AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 2002
NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
COORS BREWING COMPANY
(Exact name of registrant as specified in its charter)
<Table>
COLORADO 2082 84-1150943
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
(additional registrants listed on succeeding pages)
---------------------
C/O ROBERT M. REESE, CHIEF LEGAL OFFICER
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
ANDREW E. NAGEL
KIRKLAND & ELLIS
CITIGROUP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
(212) 446-4800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: The exchange will occur as soon as practicable after the effective date
of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
6 3/8% Senior Notes due 2012...... $850,000,000 $1,000 $850,000,000 $78,200
- ----------------------------------------------------------------------------------------------------------------------
Guarantees(2)..................... N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</Table>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) based upon the book value of the securities
as of August 5, 2002.
(2) No separate consideration will be received for the guarantees, and no
separate fee is payable, pursuant to Rule 457(n) under the Securities Act of
1933.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADOLPH COORS COMPANY
(Exact name of registrant as specified in its charter)
<Table>
COLORADO 2082 84-0178360
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
C/O ROBERT M. REESE, CHIEF LEGAL OFFICER
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COORS DISTRIBUTING COMPANY
(Exact name of registrant as specified in its charter)
<Table>
COLORADO 5181 84-0608086
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
C/O ROBERT M. REESE, CHIEF LEGAL OFFICER
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COORS CARIBE, INC.
(Exact name of registrant as specified in its charter)
<Table>
COLORADO 6719 26-0042885
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
C/O ROBERT M. REESE, CHIEF LEGAL OFFICER
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COORS INTERNATIONAL MARKET
DEVELOPMENT, L.L.L.P.
(Exact name of registrant as specified in its charter)
<Table>
COLORADO 6792 84-1570323
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
C/O ROBERT M. REESE, CHIEF LEGAL OFFICER
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COORS WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
<Table>
COLORADO 6719 84-1570317
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
C/O ROBERT M. REESE, CHIEF LEGAL OFFICER
311 TENTH STREET
GOLDEN, COLORADO 80401-0030
(303) 279-6565
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED , 2002
PROSPECTUS
, 2002
$850,000,000
COORS BREWING COMPANY
[COORS LOGO]
EXCHANGE OFFER FOR
6 3/8% SENIOR NOTES DUE 2012
(Guaranteed by Adolph Coors Company
and certain subsidiaries of Adolph Coors Company)
---------------------
MATERIAL TERMS OF EXCHANGE OFFER
- The terms of the notes to be issued in the exchange offer are
substantially identical to those of the old notes, except that the
transfer restrictions and registration rights relating to the old notes
will not apply to the exchange notes.
- There is no existing public market for the exchange notes.
- This exchange offer expires at 5:00 p.m., New York City time on
, 2002 unless we extend this date.
- The exchange of the old notes for the exchange notes will not be a
taxable event for U.S. federal income tax purposes.
- The exchange offer is not subject to any conditions other than that:
- the exchange offer not violate applicable law or any applicable
interpretation of the staff of the SEC,
- no proceedings have been instituted or threatened against us which would
impair our ability to proceed with the exchange offer, and
- we have received all necessary governmental approvals to proceed with
the exchange offer.
- We will not receive any proceeds from the exchange offer.
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF
THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE NOTES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Prospectus Summary.................... 1
Risk Factors.......................... 8
Use of Proceeds....................... 9
Ratios of Earnings to Fixed Charges... 9
Selected Historical Financial Data of
Adolph Coors Company................ 10
Selected Combined Financial Data of
Carling Brewers..................... 12
Unaudited Pro Forma Condensed Combined
Financial Information............... 14
The Exchange Offer.................... 30
</Table>
<Table>
<Caption>
PAGE
----
Description of the Exchange Notes..... 39
Material United States Federal Tax
Considerations...................... 50
Plan of Distribution.................. 53
Validity of the New Securities........ 54
Experts............................... 54
Where You Can Find More Information... 54
Documents Incorporated by Reference... 54
Index to Consolidated Financial
Statements and Condensed
Consolidated Financial Statements... F-1
</Table>
---------------------
This prospectus incorporates by reference documents that are not presented
in this prospectus or delivered with this prospectus. Copies of such documents,
other than exhibits that are not specifically incorporated by reference in this
prospectus, are available without charge to any person to whom this prospectus
is delivered, upon written or oral request to: Adolph Coors Company Consumer
Information Center, P.O. Box 4030, Mail No. NH 475, Golden, Colorado 80401-0030,
telephone (800) 642-6116 or (303) 279-6565. TO OBTAIN TIMELY DELIVERY, YOU MUST
REQUEST THE INFORMATION NO LATER THAN FIVE BUSINESS DAYS BEFORE THE DATE YOU
MUST MAKE YOUR DECISION OF WHETHER TO EXCHANGE YOUR OLD NOTES FOR THE EXCHANGE
NOTES.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus and the documents that we
incorporate by reference into this prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934. You can identify these statements by
forward-looking words such as "expect," "anticipate," "plan," "believe," "seek,"
"may," "will," "should," "approximately," "estimate," "internal," "outlook,"
"trends," "industry forces," "strategies," "goals" and similar words. Statements
that we make in this prospectus and in the documents that we incorporate by
reference into this prospectus that are not statements of historical fact may
also be forward-looking statements. In particular, statements that we make
relating to our overall volume trends, consumer preferences, pricing trends and
industry forces, cost reduction strategies and anticipated results, our
expectation for funding capital expenditures and operations, our debt service
capabilities, our shipment level and profitability, increased market share and
the sufficiency of capital to meet working capital, capital expenditures
requirements and our strategies are forward-looking statements. Forward-looking
statements are not guarantees of our future performance and involve risks,
uncertainties and assumptions that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
There may be events in the future that we are not able to predict accurately or
over which we have no control. You should not place undue reliance on forward-
looking statements. We do not promise to notify you if we learn that our
assumptions or projections are wrong for any reason.
To improve our financial performance, we must grow premium beverage volume,
achieve modest price increases for our products and control costs. The most
important factors that could influence the achievement of these goals -- and
cause actual results to differ materially from those expressed in the
forward-looking statements -- include, but are not limited to, the following:
- We have assumed a substantial amount of indebtedness to finance our
acquisition of Coors Brewers.
- An inability to implement our business strategy with respect to Coors
Brewers could have a material adverse effect on our financial results.
- Loss of the Coors Brewers management team could negatively impact our
ability to successfully operate the U.K. business.
- Our success depends largely on the success of one product in the U.S. and
one in the U.K., the failure of either of which could materially
adversely affect our financial results.
- Because our primary production facilities in the U.S. and in the U.K. are
each located at a single site, we are more vulnerable than our
competitors to transportation disruptions and natural disasters.
- Our U.S. business is significantly smaller than those of our two primary
competitors in the U.S., making us vulnerable to the pricing actions of
our primary competitors and more vulnerable than our competitors to cost
and price fluctuations.
- If any of our primary suppliers of components critical to our business
are unable or unwilling to meet our requirements, we may be unable to
promptly obtain the materials we need to operate our business.
- The government may adopt regulations that could increase our costs or
liabilities or could limit our business activities.
- If the social acceptability of our products declines, or if litigation is
directed at the alcoholic beverage industry, our sales volumes could
decrease and our business could be materially adversely affected.
- Any significant shift in packaging preferences in the beer industry could
disproportionately increase our costs and could limit our ability to meet
customer demand.
- We depend on independent distributors to sell our products and we cannot
provide any assurance that these distributors will effectively sell our
products.
- Because our sales volume is more concentrated in fewer geographic areas
in the U.S. than our competitors, any loss of market share in the states
where we are concentrated could have a material adverse effect on our
results of operations.
- We are subject to environmental regulation by federal, state and local
agencies, including laws that impose liability without regard to fault.
These and the other factors discussed elsewhere in this prospectus and the
documents incorporated by reference herein are not necessarily all of the
important factors that could cause our results to differ materially from those
expressed in our forward-looking statements. Forward-looking statements speak
only as of the date they were made and we undertake no obligation to update
them.
Please see the section "Risk Factors" in our annual report on Form 10-K for
the year ended December 30, 2001 for a further discussion of risks that could
materially affect our business.
ii
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and the financial statements appearing elsewhere in or
incorporated by reference into this prospectus. Except as otherwise specified,
as used in this prospectus, the term "parent" refers to Adolph Coors Company;
the terms "Coors," "we," "us," and "our" refer to Adolph Coors Company and its
consolidated subsidiaries; the term "issuer" refers to Coors Brewing Company, a
wholly-owned subsidiary of Adolph Coors Company; the term "Coors Brewers" refers
to the majority of the former Bass Brewers business and the other assets that we
acquired from Interbrew, S.A., known as Interbrew; and the term "Carling
Brewers" refers to Coors Brewers together with brewing and selling activities in
Scotland conducted by Interbrew which we did not acquire.
ADOLPH COORS COMPANY
We are the third largest producer of beer in the United States based on
volume and revenues and since our acquisition of the majority of the former Bass
Brewers business and other assets from Interbrew in February 2002, which we now
collectively call Coors Brewers, we are the eighth largest brewer in the world
based on volume. Since our founding in 1873, we have been committed to producing
the highest quality beers. Our portfolio of high-quality malt-based beverage
brands is designed to appeal to a wide range of consumer tastes, styles and
preferences.
Our principal executive offices are located at 311 10th Street, Golden,
Colorado 80401-0030 and our telephone number is (303) 279-6565. Our website
address is www.coors.com. Information included or referred to on our website is
not a part of this prospectus.
1
PURPOSE OF THE EXCHANGE OFFER
On May 7, 2002, the issuer sold, through a private placement exempt from
the registration requirements of the Securities Act of 1933, $850,000,000 of its
6 3/8% Senior Notes due 2012. We refer to these notes as "old notes" in this
prospectus. We used the net proceeds from the sale of the old notes to repay the
bridge and a portion of the term financing incurred in connection with the Coors
Brewers acquisition.
Simultaneously with the private placement, we entered into a registration
rights agreement with the initial purchasers of the old notes. Under the
registration rights agreement, we are required to use our reasonable best
efforts to cause a registration statement for substantially identical notes,
which will be issued in exchange for the old notes, to become effective on or
before November 3, 2002. This prospectus is part of that registration statement.
We refer to the notes to be registered under this exchange offer registration
statement as "exchange notes" in this prospectus. You may exchange your old
notes for exchange notes in this exchange offer. You should read the discussion
under the headings "-- Summary of the Exchange Offer," "The Exchange Offer" and
"Description of the Exchange Notes" for further information regarding the
exchange notes.
We did not register the offer or sale of the old notes under the Securities
Act or any state securities law, nor do we intend to after the exchange offer.
As a result, the old notes may only be transferred in limited circumstances
under the securities laws. If the holders of the old notes do not exchange their
old notes in the exchange offer, they lose their right to have the old notes
registered under the Securities Act, subject to certain limitations. Anyone who
still holds old notes after the exchange offer may be unable to resell their old
notes.
However, we believe that holders of the exchange notes may resell the
exchange notes without complying with the registration and prospectus delivery
provisions of the Securities Act, if they meet certain conditions. You should
read the discussion under the headings "-- Summary of the Exchange Offer" and
"The Exchange Offer" for further information regarding the exchange offer and
resales of the exchange notes.
SUMMARY OF THE EXCHANGE OFFER
The Initial Offering of Old
Notes......................... We sold the old notes on May 7, 2002 to J.P.
Morgan Securities Inc., Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities, Inc.,
Banc One Capital Markets, Inc. and First Union
Securities, Inc. We collectively refer to these
parties in this prospectus as the "initial
purchasers." The initial purchasers
subsequently resold the old notes to (1)
qualified institutional buyers pursuant to Rule
144A under the Securities Act, (2) to a limited
number of accredited institutional investors
and (3) outside the United States in accordance
with Regulation S under the Securities Act.
Registration Rights
Agreement..................... Simultaneously with the initial sale of the old
notes, we entered into a registration rights
agreement for the exchange offer. In the
registration rights agreement, we agreed, among
other things, to use our reasonable best
efforts to file a registration statement with
the SEC and to complete this exchange offer no
later than 40 business days after the
registration statement is due to be declared
effective by the SEC. The exchange offer is
intended to satisfy our obligations under the
registration rights agreement. After the
exchange offer is complete, you will no longer
be entitled to any exchange or registration
rights with respect to your old notes.
The Exchange Offer............ We are offering to issue the exchange notes,
which have been registered under the Securities
Act, in exchange for your old notes. In order
to be exchanged, an old note must be properly
tendered and accepted. All old notes that are
validly tendered and not validly
2
withdrawn will be exchanged. We will issue
exchange notes promptly after the expiration of
the exchange offer.
Resales....................... We believe that the exchange notes issued in
the exchange offer may be offered for resale,
resold and otherwise transferred by you without
compliance with the registration and prospectus
delivery provisions of the Securities Act
provided that:
- the exchange notes are being acquired in the
ordinary course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the exchange notes
issued to you in the exchange offer; and
- you are not an affiliate of ours.
If any of these conditions are not satisfied
and you transfer any exchange notes issued to
you in the exchange offer without delivering a
prospectus meeting the requirements of the
Securities Act or without an exemption from
registration of your exchange notes from these
requirements, you may incur liability under the
Securities Act. We will not assume, nor will we
indemnify you against, any such liability.
Each broker-dealer that is issued exchange
notes in the exchange offer for its own account
in exchange for old notes that were acquired by
that broker-dealer as a result of market-making
or other trading activities, must acknowledge
that it will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resale of the exchange
notes. A broker-dealer may use this prospectus
for an offer to resell, resale or other
retransfer of the exchange notes issued to it
in the exchange offer. See "Plan of
Distribution."
Record Date................... We mailed this prospectus and the related
exchange offer documents to registered holders
of the outstanding securities on ,
2002.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, , 2002, unless we
decide to extend the expiration date.
Conditions to the Exchange
Offer......................... The exchange offer is not subject to any
conditions other than that the exchange offer
not violate applicable law or any applicable
interpretation of the staff of the SEC, that no
proceedings have been instituted or threatened
against us which would impair our ability to
proceed with the exchange offer, and that we
have received all necessary governmental
approvals to proceed with the exchange offer.
Procedures for Tendering Old
Notes......................... We issued the old notes as global securities.
When the old notes were issued, we deposited
the global securities representing the old
notes with Deutsche Bank Trust Company
Americas, as book-entry depositary. Deutsche
Bank Trust Company Americas issued a
certificateless depositary interest in each
global security we deposited with it, which
together represent a 100% interest in the old
notes, to The Depository Trust Company, known
as DTC.
3
Beneficial interests in the old notes, which
are held by direct or indirect participants in
DTC through the certificateless depositary
interests, are shown on records maintained in
book-entry form by DTC.
You may tender your old notes through
book-entry transfer in accordance with DTC's
Automated Tender Offer Program, known as ATOP.
To tender your old notes by a means other than
book-entry transfer, a letter of transmittal
must be completed and signed according to the
instructions contained in the letter of
transmittal. The letter of transmittal and any
other documents required by the letter of
transmittal must be delivered to the exchange
agent by mail, facsimile, hand delivery or
overnight carrier. In addition, you must
deliver the old notes to the exchange agent or
comply with the procedures for guaranteed
delivery. See "The Exchange Offer -- Procedures
for Tendering Old Notes" for more information.
Do not send letters of transmittal and
certificates representing old notes to us. Send
these documents only to the exchange agent. See
"The Exchange Offer -- Exchange Agent" for more
information.
Special Procedures for
Beneficial Owners............. If you are the beneficial owner of book-entry
interests and your name does not appear on a
security position listing of DTC as the holder
of the book-entry interests or if you are a
beneficial owner of old notes that are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and you wish to tender the book-entry interests
or old notes in the exchange offer, you should
contact the person in whose name your
book-entry interests or old notes are
registered promptly and instruct that person to
tender on your behalf.
Withdrawal Rights............. You may withdraw the tender of your old notes
at any time prior to 5:00 p.m., New York City
time on , 2002.
Federal Income Tax
Consideration................. The exchange of old notes for exchange notes
will not be a taxable event for United States
federal income tax purposes.
Use of Proceeds............... We will not receive any proceeds from the
issuance of the exchange notes pursuant to the
exchange offer. We will pay all of our expenses
incident to the exchange offer.
Exchange Agent................ Deutsche Bank Trust Company Americas is serving
as the exchange agent in connection with the
exchange offer.
4
SUMMARY OF TERMS OF THE EXCHANGE NOTES
The form and terms of the exchange notes are the same as the form and terms
of the old notes, except that the exchange notes will be registered under the
Securities Act. As a result, the exchange notes will not bear legends
restricting their transfer and will not contain the registration rights and
liquidated damage provisions contained in the old notes. The exchange notes
represent the same debt as the old notes. The old notes and the exchange notes
are governed by the same indenture and are together considered a "series" of
securities under that indenture. We use the term "notes" in this prospectus to
collectively refer to the old notes and the exchange notes.
Issuer........................ Coors Brewing Company, a Colorado corporation.
Securities Offered............ $850 million in principal amount of series B
6 3/8% senior notes due 2012.
Maturity...................... May 15, 2012.
Interest Payment Dates........ May 15 and November 15, commencing November 15,
2002
Minimum Denomination.......... $1,000 and $1,000 integral multiples thereof,
except, for institutional accredited investors
only, $250,000 and $1,000 integral multiples
thereof.
Guarantees.................... The exchange notes will be guaranteed by the
issuer's parent, Adolph Coors Company, and
certain of the existing and future domestic
subsidiaries of the parent. The exchange notes
will not be guaranteed by any of the parent's
foreign subsidiaries, including Coors Brewers
Limited or its subsidiaries, which collectively
hold the assets we call Coors Brewers.
Ranking....................... The exchange notes and guarantees will be
senior unsecured obligations of the issuer and
the guarantors and will rank equally with all
of our other unsecured and unsubordinated
indebtedness.
Optional Redemption........... The issuer may redeem the exchange notes, in
whole at any time or in part from time to time,
at the redemption price described under the
heading "Description of the Exchange
Notes -- Optional Redemption." The exchange
notes will not be subject to any sinking fund
provision.
Covenants..................... The issuer will issue the exchange notes under
an indenture with Deutsche Bank Trust Company
Americas, as trustee. The indenture, among
other things, restricts the ability of the
parent, the issuer and the parent's "restricted
subsidiaries," as that term is defined in the
indenture, to:
- incur indebtedness for borrowed money or
evidenced by notes or similar
instruments secured by mortgages,
directly or indirectly, on any principal
brewery, manufacturing, processing or
packaging plant or warehouse located in
the U.S. unless the notes are secured
equally and ratably with, or prior to,
that indebtedness; and
- enter into specified sale and leaseback
transactions with respect to any
principal brewery, manufacturing,
processing or packaging plant or
warehouse located in the U.S. unless the
proceeds from those transactions are
applied to repay indebtedness or to make
expenditures for the expansion,
construction or acquisition of such a
plant or warehouse.
5
These covenants are subject to a number of
exceptions and limitations, including
exceptions for transactions that, taken
together, do not aggregate to more than 15% of
our "consolidated net tangible assets," as that
term is defined in the indenture. You should
carefully review the information under
"Description of the Exchange Notes -- Certain
Restrictions" for more information.
Use of Proceeds............... We will not receive any cash proceeds in the
exchange offer.
Absence of a Public Market for
the Notes..................... There is no existing public market for the
exchange notes. The initial purchasers of the
old notes have advised us that they currently
intend to make a market in the exchange notes
following the exchange offer, but they are not
obligated to do so, and any market-making may
be stopped at any time without notice. We do
not know if an active public market for the
exchange notes will develop or, if developed,
will continue. If an active public market does
not develop or is not maintained, the market
price and liquidity of the exchange notes may
be adversely affected. We cannot make any
assurances regarding the liquidity of the
market for the exchange notes, the ability of
holders to sell their exchange notes or the
price at which holders may sell their exchange
notes.
Additional Securities......... Under the indenture we may, without the consent
of the holders of the notes, "reopen" the
series and issue additional notes from time to
time in the future. The old notes, the exchange
notes and any additional notes we may issue in
the future upon such a reopening will
constitute a single series of debt securities
under the indenture. This means that, in
circumstances where the indenture provides for
the holders of notes to vote or take any other
action as a single class, the notes and, if
issued, the exchange notes, as well as any
additional notes or exchange notes that we may
issue by reopening the series, will vote or
take action as a single class.
6
RECENT DEVELOPMENTS
On July 25, 2002, we announced higher consolidated net sales, net income
and earnings per share for the second quarter of 2002, compared to the second
quarter of 2001. The second quarter 2002 consolidated results include earnings
for Coors Brewers.
For the 13-week quarter ended June 30, 2002, we achieved consolidated net
sales of $1.0 billion. Second quarter 2002 sales volume totaled 8,881,000
barrels.
Excluding special items, we achieved consolidated 2002 second quarter
after-tax income of $67.0 million, a 37.5% increase from $48.7 million in the
second quarter of 2001. Second quarter 2002 diluted earnings per share were
$1.83, growing 40.8% from $1.30 per diluted share last year, excluding special
items.
Including special items, we reported second quarter net income of $67.6
million, or $1.84 per diluted share, up 35.6% from $49.9 million a year ago.
7
RISK FACTORS
You should carefully consider the following factors and the other
information contained in, or incorporated by reference into, this prospectus.
Also refer to the risk factors discussed in our annual report on Form 10-K for
the year ended December 30, 2001, which is incorporated by reference in this
prospectus.
RISKS RELATING TO THE EXCHANGE OFFER
BECAUSE THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES, YOU MAY NOT BE ABLE
TO SELL YOUR EXCHANGE NOTES.
The exchange notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
- the liquidity of any trading market that may develop;
- the ability of holders to sell their exchange notes; or
- the price at which the holders would be able to sell their exchange
notes.
If a trading market were to develop, the exchange notes might trade at
higher or lower prices than their principal amount or purchase price, depending
on many factors, including prevailing interest rates, the market for similar
securities and our financial performance.
We understand that the initial purchasers presently intend to make a market
in the exchange notes. However, they are not obligated to do so, and any
market-making activity with respect to the exchange notes may be discontinued at
any time without notice. In addition, any market-making activity will be subject
to the limits imposed by the Securities Act and the Exchange Act, and may be
limited during the exchange offer or the pendency of an applicable shelf
registration statement. There can be no assurance that an active trading market
will exist for the exchange notes or that any trading market that does develop
will be liquid.
In addition, any old note holder who tenders in the exchange offer for the
purpose of participating in a distribution of the exchange notes may be deemed
to have received restricted securities, and if so, will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction.
YOUR OLD NOTES WILL NOT BE ACCEPTED FOR EXCHANGE IF YOU FAIL TO FOLLOW THE
EXCHANGE OFFER PROCEDURES.
We will issue exchange notes pursuant to this exchange offer only after a
timely receipt of your old notes, a properly completed and duly executed letter
of transmittal and all other required documents. Therefore, if you want to
tender your old notes, please allow sufficient time to ensure timely delivery.
If we do not receive your old notes, letter of transmittal and other required
documents by the expiration date of the exchange offer, we will not accept your
old notes for exchange. We are under no duty to give notification of defects or
irregularities with respect to the tenders of old notes for exchange. If there
are defects or irregularities with respect to your tender of old notes, we will
not accept your old notes for exchange.
IF YOU DO NOT EXCHANGE YOUR OLD NOTES, YOUR OLD NOTES WILL CONTINUE TO BE
SUBJECT TO THE EXISTING TRANSFER RESTRICTIONS AND YOU MAY BE UNABLE TO SELL
YOUR OLD NOTES.
We did not register the offer or sale of the old notes, nor do we intend to
do so following the exchange offer. Old notes that are not tendered will
therefore continue to be subject to the existing transfer restrictions and may
be transferred only in limited circumstances under the securities laws. If you
do not exchange your old notes, you will lose your right to have your old notes
registered under the federal securities laws. As a result, if you hold old notes
after the exchange offer, you may be unable to sell your old notes.
8
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under the
registration rights agreement. We will not receive any cash proceeds from the
issuance of the exchange notes. In consideration for issuing the exchange notes
contemplated in this prospectus, we will receive outstanding securities in like
principal amount, the form and terms of which are the same as the form and terms
of the exchange notes, except as otherwise described in this prospectus. The old
notes surrendered in exchange for exchange notes will be retired and canceled.
Accordingly, no additional debt will result from the exchange. We have agreed to
bear the expense of the exchange offer.
The net proceeds from the sale of the old notes, after deducting estimated
expenses and the initial purchasers' discount, were approximately $839.0
million. We used the net proceeds to repay the bridge and a portion of the term
financing incurred in connection with our acquisition of Coors Brewers.
RATIO OF EARNINGS TO FIXED CHARGES
The following are the unaudited consolidated ratios of earnings to fixed
charges for each of the years in the five-year period ended December 30, 2001
and for the thirteen week periods ended March 31, 2002 and April 1, 2001. The
pro forma ratios of earnings to fixed charges for the year ended December 30,
2001 and the thirteen weeks ended March 31, 2002, were prepared on the same
basis as the selected unaudited pro forma condensed combined financial
statements contained elsewhere in this prospectus.
<Table>
<Caption>
PRO
THIRTEEN WEEKS PRO FORMA
ENDED FORMA 13 WEEKS
YEAR ENDED -------------------- YEAR ENDED
----------------------------------------- MARCH 31, APRIL 1, ENDED MARCH 31,
2001 2000(1) 1999 1998 1997 2002 2001 2001 2002
------ ------- ------ ----- ----- --------- -------- --------- ---------
Ratio of earnings to
fixed charges.......... 16.3:1 14.8:1 13.0:1 7.4:1 8.5:1 4.5:1 9.2:1 3.4:1 2.0:1
</Table>
For purposes of the ratios of earnings to fixed charges, earnings consist
of earnings before income taxes plus fixed charges. Fixed charges consist of
interest expense, which includes debt issuance costs, and one-third of rental
expense, which we deem to be a reasonable estimate of the portion of our rental
expense that is attributable to interest. A statement setting forth the
computation of the ratio of earnings to fixed charges is filed as an exhibit to
the registration statement of which this prospectus is a part.
- ---------------
(1) 53-week year versus 52-week year.
9
SELECTED HISTORICAL FINANCIAL DATA OF ADOLPH COORS COMPANY
The table below summarizes selected financial information for the five
years and thirteen week periods ended as noted. For further information, refer
to our consolidated financial statements and notes thereto and our condensed
consolidated financial statements and notes thereto contained elsewhere in this
prospectus.
<Table>
<Caption>
THIRTEEN WEEKS
ENDED
YEAR ENDED --------------------
--------------------------------------------------------- MARCH 31, APRIL 1,
2001 2000(2) 1999 1998 1997 2002(1) 2001
--------- --------- --------- --------- --------- --------- --------
(UNAUDITED)
(DOLLARS IN MILLIONS)
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Gross Sales............................ $ 2,842.8 $ 2,841.7 $ 2,642.7 $ 2,463.6 $ 2,378.2 $ 937.7 $ 637.8
--------- --------- --------- --------- --------- --------- --------
Beer excise taxes...................... (413.3) (427.3) (406.2) (391.8) (386.1) (198.4) (94.1)
--------- --------- --------- --------- --------- --------- --------
Net sales.............................. 2,429.5 2,414.4 2,236.5 2,071.8 1,992.1 739.3 543.7
Cost of good sold...................... (1,537.6) (1,525.8) (1,397.3) (1,333.0) (1,302.4) (475.8) (351.2)
--------- --------- --------- --------- --------- --------- --------
Gross profit........................... 891.9 888.6 839.2 738.8 689.7 263.5 192.5
--------- --------- --------- --------- --------- --------- --------
Other operating expenses:
Marketing, general and
administrative....................... (717.1) (722.7) (693.0) (615.6) (573.8) (215.4) (170.0)
Special charges........................ (23.2) (15.2) (5.7) (19.4) 31.5 (2.9) --
--------- --------- --------- --------- --------- --------- --------
Other operating expenses............... (740.3) (737.9) (698.7) (635.0) (542.3) (218.3) (170.0)
--------- --------- --------- --------- --------- --------- --------
Operating income....................... 151.6 150.7 140.5 103.8 147.4 45.2 22.5
Other income (expense) -- net.......... 46.4 18.9 10.1 7.3 (0.5) (0.2) 7.0
--------- --------- --------- --------- --------- --------- --------
Income before income taxes............. 198.0 169.6 150.6 111.1 146.9 45.0 29.5
Income tax expense..................... (75.0) (59.9) (58.4) (43.3) (64.6) (17.8) (11.2)
--------- --------- --------- --------- --------- --------- --------
Net income............................. 123.0 109.7 92.2 67.8 82.3 27.2 18.3
========= ========= ========= ========= ========= ========= ========
Per share of common stock -- basic..... $ 3.33 $ 2.98 $ 2.51 $ 1.87 $ 2.21 $ 0.76 $ 0.49
Per share of common stock -- diluted... $ 3.31 $ 2.93 $ 2.46 $ 1.81 $ 2.16 $ 0.75 $ 0.49
CONSOLIDATED BALANCE SHEET DATA (END OF
PERIOD):
Cash and cash equivalents and
short-term and long-term marketable
securities........................... 309.7 386.2 279.9 287.7 258.1 177.4 --
Working capital........................ 89.0 118.4 220.1 165.1 158.0 41.8 --
Properties, at cost, net............... 869.7 735.8 714.0 714.4 733.1 1,281.5 --
Total assets........................... 1,739.7 1,629.3 1,546.4 1,460.6 1,412.1 3,942.2 --
Long-term debt......................... 20.0 105.0 105.0 105.0 145.0 1,554.7 --
Other long-term liabilities............ 47.5 45.4 52.6 56.6 23.2 224.3 --
Shareholders' equity................... 951.3 932.4 841.5 774.8 736.6 975.5 --
CASH FLOW DATA:
Cash provided by/(used in)
operations........................... 193.4 280.7 211.3 198.2 273.8 (27.3) (15.3)
Cash used in investing activities...... (196.7) (297.5) (121.0) (146.5) (141.2) (1,397.5) (44.5)
Cash used in financing activities...... (38.8) (26.9) (87.7) (60.7) (72.0) 1,530.0 (17.7)
OTHER INFORMATION:
Barrels of malt beverages sold (in
millions)............................ 22.7 23.0 22.0 21.2 20.6 6.4 5.1
EBITDA(3).............................. $ 300.2 $ 298.1 $ 273.2 $ 244.0 $ 237.0 $ 94.8 $ 56.3
Capital expenditures................... $ 244.5 $ 154.3 $ 134.4 $ 104.5 $ 60.4 $ 45.0 $ 30.8
Dividends per share of common stock.... $ 0.800 $ 0.720 $ 0.645 $ 0.600 $ 0.550 $ 0.205 $ 0.185
Total debt to total
capitalization(4).................... 10.7% 10.1% 11.1% 15.8% 19.0% 63.2% --
</Table>
- ---------------
(1) We acquired the Carling business in England and Wales and certain other
assets from Interbrew S.A. on February 2, 2002. Because the acquisition was
finalized in 2002, the operating results and financial position of the
Carling business are not included in our first quarter 2001 results, but are
included in our
10
first quarter 2002 results from the date of acquisition. This acquisition
will have a significant impact on our future operating results and financial
condition.
(2) 53-week year versus 52-week year.
(3) We define EBITDA, for this purpose, as income from continuing operations
before interest expense, income taxes, depreciation and amortization. We
believe that EBITDA is commonly used by certain investors and analysts to
analyze a company's ability to service debt. EBITDA is not a measure of
financial performance under generally accepted accounting principles. EBITDA
should not be considered in isolation or as a substitute for net income,
cash flows from continuing operations or other consolidated income or cash
flow data prepared in accordance with generally accepted accounting
principles or as a measure of a company's profitability or liquidity. Our
method for calculating EBITDA may not be comparable to methods used by other
companies.
(4) Total capitalization is defined as total debt (including capital lease
obligations) divided by total debt plus shareholders' equity.
11
SELECTED COMBINED FINANCIAL DATA OF CARLING BREWERS
The following table presents financial data with respect to Carling Brewers
and is derived from the audited financial statements of Carling Brewers as of
and for the three years ended December 29, 2001, incorporated by reference in
this prospectus. The information set forth below should be read together with
the other information contained under the caption "Unaudited Pro Forma Condensed
Combined Financial Information" included elsewhere in this prospectus and in the
combined financial statements of Carling Brewers incorporated by reference in
this prospectus. The information has been prepared in conformity with generally
accepted accounting principles in the United Kingdom, which differ in
significant respects from those in the United States.
Carling Brewers does not represent a consolidated legal entity. Included
within the combined profit and loss accounts and balance sheet information set
forth in the audited financial statements are assets and liabilities and results
of operations for Interbrew's Scottish brewing activities which were not
acquired by us in our acquisition of Coors Brewers. The amounts are included
because, historically Carling Brewers, including the Scottish brewing
activities, has been managed and operated on a combined basis. Additionally, we
acquired export rights associated with Coors Brewers brands. The historical
operating activity associated with these rights was recorded in a separate
Interbrew subsidiary, which is not included in the historical Carling Brewers
financial statements. The historical operating results have been separately
reflected in the pro forma financial information. The combined financial
statements for the periods presented may not necessarily be indicative of the
results of operations, financial position and cash flows of Carling Brewers had
it operated as a separate independent company or group of companies, nor are
they an indicator of future performance.
<Table>
<Caption>
PERIOD ENDED
---------------------------------------------------
2 OCTOBER 26 AUGUST 30 DECEMBER 29 DECEMBER
1999 2000 2000 2001
(53 WEEKS) (47 WEEKS) (18 WEEKS) (52 WEEKS)
---------- ---------- ----------- -----------
(L IN MILLIONS)
PROFIT AND LOSS ACCOUNT DATA:
Turnover....................................... L 1,673.0 L 1,475.8 L 639.0 L 1,751.6
Costs and overheads, less other income......... (1,541.7) (1,421.0) (597.8) (1,622.9)
--------- --------- ------- ---------
OPERATING PROFIT............................... 131.3 54.8 41.2 128.7
Income from interests in associated
undertakings................................. 12.2 12.0 5.4 12.7
--------- --------- ------- ---------
PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST..................................... 143.5 66.8 46.6 141.4
Interest receivable............................ 1.2 1.2 1.8 3.5
Interest payable (affiliates).................. -- (0.6) (21.7) (45.5)
--------- --------- ------- ---------
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION..................................... 144.7 67.4 26.7 99.4
Tax on profit on ordinary activities........... (43.9) (21.8) (9.6) (28.8)
--------- --------- ------- ---------
NET PROFIT FOR THE PERIOD...................... L 100.8 L 45.6 L 17.1 L 70.6
========= ========= ======= =========
</Table>
12
<Table>
<Caption>
AT AT AT AT
2 OCTOBER 26 AUGUST 30 DECEMBER 29 DECEMBER
1999 2000 2000 2001
--------- --------- ----------- -----------
(L IN MILLIONS)
BALANCE SHEET DATA:
FIXED ASSETS
Tangible fixed assets............................ L 351.0 L 330.8 L 319.0 L 308.1
Fixed asset investments.......................... 230.7 175.4 171.2 152.2
------- ------- ------- -------
581.7 506.2 490.2 460.3
======= ======= ======= =======
CURRENT ASSETS
Stocks........................................... 88.4 75.7 81.9 92.0
Debtors (net).................................... 285.2 350.0 350.7 372.9
Cash at bank and in hand......................... 35.5 49.5 53.7 39.8
------- ------- ------- -------
409.1 475.2 486.3 504.7
Creditors: amounts falling due within one year... (291.8) (299.1) (315.2) (324.7)
------- ------- ------- -------
NET CURRENT ASSETS............................... 117.3 176.1 171.1 180.0
======= ======= ======= =======
TOTAL ASSETS LESS CURRENT LIABILITIES............ 699.0 682.3 661.3 640.3
Creditors: amounts falling due after more than
one year (affiliates).......................... (941.8) (826.0) (780.4) (691.9)
PROVISIONS FOR LIABILITIES AND CHARGES........... (36.1) (26.5) (35.0) (43.0)
------- ------- ------- -------
NET LIABILITIES.................................. (278.9) (170.2) (154.1) (94.6)
======= ======= ======= =======
NET INVESTMENT................................... L(278.9) L(170.2) L(154.1) L (94.6)
======= ======= ======= =======
</Table>
13
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
of Adolph Coors Company is based on the historical financial statements of
Adolph Coors Company included elsewhere in this prospectus, adjusted to give pro
forma effect to the following events, which, in this section, are collectively
referred to as the Transactions: (i) the acquisition of Coors Brewers from
Interbrew, which we refer to as the Acquisition, (ii) the receipt and use of
proceeds from the senior unsecured credit facilities and senior unsecured bridge
facility and (iii) the issuance of the old notes and application of the proceeds
of the old notes to repay all outstanding borrowings under our senior unsecured
bridge facility, which we entered into in connection with the Acquisition, and
to repay a portion of outstanding term borrowings under our senior unsecured
credit facilities.
The historical financial statements of Carling Brewers include the results
of operations attributable to the Scottish Brewing business, Tennent Caledonian
Brewers, known as TCB, that was formerly a part of Bass Brewers Limited but has
not been acquired by us. For the purposes of the unaudited pro forma condensed
combined financial information, adjustments have been made to the historical
financial information of Carling Brewers to eliminate the results of operations
of TCB. These adjustments are described in note 4.
The actual business we acquired was therefore Carling Brewers excluding
TCB. For the purpose of the unaudited pro forma financial information, Carling
Brewers, excluding TCB, plus the export rights acquired by us for Carling
Brewers brands has been defined as "Coors Brewers."
The unaudited pro forma condensed combined income statement for the year
ended December 30, 2001 gives effect to the Transactions as if they had occurred
on January 1, 2001. The unaudited pro forma condensed combined income statement
for the thirteen weeks ended March 31, 2002 gives effect to the Transactions as
if they had occurred on December 31, 2001 (the first day of our 2002 fiscal
year). The unaudited pro forma adjustments are based upon available information
and certain assumptions that we believe are reasonable under the circumstances.
The unaudited pro forma condensed combined financial information has been
prepared from, and should be read in conjunction with, the respective historical
financial statements and notes thereto of Adolph Coors Company, which are
included elsewhere in this prospectus and Carling Brewers, which are
incorporated by reference in this prospectus. There is not an unaudited pro
forma condensed combined balance sheet included in this prospectus as the Coors
condensed consolidated balance sheet as of March 31, 2002 includes the acquired
assets and assumed liabilities from the Acquisition, and the issuance and
application of the proceeds of the old notes repaid an equal amount of
previously outstanding Acquisition financing as reflected in our condensed
consolidated balance sheet at March 31, 2002, included in our historical
condensed consolidated financial statements included elsewhere in this
prospectus.
The information set forth below should also be read together with the other
information contained under the captions "Selected Historical Financial Data of
Adolph Coors Company" and "Selected Combined Financial Data of Carling Brewers"
in this prospectus and under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in our Form 10-K for the year
ended December 30, 2001 and our Form 10-Q for the quarter ended March 31, 2002.
The historical combined financial statements of Carling Brewers have been
prepared in accordance with U.K. generally accepted accounting principles. For
the purpose of presenting the unaudited pro forma condensed combined financial
information, financial information relating to Carling Brewers has been adjusted
to conform with accounting policies under U.S. generally accepted accounting
principles as described in notes 2 and 3 to the unaudited pro forma condensed
combined financial information. In addition, certain adjustments have been made
to the historical financial statements of Carling Brewers to reflect
reclassifications to conform with our presentation under U.S. generally accepted
accounting principles.
The historical combined financial statements of Carling Brewers were
presented in pounds sterling. For the purposes of presenting the unaudited pro
forma condensed combined financial information, the adjusted income statements
of Carling Brewers in respect of the year ended December 29, 2001 and the 34
days ended February 1, 2002 have been translated into U.S. dollars at the
average daily closing rate for the periods then ended, (see note 1).
14
On March 21, 2002, Coors Brewers announced that it will be closing one of
its breweries, Cape Hill. The majority of the production of this brewery relates
to Interbrew brands that we did not acquire. The revenues and associated costs
of the TCB brands produced at Cape Hill have been eliminated from the pro forma
financial information as discussed above. Severance and certain restructuring
costs associated with the closure of Cape Hill have been accrued for in the
purchase price allocation (see note 6).
The pro forma acquisition adjustments described in note 5 reflect estimates
made by our management of a preliminary allocation of the purchase price to the
fair value of assets acquired and liabilities assumed by us. A final allocation
of the purchase price is dependent upon the finalization of certain studies,
including the pension plan actuarial valuation, the tax structure and the
evaluation of certain restructuring plans of the acquired business. Final actual
amounts will differ from those reflected in the unaudited pro forma condensed
combined financial information.
The unaudited pro forma condensed combined financial information is
provided for illustrative purposes only and does not purport to represent what
the actual results of operations or the financial position of the combined group
would have been had the Transactions occurred on the dates assumed, nor is it
necessarily indicative of our future operating results or combined financial
position. The usefulness of this information to investors in making projections
of future performance is limited by the following factors, among others, with
respect to Coors Brewers of which all investors should be aware: (i) the
business did not exist in its current form prior to our acquisition of the
business; (ii) we did not own, operate or manage the business prior to its
acquisition by us; (iii) the unaudited pro forma condensed combined financial
information includes businesses (TCB) that we did not acquire from Interbrew;
and (iv) management accounts created prior to the acquisition of the business
were not prepared in accordance with U.S. generally accepted accounting
principles.
15
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 30, 2001
The following unaudited pro forma condensed combined income statement for
the year ended December 30, 2001, is derived from the audited historical
consolidated statements of income of Coors for the year ended December 30, 2001,
and the audited historical combined profit and loss account of Carling Brewers
for the year ended December 29, 2001, after eliminating the results of TCB and
after giving effect to the pro forma adjustments described in notes 4 and 5,
respectively. Such adjustments have been determined as if the acquisition of
Coors Brewers took place on January 1, 2001, the first day of the 2001 fiscal
year. The unaudited pro forma condensed combined financial information has been
prepared from, and should be read in conjunction with, and supplemental to, the
respective historical consolidated financial statements and notes thereto of
Coors, which are included elsewhere in this prospectus, and Carling Brewers,
which are incorporated by reference in this prospectus.
<Table>
<Caption>
CARLING
COORS BREWERS ELIMINATE
YEAR ENDED YEAR ENDED RESULTS OF PRO FORMA COMBINED
DECEMBER 30, DECEMBER 29, NON ACQUIRED ACQUISITION GROUP
2001 2001 BUSINESSES ADJUSTMENTS PRO FORMA
US GAAP US GAAP US GAAP US GAAP US GAAP
------------ ------------ ----------------- ----------- ---------
(NOTE 1) (NOTE 4) (NOTE 5)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Sales.......................... $ 2,842.8 $ 2,546.2 $(416.3) $ -- $ 4,972.7
Beer excise taxes.............. (413.3) (874.2) 171.9 -- (1,115.6)
--------- --------- ------- ------ ---------
Net sales...................... 2,429.5 1,672.0 (244.4) -- 3,857.1
Cost of goods sold............. (1,537.6) (1,171.1) 160.4 13.8 (2,534.5)
--------- --------- ------- ------ ---------
Gross profit................... 891.9 500.9 (84.0) 13.8 1,322.6
Marketing, general and
administrative expenses...... (717.1) (391.7) 35.6 28.9 (1,044.3)
Special charges................ (23.2) -- -- (4.0) (27.2)
--------- --------- ------- ------ ---------
Operating income............... 151.6 109.2 (48.4) 38.7 251.1
Interest income................ 16.4 24.3 (4.0) (12.0) 24.7
Interest expense............... (2.0) (65.5) -- (15.3) (82.8)
Gain on sales of
distributorships............. 27.7 -- -- -- 27.7
Other income/(expense)......... 4.3 12.8 (2.6) (10.2) 4.3
--------- --------- ------- ------ ---------
Income before income taxes..... 198.0 80.8 (55.0) 1.2 225.0
Income tax expense............. (75.0) (35.6) 20.3 0.2 (90.1)
--------- --------- ------- ------ ---------
Net income..................... $ 123.0 $ 45.2 $ (34.7) $ 1.4 $ 134.9
========= ========= ======= ====== =========
Net income per common share --
basic........................ $ 3.33 $ 3.66
========= =========
Net income per common share --
diluted...................... $ 3.31 $ 3.63
========= =========
Weighted average common shares
-- Basic..................... 36.9 36.9
========= =========
-- Diluted................... 37.2 37.2
========= =========
</Table>
16
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 2002
The following unaudited pro forma condensed combined income statement for
the thirteen weeks ended March 31, 2002, is derived from the unaudited
historical condensed consolidated statement of income of Coors for the thirteen
weeks ended March 31, 2002, and the unaudited historical combined profit and
loss account of Carling Brewers for the 34 days ended February 1, 2002, the
preacquisition period, after eliminating the results of TCB and after giving
effect to the pro forma adjustments described in notes 4 and 5, respectively.
Such adjustments have been determined as if the acquisition of Coors Brewers
took place on December 31, 2001, the first day of our 2002 fiscal year. The
unaudited pro forma condensed combined financial information has been prepared
from, and should be read in conjunction with, and supplemental to, the
respective historical unaudited condensed consolidated financial statements and
notes thereto of Coors, which are included elsewhere in this prospectus.
<Table>
<Caption>
CARLING
COORS BREWERS ELIMINATE
THIRTEEN WEEKS 34 DAYS ENDED RESULTS OF PRO FORMA COMBINED
ENDED FEBRUARY 1, NON ACQUIRED ACQUISITION GROUP
MARCH 31, 2002 2002 BUSINESSES ADJUSTMENTS PRO FORMA
US GAAP US GAAP US GAAP US GAAP US GAAP
--------------- ------------- ----------------- ----------- ---------
(NOTE 1) (NOTE 4) (NOTE 5)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Sales....................... $ 937.7 $147.3 $(22.4) $ -- $1,062.6
Beer excise taxes........... (198.4) (52.8) 9.3 -- (241.9)
------- ------ ------ ------ --------
Net sales................... 739.3 94.5 (13.1) -- 820.7
Cost of goods sold.......... (475.8) (69.9) 8.8 0.2 (536.7)
------- ------ ------ ------ --------
Gross profit................ 263.5 24.6 (4.3) 0.2 284.0
Marketing, general and
administrative expenses... (215.4) (36.1) 4.2 2.4 (244.9)
Special charges............. (2.9) -- -- -- (2.9)
------- ------ ------ ------ --------
Operating income............ 45.2 (11.5) (0.1) 2.6 36.2
Interest income............. 4.8 2.1 (0.3) -- 6.6
Interest expense............ (9.9) (2.0) -- (9.3) (21.2)
Other income/(expense)...... 4.9 0.7 (0.2) (3.8) 1.6
------- ------ ------ ------ --------
Income before income
taxes..................... 45.0 (10.7) (0.6) (10.5) 23.2
Income tax expense.......... (17.8) 3.3 0.2 5.1 (9.2)
------- ------ ------ ------ --------
Net income.................. $ 27.2 $ (7.4) $ (0.4) $ (5.4) 14.0
======= ====== ====== ====== ========
Net income per common
share -- basic............ $ 0.76 $ 0.39
======= ========
Net income per common
share -- diluted.......... $ 0.75 $ 0.39
======= ========
Weighted average common
shares
-- Basic.................. 36.0 36.0
======= ========
-- Diluted................ 36.3 36.3
======= ========
</Table>
17
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
NOTE 1 INCOME STATEMENT INFORMATION RELATING TO CARLING BREWERS
The following tables show a reconciliation of the historical combined
profit and loss accounts of Carling Brewers, prepared in accordance with UK GAAP
and in pounds sterling, to the income statement prepared under US GAAP and in US
dollars included in the unaudited pro forma condensed combined income statement
for the year ended December 29, 2001 and the 34 days ended February 1, 2002.
Reclassifications have been made to the underlying Carling Brewers
historical combined profit and loss accounts prepared under UK GAAP to conform
to Coors' income statement presentation.
The UK-US GAAP adjustments reflect the material adjustments that are
required to convert the results of Carling Brewers to US GAAP. Descriptions of
the nature of each adjustment are given in notes 2 and 3.
<Table>
<Caption>
CARLING BREWERS
YEAR ENDED DECEMBER 29, 2001
---------------------------------------------
UK-US
GAAP
UK GAAP ADJUSTMENTS US GAAP US GAAP
-------- ----------- -------- ---------
(NOTE 2)
(IN MILLIONS)
Sales............................................. L1,781.6 L(13.4) L1,768.2 $ 2,546.2
Beer excise taxes................................. (607.1) -- (607.1) (874.2)
-------- ------ -------- ---------
Net sales......................................... 1,174.5 (13.4) 1,161.1 1,672.0
Cost of goods sold................................ (809.8) (3.5) (813.3) (1,171.1)
-------- ------ -------- ---------
Gross profit...................................... 364.7 (16.9) 347.8 500.9
Marketing, general and administrative expenses.... (236.0) (36.0) (272.0) (391.7)
-------- ------ -------- ---------
Operating income.................................. 128.7 (52.9) 75.8 109.2
Interest income................................... 3.5 13.4 16.9 24.3
Interest expense.................................. (45.5) -- (45.5) (65.5)
Equity in earnings of joint ventures.............. 12.7 (3.8) 8.9 12.8
-------- ------ -------- ---------
Income before income taxes........................ 99.4 (43.3) 56.1 80.8
Income tax expense................................ (28.8) 4.1 (24.7) (35.6)
-------- ------ -------- ---------
Net income........................................ L 70.6 L(39.2) L 31.4 $ 45.2
======== ====== ======== =========
</Table>
18
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
<Table>
<Caption>
CARLING BREWERS
34 DAYS ENDED FEBRUARY 1, 2002
-----------------------------------------
UK-US
GAAP
UK GAAP ADJUSTMENTS US GAAP US GAAP
------- ----------- ------- -------
(NOTE 2)
(IN MILLIONS)
Sales............................................. L105.2 L(1.5) L103.7 $147.3
Beer excise taxes................................. (37.2) -- (37.2) (52.8)
------ ----- ------ ------
Net sales......................................... 68.0 (1.5) 66.5 94.5
Cost of goods sold................................ (48.9) (0.3) (49.2) (69.9)
------ ----- ------ ------
Gross profit...................................... 19.1 (1.8) 17.3 24.6
Marketing, general and administrative expenses.... (22.2) (3.2) (25.4) (36.1)
------ ----- ------ ------
Operating loss.................................... (3.1) (5.0) (8.1) (11.5)
Interest income................................... -- 1.5 1.5 2.1
Interest expense.................................. (1.4) -- (1.4) (2.0)
Equity in earnings of joint ventures.............. 0.7 (0.2) 0.5 0.7
------ ----- ------ ------
Loss before income taxes.......................... (3.8) (3.7) (7.5) (10.7)
Income tax benefit................................ 1.2 1.1 2.3 3.3
------ ----- ------ ------
Net loss.......................................... L (2.6) L(2.6) L (5.2) $ (7.4)
====== ===== ====== ======
</Table>
The results of Carling Brewers have been translated into US dollars at the
average Daily Closing Rate of L1.00 to $1.44 for the year ended December 29,
2001 and L1.00 to $1.42 for the 34 days ended February 1, 2002.
19
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
NOTE 2 CARLING BREWERS -- US GAAP ADJUSTMENTS BY CAPTION HEADING
The US GAAP adjustments made to the historical Carling Brewers results of
operations, which are described in note 3, can be summarized by caption heading
as follows:
<Table>
<Caption>
CARLING BREWERS
------------------------------------
34 DAYS
YEAR ENDED ENDED
DECEMBER 29, 2001 FEBRUARY 1, 2002
INCOME STATEMENT NOTE 3 CREDIT/ (CHARGE) CREDIT/(CHARGE)
- ---------------- ------ ----------------- ----------------
(IN MILLIONS)
(i) SALES
Trade Loans.............................................. g L(13.4) L(1.5)
====== =====
(ii) COST OF GOODS SOLD
Pension costs............................................ b L 5.8 L 0.6
New basis of accounting on Interbrew acquisition......... d (9.3) (0.9)
------ -----
L (3.5) L(0.3)
====== =====
(iii) MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
Pension costs............................................ b L 8.1 L 0.7
New basis of accounting on Interbrew acquisition......... d (40.9) (3.9)
Restructuring provisions................................. f (2.9) --
Stock based compensation................................. c (0.3) --
------ -----
L(36.0) L(3.2)
====== =====
(iv) INTEREST INCOME
Trade loans.............................................. g L 13.4 L 1.5
====== =====
(v) EQUITY IN EARNINGS OF JOINT VENTURES
Equity accounting........................................ e L (3.8) L(0.2)
====== =====
(vi) INCOME TAXES
Equity accounting........................................ e L 3.8 L 0.2
New basis of accounting on Interbrew acquisition......... d 3.7 1.3
Deferred taxes on other US GAAP adjustments.............. a (3.4) (0.4)
------ -----
L 4.1 L 1.1
====== =====
</Table>
NOTE 3
The accounts of Carling Brewers are prepared in accordance with UK GAAP.
For the purposes of preparing the unaudited pro forma condensed combined
financial information, the accounts of Carling Brewers have been restated to
conform with US GAAP by giving effect to the adjustments described below.
(A) DEFERRED TAXES
Under UK GAAP, following the adoption of Financial Reporting Standard 19,
"Deferred Tax", deferred taxes are accounted for on all timing differences,
taking into account the before tax consequences of transactions and events
recognized in the financial statements of the current and previous periods.
Under US GAAP, deferred taxes are accounted for on all temporary differences,
providing for the effect of differences between the accounting and tax
measurement of assets and liabilities.
20
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
Under both UK and US GAAP a valuation adjustment is established for those
deferred tax assets where it is more likely than not that some portion will not
be realized.
Deferred taxes have been provided for at 30% on all temporary differences
of the relevant US GAAP adjustments.
(B) PENSION COSTS
Under UK GAAP (SSAP 24 "Accounting for Pension Costs") the basis of
valuation of both pension plan assets and liabilities is not prescribed to the
same degree as under US GAAP, although there are some basic minimum
requirements.
The profit and loss charge ("pension cost") is determined as the cost of
accruing benefits ("regular cost") together with an adjustment reflecting any
surplus or deficit not reflected on the balance sheet. This aims to spread the
unrecognized actuarial surplus or deficit over the remaining lives of employees.
There is no requirement for annual valuations and generally the latest formal
actuarial valuation is used which is usually no more than three years prior to
the balance sheet date.
Under US GAAP defined benefit pension plan accounting, plan assets are
valued on a market related basis and liabilities are valued under a specified
actuarial methodology, including market related valuation assumptions. Changes
in the funding status not reflected in the balance sheet that fall outside a 10%
corridor are recognized systematically and gradually over subsequent periods.
The valuation must be as of the balance sheet date or at a date not more than
three months prior to the balance sheet date.
(C) STOCK BASED COMPENSATION
Under UK GAAP (UITF 17), a charge is made to the profit and loss account of
the parent company only, for stock based compensation schemes (share option
schemes and share purchase plans) established in the stock of the parent
company. This charge, which is not recorded in the accounts of the subsidiaries
where the beneficiaries are employed, is based on the intrinsic value at the
date of grant. Intrinsic value is calculated as the difference between the
market price and the exercise price. Inland Revenue approved Save As You Earn
("SAYE") schemes are exempt from the requirements of UITF 17.
Under US GAAP, companies have the option of accounting for stock based
compensation under Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation", (FAS 123) or Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25).
Carling Brewers has chosen to account for such costs under APB 25.
Under APB 25, the compensation expense is calculated as the intrinsic value
at the measurement date. The intrinsic value is the excess of the fair market
value of the underlying shares over the exercise price of the shares at the
share option grant date. For fixed plans the measurement date is the grant date.
Variable plans (principally options with performance criteria) are re-measured
every period until the number of shares and exercise price are known. For both
fixed and variable plans, any compensation expense is generally recognized over
the period from grant date to vesting date.
(D) NEW BASIS OF ACCOUNTING ON INTERBREW ACQUISITION
Interbrew acquired the brewing businesses of Bass PLC, including the assets
and liabilities of the Business, on August 26, 2000, for L2,416.0 million
(including acquisition expenses). A new basis of accounting was established in
the consolidated financial statements of Interbrew, reflecting the fair values
of assets acquired and liabilities assumed. UK GAAP reflects the new basis of
accounting in group consolidated financial statements but does not allow the new
basis to be reflected in the underlying books and records of the acquired
entities.
21
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
Under US GAAP, the combined financial statements of the Business for
periods after August 26, 2000 should reflect the new basis of accounting
established for the Business' assets and liabilities based upon the fair values
at August 26, 2000, of the respective assets acquired and liabilities assumed by
Interbrew SA, as summarized below:
<Table>
<Caption>
HISTORICAL FAIR USEFUL
COST VALUE LIFE
LM LM (YEARS)
---------- ------- -------
Intangible fixed assets (including goodwill)............. -- 1,185.4 3 - 40
Property, plant and equipment............................ 309.8 410.0 3 - 50
Land..................................................... 11.7 32.7 --
Trade loans.............................................. 153.7 153.7 --
Other investments........................................ 2.1 2.1 --
Associate undertakings................................... 18.6 18.6 --
Inventory................................................ 75.7 77.1 --
Other working capital.................................... 100.4 100.4 --
Pension scheme surplus................................... -- 314.4 --
Loans.................................................... (9.9) (8.2) --
Other provisions......................................... (2.9) (2.3) --
Deferred taxes........................................... (20.8) (281.2) --
----- -------
638.4 2,002.7
===== =======
</Table>
As a result of the new basis of accounting, net assets were increased and
additional charges are reflected under US GAAP in the reconciliation of net
income, principally for the effects of increases in depreciation and
amortization expense of tangible and intangible assets, including goodwill. The
effects of deferred taxes and pensions are described in notes (a) and (b),
respectively, above.
(E) EQUITY ACCOUNTING
UK GAAP requires the investors' share of operating profit or loss, interest
and taxation relating to unconsolidated affiliates and joint ventures to be
accounted for separately within each of those headings. Under US GAAP, the
investors' share of the after-tax profits and losses of unconsolidated
affiliates and joint ventures are included within the income statement as a
single line item.
(F) RESTRUCTURING PROVISIONS
Under UK GAAP, provisions for restructuring can be recognized once the
company is demonstrably committed to the restructuring plan. Under US GAAP, the
recognition criteria for restructuring provisions are more stringent as they
require a number of prescribed conditions to be met before a liability can be
recorded. Therefore, timing differences may arise between the UK GAAP and US
GAAP recognition of the restructuring charge and associated liability, which can
result in the charge and liability being recorded in different fiscal periods.
(G) TRADE LOANS
Under UK GAAP, any interest earned on trade loans made to customers is
recognized as part of gross margin, as the interest rate charged is
inter-related with future purchase commitments made by the customer and discount
structures offered, and many such loans are made on an interest free basis. US
GAAP requires a market rate of interest to be imputed on all trade loans, with
the interest credit being recognized within interest income, rather than within
gross margin.
22
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
NOTE 4 ADJUSTMENTS TO ELIMINATE NON-ACQUIRED BUSINESSES
The historical financial information of Carling Brewers includes the
results of operations attributable to the TCB business, which was formerly a
part of Bass Brewers Limited but was not acquired by Coors.
For the purpose of the Unaudited Pro Forma Condensed Combined Financial
Information, the following adjustments have been made to the historical
financial information of Carling Brewers, after adjustment to US GAAP and to US
dollars, to eliminate the results of operations of TCB. These adjustments
reflect the terms of the separation agreement, which split Carling Brewers into
Coors Brewers and TCB.
(I) REVENUES AND GROSS MARGINS
As part of the separation agreement, a number of cross distribution
arrangements were put in place between Coors Brewers and TCB. The nature of
these arrangements vary by brand and by customer type, and therefore each of the
major revenue streams has been considered separately.
Coors Brewers and TCB will each separately supply their own brands to
national "on trade" and "off trade" channels. In the independent "on trade"
channels at the point of acquisition, Coors Brewers operated in England and
Wales, and TCB operated in Scotland and Ireland. Therefore, for the purposes of
this unaudited pro forma financial information, net sales revenue and gross
profit excludes that belonging to TCB. See (a) in table below.
TCB will continue to sell Coors Brewers brands in Ireland, and through
independent "on trade" channels in Scotland, for a period of one year. A fixed
profit margin per barrel accrues to Coors Brewers on these sales and a minimum
sales quantity will apply. After this one year period, Coors Brewers intends to
have established its own distribution channels to these customers, selling
directly to them with the full gross margin achieved accruing to Coors Brewers.
For the purpose of the pro-forma financial information, the actual sales revenue
and gross profit earned on these brands in the year ended December 29, 2001 have
been eliminated (as part of adjustments (a) in the table below), and replaced
with the contractual revenues and fixed profit margin that will be earned under
this contract. See (b) in the table below.
While this profit margin could theoretically be lost after the one year
distribution agreement expires, Coors Brewers expects that the margin achieved
from direct sales to customers in the future will be larger than the contractual
margin earned from TCB in the one year period. However, no such margin increase
has been assumed in this unaudited pro forma financial information.
Conversely, Coors Brewers will continue to brew and sell certain TCB brands
in England and Wales for periods of up to three years, on both an exclusive and
non-exclusive basis, depending on brand. For the purposes of this pro forma
financial information, the sales and profit margins have been included for those
brands where the distribution agreements give Coors Brewers exclusive rights of
sale of the brand, or where the agreements run for a period of more than one
year. Those brands where Coors Brewers have non-exclusive rights for one year
only have, with minor exceptions, been excluded, as those revenues are
considered to be non-recurring. For those sales that have been included, gross
profits have been reduced by the margin that will be payable to TCB, totaling
approximately $2 million. See (c) in table below.
Finally, an adjustment has been made to add in sales and gross profits
earned from export sales of Coors Brewers brands that have historically been
recorded in another Interbrew subsidiary and are not included in the historical
Carling Brewers financial statements. The export rights associated with Coors
Brewers brands have also been acquired by Coors. See (d) in table below.
23
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
The following table summarizes the adjustments that have been made to
revenues and gross profits for the year ended December 29, 2001:
<Table>
<Caption>
NET GROSS
SALES PROFIT
------- ------
(IN MILLIONS)
(a) TCB direct supply to National On Trade customers........ $ (60.3) $(21.5)
(a) TCB direct supply to National Off Trade customers....... (64.5) (25.8)
(a) TCB direct supply to Independent On Trade in Scotland... (145.3) (67.2)
(b) Coors Brewers brands sold by TCB in Scotland and
Ireland................................................... 7.5 1.4
(c) TCB brands sold by Coors Brewers in England and Wales... (1.4) (2.0)
(d) Export sales of Coors Brewers brands recognized......... 19.6 9.8
Less TCB freight costs...................................... -- 21.3
------- ------
$(244.4) $(84.0)
======= ======
</Table>
The methodology described above for revenues and gross margins attributable
to the TCB business was consistently applied to the preacquisition period in
fiscal 2002, the 34 days ended February 1, 2002. The cross distribution
arrangements and export sales discussed above resulted in a reduction of net
sales and gross profit of $13.1 million and $4.3 million, respectively, for the
34 days ended February 1, 2002.
(II) BREWERY COSTS AND OTHER OVERHEADS
The Wellpark brewery situated in Glasgow, Scotland, which is included in
the Carling Brewers historical financial statements, was retained by TCB as it
produces substantially all TCB brands. The breweries acquired by Coors produce
substantially all Coors Brewers brands with the exception of the brewery at Cape
Hill, where approximately 70% of brewing and 60% of packaging is for export
brands sold by Bass Beers Worldwide, an Interbrew subsidiary not acquired by
Coors.
Brewery costs are recovered by charges made against sales margins at
standard cost rates. An appropriate share of standard cost variances has been
allocated to the TCB business and thus have been removed from the unaudited pro
forma income statement. The approach taken in the unaudited pro forma income
statement on the breweries which produced TCB/Interbrew brands is as follows:
- Wellpark -- As this is retained by TCB and produces substantially all TCB
brands, both its costs and its recoveries are removed.
- Cape Hill -- As this is a brewery acquired by Coors, its costs are not
removed, but they are reduced by the contractual brewing fees arising
from the production of TCB/Interbrew brands on their behalf; effectively
leaving in place the costs of the brewery related to the production of
Coors Brewers brands.
Interbrew intends to transfer the production of its brands currently
produced at Cape Hill to its own breweries during the course of 2002. The
resulting reduction in production volume at Cape Hill means that the plant's
brewing and packaging operation will no longer be a viable proposition. Coors
Brewers has therefore announced the planned closure of Cape Hill once Interbrew
has completed its production transfers. The production of Coors Brewers brands
remaining at Cape Hill will be transferred to its brewery in Burton, where
production will be at lower costs. This benefit has not been recognized in the
unaudited pro forma financial information. Severance and certain restructuring
costs associated with the closure of Cape Hill have been accrued for in the
purchase price allocation.
The pro forma impact of the brewery costs and other overheads discussed
above is reflected in gross profit in Note 4(i) above and included in cost of
goods sold on the pro forma income statement.
24
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
(III) OTHER OVERHEADS
Other overheads, included in marketing, general and administrative
expenses, directly attributable to TCB totaling $35.6 million and $4.2 million
for the year ended December 29, 2001 and the 34 days ended February 1, 2002,
respectively, have been removed from the pro forma income statements. This
includes TCB employee costs and TCB brand marketing costs.
(IV) INTEREST, OTHER INCOME AND TAXATION
The following adjustments have been made for interest, other income and
taxation (in millions):
<Table>
<Caption>
YEAR ENDED 34 DAYS ENDED
DECEMBER 29, FEBRUARY 1,
2001 2002
------------ -------------
Interest income(a)......................................... $ (4.0) $(0.3)
Interest expense(b)........................................ $ -- $ --
Other income(c)............................................ $ (2.6) $(0.2)
Income tax expense(d)...................................... $ 20.3 $ 0.2
</Table>
- ---------------
(a) Interest income associated with the trade loans for Scotland customers has
been eliminated from the pro forma income statements as it relates to TCB
revenues that have likewise been eliminated.
(b) No adjustment has been made to eliminate an element of the interest charge,
as it is not possible to separately identify any components of debt that
are directly associated with the TCB operations.
(c) Other income has been eliminated for TCB's share of the profits in the
49.9% owned distribution joint venture, Tradeteam. In the future, TCB will
be entitled to the profits it would have earned under Carling Brewers
ownership. These profits will be provided to TCB through reduced
distribution costs.
(d) Tax effects on the TCB operating results have also been eliminated.
25
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
NOTE 5 ACQUISITION ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
The pro forma acquisition adjustments, which are described in note 6 can be
summarized by caption heading as follows:
<Table>
<Caption>
THIRTEEN WEEKS
YEAR ENDED ENDED
DECEMBER 30, 2001 MARCH 31, 2002
INCOME STATEMENT NOTE 6 CREDIT/ (CHARGE) CREDIT/(CHARGE)
- ---------------- ------ ------------------- ---------------
(IN MILLIONS)
(i) COST OF GOODS SOLD
Reclassify equity earnings of joint ventures from
other income.................................... c(ii) $ 10.2 $ 0.5
Adjustment to depreciation on property............ a(i) 3.6 (0.3)
------ ------
$ 13.8 $ 0.2
====== ======
(ii) OTHER OPERATING EXPENSES
Eliminate goodwill amortization arising on
acquisition by Interbrew........................ a(ii), a(iii) $ 18.0 $ 1.7
Eliminate intangible amortization arising on
acquisition by Interbrew........................ a(iii) 23.9 2.3
Adjustment to amortization of intangible assets... a(iii) (17.0) (1.6)
Reclassify restructuring charge to special
charge.......................................... c(iii) 4.0 --
------ ------
$ 28.9 $ 2.4
====== ======
(iii) SPECIAL CHARGES
Reclassify restructuring charge to special
charge.......................................... c(iii) $ (4.0) $ --
====== ======
(iv) INTEREST INCOME
Eliminate income on marketable securities sold to
fund the acquisition............................ b $(12.0) $ --
====== ======
(v) INTEREST EXPENSE
Interest expense on new Coors debt................ b $(80.8) $(11.3)
Eliminate Interbrew interest...................... b 65.5 2.0
------ ------
$(15.3) $ (9.3)
====== ======
(vi) OTHER INCOME
Reclassify equity earnings of joint ventures to
cost of goods sold.............................. c(ii) $(10.2) $ (0.5)
Gain on sale of marketable securities............. b -- (3.3)
------ ------
$(10.2) $ (3.8)
====== ======
(vii) INCOME TAXES
Tax effects of adjustments........................ c(i) $ 0.2 $ 5.1
====== ======
</Table>
NOTE 6 ACQUISITION ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
(A) PURCHASE CONSIDERATION AND PURCHASE PRICE ALLOCATION
On February 2, 2002, Coors acquired the entire issued capital of Bass
Holdings Limited, the parent company of Coors Brewers, plus additional
intangible assets from other subsidiaries of Interbrew for a total
26
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
cash consideration of 1.2 billion pounds sterling (approximately $1.7 billion as
of February 2, 2002), of which $495.9 million represented the repayment of
intercompany loans, plus acquisition costs of approximately $18 million. The
purchase price was adjusted for the value of working capital of Coors Brewers at
the date of acquisition. The working capital adjustment, net of a receivable
settlement due from Interbrew, was approximately $51 million.
The acquisition has been accounted for by using the purchase accounting
method. Coors has established a new accounting basis for Coors Brewers assets
and liabilities based upon the fair market values thereof and the purchase price
for Coors Brewers, including the direct cost of acquisition.
In arriving at the preliminary purchase price allocation, the following
adjustments have been made by Coors to the fair values of the assets acquired
and liabilities assumed by Coors Brewers.
(i) Property, Plant and Equipment
Property has been independently valued at market value, which has given
rise to a net decrease of $52.8 million compared to net book value. The basis of
this property valuation is existing use, with the exception of the Cape Hill
brewery, which has been valued at its net realizable value after this brewery is
closed down. These adjustments have given rise to a pro forma adjustment
reducing depreciation expense by $3.6 million for the year ended December 30,
2001 and increasing depreciation expense by $0.3 million for the 34 days ended
February 1, 2002.
The pro forma adjustments result in a net increase to depreciation expense
for the 34 days ended February 1, 2002 versus a net decrease for the year ended
December 30, 2001 due to certain Cape Hill assets becoming fully depreciated
during 2001.
(ii) Goodwill
Goodwill represents the residual purchase price, after having made
appropriate allocations to all other asset and liability categories. Goodwill
will be held as an indefinite life asset, subject to annual impairment reviews.
The impact on the unaudited pro forma income statement is a reduction of
amortization expense of $18.0 million and $1.7 million, for the fiscal year 2001
and the 34 days ended February 1, 2002, respectively. This is the elimination of
goodwill amortization included in the historical Coors Brewers results relating
to the Interbrew acquisition. No amortization expense on the goodwill resulting
from the Coors acquisition is included as a result of the adoption of Statement
of Financial Accounting Standard No. 142, as described below.
(iii) Intangible Assets
The brands, customers, contracts and technology of Coors Brewers have been
independently valued as of the date of acquisition and have been stated at their
estimated fair values. These brands will be amortized over their estimated
useful lives, which range from 2 years to 20 years, depending on the perceived
strength and longevity of each brand, with the exception of the Carling brand
which has been ascribed an indefinite life. This results in annual pro forma
amortization expense of $17.0 million, a decrease of $6.9 million compared to
the Interbrew amortization expense of $23.9 million for intangible assets. For
the 34 days ended February 1, 2002, this results in pro forma amortization
expense of $1.6 million, a decrease of $0.7 million compared to the Interbrew
amortization expense of $2.3 million for intangible assets. The total 2001
annual and 2002 preacquisition period pro forma decrease in amortization expense
for both goodwill and intangible assets is $24.9 million and $2.4 million,
respectively. This total decrease in amortization expense is partially due to
the fact that the pro forma amortization expense is based upon application of
Statement of Financial Accounting Standards Nos. 141 and 142, "Business
Combinations", and "Goodwill and Other Intangible Assets", respectively, which
are effective for the Coors Brewers acquisition. This new guidance allows for
goodwill and certain intangible assets to be identified as having an indefinite
life and therefore are nonamortizable. These
27
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
standards are effective for acquisitions occurring after June 30, 2001, and
therefore are reflected in the pro forma statements for 2001. The historical
results of Carling Brewers appropriately apply Accounting Principles Board
Opinion No. 16, "Business Combinations", which provides for all intangible
assets and goodwill to be assigned a useful life and amortized accordingly.
(B) ACQUISITION FINANCE
The total $1.7 billion purchase price plus acquisition costs of
approximately $18 million was financed through a mixture of cash raised through
the sale of marketable securities of approximately $150 million, variable-rate
term loans of $800 million and by a temporary variable-rate bridge loan of $750
million. Coors repaid the bridge loan and approximately $91.0 million of the
term loans with the proceeds of the offering of the old notes. Upon closing the
offering and making a payment on the term loans, Coors had outstanding debt
related to the Acquisition of $846.6 million discounted fixed rate notes,
consisting of the old notes, and $709 million variable rate term loans. For the
purposes of this pro forma financial information, a fixed interest rate of
6.375% on the old note financing and a weighted average variable rate of
approximately 3.6% on the variable rate facilities have been assumed based upon
recent market rates. In addition, estimated debt issue costs of approximately
$16.8 million will be amortized over the lives of the term loan and note
financing, assumed to be 5 years and 10 years, respectively, resulting in
additional pro forma interest expense of approximately $3.3 million per annum.
The adjustments recorded related to acquisition financing in the pro forma
financial information are as follows (in millions): (i) eliminate the interest
charged in the historical accounts of Carling Brewers on Interbrew intercompany
debt; (ii) reduce Coors' interest income on the marketable securities sold to
fund the acquisition; (iii) reduce Coors' other income for the gain on the sale
of marketable securities, which were used to fund the Acquisition; and (iv)
increase interest expense for the interest on the new debt.
<Table>
<Caption>
THIRTEEN WEEKS
YEAR ENDED ENDED
DECEMBER 31, 2001 MARCH 31, 2002
----------------- --------------
(i).................................................... $ 65.5 $ 2.0
(ii)................................................... $(12.0) $ --
(iii).................................................. -- $ (3.3)
(iv)................................................... $(80.8) $(11.3)
</Table>
A 1/8% movement in variable interest rates would affect annual pre-tax
income by approximately $1.0 million.
(C) OTHER ADJUSTMENTS
(i) Taxation
The 2001 annual and 2002 preacquisition period, the 34 days ended February
1, 2002, pro forma tax adjustment includes an adjustment of $4.6 million and
$1.1 million, respectively, to restate tax on the Coors Brewers results from the
UK statutory tax rate of 30% to the US federal and state tax rate of 39%.
The total 2001 annual and 2002 preacquisition period pro forma taxation
adjustments of $0.2 million and $5.1 million, respectively, which include the
amounts described above, have been calculated at a statutory rate of 39%,
representing federal plus state tax. The adjustments take account of the tax
effects of the other pro forma adjustments and the tax effects of the
acquisition structure.
28
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION -- (CONTINUED)
(ii) Earnings of Unconsolidated Affiliates and Other Income
Coors Brewers uses a 49.9% owned affiliate, Tradeteam Limited, to carry out
a majority of its distribution. Prior to the acquisition, nearly all of
Tradeteam's business was for Carling Brewers, with only an immaterial amount of
work being carried out for external customers. Coors Brewers pays Tradeteam an
above-market rate for distribution costs, but Coors Brewers then receives back
49.9% of the profit made by Tradeteam. Rather than show this profit share as
"share of equity investee earnings," Coors believes that it is more appropriate
to net this profit against distribution costs, thus reducing distribution costs
back to a market rate. Subsequent to the acquisition, a portion of Tradeteam's
business will be for Interbrew.
(iii) Restructuring Charges
Restructuring charges of approximately $4.0 million that are included in
Carling Brewers historical results have been reclassified from marketing,
general and administrative expenses to special charges to be consistent with the
Coors classification and presentation of similar charges.
29
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
Simultaneously with the sale of the old notes, we entered into a
registration rights agreement with J.P. Morgan Securities Inc., Morgan Stanley &
Co. Incorporated and the other initial purchasers of the old notes. Under this
registration rights agreement, we agreed to use our reasonable best efforts to
file a registration statement regarding the exchange of the old notes for
registered notes with terms identical in all material respects within 120 days
of the issuance of the old notes and to cause that registration statement to
become effective with the SEC within 180 days of the issuance of the old notes.
We have also agreed to use our reasonable best efforts to cause the exchange
offer for the old notes to be exchanged for the exchange notes no later than 40
business days after the date on which the registration statement was due to
become effective. A copy of the registration rights agreement has been filed as
an exhibit to the registration statement of which this prospectus is a part.
We are conducting the exchange offer to satisfy our contractual obligations
under the registration rights agreement. The form and terms of the exchange
notes are the same as the form and terms of the old notes, except that the
exchange notes will be registered under the Securities Act, and holders of the
exchange notes will not be entitled to the payment of any additional amounts
pursuant to the terms of the registration rights agreement, as described below.
The registration rights agreement provides that, promptly after the
registration statement has been declared effective, we will offer to holders of
the old notes the opportunity to exchange their old notes for exchange notes
having a principal amount, interest rate, maturity date and other terms
substantially identical to the principal amount, interest rate, maturity date
and other terms of their old notes. We will keep the exchange offer open for at
least 20 business days (or longer if we are required to by applicable law) after
the date notice of the exchange offer is mailed to the holders of the old notes
and use our reasonable best efforts to complete the exchange offer no later than
40 business days after the date on which the registration statement was due to
become effective. The exchange notes will be accepted for clearance through The
Depository Trust Company ("DTC"), Clearstream, Luxembourg and the Euroclear
System with a new CUSIP and ISIN number and common code. All of the
documentation prepared in connection with the exchange offer will be made
available at the offices of Deutsche Bank Trust Company Americas, our paying
agent.
Based on existing interpretations of the Securities Act by the staff of the
SEC, we believe that the holders of the exchange notes (other than holders who
are broker-dealers) may freely offer, sell and transfer the exchange notes.
However, holders of old notes who are our affiliates, who intend to participate
in the exchange offer for the purpose of distributing the exchange notes, or who
are broker-dealers who purchased the old notes from us for resale, may not
freely offer, sell or transfer the old notes, may not participate in the
exchange offer and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any offer, sale or
transfer of old notes.
Each holder of old notes who is eligible to and wishes to participate in
the exchange offer will be required to represent that it is not our affiliate,
that it is not a broker-dealer tendering securities directly acquired from us
for its own account and that it acquired the old notes and will acquire the
exchange notes in the ordinary course of its business and that it has no
arrangement with any person to participate in the distribution of the exchange
notes. In addition, any broker-dealer who acquired the old notes for its own
account as a result of market-making or other trading activities must deliver a
prospectus (which may be the prospectus contained in the registration statement
if the broker-dealer is not reselling an unsold allotment of old notes) meeting
the requirements of the Securities Act in connection with any resales of the
exchange notes. We will agree to allow such broker-dealers and the initial
purchasers, if subject to similar prospectus delivery requirements, to use the
prospectus contained in the registration statement or a similar prospectus in
connection with the resale of exchange notes for a period of 180 days from the
issuance of the exchange notes, provided that the broker-dealer has notified us
either in the letter of transmittal or otherwise within 20 days after
consummation of the exchange offer that it holds exchange notes as a result of
market-making or other trading activities.
30
We will promptly notify you if we are not permitted to conduct the exchange
offer because of a change in SEC rules, the exchange offer is not completed
within 40 business days after the date on which the exchange offer registration
statement was due to become effective or the exchange notes issued in the
exchange offer are not freely tradable (other than because the holder is our
affiliate or is a person that must deliver a prospectus in connection with the
resale). In any of these cases, we will file a shelf registration covering
resales of the affected securities as soon as practicable after we determine
that we can not conduct the exchange offer, such date or a notice of
determination that the exchange notes are not freely tradable is received by us.
We will use our reasonable best efforts to cause the shelf registration
statement to be declared effective as soon as reasonably practicable and to keep
effective the shelf registration statement until the earlier of two years from
issuance of the securities (or, if Rule 144(k) under the Securities Act is
amended to provide a shorter restrictive period, the shorter period) or the time
when all of the securities have been sold thereunder.
In the event that a shelf registration statement is filed, we will provide
to each affected holder copies of the prospectus that is a part of the shelf
registration statement, notify each affected holder when the shelf registration
statement has become effective and take certain other actions as are required to
permit unrestricted resales of the securities. A holder that sells securities
pursuant to the shelf registration statement will be required to be named as a
selling security holder in the prospectus and to deliver a prospectus to
purchasers. A selling holder will also be subject to certain of the civil
liability provisions under the Securities Act in connection with sales and will
be bound by the provisions of the registration rights agreement that are
applicable to it, including certain indemnification rights and obligations.
If we are permitted under SEC rules to conduct the exchange offer and we
have not filed an exchange offer registration statement or a shelf registration
statement by a specified date, if the exchange offer registration statement or
the shelf registration statement is not declared effective by a specified date,
or if either we have not consummated the exchange offer within a specified
period of time or, if applicable, we do not keep the shelf registration
statement effective from a specified period of time, then, in addition to the
interest otherwise payable on the notes, additional interest will accrue and be
payable on the notes at a rate of 0.25% per year until the requirement is
satisfied. Upon the filing of the registration statement, the effectiveness of
the exchange offer registration statement, the consummation of the exchange
offer or the effectiveness of the shelf registration statement, as the case may
be, the additional interest will cease to accrue from the date of filing,
effectiveness or consummation, as the case may be.
If a registration statement is declared effective and we fail to keep it
continuously effective or useable for resales for the period required by the
registration rights agreement, then from the day that the registration statement
ceases to be effective until the earlier of the date that the registration
statement is again deemed effective or is useable, the date that is the second
anniversary of our issuance of these securities (or, if Rule 144(k) under the
Securities Act is amended to provide a shorter restrictive period, the shorter
period) or the date as of which all of the applicable securities are sold
pursuant to the shelf registration statement, additional amounts will accrue at
a rate equal to 0.25% per year.
Any additional amounts will be payable in cash on May 15 and November 15 of
each year to the holders of record on the preceding May 1 and November 1,
respectively.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all old notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
expiration date of the exchange offer. We will issue $1,000 principal amount of
exchange notes in exchange for each $1,000 principal amount of old notes
accepted in the exchange offer. Holders may tender some or all of their old
notes pursuant to the exchange offer. However, old notes may be tendered only in
integral multiples of $1,000.
31
The form and terms of the exchange notes are the same as the form and terms
of the old notes except that:
(1) the exchange notes bear a Series B designation and a different
CUSIP Number from the old notes;
(2) the exchange notes have been registered under the Securities Act
and will therefore not bear legends restricting their transfer; and
(3) the holders of the exchange notes will be deemed to have agreed to
be bound by the provisions of the registration rights agreement and each
security will bear a legend to that effect.
The exchange notes will evidence the same debt as the outstanding securities and
will be entitled to the benefits of the indenture.
As of the date of this prospectus, $850,000,000 aggregate principal amount
of the old notes were outstanding. We have fixed the close of business on
, 2002 as the record date for the exchange offer for purposes of
determining the persons to whom this prospectus and the letter of transmittal
will be mailed initially.
Holders of old notes do not have any appraisal or dissenters' rights under
the Colorado Business Corporation Act, or the indenture in connection with the
exchange offer. We intend to conduct the exchange offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
SEC.
We will be deemed to have accepted validly tendered old notes when, as and
if we have given oral or written notice of our acceptance to the exchange agent.
The exchange agent will act as agent for the tendering holders for the purpose
of receiving the exchange notes from us.
If any tendered old notes are not accepted for exchange because of an
invalid tender, the occurrence of specified other events set forth in this
prospectus or otherwise, the certificates for any unaccepted old notes will be
returned, without expense, to the tendering holder as promptly as practicable
after the expiration date of the exchange offer.
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes
pursuant to the exchange offer. We will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the exchange offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" will mean 5:00 p.m., New York City time, on
, 2002, unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" will mean the latest date and time to
which the exchange offer is extended.
In order to extend the exchange offer, prior to 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration date,
we will:
(1) notify the exchange agent of any extension by oral or written
notice and
(2) mail to the registered holders an announcement of any extension.
We reserve the right, in our sole discretion,
(1) if any of the conditions below under the heading "-- Conditions"
shall have not been satisfied,
(A) to delay accepting any old notes,
(B) to extend the exchange offer, or
32
(C) to terminate the exchange offer, or
(2) to amend the terms of the exchange offer in any manner.
Any delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice to the registered holders. We
will give oral or written notice of any delay, extension or termination to the
exchange agent.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from their date of issuance. Holders
of old notes that are accepted for exchange will receive, in cash, accrued
interest thereon to, but not including, the date of issuance of the exchange
notes. Such interest will be paid with the first interest payment on the
exchange notes on November 15, 2002. Interest on the old notes accepted for
exchange will cease to accrue upon issuance of the exchange notes.
Interest on the exchange notes is payable semi-annually on each May 15 and
November 15, commencing on November 15, 2002.
PROCEDURES FOR TENDERING OLD NOTES
Only a holder of old notes may tender old notes in the exchange offer. To
tender in the exchange offer, a holder must:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal;
- have the signatures on the letter of transmittal guaranteed if required
by the letter of transmittal or transmit an agent's message in connection
with a book-entry transfer; and
- mail or otherwise deliver the letter of transmittal or the facsimile,
together with the old notes and any other required documents, to the
exchange agent prior to 5:00 p.m., New York City time, on the expiration
date.
To tender old notes effectively, the holder must complete a letter of
transmittal or an agent's message and other required documents and the exchange
agent must receive all the documents prior to 5:00 p.m., New York City time, on
the expiration date. Delivery of the old notes shall be made by book-entry
transfer in accordance with the procedures described below. Confirmation of the
book-entry transfer must be received by the exchange agent prior to the
expiration date.
The term "agent's message" means a message, transmitted by a book-entry
transfer facility to, and received by, the exchange agent forming a part of a
confirmation of a book-entry, which states that the book-entry transfer facility
has received an express acknowledgment from the participant in the book-entry
transfer facility tendering the outstanding securities that the participant has
received and agrees: (1) to participate in ATOP; (2) to be bound by the terms of
the letter of transmittal; and (3) that we may enforce the agreement against the
participant.
By executing the letter of transmittal, each holder will make to us the
representations set forth above in the fifth paragraph under the heading
"-- Purpose of the Exchange Offer."
The tender by a holder and the acceptance of the tender by us will
constitute agreement between the holder and us in accordance with the terms and
subject to the conditions set forth in this prospectus and in the letter of
transmittal or agent's message.
THE METHOD OF DELIVERY OF THE OLD NOTES AND THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS THAT
THE ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR THEM.
33
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the letter of transmittal.
An institution that is a member firm of the Medallion system must guarantee
signatures on a letter of transmittal or a notice of withdrawal unless the old
notes are tendered:
(1) by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery Instructions" on
the letter of transmittal; or
(2) for the account of a member firm of the Medallion system.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes listed in that letter of transmittal, the old
notes must be endorsed or accompanied by a properly completed bond power, signed
by the registered holder as the registered holder's name appears on the old
notes. An institution that is a member firm of the Medallion System must
guarantee the signature.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, the
person signing should so indicate when signing, and evidence satisfactory to us
of its authority to so act must be submitted with the letter of transmittal.
We understand that the exchange agent will make a request promptly after
the date of this prospectus to establish accounts with respect to the
outstanding securities at DTC for the purpose of facilitating the exchange
offer, and subject to the establishment of this account, any financial
institution that is a participant in DTC's system may make book-entry delivery
of outstanding securities by causing DTC to transfer the old notes into the
exchange agent's account with respect to the old notes in accordance with DTC's
procedures for the transfer. Although delivery of the old notes may be effected
through book-entry transfer into the exchange agent's account at DTC, unless an
agent's message is received by the exchange agent in compliance with ATOP, an
appropriate letter of transmittal properly completed and duly executed with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the exchange agent at its address
set forth below on or prior to the expiration date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under the procedures. Delivery of documents to DTC does not constitute
delivery to the exchange agent.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance of tendered old notes and withdrawal of tendered old notes
will be determined by us in our sole discretion, which determination will be
final and binding. We reserve the absolute right to reject any and all old notes
not properly tendered or any old notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the right in our sole
discretion to waive any defects, irregularities or conditions of tender as to
particular old notes. Our interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of transmittal, will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of old notes must be cured within the time we
determine. Although we intend to notify holders of defects or irregularities
with respect to tenders of old notes, neither we, the exchange agent nor any
other person will incur any liability for failure to give the notification.
Tenders of old notes will not be deemed to have been made until the defects or
irregularities have been cured or waived. Any old notes received by the exchange
agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
34
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding securities and:
(1) whose old notes are not immediately available;
(2) who cannot deliver their old notes, the letter of transmittal or
any other required documents to the exchange agent; or
(3) who cannot complete the procedures for book-entry transfer, prior
to the expiration date, may effect a tender if:
(1) they tender through an institution that is a member firm of the
Medallion System;
(2) prior to the expiration date, the exchange agent receives from
an institution that is a member firm of the Medallion System a properly
completed and duly executed notice of guaranteed delivery by facsimile
transmission, mail or hand delivery setting forth the name and address
of the holder, the certificate number(s) of the old notes and the
principal amount of old notes tendered, stating that the tender is being
made and guaranteeing that, within three New York Stock Exchange trading
days after the expiration date, the letter of transmittal or facsimile
thereof together with the certificate(s) representing the old notes or a
confirmation of book-entry transfer of the old notes into the exchange
agent's account at DTC, and any other documents required by the letter
of transmittal will be deposited by the member firm of the Medallion
System with the exchange agent; and
(3) the exchange agent receives
(A) such properly completed and executed letter of transmittal
or facsimile of the letter of transmittal,
(B) the certificate(s) representing all tendered old notes in
proper form for transfer or a confirmation of book-entry transfer of
the old notes into the exchange agent's account at DTC, and
(C) all other documents required by the letter of transmittal
upon three New York Stock Exchange trading days after the expiration
date.
Upon request to the exchange agent, we will send a notice of guaranteed
delivery to holders who wish to tender their old notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, holders may withdraw
tenders of old notes at any time prior to 5:00 p.m., New York City time, on the
expiration date. To withdraw a tender of old notes in the exchange offer, the
exchange agent must receive a telegram, telex, letter or facsimile transmission
notice of withdrawal at its address set forth in this prospectus prior to 5:00
p.m., New York City time, on the expiration date of the exchange offer. Any
notice of withdrawal must:
(1) specify the name of the person having deposited the old notes to
be withdrawn;
(2) identify the old notes to be withdrawn, including the certificate
number(s) and principal amount of the old notes, or, in the case of old
notes transferred by book-entry transfer, the name and number of the
account at DTC to be credited;
(3) be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the old notes were
tendered, including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee with respect to the
old notes register the transfer of the old notes into the name of the
person withdrawing the tender; and
(4) specify the name in which any old notes are to be registered, if
different from that of the person depositing the old notes to be withdrawn.
35
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of such notices. Our determination will be final and
binding on all parties. We will not deem old notes so withdrawn to have been
validly tendered for purposes of the exchange offer. We will not issue exchange
notes for withdrawn old notes unless you validly retender the withdrawn old
notes. We will return any old notes which have been tendered but which are not
accepted for exchange to the holder of the old notes at our cost as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. You may retender properly withdrawn old notes by following one of the
procedures described above under "-- Procedures for Tendering Old Notes" at any
time prior to the expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or issue exchange notes for, any old notes, and
may terminate or amend the exchange offer as provided in this prospectus before
the acceptance of the old notes, if:
(1) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the exchange offer
which, in our sole judgment, might materially impair our ability to proceed
with the exchange offer or any development has occurred in any existing
action or proceeding which may be harmful to us or any of our subsidiaries;
or
(2) the exchange offer violates any applicable law or any applicable
interpretation by the staff of the SEC; or
(3) any governmental approval has not been obtained, which we believe,
in our sole discretion, is necessary for the consummation of the exchange
offer as outlined in this prospectus.
If we determine in our sole discretion that any of the conditions are not
satisfied, we may
(1) refuse to accept any old notes and return all tendered old notes
to the tendering holders;
(2) extend the exchange offer and retain all old notes tendered prior
to the expiration of the exchange offer, subject, however, to the rights of
holders to withdraw their old notes (see "-- Withdrawal of Tenders"); or
(3) waive the unsatisfied conditions with respect to the exchange
offer and accept all properly tendered old notes that have not been
withdrawn.
EXCHANGE AGENT
Deutsche Bank Trust Company Americas has been appointed as the exchange
agent for the exchange offer. You should direct all
- executed letters of transmittal,
- questions,
- requests for assistance,
- requests for additional copies of this prospectus or of the letter of
transmittal and
- requests for Notices of Guaranteed Delivery to the exchange agent
addressed as follows:
36
DEUTSCHE BANK TRUST COMPANY AMERICAS
<Table>
<Caption>
By Overnight Courier or
By Mail: By Hand: Registered/Certified Mail:
-------- -------- --------------------------
DB Services Tennessee, Inc. Deutsche Bank Trust Company Americas DB Services Tennessee, Inc.
Reorganization Unit c/o The Depository Trust Corporate Trust & Agency Services
P.O. Box 292737 Clearing Corporation Reorganization Unit
Nashville, TN 37229-2737 55 Water Street, 1st Floor 648 Grassmere Park Road
Jeanette Park Entrance Nashville, TN 37211
New York, NY 10041
By Facsimile:
-------------
(615) 835-3701
For Confirmation Telephone:
---------------------------
(615) 835-3572
</Table>
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person by our and our affiliates' officers
and regular employees.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses incurred in connection with these services.
We will pay the cash expenses to be incurred in connection with the
exchange offer. Such expenses include fees and expenses of the exchange agent
and trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the old
notes, which is the accreted value, as reflected in our accounting records on
the date of exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes as a result of the exchange offer. The expenses of the
exchange offer will be deferred and charged to expense over the term of the
exchange notes.
TRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection with the exchange. However, holders who
instruct us to register exchange notes in the name of, or request that old notes
not tendered or not accepted in the exchange offer be returned to, a person
other than a registered tendering holder will be responsible for the payment of
any applicable transfer tax on that transfer.
CONSEQUENCES OF FAILURE TO EXCHANGE
The old notes that are not exchanged for exchange notes pursuant to the
exchange offer will remain restricted securities. Accordingly, the old notes may
be resold only:
(1) to us upon redemption thereof or otherwise;
(2) so long as the outstanding securities are eligible for resale
pursuant to Rule 144A, to a person inside the United States who is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act, which
other exemption is based upon an opinion of counsel reasonably acceptable
to us;
37
(3) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act; or
(4) pursuant to an effective registration statement under the
Securities Act,
in each case in accordance with any applicable securities laws of any state of
the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of exchange notes, based on interpretations by the
staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives exchange notes, whether or
not the person is the holder (other than a person that is our affiliate within
the meaning of Rule 405 under the Securities Act) in exchange for old notes in
the ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the exchange notes, will be allowed to
resell the exchange notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the exchange notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any holder acquires exchange notes in the exchange offer for the
purpose of distributing or participating in a distribution of the exchange
notes, the holder cannot rely on the position of the staff of the SEC expressed
in the no-action letters or any similar interpretive letters, and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction, unless an exemption from registration
is otherwise available. Further, each broker-dealer that receives exchange notes
for its own account in exchange for old notes, where the old notes were acquired
by the broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes.
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DESCRIPTION OF THE EXCHANGE NOTES
The old notes were, and the exchange notes will be, issued under an
Indenture dated as of May 7, 2002, among Coors Brewing Company, Adolph Coors
Company, certain subsidiaries of Coors Brewing Company, and Deutsche Bank Trust
Company Americas, as trustee, as supplemented by supplemental indenture No. 1,
dated May 7, 2002 (which is referred to collectively as the "Indenture"). The
following summary of selected provisions of the Indenture is not complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture. Copies of the Indenture can be obtained by following the
instructions under the heading "Where You Can Find More Information" and
"Documents Incorporated by Reference." Capitalized terms that are used in the
following summary but not defined herein have the meanings given to those terms
in the Indenture. In this summary, the term "Issuer" refers only to Coors
Brewing Company and not to any of its subsidiaries and the term "Parent" refers
only to Adolph Coors Company and not to any of its subsidiaries.
GENERAL
The Indenture provides that we may issue debt securities ("debt
securities") under the Indenture from time to time in one or more series and
permits us to establish the terms of each series of debt securities at the time
of issuance. The Indenture does not limit the amount of debt securities that we
may issue under the Indenture and provides that debt securities may be
denominated and payable in foreign currencies or units based on or relating to
foreign currencies.
The old notes and the exchange notes will constitute a series of debt
securities under the Indenture, initially limited to $850,000,000 in aggregate
principal amount. Under the Indenture we may, without the consent of the holders
of the notes, "reopen" the series and issue additional notes and exchange notes
from time to time in the future. The old notes, the exchange notes and any
additional notes or exchange notes we may issue in the future upon such a
reopening will constitute a single series of debt securities under the
Indenture. This means that, in circumstances where the Indenture provides for
the holders of notes to vote or take any other action as a single class, the
notes and the exchange notes, as well as any additional notes or exchange notes
that we may issue by reopening the series, will vote or take that action as a
single class.
The exchange notes will mature on May 15, 2012. Interest on the exchange
notes will accrue from the date of issue at the rate of 6 3/8% per annum,
payable semiannually in arrears on May 15 and November 15 of each year,
commencing November 15, 2002, to the persons in whose names the exchange notes
are registered at the close of business on May 1 or November 1, as the case may
be, next preceding those interest payment dates. Interest on the exchange notes
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. The exchange notes will be issued in fully registered form without
coupons in denominations of $1,000 and integral multiples of $1,000. The
exchange notes will be denominated and payable in U.S. dollars.
The exchange notes, except for exchange notes issued to institutional
accredited investors that are not qualified institutional buyers, as those terms
are defined below, will be issued in book-entry form and will be evidenced by
one or more registered global certificates without coupons, which we sometimes
refer to as "global notes," registered in the name of Cede & Co., as nominee for
The Depository Trust Company. Holders of interests in global notes will not be
entitled to receive exchange notes in definitive certificated form registered in
their names except in connection with a transfer to an institutional accredited
investor or in the limited circumstances described under "Global Notes; Book
Entry System".
Exchange notes in certificated form may be presented for payment and
surrendered for registration of transfer and exchange at our agency maintained
for that purpose in the Borough of Manhattan, The City of New York, currently
the office of the Trustee located at 55 Water Street, 2nd Floor, Room 234, New
York, New York 10041. Holders will not be required to pay any charge for the
registration of transfer or exchange of exchange notes, other than any tax or
other governmental charge payable in connection with the transfer or exchange,
but subject to the limitations provided in the Indenture.
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Payment of interest on global notes will be made to DTC or its nominee.
Payment of interest on exchange notes in definitive certificated form will be
made against presentation of those exchange notes at the agency referred to in
the preceding paragraph or, at our option, by mailing checks payable to the
persons entitled to that interest to their addresses as they appear in the note
register.
The exchange notes will not be entitled to the benefit of any sinking fund
and will not be subject to repurchase by us at the option of the holders prior
to maturity. The Indenture does not contain any provisions that are intended to
protect holders of exchange notes in the event of a highly leveraged or similar
transaction affecting us. Except to the limited extent described below under
"Guarantees", the Indenture does not limit the incurrence of debt by the Parent,
the Issuer or any of their subsidiaries.
GUARANTEES
The exchange notes will be jointly and severally guaranteed on a senior
unsecured basis by the Parent and each of the Subsidiary Guarantors. Each
subsidiary guaranty will be limited as necessary to prevent such subsidiary
guaranty from being rendered voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
Each Subsidiary Guarantor that makes a payment under its subsidiary
guaranty will be entitled to a contribution from each other Subsidiary Guarantor
in an amount equal to such other Subsidiary Guarantor's pro rata portion of such
payment based on the respective net assets of all the Subsidiary Guarantors at
the time of such payment determined in accordance with U.S. generally accepted
accounting principles. If a subsidiary guaranty were to be rendered voidable, it
could be subordinated by a court to all other indebtedness (including guaranties
and other contingent liabilities) of the applicable Subsidiary Guarantor and,
depending on the amount of such indebtedness, a Subsidiary Guarantor's liability
on its subsidiary guaranty could be reduced to zero.
In addition, the Parent will cause each of its Subsidiaries that guarantees
any Senior Debt of the Parent or the Issuer after the original issue date of the
exchange notes to execute and deliver to the Trustee a guaranty pursuant to
which such Subsidiary will guarantee payment of the exchange notes on the same
terms and conditions as the original guarantees from the initial Subsidiary
Guarantors.
A Subsidiary Guarantor will be released and relieved from all its
obligations under its subsidiary guarantee in the following circumstances, each
of which is permitted by the Indenture:
(1) upon the sale or other disposition (including by way of
consolidation or merger), in one transaction or a series of related
transactions, of a majority of the total voting power of the capital stock
or other interests of such Subsidiary Guarantor (other than to the Parent,
the Issuer or any of their respective affiliates);
(2) upon the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor (other than to the Parent, the Issuer
or any of their respective affiliates); or
(3) if at any time when no default has occurred and is continuing
with respect to the exchange notes, such Subsidiary Guarantor no longer
guarantees any Debt of the Parent, the Issuer or any other Subsidiary
Guarantor.
RANKING
The indebtedness evidenced by the exchange notes and the related guaranties
will be unsecured and will rank pari passu in right of payment to the other
senior debt of the Parent, the Issuer, or the applicable Subsidiary Guarantor,
as the case may be (including all debt under our senior unsecured credit
agreement). Secured debt and other secured obligations of the Parent, the Issuer
and the Subsidiary Guarantors will be effectively senior to the exchange notes
and the related guaranties to the extent of the value of the assets securing
such debt or other obligations.
A substantial portion of our operations are conducted through our
subsidiaries. Some of our subsidiaries are not guaranteeing the exchange notes.
Substantially all of these non-guarantor subsidiaries consist of Coors
40
Brewers Limited and its subsidiaries, which collectively hold all the assets and
liabilities of Coors Brewers. Claims of creditors of such non-guarantor
subsidiaries, including trade creditors and creditors holding indebtedness or
guarantees issued by such non-guarantor subsidiaries, and claims of preferred
stockholders of such non-guarantor subsidiaries generally will have priority
with respect to the assets and earnings of such non-guarantor subsidiaries over
the claims of our creditors, including holders of the exchange notes.
Accordingly, the exchange notes will be effectively subordinated to creditors
(including trade creditors) and preferred stockholders, if any, of such
non-guarantor subsidiaries. For information regarding the financial condition
(including liabilities) and results of operations of our guarantor and
non-guarantor subsidiaries, you should see note 11 to our condensed consolidated
financial statements for the thirteen weeks ended March 31, 2002, included
elsewhere in this prospectus.
OPTIONAL REDEMPTION
The Issuer may redeem all or part of the exchange notes at any time at its
option at a redemption price equal to the greater of (1) 100% of the principal
amount of the exchange notes being redeemed plus accrued and unpaid interest to
the redemption date and (2) the Make-Whole Amount for the exchange notes being
redeemed.
As used in this offering circular:
"Make Whole Amount" means the sum, as determined by a Quotation Agent, of
the present values of the principal amount of the exchange notes to be redeemed,
together with scheduled payments of interest (exclusive of interest to the
redemption date) from the redemption date to the maturity date of the exchange
notes being redeemed, in each case discounted to the redemption date on a
semi-annual basis, assuming a 360-day year consisting of twelve 30-day months,
at the Adjusted Treasury Rate, plus accrued and unpaid interest on the principal
amount of the exchange notes being redeemed to the redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date, (i)
the yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication which is published weekly by
the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the remaining term of the notes of the series being
redeemed, yields for the two published maturities most closely corresponding to
the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate
shall be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does
not contain such yields, the rate per year equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such redemption
date, in each case calculated on the third business day preceding the redemption
date, plus 0.20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term from the redemption date to the maturity date of the exchange notes being
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the exchange notes.
"Comparable Treasury Price" means, with respect to any redemption date, if
clause (ii) of the Adjusted Treasury Rate is applicable, the average of three,
or such lesser number as is obtained by the trustee, Reference Treasury Dealer
Quotations for such redemption date.
"Quotation Agent" means the Reference Treasury Dealer selected by the
trustee after consultation with the Issuer.
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"Reference Treasury Dealer" means Morgan Stanley & Co. Incorporated and
J.P. Morgan Securities Inc. and its successors and assigns, and two other
nationally recognized investment banking firms selected by the Issuer that are
primary U.S. Government securities dealers.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
CERTAIN RESTRICTIONS
The following restrictions will apply to the series of notes to which the
exchange notes belong:
RESTRICTIONS ON SECURED DEBT
If the Parent, the Issuer or any Restricted Subsidiary shall incur or
guarantee any Debt secured by a mortgage, pledge or lien ("Mortgage") on any
Principal Property of the Parent, the Issuer or any Subsidiary of the Parent, or
on any capital stock of any Restricted Subsidiary that owns, directly or
indirectly, a Principal Property, the Parent or the Issuer will, or will cause
such Restricted Subsidiary to, secure the series of notes to which the exchange
notes belong equally and ratably with (or, prior to) such secured Debt, unless
the aggregate amount of all such secured Debt, when taken together with all
Attributable Debt with respect to sale and leaseback transactions involving
Principal Properties of the Parent, the Issuer or any Restricted Subsidiary
(with the exception of such transactions which are excluded as described in the
second paragraph in "Restrictions on Sales and Leasebacks" below), would not
exceed 15% of Consolidated Net Tangible Assets.
The above restriction will not apply to Debt secured by
(1) purchase money Mortgages,
(2) Mortgages existing on any property prior to the acquisition
thereof by the Parent, the Issuer or a Restricted Subsidiary or existing on
any property of any corporation that becomes a Subsidiary after the date
hereof prior to the time such corporation becomes a Subsidiary or securing
indebtedness that is used to pay the cost of acquisition of such property
or to reimburse the Parent, the Issuer or a Restricted Subsidiary for that
cost; provided, however, that such Mortgage shall not apply to any other
property of the Parent, the Issuer or a Restricted Subsidiary other than
improvements and accessions to the property to which it originally applies,
(3) Mortgages to secure the cost of development or construction of
such property, or improvements of such property; provided, however, that
(i) such Mortgages are released or satisfied in due course within a
reasonable period after the completion of such development, construction or
improvement and (ii) such Mortgages shall not apply to any other property
of the Parent, the Issuer or any Restricted Subsidiary,
(4) Mortgages in favor of a governmental entity or in favor of the
holders of securities issued by any such entity, pursuant to any contract
or statute (including Mortgages to secure debt of the pollution control or
industrial revenue bond type) or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the cost
of construction of the property subject to such mortgages,
(5) Mortgages securing indebtedness owing to the Parent, the Issuer or
a Subsidiary Guarantor,
(6) Mortgages existing on the date the notes are originally issued,
(7) Mortgages required in connection with state or local governmental
programs which provide financial or tax benefits, as long as substantially
all of the obligations secured are in lieu of or reduce an obligation that
would have been secured by a lien permitted under the Indenture,
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(8) extensions, renewals or replacements of the Mortgages referred to
in this paragraph (other than Mortgages described is clauses (3) and (5)
above) so long as the principal amount of the secured Debt is not increased
and the extension, renewal or replacement in limited to all or part of the
same property secured by the Mortgage so extended, renewal or replaced, or
(9) Mortgages in connection with sale-leaseback transactions described
in the second paragraph in "Restrictions on Sales and Leasebacks" below.
RESTRICTIONS ON SALES AND LEASEBACKS
None of the Parent, the Issuer and any Restricted Subsidiary may enter into
any sale and leaseback transaction involving any Principal Property, unless the
aggregate amount of all Attributable Debt with respect to such transactions,
when taken together with all secured Debt permitted under the first paragraph in
"Restrictions on Secured Debt" (and not excluded in the second paragraph) would
not exceed 15% of Consolidated Net Tangible Assets.
The above restriction will not apply to, and there will be excluded from
Attributable Debt in any computation under this restriction, any sale and
leaseback transaction if
(1) the transaction is between or among the Parent, the Issuer and the
Subsidiary Guarantors,
(2) the lease is for a period, including renewal rights, of not in
excess of three years,
(3) the transaction is with a local or state authority that provides
financial or tax benefits,
(4) the net proceeds of the sale are at least equal to the fair market
value of the property and within 180 days of the transfer the Parent, the
Issuer or the Subsidiary Guarantors repay Funded Debt owed by them or make
expenditures for the expansion, construction or acquisition of a Principal
Property at least equal to the net proceeds of the sale, or
(5) such sale and leaseback transaction is entered into within 180
days after the acquisition or construction, in whole but not in part, of
such Principal Property.
CERTAIN DEFINITIONS
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable and at any date as of which the amount thereof is
to be determined, the total net amount of rent required to be paid by such
Person under such lease during the remaining primary term thereof, discounted
from the respective due dates thereof to such date at the actual percentage rate
inherent in such arrangements as determined in good faith by the Parent. The net
amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of the amount payable by the lessee with respect
to such period after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments and similar charges. In
the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but no
rent shall be considered as required to be paid under such lease subsequent to
the first date upon which it may be terminated.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Consolidated Net Tangible Assets" means the consolidated total assets of
the Parent, including its consolidated subsidiaries, after deducting current
liabilities (except for those which are Funded Debt or the current maturities of
Funded Debt) and goodwill, trade names, trademarks, patents, unamortized debt
discount and expense, organization and developmental expenses and other like
segregated intangibles. Deferred income taxes, deferred investment tax credit or
other similar items will not be considered as a liability or as a deduction from
or adjustment to total assets.
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"Debt" means with respect to any Person:
(1) indebtedness for money borrowed of such Person, whether
outstanding on the date of the Indenture or thereafter incurred; and
(2) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable.
"Funded Debt" of any Person means (a) all Debt of such Person having a
maturity of more than 12 months from the date as of which the determination is
made or having a maturity of 12 months or less but by its terms being renewable
or extendable beyond 12 months from such date at the option of the borrower and
(b) rental obligations of such Person payable more than 12 months from such date
under leases which are capitalized in accordance with generally accepted
accounting principles (such rental obligations to be included as Funded Debt at
the amount so capitalized).
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Principal Property" means any brewery, manufacturing, processing or
packaging plant or warehouse owned at the date of the Indenture or hereafter
acquired by, the Parent, the Issuer or any Restricted Subsidiary, which is
located within the United States of America other than any property which in the
opinion of the Board of Directors is not of material importance to the total
business conducted by the Parent, the Issuer and the Restricted Subsidiaries as
an entirety.
"Restricted Subsidiary" means a Subsidiary of the Parent or the Issuer (a)
substantially all the property of which is located, or substantially all the
business of which is carried on, within the United States of America and (b)
which owns a Principal Property.
"Significant Subsidiary" means any Subsidiary of the Parent that would be a
"Significant Subsidiary" within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.
"Subsidiary" means, with respect to any Person, any corporation more than
50% of the outstanding Voting Stock of which at the time of determination is
owned, directly or indirectly, by such Person and/or one or more other
Subsidiaries of such Person.
"Subsidiary Guarantors" means (a) Coors Distributing Company, Coors
International Market Development, L.L.L.P., Coors Caribe, Inc. and Coors
Worldwide, Inc., and (b) each of the Parent's future Subsidiaries that guarantee
the notes as required by the provisions described under "Guarantees" above.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
MERGER AND CONSOLIDATION
Unless otherwise permitted pursuant to the last paragraph under the caption
"Guarantees", none of the Parent, the Issuer and any Subsidiary Guarantor will
merge or sell, convey, transfer or lease all or substantially all of its assets
unless the successor Person is the Parent, the Issuer or a Subsidiary Guarantor
or another Person organized under the laws of the United States of America or
any state thereof that assumes the obligations of the Parent, the Issuer or such
Subsidiary Guarantor, as the case may be, with respect to the series of notes to
which the exchange notes belong or the related guarantee, as applicable, and
under the Indenture and, after giving effect to such transaction, no default
under the Indenture will have occurred and be continuing.
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EVENTS OF DEFAULT
The Indenture defines "Events of Default" with respect to the series of
notes to which the exchange notes belong as being one of the following events:
(1) default in the payment of any installment of interest on the
series of notes to which the exchange notes belong for 30 days after
becoming due;
(2) default in the payment of principal (or premium, if any) on the
series of notes to which the exchange notes belong when due;
(3) default in the performance of any other covenant with respect to
the series of notes to which the exchange notes belong or in the Indenture
(other than a covenant included in the Indenture solely for the benefit of
any other series of debt securities) continued for 90 days after notice as
provided below; and
(4) certain events of bankruptcy, insolvency or reorganization with
respect to the Parent or the Issuer.
The Indenture contains no Events of Default or other provisions which
specifically afford holders of the series of notes to which the exchange notes
belong protection in the event of a highly leveraged transaction, ratings
downgrade or similar occurrence.
If an Event of Default shall occur and be continuing with respect to the
series of notes to which the exchange notes belong, either the Trustee or the
holders of at least 25% in principal amount of the series of notes to which the
exchange notes belong then outstanding may declare the principal of the series
of notes to which the exchange notes belong and the accrued interest thereon, if
any, to be due and payable. The Indenture provides that the Trustee shall,
within 90 days after the occurrence of a default known to a Responsible Officer
of the Trustee, give the holders of the series of notes to which the exchange
notes belong notice of all uncured defaults known to it (the term "default" to
mean the events specified above without grace periods); provided that, except in
the case of default in the payment of principal of or interest on any series of
notes to which the exchange notes belong, the Trustee shall be protected in
withholding such notice if it in good faith determines the withholding of such
notice is in the interest of the holders of the series of notes to which the
exchange notes belong. At any time after such declaration of acceleration has
been made, but before a judgment or decree for payment of the money due has been
obtained by the Trustee, the holders of a majority in principal amount of the
series of notes to which the exchange notes belong then outstanding, by written
notice to the Parent, the Issuer and the Trustee, may, in certain circumstances,
rescind and annul such declaration.
The Parent and the Issuer will furnish to the Trustee annually a statement
by certain of their officers of the Issuer to the effect that to the best of
their knowledge no default has occurred under the Indenture or, if there has
been a default, specifying each such default.
The holders of a majority in principal amount of the outstanding series of
notes to which the exchange notes belong will have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the series of notes to which the
exchange notes belong, and to waive certain defaults with respect thereto. The
Indenture will provide that in case an Event of Default shall occur and be
continuing, the Trustee shall exercise such of its rights and powers under the
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request of
any of the holders of the series of notes to which the exchange notes belong
unless they first shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request.
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MODIFICATION OF THE INDENTURE AND WAIVER
The Indenture provides that the Parent, the Issuer, the Subsidiary
Guarantors and the Trustee may enter into supplemental indentures without the
consent of the holders of the series of notes to which the exchange notes belong
to:
(1) evidence the assumption by a successor corporation of the
obligations of the Parent, the Issuer or a Subsidiary Guarantor,
(2) add covenants for the protection of the holders of the series of
notes to which the exchange notes belong,
(3) add any additional Events of Default,
(4) cure any ambiguity or correct any inconsistency in such Indenture,
(5) establish the form or terms of the other series of debt
securities,
(6) secure the series of notes to which the exchange notes belong
then, and
(7) evidence the acceptance of appointment by a successor Trustee.
The Indenture also contains provisions permitting the Parent, the Issuer
and the Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding debt securities of all series
affected, voting as one class, to add any provisions, to or change in any manner
or eliminate any of the provisions of, the Indenture or modify in any manner the
rights of the holders of the debt securities of each series so affected.
However, the Parent and the Issuer may not, without the consent of the holder of
each outstanding debt security so affected:
- extend the final maturity of any debt security,
- reduce the principal amount of any debt security,
- reduce the rate or extend the time of payment of interest on any debt
security,
- reduce any amount payable on redemption of any debt security,
- impair the right of any holder of debt securities to institute suit for
the payment of any debt security, or
- reduce the percentage in principal amount of debt securities of any
series the consent of the holders of which is required for any such
modification.
The holders of at least a majority in principal amount of the series of
notes to which the exchange notes belong then outstanding may, on behalf of the
holders of all the notes in such series, waive, compliance by the Parent, the
Issuer and the Subsidiary guarantors with certain restrictive provisions of the
Indenture. The holders of not less than a majority in principal amount of the
series of notes to which the exchange notes belong then outstanding may, on
behalf of all holders of the notes in such series, waive any past default under
the Indenture applicable to them, except a default (a) in the payment of
principal of (and premium, if any) or any interest on any notes in such series
and (b) in respect of a covenant, or provision of the Indenture which cannot be
modified or amended without the consent of the holder of each note outstanding
affected.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Parent, the Issuer and the Subsidiary
Guarantors may specify that, with respect to the series of notes to which the
exchange notes belong, the Parent, the Issuer and the Subsidiary Guarantors will
be discharged from any and all obligations in respect of the series of notes to
which the exchange notes belong and the related guarantors notes (except for
certain obligations to register the transfer or exchange of the notes, to
replace stolen, lost or mutilated notes, to maintain paying agencies and hold
monies for payment in trust and, if so specified with respect to the notes, to
pay the principal of (and premium, if any) and interest, if any, on the notes)
upon the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations which through the payment of interest and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
any installment of principal (and premium, if any) and interest, if any, on and
any mandatory sinking fund payments in respect of the series of notes to which
the exchange notes belong on the stated maturity of such payments in accordance
with the terms of the Indenture and the series of notes to which the exchange
notes belong. If so specified with respect to the notes, such a
46
trust may only be established if establishment of the trust would not cause the
series of notes to which the exchange notes belong if listed on any nationally
recognized securities exchange to be de-listed as a result thereof. Also, such
establishment of such a trust will be conditioned on the delivery by the Parent,
the Issuer or a Subsidiary Guarantor to the Trustee of an Opinion of Counsel
(who may be counsel to the Issuer) to the effect that, based upon applicable
U.S. Federal income tax law or a ruling published by the United States Internal
Revenue Service, such a defeasance and discharge will not be deemed, or result
in, a taxable event with respect to holders of such notes.
GLOBAL NOTES; BOOK-ENTRY SYSTEM
THE GLOBAL NOTES
The old notes are, and the exchange notes will be, issued in the form of
one or more global certificates, known as "global notes." The global notes will
be deposited on the date of the acceptance for exchange of the old notes and the
issuance of the exchange notes with, or behalf of, DTC and registered in the
name of Cede & Co., as DTC's nominee.
Exchange notes that are issued as described below under "Certificated
Notes" will be issued in the form of registered definitive certificates, known
as "certificated notes." Upon the transfer of certificated notes, such
certificated notes may, unless the global notes have previously been exchanged
for certificated notes, be exchanged for an interest in the global notes
representing the principal amount of exchange notes being transferred.
Persons holding interests in the global notes may hold their interests
directly through DTC, or indirectly through organizations which are participants
in DTC.
CERTAIN BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream set forth below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
we, the Trustee, nor any paying agent or registrar takes any responsibility for
these operations or procedures, and investors are urged to contact the relevant
system or its participants directly to discuss these matters.
DTC has advised us that it is:
- a limited-purpose trust company organized under the laws of the State of
New York;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, as amended; and
- a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934.
DTC was created to hold securities for its participants (collectively, the
"participants") and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's participants include securities brokers and
dealers (including the initial purchasers), banks and trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "indirect participants") that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. Investors who are not participants may beneficially own securities
held by or on behalf of DTC only through participants or indirect participants.
Ownership of beneficial interests in the global notes will be shown on, and
the transfer of ownership interests in the global notes will be effected only
through, records maintained by DTC, with respect to the interests of
participants, and the records of participants and the indirect participants,
with respect to the interests of persons other than participants.
47
The laws of some jurisdictions may require that some purchasers of
securities take physical delivery of those securities in definitive form.
Accordingly, the ability to transfer beneficial interests in the exchange notes
represented by a global note to those persons may be limited. In addition,
because DTC can act only on behalf of its participants, who in turn act on
behalf of persons who hold interests through participants, the ability of a
person holding a beneficial interest in a global note to pledge or transfer that
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of that interest, may be affected by the lack
of a physical security in respect of that interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or that nominee, as the case may be, will be considered the sole legal owner or
holder of the exchange notes represented by that global note for all purposes of
the exchange notes and the Indenture. Except as provided below, owners of
beneficial interests in a global note will not be entitled to have the notes
represented by that global note registered in their names, will not receive or
be entitled to receive physical delivery of certificated notes, and will not be
considered the owners or holders of the exchange notes represented by that
beneficial interest under the Indenture for any purpose, including with respect
to the giving of any direction, instruction or approval to the Trustee.
Accordingly, each holder owning a beneficial interest in a global note must rely
on the procedures of DTC and, if that holder is not a participant or an indirect
participant, on the procedures of the participant through which that holder owns
its interest, to exercise any rights of a holder of exchange notes under the
Indenture or that global note. We understand that under existing industry
practice, in the event that we request any action of holders of exchange notes,
or a holder that is an owner of a beneficial interest in a global note desires
to take any action that DTC, as the holder of that global note, is entitled to
take, DTC would authorize the participants to take that action and the
participants would authorize holders owning through those participants to take
that action or would otherwise act upon the instruction of those holders.
Neither we nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of exchange notes
by DTC, or for maintaining, supervising or reviewing any records of DTC relating
to the exchange notes.
Payments with respect to the principal of and premium, if any, additional
interest, if any, and interest on a global note will be payable by the Trustee
to or at the direction of DTC or its nominee in its capacity as the registered
holder of the global note under the Indenture. Under the terms of the Indenture,
we and the Trustee may treat the persons in whose names the notes, including the
global notes, are registered as the owners thereof for the purpose of receiving
payment thereon and for any and all other purposes whatsoever. Accordingly,
neither we nor the Trustee has or will have any responsibility or liability for
the payment off those amounts to owners of beneficial interests in a global
note. Payments by the participants and the indirect participants to the owners
of beneficial interests in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the participants and indirect participants and not of DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes, cross-market transfers between the participants in DTC, on the one hand,
and Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, those
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in that system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of that system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant global notes in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly to the
depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will
48
be reported to the relevant Euroclear or Clearstream participant, during the
securities settlement processing day (which must be a business day for Euroclear
or Clearstream) immediately following the settlement date of DTC. Cash received
in Euroclear or Clearstream as a result of sales of interest in a global
security by or through a Euroclear or Clearstream participant to a participant
in DTC will be received with value on the settlement date of DTC but will be
available in the relevant Euroclear or Clearstream cash account only as of the
business day for Euroclear or Clearstream following DTC's settlement date.
Although we understand that DTC, Euroclear or Clearstream have agreed to
the foregoing procedures to facilitate transfers of interests in the global
notes among participants in DTC, Euroclear or Clearstream, they are under no
obligation to perform or to continue to perform those procedures, and those
procedures may be discontinued at any time. Neither we nor the Trustee will have
any responsibility for the performance by DTC, Euroclear or Clearstream or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
We obtained the information in this section and elsewhere in this offering
memorandum concerning DTC, Euroclear or Clearstream and their respective
book-entry systems from sources that we believe are reliable, but we take no
responsibility for the accuracy of any of this information.
CERTIFICATED NOTES
As described above, beneficial interests in the global notes generally may
not be exchanged for certificated notes. However, the Indenture provides that
if:
- the depositary for the global notes notifies us that it is unwilling or
unable to continue as depositary for the global notes or the depositary
for the global notes is no longer eligible or in good standing under the
Securities Exchange Act or other applicable statute or regulation and we
do not appoint a successor depositary within 90 day after we receive that
notice or become aware of that ineligibility,
- we in our sole discretion determine that the exchange notes will no
longer be represented by global notes, or
- an Event of Default with respect to the series of notes to which the
exchange rates belong has occurred and is continuing,
we will execute and the Trustee will authenticate and deliver certificated notes
in exchange for interests in the global notes. We anticipate that those
certificated notes will be registered in such name or names as DTC instructs the
Trustee and that those instructions will be based upon directions received by
DTC from its participants with respect to ownership of beneficial interest in
the global notes. Neither we nor the Trustee shall be liable for any delay by
DTC or any participant or indirect participant in identifying the beneficial
owners of the related exchange notes and each of them may conclusively rely on,
and will be protected in relying on, instructions from DTC for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the certificated exchange notes to be issued.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the exchange notes will be made by the initial purchasers in
immediately available funds. So long as DTC continues to make its settlement
system available to us, all payments of principal of and premium, if any, and
interest on the global notes will be made by us in immediately available funds.
APPLICABLE LAW
The exchange notes and the Indenture will be governed by and construed in
accordance with the laws of the State of New York.
CONCERNING THE TRUSTEE
Deutsche Bank Trust Company Americas is the Trustee under the Indenture. In
the ordinary course of business, the Trustee and its affiliates have provided
and may in the future continue to provide investment banking, commercial banking
and other financial services to us and our subsidiaries for which they have
received and will receive compensation.
49
MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences of the exchange offer and the holding and disposition of notes to a
United States holder or a non-United States holder. For purposes of this
discussion, a "United States holder" means a beneficial owner of notes that is
an individual who is a citizen or resident of the United States, a corporation
(or other entity taxable as a corporation) created or organized in or under the
laws of the United States or any political subdivision of the United States or
an estate or trust the income of which is subject to United States federal
income tax regardless of its source. If a partnership holds notes, then the tax
treatment of a partner generally will depend upon the status of the partner and
the activities of the partnership. If you are a partner of a partnership holding
notes, then we suggest that you consult your tax advisor. A "non-United States
holder" means a beneficial owner of notes that is, for United States federal
income tax purposes, a nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust. This summary deals
only with notes held as capital assets (that is, for investment purposes) and
acquired at the initial issue price in the original issuance of the old notes,
and does not address (1) United States holders that may be subject to special
rules, such as insurance companies, tax-exempt organizations, mutual funds,
retirement plans, financial institutions, dealers or traders in securities,
United States holders that hold notes as part of a straddle, conversion
transaction or other arrangement involving more than one position, United States
holders that have a "tax home" outside the United States and United States
holders whose functional currency is not the United States dollar or (2)
non-United States holders that may be subject to special tax rules, such as
nonresident alien individuals who have lost United States citizenship or who
have ceased to be treated as resident aliens, corporations that are treated as
foreign or domestic personal holding companies, controlled foreign corporations
or passive foreign investment companies or certain other non-United States
holders that are owned or controlled by persons subject to United States federal
income tax. Further, this discussion does not cover state, local or foreign law.
The discussion is based upon the United States Internal Revenue Code of
1986, as amended, and regulations, rulings and judicial decisions thereunder as
of the date of this prospectus. These authorities may be repealed, revoked or
modified, perhaps with retroactive effect, so as to produce United States
federal income tax consequences different from those discussed below.
BECAUSE UNITED STATES TAX CONSEQUENCES MAY DIFFER FROM ONE HOLDER TO THE
NEXT, THE DISCUSSION SET OUT BELOW DOES NOT PURPORT TO DESCRIBE ALL OF THE TAX
CONSIDERATIONS THAT MAY BE RELEVANT TO YOU AND YOUR PARTICULAR SITUATION.
ACCORDINGLY, YOU ARE ADVISED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE UNITED
STATES FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE EXCHANGE OFFER
AND THE HOLDING AND DISPOSITION OF NOTES. THE STATEMENTS OF UNITED STATES TAX
LAW SET OUT BELOW ARE BASED ON THE LAWS AND INTERPRETATIONS IN FORCE AS OF THE
DATE OF THIS PROSPECTUS, AND ARE SUBJECT TO ANY CHANGES OCCURRING AFTER THAT
DATE.
UNITED STATES HOLDERS
EXCHANGE OFFER
The exchange of the old notes for the exchange notes pursuant to the
exchange offer will not constitute a material modification of the old notes and,
therefore, will not constitute a taxable event to United States holders.
Consequently, (1) no gain or loss will be realized by a United States holder
upon the exchange of an old note for an exchange note; (2) the holding period of
the exchange note will include the holding period of the old note exchanged
therefor and (3) the adjusted tax basis of the exchange note will be the same as
the adjusted tax basis of the old note exchanged therefor immediately before the
exchange.
PAYMENTS OF INTEREST
Stated interest on a note will be taxable to a United States holder as
ordinary interest income at the time that it is received or accrued, in
accordance with the noteholder's regular method of accounting for tax purposes.
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SALE OR REDEMPTION OF THE NOTES
Upon a sale, exchange or redemption of a note, a United States holder
generally will recognize gain or loss equal to the difference, if any, between
(1) the amount realized on the disposition (other than any amounts attributable
to accrued and unpaid interest, which will be taxed as such) and (2) the United
States holder's tax basis in the note. A United States holder's tax basis in a
note generally will equal the cost of the note to the United States holder. Any
gain or loss recognized generally will constitute capital gain or loss and will
be long-term capital gain or loss if the United States holder has held the note
for more than one year.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements may apply to payments of
principal and interest on a note and to the proceeds of the sale of a note to a
non-corporate United States holder. Additionally, backup withholding tax,
currently at a rate of 30%, will apply to such payments if the United States
holder fails to provide an accurate taxpayer identification number or otherwise
fails to comply with applicable requirements of the backup withholding tax
rules. Any amounts withheld under the backup withholding tax rules will be
allowed as a credit against the United States holder's United States federal
income tax liability and may entitle the holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
NON-UNITED STATES HOLDERS
The following discussion assumes that income or gain on the notes is not
effectively connected with the conduct by a non-United States holder of a trade
or business in the United States.
PAYMENTS OF PRINCIPAL AND INTEREST
Subject to the discussion below of backup withholding tax, payments of
principal and interest on the notes to a non-United States holder generally will
not be subject to United States withholding tax under the "portfolio interest
exemption." A non-United States holder will qualify for the portfolio interest
exemption, if the holder (1) does not own, actually or constructively, 10
percent or more of the combined voting power of all classes of our stock, (2) is
not a bank receiving interest pursuant to a loan agreement entered into in the
ordinary course of its trade or business, (3) is not a controlled foreign
corporation related to us through stock ownership and (4) provides an
appropriate certification of non-United States status, or otherwise satisfies
the applicable documentation requirements, under the rules described below.
Under current law, the certification requirement generally will be met if,
in accordance with specified procedures, the non-United States holder provides
to us or our paying agent, through any intermediary that holds the notes on
behalf of the non-United States holder, an Internal Revenue Service Form W-8BEN
(or a suitable substitute or successor form) that is signed under penalties of
perjury, includes the holder's name and address and contains a certification
that the holder is the beneficial owner of the payment to be received and is not
a United States person for United States federal income tax purposes.
Treasury regulations provide alternative documentation procedures for
satisfying the certification requirement described above. For instance, under
one such option, we or our paying agent generally would be allowed to rely on an
Internal Revenue Service Form W-8IMY (or a suitable substitute or successor
form) furnished by a financial institution or other intermediary on behalf of
one or more non-United States holders without having to obtain the beneficial
owner certificate described in the preceding paragraph, provided that (1) the
financial institution or intermediary has entered into a withholding agreement
with the Internal Revenue Service and otherwise is a "qualified intermediary"
within the meaning of the Treasury regulations and (2) the non-United States
holder has furnished an Internal Revenue Service W-8BEN or other applicable form
to the qualified intermediary or the qualified intermediary has received
specified documentary evidence that establishes the non-United States status of
the non-United States holder.
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Interest payments on the notes made to a non-United States holder generally
will be reported to the Internal Revenue Service on Internal Revenue Service
Form 1042-S. However, this reporting generally will not apply to notes held
through a qualified intermediary if the applicable procedures are satisfied.
If the portfolio interest exemption is not available to a non-United States
holder, then the holder may be entitled to the benefits of an income tax treaty
under which interest on the holder's notes would be subject to a reduced rate of
or complete exemption from withholding tax, provided that the appropriate
certification requirements are satisfied.
The rules regarding withholding are complex and will vary depending upon
the individual situation of a non-United States holder. They are also subject to
change. In addition, special rules apply to certain types of non-United States
holders, including partnerships, trusts and other entities treated as
pass-through entities for United States federal income tax purposes. We suggest
that you consult with your own tax advisor regarding the specific methods for
satisfying these requirements.
SALE OR REDEMPTION OF THE NOTES
Subject to the discussion below of backup withholding tax, a non-United
States holder will not be subject to United States federal income tax or
withholding tax on gain realized on the sale, exchange or redemption of a note,
unless the non-United States holder is a nonresident alien individual who is
present in the United States for 183 or more days in the taxable year and
certain other requirements are met.
ESTATE TAX
Under current United States federal estate tax law, a note will not be
subject to United States federal estate tax as a result of the death of a
noteholder who is not a citizen or resident of the United States at the time of
death, provided that, at the time of death, the noteholder did not own, actually
or constructively, 10 percent or more of the combined voting power of all
classes of our stock.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
United States information reporting requirements and backup withholding tax
generally will not apply to payments of interest or principal on a note made by
us or our paying agent to a non-United States holder, or received by a
non-United States holder through a custodian, nominee or other agent of such
non-United States holder, provided that, in each case, (1) we or such other
payor has received an appropriate certification of non-United States status
under the rules discussed above and (2) neither we nor such other payor has
actual knowledge or reason to know that the payee is a United States person.
However, as discussed above, interest payments on the notes may be reported on
Internal Revenue Service Form 1042-S.
Information reporting requirements and backup withholding tax generally
will not apply to the payment of the proceeds of a sale of a note effected
outside the United States by a foreign office of a broker. However, information
reporting, but not backup withholding tax, will apply to the payment of the
proceeds of a sale of a note effected outside the United States by the foreign
office of a broker, if the broker is, for United States federal income tax
purposes, any of the following: a United States person, a "controlled foreign
corporation," a foreign partnership engaged in the conduct of a trade or
business in the United States or in which United States persons own more than 50
percent of the capital or profits interests or a person that derives 50 percent
or more of its gross income for certain periods from the conduct of a trade or
business in the United States, unless such broker has documentary evidence in
its records that the holder is not a United States person and certain other
conditions are met, or the holder otherwise establishes an exemption. Payments
of the proceeds of a sale of a note to or through the United States office of a
broker will be subject to backup withholding tax and information reporting
requirements unless the beneficial owner certifies, under penalties of perjury,
that it is not a United States person or otherwise establishes an exemption.
Non-United States holders should consult their own tax advisors regarding
the application of information reporting and backup withholding tax in their
particular situations, the availability of an exemption therefrom and the
procedure for obtaining any such exemption.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new securities for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new securities. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of new securities received in
exchange for outstanding securities where such securities were acquired as a
result of market-making activities or other trading activities. We will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale provided a broker-dealer has notified us
either in the letter of transmittal or otherwise within 30 days after
consummation of the exchange offer that it holds new securities as a result of
market-making or other trading activities.
We will not receive any proceeds from any sale of new securities by
brokers-dealers. New securities received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new securities. Any
broker-dealer that resells new securities that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of new securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a reasonable period after the expiration date of the exchange offer, we
will send additional copies of this prospectus and any amendment or supplement
to this prospectus to any broker-dealer that requests such documents in the
letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer (including the expenses of one counsel for the holders of the
outstanding securities) other than commissions or concessions of any brokers or
dealers and will indemnify the holders of the outstanding securities (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
Prior to the exchange offer, there has not been any public market for the
outstanding securities. The outstanding securities have not been registered
under the Securities Act and will be subject to restrictions on transferability
to the extent that they are not exchanged for new securities by holders who are
entitled to participate in this exchange offer. The holders of outstanding
securities, other than any holder that is our affiliate within the meaning of
Rule 405 under the Securities Act, who are not eligible to participate in the
exchange offer are entitled to certain registration rights, and we are required
to file a shelf registration statement with respect to the outstanding
securities. The new securities will constitute a new issue of securities with no
established trading market. We do not intend to list the new securities on any
national securities exchange or to seek the admission thereof to trading in the
National Association of Securities Dealers Automated Quotation System. In
addition, such market making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the exchange
offer and the pendency of the shelf registration statements. Accordingly, no
assurance can be given that an active public or other market will develop for
the new securities or as to the liquidity of the trading market for the new
securities. If a trading market does not develop or is not maintained, holders
of the new securities may experience difficulty in reselling the new securities
or may be unable to sell them at all. If a market for the new securities
develops, any such market may be discontinued at any time.
53
VALIDITY OF THE NEW SECURITIES
Annita Menogan, our Secretary and Assistant General Counsel, will give an
opinion as to the validity of the new securities. Kirkland & Ellis, a
partnership that includes professional corporations, New York, New York, will
give an opinion as to the accuracy of the discussion contained under the heading
"Material United States Federal Tax Considerations".
EXPERTS
The financial statements included in this Prospectus have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The combined financial statements of Carling Brewers as of October 2, 1999,
August 26, 2000, December 30, 2000 and December 29, 2001 and for the 53 weeks
ended October 2, 1999, the 47 weeks ended August 26, 2000, the 18 weeks ended
December 30, 2000 and the 52 weeks ended December 29, 2001 incorporated by
reference into this prospectus by reference to the current report on Form 8-K/A
of Adolph Coors Company filed on April 18, 2002, have been so incorporated on
the reports of KPMG Audit Plc, independent accountants, as stated in their
report therein, and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Adolph Coors Company is required to file reports and other information with
the SEC pursuant to the information requirements of the Exchange Act of 1934, as
amended. Our filings with the SEC may be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information relating to the public reference rooms.
In addition, the SEC maintains an Internet site (http://www.sec.gov) that
contains certain reports, proxy statements and other information regarding
Adolph Coors Company. The Class B common stock of Coors is traded on the New
York Stock Exchange under the symbol "RKY," through which information regarding
our company also is available. For further information about obtaining copies of
our public filings at the New York Stock Exchange, you should call (212)
656-5060.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed with the SEC, are
incorporated in this prospectus and specifically made a part of this prospectus:
(1) Adolph Coors Company's annual report on Form 10-K for the year
ended December 30, 2001;
(2) Adolph Coors Company's quarterly report on Form 10-Q for the
quarter ended March 31, 2002;
(3) Adolph Coors Company's current report on Form 8-K filed on
February 19, 2002, as amended on April 18, 2002;
(4) Adolph Coors Company's current report on Form 8-K filed on May 2,
2002; and
(5) Adolph Coors Company's current report on Form 8-K filed on July
31, 2002.
In addition, all documents filed with the SEC pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act by Adolph Coors Company subsequent to
the date of this prospectus and prior to the termination of the exchange offer
shall be deemed to be incorporated by reference into this prospectus and to be a
part hereof from the date of filing of such documents with the SEC. Any
statement contained in this prospectus or in a document incorporated or deemed
to be incorporated by reference into this prospectus shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference into this
prospectus modifies or supersedes the statement. Any statement so
54
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
Statements contained in this prospectus or in any document incorporated by
reference into this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the documents incorporated by reference, each such statement
being qualified in all respects by such reference.
This prospectus incorporates by reference documents that are not presented
in this prospectus or delivered with this prospectus. Copies of such documents,
other than exhibits to such documents that are not specifically incorporated by
reference in this prospectus, are available without charge to any person to whom
this prospectus is delivered, upon written or oral request to: Adolph Coors
Company, 311 Tenth Street, Golden, Colorado 80401-0030, telephone (303)
239-6565.
55
INDEX TO FINANCIAL STATEMENTS
<Table>
<Caption>
PAGE
----
Consolidated Financial Statement
Report of Independent Accountants......................... F-2
Consolidated Statements of Income and Comprehensive Income
for each of the three years in the period ended
December 30, 2001...................................... F-3
Consolidated Balance Sheets at December 30, 2001 and
December 31, 2000...................................... F-4
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 30, 2001...... F-6
Consolidated Statements of Shareholders' Equity for each
of the three years in the period ended December 30,
2001................................................... F-7
Notes to Consolidated Financial Statements................ F-8
Financial Statements (Unaudited)
Condensed Consolidated Statements of Income for the
periods ended March 31, 2002 and April 1, 2001......... F-47
Condensed Consolidated Balance Sheets at March 31, 2002
and December 30, 2001.................................. F-48
Condensed Consolidated Statements of Cash Flows for the
periods ended March 31, 2002 and April 1, 2001......... F-50
Notes to Condensed Consolidated Financial Statements...... F-51
</Table>
F-1
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ADOLPH COORS COMPANY:
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and comprehensive 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
30, 2001, and December 31, 2000, and the results of their operations and their
cash flows for each of the three years in the period ended December 30, 2001, in
conformity with accounting principles generally accepted in the United States of
America. 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 auditing standards generally accepted in the United States of
America 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 our opinion.
PricewaterhouseCoopers LLP
Denver, Colorado
February 6, 2002, except for Note 18, as to which the date is July 15, 2002
F-2
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Sales -- domestic and international................... $ 2,842,752 $ 2,841,738 $ 2,642,712
Beer excise taxes..................................... (413,290) (427,323) (406,228)
----------- ----------- -----------
Net sales (Note 14)................................... 2,429,462 2,414,415 2,236,484
Cost of goods sold.................................... (1,537,623) (1,525,829) (1,397,251)
----------- ----------- -----------
Gross profit.......................................... 891,839 888,586 839,233
Other operating expenses:
Marketing, general and administrative............... (717,060) (722,745) (692,993)
Special charges (Note 9)............................ (23,174) (15,215) (5,705)
----------- ----------- -----------
Total other operating expenses................... (740,234) (737,960) (698,698)
----------- ----------- -----------
Operating income...................................... 151,605 150,626 140,535
Other income (expense):
Gain on sales of distributorships................... 27,667 1,000 --
Interest income..................................... 16,409 21,325 11,286
Interest expense.................................... (2,006) (6,414) (4,357)
Miscellaneous -- net................................ 4,338 2,988 3,203
----------- ----------- -----------
Total............................................ 46,408 18,899 10,132
----------- ----------- -----------
Income before income taxes............................ 198,013 169,525 150,667
Income tax expense (Note 5)........................... (75,049) (59,908) (58,383)
----------- ----------- -----------
Net income (Note 7)................................... 122,964 109,617 92,284
Other comprehensive income (expense), net of tax (Note
13):
Foreign currency translation adjustments............ 14 2,632 (3,519)
Unrealized (loss) gain on available-for-sale
securities....................................... 3,718 1,268 (397)
Unrealized (loss) gain on derivative instruments.... (6,200) (1,997) 6,835
Minimum pension liability adjustment................ (8,487) -- --
Reclassification adjustments........................ (4,898) 366 --
----------- ----------- -----------
Comprehensive income.................................. $ 107,111 $ 111,886 $ 95,203
=========== =========== ===========
Net income per share -- basic......................... $ 3.33 $ 2.98 $ 2.51
=========== =========== ===========
Net income per share -- diluted....................... $ 3.31 $ 2.93 $ 2.46
=========== =========== ===========
Weighted-average shares -- basic...................... 36,902 36,785 36,729
=========== =========== ===========
Weighted-average shares -- diluted.................... 37,177 37,450 37,457
=========== =========== ===========
</Table>
See Notes to Consolidated Financial Statements.
F-3
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 77,133 $ 119,761
Short-term marketable securities.......................... 232,572 72,759
Accounts and notes receivable:
Trade, less allowance for doubtful accounts of $91 in
2001 and $139 in 2000................................. 94,985 104,484
Affiliates............................................. 223 7,209
Other, less allowance for certain claims of $111 in
2001 and $104 in 2000................................. 13,524 15,385
Inventories:
Finished............................................... 32,438 40,039
In process............................................. 23,363 23,735
Raw materials.......................................... 41,534 37,570
Packaging materials, less allowance for obsolete
inventories of $2,188 in 2001 and $1,993 in 2000...... 17,788 8,580
---------- ----------
Total inventories.................................... 115,123 109,924
Maintenance and operating supplies, less allowance for
obsolete supplies of $2,182 in 2001 and $1,621 in
2000................................................... 23,454 23,703
Prepaid expenses and other assets......................... 21,722 19,847
Deferred tax asset (Note 5)............................... 27,793 24,679
---------- ----------
Total current assets................................. 606,529 497,751
Properties, at cost and net (Notes 2 and 14)................ 869,710 735,793
Goodwill and other intangibles, less accumulated
amortization of $9,049 in 2001 and $12,981 in 2000 (Notes
1 and 7).................................................. 86,289 54,795
Investments in joint ventures, less accumulated amortization
of $1,625 in 2001 (Note 10)............................... 94,785 56,342
Long-term marketable securities............................. -- 193,675
Other assets................................................ 82,379 90,948
---------- ----------
Total assets................................................ $1,739,692 $1,629,304
========== ==========
</Table>
See Notes to Consolidated Financial Statements.
F-4
<Table>
<Caption>
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade.................................................. $ 219,381 $ 186,105
Affiliates............................................. 3,112 11,621
Accrued salaries and vacations............................ 56,767 57,041
Taxes, other than income taxes............................ 31,271 32,469
Accrued expenses and other liabilities (Notes 3 and 4).... 122,014 92,100
Current portion of long-term debt (Note 4)................ 85,000 --
---------- ----------
Total current liabilities............................ 517,545 379,336
---------- ----------
Long-term debt (Note 4)..................................... 20,000 105,000
Deferred tax liability (Note 5)............................. 61,635 89,986
Deferred pension and postretirement benefits (Note 7, 8 and
13)....................................................... 141,720 77,147
Other long-term liabilities (Note 3)........................ 47,480 45,446
---------- ----------
Total liabilities.................................... 788,380 696,915
---------- ----------
Commitments and contingencies (Notes 3, 4, 5, 6, 7, 8, 10
and 15)
Shareholders' equity (Notes 6, 11 and 13):
Capital stock:
Preferred stock, non-voting, no par value (authorized:
25,000,000 shares; issued and outstanding: none)...... -- --
Class A common stock, voting, no par value (authorized,
issued and outstanding: 1,260,000 shares)............. 1,260 1,260
Class B common stock, non-voting, no par value, $0.24
stated value (authorized: 200,000,000 shares; issued
and outstanding: 34,689,410 in 2001 and 35,871,121 in
2000)................................................. 8,259 8,541
---------- ----------
Total capital stock.................................. 9,519 9,801
Paid-in capital............................................. -- 11,332
Unvested restricted stock................................... (597) (129)
Retained earnings........................................... 954,981 908,123
Accumulated other comprehensive income...................... (12,591) 3,262
---------- ----------
Total shareholders' equity........................... 951,312 932,389
---------- ----------
Total liabilities and shareholders' equity.................. $1,739,692 $1,629,304
========== ==========
</Table>
See Notes to Consolidated Financial Statements.
F-5
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS)
Cash flows from operating activities:
Net income.............................................. $ 122,964 $ 109,617 $ 92,284
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in net earnings of joint ventures........... (43,630) (42,395) (36,958)
Distributions from joint ventures.................. 39,453 55,379 30,280
Impairment and non-cash portion of special
charges.......................................... 6,591 11,068 4,769
Depreciation, depletion and amortization........... 121,091 129,283 123,770
Gains on sales of securities....................... (4,042) -- --
Net (gain) loss on sale or abandonment of
properties and intangibles, net.................. (30,467) (4,729) 2,471
Deferred income taxes.............................. (19,176) 6,870 20,635
Change in operating assets and liabilities:
Accounts and notes receivable.................... (836) 21,696 (19,159)
Affiliate accounts receivable.................... 6,986 6,564 (1,877)
Inventories...................................... (5,199) (3,087) (4,373)
Prepaid expenses and other assets................ (6,024) 3,107 (49,786)
Accounts payable................................. (36,053) 988 59,082
Affiliate accounts payable....................... 8,509 12,650 (12,565)
Accrued expenses and other liabilities........... 33,229 (26,280) 2,751
--------- --------- ---------
Net cash provided by operating activities..... 193,396 280,731 211,324
--------- --------- ---------
Cash flows from investing activities:
Purchases of investments.............................. (228,237) (356,741) (94,970)
Sales and maturities of investments................... 268,093 208,176 105,920
Additions to properties and intangible assets......... (244,548) (154,324) (134,377)
Proceeds from sales of properties and intangible
assets............................................. 63,529 6,427 3,821
Investment in Molson USA, LLC......................... (65,000) -- --
Other................................................. 9,414 (1,079) (1,437)
--------- --------- ---------
Net cash used in investing activities......... (196,749) (297,541) (121,043)
--------- --------- ---------
Cash flows from financing activities:
Issuances of stock under stock plans.................. 10,701 17,232 9,728
Purchases of treasury stock........................... (72,345) (19,989) (20,722)
Dividends paid........................................ (29,510) (26,564) (23,745)
Payments of long-term debt............................ -- -- (40,000)
Overdraft balances.................................... 51,551 4,686 (11,256)
Other................................................. 759 (2,235) (1,692)
--------- --------- ---------
Net cash used in financing activities......... (38,844) (26,870) (87,687)
--------- --------- ---------
Cash and cash equivalents:
Net (decrease) increase in cash and cash
equivalents........................................ (42,197) (43,680) 2,594
Effect of exchange rate changes on cash and cash
equivalents........................................ (431) (367) 1,176
Balance at beginning of year.......................... 119,761 163,808 160,038
--------- --------- ---------
Balance at end of year................................ $ 77,133 $ 119,761 $ 163,808
========= ========= =========
</Table>
See Notes to Consolidated Financial Statements.
F-6
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<Table>
<Caption>
ACCUMULATED
COMMON STOCK OTHER
ISSUED UNVESTED COMPRE-
----------------- PAID-IN RESTRICTED RETAINED HENSIVE
CLASS A CLASS B CAPITAL STOCK EARNINGS INCOME TOTAL
------- ------- -------- ---------- -------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
BALANCES AT DECEMBER 27, 1998........ $1,260 $8,428 $ 10,505 $ -- $756,531 $ (1,926) $774,798
Shares issued under stock plans,
including related tax benefit...... 110 15,895 16,005
Purchases of stock................... (95) (20,627) (20,722)
Other comprehensive income........... 2,919 2,919
Net income........................... 92,284 92,284
Cash dividends -- $0.645 per share... (23,745) (23,745)
------ ------ -------- ----- -------- -------- --------
BALANCES AT DECEMBER 26, 1999........ 1,260 8,443 5,773 -- 825,070 993 841,539
Shares issued under stock plans,
including related tax benefit...... 181 25,465 (129) 25,517
Purchases of stock................... (83) (19,906) (19,989)
Other comprehensive income........... 2,269 2,269
Net income........................... 109,617 109,617
Cash dividends -- $0.72 per share.... (26,564) (26,564)
------ ------ -------- ----- -------- -------- --------
BALANCES AT DECEMBER 31, 2000........ 1,260 8,541 11,332 (129) 908,123 3,262 932,389
Shares issued under stock plans,
including related tax benefit...... 75 13,463 (651) 780 13,667
Amortization of restricted stock..... 183 (183) --
Purchases of stock................... (357) (24,795) (47,193) (72,345)
Other comprehensive income........... (15,853) (15,853)
Net income........................... 122,964 122,964
Cash dividends -- $0.80 per share.... (29,510) (29,510)
------ ------ -------- ----- -------- -------- --------
BALANCES AT DECEMBER 30, 2001........ $1,260 $8,259 $ -- $(597) $954,981 $(12,591) $951,312
====== ====== ======== ===== ======== ======== ========
</Table>
See Notes to Consolidated Financial Statements.
F-7
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: Our consolidated financial statements include
our accounts and our majority-owned and controlled domestic and foreign
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. The equity method of accounting is used for our investments in
affiliates where we have the ability to exercise significant influence (see Note
10, Investments). We have other investments that are accounted for at cost.
Nature of operations: We are a multinational brewer, marketer and seller
of beer and other malt-based beverages. The vast majority of our volume is sold
in the United States to independent wholesalers. Our international volume is
produced, marketed and distributed under varying business arrangements including
export, direct investment, joint ventures and licensing.
Fiscal year: Our fiscal year is a 52- or 53-week period ending on the last
Sunday in December. Fiscal years ended December 30, 2001, and December 26, 1999,
were both 52-week periods. Fiscal year ended December 31, 2000, was a 53-week
period.
Use of estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications: Certain reclassifications have been made to the 2000
and 1999 financial statements to conform with the 2001 presentation.
Cash and cash equivalents: Cash equivalents represent highly liquid
investments with original maturities of 90 days or less. The fair value of these
investments approximates their carrying value.
Investments in marketable securities: We invest our excess cash on hand in
interest-bearing marketable securities, which include corporate, government
agency and municipal debt instruments that are investment grade. All of these
securities were considered to be available-for-sale. These securities have been
recorded at fair value, based on quoted market prices, through other
comprehensive income. Unrealized gains, recorded in Accumulated other
comprehensive income, relating to these securities totaled $6.0 million and $2.0
million at December 30, 2001, and December 31, 2000, respectively. Net gains
recognized on sales for available-for-sale securities were $4.0 million in 2001.
Net gains realized on sales of available-for-sale securities were immaterial in
2000 and 1999. The cost of securities sold is based on the specific
identification method. At December 30, 2001, all $232.6 million of these
securities were classified as current assets. In January 2002, all of these
securities were sold, at a gain of $4.0 million. Approximately half of the
related funds were used in the Carling acquisition and the remaining funds were
used to cover general operating cash requirements.
Concentration of credit risk: The majority of our accounts receivable
balances are from malt beverage distributors. We secure substantially all of
this credit risk with purchase money security interests in inventory and
proceeds, personal guarantees and/or letters of credit.
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 $41.5 million and $42.9 million at December 30,
2001, and December 31, 2000, respectively.
Properties: Land, buildings and machinery and equipment are stated at
cost. Depreciation is provided principally on the straight-line method over the
following estimated useful lives: buildings and improvements, 10 to 40 years;
and machinery and equipment, 3 to 20 years. Certain equipment held under capital
lease is
F-8
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
classified as equipment and amortized using the straight-line method over the
lease term and the related obligation is recorded as a liability. Lease
amortization is included in depreciation expense. 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.
Goodwill and other intangible assets: Goodwill and other intangible
assets, with the exception of the pension intangible asset and water rights,
were amortized on a straight-line basis over the estimated future periods to be
benefited, generally 40 years for goodwill and up to 20 years for trademarks,
naming and distribution rights whose related weighted average life is 14 years.
Please see the Recent accounting pronouncement section below for information
regarding the impact of the Financial Accounting Boards' Statement of Financial
Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible Assets on this
policy.
System development costs: We capitalize certain system development costs
that meet established criteria, in accordance with Statement of Position (SOP)
98-1, Accounting for the Costs of Computer Systems Developed or Obtained for
Internal Use. Amounts capitalized in Machinery and equipment are amortized to
expense on a straight-line basis over three to five years. At December 30, 2001
and December 31, 2000 amounts capitalized were $8.4 million and $3.2 million,
respectively. Related amortization expense was $2.2 million and $0.8 million for
fiscal years 2001 and 2000, respectively. There were no amounts capitalized in
1999. System development costs not meeting the criteria in SOP 98-1, including
system reengineering, are expensed as incurred.
Overdraft balances: Under our cash management system, checks issued
pending clearance that result in overdraft balances for accounting purposes are
included in the Trade accounts payable balance. The amounts reclassified were
$70.5 million and $18.9 million at December 30, 2001 and December 31, 2000,
respectively.
Derivative instruments: Our objective in managing our exposure to
fluctuations in interest rates, foreign currency exchange rates and production
and packaging materials prices is to decrease the volatility of earnings and
cash flows associated with changes in the applicable rates and prices. To
achieve this objective, we primarily enter into forward contracts, options and
swap agreements whose values change in the opposite direction of the anticipated
cash flows. Derivative instruments, which we designate as hedges of forecasted
transactions and which qualify for hedge accounting treatment under Statement of
Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities (which we adopted on January 1, 1999), are
considered cash flows hedges, and the effective portion of any gains or losses
are included in Accumulated other comprehensive income until earnings are
affected by the variability of cash flows. Any remaining gain or loss is
recognized in current earnings. In calculating effectiveness for SFAS 133
purposes, we do not exclude any component of the derivative instruments' gain or
loss from the calculation. The cash flows of the derivative instruments are
expected to be highly effective in achieving offsetting fluctuations in the cash
flows of the hedged risk. If it becomes probable that a forecasted transaction
will no longer occur, the derivative will continue to be carried on the balance
sheet at fair value, and the gains and losses that were accumulated in other
comprehensive income will be recognized immediately in earnings. If the
derivative instruments are terminated prior to their expiration dates, any
cumulative gains and losses are deferred and recognized in earnings over the
remaining life of the underlying exposure. If the hedged assets or liabilities
are sold or extinguished, we recognize in earnings the gain or loss on the
designated financial instruments concurrent with the sale or extinguishment of
the hedged assets or liabilities. Cash flows from our derivative instruments are
classified in the same category as the hedged item in the Consolidated
Statements of Cash Flows. See Note 12, Derivative Instruments, for additional
information regarding our derivative holdings.
F-9
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Impairment policy: When events or changes in circumstances indicate that
the carrying amount of long-lived assets, including goodwill or other intangible
assets, may not be recoverable, an evaluation is performed to determine if an
impairment exists. We compare the carrying amount of the assets to the
undiscounted expected future cash flows. If this comparison indicates that an
impairment exists, the assets are written down to fair value. Fair value would
typically be calculated using discounted expected future cash flows. All
relevant factors are considered in determining whether impairment exits.
Revenue recognition: Revenue is recognized upon shipment of our product to
our distributors.
Freight expense: In 2000, the Financial Accounting Standards Board's
Emerging Issues Task Force issued a pronouncement stating that shipping and
handling costs should not be reported as a reduction to gross sales within the
income statement. As a result of this pronouncement, our finished product
freight expense, which is incurred upon shipment of our product to our
distributors, is now included within Cost of goods sold in our accompanying
Consolidated Statements of Income. This expense had previously been reported as
a reduction to gross sales; financial statements for all periods presented
herein have been reclassified to reflect this change.
Advertising: Advertising costs, included in Marketing, general and
administrative, are expensed when the advertising is run. Advertising expense
was $465.2 million, $477.3 million and $443.4 million for years 2001, 2000 and
1999, respectively. Prepaid advertising costs of $30.4 million ($5.6 million in
current and $24.8 million in long term) and $36.2 million ($7.4 million in
current and $28.8 million in long term) were included in the Consolidated
Balance Sheets at December 30, 2001, and December 31, 2000, respectively.
Research and development: Research and project development costs, included
in Marketing, general and administrative, are expensed as incurred. These costs
totaled $16.5 million, $16.9 million and $16.5 million in 2001, 2000 and 1999,
respectively.
Environmental expenditures: Environmental expenditures that relate to an
existing condition caused by past operations, which contribute to current or
future revenue generation, are capitalized; whereas expenditures that 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 estimated reasonably.
Statement of Cash Flows: During 2001 and 1999, we issued restricted common
stock under our management incentive program. The non-cash impact of these
issuances, net of forfeitures and tax withholding, was $1.2 million and $0.7
million in 2001 and 1999, respectively. We did not issue any restricted stock
under this plan in 2000,however, restricted forfeitures and tax withholding
resulted in a non-cash decrease to the equity accounts of $5.8 million. Also
during 2001, 2000 and 1999, equity was increased by the tax benefit on the
exercise of stock options under our stock plans of $4.4 million, $14.2 million
and $7.0 million, respectively. Income taxes paid were $83.2 million in 2001,
$49.6 million in 2000 and $42.4 million in 1999. See Note 15, Other
Comprehensive Income, for other non-cash items.
Recent accounting pronouncements: In July 2001, the Financial Accounting
Standards Board issued SFAS 141, Business Combinations. SFAS 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. In connection with the Carling acquisition, we
will adopt SFAS 141 (See Note 17, Subsequent Event).
In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS 142, which will be effective for us
beginning in the first quarter of fiscal 2002, and requires goodwill and
intangible assets that have indefinite lives to not be amortized but to be
reviewed annually for impairment, or more frequently if impairment indicators
arise. During 2001, we recorded approximately $3 million of amortization related
to goodwill and other intangible assets. Although we have yet to complete our
analysis of these assets and the related amortization expense under the new
rules for 2002, we anticipate that a significant part of the goodwill and other
intangible assets on our books at the end of the year
F-10
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
will no longer be subject to amortization. Our analysis to date has not
identified any goodwill or other intangible assets that will be considered
impaired under SFAS 142.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 143,
Accounting for Asset Retirement Obligations, which addresses accounting and
financial reporting for obligations associated with the retirement of tangible
long-lived assets. This statement is effective for us beginning in the second
quarter of 2002, and we are evaluating the impact, if any, that the
implementation will have on our financial statements.
In August 2001, the Financial Accounting Standards Board issued SFAS No.
144, Impairment or Disposal of Long-Lived Assets, which addresses accounting and
financial reporting for the impairment or disposal of long-lived assets. This
statement is effective for us beginning in the first quarter of 2002, and we are
evaluating the impact, if any, that the implementation will have on our
financial statements.
NOTE 2:
PROPERTIES
The cost of properties and related accumulated depreciation, depletion and
amortization consists of the following:
<Table>
<Caption>
AS OF
---------------------------
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
Land and improvements...................................... $ 94,321 $ 93,507
Buildings.................................................. 506,537 508,443
Machinery and equipment.................................... 1,783,527 1,731,463
Natural resource properties................................ 6,798 7,373
Construction in progress................................... 141,663 91,964
----------- -----------
2,532,846 2,432,750
Less accumulated depreciation, depletion and
amortization............................................. (1,663,136) (1,696,957)
----------- -----------
Net properties............................................. $ 869,710 $ 735,793
=========== ===========
</Table>
In 2001, we sold our distribution operations in Anaheim and San Bernardino,
California, and Oklahoma City, Oklahoma for total proceeds of $59.4 million,
resulting in a net gain, before tax, of approximately $27.7 million. We are in
the process of selling the land and buildings associated with these previously
owned distributors and in the short-term are leasing these facilities to the
buyers of the distributor operations.
Interest incurred, capitalized, expensed and paid were as follows:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS)
Interest incurred............................... $ 8,653 $ 9,567 $ 8,478
Interest capitalized............................ (6,647) (3,153) (4,121)
------- ------- -------
Interest expensed............................... $ 2,006 $ 6,414 $ 4,357
======= ======= =======
Interest paid................................... $ 7,570 $ 7,664 $ 9,981
======= ======= =======
</Table>
F-11
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3:
LEASES
We lease certain office facilities and operating equipment under cancelable
and non-cancelable agreements accounted for as capital and operating leases. In
2001, information and technology equipment, included in properties, totaling
$10.2 million was sold and leased back under a non-cash capital lease agreement
with EDS Information Services, LLC. Capital lease amortization of $1.8 million
for 2001 was included in accumulated amortization. Current and long term capital
lease obligations are included in Accrued expenses and other liabilities and
Other long term liabilities, respectively, in the Consolidated Balance Sheets.
Future minimum lease payments under scheduled capital and operating leases that
have initial or remaining non-cancelable terms in excess of one year are as
follows (in thousands):
<Table>
<Caption>
CAPITAL OPERATING
FISCAL YEAR LEASES LEASES
- ----------- ------- ---------
(IN THOUSANDS)
2002........................................................ $ 4,298 $ 7,069
2003........................................................ 4,688 6,173
2004........................................................ 391 5,659
2005........................................................ -- 4,868
2006........................................................ -- 4,525
Thereafter.................................................. -- 2,469
------- -------
Total....................................................... 9,377 $30,763
=======
Amounts representing interest............................... (986)
-------
Obligations under capital lease............................. 8,391
Obligation due within one year.............................. (3,621)
-------
Long-term obligations under capital leases.................. $ 4,770
=======
</Table>
Total rent expense was (in thousands) $11,763, $11,502 and $10,978 for the
years 2001, 2000 and 1999, respectively.
NOTE 4:
DEBT
Long-term debt consists of the following:
<Table>
<Caption>
AS OF
----------------------------------------
DECEMBER 30, 2001 DECEMBER 31, 2000
------------------ -------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- ------- -------- --------
(IN THOUSANDS)
Senior Notes................................. $20,000 $20,850 $100,000 $100,300
Industrial development bonds................. -- -- 5,000 5,000
------- ------- -------- --------
$20,000 $20,850 $105,000 $105,300
======= ======= ======== ========
</Table>
Fair values were determined using discounted cash flows at current interest
rates for similar borrowings.
Senior Notes: At December 30, 2001, we had $100 million in unsecured
Senior Notes at fixed interest rates ranging from 6.76% to 6.95% per annum.
Interest on the notes is due semiannually in January and July.
F-12
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The principal amount of the Notes outstanding is payable as follows: $80 million
in July of 2002, classified as current in Current portion of long-term debt, and
$20 million in July of 2005, classified as Long-term debt. The terms of our
private placement Notes allow for maximum liens, transactions and obligations.
We were in compliance with these requirements at year-end 2001. No principal
payments were due or made in 2001 or 2000.
Colorado Industrial Revenue Bonds (IRB): We were obligated to pay the
principal, interest and premium, if any, on the $5 million, City of Wheat Ridge,
IRB (Adolph Coors Company Project) Series 1993. The bonds were scheduled to
mature in 2013 and were secured by a letter of credit. At December 30, 2001,
they were variable rate securities with interest payable on the first of March,
June, September and December. The interest rate on December 30, 2001, was
approximately 3%. We were required to maintain a minimum tangible net worth and
a certain debt-to-total capitalization ratio under the bond agreements. At
December 30, 2001, we were in compliance with these requirements. In March 2002,
all obligations under the terms of the IRB were prepaid and the debt was
terminated.
Line of credit: At December 30, 2001, we had an unsecured, committed
credit arrangement totaling $200 million, all of which was available as of
December 30, 2001. This line of credit had a five-year term which was scheduled
to expire in 2003. A facilities fee was paid on the total amount of the
committed credit. Under the arrangement, we were required to maintain a certain
debt-to-total capitalization ratio and were in compliance at year-end 2001. In
February 2002, this credit facility was terminated and replaced by the credit
agreements associated with the Carling acquisition.
Financial guarantees: We have a 1.1 million yen financial guarantee
outstanding on behalf of our subsidiary, Coors Japan. This subsidiary guarantee
is primarily for two working capital lines of credit and payments of certain
duties and taxes. One of the lines provides up to 500 million yen and the other
provides up to 400 million yen (approximately $6.8 million in total as of
December 30, 2001) in short-term financing. As of December 30, 2001, the
approximate yen equivalent of $3.0 million was outstanding under these
arrangements and is included in Accrued expenses and other liabilities in the
accompanying Consolidated Balance Sheets.
Subsequent event: Please refer to Note 17 for additional information
regarding the debt obligations that have resulted from our acquisition of Coors
Brewers.
F-13
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5:
INCOME TAXES
Income tax expense (benefit) includes the following current and deferred
provisions:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS)
Current:
Federal....................................... $ 74,140 $29,573 $24,088
State......................................... 13,841 9,230 5,119
Foreign....................................... 1,878 52 1,567
-------- ------- -------
Total current tax expense....................... 89,859 38,855 30,774
-------- ------- -------
Deferred:
Federal....................................... (16,171) 6,669 19,035
State......................................... (3,005) 283 3,460
Foreign....................................... -- (82) (1,860)
-------- ------- -------
Total deferred tax (benefit) expense............ (19,176) 6,870 20,635
-------- ------- -------
Other:
Allocation to paid-in capital................. 4,366 14,183 6,974
-------- ------- -------
Total income tax expense........................ $ 75,049 $59,908 $58,383
======== ======= =======
</Table>
Our income tax expense varies from the amount expected by applying the
statutory federal corporate tax rate to income as follows:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
Expected tax rate............................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit...... 3.6 3.7 3.7
Effect of foreign investments................... (0.5) (3.1) 1.1
Non-taxable income.............................. (0.1) (0.2) (0.8)
Other, net...................................... (0.1) (0.1) (0.2)
---- ---- ----
Effective tax rate............................ 37.9% 35.3% 38.8%
==== ==== ====
</Table>
F-14
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Our deferred taxes are composed of the following:
<Table>
<Caption>
AS OF
---------------------------
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
Current deferred tax assets:
Deferred compensation and other employee related.......... $14,046 $ 14,212
Balance sheet reserves and accruals....................... 11,607 10,467
Write-off of foreign account receivable................... 7,002 7,002
Valuation allowance....................................... (7,002) (7,002)
------- --------
Total current deferred tax assets...................... 25,653 24,679
------- --------
Current deferred tax liabilities:
Balance sheet reserves and accruals....................... 2,140 --
------- --------
Net current deferred tax assets...................... $27,793 $ 24,679
======= ========
Non-current deferred tax assets:
Deferred compensation and other employee related.......... $19,106 $ 9,602
Balance sheet reserves and accruals....................... 1,980 8,410
Retirement benefits....................................... 10,507 11,365
Environmental accruals.................................... 2,200 2,274
Deferred foreign losses................................... 1,087 1,395
Partnership investments................................... -- 3,297
------- --------
Total non-current deferred tax assets.................. 34,880 36,343
------- --------
Non-current deferred tax liabilities:
Depreciation and capitalized interest..................... 96,515 110,225
Deferred tax on foreign investment........................ -- 16,104
------- --------
Total non-current deferred tax liabilities............. 96,515 126,329
------- --------
Net non-current deferred tax liabilities............. $61,635 $ 89,986
======= ========
</Table>
The current deferred tax assets related to the foreign accounts receivable
have been reduced by a valuation allowance because management believes it is
more likely than not that such benefits will not be fully realized.
In 2000, we realized a tax benefit pertaining to the Spain brewery closure.
We also resolved substantially all of the issues raised by the Internal Revenue
Service examination of our federal income tax returns through 1998. One issue
relating to the tax treatment of a Korean investment is currently being appealed
to the Internal Revenue Service appeals office. The Internal Revenue Service is
currently examining the federal income tax returns for 1999 through 2000. In the
opinion of management, adequate accruals have been provided for all income tax
matters and related interest.
NOTE 6:
STOCK OPTION, RESTRICTED STOCK AWARD AND EMPLOYEE AWARD PLANS
At December 30, 2001, we had three stock-based compensation plans, which
are described in greater detail below. We apply Accounting Principles Board
Opinion No. 25 and related interpretations in accounting
F-15
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for our plans. Accordingly, as the exercise prices upon grant are equal to
quoted market values, no compensation cost has been recognized for the stock
option portion of the plans. Had compensation cost been determined for our stock
option portion of the plans based on the fair value at the grant dates for
awards under those plans consistent with the alternative method set forth under
Financial Accounting Standards Board Statement No. 123, our net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income
As reported................................... $122,964 $109,617 $92,284
Pro forma..................................... $106,420 $ 96,164 $82,222
Earnings per share -- basic
As reported................................... $ 3.33 $ 2.98 $ 2.51
Pro forma..................................... $ 2.88 $ 2.61 $ 2.24
Earnings per share -- diluted
As reported................................... $ 3.31 $ 2.93 $ 2.46
Pro forma..................................... $ 2.86 $ 2.57 $ 2.20
</Table>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
<Table>
<Caption>
2001 2000 1999
------ ------ ------
Risk-free interest rate.................................... 5.01% 6.72% 5.03%
Dividend yield............................................. 0.96% 1.27% 1.09%
Volatility................................................. 30.70% 31.41% 30.66%
Expected term (years)...................................... 5.40 6.20 7.80
Weighted average fair market value......................... $20.65 $20.17 $23.28
</Table>
1990 Plan: The 1990 Equity Incentive Plan (1990 EI Plan) provides for two
types of grants: stock options and restricted stock awards. The stock options
have a term of 10 years with exercise prices equal to fair market value on the
day of the grant, and one-third of the stock option grant vests in each of the
three successive years after the date of grant. Total authorized shares of Class
B common stock for issuance under the 1990 EI Plan were 10.8 million shares.
F-16
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the status of our 1990 EI Plan as of December 30, 2001,
December 31, 2000, and December 26, 1999, and changes during the years ending on
those dates is presented below:
<Table>
<Caption>
OPTIONS EXERCISABLE AT
YEAR-END
-----------------------
WEIGHTED- WEIGHTED-
OPTIONS AVERAGE AVERAGE
AVAILABLE OUTSTANDING EXERCISE EXERCISE
FOR GRANT OPTIONS PRICE SHARES PRICE
---------- ----------- --------- ---------- ----------
As of December 27, 1998....... 3,980,243 2,330,217 $24.47 630,457 $19.06
Granted..................... (917,951) 917,951 57.86
Exercised................... -- (494,424) 21.54
Forfeited................... 110,289 (110,289) 38.00
---------- --------- ------
As of December 26, 1999....... 3,172,581 2,643,455 36.05 881,161 23.26
Transferred................. 716,886 -- --
Granted..................... (1,179,094) 1,179,094 51.37
Exercised................... -- (900,804) 23.80
Forfeited................... 160,148 (160,148) 47.76
---------- --------- ------
As of December 31, 2000....... 2,870,521 2,761,597 45.91 910,548 35.21
Authorized.................. 2,033,114 -- --
Granted..................... (1,660,150) 1,660,150 67.28
Exercised................... -- (331,758) 32.38
Forfeited................... 268,709 (268,709) 59.50
---------- --------- ------
As of December 30, 2001....... 3,512,194 3,821,280 $55.41 1,374,961 $43.68
========== ========= ======
</Table>
The following table summarizes information about stock options outstanding
at December 30, 2001:
<Table>
<Caption>
OPTIONS OUTSTANDING
------------------------------------ OPTIONS EXERCISABLE
WEIGHTED- ---------------------
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE EXERCISE
EXERCISE PRICES SHARES LIFE (YEARS) PRICE SHARES PRICE
- --------------- --------- ------------ --------- --------- ---------
$16.75-$22.00 239,855 4.8 $20.12 239,855 $20.12
$26.88-$33.41 325,468 6.0 $33.35 325,468 $33.35
$37.22-$59.25 1,796,429 7.8 $53.07 792,237 $54.51
$63.16-$75.22 1,459,528 9.1 $69.00 17,401 $68.99
------------- --------- --- ------ --------- ------
$16.75-$75.22 3,821,280 8.0 $55.41 1,374,961 $43.68
============= ========= === ====== ========= ======
</Table>
We issued 10,750 shares and 4,953 shares of restricted stock in 2001 and
1999, respectively, under the 1990 EI Plan. No restricted shares were issued
under this plan in 2000. For the 2001 shares, the vesting period is three years
from the date of grant. For the 1999 shares, the vesting period is two years
from the date of grant. The compensation cost associated with these awards is
amortized over the vesting period. Compensation cost associated with these
awards was immaterial in 2001, 2000 and 1999.
1991 Plan: The Equity Compensation Plan for Non-Employee Directors (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 all or any portion of the balance of the retainer. A
director may elect to receive his or her remaining 80% retainer in cash,
restricted stock or any combination of the two. Grants of stock vest after
completion of the director's annual term. The compensation cost associated with
the EC Plan
F-17
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
is amortized over the director's term. Compensation cost associated with this
plan was immaterial in 2001, 2000 and 1999. Common stock reserved for the 1991
plan as of December 30, 2001, was 28,273 shares.
1995 Supplemental Compensation Plan: This supplemental compensation plan
covers substantially all our employees. Under the plan, management is allowed to
recognize employee achievements through awards of Coors Stock Units (CSUs) or
cash. CSUs are a measurement component equal to the fair market value of our
Class B common stock. CSUs have a one-year holding period after which the
recipient may redeem the CSUs for cash, or, if the holder has 100 or more CSUs,
for shares of our Class B common stock. No awards were made under this plan in
2001 or 2000. Awards under the plan in 1999 were immaterial. There are 84,000
shares authorized under this plan. The number of shares of common stock
available under this plan as of December 30, 2001, was 83,707 shares.
NOTE 7:
EMPLOYEE RETIREMENT PLANS
We maintain several defined benefit pension plans for the majority of our
employees. Benefits are based on years of service and average base compensation
levels over a period of years. Plan assets consist primarily of equity,
interest-bearing investments and real estate. Our funding policy is to
contribute annually not less than the ERISA minimum funding standards, nor more
than the maximum amount that can be deducted for federal income tax purposes.
Total expense for all these plans was $18.6 million in 2001, $14.7 million in
2000 and $11.6 million in 1999. These amounts include our matching for the
savings and investment (thrift) plan of $6.4 million in 2001, $7.3 million in
2000 and $6.1 million in 1999. The increase in pension expense from 2000 to 2001
is primarily due to the decline in the market value of plan investments. In
2001, the funded position of the Coors Retirement Plan declined somewhat due to
the combined effects of a lower discount rate and a challenging investment
environment. This resulted in the recognition of an additional minimum
liability, resulting from the excess of our accumulated benefit obligation over
the fair value of plan assets. The amounts recognized in the consolidated
statement of financial position for accrued pension liability, additional
minimum liability, accumulated other comprehensive loss, prepaid benefit cost
and intangible asset in 2001 are $61.9 million, $29.8 million, $8.5 million (net
of tax), $21.5 million and $48.3 million, respectively.
Note that the settlement rates shown in the table on the following page
were selected for use at the end of each of the years shown. Pension expense is
actuarially calculated annually based on data available at the beginning of each
year, which includes the settlement rate selected and disclosed at the end of
the previous year.
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS)
COMPONENTS OF NET PERIODIC PENSION COST:
Service cost-benefits earned during the year.... $ 17,913 $ 16,467 $ 16,456
Interest cost on projected benefit obligation... 46,374 44,192 38,673
Expected return on plan assets.................. (58,342) (58,108) (52,173)
Amortization of prior service cost.............. 5,945 5,906 4,161
Amortization of net transition amount........... 241 (1,690) (1,690)
Recognized net actuarial loss................... 110 590 75
-------- -------- --------
Net periodic pension cost..................... $ 12,241 $ 7,357 $ 5,502
======== ======== ========
</Table>
F-18
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The changes in the projected benefit obligation and plan assets and the
funded status of the pension plans are as follows:
<Table>
<Caption>
AS OF
---------------------------
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
ACTUARIAL PRESENT VALUE OF ACCUMULATED BENEFIT
OBLIGATION:............................................... $ 567,155 $537,791
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Projected benefit obligation at beginning of year......... $ 614,420 $548,428
Service cost.............................................. 17,913 16,467
Interest cost............................................. 46,374 44,192
Amendments................................................ -- 871
Actuarial loss............................................ 10,116 31,974
Benefits paid............................................. (29,717) (27,512)
--------- --------
Projected benefit obligation at end of year............... $ 659,106 $614,420
========= ========
CHANGE IN PLAN ASSETS:
Fair value of assets at beginning of year................. $ 578,500 $627,153
Actual return on plan assets.............................. (25,047) (20,376)
Employer contributions.................................... 7,306 2,561
Benefits paid............................................. (29,717) (27,512)
Expenses paid............................................. (4,042) (3,326)
--------- --------
Fair value of plan assets at end of year.................. $ 527,000 $578,500
========= ========
RECONCILIATION OF FUNDED STATUS:
Funded status -- (shortfall) excess....................... $(132,106) $(35,920)
Unrecognized net actuarial loss (gain).................... 105,082 7,722
Unrecognized prior service cost........................... 47,841 53,680
Unrecognized net transition amount........................ 722 962
--------- --------
Net amount recognized.................................. $ 21,539 $ 26,444
========= ========
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION
CONSIST OF:
Non-current prepaid benefit cost............................ $ 21,539 $ 26,444
Non-current accrued benefit liability cost.................. (61,959) --
Non-current intangible asset................................ 48,291 --
Accumulated other comprehensive income...................... 13,668 --
--------- --------
Net amount recognized..................................... $ 21,539 $ 26,444
========= ========
</Table>
<Table>
<Caption>
2001 2000 1999
----- ----- -----
WEIGHTED AVERAGE ASSUMPTIONS AS OF YEAR-END:
Discount rate............................................... 7.25% 7.75% 8.00%
Rate of compensation increase............................... 4.10% 4.75% 5.25%
Expected return on plan assets.............................. 10.50% 10.50% 10.50%
</Table>
F-19
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8:
NON-PENSION POSTRETIREMENT BENEFITS
We have postretirement plans that provide medical benefits and life
insurance for retirees and eligible dependents. The plans are not funded.
The obligation under these plans 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 8.50% in 2001
to 5.00% in 2007. The discount rate used in determining the accumulated
postretirement benefit obligation was 7.25%, 7.75% and 8.00% at December 30,
2001, December 31, 2000, and December 26, 1999, respectively.
The changes in the benefit obligation and plan assets and the funded status
of the postretirement benefit plan are as follows:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS)
COMPONENTS OF NET PERIODIC POSTRETIREMENT
BENEFIT COST:
Service cost -- benefits earned during the
year.......................................... $1,447 $1,477 $1,404
Interest cost on projected benefit obligation... 6,782 5,613 5,112
Recognized net actuarial gain................... (19) (51) (138)
------ ------ ------
Net periodic postretirement benefit cost...... $8,210 $7,039 $6,378
====== ====== ======
</Table>
<Table>
<Caption>
AS OF
---------------------------
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
CHANGE IN PROJECTED POSTRETIREMENT BENEFIT OBLIGATION:
Projected benefit obligation at beginning of year........... $ 77,750 $ 72,400
Service cost................................................ 1,447 1,477
Interest cost............................................... 6,782 5,613
Actuarial loss.............................................. 21,476 3,264
Benefits paid............................................... (5,300) (5,004)
--------- --------
Projected postretirement benefit obligation at end of
year................................................... $ 102,155 $ 77,750
========= ========
CHANGE IN PLAN ASSETS:
Employer contributions...................................... $ 5,300 $ 5,004
Benefits paid............................................... (5,300) (5,004)
--------- --------
Fair value of plan assets at end of year.................. $ -- $ --
========= ========
Funded status -- shortfall.................................. $(102,155) $(77,750)
Unrecognized net actuarial (gain) loss...................... 16,813 (4,662)
Unrecognized prior service cost............................. 281 261
--------- --------
Accrued postretirement benefits............................. (85,061) (82,151)
Less current portion........................................ 5,300 5,004
--------- --------
Long-term postretirement benefits......................... $ (79,761) $(77,147)
========= ========
</Table>
F-20
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:
<Table>
<Caption>
ONE-PERCENTAGE- ONE-PERCENTAGE-
POINT INCREASE POINT DECREASE
--------------- ---------------
(IN THOUSANDS)
Effect on total of service and interest cost
components............................................ $ 528 $ (470)
Effect on postretirement benefit obligation............. $4,777 $(4,323)
</Table>
NOTE 9:
SPECIAL CHARGES (CREDITS)
Our annual results for 2001, 2000 and 1999 include net pretax special
charges of $23.2 million, $15.2 million and 5.7 million, respectively. The
following is a summary of special charges incurred during those years:
Information technology: We entered into a contract with EDS
Information Services (EDS), effective August 1, 2001, to outsource certain
information technology functions. We incurred outsourcing transition costs
in the year of approximately $14.6 million. These costs were mainly related
to a $6.6 million write-down of the net book value of information
technology assets that were sold to and leased back from EDS, $5.3 million
of one-time implementation costs and $2.7 million of employee transition
costs and professional fees associated with the outsourcing project. We
believe this arrangement will allow us to focus on our core business while
having access to the expertise and resources of a world-class information
technology provider.
Restructure charges: In 2001, we incurred total restructuring special
charges of $6.0 million. In the third quarter of 2001, we recorded $1.6
million of severance costs for approximately 25 employees, primarily due to
the restructuring of our purchasing organization. During the fourth quarter
of 2001, we announced plans to restructure certain production areas. These
restructurings, which began in October 2001 and have continued through
April 2002, will result in the elimination of approximately 90 positions.
As a result of these plans, we recorded associated employee termination
costs of approximately $4.0 million in the fourth quarter. Similar costs of
approximately $0.4 million related to employee terminations in other
functions were also recorded in the fourth quarter. We paid $3.8 million of
this severance in 2001 and expect the remaining severance to be paid by the
second quarter of 2002, out of current cash balances.
In 1999, we recorded a special charge of $5.7 million. The special
charge included $3.7 million for severance costs from the restructuring of
our engineering and construction units and $2.0 million for distributor
network improvements. Approximately 50 engineering and construction
employees were severed under this reorganization. During 2001, 2000 and
1999, approximately $0.2 million, $2.3 million and $0.9 million,
respectively, of severance costs were paid and no further amounts are due.
Can and end plant joint venture: In the third quarter of 2001, we
recorded $3.0 million of special charges related to the dissolution of our
existing can and end joint venture as part of the restructuring of this
part of our business.
Property abandonment: In 2001, we recorded a $2.3 million charge for
a portion of certain production equipment that was abandoned and will no
longer be used.
Spain closure: In 2000, we incurred a total special charge of $20.6
million triggered by our decision to close our Spain brewery and commercial
operations. Of the total charge, $11.3 million related to severance and
other related closure costs for approximately 100 employees, $4.9 million
related to a fixed
F-21
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
asset impairment charge and $4.4 million for the write-off of our
cumulative translation adjustments previously recorded to equity related to
our Spain operations. In 2000, approximately $9.6 million of severance and
other related closure costs were paid with the remaining $1.7 million
reserve being paid during the first quarter of 2001. These payments were
funded from current cash balances. In December 2001, the plant and related
fixed assets were sold for approximately $7.2 million resulting in a net
gain, before tax, of approximately $2.7 million.
Insurance settlement: In 2000, we received an insurance claim
settlement of $5.4 million that was credited to special charges.
NOTE 10:
INVESTMENTS
EQUITY METHOD INVESTMENTS
We have investments in affiliates that are accounted for using the equity
method of accounting. These investments aggregated $94.8 million and $56.3
million at December 30, 2001, and December 31, 2000, respectively.
Summarized condensed balance sheet information for our equity method
investments are as follows:
<Table>
<Caption>
AS OF
---------------------------
DECEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS)
Current assets.............................................. $59,234 $75,464
Non-current assets.......................................... $53,307 $87,353
Current liabilities......................................... $31,031 $34,907
Non-current liabilities..................................... $ 231 $ 264
</Table>
Summarized condensed income statement information for our equity method
investments are as follows:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS)
Net sales............................................... $544,341 $490,227 $449,238
Gross profit............................................ $177,211 $132,805 $116,970
Net income.............................................. $ 80,127 $ 77,575 $ 68,375
Company's equity in net income.......................... $ 43,630 $ 42,395 $ 36,958
</Table>
Coors Canada: Coors Canada, Inc. (CCI), one of our wholly owned
subsidiaries, formed a partnership, Coors Canada, with Molson, Inc. to market
and sell our products in Canada. Coors Canada began operations January 1, 1998.
CCI and Molson have a 50.1% and 49.9% interest, respectively. CCI's investment
in the partnership is accounted for using the equity method of accounting due to
Molson's participating rights in the partnership's business operations. The
partnership agreement has an indefinite term and can be canceled at the election
of either partner. Under the partnership agreement, Coors Canada is responsible
for marketing our products in Canada, while the partnership contracts with
Molson Canada for brewing, distribution and sales of these brands. Coors Canada
receives an amount from Molson Canada generally equal to net sales revenue
generated from our brands less production, distribution, sales and overhead
costs related to these sales. CCI received distributions from the partnership of
a U.S. dollar equivalent of approximately $27.9 million, $25.8 million and $21.0
million for 2001, 2000 and 1999, respectively. Our share of net income from this
partnership, which was approximately $29.2 million, $25.4 million and $21.5
million for 2001, 2000 and 1999,
F-22
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
respectively, is included in Sales on the accompanying Consolidated Statements
of Income. Also see discussion in Note 14, Segment and Geographic Information.
In December 2000, we entered into a five year brewing and packaging
arrangement with Molson in which we will have access to some of Molson's
available production capacity in Canada. The Molson capacity available to us
under this arrangement in 2001 was 250,000 barrels, none of which was used by
us. Starting in 2002, this available capacity increases up to 500,000 barrels.
Currently, we pay Molson a fee for holding this capacity aside for our future
use. The annual fee, starting in 2002, is 1.5 million Canadian dollars, which
results in an annual commitment of approximately $1 million. As of December 30,
2001, we are fully accrued for all fees required under the terms of this
agreement.
Molson USA, LLC: In January 2001, we entered into a joint venture
partnership agreement with Molson, Inc. and paid $65 million for our 49.9%
interest in the joint venture. The joint venture, Molson USA, LLC, has been
formed to import, market, sell and distribute Molson's brands of beer in the
United States. Approximately, $63.9 million of our initial investment was
considered goodwill, which was being amortized on a straight-line basis over a
life of 40 years. Amortization expense in 2001 was $1.6 million. (Please refer
to the Recent accounting pronouncement section of Note 1 for discussion
regarding changes in accounting for Goodwill and Other Intangible Assets).
During 2001, we received no distributions from the partnership and our share of
the net loss was approximately $2.2 million. This net loss is included in Other
income (expense) on the accompanying Consolidated Statements of Income. As a
result of the 2001 operating loss, we considered whether our investment was
impaired under Accounting Principles Board Opinion No. 18, The Equity Method of
Accounting for Investments in Common Stock, and determined that it was not. Any
potential decline in value during the year cannot be determined to be other than
temporary based on our short experience with the joint venture and our
continuing commitment to its success. The recoverability of our investment in
the joint venture will be further evaluated during 2002.
Rocky Mountain Bottle Company: We operate a 50/50 production joint venture
with Owens-Brockway Glass Container, Inc. (Owens), the Rocky Mountain Bottle
Company (RMBC), to produce glass bottles at our glass manufacturing facility.
The initial term of the joint venture expires in 2005 and can be extended for
additional two-year periods. RMBC has a contract to supply our bottle
requirements and Owens has a contract to supply the majority of our bottles for
our bottle requirements not met by RMBC. In 2001, we purchased all of the
bottles produced by RMBC, approximately 1.1 billion bottles.
The expenditures under this agreement in 2001, 2000 and 1999 were
approximately $92 million, $86 million and $69 million, respectively. Cash
distributions received from this joint venture were $9.1 million and $20.3
million in 2001 and 2000, respectively. No distributions were received in 1999.
Our share of net income from this partnership was $10.9 million, $9.8 million
and $9.0 million in 2001, 2000 and 1999, respectively, and is included within
Cost of goods sold on the accompanying Consolidated Statements of Income.
Valley Metal Container Partnership: In 1994, we formed a 50/50 production
joint venture with American National Can Company (ANC), called Valley Metal
Container Partnership, to produce beverage cans and ends at our manufacturing
facilities for sale to us and outside customers. ANC was subsequently acquired
by Rexam LLC. We purchased Rexam's interest in the joint venture at the end of
its term in August 2001. The aggregate amount paid to the joint venture for cans
and ends in 2001, 2000 and 1999 was approximately $149 million, $230 million and
$223 million, respectively. The 2001 amount reflects only what was paid to the
joint venture prior to its expiration in August. In addition, we received cash
distributions from this joint venture of $2.5 million, $8.5 million and $7.5
million in 2001, 2000 and 1999, respectively. Our share of net income from this
joint venture was $5.7 million, $7.2 million and $6.0 million for 2001, 2000 and
1999, respectively, and is included within Cost of goods sold on the
accompanying Consolidated Statements of Income.
F-23
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Rocky Mountain Metal Container: Effective January 1, 2002, we became an
equal member with Ball Corporation (Ball) in a Colorado limited liability
company, Rocky Mountain Metal Container, LLC (RMMC). Also effective on January
1, 2002, we entered into a can and end supply agreement with RMMC (the Supply
Agreement). Under that Supply Agreement, RMMC agreed to supply us with
substantially all of the can and end requirements for our Golden Brewery. RMMC
will manufacture these cans and ends at our existing manufacturing facilities,
which RMMC is operating under a use and license agreement. We have the right to
purchase Ball's interest in RMMC under certain conditions. If we do not exercise
that right, Ball may have the right to purchase our interest in RMMC. RMMC plans
to reduce manufacturing costs, and has planned capital improvements to the
facilities in the amount of approximately $50 million over the first three years
of its operations. RMMC will fund such improvements with third party financing.
RMMC's debt will not be included on our financial statements.
Graphic Packaging International Corporation: In 1992, we spun off our
wholly owned subsidiary, ACX Technologies, Inc., which has subsequently changed
its name to Graphic Packaging International Corporation (GPIC). We are also a
limited partner in a real estate development partnership in which a subsidiary
of GPIC is the general partner. The partnership owns, develops, operates and
sells certain real estate previously owned directly by us. We received cash
distributions of $0.8 million and $1.8 million in 2000 and 1999, respectively.
We did not receive income in 2001 or 2000. We received income of $0.5 million in
1999.
COST INVESTMENTS
Colorado Rockies Baseball: In 1991, we entered into an agreement with
Colorado Baseball Partnership 1993, Ltd. for an investment and multiyear signage
and advertising package. This commitment, totaling approximately $30 million,
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. We
believe that the carrying amount is not in excess of fair value. During 1998,
the agreement was modified to extend the term and expand the conditions of the
multiyear signage and advertising package. The recognition of the liability
under the multiyear signage and advertising package began in 1995 with the
opening of Coors Field(R). This liability is included in the total advertising
and promotion commitment discussed in Note 15, Commitments and Contingencies.
NOTE 11:
STOCK ACTIVITY AND EARNINGS PER SHARE
Capital stock: Both classes of common stock have the same rights and
privileges, except for voting, which (with certain limited exceptions) is the
sole right of the holder of Class A stock.
F-24
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Activity in our Class A and Class B common stock, net of forfeitures, for
each of the three years ended December 30, 2001, December 31, 2000, and December
26, 1999, is summarized below:
<Table>
<Caption>
COMMON STOCK
----------------------
CLASS A CLASS B
--------- ----------
BALANCES AT DECEMBER 27, 1998............................... 1,260,000 35,395,306
Shares issued under stock plans............................. -- 478,390
Purchases of stock.......................................... -- (411,662)
--------- ----------
BALANCES AT DECEMBER 26, 1999............................... 1,260,000 35,462,034
Shares issued under stock plans............................. -- 817,395
Purchases of stock.......................................... -- (408,308)
--------- ----------
BALANCES AT DECEMBER 31, 2000............................... 1,260,000 35,871,121
Shares issued under stock plans............................. -- 324,926
Purchases of stock.......................................... -- (1,506,637)
--------- ----------
BALANCES AT DECEMBER 30, 2001............................... 1,260,000 34,689,410
========= ==========
</Table>
At December 30, 2001, December 31, 2000, and December 26, 1999, 25 million
shares of no par value preferred stock were authorized but unissued.
The board of directors authorized the repurchase during 2001, 2000 and 1999
of up to $40 million each year of our outstanding Class B common stock on the
open market. In September 2001, the board of directors increased the authorized
2001 expenditure limit for the repurchase of outstanding shares of Class B
common stock to $90 million. During 2001, 2000 and 1999, 1,500,000 shares,
308,000 shares and 232,300 shares, respectively, were repurchased for
approximately $72.3 million, $17.6 million and $12.2 million, respectively,
under this stock repurchase program. In addition to the repurchase program, we
purchased 41,845 restricted shares for $2.4 million in 2000 and 164,117
restricted shares for $8.5 million in 1999. Pursuant to our by-laws restricted
shares must first be offered to us for repurchase. Even though in November 2001,
the board of directors extended the program and authorized the repurchase during
2002 of up to $40 million of stock, we decided to suspend our share repurchases
until we reduce debt levels resulting from the acquisition of the Coors Brewers
business from Interbrew. See discussion of the Carling acquisition in Note 17,
Subsequent Event.
F-25
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Earnings per share: Basic and diluted net income per common share were
arrived at using the calculations outlined below:
<Table>
<Caption>
FOR THE YEARS ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
2001 2000 1999
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income available to common shareholders..... $122,964 $109,617 $92,284
======== ======== =======
Weighted-average shares for basic EPS........... 36,902 36,785 36,729
Effect of dilutive securities:
Stock options................................. 266 606 640
Contingent shares not included in shares
outstanding for basic EPS.................. 9 59 88
-------- -------- -------
Weighted-average shares for diluted EPS......... 37,177 37,450 37,457
======== ======== =======
Basic EPS....................................... $ 3.33 $ 2.98 $ 2.51
======== ======== =======
Diluted EPS..................................... $ 3.31 $ 2.93 $ 2.46
======== ======== =======
</Table>
The dilutive effects of stock options were arrived at by applying the
treasury stock method, assuming we were to repurchase common shares with the
proceeds from stock options exercised. Stock options to purchase 2,199,173 and
6,555 shares of common stock were not included in the computation of 2001 and
2000 earnings per share, respectively, because the stock options' exercise
prices were greater than the average market price of the common shares.
NOTE 12:
DERIVATIVE INSTRUMENTS
In the normal course of business, we are exposed to fluctuations in
interest rates, foreign currency exchange rates and production and packaging
materials prices. To manage these exposures when practical, we have established
policies and procedures that govern the management of these exposures through
the use of a variety of financial instruments, as noted in detail below. By
policy, we do not enter into such contracts for the purpose of speculation.
Our derivative activities are subject to the management, direction and
control of the Financial Risk Management Committee (FRMC). The FRMC is composed
of the chief financial officer and other senior financial management of the
company. The FRMC sets forth risk management philosophy and objectives through a
corporate policy; provides guidelines for derivative-instrument usage; and
establishes procedures for control and valuation, counterparty credit approval
and the monitoring and reporting of derivative activity.
At December 30, 2001, and December 31, 2000, we had certain forward
contracts, options and swap agreements outstanding. Substantially all of these
instruments have been designated as cash flow hedges and these instruments hedge
a portion of our total exposure to the variability in future cash flows relating
to fluctuations in foreign exchange rates and certain production and packaging
materials prices.
F-26
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the aggregate notional principal amounts,
fair values and maturities of our derivative financial instruments outstanding
on December 30, 2001, and December 31, 2000 (in thousands):
<Table>
<Caption>
NOTIONAL
PRINCIPAL
AMOUNTS FAIR VALUES MATURITY
--------- ----------- -------------
(USD)
December 30, 2001
Foreign currency management
Option(1).................................. 1,705,000 (1,023) 02/02
Forwards................................... 217,370 2,336 01/02 - 04/03
Commodity pricing management
Swaps...................................... 132,477 (10,563) 02/02 - 02/04
December 31, 2000
Foreign currency management
Forwards................................... 28,958 1,054 01/01 - 01/02
Commodity pricing management
Swaps...................................... 86,621 4,574 02/01 - 08/02
</Table>
- ---------------
(1) The foreign exchange option for $1.7 billion notional was purchased to hedge
our exposure to fluctuations in the British pound exchange rate related to
acquisition of certain Coors Brewers assets.
Maturities of derivative financial instruments held on December 30, 2001,
are as follows (in thousands):
<Table>
<Caption>
2002(2) 2003 2004
- ------- ------- -----
$(6,473) $(3,053) $(123)
</Table>
(2) Amount includes the estimated deferred net loss of $6.1 million that is
expected to be recognized over the next 12 months, on certain forward
foreign exchange contracts and production and packaging materials derivative
contracts, when the underlying forecasted cash flow transactions occur.
In December 2001, we entered into a foreign currency forward sale agreement
to hedge our exposure to fluctuations in the British pound exchange rate related
to acquisition of certain Coors Brewers assets. Also, in anticipation of the
Carling acquisition, we entered into a commitment with a lender for the
financing of this transaction. Included within the commitment letter is a
foreign currency written option which reduced our exposure on the U.S. dollar
borrowing to fund the Coors Brewers transaction. The derivatives resulting from
these agreements do not qualify for hedge accounting and, accordingly, were
marked to market at year-end. The associated $0.3 million net expense was
recorded in other income in the accompanying Consolidated Statements of Income.
Subsequent to year-end, the foreign currency swap settled on January 12,
2002, and the written option included in the loan commitment expired on February
11, 2002, resulting in a combined loss and amortization expense of $1.2 million
to be realized during the first quarter of 2002.
During 2000, we had certain interest rate swap agreements outstanding to
help manage our exposure to fluctuations in interest rates. These swap
agreements were not designated as hedges and accordingly, all gains and losses
on these agreements were recorded in interest income in the accompanying
Consolidated Statements of Income. We did not have any interest rate swap
agreements outstanding during 2001, at December 30, 2001 or at December 31,
2000.
F-27
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 2001 and 2000, there were no significant gains or losses recognized
in earnings for hedge ineffectiveness or for discontinued hedges as a result of
an expectation that the forecasted transaction would no longer occur.
Derivatives are either exchange-traded instruments that are highly liquid,
or over-the-counter instruments with highly rated financial institutions. No
credit loss is anticipated as the counterparties to over-the-counter instruments
generally have long-term ratings from S&P or Moody's, that are no lower than A
or A2, respectively. Additionally, most counterparty fair value positions
favorable to us and in excess of certain thresholds are collateralized with
cash, U.S. Treasury securities or letters of credit. We have reciprocal
collateralization responsibilities for fair value positions unfavorable to us
and in excess of certain thresholds. At December 30, 2001, we had zero
counterparty collateral and had none outstanding.
F-28
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 13:
OTHER COMPREHENSIVE INCOME
<Table>
<Caption>
UNREALIZED GAIN
(LOSS) ON
FOREIGN AVAILABLE-FOR-SALE MINIMUM ACCUMULATED
CURRENCY SECURITIES AND PENSION OTHER
TRANSLATION DERIVATIVE LIABILITY COMPREHENSIVE
ADJUSTMENTS INSTRUMENTS ADJUSTMENT INCOME
----------- ------------------ ---------- -------------
(IN THOUSANDS)
Balances, December 27, 1998............... $(2,366) $ 440 $ -- $ (1,926)
Foreign currency translation
adjustments............................. (5,745) (5,745)
Unrealized loss on available-for-sale
securities.............................. (648) (648)
Unrealized gain on derivative
instruments............................. 11,159 11,159
Tax benefit (expense)..................... 2,226 (4,073) (1,847)
------- -------- -------- --------
Balances, December 26, 1999............... (5,885) 6,878 -- 993
Foreign currency translation
adjustments............................. 4,460 4,460
Unrealized gain on available-for-sale
securities.............................. 2,045 2,045
Unrealized loss on derivative
instruments............................. (3,221) (3,221)
Reclassification
adjustment -- available-for-sale
securities and derivative instruments... (4,058) (4,058)
Reclassification adjustment -- accumulated
translation adjustment -- closure of
Spain operations........................ 4,434 4,434
Tax (expense) benefit..................... (3,380) 1,989 (1,391)
------- -------- -------- --------
Balances, December 31, 2000............... (371) 3,633 -- 3,262
Foreign currency translation
adjustments............................. 22 22
Unrealized gain on available-for-sale
securities.............................. 5,997 5,997
Unrealized loss on derivative
instruments............................. (10,000) (10,000)
Minimum pension liability adjustment...... (13,668) (13,668)
Reclassification
adjustment -- available-for-sale
securities.............................. (4,042) (4,042)
Reclassification adjustment -- derivative
instruments............................. (3,858) (3,858)
Tax (expense) benefit..................... (8) 4,523 5,181 9,696
------- -------- -------- --------
Balances, December 30, 2001............... $ (357) $ (3,747) $ (8,487) $(12,591)
======= ======== ======== ========
</Table>
NOTE 14:
SEGMENT AND GEOGRAPHIC INFORMATION
We have one reporting segment relating to the continuing operations of
producing, marketing and selling malt-based beverages. Our operations are
conducted in the United States, the country of domicile, and several foreign
countries, none of which is individually significant to our overall operations.
The net revenues from
F-29
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
external customers, operating income and pretax income attributable to the
United States and all foreign countries for the years ended December 30, 2001,
December 31, 2000, and December 26, 1999, are as follows:
<Table>
<Caption>
2001 2000 1999
---------- ---------- ----------
(IN THOUSANDS)
United States and its territories:
Net revenues................................... $2,353,843 $2,331,693 $2,177,407
Operating income............................... $ 133,361 $ 163,563 $ 148,823
Pretax income.................................. $ 182,317 $ 185,082 $ 161,281
Other foreign countries:
Net revenues................................... $ 75,619 $ 82,722 $ 59,077
Operating income (loss)........................ $ 18,244 $ (12,937) $ (8,288)
Pretax income (loss)........................... $ 15,696 $ (15,557) $ (10,614)
</Table>
Included in 2001, 2000 and 1999 foreign revenues are earnings from CCI, our
investment accounted for using the equity method of accounting (see Note 10,
Investments). Included in operating income and pretax income are net special
charges of $23.2 million, $15.2 million and $5.7 million, for 2001, 2000 and
1999, respectively (see Note 9, Special Charges). The 2001 net special charge
included a charge of $25.9 million related to the United States and its
territories and a credit of $2.7 million related to other foreign countries. The
2000 net special charge included a credit of $5.4 million related to the United
States and its territories and a charge of $20.6 million related to other
foreign countries. The special charges recorded in 1999 related entirely to the
United States and its territories.
The net long-lived assets, including Property, Goodwill and other
intangible assets, located in the United States and its territories and all
other foreign countries as of December 30, 2001, December 31, 2000 and December
26, 1999 are as follows:
<Table>
<Caption>
2001 2000 1999
-------- -------- --------
(IN THOUSANDS)
United States and its territories.................... $955,615 $786,966 $758,875
Other foreign countries.............................. 384 3,622 8,939
-------- -------- --------
Total.............................................. $955,999 $790,588 $767,814
======== ======== ========
</Table>
The total net export sales (in thousands) during 2001, 2000 and 1999 were
$205,187, $202,832 and $185,260, respectively.
We are currently evaluating the impact the Carling acquisition will have on
our number of reporting segments for 2002. At this time, we anticipate having
two reportable operating segments: the Americas and Europe. See Note 17,
Subsequent Event, for discussion of the Carling acquisition.
NOTE 15:
COMMITMENTS AND CONTINGENCIES
Insurance: It is our policy to be self-insured for certain insurable risks
consisting primarily of employee health insurance programs, as well as workers'
compensation, general liability and property insurance deductibles. During 2001,
we fully insured future risks for long-term disability, and, in most states,
workers' compensation, but maintained a self-insured position for workers'
compensation for certain self-insured states and for claims incurred prior to
the inception of the insurance coverage in Colorado in 1997.
Letters of credit: As of December 30, 2001, we had approximately $5.8
million outstanding in letters of credit with certain financial institutions.
These letters expire in March 2003. These letters of credit are being
F-30
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
maintained as security for performance on certain insurance policies and for
operations of underground storage tanks, as well as to collateralize principal
and interest on industrial revenue bonds issued by us.
As part of the settlement and indemnification agreement related to the
Lowry landfill site with the City and County of Denver and Waste Management of
Colorado, Inc., we agreed to post a letter of credit equal to the present value
of our share of future estimated costs if estimated future costs exceed a
certain amount and our long-term credit rating falls to a certain level.
Although future estimated costs now exceed the level provided in the agreement,
our credit rating remains above the level that would require this letter of
credit to be obtained. Based on our preliminary evaluation, should our credit
rating fall below the level stipulated by the agreement, it is reasonably
possible that the letter of credit that would be issued could be for as much as
$10 million. For additional information see the Environmental section below.
Financial guarantees: We have a 1.1 million yen financial guarantee
outstanding on behalf of our subsidiary, Coors Japan. This subsidiary guarantee
is primarily for two working capital lines of credit and payments of certain
duties and taxes. One of the lines provides up to 500 million yen and the other
provides up to 400 million yen (approximately $6.8 million in total as of
December 30, 2001) in short-term financing. As of December 30, 2001, the
approximate yen equivalent of $3.0 million was outstanding under these
arrangements and is included in Accrued expenses and other liabilities in the
accompanying Consolidated Balance Sheets.
Power supplies: Coors Energy Company (CEC), a fully owned subsidiary of
ours, entered into a 10-year agreement to purchase 100% of the brewery's coal
requirements from Bowie Resources Ltd. (Bowie). The coal then is sold to
Trigen-Nations Energy Corporation, L.L.L.P. (Trigen).
We have an agreement to purchase the electricity and steam needed to
operate the brewery's Golden facilities through 2020 from Trigen. Our financial
commitment under this agreement is divided between a fixed, non-cancelable cost
of approximately $14.6 million for 2002, which adjusts annually for inflation,
and a variable cost, which is generally based on fuel cost and our electricity
and steam use. Total purchases, fixed and variable, under this contract in 2001,
2000 and 1999 were $29.8 million, $28.4 million and $26.3 million, respectively.
Supply contracts: We have various long-term supply contracts with
unaffiliated third parties and our joint ventures to purchase materials used in
production and packaging, such as starch, cans and glass. The supply contracts
provide that we purchase certain minimum levels of materials for terms extending
through 2005. The approximate future purchase commitments under these supply
contracts are:
<Table>
<Caption>
FISCAL YEAR AMOUNT
- ----------- --------------
(IN THOUSANDS)
2002........................................................ $478,800
2003........................................................ 195,750
2004........................................................ 195,750
2005........................................................ 93,500
--------
Total....................................................... $963,800
========
</Table>
Our total purchases under these contracts in 2001, 2000 and 1999 were
approximately $243.3 million, $235.0 million and $177.9 million, respectively.
Brewing and packaging contract: In December 2000, we entered into a five
year brewing and packaging arrangement with Molson in which we will have access
to some of Molson's available production capacity in Canada. The Molson capacity
available to us under this arrangement in 2001 was 250,000 barrels, none of
which was used by us. Starting in 2002, this available capacity increases up to
500,000 barrels. Currently, we pay Molson a fee for holding this capacity aside
for our future use. The annual fee starting in 2002 is
F-31
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1.5 million Canadian dollars which results in an annual commitment of
approximately $1 million. As of December 30, 2001, we are fully accrued for all
fees required under the terms of this agreement.
Third-party logistics contract: We are consolidating our California and
Colorado finished goods warehouse network and EXEL, Inc. is providing warehouse
services in Ontario, California, for us under a seven-year operating agreement.
The operating costs which total $2.6 million have been agreed to for the first
year of operation. We will be conducting an annual review of the scope of
services with EXEL to determine pricing for the following years. Any increases
are limited to 3% annually.
Graphic Packaging International Corporation: We have a packaging supply
agreement with a subsidiary of Graphic Packaging International Corporation
(GPIC) under which we purchase a large portion of our paperboard requirements.
We have begun negotiations to extend the term of this contract which expires in
2002. We expect it to be renewed prior to expiration. Our purchases under the
packaging agreement in 2001, 2000 and 1999 totaled approximately $125 million,
$112 million and $107 million, respectively. We expect purchases in 2002 under
the packaging agreement to be approximately $118 million. Related accounts
receivable balances included in Affiliates Accounts Receivable on the
Consolidated Balance Sheets were immaterial in 2001 and 2000. Related accounts
payable balances included in Affiliates Accounts Payable on the Consolidated
Balance Sheets were $0.5 million and $1.3 million in 2001 and 2000,
respectively. William K. Coors is a trustee of family trusts that collectively
own all of our Class A voting common stock, approximately 31% of our Class B
common stock, approximately 42% of GPIC's common stock and 100% of GPIC's series
B preferred stock, which is currently convertible into 48,484,848 shares of
GPIC's common stock. If converted, the trusts would own approximately 78% of
GPIC's common stock. Peter H. Coors is also a trustee of some of these trusts.
Advertising and promotions: We have various long-term non-cancelable
commitments for advertising and promotions, including marketing at sports
arenas, stadiums and other venues and events. At December 30, 2001, the future
commitments are as follows:
<Table>
<Caption>
FISCAL YEAR AMOUNT
- ----------- --------------
(IN THOUSANDS)
2002........................................................ $40,909
2003........................................................ 11,512
2004........................................................ 10,618
2005........................................................ 9,221
2006........................................................ 7,933
Thereafter.................................................. 11,299
-------
Total..................................................... $91,492
=======
</Table>
Environmental: We were one of a number of entities named by the
Environmental Protection Agency (EPA) as a potentially responsible party (PRP)
at the Lowry Superfund site. This landfill is owned by the City and County of
Denver (Denver), and was managed by Waste Management of Colorado, Inc. (Waste).
In 1990, we recorded a special pretax charge of $30 million, a portion of which
was put into a trust in 1993 as part of an agreement with Denver and Waste to
settle the outstanding litigation related to this issue.
Our settlement was based on an assumed cost of $120 million (in 1992
adjusted dollars). It requires us to pay a portion of future costs in excess of
that amount.
In January 2002, in response to the EPA's five-year review conducted in
2001, Waste provided us with updated annual cost estimates through 2032. We have
reviewed these cost estimates in the assessment of our accrual related to this
issue. In determining that the current accrual is adequate, we eliminated
certain costs included in Waste's estimates, primarily trust management costs
that will be accrued as incurred, certain
F-32
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
remedial costs for which technology has not yet been developed and income taxes
which we do not believe to be an included cost in the determination of when the
$120 million threshold is reached. We generally used a 2% inflation rate for
future costs, and discounted certain operations and maintenance costs at the
site that we deemed to be determinable, at a 5.46% risk-free rate of return.
Based on these assumptions, the present value and gross amount of discounted
costs are approximately $1 million and $4 million, respectively. We did not
assume any future recoveries from insurance companies in the estimate of our
liability.
There are a number of uncertainties at the site, including what additional
remedial actions will be required by the EPA, and what costs are included in the
determination of when the $120 million threshold is reached. Because of these
issues, the estimate of our liability may change as facts further develop, and
we may need to increase the reserve. While we cannot predict the amount of any
such increase, an additional accrual of as much as $25 million is reasonably
possible based on our preliminary evaluation, with additional cash contributions
beginning as early as 2013.
We were one of several parties named by the EPA as a PRP at the Rocky Flats
Industrial Park site. In September 2000, the EPA entered into an Administrative
Order on Consent with certain parties, including our company, requiring
implementation of a removal action. Our projected costs to construct and monitor
the removal action are approximately $300,000. The EPA will also seek to recover
its oversight costs associated with the project which are not possible to
estimate at this time. However, we believe they would be immaterial to our
operating results, cash flows and financial position.
In August 2000, an accidental spill into Clear Creek at our Golden,
Colorado, facility caused damage to some of the fish population in the creek. A
settlement reached in February 2001 with the Colorado Department of Public
Health and Environment was modified based on public comment, including comments
by the EPA. As a result, permit violations that occurred several years prior to
the accidental spill were included in the settlement, as well as economic
benefit penalties related to those prior violations. A total civil penalty of
$100,000 was assessed in the final settlement with the Department reached in
August 2001. In addition, we will undertake an evaluation of our process
wastewater treatment plant. On December 21, 2001, we settled with the Colorado
Division of Wildlife for the loss of fish in Clear Creek. We have agreed to
construct, as a pilot project, a tertiary treatment wetlands area to evaluate
the ability of a wetlands to provide additional treatment to the effluent from
our waste treatment facilities. We will also pay for the stocking of game fish
in the Denver metropolitan area and the cost of two graduate students to assist
in the research of the pilot project. The anticipated costs of the project are
estimated to be approximately $500,000. The amounts of these settlements have
been fully accrued as of December 30, 2001.
From time to time, we have been notified that we are or may be a PRP under
the Comprehensive Environmental Response, Compensation and Liability Act or
similar state laws for the cleanup of other sites where hazardous substances
have allegedly been released into the environment. We cannot predict with
certainty the total costs of cleanup, our share of the total cost, the extent to
which contributions will be available from other parties, the amount of time
necessary to complete the cleanups or insurance coverage.
In addition, we are aware of groundwater contamination at some of our
properties in Colorado resulting from historical, ongoing or nearby activities.
There may also be other contamination of which we are currently unaware.
While we cannot predict our eventual aggregate cost for our environmental
and related matters in which we are currently involved, we believe that any
payments, if required, for these matters would be made over a period of time in
amounts that would not be material in any one year to our operating results,
cash flows or our financial or competitive position. We believe adequate
reserves have been provided for losses that are probable and estimable.
Litigation: We are also named as a defendant in various actions and
proceedings arising in the normal course of business. In all of these cases, we
are denying the allegations and are vigorously defending ourselves
F-33
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
against them and, in some instances, have filed counterclaims. Although the
eventual outcome of the various lawsuits cannot be predicted, it is management's
opinion that these suits will not result in liabilities that would materially
affect our financial position, results of operations or cash flows.
Restructuring: At December 30, 2001, we had a $2.2 million liability
related to personnel accruals as a result of a restructuring of operations that
occurred in 1993. These accruals relate to obligations under deferred
compensation arrangements and postretirement benefits other than pensions. For
the restructuring liabilities incurred during 2001, 2000 and 1999, see
discussion in Note 9, Special Charges.
Labor: Approximately 8% of our work force, located principally at the
Memphis brewing and packaging facility, is represented by a labor union with
whom we engage in collective bargaining. A labor contract prohibiting strikes
was negotiated in early 2001. The new contract expires in 2005.
NOTE 16:
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following summarizes selected quarterly financial information for each
of the two years in the period ended December 30, 2001.
Income in 2001 was decreased by a net special pretax charge of $23.2
million and income in 2000 was decreased by a net special pretax charge of $15.2
million. Refer to Note 9 for a further discussion of special charges.
During the fourth quarter of 2000, we reduced our total expenses by
approximately $3.1 million when certain estimates for employee benefits and
other liabilities were adjusted based upon updated information that we received
in the normal course of business.
<Table>
<Caption>
2001 FIRST SECOND THIRD FOURTH YEAR
---- --------- --------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Gross sales....................... $ 637,828 $ 809,729 $ 742,654 $ 652,541 $ 2,842,752
Beer excise taxes................. (94,128) (117,029) (107,991) (94,142) (413,290)
--------- --------- --------- --------- -----------
Net sales......................... 543,700 692,700 634,663 558,399 2,429,462
Cost of goods sold................ (351,153) (424,880) (402,306) (359,284) (1,537,623)
--------- --------- --------- --------- -----------
Gross profit...................... $ 192,547 $ 267,820 $ 232,357 $ 199,115 $ 891,839
Net income........................ $ 18,328 $ 49,852 $ 38,916 $ 15,868 $ 122,964
Net income per common share --
basic........................... $ 0.49 $ 1.34 $ 1.05 $ 0.44 $ 3.33
Net income per common share --
diluted......................... $ 0.49 $ 1.33 $ 1.05 $ 0.44 $ 3.31
</Table>
F-34
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<Table>
<Caption>
2000 FIRST SECOND THIRD FOURTH YEAR
---- --------- --------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Gross sales....................... $ 596,789 $ 788,921 $ 773,535 $ 682,493 $ 2,841,738
Beer excise taxes................. (91,360) (119,108) (116,459) (100,396) (427,323)
--------- --------- --------- --------- -----------
Net sales......................... 505,429 669,813 657,076 582,097 2,414,415
Cost of goods sold................ (326,919) (404,570) (413,314) (381,026) (1,525,829)
--------- --------- --------- --------- -----------
Gross profit...................... $ 178,510 $ 265,243 $ 243,762 $ 201,071 $ 888,586
Net income........................ $ 14,819 $ 48,344 $ 34,492 $ 11,962 $ 109,617
Net income per common share --
basic........................... $ 0.40 $ 1.32 $ 0.94 $ 0.32 $ 2.98
Net income per common share --
diluted......................... $ 0.40 $ 1.29 $ 0.92 $ 0.32 $ 2.93
</Table>
NOTE 17:
SUBSEQUENT EVENT
On February 2, 2002, we acquired 100% of the outstanding shares of Bass
Holdings Ltd. and certain other intangible assets from Interbrew S.A. as well as
paying off certain intercompany loan balances with Interbrew for a total
purchase price of L.1.2 billion (approximately $1.7 billion), plus associated
fees and expenses and a restructuring provision. The purchase price is subject
to adjustment based on the value of working capital, certain intercompany trade
balances and undistributed earnings from joint ventures as of the acquisition
date. This acquisition resulted in us obtaining the United Kingdom (U.K.) based
Carling business. The Carling Brewers' business, subsequently renamed Coors
Brewers Limited, includes the majority of the assets that previously made up
Bass Brewers, including the Carling, Worthington and Caffrey's brand beers; the
U.K. distribution rights to Grolsch (via a joint venture with Grolsch N.V.);
several other beer and flavored-alcoholic beverage brands; related brewing and
malting facilities in the U.K.; and a 49.9% interest in the distribution
logistics provider, Tradeteam. Coors Brewers is the second-largest brewer in the
U.K. and Carling lager is the best-selling beer brand in the U.K. The brand
rights for Carling, which is the largest acquired brand by volume, are mainly
for territories in Europe. The addition of Coors Brewers reduces our reliance on
one product in North America and also creates a broader, more diversified
company in a consolidating global beer market.
The following table summarizes the preliminary estimated fair values of the
assets acquired and liabilities assumed at the date of acquisition. We are in
the process of obtaining third-party valuations of certain tangible and
intangible assets and of pension and other liabilities, and analyzing other
market or historical information for certain estimates. We are also finalizing
the tax and financing structure of the acquired business and evaluating certain
restructuring plans. Accordingly, the allocation of the purchase price is
subject to change.
F-35
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Also, as noted above, the purchase price is subject to further adjustments,
which have not yet been finalized with Interbrew. These adjustments will result
in further change to the purchase price allocation.
<Table>
<Caption>
AS OF FEBRUARY 2,
2002
-----------------
(IN MILLIONS)
Current assets.............................................. $ 547
Property, plant and equipment............................... 445
Other assets................................................ 444
Intangible assets........................................... 415
Goodwill.................................................... 532
------
Total assets acquired..................................... 2,383
------
Current liabilities......................................... (428)
Non-current liabilities..................................... (238)
------
Total liabilities assumed................................. (666)
------
Net assets acquired.................................... $1,717
======
</Table>
Of the $415 million of acquired intangible assets, approximately $389
million has been assigned to brand names and distribution rights. The remaining
$26 million was assigned to patents and technology and distribution channels.
The respective lives of these assets and the resulting amortization is still
being evaluated.
In March 2002, we announced plans to close our Cape Hill brewery and Alloa
malting facility. A majority of the production at the Cape Hill brewery relates
to brands that were retained by Interbrew. The production at the Alloa malting
facility will be moved to one of the other existing malting facilities. The plan
to close these sites and the associated exit costs have been reflected in the
purchase price allocation above.
We funded the acquisition with approximately $150 million of cash on hand
and approximately $1.55 billion of combined debt as described below at the
prevailing exchange rate:
<Table>
<Caption>
FACILITY
CURRENCY BALANCE
TERM DENOMINATION (IN MILLIONS)
- ---- ------------ -------------
5 year Amortizing term loan............................. USD $ 478
5 year Amortizing term loan (L228 million).............. GBP 322
9 month Bridge facility.................................. USD 750
------
$1,550
======
</Table>
In conjunction with the term loan and bridge facility, we incurred
financing fees of approximately $9 million and $500,000, respectively. These
fees will be amortized over the respective term of the borrowing. There is an
additional financing fee on the bridge facility of approximately $1.1 million if
the facility is not repaid by May 15, 2002. We expect to refinance our nine
month bridge facility through issuance of long-term financing prior to maturity.
Amounts outstanding under both our term loan and our bridge facility bear
interest, at our option, at a rate per annum equal to either an adjusted LIBOR
or an alternate rate, in each case plus an additional margin. The additional
margin is set based upon our investment grade. If our investment grade changes,
the additional margin is subject to adjustment. Interest is payable quarterly
unless the selected LIBOR is for a time period
F-36
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
less than 90 days, in which case the interest is payable in the time period
corresponding to the selected LIBOR.
Our term loan is payable quarterly in arrears beginning March 28, 2003,
pursuant to the amortization schedule below, and matures February 1, 2007.
<Table>
<Caption>
AMORTIZATION RATE
YEAR OF ANNUAL PAYMENTS OF TERM LOANS
- ----------------------- -----------------
2003........................................................ 15%
2004........................................................ 20%
2005........................................................ 25%
2006........................................................ 30%
2007........................................................ 10%
---
100%
===
</Table>
We and all of our existing and future, direct and indirect, domestic
subsidiaries, other than immaterial domestic subsidiaries, have guaranteed our
term loan.
Our term loan requires us to meet certain periodic financial tests,
including maximum total leverage ratio and minimum interest coverage ratio.
There are also certain restrictions on indebtedness, liens and guarantees;
mergers, consolidations and some types of acquisitions and assets sales;
dividends and stock repurchases; and certain types of business in which we can
engage. We expect to timely repay this facility in accordance with its terms.
F-37
18. SUPPLEMENTAL GUARANTOR INFORMATION
On May 7, 2002, our wholly owned subsidiary, Coors Brewing Company,
completed a private placement of $850 million principal amount of 6 3/8% Senior
Notes due 2012. The notes were issued with registration rights and are jointly
and severally guaranteed on a senior and unsecured basis by Adolph Coors Company
and certain domestic subsidiaries. A significant amount of the Issuer's income
and cash flow is generated by its subsidiaries. As a result, funds necessary to
meet the Issuer's debt service obligations are provided in large part by
distributions or advances from its subsidiaries. Under certain circumstances,
contractual and legal restrictions, as well as our financial condition and
operating requirements and those of certain domestic subsidiaries, could limit
the Issuer's ability to obtain cash from us and certain subsidiaries for the
purpose of meeting its debt service obligation, including the payment of
principal and interest on the Notes.
The following information sets forth our condensed consolidating balance
sheet as of December 30, 2001 and December 31, 2000, and the condensed
consolidating statements of operations and cash flows for the fiscal years ended
December 30, 2001, December 31, 2000 and December 26, 1999. Investments in our
subsidiaries are accounted for on the equity method; accordingly entries
necessary to consolidate the Parent Guarantor, Issuer of Notes, and all of its
subsidiaries are reflected in the elimination column. Separate complete
financial statements of the Issuer and the Subsidiary Guarantors would not
provide additional material information that would be useful in assessing the
financial composition of the Guarantors.
F-38
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 30, 2001
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
Sales -- domestic and
international........ $ -- $ 2,544,857 $122,793 $175,102 $ -- $ 2,842,752
Beer excise taxes...... -- (396,270) (5,732) (11,288) -- (413,290)
-------- ----------- -------- -------- --------- -----------
Net sales.............. -- 2,148,587 117,061 163,814 -- 2,429,462
Cost of goods sold..... -- (1,384,854) (87,085) (65,684) -- (1,537,623)
Equity in subsidiary
earnings............. 110,468 40,156 -- -- (150,624) --
-------- ----------- -------- -------- --------- -----------
Gross profit........... 110,468 803,889 29,976 98,130 (150,624) 891,839
Other operating
expenses:
Marketing, general
and
administrative.... (465) (654,622) (27,912) (34,061) -- (717,060)
Special charges...... -- (23,174) -- -- -- (23,174)
-------- ----------- -------- -------- --------- -----------
Total other
operating
expenses........ (465) (677,796) (27,912) (34,061) -- (740,234)
-------- ----------- -------- -------- --------- -----------
Operating income....... 110,003 126,093 2,064 64,069 (150,624) 151,605
Other income (expense):
Gain on sales of
distributorships... -- -- 27,667 -- -- 27,667
Interest income...... 14,313 1,781 -- 315 -- 16,409
Interest expense..... 2,241 (4,236) (11) -- -- (2,006)
Miscellaneous -- net... 4,042 28,318 33,077 (61,099) -- 4,338
-------- ----------- -------- -------- --------- -----------
Total other income
(expense)....... 20,596 25,863 60,733 (60,784) -- 46,408
-------- ----------- -------- -------- --------- -----------
Income before income
taxes................ 130,599 151,956 62,797 3,285 (150,624) 198,013
Income tax expense..... (7,635) (42,372) (23,800) (1,242) -- (75,049)
-------- ----------- -------- -------- --------- -----------
Net income............. $122,964 $ 109,584 $ 38,997 $ 2,043 $(150,624) $ 122,964
======== =========== ======== ======== ========= ===========
</Table>
F-39
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
Sales -- domestic and
international........ $ -- $ 2,632,436 $133,842 $ 75,460 $ -- $ 2,841,738
Beer excise taxes...... -- (403,790) (7,902) (15,631) -- (427,323)
-------- ----------- -------- -------- -------- -----------
Net sales.............. -- 2,228,646 125,940 59,829 -- 2,414,415
Cost of goods sold..... -- (1,419,483) (92,109) (14,237) -- (1,525,829)
Equity in subsidiary
earnings............. 92,689 (23,795) -- -- (68,894) --
-------- ----------- -------- -------- -------- -----------
Gross profit........... 92,689 785,368 33,831 45,592 (68,894) 888,586
Other operating
expenses:
Marketing, general
and
administrative.... (1,224) (645,668) (30,709) (45,144) -- (722,745)
Special charges...... -- 1,543 -- (16,758) -- (15,215)
-------- ----------- -------- -------- -------- -----------
Total other
operating
expenses........ (1,224) (644,125) (30,709) (61,902) -- (737,960)
-------- ----------- -------- -------- -------- -----------
Operating income....... 91,465 141,243 3,122 (16,310) (68,894) 150,626
Other income (expense):
Gain on sale of
distributorships... -- -- 1,000 -- -- 1,000
Interest income...... 18,306 2,566 -- 453 -- 21,325
Interest expense..... 9,094 (15,450) -- (58) -- (6,414)
Miscellaneous -- net... -- 27,509 1,393 (25,914) -- 2,988
-------- ----------- -------- -------- -------- -----------
Total other income
(expense)....... 27,400 14,625 2,393 (25,519) -- 18,899
-------- ----------- -------- -------- -------- -----------
Income before income
taxes................ 118,865 155,868 5,515 (41,829) (68,894) 169,525
Income tax expense..... (9,248) (63,475) (1,948) 14,763 -- (59,908)
-------- ----------- -------- -------- -------- -----------
Net income............. $109,617 $ 92,393 $ 3,567 $(27,066) $(68,894) $ 109,617
======== =========== ======== ======== ======== ===========
</Table>
F-40
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 26, 1999
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
Sales -- domestic and
international........ $ -- $ 2,476,079 $109,663 $ 56,970 $ -- $ 2,642,712
Beer excise taxes...... -- (386,673) (7,561) (11,994) -- (406,228)
-------- ----------- -------- -------- -------- -----------
Net sales.............. -- 2,089,406 102,102 44,976 -- 2,236,484
Cost of goods sold..... -- (1,305,301) (72,046) (19,904) -- (1,397,251)
Equity in subsidiary
earnings............. 73,895 6,317 -- -- (80,212) --
-------- ----------- -------- -------- -------- -----------
Gross profit........... 73,895 790,422 30,056 25,072 (80,212) 839,233
Other operating
expenses:
Marketing, general
and
administrative.... (1,380) (647,134) (27,757) (16,722) -- (692,993)
Special charges...... -- (3,725) (1,980) -- -- (5,705)
-------- ----------- -------- -------- -------- -----------
Total other
operating
expenses........ (1,380) (650,859) (29,737) (16,722) -- (698,698)
-------- ----------- -------- -------- -------- -----------
Operating income....... 72,515 139,563 319 8,350 (80,212) 140,535
Other income (expense):
Interest income...... 11,286 -- -- -- -- 11,286
Interest expense..... 20,117 (24,474) (349) 349 -- (4,357)
Miscellaneous -- net... -- 5,334 -- (2,131) -- 3,203
-------- ----------- -------- -------- -------- -----------
Total other income
(expense)....... 31,403 (19,140) (349) (1,782) -- 10,132
-------- ----------- -------- -------- -------- -----------
Income before income
taxes................ 103,918 120,423 (30) 6,568 (80,212) 150,667
Income tax expense..... (11,634) (44,216) 12 (2,545) -- (58,383)
-------- ----------- -------- -------- -------- -----------
Net income............. $ 92,284 $ 76,207 $ (18) $ 4,023 $(80,212) $ 92,284
======== =========== ======== ======== ======== ===========
</Table>
F-41
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 30, 2001
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER OF SUBSIDIARY NON
GUARANTOR NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents... $ 58,565 $ 4,790 $ 724 $13,054 $ -- $ 77,133
Short-term marketable
securities............... 232,572 -- -- -- -- 232,572
Accounts and notes
receivable:
Trade, net............... -- 74,017 9,909 11,059 -- 94,985
Affiliates............... -- 223 -- -- -- 223
Other, net............... 791 10,694 1,766 273 -- 13,524
Total inventories...... -- 108,012 5,134 1,977 -- 115,123
Maintenance and operating
supplies, net............ -- 21,378 -- 2,076 -- 23,454
Prepaid expenses and other
assets................... 152 18,123 317 3,130 -- 21,722
Deferred tax asset.......... (1,451) 27,074 1,503 667 -- 27,793
---------- ---------- ------- ------- --------- ----------
Total current assets... 290,629 264,311 19,353 32,236 -- 606,529
Properties, at cost and net... -- 839,304 23,141 7,265 -- 869,710
Goodwill...................... -- 878 6,077 -- -- 6,955
Other intangibles, net........ -- 72,167 7,167 -- -- 79,334
Investments in joint ventures,
net......................... -- 94,785 -- -- -- 94,785
Net investment in and advances
to subs..................... 769,754 67,458 -- -- (837,212) --
Other assets.................. 3,298 65,102 8,062 5,917 -- 82,379
---------- ---------- ------- ------- --------- ----------
Total assets.................. $1,063,681 $1,404,005 $63,800 $45,418 $(837,212) $1,739,692
========== ========== ======= ======= ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade.................... $ -- $ 197,925 $ 5,074 $16,382 $ -- $ 219,381
Affiliates............... -- 3,112 -- -- -- 3,112
Accrued salaries and
vacations................ -- 55,397 1,358 12 -- 56,767
Taxes, other than income
taxes.................... -- 27,469 556 3,246 -- 31,271
Accrued expenses and other
liabilities.............. 5,186 106,329 2,105 8,394 -- 122,014
Current portion of long-term
debt..................... 85,000 -- -- -- -- 85,000
---------- ---------- ------- ------- --------- ----------
Total current
liabilities......... 90,186 390,232 9,093 28,034 -- 517,545
Long-term debt................ 20,000 -- -- -- -- 20,000
Deferred tax liability........ (3,032) 65,643 (611) (365) -- 61,635
Deferred pension and post-
retirement benefits......... -- 141,720 -- -- -- 141,720
Other long-term liabilities... 5,215 38,702 26 3,537 -- 47,480
---------- ---------- ------- ------- --------- ----------
Total liabilities...... 112,369 636,297 8,508 31,206 -- 788,380
---------- ---------- ------- ------- --------- ----------
Total shareholders'
equity.............. 951,312 767,708 55,292 14,212 (837,212) 951,312
---------- ---------- ------- ------- --------- ----------
Total liabilities and
shareholders' equity........ $1,063,681 $1,404,005 $63,800 $45,418 $(837,212) $1,739,692
========== ========== ======= ======= ========= ==========
</Table>
F-42
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER OF SUBSIDIARY NON
GUARANTOR NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents... $ 114,546 $ (2,111) $ 2,321 $ 5,005 $ -- $ 119,761
Short-term marketable
securities............... 72,759 -- -- -- -- 72,759
Accounts and notes
receivable:
Trade, net............... -- 76,093 15,298 13,093 -- 104,484
Affiliates............... -- 7,173 36 -- -- 7,209
Other, net............... 3,990 10,446 -- 949 -- 15,385
Total inventories...... -- 96,027 10,981 2,916 -- 109,924
Maintenance and operating
supplies, net............ -- 22,121 -- 1,582 -- 23,703
Prepaid expenses and other
assets................... 885 15,733 873 2,356 -- 19,847
Deferred tax asset.......... (1,138) 23,724 1,388 705 -- 24,679
---------- ---------- ------- ------- --------- ----------
Total current assets... 191,042 249,206 30,897 26,606 -- 497,751
Properties, at cost and net... 252 713,621 11,636 10,284 -- 735,793
Goodwill and other
intangibles, net............ -- 25,349 29,446 -- -- 54,795
Investments in joint ventures,
net......................... -- 56,342 -- -- -- 56,342
Long-term marketable
securities.................. 193,675 -- -- -- -- 193,675
Net investment in and advances
to subs..................... 658,799 61,719 -- -- (720,518) --
Other assets, net............. 2,106 81,611 1,922 5,309 -- 90,948
---------- ---------- ------- ------- --------- ----------
Total assets.................. $1,045,874 $1,187,848 $73,901 $42,199 $(720,518) $1,629,304
========== ========== ======= ======= ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade.................... $ -- $ 174,931 $ 3,679 $ 7,495 $ -- $ 186,105
Affiliates............... 5,706 5,915 -- -- -- 11,621
Accrued salaries and
vacations................ -- 51,994 2,895 2,152 -- 57,041
Taxes, other than income
taxes.................... -- 28,817 1,246 2,406 -- 32,469
Accrued expenses and other
liabilities.............. -- 65,581 25,498 1,021 -- 92,100
---------- ---------- ------- ------- --------- ----------
Total current
liabilities......... 5,706 327,238 33,318 13,074 -- 379,336
Long-term debt................ 105,000 -- -- -- -- 105,000
Deferred tax liability........ (3,281) 90,356 671 2,240 -- 89,986
Deferred pension and post-
retirement benefits......... -- 77,147 -- -- -- 77,147
Other long-term liabilities... 6,060 35,464 59 3,863 -- 45,446
---------- ---------- ------- ------- --------- ----------
Total liabilities...... 113,485 530,205 34,048 19,177 -- 696,915
---------- ---------- ------- ------- --------- ----------
Total shareholders'
equity.............. 932,389 657,643 39,853 23,022 (720,518) 932,389
---------- ---------- ------- ------- --------- ----------
Total liabilities and
shareholders' equity........ $1,045,874 $1,187,848 $73,901 $42,199 $(720,518) $1,629,304
========== ========== ======= ======= ========= ==========
</Table>
F-43
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 30, 2001
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTOR GUARANTOR CONSOLIDATED
--------- --------- ---------- ---------- ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES............... $(110,280) $ 266,986 $ 41,922 $(5,232) $ 193,396
--------- --------- -------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments........... (228,237) -- -- -- (228,237)
Sales and maturities of
investments..................... 268,093 -- -- -- 268,093
Additions to properties and
intangible assets............... 522 (230,593) (13,934) (543) (244,548)
Investment in Molson USA, LLC...... -- (65,000) -- -- (65,000)
Proceeds from sales of properties
and intangible assets........... -- 20,060 43,469 -- 63,529
Other.............................. -- 7,589 -- 1,825 9,414
--------- --------- -------- ------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES.......... 40,378 (267,944) 29,535 1,282 (196,749)
--------- --------- -------- ------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock........ (72,345) -- -- -- (72,345)
Issuances of stock under stock
plans........................... 10,701 -- -- -- 10,701
Dividends paid..................... (29,510) -- -- -- (29,510)
Net activity in investment in and
advances to (from)
subsidiaries.................... 53,524 7,859 (73,054) 11,671 --
Overdraft balances................. 51,551 -- -- -- 51,551
Other.............................. -- -- -- 759 759
--------- --------- -------- ------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES.......... 13,921 7,859 (73,054) 12,430 (38,844)
--------- --------- -------- ------- ---------
Cash and cash equivalents:
Net increase (decrease) in cash and
cash equivalents................ (55,981) 6,901 (1,597) 8,480 (42,197)
Effect of exchange rate changes on
cash and cash equivalents....... -- -- -- (431) (431)
Balance at beginning of year....... 114,546 (2,111) 2,321 5,005 119,761
--------- --------- -------- ------- ---------
BALANCE AT END OF YEAR............... $ 58,565 $ 4,790 $ 724 $13,054 $ 77,133
========= ========= ======== ======= =========
</Table>
F-44
ADOLPH COORS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTOR GUARANTOR CONSOLIDATED
--------- --------- ---------- ---------- ------------
(IN THOUSANDS)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES............... $ 5,124 $ 298,746 $ 7,656 $(30,795) $ 280,731
--------- --------- -------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments........... (356,741) -- -- -- (356,741)
Sales and maturities of
investments..................... 208,176 -- -- -- 208,176
Additions to properties and
intangible assets............... -- (155,412) (2,187) 3,275 (154,324)
Proceeds from sales of properties
and intangible assets........... -- 3,486 2,933 8 6,427
Other.............................. (277) 3,971 -- (4,773) (1,079)
--------- --------- -------- -------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES.......... (148,842) (147,955) 746 (1,490) (297,541)
--------- --------- -------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock........ (19,989) -- -- -- (19,989)
Issuances of stock under stock
plans........................... 17,232 -- -- -- 17,232
Dividends paid..................... (26,564) -- -- -- (26,564)
Overdraft balance.................. 4,686 -- -- -- 4,686
Net activity in investment in and
advances to (from)
subsidiaries.................... 134,775 (141,688) (19,025) 25,938 --
Other.............................. -- -- -- (2,235) (2,235)
--------- --------- -------- -------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES.......... 110,140 (141,688) (19,025) 23,703 (26,870)
--------- --------- -------- -------- ---------
Cash and cash equivalents:
Net increase (decrease) in cash and
cash equivalents................ (33,578) 9,103 (10,623) (8,582) (43,680)
Effect of exchange rate changes on
cash and cash equivalents....... -- -- -- (367) (367)
Balance at beginning of year....... 148,124 (11,214) 12,944 13,954 163,808
--------- --------- -------- -------- ---------
BALANCE AT END OF YEAR............... $ 114,546 $ (2,111) $ 2,321 $ 5,005 $ 119,761
========= ========= ======== ======== =========
</Table>
F-45
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 26, 1999
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTOR GUARANTOR CONSOLIDATED
--------- --------- ---------- ---------- ------------
(IN THOUSANDS)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................ $ 58,428 $ 150,078 $ (2,636) $ 5,454 $ 211,324
-------- --------- -------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments............ (94,970) -- -- -- (94,970)
Sales and maturities of
investments...................... 105,920 -- -- -- 105,920
Proceeds from sales of properties
and intangible assets............ -- (3,709) 6,773 757 3,821
Additions to properties and
intangible assets................ -- (113,133) (19,812) (1,432) (134,377)
Other............................... (544) (1,409) -- 516 (1,437)
-------- --------- -------- -------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES........... 10,406 (118,251) (13,039) (159) (121,043)
-------- --------- -------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long term debt.......... (40,000) -- -- -- (40,000)
Issuances of stock under stock
plans............................ 9,728 -- -- -- 9,728
Purchases of treasury stock......... (20,722) -- -- -- (20,722)
Overdraft balances.................. (11,256) -- -- -- (11,256)
Dividends paid...................... (23,745) -- -- -- (23,745)
Net activity in investment in and
advances to (from)
subsidiaries..................... 17,191 12,205 (64) (29,332) --
Other............................... -- (1,692) -- -- (1,692)
-------- --------- -------- -------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES........... (68,804) 10,513 (64) (29,332) (87,687)
-------- --------- -------- -------- ---------
Cash and cash equivalents:
Net increase (decrease) in cash and
cash equivalents................. 30 42,340 (15,739) (24,037) 2,594
Effect of exchange rate changes on
cash and cash equivalents........ -- -- -- 1,176 1,176
Balance at beginning of year........ 148,092 (53,553) 28,683 36,816 160,038
-------- --------- -------- -------- ---------
BALANCE AT END OF YEAR................ $148,122 $ (11,213) $ 12,944 $ 13,955 $ 163,808
======== ========= ======== ======== =========
</Table>
F-46
UNAUDITED FINANCIAL STATEMENTS
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<Table>
<Caption>
THIRTEEN WEEKS ENDED
---------------------
MARCH 31, APRIL 1,
2002 2001
--------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
(UNAUDITED)
Sales -- domestic and international......................... $ 937,756 $ 637,828
Beer excise taxes........................................... (198,434) (94,128)
--------- ---------
Net sales................................................... 739,322 543,700
Cost of goods sold.......................................... (475,844) (351,153)
--------- ---------
Gross profit.............................................. 263,478 192,547
Marketing, general and administrative expenses.............. (215,414) (169,958)
Special charge.............................................. (2,876) --
--------- ---------
Operating income.......................................... 45,188 22,589
Interest income............................................. 4,764 4,612
Interest expense............................................ (9,913) (811)
Other income................................................ 4,927 3,172
--------- ---------
Income before income taxes................................ 44,966 29,562
Income tax expense.......................................... (17,763) (11,234)
--------- ---------
Net income................................................ $ 27,203 $ 18,328
========= =========
Net income per common share -- basic........................ $ 0.76 $ 0.49
========= =========
Net income per common share -- diluted...................... $ 0.75 $ 0.49
========= =========
Weighted average number of outstanding common
shares -- basic........................................... 35,973 37,203
========= =========
Weighted average number of outstanding common
shares -- diluted......................................... 36,270 37,688
========= =========
Cash dividends declared and paid per common share........... $ 0.205 $ 0.185
========= =========
</Table>
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-47
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
MARCH 31, DECEMBER 30,
2002 2001
----------- ------------
(UNAUDITED)
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 177,402 $ 77,133
Short-term marketable securities.......................... -- 232,572
Accounts receivable, net.................................. 427,132 94,985
Notes receivable, net..................................... 80,442 13,747
Inventories:
Finished............................................... 98,125 32,438
In process............................................. 35,724 23,363
Raw materials.......................................... 70,828 41,534
Packaging materials.................................... 13,604 17,788
---------- ----------
Total inventories......................................... 218,281 115,123
Other current assets...................................... 92,373 72,969
---------- ----------
Total current assets................................... 995,630 606,529
Properties, at cost and net................................. 1,281,507 869,710
Goodwill.................................................... 572,945 6,955
Other intangibles, net...................................... 503,072 79,334
Investments in joint ventures............................... 192,860 94,785
Other assets................................................ 396,152 82,379
---------- ----------
Total assets........................................... $3,942,166 $1,739,692
========== ==========
</Table>
(Continued)
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-48
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
<Table>
<Caption>
MARCH 31, DECEMBER 30,
2002 2001
------------ -------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE
INFORMATION)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 276,622 $ 222,493
Accrued salaries and vacations............................ 58,593 56,767
Taxes, other than income taxes............................ 125,649 31,271
Accrued expenses and other liabilities.................... 382,925 122,014
Current portion of long-term debt......................... 110,000 85,000
---------- ----------
Total current liabilities............................ 953,789 517,545
Long-term debt.............................................. 1,554,656 20,000
Deferred tax liability...................................... 233,841 61,635
Other long-term liabilities................................. 224,339 189,200
---------- ----------
Total liabilities.................................... 2,966,625 788,380
---------- ----------
Shareholders' equity:
Capital stock:
Preferred stock, non-voting, no par value (authorized:
25,000,000 shares; issued: none)...................... -- --
Class A common stock, voting, no par value (authorized
and issued: 1,260,000 shares)......................... 1,260 1,260
Class B common stock, non-voting, no par value, $0.24
stated value (authorized: 200,000,000 shares; issued:
34,779,697 in 2002 and 36,048,008 in 2001)............ 8,281 8,259
---------- ----------
Total capital stock.................................. 9,541 9,519
Paid-in capital........................................... 5,646 --
Unvested restricted stock................................. (738) (597)
Retained earnings......................................... 974,212 954,981
Accumulated other comprehensive loss...................... (13,120) (12,591)
---------- ----------
Total shareholders' equity........................... 975,541 951,312
---------- ----------
Total liabilities and shareholders' equity.................. $3,942,166 $1,739,692
========== ==========
</Table>
(Concluded)
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-49
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
THIRTEEN WEEKS ENDED
-----------------------
MARCH 31, APRIL 1,
2002 2001
----------- ---------
(IN THOUSANDS)
(UNAUDITED)
Cash flows from operating activities:
Net income................................................ $ 27,203 $ 18,328
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in net earnings of joint ventures............... (9,691) (9,226)
Distributions from joint ventures...................... 10,660 7,241
Depreciation, depletion and amortization............... 44,710 30,522
Gains on sales of securities........................... (4,003) (2,954)
Deferred income taxes.................................. 3,196 (122)
Change in operating assets and liabilities................ (99,334) (59,122)
----------- ---------
Net cash used in operating activities................ (27,259) (15,333)
----------- ---------
Cash flows from investing activities:
Purchases of securities................................... -- (130,968)
Sales and maturities of securities........................ 232,758 179,135
Additions to properties and intangible assets............. (44,981) (30,752)
Acquisition of Coors Brewers Limited, net of cash
acquired............................................... (1,588,348) --
Investment in Molson USA, LLC............................. -- (65,000)
Other..................................................... 3,100 3,106
----------- ---------
Net cash used in investing activities................ (1,397,471) (44,479)
----------- ---------
Cash flows from financing activities:
Issuances of stock under stock plans...................... 3,346 9,212
Purchases of stock........................................ -- (6,055)
Dividends paid............................................ (7,374) (6,893)
Proceeds from long-term debt.............................. 1,553,000 --
Payments on short-term debt............................... (5,000) --
Overdraft balances........................................ (14,058) (17,245)
Other..................................................... -- 3,285
----------- ---------
Net cash provided by (used in) financing
activities.......................................... 1,529,914 (17,696)
----------- ---------
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents...... 105,184 (77,508)
Effect of exchange rate changes on cash and cash
equivalents............................................ (4,915) (288)
Balance at beginning of year.............................. 77,133 119,761
----------- ---------
Balance at end of quarter................................. $ 177,402 $ 41,965
=========== =========
</Table>
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-50
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 2002
1. BUSINESS
We are the third-largest producer of beer in the United States based on
volume and revenues. Following our acquisition of the majority of the former
Bass Brewers business and other assets from Interbrew in February 2002, which we
now collectively call Coors Brewers Limited, we are the eighth largest brewer in
the world based on volume. Including Coors Brewers Limited, the number-two
brewer in the United Kingdom based on volume, we produce in excess of 32 million
barrels of beer and other beverages per year. Since our founding in 1873, we
have been committed to producing the highest quality beers and other beverages.
2. SIGNIFICANT ACCOUNTING POLICIES
Unaudited condensed consolidated financial statements -- In our opinion,
the accompanying unaudited financial statements reflect all adjustments,
consisting of normal recurring accruals, and certain other adjustments as
discussed in Note 5, Change in Accounting Principle, which are necessary for a
fair presentation of the financial position, results of operations and cash
flows for the periods presented. The accompanying financial statements include
our accounts and the accounts of our majority-owned and controlled domestic and
foreign subsidiaries. All significant intercompany transactions and balances
have been eliminated in consolidation. These financial statements should be read
in conjunction with the notes to the consolidated financial statements contained
in our Annual Report on Form 10-K for the year ended December 30, 2001. Also,
these financial statements should be read in conjunction with the financial
statements of our acquired business and the pro forma financial information
included in our Form 8-K/A filed with the Securities and Exchange Commission on
April 18, 2002. The results of operations for the thirteen weeks ended March 31,
2002, are not necessarily indicative of the results that may be achieved for the
full fiscal year and cannot be used to indicate financial performance for the
entire year.
The results of Coors Brewers Limited operations have been included in the
consolidated financial statements since February 2, 2002, the date of
acquisition.
The year-end condensed balance sheet data was derived from audited
financial statements but does not include all disclosures required by generally
accepted accounting principles.
Significant non-cash transactions -- During the first thirteen weeks of
2002 and 2001, we issued restricted common stock under our management incentive
program. The non-cash impact of these issuances, net of forfeitures and tax
withholding, was $0.2 million and $1.2 million, respectively. Also during the
first quarter of 2002 and 2001, equity was increased by the tax benefit on the
exercise of stock options under our stock plans of $0.3 million and $4.1,
respectively.
Recent accounting pronouncements -- On October 3, 2001, the FASB issued
Statement of Financial Accounting Standards No. 144. "Accounting for the
Impairment or Disposal of Long-Lived Assets," (SFAS 144) which is applicable to
financial statements issued for fiscal years beginning after December 15, 2001.
This standard provides a single accounting model for long-lived assets to be
disposed of by sale and establishes additional criteria that would have to be
met to classify an asset as held-for-sale. Classification as held-for-sale is an
important distinction since such assets are not depreciated and are stated at
the lower of fair value or carrying amount. This standard also requires expected
future operating losses from discontinued operations to be recorded in the
period(s) in which the losses are incurred, rather than as of the measurement
date as previously required. Our adoption of SFAS No. 144 on January 1, 2002 did
not have a material effect on our operating results or financial position.
Reclassifications -- Certain reclassifications have been made to the 2001
financial statements to conform with the 2002 presentation.
F-51
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
3. COORS BREWERS LIMITED ACQUISITION
On February 2, 2002, we acquired 100% of the outstanding shares of Bass
Holdings Ltd. and certain other intangible assets from Interbrew S.A. and paid
off certain intercompany loan balances with Interbrew, for a total purchase
price of L1.2 billion (approximately $1.7 billion), plus associated fees and
expenses. The purchase price is still subject to adjustment based on the value
of working capital, certain intercompany trade balances and undistributed
earnings from joint ventures as of the acquisition date. This acquisition
resulted in us obtaining the United Kingdom (U.K.) based Carling business. The
Carling Brewers business, renamed Coors Brewers Limited, includes the majority
of the assets that previously made up Bass Brewers, including the Carling,
Worthington and Caffrey's brand beers; the U.K. distribution rights to Grolsch
(via a joint venture with Royal Grolsch N.V.); several other beer and
flavored-alcohol beverage brands; related brewing and malting facilities in the
U.K.; and a 49.9% interest in the distribution logistics provider, Tradeteam.
Coors Brewers Limited is the second-largest brewer in the U.K., and Carling
lager is the best-selling beer brand in the U.K. The brand rights for Carling,
which is the largest acquired brand by volume, are mainly for territories in
Europe. The addition of Coors Brewers Limited creates a broader, more
diversified company in a consolidating global beer market.
As noted in Note 2, Significant Accounting Policies, the results of Coors
Brewers Limited operations have been included in the consolidated financial
statements since February 2, 2002, the date of acquisition.
The following table summarizes the fair values of the assets acquired and
liabilities assumed at the date of acquisition. We are in the process of
finalizing the tax and financing structure. We are also evaluating the pension
plan actuarial valuation and certain restructuring plans of the acquired
business. Accordingly, the allocation of the purchase price is subject to
change. Also, as noted above, the purchase price is subject to further
adjustments, which have not yet been finalized. These adjustments will result in
further change to the purchase price allocation.
<Table>
<Caption>
AS OF FEBRUARY 2,
2002
-----------------
(IN MILLIONS)
Current assets.............................................. $ 546
Property, plant and equipment............................... 445
Other assets................................................ 415
Intangible assets........................................... 415
Goodwill.................................................... 562
------
Total assets acquired..................................... 2,383
------
Current liabilities......................................... (428)
Non-current liabilities..................................... (238)
------
Total liabilities assumed................................... (666)
------
Net assets acquired.................................... $1,717
======
</Table>
Of the $415 million of acquired intangible assets, approximately $389
million has been assigned to brand names and distribution rights. The remaining
$26 million was assigned to patents and technology and distribution channels.
Approximately $284 million of the $389 million brand name and distribution
rights value has been determined to have an indefinite life and accordingly will
not be amortized. The remaining $105 million brand name and distribution right
value will be amortized over a weighted average useful life of approximately
11.6 years. The $26 million value for patents and technology and distribution
channels will be amortized over a weighted average useful life of approximately
8.4 years.
F-52
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
The $562 million of goodwill was assigned to the Europe and Americas
segments in the amounts of approximately $396 million and $166 million,
respectively. It is currently expected that none of the goodwill will be
deductible for tax purposes, but as noted above we are in the process of
finalizing the tax structure.
In March 2002, we announced plans to close our Cape Hill brewery and Alloa
malting facility. A majority of the production at the Cape Hill brewery relates
to brands that were retained by Interbrew. The production at the Alloa malting
facility will be moved to one of the other existing malting facilities. The
alternative use value for these sites, and the associated exit costs, have been
reflected in the purchase price allocation above.
The following unaudited, pro forma information shows the results of our
operations for the three months ended March 31, 2002, and April 1, 2001, as if
the business combination with Coors Brewers Limited and us had occurred at the
beginning of each period. The proforma information has been revised, from that
previously included in our quarterly report on Form 10-Q for the thirteen weeks
ended March 31, 2002, to reflect changes in estimates based upon more recent
information and to adjust the proforma interest expense on the debt used to fund
the acquisition. These pro forma results are not necessarily indicative of the
results of operations that would have occurred if the business combinations had
occurred at the beginning of the respective periods and is not intended to be
indicative of future results of operations (in thousands, except per share
data).
<Table>
<Caption>
THREE MONTHS ENDED
--------------------
MARCH 31, APRIL 1,
2002 2001
--------- --------
Net Sales................................................... $820,593 $805,636
Pretax income............................................... $ 23,199 $ 9,546
Net income.................................................. $ 14,002 $ 5,775
Net income per common share:
Basic..................................................... $ 0.39 $ 0.16
Diluted................................................... $ 0.39 $ 0.15
</Table>
We funded the acquisition with approximately $150 million of cash on hand
and approximately $1.55 billion of combined debt as described below at the
prevailing exchange rate:
<Table>
<Caption>
FACILITY
CURRENCY BALANCE
TERM DENOMINATION (IN MILLIONS)
- ---- ------------ -------------
5 year Amortizing term loan........................... USD $ 478
5 year Amortizing term loan (L228 million)............ GBP 322
Bridge facility (see Note 10, Subsequent
9 month Event)......................................... USD 750
------
$1,550
======
</Table>
In conjunction with the term loan and bridge facility, we incurred
financing fees of approximately $9 million and $500,000, respectively. These
fees will be amortized over the respective terms of the borrowings. On May 7,
2002, we repaid our nine month bridge facility through the issuance of long-term
financing and used additional proceeds from that issuance to repay a portion of
our term loans (See Note 10, Subsequent Event).
Amounts outstanding under our term loan bear, and under our bridge facility
prior to repayment bore, interest, at our option, at a rate per annum equal to
either an adjusted LIBOR or an alternate rate, in each case plus an additional
margin. The additional margin is set based upon our investment grade debt rating
which is BBB+ (S&P) and Baa2 (Moody's). If our debt rating changes, the
additional margin is subject to
F-53
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
adjustment. Interest is payable quarterly unless the selected LIBOR is for a
time period less than 90 days, in which case the interest is payable in the time
period corresponding to the selected LIBOR.
Our term loan is payable quarterly in arrears beginning March 28, 2003,
pursuant to the amortization schedule below, and matures February 1, 2007.
<Table>
<Caption>
AMORTIZATION RATE
YEAR OF ANNUAL PAYMENTS OF TERM LOANS
- ----------------------- -----------------
2003........................................................ 15%
2004........................................................ 20%
2005........................................................ 25%
2006........................................................ 30%
2007........................................................ 10%
---
100%
===
</Table>
We and all of our existing and future, direct and indirect, domestic
subsidiaries, other than immaterial domestic subsidiaries, have guaranteed our
term loan.
Our term loan requires us to meet certain periodic financial tests,
including maximum total leverage ratio and minimum interest coverage ratio.
There are also certain restrictions on indebtedness, liens and guarantees;
mergers, consolidations and some types of acquisitions and assets sales; and
certain types of business in which we can engage. We expect to timely repay this
facility in accordance with its terms.
4. BUSINESS SEGMENTS
Prior to our acquisition of Coors Brewers Limited, we reported results of
operations in one segment. We now categorize our operations into the two
geographical regions: the Americas and Europe. These segments are managed by
separate operating teams, even though both consist primarily of the manufacture,
marketing, and sale of beer and other beverage products. We also now categorize
certain of our activities as our Corporate segment, which we describe below.
The Americas malt beverage segment primarily consists of our production,
marketing, and sale of the Coors family of brands in the U.S. and its
territories. This segment also includes the Coors Light business in Canada that
is conducted through a partnership investment with Molson, Inc. and the sale of
Molson products in the U.S. that is conducted through a joint venture investment
with Molson, Inc. The Americas segment also includes the small amount of Coors
products that are sold outside of the U.S. and its possessions, excluding
Europe.
The Europe segment consists of our production and sale of the Coors Brewers
Limited brands throughout the world, our joint venture arrangement in the U.K.
Grolsch business, and our joint venture arrangement for the distribution of
products throughout the U.K. It also includes the sale of Coors Light in the
U.K. and the Republic of Ireland.
The Corporate segment currently includes interest and certain corporate
costs in both the U.S. and the U.K. The large majority of these corporate costs
relate to certain finance costs and other administrative costs.
No single customer accounted for more than 10% of our sales.
F-54
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
Summarized financial information concerning our reportable segments is
shown in the following table:
<Table>
<Caption>
AMERICAS EUROPE CORPORATE TOTAL
---------- ---------- --------- ----------
(IN THOUSANDS)
3/31/2002
Gross sales............................ $ 636,969 $ 300,787 $ -- $ 937,756
Excise taxes........................... (91,993) (106,441) -- (198,434)
---------- ---------- ------- ----------
Net sales.............................. 544,976 194,346 -- 739,322
Cost of goods sold..................... (343,332) (132,512) -- (475,844)
Marketing, general and
administrative....................... (162,241) (53,173) -- (215,414)
Special charges........................ (804) -- (2,072) (2,876)
---------- ---------- ------- ----------
Operating income (loss)................ 38,599 8,661 (2,072) 45,188
Interest income........................ -- 2,420 2,344 4,764
Interest expense....................... -- -- (9,913) (9,913)
Other (expense) income -- net.......... (149) 1,878 3,198 4,927
---------- ---------- ------- ----------
Earnings (loss) before income taxes.... $ 38,450 $ 12,959 $(6,443) $ 44,966
========== ========== ======= ==========
Other financial data:
Depreciation, depletion,
amortization...................... $ 30,876 $ 13,834 $ -- $ 44,710
Capital Expenditures................. $ 37,328 $ 7,653 $ -- $ 44,981
Total Assets......................... $1,728,435 $2,213,731 $ -- $3,942,166
Equity Investments................... $ 98,806 $ 94,054 $ -- $ 192,860
4/1/2001
Gross sales............................ $ 637,009 $ 819 $ -- $ 637,828
Excise taxes........................... (94,125) (3) -- (94,128)
---------- ---------- ------- ----------
Net sales.............................. 542,884 816 -- 543,700
Costs of goods sold.................... (350,404) (749) -- (351,153)
Marketing, general and
administrative....................... (168,645) (1,313) -- (169,958)
Special charges........................ -- -- -- --
---------- ---------- ------- ----------
Operating income....................... 23,835 (1,246) -- 22,589
Interest income........................ -- -- 4,612 4,612
Interest expense....................... -- -- (811) (811)
Other income -- net.................... 218 -- 2,954 3,172
---------- ---------- ------- ----------
Earnings before income taxes........... $ 24,053 $ (1,246) $ 6,755 $ 29,562
========== ========== ======= ==========
Other financial data:
Depreciation, depletion,
amortization...................... $ 30,501 $ 21 $ -- $ 30,522
Capital Expenditures................. $ 30,752 $ -- $ -- $ 30,752
Total Assets......................... $1,719,448 $ 20,244 $ -- $1,739,692
Equity Investments................... $ 94,785 $ -- $ -- $ 94,785
</Table>
F-55
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
The following table represents sales by geographic segment:
<Table>
<Caption>
THREE MONTHS ENDED
--------------------
MARCH 31, APRIL 1,
2002 2001
--------- --------
(IN THOUSANDS)
Net sales to unaffiliated customers(1):
United States and its territories......................... $531,919 $529,493
United Kingdom............................................ 194,346 816
Other foreign countries................................... 13,057 13,391
-------- --------
Net sales.............................................. $739,322 $543,700
======== ========
</Table>
<Table>
<Caption>
FOR THE PERIOD ENDED
-------------------------
MARCH 31, DECEMBER 30,
2002 2001
---------- ------------
(IN THOUSANDS)
Long-lived assets(2):
United States and its territories......................... $1,002,213 $955,615
United Kingdom............................................ 1,355,039 231
Other foreign countries................................... 272 153
---------- --------
Total long-lived assets................................ $2,357,524 $955,999
========== ========
</Table>
- ---------------
(1) Net sales attributed to geographic areas is based on the location of the
customer.
(2) Long-lived assets include tangible and intangible assets physically located
in foreign countries.
5. CHANGE IN ACCOUNTING PRINCIPLE
In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No. 141, "Business Combinations,"
(SFAS 141) and No. 142, "Goodwill and Other Intangible Assets," (SFAS 142). SFAS
141 requires that all business combinations be accounted for using the purchase
method of accounting and that certain intangible assets acquired in a business
combination be recognized as assets apart from goodwill. SFAS 141 was effective
for all business combinations initiated after June 30, 2001. SFAS 142 requires
goodwill to be tested for impairment under certain circumstances, and written
down when impaired, rather than being amortized as previously required.
Furthermore, SFAS 142 requires purchased intangible assets other than goodwill
to be amortized over their useful lives unless those lives are determined to be
indefinite. Purchased intangible assets are carried at cost less accumulated
amortization.
SFAS 142 is effective for fiscal years beginning after December 15, 2001
and accordingly we adopted the provisions of the standard effective the
beginning of fiscal 2002. In accordance with SFAS 142, we ceased amortizing
goodwill totaling $69.2 million, including $62.2 million related to our U.S.
joint venture investment with Molson, Inc., as of the beginning of fiscal 2002.
We also ceased amortizing approximately $7.2 million of other net intangible
assets that we considered to have indefinite lives. We also have $21.1 million
of other intangible assets that have indefinite lives that were previously not
amortized. As a result, during the three month period ended March 31, 2002, we
did not recognize pre-tax amortization of goodwill and other intangibles
totaling $0.4 million and $0.1 million, respectively, that would have been
recognized had the previous standards still been in effect. The following table
presents the impact of SFAS 142 on net income and
F-56
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
net income per share had the new standard been in effect for both of the
quarters ended March 31, 2002, and April 1, 2001 (in thousands, except per share
amounts):
<Table>
<Caption>
THREE MONTHS ENDED
--------------------
MARCH 31, APRIL 1,
2002 2001
--------- --------
Reported net income......................................... $27,203 $18,328
Adjustments:
Amortization of goodwill.................................. -- 400
Amortization of intangible assets reclassified as
indefinite lives:
Distribution rights....................................... -- 100
Income tax effect......................................... -- (190)
------- -------
Net adjustments........................................... -- 310
------- -------
Pro forma adjusted net income............................... $27,203 $18,638
======= =======
Net income per share -- basic
As reported............................................... $ 0.76 $ 0.49
Pro forma................................................. $ 0.76 $ 0.50
Net income per share -- diluted
As reported............................................... $ 0.75 $ 0.49
Pro forma................................................. $ 0.75 $ 0.49
</Table>
There was no impairment of goodwill upon adoption of SFAS 142. We are
required to perform goodwill impairment tests on at least an annual basis and
more frequently in certain circumstances. We plan to perform our required annual
impairment test during the third quarter of 2002.
The following tables present details of our intangible assets (in
millions):
<Table>
<Caption>
USEFUL ACCUMULATED
MARCH 31, 2002 LIFE GROSS AMORTIZATION NET
-------------- ---------- ------ ------------ ------
Intangible assets subject to amortization:
Coors Brewers Limited:
Brand names and distribution rights..... 2-20 $105.8 $(2.4) $103.4
Patents and technology and distribution
channels.............................. 3-10 25.6 (0.6) 25.0
Other........................................ 5-34 17.1 (5.3) 11.8
Intangible assets not subject to
amortization:
Brand names................................ Indefinite 286.3 -- 286.3
Pension.................................... N/A 48.3 -- 48.3
Other...................................... Indefinite 28.8 (0.5) 28.3
</Table>
We engaged third-party business valuation appraisers to help us determine
the fair value of the intangible assets in connection with our acquisition of
what is now called Coors Brewers Limited. The allocation of purchase price for
the Coors Brewers Limited acquisition is tentative pending finalization of our
tax and financing structure. We are also evaluating the pension plan actuarial
valuation and certain restructuring plans. The allocation may change following
the completion of these items. Note that the amounts reflected in the table
above as of March 31, 2002, have fluctuated from the original purchase price
allocation at February 2, 2002, due to the change in the pound sterling exchange
rate between these dates.
F-57
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
The estimated future amortization expense of intangible assets is as
follows (in millions):
<Table>
<Caption>
FISCAL YEAR AMOUNT
- ----------- ------
2003........................................................ $17.4
2004........................................................ $15.9
2005........................................................ $10.9
2006........................................................ $10.5
2007........................................................ $ 6.9
</Table>
Amortization expense of intangible assets was $3.5 million and $0.3 million
for the three months ended March 31, 2002 and April 1, 2001, respectively. The
following table presents the changes in goodwill during the first three months
of fiscal 2002 allocated to the reportable segments (in millions):
<Table>
<Caption>
BALANCE AT
DECEMBER 31, MARCH 31,
SEGMENT 2001 ACQUIRED ADJUSTMENTS 2002
- ------- ------------ -------- ----------- ----------
Americas................................. $69.2 $166.5 $0.8 $236.5
Europe................................... -- 395.9 2.7 398.6
</Table>
The adjustments during the first three months of fiscal 2002 include $3.5
million resulting from the foreign currency exchange rate change between
February 2, 2002, the date of our acquiring Coors Brewers Limited, and March 31,
2002. Goodwill includes approximately $62.2 million related to our joint venture
investment in Molson, Inc.
6. SPECIAL CHARGES
In the first quarter of 2002, we recorded special charges of $2.9 million,
mainly for transition expenses related to the newly acquired U.K. business,
including accounting, appraisal and legal fees. In the first quarter of 2001, we
recorded no special charges.
7. OTHER COMPREHENSIVE INCOME
<Table>
<Caption>
THIRTEEN WEEKS ENDED
--------------------
MARCH 31, APRIL 1,
2002 2001
--------- --------
(IN THOUSANDS)
Net income.................................................. $27,203 $18,328
Other comprehensive income (expense), net of tax:
Foreign currency translation adjustments.................. 117 (81)
Unrealized (loss) gain on available-for-sale securities
and derivative instruments............................. (1,293) 1,108
Reclassification adjustment for net loss (gains) realized
in net income on derivative instruments................ 533 (2,023)
------- -------
Comprehensive income........................................ $26,560 $17,332
======= =======
</Table>
F-58
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
8. EARNINGS PER SHARE (EPS)
Basic and diluted net income per common share were arrived at using the
calculations outlined below:
<Table>
<Caption>
THIRTEEN WEEKS ENDED
----------------------
MARCH 31, APRIL 1,
2002 2001
---------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Net income available to common shareholders................. $27,203 $18,328
======= =======
Weighted average shares for basic EPS....................... 35,973 37,203
Effect of dilutive securities:
Stock options............................................. 276 477
Contingent shares not included in shares outstanding for
basic EPS.............................................. 21 8
------- -------
Weighted average shares for diluted EPS..................... 36,270 37,688
======= =======
Basic EPS................................................... $ 0.76 $ 0.49
======= =======
Diluted EPS................................................. $ 0.75 $ 0.49
======= =======
</Table>
The dilutive effects of stock options were determined by applying the
treasury stock method, assuming we were to purchase common shares with the
proceeds from stock option exercises. Stock options to purchase 1,804 shares of
common stock were not included in the computation of first quarter 2002 earnings
per share because the stock options' exercise prices were greater than the
average market price of the common shares.
9. COMMITMENTS AND CONTINGENCIES
We were one of a number of entities named by the Environmental Protection
Agency (EPA) as a potentially responsible party (PRP) at the Lowry Superfund
site. This landfill is owned by the City and County of Denver (Denver), and was
managed by Waste Management of Colorado, Inc. (Waste). In 1990, we recorded a
special pretax charge of $30 million, a portion of which was put into a trust in
1993 as part of an agreement with Denver and Waste to settle the outstanding
litigation related to this issue.
Our settlement was based on an assumed cost of $120 million (in 1992
adjusted dollars). It requires us to pay a portion of future costs in excess of
that amount.
In January 2002, in response to the EPA's five-year review conducted in
2001, Waste provided us with updated annual cost estimates through 2032. We have
reviewed these cost estimates in the assessment of our accrual related to this
issue. In determining that the current accrual is adequate, we eliminated
certain costs included in Waste's estimates, primarily trust management costs
that will be accrued as incurred, certain remedial costs for which technology
has not yet been developed and income taxes which we do not believe to be an
included cost in the determination of when the $120 million threshold is
reached. We generally used a 2% inflation rate for future costs, and discounted
certain operations and maintenance costs at the site that we deemed to be
determinable, at a 5.46% risk-free rate of return. Based on these assumptions,
the present value and gross amount of discounted costs are approximately $1
million and $4 million, respectively. We did not assume any future recoveries
from insurance companies in the estimate of our liability.
There are a number of uncertainties at the site, including what additional
remedial actions will be required by the EPA, and what costs are included in the
determination of when the $120 million threshold is reached. Because of these
issues, the estimate of our liability may change as facts further develop, and
we may need to increase the reserve. While we cannot predict the amount of any
such increase, an additional accrual
F-59
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
of as much as $25 million is reasonably possible based on our preliminary
evaluation, with additional cash contributions beginning as early as 2013.
We were one of several parties named by the EPA as a PRP at the Rocky Flats
Industrial Park site. In September 2000, the EPA entered into an Administrative
Order on Consent with certain parties, including our company, requiring
implementation of a removal action. Our projected costs to construct and monitor
the removal action are approximately $300,000. The EPA will also seek to recover
its oversight costs associated with the project which are not possible to
estimate at this time. However, we believe they would be immaterial to our
operating results, cash flows and financial position.
From time to time, we have been notified that we are or may be a PRP under
the Comprehensive Environmental Response, Compensation and Liability Act or
similar state laws for the cleanup of other sites where hazardous substances
have allegedly been released into the environment. We cannot predict with
certainty the total costs of cleanup, our share of the total cost, the extent to
which contributions will be available from other parties, the amount of time
necessary to complete the cleanups or insurance coverage.
In addition, we are aware of groundwater contamination at some of our
properties in Colorado resulting from historical, ongoing or nearby activities.
There may also be other contamination of which we are currently unaware.
While we cannot predict our eventual aggregate cost for our environmental
and related matters in which we are currently involved, we believe that any
payments, if required, for these matters would be made over a period of time in
amounts that would not be material in any one year to our operating results,
cash flows or our financial or competitive position. We believe adequate
reserves have been provided for losses that are probable and estimable.
10. SUBSEQUENT EVENT
On April 25, 2002, we made a principal and interest payment of $56 million
on our five year amortizing U.S. dollar term loan.
On May 7, 2002, our wholly owned subsidiary, Coors Brewing Company,
completed a private placement of $850 million principal amount of 6 3/8% Senior
notes, due 2012, with interest payable semi-annually. The notes were sold to
investors at a price of 99.596% of par for a yield to maturity of 6.43%, are
unsecured, are not subject to any sinking fund provision and include a
redemption provision (make-whole provision) which allows us to retire the notes
at whole or any time at a redemption price. The redemption price is equal to the
greater of (1) 100% of the principal amount of the notes plus accrued and unpaid
interest and (2) the "make whole" premium on the amount of the notes being
redeemed, which is intended to equal to the present value of the principal
amount of the notes redeemed and interest thereon. The notes were issued with
registration rights and are guaranteed by Adolph Coors Company and certain
domestic subsidiaries. Net proceeds from the sale of the notes, after deducting
estimated expenses and placement fees, were approximately $839 million. The net
proceeds and cash on hand were used to (1) repay the $750 million of loans
outstanding under our senior unsecured bridge facility which we entered into in
connection with our acquisition of Coors Brewers Limited and (2) repay
approximately $91 million of outstanding U.S. term borrowings under our senior
unsecured credit facilities.
On the same date as the private placement of debt, we entered into certain
cross currency swaps totaling L.530 million (approximately $774 million). The
swaps include an initial exchange of principal on the date of the private
placement and will require final principal exchange 10 years later. The swaps
also call for an exchange of fixed British pound interest payments for fixed
U.S. dollar interest receipts. At the initial principal exchange, we paid U.S.
dollars to a counterparty and received British pounds. Upon final exchange, we
will provide British pounds to the counterparty and receive U.S. dollars. The
cross currency swaps have been
F-60
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
designated as cash flow hedges of the changes in value of the future British
pound interest and principal receipts on an intercompany loan between us and our
Europe subsidiary that results from changes in the U.S. dollar to British pound
exchange rates.
On the same day as the settlement of our private placement offering and
initial exchange of principal amounts associated with our swap transactions, we
were required to settle our previously established forward sale of 530 million
British pounds. The settlement of all these transactions in aggregate resulted
in a foreign exchange loss of approximately $26 million, almost all of which was
offset by a foreign exchange gain on our intercompany loan.
11. SUPPLEMENTAL GUARANTOR INFORMATION
On May 7, 2002, our wholly owned subsidiary, Coors Brewing Company,
completed a private placement of $850 million principal amount of 6 3/8% Senior
Notes due 2012. The notes were issued with registration rights and are jointly
and severally guaranteed on a senior and unsecured basis by Adolph Coors Company
and certain domestic subsidiaries. A significant amount of the Issuer's income
and cash flow is generated by its subsidiaries. As a result, funds necessary to
meet the Issuer's debt service obligations are provided in large part by
distributions or advances from its subsidiaries. Under certain circumstances,
contractual and legal restrictions, as well as our financial condition and
operating requirements and those of certain domestic subsidiaries, could limit
the Issuer's ability to obtain cash from us and certain subsidiaries for the
purpose of meeting its debt service obligation, including the payment of
principal and interest on the notes.
The following information sets forth our condensed consolidating balance
sheet as of March 31, 2002 and December 30, 2001, and the condensed
consolidating statements of operations and cash flows for the thirteen weeks
ended March 31, 2002 and April 1, 2001. Investments in our subsidiaries are
accounted for on the equity method; accordingly, entries necessary to
consolidate the Parent Guarantor, Issuer of Notes, and all of its subsidiaries
are reflected in the elimination column. Separate complete financial statements
of the Issuer and the Subsidiary Guarantors would not provide additional
material information that would be useful in assessing the financial composition
of the Guarantors.
F-61
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 2002
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER OF SUBSIDIARY NON
GUARANTOR NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- --------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
(UNAUDITED)
Sales -- domestic and
international.......... $ -- $ 579,781 $ 15,420 $ 342,555 $ -- $ 937,756
Beer excise taxes........ -- (89,939) (443) (108,052) -- (198,434)
------- --------- -------- --------- -------- ---------
Net sales................ -- 489,842 14,977 234,503 -- 739,322
Cost of goods sold....... -- (319,406) (11,251) (145,187) -- (475,844)
Equity in subsidiary
earnings............... 20,409 15,022 -- -- (35,431) --
------- --------- -------- --------- -------- ---------
Gross profit............. 20,409 185,458 3,726 89,316 (35,431) 263,478
Marketing, general and
administrative...... (84) (150,104) (5,852) (59,374) -- (215,414)
Special charge......... -- (2,876) -- -- -- (2,876)
------- --------- -------- --------- -------- ---------
Operating income......... 20,325 32,478 (2,126) 29,942 (35,431) 45,188
Interest income........ 3,868 361 30 505 -- 4,764
Interest expense....... 2,057 (11,970) -- -- -- (9,913)
Other income........... 6,219 4,151 11,309 (16,752) -- 4,927
------- --------- -------- --------- -------- ---------
Income before income
taxes.................. 32,469 25,020 9,213 13,695 (35,431) 44,966
Income tax expense....... (5,266) (4,363) (4,020) (4,114) -- (17,763)
------- --------- -------- --------- -------- ---------
Net income............... $27,203 $ 20,657 $ 5,193 $ 9,581 $(35,431) $ 27,203
======= ========= ======== ========= ======== =========
</Table>
F-62
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE THIRTEEN WEEKS ENDED APRIL 1, 2001
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER OF SUBSIDIARY NON
GUARANTOR NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- --------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
(UNAUDITED)
Sales -- domestic and
international.......... $ -- $ 599,400 $ 25,137 $13,291 $ -- $ 637,828
Beer excise taxes........ -- (89,871) (1,542) (2,715) -- (94,128)
------- --------- --------- ------- -------- ---------
Net sales................ -- 509,529 23,595 10,576 -- 543,700
Cost of goods sold....... -- (329,845) (17,078) (4,230) -- (351,153)
Equity in subsidiary
earnings............... 15,142 (3,883) -- -- (11,259) --
------- --------- --------- ------- -------- ---------
Gross profit............. 15,142 175,801 6,517 6,346 (11,259) 192,547
Marketing, general and
administrative...... (187) (155,114) (7,777) (6,880) -- (169,958)
Operating income......... 14,955 20,687 (1,260) (534) (11,259) 22,589
Interest income........ 4,390 156 -- 66 -- 4,612
Interest expense....... (2,017) 1,206 -- -- -- (811)
Other income........... 2,954 5,057 -- (4,839) -- 3,172
------- --------- --------- ------- -------- ---------
Income before income
taxes.................. 20,282 27,106 (1,260) (5,307) (11,259) 29,562
Income tax expense....... (1,954) (11,775) 478 2,017 -- (11,234)
------- --------- --------- ------- -------- ---------
Net income............... $18,328 $ 15,331 $ (782) $(3,290) $(11,259) $ 18,328
======= ========= ========= ======= ======== =========
</Table>
F-63
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 2002
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER SUBSIDIARY NON
GUARANTOR OF NOTES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents... $ 68,100 $ 4,768 $ 458 $ 104,076 $ -- $ 177,402
Accounts receivable, net.... -- 118,784 52,684 255,664 -- 427,132
Notes receivable, net....... 87 25,477 1,100 53,778 -- 80,442
Total inventories........... -- 103,807 9,793 104,681 -- 218,281
Other current assets........ -- 50,703 339 41,331 -- 92,373
---------- ---------- -------- ---------- ----------- ----------
Total current assets...... 68,187 303,539 64,374 559,530 -- 995,630
Properties, at cost and net... -- 824,796 27,296 429,415 -- 1,281,507
Goodwill...................... -- 122,060 93,396 357,489 -- 572,945
Other intangibles, net........ -- 81,330 7,167 414,575 -- 503,072
Investments in joint
ventures.................... -- 98,806 -- 94,054 -- 192,860
Net investment in and advances
to subs..................... 989,510 1,687,014 -- -- (2,676,524) --
Other assets.................. 4,109 7,954 176,784 207,305 -- 396,152
---------- ---------- -------- ---------- ----------- ----------
Total assets.................. $1,061,806 $3,125,499 $369,017 $2,062,368 $(2,676,524) $3,942,166
========== ========== ======== ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............ $ -- $ 163,765 $ 3,289 $ 109,568 $ -- $ 276,622
Accrued salaries and
vacations................. -- 46,397 884 11,312 -- 58,593
Taxes, other than income
taxes..................... -- 37,694 426 87,529 -- 125,649
Accrued expenses and other
liabilities............... 3,578 70,188 3,569 305,590 -- 382,925
Current portion of long-term
debt...................... 80,000 30,000 -- -- -- 110,000
---------- ---------- -------- ---------- ----------- ----------
Total current
liabilities............. 83,578 348,044 8,168 513,999 -- 953,789
Long-term debt................ -- 1,554,656 -- -- -- 1,554,656
Deferred tax liability........ (3,352) 72,753 (2,208) 166,648 -- 233,841
Other long-term liabilities... 6,039 161,387 35 56,878 -- 224,339
---------- ---------- -------- ---------- ----------- ----------
Total liabilities......... 86,265 2,136,840 5,995 737,525 -- 2,966,625
---------- ---------- -------- ---------- ----------- ----------
Total shareholders'
equity.................. 975,541 988,659 363,022 1,324,843 (2,676,524) 975,541
---------- ---------- -------- ---------- ----------- ----------
Total liabilities and
shareholders' equity........ $1,061,806 $3,125,499 $369,017 $2,062,368 $(2,676,524) $3,942,166
========== ========== ======== ========== =========== ==========
</Table>
F-64
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 2002
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER OF SUBSIDIARY NON
GUARANTOR NOTES GUARANTOR GUARANTOR CONSOLIDATED
--------- ----------- ---------- ----------- ------------
(IN THOUSANDS)
(UNAUDITED)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES......... $ 22,455 $ (37,806) $(156,346) $ 144,438 $ (27,259)
--------- ----------- --------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Sales and maturities of
securities................ 232,758 -- -- -- 232,758
Additions to properties and
intangible assets......... -- (73,161) 35,863 (7,683) (44,981)
Acquisition of Coors Brewers
Limited, net of cash
acquired.................. -- (115,105) (93,397) (1,379,846) (1,588,348)
Other........................ -- (7,857) -- 10,957 3,100
--------- ----------- --------- ----------- -----------
NET CASH PROVIDED BY (USED
IN) INVESTING
ACTIVITIES.............. 232,758 (196,123) (57,534) (1,376,572) (1,397,471)
--------- ----------- --------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuances of stock under
stock plans............... 3,346 0 0 0 3,346
Proceeds from long-term
debt...................... -- 1,553,000 0 0 1,553,000
Payments on short-term
debt...................... (5,000) -- -- -- (5,000)
Dividends paid............... (7,374) -- -- -- (7,374)
Overdraft balances........... (14,058) -- -- -- (14,058)
Net activity in investment in
and advances (to) from
subsidiaries.............. (222,592) (1,319,093) 215,417 1,326,268 --
--------- ----------- --------- ----------- -----------
NET CASH PROVIDED BY (USED
IN) FINANCING
ACTIVITIES.............. (245,678) 233,907 215,417 1,326,268 1,529,914
--------- ----------- --------- ----------- -----------
Cash and cash equivalents:
Net increase (decrease) in
cash and cash
equivalents............... 9,535 (22) 1,537 94,134 105,184
Effect of exchange rate
changes on cash and cash
equivalents............... -- -- (1,803) (3,112) (4,915)
Balance at beginning of year... 58,565 4,790 724 13,054 77,133
--------- ----------- --------- ----------- -----------
BALANCE AT END OF QUARTER...... $ 68,100 $ 4,768 $ 458 $ 104,076 $ 177,402
========= =========== ========= =========== ===========
</Table>
F-65
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 1, 2001
<Table>
<Caption>
SUBSIDIARY
PARENT ISSUER OF SUBSIDIARY NON
GUARANTOR NOTES GUARANTOR GUARANTOR CONSOLIDATED
--------- --------- ---------- ---------- ------------
(IN THOUSANDS)
(UNAUDITED)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................ $ 13,233 $(17,923) $(2,140) $(8,503) $ (15,333)
--------- -------- ------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities............. (130,968) -- -- -- (130,968)
Sales and maturities of
securities....................... 179,135 -- -- -- 179,135
Additions to properties and
intangible assets................ -- (27,128) (3,401) (223) (30,752)
Investment in Molson USA, LLC....... -- (65,000) -- -- (65,000)
Other............................... -- 2,939 19 148 3,106
--------- -------- ------- ------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES........... 48,167 (89,189) (3,382) (75) (44,479)
--------- -------- ------- ------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of stock.................. (6,055) -- -- -- (6,055)
Issuances of stock under stock
plans............................ 9,212 -- -- -- 9,212
Dividends paid...................... (6,893) -- -- -- (6,893)
Proceeds from long-term debt........ -- -- -- 3,285 3,285
Overdraft balances.................. (17,245) -- -- -- (17,245)
Net activity in investment in and
advances to (from)
subsidiaries..................... (119,149) 110,589 5,186 3,374 --
--------- -------- ------- ------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES........... (140,130) 110,589 5,186 6,659 (17,696)
--------- -------- ------- ------- ---------
Cash and cash equivalents
Net increase (decrease) in cash and
cash equivalents................. (78,730) 3,477 (336) (1,919) (77,508)
Effect of exchange rate changes on
cash and cash equivalents........ -- -- -- (288) (288)
Balance at beginning of year.......... 114,546 (2,111) 2,321 5,005 119,761
--------- -------- ------- ------- ---------
BALANCE AT END OF QUARTER............. $ 35,816 $ 1,366 $ 1,985 $ 2,798 $ 41,965
========= ======== ======= ======= =========
</Table>
F-66
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything to you other than the information contained in
this prospectus. You may not rely on unauthorized information or
representations.
This prospectus does not offer to sell or ask for offers to buy any of the
securities in any jurisdiction where it is unlawful, where the person making the
offer is not qualified to do so, or to any person who can not legally be offered
the securities.
The information in this prospectus in current only as of the date on its
cover, and may change after that date. For any time after the cover date of this
prospectus, we do not represent that our affairs are the same as described or
that the information in this prospectus is correct, nor do we imply those things
by delivering this prospectus or selling securities to you.
Until , 2002, all dealers that buy, sell or trade the exchange
notes may be required to deliver a prospectus, regardless of whether they are
participating in the offering. This is in addition to the dealer's obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
---------------------
PROSPECTUS
---------------------
$850,000,000
[COORS LOGO]
EXCHANGE OFFER FOR
6 3/8% SENIOR NOTES
DUE 2012
, 2002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II:
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article X of Adolph Coors Company's Amended and Restated Articles of
Incorporation provides that we may indemnify our directors, officers, employees
and others against liabilities and expenses incurred in their corporate
capacities in a manner consistent with the Colorado Corporation Code (the
predecessor to the Colorado Business Corporation Act). The Colorado Business
Corporation Act provides that we may indemnify each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "Proceeding"), by reason of the fact that he or she
is or was (a) a director, (b) an officer, or (c) a director, officer, employee
or other agent of Adolph Coors Company or another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (such persons described in (a), (b) and (c)
are sometimes hereinafter referred to as an "Indemnitee") against all expense,
liability, and loss reasonably incurred by any such Indemnitee in connection
therewith. Notwithstanding the foregoing, if the Colorado Business Corporation
Act requires, an advancement of expenses incurred by an Indemnitee will be made
only upon delivery to us of an undertaking, by or on behalf of such Indemnitee,
to repay all amounts so advanced if it shall ultimately be determined that the
person did not meet the required standard of conduct.
The effect of these provisions would be to authorize such indemnification
by us for liabilities arising out of the Securities Act.
Article VI of Adolph Coors Company's Amended and Restated Bylaws provides
that we shall indemnify its directors, to the full extent allowed by the
Colorado Corporation Code, against any and all liabilities and reasonable
expenses incurred in connection with any action, suit, or proceeding to which
such director is made a party, and which may be asserted against him in his
corporate capacity. Adolph Coors Company's bylaws also provide that we shall
indemnify our officers, employees and others against any and all liabilities and
reasonable expenses incurred in connection with any action, suit, or proceeding
which is or may be asserted against the officer or employee for acts within the
scope of the officer's or employee's duties in such capacity, except for matters
in which the person is adjudged in any action, suit, or proceeding to be liable
for his own gross negligence or willful misconduct in the performance of any
duty, and except for any personal benefit improperly received by him.
ITEM 21. EXHIBITS
(a) The following exhibits are filed as part of this registration statement
or incorporated by reference herein:
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
1.1 Purchase Agreement, dated April 30, 2002, among Coors
Brewing Company (the "Issuer"), and Adolph Coors Company,
Coors Distributing Company, Coors' International Market
Development, L.L.L.P., Coors Worldwide, Inc. and Coors
Caribe, Inc. (collectively the "Guarantors"), and J.P.
Morgan Securities Inc., Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities, Inc., Banc One Capital Markets,
Inc. and Wachovia Securities (collectively, the "Initial
Purchasers").*
4.1 Indenture, dated as of May 7, 2002, by and among the Issuer,
the Guarantors and Deutsche Bank Trust Company Americas, as
trustee.+
4.2 First Supplemental Indenture, dated as of May 7, 2002, by
and among the Issuer, the Guarantors and Deutsche Bank Trust
Company Americas, as trustee.+
4.3 Registration Rights Agreement, dated as of May 7, 2002,
among the Issuer and the Initial Purchasers.*
5.1 Opinion of Annita M. Menogan regarding the validity of the
securities offered hereby.*
8.1 Opinion of Kirkland & Ellis regarding federal income tax
considerations.*
</Table>
II-1
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
12.1 Computation of Ratios of Earnings to Fixed Charges.*
23.1 Consent of PricewaterhouseCoopers LLP.*
23.2 Consent of KPMG Audit Plc.*
23.3 Consent of Annita M. Menogan (included in Exhibit 5.1).*
23.4 Consent of Kirkland & Ellis (included in Exhibit 8.1).*
24.1 Power of Attorney (included on the signature pages hereto).*
25.1 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939 of Deutsche Bank Trust Company
Americas relating to the Indenture and the issuance of the
Issuer's securities.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Tender Instructions.*
</Table>
- ---------------
* Filed herewith.
+ Incorporated by reference to the registrant's quarterly report of Form 10-Q
for the quarter ended March 31, 2002 (File No. 0-8251).
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933 if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such registration statement;
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for the purpose of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of any employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 20,
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 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
directors, 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 Securities Act and will be
governed by the final adjudication of such issue.
(f) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), or 11 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
date of the registration statement through the date of responding to the
request.
(g) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado, on the 5th day of August, 2002.
COORS BREWING COMPANY
/s/ TIMOTHY V. WOLF
--------------------------------------
By: Timothy V. Wolf
Title: Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Peter H. Coors, W. Leo Kiely III and
Robert M. Reese his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities (including his or her capacity as a
director and/or officer of the registrant), to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent or each such attorney-in-fact and agent's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of August, 2002.
/s/ PETER H. COORS
--------------------------------------
By: Peter H. Coors
Title: Chairman and Director
/s/ W. LEO KIELY III
--------------------------------------
By: W. Leo Kiely III
Title: Chief Executive Officer
(Principal Executive Officer)
II-4
/s/ TIMOTHY V. WOLF
--------------------------------------
By: Timothy V. Wolf
Title: Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ RONALD A. TRYGGESTAD
--------------------------------------
By: Ronald A. Tryggestad
Title: Vice President and Controller
(Principal Accounting Officer)
/s/ WILLIAM K. COORS
--------------------------------------
By: William K. Coors
Title: Chairman and Director
/s/ FRANKLIN W. HOBBS
--------------------------------------
By: Franklin W. Hobbs
Title: Director
--------------------------------------
By: Pamela H. Patsley
Title: Director
/s/ WAYNE R. SANDERS
--------------------------------------
By: Wayne R. Sanders
Title: Director
/s/ DR. ALBERT C. YATES
--------------------------------------
By: Dr. Albert C. Yates
Title: Director
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado, on the 5th day of August, 2002.
ADOLPH COORS COMPANY
/s/ TIMOTHY V. WOLF
--------------------------------------
By: Timothy V. Wolf
Title: Vice President and
Chief Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Peter H. Coors, W. Leo Kiely III and
Robert M. Reese his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities (including his or her capacity as a
director and/or officer of the registrant), to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent or each such attorney-in-fact and agent's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of August, 2002.
/s/ PETER H. COORS
--------------------------------------
By: Peter H. Coors
Title: Chairman and Director
/s/ W. LEO KIELY III
--------------------------------------
By: W. Leo Kiely III
Title: Chief Executive Officer
and Director
(Principal Executive Officer)
II-6
/s/ TIMOTHY V. WOLF
--------------------------------------
By: Timothy V. Wolf
Title: Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ RONALD A. TRYGGESTAD
--------------------------------------
By: Ronald A. Tryggestad
Title: Vice President and
Controller (Principal
Accounting Officer)
/s/ WILLIAM K. COORS
--------------------------------------
By: William K. Coors
Title: Director
/s/ FRANKLIN W. HOBBS
--------------------------------------
By: Franklin W. Hobbs
Title: Director
--------------------------------------
By: Pamela H. Patsley
Title: Director
/s/ WAYNE R. SANDERS
--------------------------------------
By: Wayne R. Sanders
Title: Director
/s/ DR. ALBERT C. YATES
--------------------------------------
By: Dr. Albert C. Yates
Title: Director
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado, on the 5th day of August, 2002.
COORS CARIBE, INC.
/s/ DAVID G. BARNES
--------------------------------------
By: David G. Barnes
Title: Treasurer (Principal
Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Peter H. Coors, W. Leo Kiely III and
Robert M. Reese his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities (including his or her capacity as a
director and/or officer of the registrant), to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent or each such attorney-in-fact and agent's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of August, 2002.
/s/ ROBERT D. KLUGMAN
--------------------------------------
By: Robert D. Klugman
Title: President and Sole Director
(Principal Executive Officer)
/s/ DAVID G. BARNES
--------------------------------------
By: David G. Barnes
Title: Treasurer (Principal
Financial Officer)
/s/ RONALD A. TRYGGESTAD
--------------------------------------
By: Ronald A. Tryggestad
Title: Assistant Treasurer
(Principal Accounting Officer)
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado, on the 5th day of August, 2002.
COORS DISTRIBUTING COMPANY
/s/ DAVID G. BARNES
--------------------------------------
By: David G. Barnes
Title: Treasurer (Principal
Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Peter H. Coors, W. Leo Kiely III and
Robert M. Reese his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities (including his or her capacity as a
director and/or officer of the registrant), to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent or each such attorney-in-fact and agent's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of August, 2002.
/s/ CARL L. BARNHILL
--------------------------------------
By: Carl L. Barnhill
Title: President and Director
(Principal Executive Officer)
/s/ DAVID G. BARNES
--------------------------------------
By: David G. Barnes
Title: Treasurer (Principal
Executive Officer)
II-9
/s/ RONALD A. TRYGGESTAD
--------------------------------------
By: Ronald A. Tryggestad
Title: Assistant Treasurer
(Principal Executive Officer)
/s/ ROBERT D. KLUGMAN
--------------------------------------
By: Robert D. Klugman
Title: Director
--------------------------------------
By: Jeff B. Popkin
Title: Director
/s/ TIMOTHY V. WOLF
--------------------------------------
By: Timothy V. Wolf
Title: Director
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado, on the 5th day of August, 2002.
COORS INTERNATIONAL MARKET
DEVELOPMENT L.L.L.P.
By: COORS CARIBE, INC.
Its: General Partner
/s/ ROBERT D. KLUGMAN
--------------------------------------
By: Robert D. Klugman
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Peter H. Coors, W. Leo Kiely III and
Robert M. Reese his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities (including his or her capacity as a
director and/or officer of the registrant), to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent or each such attorney-in-fact and agent's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of August, 2002.
/s/ ROBERT D. KLUGMAN
--------------------------------------
By: Robert D. Klugman
Title: Sole Director of General
Partner
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado, on the 5th day of August, 2002.
COORS WORLDWIDE, INC.
/s/ DAVID G. BARNES
--------------------------------------
By: David G. Barnes
Title: Treasurer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Peter H. Coors, W. Leo Kiely III and
Robert M. Reese his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities (including his or her capacity as a
director and/or officer of the registrant), to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent or each such attorney-in-fact and agent's
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 5th day of August, 2002.
/s/ PETER M.R. KENDALL
--------------------------------------
By: Peter M.R. Kendall
Title: President and Sole Director
(Principal Executive Officer)
/s/ DAVID G. BARNES
--------------------------------------
By: David G. Barnes
Title: Treasurer
(Principal Financial Officer)
/s/ RONALD A. TRYGGESTAD
--------------------------------------
By: Ronald A. Tryggestad
Title: Assistant Treasurer
(Principal Accounting Officer)
II-12
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1 Purchase Agreement, dated April 30, 2002, among Coors
Brewing Company (the "Issuer"), and Adolph Coors Company,
Coors Distributing Company, Coors' International Market
Development, L.L.L.P., Coors Worldwide, Inc. and Coors
Caribe, Inc. (collectively the "Guarantors"), and J.P.
Morgan Securities Inc., Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities, Inc., Banc One Capital Markets,
Inc. and Wachovia Securities (collectively, the "Initial
Purchasers").*
4.1 Indenture, dated as of May 7, 2002, by and among the Issuer,
the Guarantors and Deutsche Bank Trust Company Americas, as
trustee.+
4.2 First Supplemental Indenture, dated as of May 7, 2002, by
and among the Issuer, the Guarantors and Deutsche Bank Trust
Company Americas, as trustee.+
4.3 Registration Rights Agreement, dated as of May 7, 2002,
among the Issuer and the Initial Purchasers.*
5.1 Opinion of Annita M. Menogan regarding the validity of the
securities offered hereby.*
8.1 Opinion of Kirkland & Ellis regarding federal income tax
considerations.*
12.1 Computation of Ratios of Earnings to Fixed Charges.*
23.1 Consent of PricewaterhouseCoopers LLP.*
23.2 Consent of KPMG Audit Plc.*
23.3 Consent of Annita M. Menogan (included in Exhibit 5.1).*
23.4 Consent of Kirkland & Ellis (included in Exhibit 8.1).*
24.1 Power of Attorney (included on the signature pages hereto).*
25.1 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939 of Deutsche Bank Trust Company
Americas relating to the Indenture and the issuance of the
Issuer's securities.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Tender Instructions.*
</Table>
- ---------------
* Filed herewith.
+ Incorporated by reference to the registrant's quarterly report of Form 10-Q
for the quarter ended March 31, 2002 (File No. 0-8251).