a Director of Adolph Coors Company
since 1973. Prior to 1993, he served as Executive Vice President of Adolph
Coors Company and Chairman of the Brewing Group. In December 1993, he was
named interim treasurer. Also in 1993, he became Vice President and Secretary
of Adolph Coors Company and was elected CEO and Vice Chairman of CBC. He is
also a member of the Board of Directors of CBC. He serves as a member of the
Debt Pricing Committee and the Executive Committee. In his career at Coors,
he has served in a number of different positions, including Divisional
President of Sales, Marketing and Administration and Secretary (1982-1985),
Senior Vice President, Sales and Marketing (1978-1982), Vice President (1976-
1978), and Assistant Secretary and Assistant Treasurer (1974-1976).
WILLIAM K. COORS (Age 77) is Chairman of the Board and President of Adolph
Coors Company and has served in such capacities since 1970 and 1989,
respectively. He has served as a Director since 1940. He serves as Chairman
of the Debt Pricing Committee and the Executive Committee. He is also a
director and Chairman of the Board of CBC and ACXT.
J. BRUCE LLEWELLYN (Age 66) has served as a Director and member of the Audit
Committee since 1989. In 1993, he was named chairman of the Audit Committee.
As of 1993, he also serves on the Compensation Committee. He is a member of
the Board of Directors of CBC. He is an attorney and involved in the
management of several businesses in which he is an investor. He is presently
the Chairman of the Board and Chief Executive Officer of Philadelphia Coca
Cola Bottling, Inc., Queen City Broadcasting, Inc. and Garden State
Cablevision, Inc. He is also a Director of Manufacturers Hanover
Trust/Chemical Bank and QVC, Inc.
LUIS G. NOGALES (Age 50) is a Director and member of the Audit Committee and
has served in such capacities since 1989. In 1993, he also became a member
of the Compensation Committee. He is a member of the Board of Directors of
CBC. He is Chairman and Chief Executive Officer of Embarcadero Media, Inc., a
media (radio) acquisition company in Los Angeles. In the past he was
president of Nogales Partners (1990 to present), a media acquisition firm,
general partner of Nogales Castro Partners (1989-1990), President of
Univision, the nation's largest Spanish language television network (1986-
1988) and Chairman and Chief Executive Officer of United Press International
(1983-1986). From 1981-1983 he served as Senior Vice President of Fleishman-
Hillard, Inc. He is also a Director of Southern California Edison Company and
SCEcorp.
It is the Company's intent to name one additional independent director in
1994.
(b) Executive Officers
Of the above directors, Peter H. Coors and William K. Coors are executive
officers of Adolph Coors Company and CBC. The following also were executive
officers of the Company on March 18, 1994:
ALVIN C. BABB (Age 61) has served as Executive Vice President, Operations and
Technology for CBC since 1983. Prior to becoming Executive Vice President of
CBC, he served as Group Vice President of Brewery Operations (1982-1983),
Senior Vice President of Brewery Operations (1981-1982) and Senior Vice
President of Plant Operations (1978-1981). He has been with the company for
more than 40 years. He is a member of the Master Brewing Association of
America.
W. LEO KIELY, III (Age 47) became President and Chief Operating Officer of
CBC as of March 1, 1993. Prior to joining Coors, he served as Division Vice
President and then Central Division President of Frito-Lay, Inc., a
subsidiary of PepsiCo, in Plano, Texas. From 1989-1991, he served as Senior
Vice President of Field Operations, overseeing the operations of Frito-Lay's
four regional business teams. From 1984-1989, he was the Vice President of
Sales and Marketing for Frito-Lay.
ROBERT D. KLUGMAN (Age 46) was named Vice President of Corporate Development
in July 1993. Prior to that, he was Vice President of Brand Marketing, a
position he held from 1981-1987, and again from 1990-1993. From 1987-1990, he
was Vice President of International Development and Marketing Services.
Before joining Coors, Klugman was a Vice President of Client Services at Leo
Burnett USA, a Chicago-based advertising agency.
M. CAROLINE TURNER (Age 44) was named Vice President and Assistant Secretary
of ACC and Vice President, Chief Legal Officer and Assistant Secretary of CBC
in 1993. In the past she served as Vice President, Legal (1991-December 1992)
and Director, Legal (1986-February 1991) of ACC. Prior to joining the
Company, she was a partner with the law firm of Holme Roberts & Owen (1983-
1986), an associate for Holme Roberts & Owen (1977-1982) and a clerk in the
U.S. 10th Circuit Court of Appeals (1976-1977).
WILLIAM H. WEINTRAUB (Age 51) joined CBC as Vice President of Marketing in
July 1993. Prior to joining Coors, he directed all marketing and advertising
for Tropicana Products as Senior Vice President. From 1982-1991, Weintraub
was with the Kellogg Company, with responsibility for marketing and sales. He
also held a number of positions at Procter and Gamble from 1967-1982.
The Company is actively searching for a new Chief Financial Officer.
ACC and CBC employ a number of other officers who are not considered
executive officers of the Registrant as defined under SEC regulations.
Terms for all officers and directors are for a period of one year, except
that vacancies may be filled and additional officers elected at any regular
or special meeting. Directors are elected at the Annual Shareholders'
Meeting held on the Thursday of the second full week of May. There are no
arrangements or understandings between any officer or director pursuant to
which any officer or director was elected as such.
(d) Family Relationships
William K. Coors and Joseph Coors are brothers. Peter H. Coors is a son of
Joseph Coors.
(e) Section 16 Disclosures
All filing and disclosure requirements were met in 1993.
<PAGE>
ITEM 11. Executive Compensation
<TABLE>
<CAPTION>
I. SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
Awards Payouts
NAME & PRINCIPAL POSITION YEAR SALARY BONUS OTHER RESTRICTED SECURITIES LTIP ALL OTHER
($) ($) ANNUAL STOCK UNDERLYING PAYOUTS COMP
(a) COMP($) ($) OPTIONS ($) ($)
(d)(e) (b) (#)(f) (c) (f)(g)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William K. Coors, Chairman 1993 256,000 1,938 0 0 0 0 65,539
of the Board 1992 256,000 0 27,288 0 0 0 58,153
1991 256,000 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Peter H. Coors, Vice Chairman 1993 465,688 44,185 13,041 49,312 30,000 0 8,622
& CEO of Coors Brewing 1992 465,061 0 18,593 0 0 491,302 7,257
Company 1991 465,004 27,796 0 58,125 30,000 0
- ----------------------------------------------------------------------------------------------------------------------------------
W. Leo Kiely III, President 1993 310,000 187,251 309,121 16,500 10,000 0 6,198
& COO of Coors Brewing 1992
Company 1991
- ----------------------------------------------------------------------------------------------------------------------------------
Alvin C. Babb, Executive VP, 1993 278,800 27,333 11,538 4,931 3,000 0 15,239
Operations & Technology 1992
1991
- ----------------------------------------------------------------------------------------------------------------------------------
William H. Weintraub, 1993 120,271 106,397 33,084 0 0 0 5,733
VP, Marketing 1992
1991
- ----------------------------------------------------------------------------------------------------------------------------------
/TABLE
<PAGE>
(a) Amounts awarded under the Annual Cash Incentive Award Programs.
(b) In 1993, restricted stock was granted to three of the named
officers. The number of grants and their values at December 26,
1993, are as follows: Peter H. Coors - 3,000 shares valued at
$47,250; W. Leo Kiely III - 1,000 shares valued at $15,750; and
Alvin C. Babb - 300 shares valued at $4,725.
Restricted stock awards granted in 1993 have a three-year vesting
period based on year of grant and expire with termination of
employment. Dividends are paid to the holders of the grants during
the vesting period.
No restricted stock grants were made in 1992. In 1992, all
restricted stock grants existing as of December 27, 1992 became
vested due to the spin-off. No restricted stock grants were
outstanding as of December 27, 1992.
(c) In 1992, cash was paid under CBC's 1990 Long-Term Incentive
Plan for the three-year performance period ended December 27, 1992.
(d) Under the 1983 Non-Qualified Stock Option Plan, the Company
reimburses a portion of the taxes the executive will incur. In 1993,
both W. Leo Kiely III and William H. Weintraub received perquisites
in excess of the lesser of $50,000 or 10% of salary plus bonus.
Perquisites for both included moving expenses of $299,639 for W. Leo
Kiely III and $28,320 for William H. Weintraub. In 1992, William K.
Coors had perquisites including personal use of the Company's Lear
jet - $13,118 and auto allowance - $8,694.
(e) In accordance with the transitional provisions applicable to the
revised rules on executive officer compensation disclosure adopted
by the Securities and Exchange Commission, amounts of "Other Annual
Compensation" and "All Other Compensation" are excluded for the
Company's 1991 fiscal year.
(f) No stock option grants were made in 1992.
(g) The amounts shown in this column are attributable to the officer life
insurance and 401(k) plans. The named executives receive officer
life insurance provided by the Company until retirement. At the
time of retirement, the officer's life insurance program terminates
and for the majority of the officers, the salary continuation
agreement becomes effective. The officer life insurance provides
six times the executive base salary until retirement, at which time
the Company becomes the beneficiary. The 1993 annual benefit for
each executive: William K. Coors - $65,539; Peter H. Coors -
$4,125; W. Leo Kiely III - $0; Alvin C. Babb - $7,409; William H.
Weintraub - $2,758. The Company's 50% match on the first 6% of
salary contributed by the officer to the ACC's qualified 401(k)
plan is $4,497 each for Peter H. Coors and Alvin C. Babb. The match
for William H. Weintraub was $2,975.
II. OPTION/SAR GRANTS TABLE<PAGE>
<TABLE>
<CAPTION>
OPTIONS Grants in Last Fiscal Year
- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter H. Coors 30,000 (a) 36% $16.44 01/01/03 $276,528 $732,418
- ----------------------------------------------------------------------------------------------------------------------------------
W. Leo Kiely III 10,000 (a) 12% $16.50 03/01/03 $ 91,551 $243,514
- ----------------------------------------------------------------------------------------------------------------------------------
Alvin C. Babb 3,000 (a) 4% $16.44 01/01/03 $ 27,653 $ 73,242
- ----------------------------------------------------------------------------------------------------------------------------------
/TABLE
<PAGE>
(a) One-third of the grant is vested in each of the three successive years
after the date of grant. The grants have a term of ten years with the
prices equal to market on the day of the grants. There are no other
material terms.
No grants were made in 1992. In 1992, ACC approved the adjustment of all
options outstanding as of December 27, 1992, for both the amount and exercise
price pursuant to a formula which retained the same option spread for the
employee after the spin-off as had existed immediately prior to the spin-off.
III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR
Value
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE REALIZED UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY
ACQUIRED ON (a)($) AT FY-END (#)(b) OPTIONS AT FY-END ($)(b)
EXERCISE (#)
NAMES Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter H. Coors 15,338 81,508 129,270 43,410 141,554 17,455
- ----------------------------------------------------------------------------------------------------------------------------------
W. Leo Kiely III 0 0 0 10,000 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Alvin C. Babb 10,057 72,111 24,673 3,939 23,226 1,222
- ----------------------------------------------------------------------------------------------------------------------------------
/TABLE
<PAGE>
(a) Values stated are the bargain element paid in 1993, which is the
difference between the option price and the market price at the time of
exercise.
(b) After the adjustment for the spin-off and as also discussed in Item 11,
II.
IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE - There were no awards under any
long-term incentive plans in 1993.
V. PENSION PLAN TABLE
The following table sets forth annual retirement benefits for representative
years of service and average annual earnings.
<PAGE>
<TABLE>
<CAPTION>
Average Annual YEARS OF SERVICE
Compensation ---------------------------------------------------------
10 20 30 40
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 125,000 $ 21,875 $ 43,750 $ 65,625 $ 71,875
150,000 26,250 52,500 78,750 86,250
175,000 30,625 61,250 91,875 100,625
200,000 35,000 70,000 105,000 115,000*
225,000 39,375* 78,750* 118,125* 129,375*
250,000 43,750* 87,500* 131,250* 143,750*
275,000 48,125* 96,250* 144,375* 158,125*
300,000 52,500* 105,000* 157,500* 172,500*
325,000 56,875* 113,750* 170,625* 186,875*
350,000 61,250* 122,500* 183,750* 201,250*
375,000 65,625* 131,250* 196,875* 215,625*
400,000 70,000* 140,000* 210,000* 230,000*
425,000 74,375* 148,750* 223,125* 244,375*
450,000 78,750* 157,500* 236,250* 258,750*
- -------------------------------------------------------------------------------
/TABLE
<PAGE>
*Maximum permissible benefit under ERISA from the qualified retirement income
plan for 1993 was $115,641 and annual compensation in excess of $235,840 is
not considered for benefits under the qualified plan. The Company has a non-
qualified supplemental retirement plan to provide full accrued benefits to
all employees in excess of IRS maximums. The plan is unfunded.
Annual average compensation covered by the retirement plan and credited years
of service for individuals named in Item 11(a) are as follows: William K.
Coors - $241,000 and 54 years; Peter H. Coors - $450,229 and 22 years; and
Alvin C. Babb - $272,060 and 40 years. Because both W. Leo Kiely III and
William H. Weintraub had not been employed for one full year as of December
26, 1993, neither had compensation covered by the retirement plan.
The Company's principal retirement income plan is a defined benefit plan.
The amount of contribution for officers is not included in the above table
since total plan contributions cannot be readily allocated to individual
employees. The Company's most recent actuarial valuation was as of January
1, 1993, in which the ratio of plan contributions to total compensation
covered by the plan was approximately 4.4%. Covered compensation is defined
as the total base compensation (average of three highest consecutive years
out of the last ten) of employees participating in the plan, including
commissions but excluding bonuses and overtime pay. Compensation also
includes amounts deferred by the individual under Internal Revenue Code
Section 401(k) and any amounts deferred into a plan under Internal Revenue
Code Section 125. Normal retirement under the plan is age 65. An employee
with at least 10 years of vesting service may retire as early as age 55.
Benefits are reduced for early retirement based on an employee's age and
years of service at retirement. The amount of pension actually accrued under
the pension formula is in the form of a straight line annuity.
In addition to the annual benefit from the qualified Retirement Plan, two of
the named executives are covered by salary continuation agreements. These
agreements provide for a lump sum cash payment to the officer upon normal
retirement in an amount actuarially equivalent in value to 30% of the
officer's last annual base salary, payable for the remainder of the officer's
life, but not less than 10 years, plus a 50% survivor benefit for the
surviving spouse. The interest rate used in calculating the lump sum is
determined using 80% of the annual average yield of the 10-year Treasury
constant maturities for the month preceding the month of retirement. Using
1993 eligible salary amounts as representative of the final pay, the
estimated annual benefit upon normal retirement for these officers would be:
Peter H. Coors - $135,200; and Alvin C. Babb - $83,600.
Compensation of Directors
The Company adopted the Equity Compensation Plan for Non-Employee Directors
(the EC Plan) effective May 16, 1991, amended and restated on August 13,
1992. The EC Plan provides for two grants of Adolph Coors Company's Class B
(non-voting) common stock to non-employee (NE) directors. The first grant is
automatic and equals 20% of the annual retainer. The second grant is
elective and allows the NE directors to take a portion, or all, of the
remaining annual retainer in stock. Amounts of both grants are determined by
the market value of the shares on the date of grant. Shares received under
either grant may not be sold or disposed of before completion of the annual
term. The Company reserved 50,000 shares of stock to be issued under the EC
Plan. The retainer for the 1992-1993 term was $25,000 plus $1,500 per
meeting. Beginning with the 1993-1994 annual term the Company increased the
NE directors' annual retainer to $32,000.
The NE members of the Board of Directors in 1993 were paid 50% of the $25,000
annual retainer for the 1992-1993 term plus $1,500 per meeting and 50% of the
$32,000 annual retainer for the 1993-1994 term and reimbursement of expenses
incurred to perform their duties as directors. Directors who are full-time
employees of the Company receive $15,000 annually. All directors are
reimbursed for any expenses incurred while attending Board of Directors or
committee meetings and in connection with any other company business. In
addition, Joseph Coors, as a director and retired executive officer, is
provided an office, transportation and secretarial support from the Company.
Employment Contracts and Termination of Employment Arrangements
In response to Code Section 162 of the Revenue Reconciliation Act of 1993,
the Company has appointed a special compensation committee to approve and
monitor performance criteria in certain performance based executive
compensation plans for 1994.
The company has no agreements with executives or employees providing
employment for a set period. W. Leo Kiely III, President and COO, has an
arrangement with the company that provides for a guaranteed bonus equal to
50% of base salary for the first and second year of his employment (1993 and
1994). In the event of termination without cause, prior to June 1, 1995, the
company would pay his base monthly salary, plus the guaranteed bonus, for 30
months. Thereafter, Mr. Kiely would receive his then current salary for 18
months plus 1 1/2 times his last bonus amount. In either case, health
benefits would continue through the payout period or when he commenced other
employment if earlier.
William H. Weintraub, Vice President, Marketing, has an arrangement providing
for a guaranteed bonus equal to 40% of base salary for 1993 and 1994. It
provides that, if Mr. Weintraub were terminated without cause during the
first two years of employment prior to July 1, 1995, he would receive 15
months of salary plus the 40% bonus for that period.
In 1993, Alvin C. Babb, Executive Vice President, Operations and Technology,
and the company entered into an arrangement providing for certain payments to
Mr. Babb if his employment terminates on or before December 31, 1996. The
company would pay Mr. Babb an amount equal to two times his salary plus a
lump-sum payment under his salary continuation agreement using a 5% discount
factor and would pay any differential between medical benefits then provided
and medical benefits provided under the company's 1993 medical program.
The standard severance program for officers is one year of base salary plus a
prorated portion of any earned bonus for the year of severance. <PAGE>
<PAGE>
<TABLE>
<CAPTION>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
COORS COMMON, S & P COMPOSITE-5OO AND S & P BEVERAGES-ALCOHOLIC
Indexed/Cumulative Returns
------------------------------------------------- Base
Period Return Return Return Return Return
Company/Index Name 1988 1989 1990 1991 1992** 1993
- ------------------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
S & P Composite-500 100 131.69 127.60 166.47 179.15 197.21
S & P Beverages-Alcoholic 100 136.34 142.56 195.68 186.31 176.64
Coors 100 101.27 107.61 112.90 134.62 136.35
</TABLE>
*Assumes that the value of the investment in Coors Common Stock and each
index was $100 on December 25, 1988, and that all dividends were reinvested.
**Results are adjusted for the December 1992 spin-off of ACXT.
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for Adolph Coors Company. This
report presents Adolph Coors Company's compensation philosophy for fiscal
year 1993.
Overview of Compensation Strategy for Executives
Under the supervision of the three-member 1993 Compensation Committee of the
Board of Directors, the Company continued to support the compensation
policies, plans and programs developed in 1992, which sought to enhance the
profitability of the Company by linking financial incentives of senior
management with the Company's financial performance. The Compensation
Committee of the Board recognized that 1993 was a year of transition with
major changes occurring in management and in the company. New compensation
policies, plans and programs will be developed in 1994.
In furtherance of the profitability goal, annual base salaries were set at
median levels found in the external market so that the Company relied to a
large degree on annual incentive compensation to reward corporate officers
for superior corporate and business unit performance. Annual incentive
compensation strategies were variable and closely tied to corporate
performance in a manner designed to encourage a continuing focus on improved
profitability.
The Compensation Committee also endorsed the position that stock ownership by
management was beneficial in aligning management interest with shareholders
to enhance shareholder value. Consequently, the compensation strategy
provided incentives for management to increase equity participation in the
Company.
The Compensation Committee's compensation strategy for the CEO and other
executive officers consisted of:
* targeting base salary to the 50th percentile of relevant, broadly-
defined external markets;
* providing an annual cash incentive award targeted to the 75th
percentile of the same external markets;
* the equity portion of the long-term incentive award provided
ownership opportunities through the Non-Qualified Equity Incentive
Plan.
Relationship of Performance to Specific Elements of the Compensation Strategy
Following are brief descriptions which outline details and performance
measures of each component of the 1993 executive compensation strategy.
Base salary
The Company used compensation survey data to determine salaries competitive
at the 50th percentile for like positions in similar sized manufacturing
companies. Company size was determined by total net sales since a
correlation exists between salary amounts and total sales.
Salary ranges were established for executives by using the 50th percentile
market data as the mid-point and surrounding it with a 50% spread between
minimum and maximum. Where the executive was paid within that range was
determined by individual performance and the company's ability to pay. The
salary range could be viewed as a continuum based on experience and
performance:
* Newly-hired or -promoted executives who have little performance
history in the position were normally paid below the mid-point.
* Consistent with Coors' compensation strategy, the market 50th
percentile was the targeted salary for executives who are fully
experienced and fully contributing in the position.
* Base salary above the 50th percentile was used to recognize
contributions beyond those normally associated with the position.
Annual Cash Incentive Award
In 1993, executive officers of Adolph Coors Company who are also executive
officers of Coors Brewing Company (CBC), and executive officers of CBC had an
opportunity to earn an annual bonus through the Coors Brewing Company
employee-wide, profit sharing plan. Annual pre-tax profit targets as
approved by the Compensation Committee were met, payouts to all employees
were based on an equal percentage of their 1993 eligible earnings.
In 1993, the executive officers of CBC also had an opportunity to earn an
annual bonus through the Management Incentive Program. The annual pre-tax
profit and payout percentage was stated with an acceptable performance range
starting from threshold to a maximum as approved by the Compensation
Committee. The approved annual pre-tax profit targets were met, and payouts
to all eligible employees were based on a percentage of their 1993 base
salary.
In 1993, the Chief Operating Officer and Vice President of Marketing, as part
of their employment contracts, earned a cash incentive award based on a
percentage of their 1993 base salary.
In 1993, the Company undertook several strategic initiatives -- including a
voluntary separation package -- to better position the Company for profitable
growth. This resulted in some significant asset write-downs and other
restructuring expenses. The Company recognized the impact of these charges
on earnings and approved the payout at the minimum profit level for the
profit sharing plan.
Long-term Incentive Awards
In addition to receiving base salary and being eligible for annual cash
incentive awards, executive officers of CBC were also provided an opportunity
to earn a total long-term award targeted to the 75th percentile level of
comparably sized companies paying long-term awards. This opportunity was
provided by means of the Non-Qualified Equity Incentive Plan (NQEI) through
grants of ACC restricted stock and non-qualified stock options.
The NQEI plan was administered by the Compensation Committee. That committee
was composed entirely of non-employee, independent directors. The NQEI plan
provided for two types of grants for key management employees: restricted
stock awards and stock options. Both types of grants were subject to certain
holding periods and other restrictions to encourage long-term ownership. The
NQEI plan provided that options be granted at exercise prices equal to the
market value on the date the option was granted.
CEO Compensation for 1993
The CEO's 1993 compensation did not reflect any of the incentive elements of
the Company's compensation strategy. While fully supportive of the executive
compensation strategy and fully committed to the Company goal of improved
profitability, CEO William K. Coors has elected not to participate in the
incentive program. It is Mr. Coors' belief that his compensation, although
quite low relative to market and industry standards, is adequate to support
his needs and that, given his strong commitment to corporate goals and
objectives, financial incentives would not enhance his motivation to achieve
superior performance. Consequently, the base annual salary of the CEO has
been set at the current level for 11 years.
Joseph Coors, Chairman
J. Bruce Llewellyn
Luis G. Nogales
Compensation Committee Interlocks and Insider Participation
Joseph Coors, J. Bruce Llewellyn and Luis G. Nogales served on the
Compensation Committee during the past fiscal year. Joseph Coors, Chairman
of the Compensation Committee, retired as the President and Chief Operating
Officer of the Company in December 1987.
Joseph Coors owns a Coors beer distributorship in Cincinnati, Ohio. During
1993, this distributor purchased 71,035 barrels of beer from CBC at the same
pricing available to independent distributors.
Joseph Coors is a director of both ACC and ACXT. He, along with William K.
Coors, a Director of both ACC and ACXT, and Peter H. Coors, Director and an
executive officer of ACC, and Jeffrey H. Coors and Joseph Coors, Jr., both
directors and executive officers of ACXT, are trustees of several family
trusts that collectively own a majority of the common stock of ACC and ACXT,
or their subsidiaries, have certain business relationships and have engaged
in certain transactions with one another, as described below. Such
relationships and transactions are not, individually or in the aggregate,
material to the Company.
In connection with the spin-off of ACXT in December 1992, CBC entered into
market-based, long-term supply contracts with certain ACXT subsidiaries to
provide packaging, aluminum and starch products to CBC. In addition, CBC
sells brewery by-products to an ACXT subsidiary and sells aluminum scrap from
CBC's can making operations to another ACXT subsidiary. The sales under
these supply contracts are a material source of revenue for ACXT and provide
CBC a stable source for a significant portion of its raw materials and
packaging materials.
Also in connection with the spin-off, ACC and ACXT and their subsidiaries
negotiated several other agreements, including employee matters,
environmental management, tax sharing, trademark licensing and numerous one-
year transitional agreements for various services and materials. A few
service agreements between ACC and ACXT subsidiaries that extend beyond the
now expired transitional period include agreements under which Coors Energy
supplies natural gas to certain Colorado facilities of ACXT and an agreement
by CBC to provide water and waste water treatment services for an ACXT
ceramics facility. A joint defense agreement that commenced at the time of
the spin-off is in effect with respect to the TransRim litigation described
in Item 3, Legal Proceedings. A description of the foregoing agreements was
included in the Company's report on Form 8-K dated December 27, 1992, in
Exhibit B, "Information Statement dated December 9, 1992, mailed by the
Company to its shareholders."
CBC is a limited partner in a limited partnership formed in connection with
the spin-off, with an ACXT subsidiary as general partner. The partnership
owns, develops, operates and sells certain real estate previously owned
directly by CBC or ACC. Each partner is obligated to make additional cash
contributions of up to $500,000 upon call of the general partner.
Distributions of $500,000 were made to both partners in 1993. Distributions
are allocated equally between the partners until CBC recovers its investment,
and thereafter 80% to the general partner and 20% to CBC.
In 1993, CBC sold certain laboratory facilities and technology to an ACXT
subsidiary for approximately $350,000, the estimated fair value of the
assets. In addition, certain subsidiaries of ACC and ACXT are parties to
miscellaneous market-based transactions. For instance, CBC buys ceramic can
tooling from an ACXT subsidiary to test on CBC can lines, CBC serves as
aggregator for long distance telephone services for itself and certain ACXT
companies, CBC leases office space to the limited partnership mentioned above
and the partnership separately provides real estate management and
administrative services to CBC.
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth stock ownership of persons holding in excess
of five percent of any class of voting securities, as of March 18, 1994:
<PAGE>
<TABLE>
<CAPTION>
Name and
Address of Amount and Nature
Title of Beneficial of Beneficial Percent
Class Owner Ownership of Class
-------- --------------- ------------------- --------
<S> <C> <C> <C>
Class A Adolph Coors, Jr. 1,260,000 shares for 100%
Common Trust, Golden benefit of William K.
Stock Colorado, William K. Coors, Joseph Coors
(voting) Coors, Joseph Coors, and May Coors Tooker
Joseph Coors, Jr., and their lineal
Jeffrey H. Coors and descendants living
Peter H. Coors, Trustees at distribution
/TABLE
<PAGE>
In addition, certain officers and directors hold interests in other family
trusts, as indicated in Item 12, Section (b) (1) following.
(b) Security Ownership of Management
The following table sets forth stock ownership of the Company's directors,
and all executive officers and directors as a group, as of March 18, 1994:<PAGE>
<TABLE>
<CAPTION>
Options/
Restricted
Shares Stocks
Title of Name of Beneficially Awards Percent
Class Beneficial Owner Owned (2) Total of Class
- -------- ---------------- ------------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Class B Joseph Coors 547 (1) 602 1,149 (1) (1)
Common Peter H. Coors 36,451 (1) 142,270 178,721 (1) (1)
Stock William K. Coors (1) (1) (1)
(non- J. Bruce Llewellyn 1,983 1,083 3,066
voting) Luis G. Nogales 464 352 816
W. Leo Kiely III 10,000 4,333 14,333
Alvin C. Babb 100 25,973 26,073
William H. Weintraub
All Executive
Officers and
Directors as a
Group (10 persons) 19,306,317 213,160 19,519,477 53%
/TABLE
<PAGE>
(1) William K. Coors and Peter H. Coors are two of the directors of the
Adolph Coors Foundation, which owns 732,413 shares of Class B Common
Stock. William K. Coors, Joseph Coors and Peter H. Coors are trustees,
in addition to other trustees, and beneficiaries or contingent
beneficiaries in certain cases, of various trusts that own an aggregate
of 16,760,738 shares. These individuals, and others, are trustees of
five trusts owning 1,762,921 shares. In certain of these trusts, they
act solely as trustees and have no vested or contingent benefits. The
total of these trust shares, together with other management shares
shown above, represents 53% of the total number of shares of such class
outstanding.
(2) This represents exercisable options to purchase shares under the
Company's 1983 Non-Qualified Stock Option Plan and 1990 Non-Qualified Equity
Incentive Plan that could be exercised as of March 18,1994. In addition, it
reflects restricted stock awards granted under the 1990 Plan. Vesting in the
restricted stock is over a three year period from date of grant. All
restricted stock awards became fully vested at the time of the ACXT spin-off.
In the event of a change in control of the Company, all vesting restrictions
on the restricted stock awards would be lifted.
(c) Changes in Control
There are no arrangements which would at some subsequent date result in a
change of control of the Company.
ITEM 13. Certain Relationships and Related Transactions
(a) & (b) For a description of certain business relationships and related
transactions see the discussion under the caption "Compensation Committee
Interlock and Insider Participation" contained in Item 11 of this report.
(c) Indebtedness of Management
Loans are made available to employees in connection with the exercise of
stock options. Amounts receivable from officers and directors for such loans
in excess of $60,000 are shown on Schedule II.
There was no other indebtedness in excess of $60,000 between the Company and
members of management or others that have a direct or indirect interest in
the Company.
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements: See index of finanical statements in Item 8.
(2) Financial Statement Schedules:
Report of Independent Accountants on Financial Statement Schedules
for the years ended December 26, 1993, December 27, 1992 and
December 29, 1991.
Schedule II - Amounts Receivable from Related Parties and
Underwriters, Promoters and Employees other
than Related Parties
Schedule V - Property, Plant and Equipment
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-term Borrowings
Schedule X - Supplementary Income Statement Information
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.
<PAGE>
Report of Independent Accountants
on Financial Statement Schedules
To the Board of Directors
of Adolph Coors Company
Our audits of the consolidated financial statements referred to in our report
dated March 4, 1994, appearing on page _____ of this Form 10-K, also included
an audit of the Financial Statement Schedules listed in Item 14(a)(2) of this
Form 10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE
Denver, Colorado
March 4, 1994<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
ADOLPH COORS COMPANY AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
Balance
at
beginning Additions Deductions Balance at
Name of Debtor of Year (a) (c) end of Year(d)
- -------------- --------- --------- ---------- --------------
(In thousands)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 29, 1991
- ----------------------------
Jeffrey H. Coors $ -- $ 87 $ -- $ 87
Joseph Coors, Jr. 238 -- -- 238
Peter H. Coors -- 90 -- 90
Norman E. Kuhl 174 -- -- 174
Albert D. Peer 225 -- -- 225
Alva C. Pipkin 138 -- (138) --
Robert C. Walker 114 94 (208) --
Sandra K. Woods 157 -- (157) --
All employees as a
group (16 persons) (b) $1,062 $1,046 $(1,146) $962
YEAR ENDED DECEMBER 27, 1992
- ----------------------------
Jeffrey H. Coors $ 87 $ 60 $ (147)(e) $ --
Joseph Coors, Jr. 238 -- (238)(e) --
Peter H. Coors 90 30 -- 120
Norman E. Kuhl 174 -- (174) --
Albert D. Peer 225 -- (225)(e) --
All employees as a
group (27 persons) (b) $ 962 $2,613 $(3,443) $132
YEAR ENDED DECEMBER 26, 1993
- ----------------------------
Peter H. Coors $ 120 $ 172 $ (292) $ --
All employees as a group
(3 persons) (b) $ 132 $ 284 $ (416) $ --
- ---------------------------
/TABLE
<PAGE>
(a) Demand promissory notes issued in conjunction with the exercise of stock
options and collateralized by the related Class B Common Stock.
Interest is calculated using the lowest interest rates permitted under
IRS rules on date the loan originates. The interest rate has fluctuated
between 3.56% and 6.44%. Interest is payable quarterly or upon
repayment of the loan.
(b) Includes notes issued to employees in excess of $100,000. The average
number of days outstanding on these loans was approximately 170 days, 87
days and 131 days in 1993, 1992, and 1991, respectively.
(c) All amounts not transferred have been collected.
(d) All amounts are current.
(e) These receivables were transferred to ACX Technologies as a result of
the spin-off.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE V
ADOLPH COORS COMPANY AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
Other
Balance at changes- Balance
beginning Additions increases at end
of year at cost Retirements (decreases) of year
------------ ------- ----------- ----------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 29, 1991 (b)
- ---------------------------------
Land and improvements;
Land $ 37,519 $ (179) $ (1,745) $ 4 $ 35,599
Improvements 50,973 3,195 (821) (95) 53,252
---------- --------- ---------- --------- ---------
88,492 3,016 (2,566) (91) 88,851
Buildings 370,070 26,136 (34) 313 396,485
Machinery and equipment 1,072,894 199,530 (31,870) 917 1,241,471
Natural resource properties 131,534 3,931 (88,752) (c) (4) 46,709
Construction in progress 89,856 8,899 (4,189) -- 94,566
---------- --------- --------- ------- ---------
$1,752,846 $ 241,512 $(127,411) $ 1,135 (a) $1,868,082
========= ========= ========= ======= =========
YEAR ENDED DECEMBER 27, 1992
- ----------------------------
Land and improvements;
Land $ 35,599 $ 603 $ (97) $ 1,382 $ 37,487
Improvements 53,252 1,955 (128) 45 55,124
--------- -------- --------- -------- ---------
88,851 2,558 (225) 1,427 92,611
Buildings 396,485 16,904 (1,940) (2,268) 409,181
Machinery and equipment 1,241,471 127,930 (33,489) 2,384 1,338,296
Natural resource properties 46,709 1,463 (22,977) (c) -- 25,195
Construction in progress 94,566 (33,405) (2,586) 216 58,791
--------- --------- ---------- -------- ---------
$1,868,082 $ 115,450 $(61,217) $ 1,759 $1,924,074
========= ======== ======== ======= =========
YEAR ENDED DECEMBER 26, 1993
- ----------------------------
Land and improvements;
Land $ 37,487 $ 223 $ 54 (d) $ -- $ 37,764
Improvements 55,124 1,425 (877) (d) -- 55,672
--------- -------- --------- ---------- ---------
92,611 1,648 (823) -- 93,436
Buildings 409,181 18,163 (233) (d) -- 427,111
Machinery and equipment 1,338,296 80,505 (23,761) (d) (884) 1,394,156
Natural resource properties 25,195 179 (2,988) (d) -- 22,386
Construction in progress 58,791 21,778 (15,263) (d) (1) 65,305
--------- -------- ------- -------- ---------
$1,924,074 $ 122,273 $(43,068) $ (885) $2,002,394
========= ======= ======= ======= =========
/TABLE
<PAGE>
Depreciation is computed principally on the straight-line method at rates
considered sufficient to amortize costs over estimated service lives. The
general ranges of annual depreciation rates used are as follows: land
improvements 5-20%; buildings 2 1/4-20%; and machinery and equipment 6 2/3-33
1/3%. Natural resource properties are primarily depleted on the units of
production method.
- -----------------------------
(a) Primarily from settlement of an Internal Revenue Service audit.
(b) Restated for discontinued operations.
(c) Represents the sale of oil and gas properties of Coors Energy Company.
(d) Includes write-off of various properties and construction projects
associated with Company restructuring.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VI
ADOLPH COORS COMPANY AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Other
Balance at Charged to changes- Balance
beginning costs and increases at end
of year expense Retirements (decreases) of year
------------ ---------- ----------- ----------- --------
(In thousands)
YEAR ENDED DECEMBER 29, 1991 (b)
- ---------------------------------
<S> <C> <C> <C> <C> <C>
Land improvements $ 25,458 $ 2,180 $ (65) $ (22) $ 27,551
Buildings 170,878 16,188 (138) 125 187,053
Machinery and equipment 640,340 83,145 (21,567) 1,038 702,956
Natural resource properties 71,755 6,516 (61,326) (115) 16,830
--------- -------- -------- ------- ---------
$ 908,431 $ 108,029 $ (83,096) $ 1,026 (a) $ 934,390
========= ======== ======== ======= =========
YEAR ENDED DECEMBER 27, 1992
- ----------------------------
Land improvements $ 27,551 $ 2,139 $ (91) $ (59) $ 29,540
Buildings 187,053 16,672 (1,300) (765) 201,660
Machinery and equipment 702,956 94,671 (28,510) 1,506 770,623
Natural resource properties 16,830 916 (399) (11) 17,336
--------- -------- -------- ------- ---------
$ 934,390 $ 114,398 $ (30,300) $ 671 (a) $1,019,159
========= ======== ======== ======= =========
YEAR ENDED DECEMBER 26, 1993
- ----------------------------
Land improvements $ 29,540 $ 2,101 $ (11) $ 30 $ 31,660
Buildings 201,660 16,816 (492) 213 218,197
Machinery and equipment 770,623 99,206 (18,655) 888 852,062
Natural resource properties 17,336 377 (1,255) (85) 16,373
--------- --------- --------- ------- ---------
$1,019,159 $ 118,500 $ (20,413) $ 1,046 $1,118,292
========= ========= ========= ======= =========
</TABLE>
<PAGE>
(a) Primarily from settlement of an Internal Revenue Service audit.
(b) Restated for discontinued operations.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VIII
ADOLPH COORS COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at charged to Balance
beginning costs and Other at end
of year expenses additions Deductions of year
------------ ------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful (In thousands)
receivables (deducted
from accounts receivable)
- -------------------------
Year Ended
December 29, 1991 (c) $ 41 $ 6 $ -- (a) $ (1) (b) $ 46
December 27, 1992 46 23 -- (a) (57) (b) 12
December 26, 1993 12 493 -- (a) (96) (b) 409
- -----------------------
/TABLE
<PAGE>
(a) Collections of accounts previously written off and additions through
acquisition of businesses.
(b) Write-off of uncollectible accounts.
(c) Restated for discontinued operations.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE IX
ADOLPH COORS COMPANY AND SUBSIDIARIES
SHORT-TERM BORROWINGS
Maximum Average Weighted
Weighted amount amount average
average outstanding outstanding interest rate
Balance at interest during during during
end of year rate the year the year (a) the year (a)
------------ ------- ----------- ----------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 29, 1991 (c) $ 46,300 5.1% $132,800 $ 44,353 6.3%
payable to banks
December 27, 1992 (d) (b) (b) $123,382 $ 62,205 4.1%
payable to banks
December 26, 1993 (e) (b) (b) $ 8,500 $ 6,750 3.2%
payable to banks
- -----------------------
/TABLE
<PAGE>
(a) The average amount outstanding and weighted average interest rate during
the year are based on average daily balances outstanding.
(b) The Company had no outstanding short-term borrowings at December 26,
1993 and December 27, 1992.
(c) At December 29, 1991, the Company had committed lines of credit of $150
million, $110 million was unused. Also at December 29, 1991, the
Company had uncommitted lines of credit available of which $6.3 million
was outstanding.
(d) At December 27, 1992, the Company had committed lines of credit of $100
million. Of this $100 million, there was no outstanding balance. Also
at December 27, 1992, the Company had uncommitted lines of credit
available with no outstanding balance.
(e) At December 26, 1993, the Company had committed lines of credit of $100
million. Of this $100 million, there was no outstanding balance. Also
at December 26, 1993, the Company had uncommitted lines of credit
available with no outstanding balance.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE X
ADOLPH COORS COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the years ended
-----------------------
December 26, December 27, December 29,
1993 1992 1991 (a)
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Maintenance and repairs $ 69,676 $ 72,710 $ 64,732
=========== ========== ==========
Taxes, other than payroll,
income and beer excise
taxes:
Property $ 17,504 $ 17,414 $ 15,191
Other 6,734 9,433 10,465
---------- ---------- ----------
$ 24,238 $ 26,847 $ 25,656
========== ========== ==========
Advertising $ 272,539 $ 251,002 $ 267,241
========== ========== ==========
- --------------------------
/TABLE
<PAGE>
The above amounts have been deducted in the Consolidated Statement of Income
except for certain portions which have been allocated to inventory and
property accounts. Amortization of intangible assets and royalties have been
omitted because they are individually less than one percent of net sales.
(a) Restated for discontinued operations.
<PAGE>
<TABLE>
<CAPTION>
(3) Exhibits:
<S> <C>
Exhibit 3.1 - Amended Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Form 10-K for the
fiscal year ended December 30, 1990)
Exhibit 3.2 - Amended By-laws. (Incorporated by reference to Exhibit 3.2 to Form 10-Q for the fiscal quarter ended
June 13, 1993)
Exhibit 4.1 - Form of Indenture for Adolph Coors Company Senior Debt Securities. (Incorporated by reference to
Exhibit 4 to Registration Statement on Form S-3 filed March 14, 1990 and amended on March 26, 1990,
file No. 33-33831). Upon request, the Company agrees to provide a copy of any debt instrument as
applicable index Regulation S-K, Item 601, (b) (4) (iii)
Exhibit 10.1 - Officers' Life Insurance Program. (Incorporated by reference to Exhibit 10 to Form 10-K for the fiscal
year ended December 28, 1980)
Exhibit 10.2* - Officers and Directors Salary Continuation Agreement. (Incorporated by reference to Exhibit 10 to Form
10-K for the fiscal year ended December 26, 1982)
Exhibit 10.3* - Adolph Coors Company 1983 Non-Qualified Stock Option Plan, as amended effective February 13, 1992.
(Incorporated by reference to Exhibit 10.3 to Form 10-K for the fiscal year ended December 29, 1991)
Exhibit 10.4* - Model of Adolph Coors Company Short-Term Incentive Plan. (Incorporated by reference to Exhibit 10.5 to
Form 10-K for the fiscal year ended December 31, 1989)
Exhibit 10.5* - Model of Adolph Coors Company Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.6 to
Form 10-K for the fiscal year ended December 31, 1989)
Exhibit 10.6* - Adolph Coors Company Equity Incentive Plan
Exhibit 10.7* - Coors Brewing Company Employee Profit Sharing Program. (Incorporated by reference to Exhibit 10.8 to
Form 10-K for the fiscal year ended December 31, 1989)
Exhibit 10.8 - Adolph Coors Company Non-Employee Director Compensation Deferral Plan. (Incorporated by reference to
Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 1989)
Exhibit 10.9 - Agreement between Adolph Coors Company and a former Executive Officer and current Director.
(Incorporated by reference to Exhibit 10.10 to Form 10-K for the fiscal year ended December 31,
1989)
Exhibit 10.11 - Adolph Coors Company Water Augmentation Plan. (Incorporated by reference to Exhibit 10.12 to Form 10-K
for the fiscal year ended December 31, 1989)
Exhibit 10.10 - Form of Coors Brewing Company Distributorship Agreement. (Introduced 1989). (Incorporated by
reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 1989)
Exhibit 10.14 - Adolph Coors Company Equity Compensation Plan for Non-Employee Directors (Incorporated by reference to
Exhibit 4.1 to registration Statement on Form S-8 filed on May 21, 1991, file No. 33-40730)
Exhibit 10.15 - Adolph Coors Company Excess Benefit Plan
Exhibit 10.16 - Distribution Agreement dated as of October 5, 1992, between the Company and ACX Technologies, Inc.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, this exhibit is incorporated herein
by reference to the Distribution Agreement included as Exhibit 2.1 to the Registration Statement on
Form 10 filed by ACX Technologies, Inc. (file No. 0-20704) with the Commission on October 6, 1992, as
amended
Exhibit 10.17 - Employment Contracts and Termination of Employment Arrangements for W. Leo Kiely III, Alvin C. Babb and
William H. Weintraub.
Exhibit 12 - Statement of computation of ratio of earnings to fixed charges.
Exhibit 21 - Subsidiaries.
Exhibit 23 - Consent of Independent Accountants.
</TABLE>
* Represents a management contract.
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter ended December
26, 1993.
(c) Other Exhibits
No exhibits in addition to those previously filed and listed in Item 14 (a)
(2) are filed herein.
(d) Other Financial Statement Schedules
No additional financial statement schedules are required.
Other Matters
For the purpose of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall
be incorporated by reference into registrant's Registration Statements on
Form S-8 No. 33-2761 (filed January 17, 1986), 33-35035 (filed May 24, 1990),
33-40730 (filed May 21, 1991), and Form S-3 No. 33-33831 (filed March 14,
1990):
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
ADOLPH COORS COMPANY
By /s/ William K. Coors
William K. Coors
Chairman and President
(Chief Executive Officer)
By /s/ Robert J. Diaz
Robert J. Diaz
Vice President
Coors Brewing Company
(Principal Financial Officer)
(Principal Accounting Officer)
March 24, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following directors on behalf of the
Registrant and in the capacities and on the date indicated.
By /s/ Joseph Coors By /s/ J. Bruce Llewellyn
Joseph Coors J. Bruce Llewellyn
Vice Chairman
By /s/ Peter H. Coors By /s/ Luis G. Nogales
Peter H. Coors Luis G. Nogales
Chief Executive Officer
Coors Brewing Company
March 24, 1994
<PAGE>
EXHIBIT 10.6
ADOLPH COORS COMPANY
EQUITY INCENTIVE PLAN
Amended and restated,
effective January 1, 1994
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
Section 1 - Introduction 1
1.1 Establishment and Amendment 1
1.2 Purposes 1
1.3 Effective Date 1
Section 2 - Definitions 1
2.1 Definitions 1
2.2 Gender and Number 3
Section 3 - Plan Administration 3
Section 4 - Stock Subject to the Plan 4
4.1 Number of Shares 4
4.2 Other Shares of Stock 4
4.3 Adjustments for Stock Split, Stock
Dividend, Etc.. 4
4.4 Other Distributions and Changes in the Stock 4
4.5 General Adjustment Rules 5
4.6 Determination by the Committee, Etc. 5
Section 5 - Reorganization or Liquidation 5
Section 6 - Participation 6
6.1 In General 6
6.2 Restriction on Award Grants to Certain
Individuals 6
Section 7 - Stock Options 7
7.1 Grant of Stock Options 7
7.2 Stock Option Certificates 7
7.3 Shareholder Privileges 10
Section 8 - Restricted Stock Awards 10
8.1 Grant of Restricted Stock Awards 10
8.2 Restrictions 10
8.3 Privileges of a Stockholder,
Transferability 11
8.4 Enforcement of Restrictions 11
Page
Section 9 - Purchase of Stock 11
9.1 General 11
9.2 Other Terms 11
Section 10 - Other Common Stock Grants 12
Section 11 - Company Right to Purchase Stock 12
11.1 Right of First Refusal 12
11.2 Marking of Certificates 13
Section 12 - Change in Control 13
12.1 In General 13
12.2 Limitation on Payments 13
12.3 Definition 13
Section 13 - Rights of Employees; Participants 14
13.1 Employment 14
13.2 Nontransferability 14
Section 14 - General Restrictions 15
14.1 Investment Representations 15
14.2 Compliance With Securities Laws 15
14.3 Changes in Accounting Rules 15
Section 15 - Other Employee Benefits 15
Section 16 - Plan Amendment, Modification and Termination 16
Section 17 - Withholding 16
17.1 Witholding Requirement 16
17.2 Withholding With Stock 16
Section 18 - Requirements of Law 16
18.1 Requirements of Law 16
18.2 Federal Securities Law Requirements 16
18.3 Governing Law 17
Section 19 - Duration of the Plan 17
</TABLE>
<PAGE>
ADOLPH COORS COMPANY
EQUITY INCENTIVE PLAN
Amended and restated,
effective January 1, 1994
Section 1
Introduction
1.1 Establishment and Amendment. Adolph Coors Company, a Colorado
corporation (hereinafter referred to, together with its Affiliated Corporations
(as defined in subsection 2.1(a)) as the "Company" except where the context
otherwise requires), established the Adolph Coors Company Equity Incentive Plan
(the "Plan") for certain key employees of the Company. The Plan, which permits
the grant of stock options and restricted stock awards to certain key employees
of the Company, was originally effective January 1, 1990. Pursuant to the power
granted in Section 16 (Section 14 prior to the Plan's amendment and
restatement), the Company hereby amends and restates the Plan in its entirety,
effective January 1, 1994.
1.2 Purposes. The purposes of the Plan are to provide the key management
employees selected for participation in the Plan with added incentives to
continue in the service of the Company and to create in such employees a more
direct interest in the future success of the operations of the Company by
relating incentive compensation to the achievement of long-term corporate
economic objectives, so that the income of the key management employees is more
closely aligned with the income of the Company's shareholders. The Plan is also
designed to attract key employees and to retain and motivate participating
employees by providing an opportunity for investment in the Company.
1.3 Effective Date. The original effective date of the Plan (the
"Effective Date") was January 1, 1990. The Plan, each amendment to the Plan,
and each option or other award granted hereunder is conditioned on and shall be
of no force or effect until approval of the Plan by the holders of the shares
of voting stock of the Company unless the Company, on the advice of counsel,
determines that shareholder approval is not necessary.
Section 2
Definitions
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Adolph
Coors Company through stock ownership or otherwise and is treated as a common
employer under the provisions of Sections 414(b) and (c) of the Internal Revenue
Code.
(b) "Award" means an Option or a Restricted Stock Award issued
hereunder, an offer to purchase Stock made hereunder, or a grant of Stock made
hereunder.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means a committee consisting of members of the Board
who are empowered hereunder to take actions in the administration of the Plan.
The Committee shall be so constituted at all times as to permit the Plan to
comply with Rule 16b-3 or any successor rule promulgated under the Securities
Exchange Act of 1934 (the "1934 Act"). Members of the Committee shall be
appointed from time to time by the Board, shall serve at the pleasure of the
Board and may resign at any time upon written notice to the Board.
(e) "Effective Date" means the original effective date of the Plan,
January 1, 1990.
(f) "Eligible Employees" means those key management employees
(including, without limitation, officers and directors who are also employees)
of the Company or any division thereof, upon whose judgment, initiative and
efforts the Company is, or will become, largely dependent for the successful
conduct of their business.
(g) "Fair Market Value" means the average of the highest and lowest
prices of the Stock as reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") on a particular date. If there
are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions. If the price of the Stock is not reported on NASDAQ, the Fair
Market Value of the Stock on the particular date shall be as determined by the
Committee using a reference comparable to the NASDAQ system. If, upon exercise
of an Option, the exercise price is paid by a broker's transaction as provided
in section 7.2(g)(ii)(D), Fair Market Value, for purposes of the exercise, shall
be the price at which the Stock is sold by the broker.
(h) "Internal Revenue Code" means the Internal Revenue Code of 1986,
as it may be amended from time to time.
(i) "Option" means a right to purchase Stock at a stated price for a
specified period of time. All Options granted under the Plan shall be "non-
qualified stock options" whose grant is not intended to fall under the
provisions of Section 422A of the Internal Revenue Code.
(j) "Option Price" means the price at which shares of Stock subject to
an Option may be purchased, determined in accordance with subsection 7.2(b).
(k) "Participant" means an Eligible Employee designated by the
Committee from time to time during the term of the Plan to receive one or more
of the Awards provided under the Plan.
(l) "Restricted Stock Award" means an award of Stock granted to a
Participant pursuant to Section 8 that is subject to certain restrictions
imposed in accordance with the provisions of such Section.
(m) "Stock" means the no par value Class B (non-voting) Common Stock
of the Company.
(n) "Voting Stock" means the $1.00 par value Class A Common Stock of
the Company.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.
Section 3
Plan Administration
The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, select the
Participants from among the Eligible Employees, determine the Options,
Restricted Stock Awards and other Awards to be granted pursuant to the Plan, the
number of shares of Stock to be issued thereunder and the time at which such
Options and Restricted Stock Awards are to be granted, fix the Option Price,
period and manner in which an Option becomes exercisable, establish the duration
and nature of Restricted Stock Award restrictions establish the terms and
conditions on which an offer to purchase Stock will be made, and establish such
other terms and requirements of the various compensation incentives under the
Plan as the Committee may deem necessary or desirable and consistent with the
terms of the Plan. The Committee shall determine the form or forms of the
agreements with Participants which shall evidence the particular provisions,
terms, conditions, rights and duties of the Company and the Participants with
respect to Awards granted pursuant to the Plan, which provisions need not be
identical except as may be provided herein. The Committee may from time to time
adopt such rules and regulations for carrying out the purposes of the Plan as
it may deem proper and in the best interests of the Company. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any agreement entered into hereunder in the manner and to the extent
it shall deem expedient and it shall be the sole and final judge of such
expediency. No member of the Committee shall be liable for any action or
determination made in good faith. The determinations, interpretations and other
actions of the Committee pursuant to the provisions of the Plan shall be binding
and conclusive for all purposes and on all persons.
Section 4
Stock Subject to the Plan
4.1 Number of Shares. Two Million (2,000,000) shares of Stock are
authorized for issuance under the Plan in accordance with the provisions of the
Plan and subject to such restrictions or other provisions as the Committee may
from time to time deem necessary. This authorization may be increased from time
to time by approval of the Board and by the shareholders of the Company if, in
the opinion of counsel for the Company, such shareholder approval is required.
Shares of Stock that may be issued upon exercise of Options, that are issued as
Restricted Stock Awards, that are purchased under the Plan, and that are used
as incentive compensation under the Plan shall be applied to reduce the maximum
number of shares of Stock remaining available for use under the Plan. The
Company shall at all times during the term of the Plan and while any Options are
outstanding retain as authorized and unissued Stock at least the number of
shares from time to time required under the provisions of the Plan, or otherwise
assure itself of its ability to perform its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to an
Option that expires or for any reason is terminated unexercised, any shares of
Stock that are subject to an Award (other than an Option) and that are
forfeited, any shares of Stock withheld for the payment of taxes or received by
the Company as payment of the exercise price of an Option and any shares of
Stock that for any other reason are not issued to an Eligible Employee or are
forfeited shall automatically become available for use under the Plan. However,
any shares of Stock that are subject to an Award (other than an Option) and that
are forfeited and any shares of Stock that are withheld for the payment of taxes
or received by the Company as payment of the exercise price of an Option shall
be available for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall
at any time increase or decrease the number of its outstanding shares of Stock
or change in any way the rights and privileges of such shares by means of the
payment of a stock dividend or any other distribution upon such shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of Stock as to
which Awards may be granted under the Plan; and (ii) the shares of the Stock
then included in each outstanding Award granted hereunder.
4.4 Other Distributions and Changes in the Stock. If
(a) the Company shall at any time distribute with respect to the Stock
assets or securities of persons other than the Company (excluding cash or
distributions referred to in Section 4.3),
(b) the Company shall at any time grant to the holders of its Stock
rights to subscribe <f=37>pro rata<f=35> for additional shares thereof or for
any other securities of the Company, or
(c) there shall be any other change (except as described in
Section 4.3), in the number or kind of outstanding shares of Stock or of any
stock or other securities into which the Stock shall be changed or for which it
shall have been exchanged,
and if the Committee shall in its discretion determine that the event described
in subsection (a), (b), or (c) above equitably requires an adjustment in the
number or kind of shares subject to an Option or other Award, an adjustment in
the Option Price or the taking of any other action by the Committee, including
without limitation, the setting aside of any property for delivery to the
Participant upon the exercise of an Option or the full vesting of an Award, then
such adjustments shall be made, or other action shall be taken, by the Committee
and shall be effective for all purposes of the Plan and on each outstanding
Option or Award that involves the particular type of stock for which a change
was effected. Notwithstanding the foregoing provisions of this Section 4.4,
pursuant to Section 8.3 below, a Participant holding Stock received as a
Restricted Stock Award shall have the right to receive all amounts, including
cash and property of any kind, distributed with respect to the Stock upon the
Participant's becoming a holder of record of the Stock.
4.5 General Adjustment Rules. No adjustment or substitution provided for
in this Section 4 shall require the Company to sell a fractional share of Stock
under any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option and other Award shall be
limited by deleting any fractional share. In the case of any such substitution
or adjustment, the total Option Price for the shares of Stock then subject to
the Option shall remain unchanged but the Option Price per share under each such
Option shall be equitably adjusted by the Committee to reflect the greater or
lesser number of shares of Stock or other securities into which the Stock
subject to the Option may have been changed, and appropriate adjustments shall
be made to Restricted Stock Awards to reflect any such substitution or
adjustment.
4.6 Determination by the Committee, Etc. Adjustments under this Section 4
shall be made by the Committee, whose determinations with regard thereto shall
be final and binding upon all parties thereto.
Section 5
Reorganization or Liquidation
If the Company is merged or consolidated with another corporation and the
Company is not the surviving corporation, or if all or substantially all of the
assets or more than 50% of the outstanding voting stock of the Company is
acquired by any other corporation, business entity or person, or in case of a
reorganization (other than a reorganization under the United States Bankruptcy
Code), including a divisive reorganization under Section 355 of the Code, or
liquidation of the Company, and if the provisions of Section 12 do not apply,
the Committee, or the board of directors of any corporation assuming the
obligations of the Company, shall, as to the Plan and outstanding Options and
other Awards, either (i) make appropriate provision for the adoption and
continuation of the Plan by the acquiring or successor corporation and for the
protection of any such outstanding Options and other Awards by the substitution
on an equitable basis of appropriate stock of the Company or of the merged,
consolidated or otherwise reorganized corporation that will be issuable with
respect to the Stock, provided that no additional benefits shall be conferred
upon the Participants holding such Options and other Awards as a result of such
substitution, and the excess of the aggregate Fair Market Value of the shares
subject to the Options immediately after such substitution over the Option Price
thereof is not more than the excess of the aggregate Fair Market Value of the
shares subject to such Options immediately before such substitution over the
Option Price thereof, or (ii) upon written notice to the Participants, provide
that all unexercised Options must be exercised within a specified number of days
of the date of such notice or they will be terminated. In the latter event, the
Committee shall accelerate the exercise dates of outstanding Options and
accelerate the restriction period and modify the performance requirements for
any outstanding Awards so that all Options and other Awards become fully vested
prior to any such event.
Section 6
Participation
6.1 In General. Participants in the Plan shall be those Eligible Employees
who, in the judgment of the Committee, are performing, or during the term of
their incentive arrangement will perform, vital services in the management,
operation and development of the Company or an Affiliated Corporation, and
significantly contribute, or are expected to significantly contribute, to the
achievement of long-term corporate economic objectives. Participants may be
granted from time to time one or more Awards; provided, however, that the grant
of each such Award shall be separately approved by the Committee, and receipt
of one such Award shall not result in automatic receipt of any other Award.
Upon determination by the Committee that an Award is to be granted to a
Participant, written notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto. Each Participant shall, if
required by the Committee, enter into an agreement with the Company, in such
form as the Committee shall determine and that is consistent with the provisions
of the Plan, specifying such terms, conditions, rights and duties. Awards shall
be deemed to be granted as of the date specified in the grant resolution of the
Committee, which date shall be the date of any related agreement with the
Participant. In the event of any inconsistency between the provisions of the
Plan and any such agreement entered into hereunder, the provisions of the Plan
shall govern.
6.2 Restriction on Award Grants to Certain Individuals. Notwithstanding
the foregoing provisions of Section 6.1, no Awards shall be granted to any
lineal descendant of Adolph Coors, Jr. without the prior written approval of
counsel to the Company as to the effect of any such grant on the possible status
of the Company as a "personal holding company" within the meaning of Section 542
of the Internal Revenue Code.
Section 7
Stock Options
7.1 Grant of Stock Options. Coincident with or following designation for
participation in the Plan, a Participant may be granted one or more Options.
In no event shall the exercise of one Option affect the right to exercise any
other Option or affect the number of shares of Stock for which any other Option
may be exercised, except as provided in subsection 7.2(j).
7.2 Stock Option Certificates. Each Option granted under the Plan shall
be evidenced by a written stock option certificate. A stock option certificate
shall be issued by the Company in the name of the Participant to whom the Option
is granted (the "Option Holder") and shall incorporate and conform to the
conditions set forth in this Section 7.2, as well as such other terms and
conditions, not inconsistent herewith, as the Committee may consider appropriate
in each case.
(a) Number of Shares. Each stock option agreement shall state that it
covers a specified number of shares of the Stock, as determined by the
Committee.
(b) Price. The price at which each share of Stock covered by an Option
may be purchased shall be determined in each case by the Committee and set forth
in the stock option certificate.
(c) Duration of Options; Restrictions on Exercise. Each stock option
agreement shall state the period of time, determined by the Committee, within
which the Option may be exercised by the Option Holder (the "Option Period"),
and shall also set forth any installment or other restrictions on Option
exercise during such period, if any, as may be determined by the Committee.
(d) Termination of Employment, Death, Disability, Etc. Each stock
option agreement shall provide as follows with respect to the exercise of the
Option upon termination of the employment or the death of the Option Holder:
(i) If the employment of the Option Holder is terminated within the
Option Period for cause, as determined by the Company, the Option shall
thereafter be void for all purposes. As used in this subsection 7.2(d), "cause"
shall mean a gross violation, as determined by the Company, of the Company's
established policies and procedures, provided that the effect of this
subsection 7.2(d) shall be limited to determining the consequences of a
termination and that nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any employee.
(ii) If the Option Holder retires from employment by the Company
or its affiliates during the Option Period pursuant to the Company's retirement
policy, or if the Option Holder becomes disabled (as determined pursuant to the
Company's Long-Term Disability Plan), the Option may be exercised by the Option
Holder, or in the case of death by the persons specified in subsection (iii) of
this subsection 7.2(d), within thirty-six months following his or her retirement
or disability (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to
the shares as to which the Option had become exercisable on or before the date
of the Option Holder's termination of employment.
(iii) If the Option Holder dies during the Option Period while
still employed or within the three-month period referred to in (iv) below, or
within the thirty-six-month period referred to in (ii) above, the Option may be
exercised by those entitled to do so under the Option Holder's will or by the
laws of descent and distribution within fifteen months following the Option
Holder's death, (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option may be exercised only
as to the shares as to which the Option had become exercisable on or before the
date of the Option Holder's death.
(iv) If the employment of the Option Holder by the Company is
terminated (which for this purpose means that the Option Holder is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than cause, retirement pursuant to the Company's
retirement policy, disability or the Option Holder's death, the Option may be
exercised by the Option Holder within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to
the shares as to which the Option had become exercisable on or before the date
of termination of employment.
(e) Transferability. Each stock option agreement shall provide that
the Option granted therein is not transferable by the Option Holder except by
will or pursuant to the laws of descent and distribution, and that such Option
is exercisable during the Option Holder's lifetime only by him or her, or in the
event of disability or incapacity, by his or her guardian or legal
representative.
(f) Agreement to Continue in Employment. Each stock
option agreement shall contain the Option Holder's agreement to remain in the
employment of the Company, at the pleasure of the Company, for a continuous
period of at least one year after the date of such stock option agreement, at
the salary rate in effect on the date of such agreement or at such changed
rate as may be fixed, from time to time, by the Company.
(g) Exercise, Payments, Etc.
(i) Each stock option agreement shall provide that the method for
exercising the Option granted therein shall be by delivery to the Corporate
Secretary of the Company of written notice specifying the number of shares
with respect to which such Option is exercised and payment of the Option
Price. Such notice shall be in a form satisfactory to the Committee and
shall specify the particular Option (or portion thereof) which is being
exercised and the number of shares with respect to which the Option is being
exercised. The exercise of the Stock Option shall be deemed effective upon
receipt of such notice by the Corporate Secretary and payment to the Company.
If requested by the Company, such notice shall contain the Option Holder's
representation that he or she is purchasing the Stock for investment purposes
only and his or her agreement not to sell any Stock so purchased in any
manner that is in violation of the Securities Act of 1933, as amended, or any
applicable state law. Such restrictions, or notice thereof, shall be placed
on the certificates representing the Stock so purchased. The purchase of
such Stock shall take place at the principal offices of the Company upon
delivery of such notice, at which time the purchase price of the Stock shall
be paid in full by any of the methods or any combination of the methods set
forth in (ii) below. A properly executed certificate or certificates
representing the Stock shall be issued by the Company and delivered to the
Option Holder. If certificates representing Stock are used to pay all or
part of the exercise price, separate certificates for the same number of
shares of Stock shall be issued by the Company and delivered to the Option
Holder representing each certificate used to pay the Option Price, and an
additional certificate shall be issued by the Company and delivered to the
Option Holder representing the additional shares, in excess of the Option
Price, to which the Option Holder is entitled as a result of the exercise of
the Option.
(ii) The exercise price shall be paid by any of the following
methods or any combination of the following methods:
(A) in cash;
(B) by certified or cashier's check payable to the order of
the Company;
(C) by delivery to the Company of certificates representing
the number of shares then owned by the Option Holder, the Fair Market Value
of which equals the purchase price of the Stock purchased pursuant to the
Option, properly endorsed for transfer to the Company; provided however, that
no Option may be exercised by delivery to the Company of certificates
representing Stock, unless such Stock has been held by the Option Holder for
more than six months; for purposes of this Plan, the Fair Market Value of any
shares of Stock delivered in payment of the purchase price upon exercise of
the Option shall be the Fair Market Value as of the exercise date; the
exercise date shall be the day of delivery of the certificates for the Stock
used as payment of the Option Price; or
(D) by delivery to the Company of a properly executed notice
of exercise together with irrevocable instructions to a broker to deliver to
the Company promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option Holder
necessary to pay the exercise price.
(h) Date of Grant. An option shall be considered as
having been granted on the date specified in the grant resolution of the
Committee.
(i) Notice of Sale of Stock; Withholding. Each stock
option agreement shall provide that, upon exercise of the Option, the Option
Holder shall make appropriate arrangements with the Company to provide for
the amount of additional withholding required by Sections 3102 and 3402 of
the Internal Revenue Code and applicable state income tax laws, including
payment of such taxes through delivery of shares of Stock or by withholding
Stock to be issued under the Option, as provided in Section 17.
(j) Issuance of Additional Option. If an Option Holder pays all
or any portion of the exercise price of an Option with Stock, or pays all or
any portion of the applicable withholding taxes with respect to the exercise
of an Option with Stock which has been held by the Option Holder for more
than six months, the Committee shall grant to such Option Holder a new Option
covering the number of shares of Stock used to pay such exercise price and/or
withholding tax. The new Option shall have an Option Price per share equal
to the Fair Market Value of a share of Stock on the date of the exercise of
the Option and shall have the same terms and provisions as the Option, except
as otherwise determined by the Committee in its sole discretion. Effective
for Options granted on and after January 1, 1994, this section 7.2(j) shall
be null and void.
7.3 Shareholder Privileges. No Option Holder shall have any rights as a
shareholder with respect to any shares of Stock covered by an Option until
the Option Holder becomes the holder of record of such Stock, and no
adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date such Option
Holder becomes the holder of record of such Stock, except as provided in
Section 4.
<PAGE>
Section 8
Restricted Stock Awards
8.1 Grant of Restricted Stock Awards. Coincident with or following
designation for participation in the Plan, the Committee may grant a
Participant one or more Restricted Stock Awards consisting of shares of
Stock. The number of shares granted as a Restricted Stock Award shall be
determined by the Committee.
8.2 Restrictions. A Participant's right to retain a Restricted Stock
Award granted to him under Section 8.1 shall be subject to such restrictions,
including but not limited to his continuous employment by the Company or an
Affiliated Corporation for a restriction period specified by the Committee or
the attainment of specified performance goals and objectives, as may be
established by the Committee with respect to such Award. The Committee may
in its sole discretion require different periods of employment or different
performance goals and objectives with respect to different Participants, to
different Restricted Stock Awards or to separate, designated portions of the
Stock shares constituting a Restricted Stock Award. In the event of the
death or disability (as defined in subsection 7.2(d)) of a Participant, or
the retirement of a Participant in accordance with the Company's established
retirement policy, all employment period and other restrictions applicable to
Restricted Stock Awards then held by him shall lapse with respect to a pro
rata part of each such Award based on the ratio between the number of full
months of employment completed at the time of termination of employment from
the grant of each Award to the total number of months of employment required
for such Award to be fully nonforfeitable, and such portion of each such
Award shall become fully nonforfeitable. The remaining portion of each such
Award shall be forfeited and shall be immediately returned to the Company.
In the event of a Participant's termination of employment for any other
reason, any Restricted Stock Awards as to which the employment period or
other restrictions have not been satisfied (or waived or accelerated as
provided herein) shall be forfeited, and all shares of Stock related thereto
shall be immediately returned to the Company.
8.3 Privileges of a Stockholder, Transferability. A Participant shall
have all voting, dividend, liquidation and other rights with respect to Stock
in accordance with its terms received by him as a Restricted Stock Award
under this Section 8 upon his becoming the holder of record of such Stock;
provided, however, that the Participant's right to sell, encumber, or
otherwise transfer such Stock shall be subject to the limitations of
Sections 9 and 11.2.
8.4 Enforcement of Restrictions. The Committee shall cause a legend to
be placed on the Stock certificates issued pursuant to each Restricted Stock
Award referring to the restrictions provided by Sections 8.2 and 8.3 and, in
addition, may in its sole discretion require one or more of the following
methods of enforcing the restrictions referred to in Sections 8.2 and 8.3:
(a) Requiring the Participant to keep the Stock certificates, duly
endorsed, in the custody of the Company while the restrictions remain in
effect; or
(b) Requiring that the Stock certificates, duly endorsed, be held
in the custody of a third party while the restrictions remain in effect.
Section 9
Purchase of Stock
9.1 General. From time to time the Company may make an offer to certain
Participants, designated by the Committee in its sole discretion, to purchase
Stock from the Company. The number of shares of Stock offered by the Company
to each selected Participant shall be determined by the Committee in its sole
discretion. The purchase price for the Stock shall be as determined by the
Committee in its sole discretion and may be less than the Fair Market Value
of the Stock. The Participants who accept the Company's offer shall purchase
the Stock at the time designated by the Committee. The purchase shall be on
such additional terms and conditions as may be determined by the Committee in
its sole discretion.
9.2 Other Terms. The Committee may, in its sole discretion, grant
Options, Restricted Stock, or any combination thereof, on terms and
conditions determined by the Committee, in its sole discretion, to the
Participants who purchase Stock pursuant to Section 9.1.
Section 10
Other Common Stock Grants
From time to time during the duration of this Plan, the Board may, in its
sole discretion, adopt one or more incentive compensation arrangements for
Participants pursuant to which the Participants may acquire shares of Stock,
whether by purchase, outright grants, or otherwise. Any such arrangements
shall be subject to the general provisions of this Plan and all shares of
Stock issued pursuant to such arrangements shall be issued under this Plan.
Section 11
Company Right To Purchase Stock
11.1 Right of First Refusal.
(a) In the event of the death of a Participant, or if a Participant
at any time proposes to transfer any of the Stock acquired pursuant to the
Plan to a third party, the Participant (or his personal representative or
estate, as the case may be) shall make a written offer (the "Offer") to sell
all of the Stock acquired pursuant to the Plan then owned by the Participant
(or thereafter acquired by the Participant's estate or personal
representative pursuant to any Award hereunder) to the Company at the
"purchase price" as hereinafter defined. In the case of a proposed sale of
any of the Stock to a third party, the Offer shall state the name of the
proposed transferee and the terms and conditions of the proposed transfer.
In a case of a proposed sale through or to a registered broker/dealer, the
Offer shall state the name and address of the broker. The Company shall have
the right to elect to purchase all (but not less than all) of the shares of
Stock. The Company shall have the right to elect to purchase the shares of
Stock for a period of ten (10) days after the receipt by the Company of the
Offer. The provisions of this Section 11 shall apply to proposed sales
through or to a registered broker/dealer at the prevailing market price, even
if the prevailing market price should fluctuate between the date the Company
receives the Offer and the date the Company elects to purchase the shares of
Stock. In all cases, the purchase price for the Stock shall be determined
pursuant to subsection 11.1(d).
(b) The Company shall exercise its right to purchase the Stock by
given written notice of its exercise to the Participant (or his personal
representative or estate, as the case may be). If the Company elects to
purchase the Stock, payment for the shares of Stock shall be made in full by
Company check. Any such payments shall be made within ten (10) days after
the election to purchase has been exercised.
(c) If the Stock is not purchased pursuant to the foregoing
provisions, the shares of Stock may be transferred by the Participant to the
proposed transferee named in the Offer to the Company, in the case of a
proposed sale to a third party. However, if such transfer is not made within
120 days following the termination of the Company's right to purchase, a new
offer must be made to the Company before the Participant can transfer any
portion of his shares and the provisions of this Section 11 shall again apply
to such transfer. If the Company's right of first refusal under this Section
11 is created by an event other than a proposed transfer to a third party,
the shares of Stock shall remain subject to the provisions of this Section 11
in the hands of the registered owner of the Stock.
(d) The purchase price for each share of Stock purchased by the
Company pursuant to this Section 11 shall be equal to the Fair Market Value
of the Stock on the date the Company receives the Offer under
subsection 11.1(a).
11.2 Marking of Certificates. Each certificate representing shares of
Stock acquired pursuant to this Plan shall bear the following legend:
The shares of stock represented by this Certificate are subject to all the
terms of the Adolph Coors Company Equity Incentive Plan, as the Plan may be
amended from time to time (the "Plan") and to the terms of a [Non-Qualified
Stock Option Agreement] [Restricted Stock Agreement] [Stock Purchase
Agreement] between the Company and the Participant (the "Agreement"). Copies
of the Plan and the Agreement are on file at the office of the Company. The
Plan and the Agreement, among other things, limit the right of the Owner to
transfer the shares represented hereby and provides that in certain
circumstances the shares may be purchased by the Company.
Section 12
Change in Control
12.1 In General. In the event of a change in control of the Company as
defined in Section 12.3, then (a) all Options shall become immediately
exercisable in full during the remaining term thereof, and shall remain so,
whether or not the Participants to whom such Options have been granted remain
employees of the Company or an Affiliated Corporation; and (b) all
restrictions with respect to outstanding Restricted Stock Awards shall
immediately lapse.
12.2 Limitation on Payments. If the provisions of this Section 12 would
result in the receipt by any Participant of a payment within the meaning of
Section 280G of the Internal Revenue Code and the regulations promulgated
thereunder and if the receipt of such payment by any Participant would, in
the opinion of independent tax counsel of recognized standing selected by the
Company, result in the payment by such Participant of any excise tax provided
for in Sections 280G and 4999 of the Internal Revenue Code, then the amount
of such payment shall be reduced to the extent required, in the opinion of
independent tax counsel, to prevent the imposition of such excise tax;
provided, however, that the Committee, in its sole discretion, may authorize
the payment of all or any portion of the amount of such reduction to the
Participant.
12.3 Definition. For purposes of the Plan, a "change in control" shall
mean any of the following:
(i) The acquisition of or the ownership of fifty percent or more
of the total Voting Stock of the Company then issued and outstanding, by any
person, or group of affiliated persons, or entities not affiliated with the
Company as of the Effective Date of this Plan, without the consent of the
Board of Directors, or
(ii) The election of individuals constituting a
majority of the Board of Directors who were not either (A) members of the
Board of Directors prior to the election or (B) recommended to the
shareholders by management of the Company, or
(iii) A legally binding and final vote of the shareholders of the
Company in favor of selling all or substantially all of the assets of the
Company.
Section 13
Rights of Employees; Participants
13.1 Employment. Nothing contained in the Plan or in any Option or
Restricted Stock Award granted under the Plan shall confer upon any
Participant any right with respect to the continuation of his or her
employment by the Company or any Affiliated Corporation, or interfere in any
way with the right of the Company or any Affiliated Corporation, subject to
the terms of any separate employment agreement to the contrary, at any time
to terminate such employment or to increase or decrease the compensation of
the Participant from the rate in existence at the time of the grant of an
Option or Restricted Stock Award. Whether an authorized leave of absence, or
absence in military or government service, shall constitute a termination of
employment shall be determined by the Committee at the time.
13.2 Nontransferability. No right or interest of any Participant in an
Option or a Restricted Stock Award (prior to the completion of the
restriction period applicable thereto), granted pursuant to the Plan, shall
be assignable or transferable during the lifetime of the Participant, either
voluntarily or involuntarily, or subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy. In the event of a
Participant's death, a Participant's rights and interests in Options and
Restricted Stock Awards shall, to the extent provided in Sections 7, 8 and 9,
be transferable by testamentary will or the laws of descent and distribution,
and payment of any amounts due under the Plan shall be made to, and exercise
of any Options may be made by, the Participant's legal representatives, heirs
or legatees. If in the opinion of the Committee a person entitled to
payments or to exercise rights with respect to the Plan is disabled from
caring for his affairs because of mental condition, physical condition or
age, payment due such person may be made to, and such rights shall be
exercised by, such person's guardian, conservator or other legal personal
representative upon furnishing the Committee with evidence satisfactory to
the Committee of such status.
Section 14
General Restrictions
14.1 Investment Representations. The Company may require any person to
whom an Option, Restricted Stock Award, Stock is granted, or to whom Stock is
sold, as a condition of exercising such Option or receiving such Restricted
Stock Award or Stock, or purchasing such Stock, to give written assurances in
substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Stock subject to the Option, Restricted
Stock Award, Stock grant, or purchase of Stock, for his own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with Federal and applicable state
securities laws.
14.2 Compliance with Securities Laws. Each Option and Restricted Stock
Award, and Stock grant or purchase shall be subject to the requirement that,
if at any time counsel to the Company shall determine that the listing,
registration or qualification of the shares subject to such Option,
Restricted Stock Award, Stock grant or purchase upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance or purchase of shares thereunder, such Option,
Restricted Stock Award, or Stock grant or purchase may not be accepted or
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.
14.3 Changes in Accounting Rules. Notwithstanding any other provision
of the Plan to the contrary, if, during the term of the Plan, any changes in
the financial or tax accounting rules applicable to Options or Restricted
Stock Awards shall occur that, in the sole judgment of the Committee, may
have a material adverse effect on the reported earnings, assets or
liabilities of the Company, the Committee shall have the right and power to
modify as necessary, any then outstanding and unexercised Options and
outstanding Restricted Stock Awards as to which the applicable employment or
other restrictions have not been satisfied.
<PAGE>
Section 15
Other Employee Benefits
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option, the sale of shares received upon such
exercise, the vesting of any Restricted Stock Award, or the purchase or grant
of Stock, shall not constitute "earnings" with respect to which any other
employee benefits of such employee are determined, including without
limitation benefits under any pension, profit sharing, life insurance or
salary continuation plan.
Section 16
Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time to time may amend or
modify the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
shareholders if shareholder approval is required to enable the Plan to
satisfy any applicable statutory or regulatory requirements, or if the
Company, on the advice of counsel, determines that shareholder approval is
otherwise necessary or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Restricted Stock Awards or Stock theretofore
granted or purchased under the Plan, without the consent of the Participant
holding such Options Restricted Stock Awards, or Stock.
Section 17
Withholding
17.1 Withholding Requirement. The Company's obligations to deliver
shares of Stock upon the exercise of any Option, the vesting of any
Restricted Stock Award, or the grant or purchase of Stock shall be subject to
the Participant's satisfaction of all applicable federal, state and local
income and other tax withholding requirements.
17.2 Withholding With Stock. The withholding obligation with respect to
the grant of Restricted Stock shall be satisfied by the Company's withholding
from the shares otherwise issuable to the Participant shares of Stock having
a value equal to the amount required to be withheld. The value of shares of
Stock to be withheld shall be based on the Fair Market Value of the Stock on
the date that the amount of tax to be withheld is to be determined.
Section 18
Requirements of Law
18.1 Requirements of Law. The issuance of Stock and the payment of cash
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
18.2 Federal Securities Law Requirements. If a Participant is an
officer or director of the Company within the meaning of Section 16, Awards
granted hereunder shall be subject to all conditions required under Rule 16b-
3, or any successor rule promulgated under the 1934 Act, to qualify the Award
for any exception from the provisions of Section 16(b) of the 1934 Act
available under that Rule. Such conditions shall be set forth in the
agreement with the Participant which describes the Award.
18.3 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of
Colorado.
Section 19
Duration of the Plan.
The Plan shall terminate at such time as may be determined by the Board of
Directors, and no Option or Restricted Stock Award, or Stock shall be granted
or purchased after such termination. Options and Restricted Stock Awards
outstanding at the time of the Plan termination may continue to be exercised,
or become free of restrictions, or paid, in accordance with their terms.
Dated: February 25, 1994
___________________________
ADOLPH COORS COMPANY
ATTEST:
/s/ Patricia J. Smith By: /s/ M. Caroline Turner
___________________________ _______________________
<PAGE>
P R O S P E C T U S
2,000,000 Shares
Adolph Coors Company
Class B Common Stock (Non-voting) No Par
Offered Pursuant To The
ADOLPH COORS COMPANY EQUITY INCENTIVE PLAN
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The 2,000,000 shares of Class B Common Stock (Non-voting), no par (the
"Class B Common Stock"), of Adolph Coors Company (the "Company") covered by this
prospectus will be issued under the Adolph Coors Company Equity Incentive Plan
(the "Plan") to eligible employees of the Company who become participants (the
"Participants") in the Plan.
Subject to the Company's right of first refusal to purchase shares of Class
B Common Stock issued to Participants under the Plan, shares of Class B Common
Stock issued to Participants may be resold by them in ordinary market
transactions when all holding periods and other requirements imposed by the Plan
or by law have been satisfied. However, certain Participants may be deemed
affiliates of the Company; and there are certain restrictions on the reoffer and
resale of shares of Class B Common Stock acquired by affiliates of the Company.
This prospectus is not available for use by affiliates of the Company in
connection with any such reoffers or resales.
The date of this prospectus is February 1, 1994.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SUMMARY 4
GENERAL INFORMATION 4
EQUITY INCENTIVE PLAN 4
SECURITIES TO BE OFFERED AND EMPLOYEES WHO
MAY PARTICIPATE IN THE PLAN 4
RESTRICTIONS 5
TERMINATION OF EMPLOYMENT 6
ACQUISITION OR PURCHASE OF SECURITIES
PURSUANT TO THE PLAN 7
REORGANIZATION OR CHANGE IN CONTROL 8
PAYMENT FOR SECURITIES OFFERED 8
WITHDRAWAL FROM THE PLAN AND ASSIGNMENT
OF INTERESTS 9
ADMINISTRATION OF THE PLAN 9
ERISA AND FEDERAL INCOME TAX CONSEQUENCES 9
DESCRIPTION OF COMMON STOCK 14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 14
INDEMNIFICATION OF DIRECTORS AND OFFICERS 15
</TABLE>
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus and any exhibit
to the registration statement in connection with the offering contained herein;
and if given or made, such information or representations must not be relied
upon as having been authorized by the Company. This prospectus does not
constitute an offering in any state in which such offering may not lawfully be
made. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that there has been no
change in the affairs of the Company since the date hereof.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission") which
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Room 1400, 7 World Trade Center, 13th Floor,
New York, New York 10048; and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60404. Copies of such material can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates.
The Company furnishes annual reports to its shareholders containing
consolidated financial statements which have been examined and reported upon,
with an opinion expressed, by its independent accountants. The Company
furnishes unaudited quarterly reports to its shareholders.
Shares of the Class B Common Stock are traded in the over-the-counter market
and are included as National Market System securities on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
Reports and other information covering the Company can be inspected at the
offices of the National Association of Securities Dealers, Inc. ("NASD"), 1735
K Street, Washington, D.C. 20006.
The registration statement filed with the Commission, which includes this
prospectus, incorporates by reference various documents which are not delivered
herewith. Statements herein contained concerning the provisions of any document
are not necessarily complete; and in each instance, reference is made to the
copy of such document filed as an exhibit to the registration statement. Each
such statement is qualified in its entirety by such reference. The Company will
provide without charge to each person to whom this prospectus is delivered, upon
written or oral request of such person, a copy of any and all information
incorporated by reference in the registration statement, excluding exhibits to
such information unless such exhibits are specifically referenced therein.
Requests for such information, and information concerning the Administrative
Committee (including the identity of its current members) should be directed to
Patricia J. Smith, Corporate Secretary, Mail No. BC300, Adolph Coors Company,
Golden, Colorado 80401, telephone (303) 277-2111.
SUMMARY
The Plan provides for grants of Restricted Stock and Stock Options to
Participants. The Plan also provides that Participants may be offered the
opportunity to purchase Class B Common Stock from the Company and to otherwise
receive Class B Common Stock. The Plan's Administrative Committee
("Administrative Committee") designates Participants from among eligible
employees and determines the amounts of each grant. The grants are subject to
certain holding periods and other restrictions to encourage long-term ownership.
GENERAL INFORMATION
The mailing address of the Company's principal executive offices is: Adolph
Coors Company, 12th and Ford Streets, Golden, Colorado 80401; and its telephone
number is (303) 279-6565.
EQUITY INCENTIVE PLAN
The Plan for which securities are being offered hereby is the Adolph Coors
Company Equity Incentive Plan, which was adopted by the board of directors of
the Company (the "Board") effective January 1, 1990. The Plan was amended and
restated effective January 1, 1994. The Plan will continue in effect until
terminated by the Board and may be modified or amended by the Board at any time;
provided, however, that any termination, amendment or modification of the Plan
may not adversely affect any previous grants or awards under the Plan without
the consent of the Participants affected by a change and, when required by law,
the approval of shareholders. Participants are designated by the Administrative
Committee from among key management employees ("Eligible Employees") of the
Company and its divisions. See "Administration of the Plan."
The purposes of the Plan are to provide key employees selected for
participation in the Plan with added incentives to continue in the service of
the Company; to create in such employees a more direct interest in the future
success of the operations of the Company by relating incentive compensation to
the achievement of long-term corporate objectives; to more directly align the
income of management with the growth of the Company; and to attract and retain
key employees by providing an opportunity for investment in the Company.
SECURITIES TO BE OFFERED AND EMPLOYEES WHO MAY
PARTICIPATE IN THE PLAN
A total of 2,000,000 shares of Class B Common Stock has been reserved to be
issued under the Plan. This reservation of shares may be increased from time
to time by the Board, with the consent of the Class A Shareholder when so
required.
The Plan defines Eligible Employees as key management employees (including,
without limitation, officers and directors who also are employees) of the
Company or any of its divisions, upon whose judgment, initiative and efforts the
Company is largely dependent for the successful conduct of its business. The
Administrative Committee has discretion to designate Participants from among the
Eligible Employees. There are no maximum or minimum amounts of securities to
be awarded through Restricted Stock Awards, the grant of Options or otherwise.
RESTRICTIONS
The Administrative Committee may impose certain restrictions on Restricted
Stock Awards, including the Participant's continuous employment by the Company
or an affiliated corporation for a specified restriction period or the
attainment of specified performance goals and objectives. The periods of
employment and performance goals may vary between the Participants or the same
Participant may receive several grants, each of which may involve different
employment periods and performance goals. Certain additional restrictions apply
upon the termination of employment. See "Termination of Employment." No right
or interest of any Participant in a Restricted Stock Award or Option (prior to
the completion of the holding period, satisfaction of other restrictions, or the
exercise of an Option) may be assignable or transferable during the lifetime of
the Participant. Stock certificates for shares granted pursuant to Restricted
Stock Awards shall bear a legend referring to these restrictions. The Company
may enforce these restrictions by requiring such certificates to be kept in the
custody of the Company or of a third party while the restrictions are in effect.
The terms of each Restricted Stock Award will be described in a Restricted
Stock Agreement to be executed by the Company and the Participant at the time
of the award. Options shall be granted for an Option Period to be determined
by the Administrative Committee and may be subject to such other restrictions
as the Administrative Committee determines. The rights of Participants upon
termination of employment depend on the type of termination. See "Termination
of Employment."
Except for transfers by will or pursuant to the laws of descent and
distribution, an Option is not transferable. The terms of each grant of an
Option will be specified in a Non-Qualified Stock Option Certificate to be
executed by the Company and delivered to the Participant at the time of the
grant.
Right of Repurchase
In the event of the death of a Participant, or if a Participant at any time
proposes to transfer any of the Class B Common Stock acquired pursuant to the
Plan to a third party, the Participant (or his personal representative or
estate, as the case may be) must make a written offer (the "Offer") to sell all
of the Class B Common Stock acquired pursuant to the Plan then owned by the
Participant (or thereafter acquired by the Participant's estate or personal
representative pursuant to any Award hereunder) to the Company at the "purchase
price" as defined in the Plan. In the case of a proposed sale of any of the
Class B Common Stock to a third party, the Offer must state the name of the
proposed transferee and the terms and conditions of the proposed transfer. In
a case of a proposed sale through or to a registered broker-dealer, the Offer
must state the name and address of the broker. The Company will have the right
to elect to purchase all (but not less than all) of the shares of Class B Common
Stock. The Company will have the right to elect to purchase the shares of
Class B Common Stock for a period of ten days after the receipt by the Company
of the Offer. This right of first refusal will apply to proposed sales through
or to a registered broker-dealer at the prevailing market price, even if the
prevailing market price should fluctuate between the date the Company receives
the Offer and the date the Company elects to purchase the shares of Class B
Common Stock.
The Company will exercise its right to purchase the Class B Common Stock by
giving written notice of its exercise to the Participant (or his personal
representative or estate, as the case may be). If the Company elects to
purchase the Class B Common Stock, payment for the shares of Class B Common
Stock will be made in full by Company check. Any such payments will be made
within ten days after the election to purchase has been exercised.
If the Class B Common Stock is not purchased pursuant to the foregoing
provisions, the shares of Class B Common Stock may be transferred by the
Participant to the proposed transferee named in the Offer to the Company, in the
case of a proposed sale to a third party. However, if such transfer is not made
within 120 days following the termination of the Company's right to purchase,
a new offer must be made to the Company before the Participant can transfer any
portion of his shares and the provisions of this section will again apply to
such transfer. If the Company's right of first refusal under this section is
created by an event other than a proposed transfer to a third party, the shares
of Class B Common Stock will remain subject to the provisions of this section
in the hands of the registered owner of the Class B Common Stock.
The purchase price for each share of Class B Common Stock purchased by the
Company pursuant to this section will be equal to the Fair Market Value of the
Class B Common Stock on the date the Company receives the Offer.
Shares issued to Participants who are considered affiliates of the Company
cannot be resold unless a registration statement covering such sale is in
effect, an appropriate exemption from registration is available, or the sale can
be accomplished through, and within the limitations of, Rule 144 promulgated
under the Securities Act of 1933. Generally, "affiliates" are persons who exert
a controlling influence over the affairs of the Company, such as members of the
Board or certain Officers.
TERMINATION OF EMPLOYMENT
If a Participant's employment by the Company or by an affiliated corporation
is terminated by death, disability or retirement, all employment period and
other restrictions under a Restricted Stock Award will lapse with respect to a
pro rata part of each award (based on the ratio between the number of full
months of employment completed and the full term of each award), while shares
represented by the remainder of a Restricted Stock Award shall be forfeited and
returned to the Company, unless the restrictions are waived, accelerated or
otherwise modified in the Administrative Committee's discretion. If a
Participant's employment terminates for any other reason, including termination
with or without cause, or resignation, the entire amount of the award as to
which the employment period or other restrictions have not been satisfied shall
be forfeited, unless waived or accelerated in the Administrative Committee's
discretion.
If a Participant's employment is terminated for cause (as defined in the
Plan), any outstanding Option will expire immediately. If the Participant
retires or becomes disabled, the unexpired portion of the Option will expire on
the earlier of the end of the Option Period for which the Option is granted or
36 months after the date of retirement or disability, and such Option may be
exercised only as to shares as to which it could have been exercised on or
before the date of retirement or disability. If a Participant dies while still
employed or dies within the 36 months following the Participant's retirement or
disability, the Participant's heirs will have until the earlier of the
expiration of the Option Period or 15 months after death to purchase shares
which were available for purchase under an Option on the date of death (provided
that such exercise must occur within the Option Period). If a Participant's
employment is terminated by the Company or any affiliated corporation for any
other reason, the Participant's Options will expire on the earlier of the
expiration of the Option Period or three months after the date of termination.
ACQUISITION OR PURCHASE OF SECURITIES
PURSUANT TO THE PLAN
The Administrative Committee will determine the period within which a
Participant may receive a Restricted Stock Award or an Option. Restricted Stock
Awards will be subject to the satisfaction of periods of employment and other
requirements before the shares granted will be free of restrictions and become
freely transferable. The grant of an Option will be for a specified Option
Period to be determined by the Administrative Committee. At the time an Option
is granted, the Administrative Committee may impose continuous employment or
"vesting" requirements which must be satisfied before the Option can be
exercised.
Once the continuous employment or vesting requirements have been satisfied,
shares subject to an Option may be purchased at any time during the Option
Period, but not thereafter. There is no minimum or maximum number of shares as
to which an Option may be exercised at any time or during any year.
From time to time, the Company may make an offer to certain Participants,
designated by the Administrative Committee in its sole discretion, to purchase
Class B Common Stock from the Company. The number of shares of Class B Common
Stock offered by the Company to each selected Participant will be determined by
the Administrative Committee in its sole discretion. The purchase price for the
Class B Common Stock will be as determined by the Administrative Committee in
its sole discretion and may be less than the Fair Market Value of the Class B
Common Stock. The Participants who accept the Company's offer will purchase the
Class B Common Stock at the time designated by the Administrative Committee.
The purchase will be on such additional terms and conditions as may be
determined by the Committee in its sole discretion.
The Administrative Committee may, in its sole discretion, grant Options,
Restricted Stock, or any combination of Options and Restricted Stock, on terms
and conditions determined by the Committee, in its sole discretion, to the
Participants who purchase Class B Common Stock after receiving an offer from the
Company.
Additionally, the Board may, in its sole discretion, adopt one or more
incentive compensation arrangements for Participants whereby the Participants
may acquire shares of Class B Common Stock, by purchase, outright grants, or
otherwise. Any such arrangements will be subject to the general provisions of
the Plan and all shares of Class B Common Stock issued according to such
arrangements will be issued under the Plan.
An Option may be exercised at the Option Price determined by the
Administrative Committee at the time of the grant. Once established, the
Option Price may not be modified without the consent of the Participant.
Adjustments in the capital structure of the Company by stock splits, stock
dividends, and similar changes will affect the number of shares as to which a
Restricted Stock Award or Option may be granted under the Plan and the number
of shares included in each outstanding Award or Option granted under the Plan.
REORGANIZATION OR CHANGE IN CONTROL
If the Company is merged or consolidated with another corporation and the
Company is not the surviving corporation, or if all, or substantially all, of
the assets or more than 50 percent of the outstanding voting stock of the
Company is acquired by any other person, or in the case of a reorganization
(other than a reorganization under the United States Bankruptcy Code) or
liquidation of the Company, the Administrative Committee, or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to the Plan and outstanding Restricted Stock Awards and Options, make
appropriate provision for the adoption and continuation of the Plan or provide
that all unexercised Options will be terminated unless they are exercised within
a specified number of days.
In the event of a change in control of the Company, all Options shall become
immediately exercisable in full for the balance of the Option Period and all
restrictions with respect to outstanding Restricted Stock Awards shall
immediately lapse. A "change in control" means the acquisition of 50 percent
or more of the outstanding Class A Common Stock by persons not affiliated with
the Company and without the consent of the Board, the election of individuals
to a majority of the Board who were not previously members of the Board or were
not recommended by management, or a legally binding and final vote of the
shareholders of the Company in favor of selling all, or substantially all,
assets of the Company.
PAYMENT FOR SECURITIES OFFERED
Shares acquired pursuant to Restricted Stock Awards are a form of compensation
by the Company to a Participant rather than a direct purchase by a Participant;
however, each Participant must satisfy the withholding tax obligation on income
generated by said award. See "ERISA and Federal Income Tax Consequences."
The Option Price may be paid by cash, certified or cashier's check; by
surrender of shares of Class B Common Stock then owned by the Participant,
provided such shares have been held by the Participant for more than six months;
or by notice of exercise to the Company coupled with irrevocable instructions
to a broker to deliver to the Company promptly either the amount of proceeds of
a sale of shares of Class B Common Stock or the proceeds of a loan from the
broker to cover the Option Price.
The Company will report to each Participant annually with respect to each
Participant's Restricted Stock Awards, Options and other awards under the Plan.
WITHDRAWAL FROM THE PLAN AND ASSIGNMENT OF INTERESTS
The termination of a Participant's employment will effect the Participant's
withdrawal from the Plan, subject to the specific provisions of the Plan
concerning rights after termination. A Participant's interest in Restricted
Stock Awards or Options is not assignable or transferable except by will or by
the laws of descent or distribution and may not be assigned or hypothecated.
Once the holding periods and other requirements are satisfied, shares received
pursuant to a Restricted Stock Award or Option become fully transferable (except
for the Company's right of first refusal); thereafter, a Participant's ownership
is not terminable by termination of employment or by death. See "Restrictions"
and "Termination of Employment."
There are no defaults under the Plan, but an Option not exercised within the
Option Period will lapse.
ADMINISTRATION OF THE PLAN
The plan is administered by the Administrative Committee. The Administrative
Committee is authorized, in its sole discretion, to select Participants from
among the Eligible Employees; to determine each Restricted Stock Award, Option
and other awards to be granted pursuant to the Plan, the number of shares of
Class B Common Stock to be issued thereunder, and the time in which Restricted
Stock Awards and Options are to be granted; to fix the Option Price, Option
Period, and manner in which an Option becomes exercisable; to establish the
duration and nature of Restricted Stock Award restrictions; and to establish
such other terms and requirements of the various compensation incentives under
the Plan as the Administrative Committee may deem necessary or desirable and
which are consistent with the terms of the Plan. The Administrative Committee
will determine the form or forms of agreements with Participants to evidence the
provisions, terms, conditions, rights and duties of the Company and Participants
with respect to each grant and adopt such rules and regulations to carry out the
purposes of the Plan as it may deem proper. The Administrative Committee may
correct defects, supply omissions, and reconcile any inconsistency in the Plan
or in any agreement entered into under the Plan. Members of the Administrative
Committee are not liable for any action or determination made in good faith.
The determinations, interpretations, and other actions of the Administrative
Committee will be binding and conclusive for all purposes and on all persons.
ERISA AND FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of
participation in the Plan for a typical Participant is only a summary and does
not cover, among other things, foreign, state, or local tax consequences or
estate and gift tax consequences of participation in the Plan. Differences in
Participants' financial situations may cause the tax consequences of
participation in the Plan to vary. Therefore, each Participant is urged to
consult his own legal counsel, accountant, or other tax advisor regarding the
tax consequences of participation in the Plan to him.
Grant and Exercise of Options.
In general, a Participant will not recognize any compensation upon the grant
of an Option. Upon exercise of the Option, the amount by which the fair market
value of the shares at the time of exercise exceeds the exercise price must be
reported by the Participant as compensation. See "Exercise Of Options With
Stock" below for the consequences of using previously acquired stock to exercise
an Option. However, if the exercise price is substantially less than the fair
market value of the shares at the time the Option is granted, there is a risk
that the Internal Revenue Service may assert that the Participant must recognize
compensation at the time the Option is granted equal to the excess of the fair
market value of the Class B Common Stock over the exercise price.
The Participant must make appropriate arrangements with the Company to pay
the federal, state, or local income tax withholding resulting from the exercise
of the Option. The Company will be entitled to a deduction, in an amount equal
to the compensation recognized by the Participant, for the Company's taxable
year that ends with or within the taxable year in which the Participant
recognizes compensation, if and to the extent such amount is an ordinary and
necessary business expense and satisfies the test of reasonable compensation.
The Participant's basis for the Class B Common Stock will be equal to the sum
of (1) the exercise price of the shares and (2) the compensation includable in
income with respect to the exercise of such Option, if any. The holding period
will begin on the day after the day the Option is exercised.
Exercise of Options With Stock.
If a Participant exercises an Option by paying the exercise price with shares
of Class B Common Stock, the Participant will be treated as having made a
nontaxable exchange of the number of shares surrendered for an equal number of
shares received (the "Exchange Stock"). The basis and holding period of the
Exchange Stock received will be the same as the basis and holding period of the
Class B Common Stock surrendered.
All shares received in excess of the Exchange Stock (the "Excess Stock") are
treated as compensation to the Participant, and the Company will have a
corresponding deduction to the extent the amount is an ordinary and necessary
business expense and satisfies the test of reasonable compensation. The amount
of compensation is equal to the fair market value of the Excess Stock on the
date the Option is exercised. The Participant must make appropriate
arrangements with the Company to pay the federal, state, or local income tax
withholding resulting from the receipt of compensation. The Excess Stock has
a basis equal to the compensation included in income with respect to the
acquisition of such Excess Stock and a holding period that begins on the day
after the date the Option is exercised.
For example, if a Participant exercises an Option by surrendering 20 shares
of Class B Common Stock and receives 50 shares of Class B Common Stock, 20 of
the 50 shares will be treated as Exchange Stock; the remaining 30 shares will
be treated as Excess Stock.
When shares of Class B Common Stock acquired through the exercise of an Option
are disposed of, the shares constituting Excess Stock are deemed to be the first
disposed of; the next shares disposed of are the shares of Exchange Stock having
the lowest basis; the shares of Exchange Stock having the highest basis are
deemed to be the last shares disposed of.
ANY PARTICIPANT WHO CONTEMPLATES EXERCISING AN OPTION BY PAYING THE EXERCISE
PRICE WITH PREVIOUSLY ACQUIRED CLASS B COMMON STOCK IS STRONGLY URGED TO CONSULT
WITH HIS/HER OWN TAX ADVISOR PRIOR TO MAKING SUCH AN EXERCISE.
Restricted Stock.
In general, a Participant will not recognize compensation until the
Restricted Stock vests. The amount of compensation is equal to the fair market
value of the Restricted Stock on the date it vests. In the alternative, a
Participant may make an election under Code section 83(b) to recognize
compensation when the Restricted Stock is granted. The amount of compensation
is equal to the fair market value of the Restricted Stock on the date it is
granted. The election must be filed with the Internal Revenue Service within
30 days after the date of grant.
The Company will withhold the number of shares of stock required to pay the
federal, state, or local income tax withholding resulting from the receipt of
compensation. The Company will be entitled to a deduction, in an amount equal
to the compensation recognized by the Participant, for the Company's taxable
year that ends with or within the taxable year in which the Participant
recognizes compensation, if and to the extent such amount is an ordinary and
necessary business expense and satisfies the test of reasonable compensation.
The Participant's basis for the Class B Common Stock is equal to the amount
of compensation recognized by the Participant. The holding period begins just
after the Restricted Stock vests. However, if the Participant makes the
election under Code section 83(b), the holding period begins just after the
Restricted Stock is granted.
Purchase of Stock.
A Participant who purchases Class B Common Stock that is not subject to
restrictions for a purchase price equal to the Class B Common Stock's fair
market value on the date of purchase will not recognize compensation when the
Class B Common Stock is purchased, and the Company will not be entitled to a
deduction. The Participant's basis for the Class B Common Stock will be equal
to the amount paid for the Class B Common Stock, and the Participant's holding
period will begin on the day after the Class B Common Stock is purchased.
If the Class B Common Stock purchased is subject to restrictions (other
than restrictions imposed by the securities laws), the Participant will
recognize compensation when the restrictions lapse. The amount of compensation
is equal to the fair market value of the Class B Common Stock on the date the
restrictions lapse minus the amount paid for the Class B Common Stock. The
Participant must make appropriate arrangements with the Company to pay the
federal, state, or local income tax withholding resulting from the receipt of
compensation. The Company will be entitled to a deduction, in an amount equal
to the compensation recognized by the Participant, for the Company's taxable
year that ends with or within the taxable year in which the Participant
recognizes compensation, if and to the extent such amount is an ordinary and
necessary business expense and satisfies the test of reasonable compensation.
The Participant's basis for the Class B Common Stock will be equal to the amount
paid for the Class B Common Stock plus the compensation recognized by the
Participant, and the Participant's holding period will begin just after the
restrictions lapse.
In the alternative, a Participant who purchases Class B Common Stock
subject to restrictions (other than restrictions imposed by the securities laws)
may make an election under Code section 83(b) to recognize compensation when the
Class B Common Stock is purchased. The amount of compensation is equal to the
fair market value of the Class B Common Stock on the date it is purchased minus
the amount paid for the Class B Common Stock. The election must be filed with
the Internal Revenue Service within 30 days after the date of purchase. The
Participant must make appropriate arrangements with the Company to pay the
federal, state, or local income tax withholding resulting from the receipt of
compensation. The Company will be entitled to a deduction, in an amount equal
to the compensation recognized by the Participant, for the Company's taxable
year that ends with or within the taxable year in which the participant
recognizes compensation, if and to the extent such amount is an ordinary and
necessary business expense and satisfies the test of reasonable compensation.
The Participant's basis for the Class B Common Stock will be equal to the amount
paid for the Class B Common Stock and the amount of compensation recognized.
The Participant's holding period will begin on the day after the day the Class B
Common Stock was purchased.
If the Participant purchases the Class B Common Stock for a price less than
fair market value, the Participant will recognize compensation equal to the fair
market value of the Class B Common Stock on the date of purchase minus the
amount paid. The Participant must make appropriate arrangements with the
Company to pay the federal, state, or local income tax withholding resulting
from the receipt of compensation. The Company will be entitled to a deduction,
in an amount equal to the compensation recognized by the Participant, for the
Company's taxable year that ends with or within the taxable year in which the
Participant recognizes compensation, if and to the extent such amount is an
ordinary and necessary business expense and satisfies the test of reasonable
compensation. The Participant's basis for the Class B Common Stock will be
equal to the sum of the amount paid for the Class B Common Stock and the
compensation recognized. The Participant's holding period will commence on the
day after the date the Class B Common Stock is purchased. If the Class B Common
Stock is subject to restrictions, see the two preceding paragraphs concerning
the time when the Participant recognizes income and elections under Code section
83(b).
Grant of Stock.
A Participant who receives a grant of Class B Common Stock will recognize
compensation in an amount equal to the fair market value of the Class B Common
Stock on the date the Class B Common Stock is granted. The Participant must
make appropriate arrangements with the Company to pay the federal, state, or
local income tax withholding resulting from the receipt of compensation. The
Company will be entitled to a deduction, in an amount equal to the compensation
recognized by the Participant, for the Company's taxable year that ends with or
within the taxable year in which the participant recognizes compensation, if and
to the extent such amount is an ordinary and necessary business expense and
satisfies the test of reasonable compensation.
The basis for the Class B Common Stock will be equal to the compensation
recognized, and the holding period will begin on the day after the date the
Class B Common Stock was granted.
If the Class B Common Stock is subject to restrictions, the tax treatment
will be as described under "Restricted Stock," above.
Withholding Tax.
The Company's obligations to deliver shares acquired under the Plan are
subject to the Participant satisfying all applicable federal, state and local
income and other tax withholding requirements. The Company's withholding
obligation as it relates to the grant of Restricted Stock will be satisfied by
the Company's withholding from the Shares otherwise issuable to the Participant
shares having a value equal to the amount required to be withheld. The value
of shares to be withheld will be based on the Fair Market Value of the Class B
Common Stock on the date that the amount of tax withheld is to be determined.
Disposition of Stock.
Upon a taxable disposition of shares of Class B Common Stock acquired under
the Plan, any amount received by the Participant in excess of his basis for the
Class B Common Stock will generally be treated as long- or short-term capital
gain, depending upon the holding period of the shares. If upon disposition the
Participant receives an amount that is less than his basis, the loss will
generally be treated as a long- or short-term capital loss, depending upon the
holding period of the shares.
Alternative Minimum Tax.
In the event of any long-term capital gain on sale or exchange of shares
of Class B Common Stock acquired under the Plan, the amount of such gain will
be included in minimum taxable income. In general, alternative minimum taxable
income is computed by adding the tax preference items to adjusted gross income
and then subtracting the allowable deductions. Computation of the alternative
minimum tax is complex and depends on the financial situation of each taxpayer.
Participants are urged to consult their own tax advisors with respect to this
matter.
Vesting Upon Change In Control.
The Plan provides that all outstanding Options and Restricted Stock will
become fully vested upon a "change in control," as defined in the description
of the Equity Incentive Plan in the Registration Statement on Form 10 referred
to below. The value of the acceleration of vesting and payment will be treated
as a "parachute payment" within the meaning of Code section 280G. If the value
of the acceleration of vesting and payment together with any other payments
received by the participant in connection with the change in control results in
an "excess parachute payment," as defined in Code section 280G, the Participant
will be subject to an excise tax equal to 20% of the "excess parachute
payment." The Company will not be entitled to a deduction for any amount
treated as an "excess parachute payment."
"ERISA" Provisions.
The Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and is not a "qualified" Plan as
defined in Code section 401(a). The information contained in this Section,
ERISA AND FEDERAL INCOME TAX CONSEQUENCES, is based on existing law, which is
subject to change.
DESCRIPTION OF COMMON STOCK
The Class B Common Stock offered hereby is registered under Section 12 of
the 1934 Act as Adolph Coors Company Class B Common Stock (Non-voting), no par.
The Company is authorized to issue 1,260,000 shares of Class A Common Stock
(Voting), $1 par, and 46,200,000 shares of Class B Common Stock. The Articles
of Incorporation provide that no dividends may be declared on the Class A Common
Stock without declaring equal dividends per share on the Class B Common Stock.
The entire voting power is vested in the Class A Common Stock which has one
vote per share, except as otherwise expressly provided by statute. Under the
present Colorado Corporation Code, holders of non-voting shares are entitled to
vote as a class on any proposed amendment to the Articles of Incorporation which
would increase or decrease the number of shares of such class authorized to be
issued; increase or decrease the par value of the shares of such class; or alter
or change the preferences, special rights, or powers of such class so as to
affect it adversely. Class voting is also provided by statute on proposals
involving certain mergers and share exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference the documents listed below.
All documents subsequently filed by the Company pursuant to Sections 13 (a) and
(c), 14, and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"),
prior to the filing of a post-effective amendment to the registration statement
which indicates that all securities offered thereby have been sold or which
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents:
(a) The Company's latest Annual Report on Form 10-K for its fiscal year
ended in December 1992, filed pursuant to Section 13 or 15(d) of
the Exchange Act.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Form
10-K referred to in paragraph (a).
(c) The description of the Company's common stock contained in the
Company's registration statement under Section 12 of the Exchange
Act.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation authorize the Company to indemnify
its directors, officers, employees, and agents against liabilities and expenses
incurred in their corporate capacities in the manner allowed by the provisions
of the Colorado Corporation Code. Generally, the Colorado Corporation Code and
the Company's Bylaws allow the Company to indemnify a director who is made party
to a proceeding as long as he conducted himself in good faith; reasonably
believed that his conduct in an official capacity was in the corporation's best
interests or, in other cases, that his conduct was not opposed to the
corporation's best interests; and in the case of criminal proceeding, had no
reasonable cause to believe his conduct was unlawful. The Bylaws extend
indemnification to officers and employees and permit the Board to authorize
indemnification of agents of the Company in certain instances.
The Company's Articles of Incorporation also limit the liability of
Directors for monetary damages for breach of fiduciary duty to the Company
except for disloyalty, acts or omissions not in good faith, intentional
misconduct, knowing violations of the law, receipt of improper personal
benefits, or violations of the Colorado Corporation Code regarding certain
financial matters such as the payment of dividends and the making of loans.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers, or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
[TEXT]
EXHIBIT 10.17
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT ARRANGEMENTS FOR
W. LEO KIELY III, ALVIN C. BABB AND WILLIAM H. WEINTRAUB
February 4, 1993
Mr. Leo Kiely
1912 MacGregor
Plano, TX 75093
Dear Leo,
It is a pleasure for me to forward this offer of employment and compensation for
your consideration. I have made a few changes from the previous document we
have reviewed, and I hope I have covered all the issues. I would be happy to
discuss any of the items with you if you have further questions.
This offer is subject to your election by the board of directors (scheduled for
February 11, 1993). You will be happy to know that a pre-employment physical
examination is not required.
Your official starting date of employment will be March 1, 1993.
POSITION: PRESIDENT/COO
BASE SALARY: $30,000 per month ($360,000 annual)
reviewed annually and adjusted January 1
of each year.
OFFICER'S SALARY: $10,000 lump sum paid July 1 each year. (Not included
in base pay for bonus calculation.)
BONUS: 50% of base pay as target paid out each year by end of
February.
50% of base pay guaranteed in year 1 and 2.
RELOCATION BONUS: Our relocation policy provides for an option to get 2-3
appraisals on your home and pay you immediately the
average and the company would then sell the home, or
you may choose to sell the home yourself if you believe
you can do better. You have indicated that your cost
in the home may be greater than current market by as
much as $150,000. We will pay you ("grossed up") up
to that amount above the appraised value of your home.
LONG-TERM INCENTIVE: It is my desire for you to have a major opportunity to
earn significant cash/equity reward (in the 7 digit
range annually) for leading the company in the
achievement of its financial and growth goals. A
program is being developed for senior management which
will be put into place next year. You should be a key
architect of that plan. The plan will be
bi-directional with focus on increasing stockholder
value as well as volume growth. I anticipate three
year rolling plans with a minimum threshold for any
payout and an upper end opportunity at 400% annual
salary. The parameters need to be established and
then approved by the board.
SEPARATION/ I anticipate a long and mutually rewarding
SEVERANCE: relationship. For the record, your employment is "at
will" with no obligation to either you or the company
to continue this relationship for a set length of
time. In the unlikely event that something goes awry
for reasons other than cause during the first 18
months of employment, we will pay your base salary
monthly for a period of 30 months and your guaranteed
bonus for that same period of 30 months. If such an
event happens after 18 months, we will pay you 18
months of your then current salary and 1.5 times your
last bonus payment. In either case your health
insurance benefits will continue until you commence
employment elsewhere or until the end of the payout
period. You would also receive a pro rata share of
any long-term incentive payout.
STOCK GRANT: Last year the board of directors approved a restricted
stock grant effective January 1, 1993. We reserved
1,000 shares as a grant to the new president at the
time he joined the company. The value is taxable to
you. The shares vest in three years.
OTHER BENEFITS/ See enclosure
PERQUISITES:
Leo, if the meetings we have had together so far are an indication of the type
of relationship that lies ahead, I am thrilled about the prospects. I look
forward to working with you.
Best regards
/s/ Peter H. Coors
Peter H. Coors
Chief Executive Officer
PHC/cl
Enclosure
<PAGE>
December 1, 1993
Mr. Alvin C. Babb
Executive Vice President
Coors Brewing Company
BC 400
Golden, CO 80401
RE: Agreement Regarding Severance or Termination
Dear Al:
This letter sets forth the terms and conditions that will apply in the event
that your employment with Coors Brewing Company is terminated between now and
December 31, 1996.
Either you or Coors may terminate your employment at any time prior to December
31, 1996, with thirty (30) days' prior written notice.
While employed, you will receive salary and other benefits in accordance with
company practice. Attached to this letter is a list of the benefits you will
receive at the termination of this agreement. You will receive the medical plan
benefits provided by the Company at the time of your termination. In addition,
Coors will provide you, on an after-tax basis, with any additional benefits
necessary to assure that you receive in the aggregate the same benefits you
would have been entitled to receive, on an after-tax basis, if you had retired
under the medical program in effect in October 1993.
If your employment is terminated on or before December 31, 1996, within thirty
(30) business days after such termination, the Company will pay you an amount
equal to the sum of two times your annual salary at the date of termination (but
not less than two times your current salary of $268,800) plus a lump-sum payment
under your salary continuation agreement calculated at your annual base salary
at the date of termination (but not less than your current salary) and using a
five percent (5%) annual discount rate. This figure includes the payment you
are entitled to receive under salary continuation or supplemental pension or
severance arrangements.
Should you die before termination of this agreement, the Company's financial
obligation to you may be fulfilled in whole or in part through payment of your
existing Company-paid officers' life insurance policy (six times salary), but
in no event will you be entitled to receive a total of more than the greater of
the amount payable under such officer's life insurance and the amount payable
under the preceding paragraph.
Al, you may not assign your rights or obligations under this agreement. Any
dispute arising under this agreement will be settled in Denver, Colorado, in
accordance with the rules of the American Arbitration Association then in
effect. The parties shall be entitled to discovery as permitted by the Colorado
Rules of Civil Procedure.
Your signature below indicates that you agree to the employment terms set forth
in this letter.
COORS BREWING COMPANY
By: /s/ W. Leo Kiely, III
/s/ Alvin C. Babb
Alvin C. Babb
Date: 12/15/93
<PAGE>
ATTACHMENT TO LETTER
TO ALVIN C. BABB
DECEMBER 1, 1993
As an Officer of Coors Brewing Company, if you are eligible for and elect
regular retirement after electing to terminate your employment under the
Enhanced Voluntary Severance Program, you are eligible for the following
benefits at the time of your retirement:
GROUP HEALTH:
Medical - In-Network - You and your eligible dependents are provided with 100%
medical coverage of approved charges if you participate in the HHA process, 85%
without HHA. All eligible dependent children have 100% coverage of approved
charges. If you use an out-of-network provider, there is a $250 per individual
deductible and coverage will be reduced to 65% or 70% depending on HHA
participation.
Dental - Coors provides you and your eligible dependent with 100% coverage of
approved expenses.
Prescription Drugs - Coors will pay 100% of prescription drugs for you and your
eligible dependents.
The current premium for Group Health coverage is $50.00 per month for eligible
dependent coverage.
Officer Life Insurance - Coverage will cease upon date of retirement; you may
purchase all or any part of the policy at the cash value less any policy loan.
Annual Physical - A complete physical examination is provided annually for you
through the Coors Medical Center. This benefit will continue when you retire.
Adoption Assistance - This benefit will cease upon date of retirement.
Equity Incentive Plan - You may exercise your Options under this Plan until the
earliest of either the day your Option Period expires, or three months following
the date of your retirement.
NQSO - You may exercise your options until the earliest of either the day your
Option Period expires or two months following the date of your retirement.
Deferred Compensation - Coors will pay you an amount based upon 30% of your last
annual salary including officer's salary. One year will be added to your age
and to your service when calculating your benefits and you will receive a vested
benefit payable in a lump sum. Vesting will be 1% of final annual pay for each
full year with the Company. This benefit is reduced for early retirement form
either age 65 or Rule of 85 date. You will receive the greater of your deferred
compensation benefit per your agreement or the Enhanced Deferred Compensation
amount (as stated above).
Officers' Salary - Your Officers' salary ceases when you retire but is use in
the calculation of your retirement benefit and deferred compensation.
Car - You have the option of purchasing your company car at the Company's book
value.
Country Club Membership - You may assume the membership for your use during
retirement upon payment of the monthly dues and any assessment fees.
Financial Planning - You may continue this service for two years following your
date of retirement. The cost of this service is assumed by Coors.
Sports Tickets - Unused tickets to sporting events must be returned to the
Company at date of retirement.<PAGE>
June 15, 1993
Mr. William H. Weintraub
3461 Winding Oaks Drive
Longboat Key, FL 34228
Dear Bill,
It is my intention to summarize in this letter all of the details associated
with our employment offer to you.
It is with great pleasure that we offer to you the position of Vice President,
Marketing, for the Coors Brewing Company. You will be reporting to Leo Kiely
at an annual base salary of $254,000. Your salary will be reviewed annually and
adjusted January 1 of each year. In addition to your base salary, you will be
paid a lump sum officer's fee of $10,000 each July 1. A new executive
compensation program is currently being designed that will include both annual
and long-term incentive programs. You will participate in it.
Annual Management Incentive Program - In 1993 and 1994 you will be paid a
minimum of 40% of the base salary you are paid in those years. The annual
bonuses will be paid by February 28 of the subsequent year (i.e. February
28, 1994 and February 28, 1995). I believe that the annual incentive
program being designed will have a target of about 40% of annual base pay
with payout possibilities ranging from 10% to possibly as much as 60% of
annual base pay. It is our intention to design and to implement a very
competitive and motivating annual incentive program effective 1/1/94.
Long-Term Incentive Program - The long-term incentive program will be in
addition to the annual bonus program referred to above. The plan is being
designed to provide lucrative rewards to participants if business
performance objectives are met and shareholder value is increased.
You will receive all of the benefits which are briefly reviewed in an outline
which has already been provided to you. In addition the current company
officers' automobile policy should give you more details about that particular
benefit. However, I would be happy to answer any remaining unanswered questions
you may have about the benefits you will have.
In the very unlikely event that your employment with the company should be
terminated for reasons other than cause during the first two years of
employment, fifteen months of total salary (base salary plus 40% target bonus)
will be paid to you. After your first two years of employment, you will be
covered by the standard officer severance package, which is currently one year
of base salary plus a pro rata amount of the actual bonus earned in that year.
The company will pay costs associated with your relocation to the Denver
metropolitan area. The details of our program are more fully explained in the
policy which as been provided to you. Since your home is in an area where real
estate values cycle seasonally, we have agreed that the company will pay normal
closing costs on the home you purchase in Colorado now and that you can delay
sale of your home in Florida until "prime selling time." At that time you will
have the options of selling your Florida home yourself or selling it to the
Coors Brewing Company per the procedure outlined in the Relocation Policy. As
a part of your relocation, the company will pay you a one-month salary stipend
to cover incidental costs normally associated with moving.
You requested in our telephone conversation yesterday afternoon that your offer
include a brief description of your responsibilities upon joining our company.
I have not included that in this letter. That is because discussions and
analysis for how to organize the marketing organization so that it is the most
effective are currently underway. You will certainly be a key person in those
decisions. It is distinctly possible that you will have additional
responsibilities, but you need to discuss those possibilities with Leo Kiely.
Enclosed you will find a copy of Coors Brewing Company inventions and
Nondisclosure Agreement. This agreement should be signed, dated, and returned.
The bottom copy is for your records.
We anticipate a long and mutually rewarding relationship. However, you should
know that your employment is "at will" with no obligation on either you or the
company to continue for a set length of time.
I think that covers everything. If there is something we've discussed which
isn't included in this letter, or if you have other questions that remain
unanswered, please let me know.
Best regards,
/s/ Gerry L. Kaveny
Gerry L. Kaveny
Executive Vice President
Administration and Finance
Enclosure: Coors Brewing Company Invention Agreement
<PAGE>
June 11, 1993
Mr. William H. Weintraub
3461 Winding Oaks Drive
Longboat Key, FL 34118
Dear Bill,
In this letter I will try to "wrap up" some of the details we've discussed on
the phone this week:
1. Severance: Should you be terminated from the company for reasons other
than cause during the first two years of employment, fifteen months of total
salary (base salary plus 40% target bonus) will be paid to you. After the first
two years, you will receive the standard officer severance package which is
currently one year of base salary plus a pro rata amount of the actual bonus
earned in that year.
2. You will be eligible to participate in the long-term incentive plan that is
being developed. The long-term incentive plan will be in addition to the annual
bonus program which Leo referred to in an earlier letter to you. I can't
provide details of the plan to you since it isn't yet designed. However, I can
say that the plan is being designed to provide lucrative rewards to participants
if business performance objectives are met and shareholder value is increased.
3. As you requested, enclosed is the current company officers' automobile
policy.
4. I've included two recent analyst reports as you requested.
5. By now, Nadine Detro from Golden Equities, Inc. has probably contacted you.
Nadine should be able to answer any questions and be a great assistance in
making your relocation as simple as possible. She can be trusted to maintain
the confidentiality of your situation.
I think this covers everything we discussed and you requested. Feel free to
call me if other questions arise.
Welcome aboard!
Yours very truly,
/s/ Gerry L. Kaveny
Gerry L. Kaveny
Executive Vice President
Administration and Finance
pc: Leo Kiely
<TABLE>
<CAPTION>
EXHIBIT 12
ADOLPH COORS COMPANY AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
Before After
Special Charges Special Charges
1993 (a) 1993 (a)
--------------- ---------------
(Dollars in thousands)
<S> <C> <C>
Pretax income (loss) from continuing operations $ 65,710 ($ 56,830)
Equity adjustments ( 4,182) ( 4,182)
--------- ---------
Earnings net of equity adjustments 69,892 ( 52,648)
Add: Fixed charges -
Interest expense 15,780 15,780
Capitalized interest 4,800 4,800
Amortization of debt expense 368 368
Interest portion of rent expense 939 939
--------- --------
Total fixed charges 21,887 21,887
Less: Interest capitalized during the period ( 4,800) ( 4,800)
Add: Amortization of prior year capitalized
interest 1,853 1,853
--------- -------
ADJUSTED EARNINGS $ 88,832 ($ 33,708)
========= ========
FIXED CHARGES $ 21,887 $ 21,887
========= ========
RATIO OF EARNINGS TO FIXED CHARGES 4.06 ( 1.54)
========= ========
</TABLE>
(a) Pretax earnings for the year ended December 26, 1993, were affected by
special charges and asset write-downs aggregating $122.5 million, relating
principally to restructuring charges as well as smaller special charges
for the write-down of certain distributor assets and environmental
enhancements. Without giving effect to such charges, the ratio of
earnings to fixed charges for the year ended December 26, 1993, would have
been 4.06. Giving effect to this charge, the ratio was (1.54). At this
level, the ratio indicates inadequate earnings to cover fixed charges.
The dollar amount of the coverage deficiency was $55.6 million.
[TEXT]
EXHIBIT 21
ADOLPH COORS COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
The following table lists subsidiaries of the Registrant and the respective
jurisdictions of their incorporation as of December 26, 1993. All
subsidiaries are included in Registrant's consolidated financial statements.
<TABLE>
<CAPTION>
State/Country of
Name Incorporation
- ------------------------------------- -----------------
<S> <C>
Coors Brewing Company Colorado
Ford Street Management Company Colorado
CBC International, Inc. Colorado
Coors Distributing Company Colorado
Coors Energy Company Colorado
Gap Run Pipeline Company Colorado
Coors International, Inc. Delaware
Coors Transportation Company Colorado
Rocky Mountain Water Company Colorado
Wannamaker Ditch Company Colorado
</TABLE>
[TEXT]
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-33831) and
in the Registration Statements on Form S-8 (No. 33-2761), (No. 33-35035) and
(No. 33-40730) of Adolph Coors Company of our report dated March 4, 1994
appearing on page ____ of this Form 10-K. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules, which appears
on page ___ of this Form 10-K.
PRICE WATERHOUSE
Denver, Colorado
March 25, 1994
