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<SEC-DOCUMENT>0000024545-01-500005.txt : 20010409
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ACCESSION NUMBER: 0000024545-01-500005
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010402
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: COORS ADOLPH CO
CENTRAL INDEX KEY: 0000024545
STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082]
IRS NUMBER: 840178360
STATE OF INCORPORATION: CO
FISCAL YEAR END: 1228
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 001-14829
FILM NUMBER: 1589533
BUSINESS ADDRESS:
STREET 1: P.O. BOX 4030, MAIL #NH375
CITY: GOLDEN
STATE: CO
ZIP: 80401
BUSINESS PHONE: 3032773271
</SEC-HEADER>
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<TEXT>
U.S. SECURITIES AND EXCHANGE COMMISSION PRIVATE
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 2000
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 0-8251
ADOLPH COORS COMPANY
(Exact name of registrant as specified in its charter)
Colorado 84-0178360
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 279-6565
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Class B Common Stock (non-voting), New York Stock Exchange
no par value
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: All voting shares are held by Adolph Coors, Jr. Trust.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of March 15, 2001:
Class A Common Stock - 1,260,000 shares
Class B Common Stock - 36,090,195 shares
PART I
ITEM 1. Business
(a) General Development of Business
We are the third largest producer of beer in the United States and, since
our founding in 1873, we have been committed to producing the highest
quality beers. Our portfolio of brands is designed to appeal to a wide
range of consumer taste, style and price preferences. Our beverages are
sold throughout the United States and in select international markets.
Recent General Business Developments
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.
Under the agreement, the joint venture owns the exclusive right to import
Molson brands into the United States, including Molson Canadian, Molson
Golden and Molson Ice. Additionally, any Molson brands that may be
developed in the future for import into the United States will be covered
under the agreement. We will be responsible for the sales of these brands.
Production of these brands will be handled in Canada by Molson, and
marketing of these brands will be managed by the joint venture.
In January 1998, we began a partnership arrangement with Molson, Inc. in
Canada for the purpose of distributing Coors products in Canada. We own
50.1% of this partnership through our 100% ownership of Coors Canada, Inc.
See further discussion of our Canadian business under section (c),
Narrative Description of Business. In December 2000, we made certain
changes to the Canadian partnership arrangement. Also in December 2000, we
entered into a 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 is
expected to reach an annual contract brewing rate of up to 500,000 barrels
over the next few years.
In the second quarter of 2000, we made the decision to close our brewery in
Zaragoza, Spain, and sales operation in Madrid, Spain. The brewery was
acquired in March 1994 and provided services for the production and sales
to unaffiliated distributors for Coors products in Spain and certain
European markets outside of Spain. The decision to close the Spain
operations came as a result of various analyses we performed which focused
on the potential for improved distribution channels, the viability of Coors
brands in the Spain market and additional contract brewing opportunities.
These analyses conclusively demonstrated that our Spanish operations were
not viable. As a result of our decision to close the brewery, we incurred a
total charge of approximately $20.6 million in 2000, approximately $11.3
million for severance and other related closure costs, approximately $4.9
million for a fixed asset impairment charge and approximately $4.4 million
for the write-off of our cumulative translation adjustments previously
charged to equity related to our Spain operations.
Some of the following statements describe our expectations of future
products and business plans, financial results, performance and events.
Actual results may differ materially from these forward-looking statements.
Please see Item 7, Management's Discussion and Analysis - Cautionary
Statement Pursuant to Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995 for factors that may negatively impact our
performance.
(b) Financial Information About Industry Segments
We have one reporting segment, which is focused on the continuing
operations of producing, marketing and selling malt-based beverages. See
Item 8, Financial Statements and Supplementary Data, for financial
information relating to our operations.
(c) Narrative Description of Business
Coors Brewing Company - General
We produce, market and sell high-quality malt-based beverages. Our
portfolio of brands is designed to appeal to a wide range of consumer
taste, style and price preferences. Our beverages are sold throughout the
United States and in select international markets. Coors Lightr has
accounted for more than 70% of our sales volume in each of the last three
years. Premium and above-premium products accounted for more than 85% of
our total sales volume in each of the last three years. Most of our sales
are in U.S. markets; however, we are committed to building profitable sales
in international markets. Our goal is to continue growing our business and
increasing our profitability, both domestically and internationally, by
focusing on the following six key strategies:
- producing the highest quality products;
- focusing on high-growth, high-margin segments;
- investing in high-potential markets and brands;
- improving our wholesale distribution network;
- building organizational excellence and improving our cost structure
and efficiencies; and
- pursuing strategic opportunities.
Our sales of malt beverages totaled 23.0 million barrels in 2000, 22.0
million barrels in 1999 and 21.2 million barrels in 1998. The barrel sales
figures for each year do not include barrel sales of a non-consolidated
joint venture. An additional 1.2 million, 1.0 million and 0.9 million
barrels were sold by this non-consolidated entity in 2000, 1999 and 1998,
respectively. See Item 7, Management's Discussion and Analysis, for
discussion of changes in volume.
Our Products
Our product portfolio includes 12 brands, including Coors Light, a premium
beer, which is our top-selling brand. Our other premium beers include
Original Coorsr and Coorsr Non-Alcoholic. We also offer a selection of
above-premium beers including George Killian'sr Irish RedT Lager, Blue
MoonT Belgian White Ale and Winterfestr, a specialty beer offered
seasonally. In addition, we offer Zimar and Zimar Citrus, alternative malt-
based beverages that are light and refreshing. We also compete in the
lower-priced segment of the beer market, called the popular-priced segment,
with Coors Extra Goldr and our Keystoner family of beers - Keystoner
Premium, Keystoner Light and Keystoner Ice.
In 2001, an additional brand, Coors Dry, will be phased out because of
greater opportunities posed by emphasis and focus on our other brands.
We own and operate The SandLot Breweryr at Coors Fieldr ballpark in Denver,
Colorado. This brewery, which is open year-round, makes a variety of
specialty beers and has an annual capacity of approximately 4,000 barrels.
Sales and Distribution
By federal law, beer must be distributed in the United States through a
three-tier system consisting of manufacturers, distributors and retailers.
A national network of 517 distributors currently delivers our products to
U.S. retail markets. Of these, 511 are independent businesses and the other
six are owned and operated by one of our subsidiaries. Some distributors
operate multiple branches, bringing the total number of U.S. distributor
and branch locations to 571 for the year ended December 31, 2000. As a
result of our new joint venture with Molson, we have an additional 350-400
domestic distributors that distribute Molson brands within the United
States. Additional independent distributors deliver our products to some
international markets under licensing and distribution agreements.
We establish standards and monitor distributors' methods of handling our
products to ensure the highest product quality and freshness. Monitoring
ensures adherence to proper refrigeration and rotation guidelines for our
products at both wholesale and retail locations. Distributors are required
to remove our products from retailer outlets if they have not sold within a
certain period of time.
Our highest volume states are California, Texas, Pennsylvania, New York and
New Jersey, which together comprised 45% of our total domestic volume in
2000.
We have approximately 350 full-time salespeople throughout the United
States. Our salespeople work closely with our distributors to assure that
they focus appropriately on our product and to assist them in implementing
industry best practices to improve efficiency and performance. Our sales
function is organized into two regions that manage a total of six
geographic field business areas responsible for overseeing domestic sales.
We believe this structure enables our salespeople to better anticipate
wholesaler and consumer needs and to respond to those needs locally, with
greater speed.
In addition, we have a team of category managers responsible for assisting
leading U.S. retailers, such as large supermarket chains, with managing
their beer offerings. Our category managers work with retailers to enhance
overall beer sales through optimizing space allocation, merchandising
displays, promotional campaigns and product distribution throughout the
retailer's chain. We believe that our success in category management
enhances our competitive position.
Manufacturing, Production and Packaging
Brewing Process and Raw Materials
Our ingredients and brewing process make our Rocky Mountain-style beers
unlike any other beers in the world. We also use unique packaging materials
developed to accommodate our cold shipping method.
We use all-natural ingredients to produce high quality beers. We adhere to
strict formulation and quality standards in selecting our raw materials. We
believe we have sufficient access to raw materials to meet our quality and
production requirements.
Barley is the fundamental ingredient in beer. Barley is so important to the
quality and taste of our products that we started developing our own
strains of barley in 1937. We use proprietary strains of barley, developed
by our own barley breeders and agronomists, in most of our malt beverages.
Virtually all of this barley is grown on irrigated farmland in the western
United States under contracts with area growers. The growers use only the
proprietary barley seed developed by us to produce our malting barley. We
are the only major brewer in the United States to exclusively use two-row
barley rather than six-row barley generally used by other brewers. Two-row
barley allows the seed ample room to grow and develop, which we believe
produces a more consistent, higher-quality crop and better tasting beer.
Barley must be malted to produce beer. Our malting facility in Golden
produces approximately 90% of all of our malt requirements. We also have
our own barley malted by third parties under contract. We maintain
inventory levels in facilities that we own. Our inventories are sufficient
to continue production in the event of any foreseeable disruption in barley
supply and usually exceed a 14-month supply.
We use naturally filtered water from underground aquifers to brew malt
beverages at our Golden facility. Water quality and composition have been
primary factors in all facility site selections. Water from our sources
contains minerals that help brew high-quality malt beverages.
We continually monitor the quality of the water used in our brewing and
blending processes for compliance with our own stringent quality standards,
which exceed federal and state water standards. We own water rights that we
believe are more than sufficient to meet all of our present and foreseeable
requirements for both brewing and industrial uses. We acquire water rights,
as appropriate, to provide flexibility for long-term strategic growth needs
and also to sustain brewing operations in case of a prolonged drought.
We take an average of 55 days-significantly longer than our major
competitors-to brew, age, finish and package our beers. Although our
brewing process takes longer, we believe it creates a smoother, more
drinkable product. We were the first brewer to introduce a cold-filter
process to preserve taste. We keep the product cold from the brewhouse
through packaging to retail by using insulated containers for transport and
requiring our distributors to hold our products in temperature-controlled
warehouses. Keeping our beers cold extends their freshness.
Brewing and Packaging Facilities
We have three domestic production facilities. We own and operate the
world's largest single-site brewery in Golden, Colorado. In addition, we
own and operate a packaging and brewing facility in Memphis, Tennessee, and
a packaging facility located in the Shenandoah Valley in Virginia.
We brew Coors Light, Original Coors, Coors Extra Gold, Killian's and the
Keystone brands in Golden. Approximately 62% of our beer volume brewed in
Golden is also packaged in Golden. The remainder is shipped in bulk from
the Golden brewery to either our Memphis facility or to our Shenandoah
facility for packaging.
The Memphis facility packages all products exported from the United States.
It also brews and packages our Zima, Zima Citrus, Coors Non-Alcoholic and
Blue Moon brands.
Our Shenandoah facility packages Coors Light, Keystone Light and a small
portion of Killian's volume for distribution to eastern U.S. markets.
To support the growth of our brands, we intend to increase our capital
expenditures to expand our brewing and packaging capacity. In particular,
beginning in 2001, we will be adding an additional bottle line to our
Shenandoah facility to meet growing demand and to lower our production and
distribution costs to markets in the northeastern United States. We are
improving manufacturing processes in Golden to increase brewing and
packaging capacity in our largest facility. We also anticipate that
increased output from our Memphis facility will be an important part of our
long-term capacity plan. Please see Item 7, Management's Discussion and
Analysis - Liquidity and Capital Resources for more information about our
planned capital expenditures.
Most of our glass bottle and aluminum can and end requirements are produced
in facilities that either we own or are operated by joint ventures in which
we are a partner.
Energy
We purchase electricity and steam for our Golden manufacturing facilities
from Trigen-Nations Energy Corporation, L.L.L.P. (Trigen). Coors Energy
Company, our wholly owned subsidiary, buys coal which it sells to Trigen
for Trigen's steam generator system and purchases gas for our Shenandoah
and Golden operations.
Packaging Materials
Slightly less than 60% of our products were packaged in aluminum cans in
2000. In 1994, Coors and American National Can Company formed a joint
venture to produce beverage cans and ends at our manufacturing facilities.
These cans and ends are for sale to our brewery and to outside customers.
The joint venture's initial term is seven years and can be extended for two
additional three-year terms. We have notified American National Can of our
intent to terminate the joint venture in October of 2001. We are evaluating
other alternatives, including possibly a new arrangement with Rexam LLC,
who acquired American National Can in 2000. We own the can manufacturing
facility, which produced approximately 4.0 billion aluminum cans in 2000.
We also own a manufacturing facility that provides our aluminum ends and
tabs. In 2000, we purchased most of our cans and ends from the joint
venture with American National Can, and we purchased all of the cans
produced by the joint venture. We purchased certain specialized cans and
some cans for products packaged at our Memphis and Shenandoah plants
directly from outside suppliers, including American National Can and Rexam
LLC.
We used glass bottles for approximately 29% of our products in 2000. Owens-
Brockway Glass Container, Inc. and Coors operate a joint venture, the Rocky
Mountain Bottle Company, to produce glass bottles at our glass
manufacturing facility. The initial term of the joint venture lasts until
2005 and can be extended for additional two-year periods. In 2000, Rocky
Mountain Bottle Company produced approximately 1.1 billion bottles, and we
purchased virtually all of these bottles. This fulfilled about half of our
bottle requirements in 2000. Owens has a contract to supply bottles for our
bottle requirements that are not met by Rocky Mountain Bottle Company, and
we acquired the remaining bottles from Owens.
We have arranged for sufficient container supplies with our joint venture
partners.
The remaining 11% of the volume we sold in 2000 was packaged in quarter-
and half-barrel stainless steel kegs purchased from third-party suppliers.
We purchase most of our paperboard and label packaging from Graphic
Packaging Corporation. These products include paperboard, multi-can pack
wrappers, bottle labels and other secondary packaging supplies. Graphic
Packaging supplies some unique packaging to us that, we believe, is not
currently produced by any other supplier. Our agreement with Graphic
Packaging expires in 2002. William K. Coors and Peter H. Coors serve as co-
trustees of a number of Coors family trusts that collectively control
Graphic Packaging. Please read Item 13, Certain Relationships and Related
Transactions, for more information regarding Graphic Packaging.
Product Shipment
We must ship our products greater distances than most of our competitors.
By packaging some of our products in our Memphis and Shenandoah facilities,
we reduce freight costs to certain markets.
In 2000, approximately 65% of our products were shipped by truck and
intermodal directly to distributors or to our satellite redistribution
centers. Transportation vehicles are refrigerated or properly insulated to
keep our malt beverages at required temperatures while in transit. In 2000,
we transported the remaining 35% of the products packaged at our production
facilities by railcar to either satellite redistribution centers or
directly to distributors throughout the country. Railcars assigned to us
are specially built and insulated to keep Coors products cold en route.
At December 31, 2000 we had 11 strategically located satellite
redistribution centers, which we use to receive product from production
facilities and to prepare shipments to distributors. In 2000, approximately
58% of packaged products were shipped directly to distributors and 42%
moved through the satellite redistribution centers.
International Business
We market our products to select international markets and to U.S. military
bases worldwide.
Canada
Coors Canada, a partnership between Molson and ourselves, markets Coors
Light in Canada. Coors Canada is owned 50.1% by us and 49.9% by Molson. The
partnership contracts with a Molson subsidiary for the brewing,
distribution and sale of products. It manages all marketing activities for
Coors products in Canada. Currently, Coors Light has a market share of more
than 6% and is now the number one light beer - and the number four beer
brand overall - in Canada. See also Item 1, General Development of
Business, for recent amendments in our partnership agreement between Coors
Canada and Molson.
Puerto Rico and the Caribbean
In Puerto Rico, we market and sell Coors Light to an independent local
distributor. A local team of Coors employees manages marketing and
promotional efforts in this market. Coors Light is the number-one brand in
the Puerto Rico market with more than a 50% market share in 2000.
We also sell products in several other Caribbean markets, including the
U.S. Virgin Islands, through local distributors.
Europe
In Europe, we currently focus our efforts on Ireland and Northern Ireland,
where we market the Coors Light brand. Additionally, we are currently
testing Coors Light in Scotland, and we will assess the feasibility of
expanding to the balance of the United Kingdom.
During the fourth quarter of 2000, we closed our brewery and commercial
operations in Spain. This brewery produced beer for Spain and other
European markets. Beginning in late 2000, we began sourcing beer for our
remaining European markets from our Memphis plant. The beer is then
packaged for distribution under contract in the United Kingdom by Thomas
Hardy.
Japan
Coors Japan Company, Ltd., our Tokyo-based subsidiary, is the exclusive
importer and marketer of Coors products in Japan. The Japanese business is
currently focused on Zima and Original Coors. Coors Japan sells Coors
products to independent distributors in Japan.
China
In China, we currently market Original Coors beer under a licensing
arrangement with Carlsberg-Guangdong. The arrangement is focused on select
cities and under this arrangement, we maintain representative offices that
oversee the marketing of our products in China.
Seasonality of the Business
The beer industry is subject to seasonal sales fluctuation. Our sales
volumes are normally at their lowest in the first and fourth quarters and
highest in the second and third quarters. Our fiscal year is a 52- or 53-
week year that ends on the last Sunday in December. The 2000 fiscal year
was 53 weeks, while the 1999 and 1998 fiscal years were both 52 weeks.
Research and Development
Our research and development activities relate primarily to creating and
improving products and packages. These activities are designed to refine
the quality and value of our products and to reduce costs through more
efficient processing and packaging techniques, equipment design and
improved raw materials. We spent approximately $15.9 million, $15.5 million
and $15.2 million for research and development in 2000, 1999 and 1998,
respectively. We expect to spend approximately $16.0 million on research
and product development in 2001.
To support new product development, we maintain a fully equipped pilot
brewery within the Golden facility. This facility has a 6,500 barrel annual
capacity and enables us to brew small batches of innovative products
without interrupting ongoing operations in the main brewery.
Intellectual Property
We own trademarks on the majority of the brands we produce and we have
licenses for the remainder. We also hold several patents on innovative
processes related to product formulae, can making, can decorating and
certain other technical operations. These patents have expiration dates
ranging from 2001 to 2019. In addition, we have several design patents for
innovative packaging.
Regulation
Our business is highly regulated by federal, state and local government
entities. These regulations govern many parts of our operations, including
brewing, marketing, advertising, transportation, distributor relationships,
sales and environmental impact. To operate our facilities, we must obtain
and maintain numerous permits, licenses and approvals from various
governmental agencies, including the U.S. Treasury Department; Bureau of
Alcohol, Tobacco and Firearms; the U.S. Department of Agriculture; the U.S.
Food and Drug Administration, state alcohol regulatory agencies as well as
state and federal environmental agencies. Internationally, our business is
also subject to regulations and restrictions imposed by the laws of the
foreign jurisdictions in which we sell our products.
Governmental entities also levy taxes and may require bonds to ensure
compliance with applicable laws and regulations. Federal excise taxes on
malt beverages are currently $18 per barrel. State excise taxes also are
levied at rates that ranged in 2000 from a high of $32.65 per barrel in
Alabama to a low of $0.62 per barrel in Wyoming, with an average of $7.91
per barrel. In 2000, we incurred approximately $427 million in federal and
state excise taxes. We are aware that from time to time Congress and state
legislatures consider various proposals to increase or decrease excise
taxes on the production and sale of alcoholic beverages, including beer.
The last significant increase in federal excise taxes on beer was in 1991
when excise taxes on beer doubled.
Environmental Matters
We are subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations.
Compliance with these laws and regulations did not materially affect our
2000 capital expenditures, earnings or competitive position, and we do not
anticipate that they will do so in 2001.
We are also required to obtain environmental permits from governmental
authorities for certain of our operations. We cannot assure you that we
have been or will be at all times in complete compliance with, or have
obtained, all such permits. These authorities can modify or revoke our
permits and can enforce compliance through fines and injunctions. To the
best of our knowledge, we are not in violation of any of our permits and,
we believe, we have obtained all necessary permits.
We continue to promote the efficient use of resources, waste reduction and
pollution prevention. Programs currently under way include recycling
bottles and cans and, where practical, increasing the recycled content of
product packaging materials, paper and other supplies.
See also Item 7, Management's Discussion and Analysis - Contingencies, for
additional discussion of our environmental contingencies.
Employees and Employee Relations
We have approximately 5,850 full-time employees. Memphis plant workers, who
comprise about 8% of our total work force, are represented by the Teamsters
and are the only significant employee group at any of our three domestic
production facilities that has union representation. This union contract
expires in 2001. We believe our people are key to our success and that
relations with our employees are good.
Competitive Conditions
Known trends and competitive conditions: Industry and competitive
information was compiled from various industry sources, including beverage
analyst reports, Beer Marketer's Insights, Impact Databank and The Beer
Institute. While management believes that these sources are reliable, we
cannot guarantee the complete accuracy of these numbers and estimates.
2000 industry overview: The beer industry in the United States is
extremely competitive. Industry volume growth has averaged less than 1%
annually since 1991. Therefore, growing, even maintaining, market share
requires substantial and consistent investments in marketing and sales. In
a very competitive year, 2000 saw domestic beer industry shipments increase
less than 1%, after growing 1.2% in 1999. In recent years, brewers have
focused on marketing, promotions and innovative packaging in an effort to
gain market share and less on price discounting strategies.
The industry's pricing environment continued to be positive in 2000, with
the announcement of modest price increases on specific packages in select
markets. As a result, revenue per barrel improved for major U.S. brewers
during the year. However, consumer demand continued to shift away from
short bottles and toward longneck bottles, which cost significantly more to
make and ship than short bottles. In addition, many raw material prices
increased in 2000, including aluminum, glass and fuel. In 2000, a
significant portion of our incremental gross profit generated by volume
growth and price increases was reinvested in packaging materials, as well
as in additional marketing and sales activities.
A number of important trends continued in the U.S. beer market in 2000. The
first was a trend toward lighter, more-refreshing beers. The largest beer
brands that grew in the U.S. market were again American-style light lagers,
such as Coors Light. More than 80% of our annual unit volume in 2000 was in
light beers. The second trend was toward "trading up," as consumers
continue to move away from lower-priced brands to higher-priced brands,
including imports. Import beer shipments rose more than 10% in 2000. The
industry sales trends toward lighter, more-upscale beers play to our
strengths.
The U.S. brewing industry has experienced significant consolidation in the
past several years which has removed excess capacity. Several competitors
have exited the beer business, sold brands, or closed inefficient, outdated
brewing facilities. The beer industry is also consolidating at the
wholesaler level, a trend that continued in 2000 and generally improves
economics for the combining wholesalers and their suppliers.
U.S. demographics continued to improve for the beer industry, with the
number of consumers reaching legal drinking age continuing to increase in
2000, according to U.S. Census Bureau assessments and projections. These
same projections anticipate that the 21-24 age group will continue to grow
for virtually this entire decade. This trend is important to the beer
industry because young adult males tend to consume more beer per capita
than other demographic groups.
Our competitive position: Our malt beverages compete with numerous above-
premium, premium, low-calorie, popular-priced, non-alcoholic and imported
brands. These competing brands are produced by national, regional, local
and international brewers. In 2000, approximately 80% of U.S. beer
shipments were attributable to the top three domestic brewers: Anheuser-
Busch, Inc.; Philip Morris, Inc., through its subsidiary Miller Brewing
Company; and Coors Brewing Company. We compete most directly with Anheuser
and Miller, the dominant companies in the U.S. industry. We are the
nation's third-largest brewer and, according to Beer Marketer's Insights
estimates, we represented approximately 11.1% of the total 2000 U.S.
brewing industry shipments of malt beverages (including exports and U.S.
shipments of imports). This compares to Anheuser's 48.3% share and Miller's
20.6% share.
Our beer shipments to wholesalers increased 4.7% in 2000, representing the
fourth consecutive year that our shipments have outpaced industry growth by
2 percentage points or more. By comparison, Anheuser's shipments increased
2.7% in 2000 and Miller's declined 2.6%, due in part to reductions in
distributor inventories. More than 85% of our unit volume was in the
premium and above-premium price categories, the highest proportion among
the largest domestic brewers. This product mix compares to 77% premium-and-
above volume for Anheuser and 61% for Miller.
We continue to face significant competitive disadvantages related to
economies of scale. Besides lower transportation costs achieved by
competitors with multiple breweries, these larger brewers also benefit from
economies of scale in advertising spending because of their greater unit
sales volumes. In an effort to achieve and maintain national advertising
exposure and grow our U.S. market share, we generally spend substantially
more to market our beer, per barrel, than our major competitors.
Although our results are primarily driven by U.S. sales, international
operations have increased in importance in recent years, including Canada,
where Coors Light is the number one light beer.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
See Item 8, Financial Statements and Supplementary Data, for discussion of
sales, operating income and identifiable assets attributable to our country
of domicile, the United States, and all foreign countries.
ITEM 2. Properties
Our major facilities are:
Facility Location Product
Brewery/packaging Golden, CO Malt beverages/packaged
malt beverages
Packaging Elkton, VA (Shenandoah) Packaged malt beverages
Brewery/packaging Memphis, TN Malt beverages/packaged
malt beverages
Can and end plants Golden, CO Aluminum cans and ends
Bottle plant Wheat Ridge, CO Glass bottles
Distribution warehouse Anaheim, CA Wholesale beer
distribution
Meridian, ID
Denver, CO
Oklahoma City, OK
San Bernardino, CA
Glenwood Springs, CO
In 2000, we closed our Zaragoza, Spain, facility, which had both brewing
and packaging operations. See discussion of our closure in Item 7,
Management's Discussion and Analysis. We own all of our facilities except
our San Bernardino, California, and Glenwood Springs, Colorado,
distribution warehouses.
We own approximately 2,400 acres of land in Golden, Colorado, which include
brewing, packaging, can manufacturing and related facilities, as well as
gravel deposits and water storage facilities. We own 2,700 acres of land in
Rockingham County, Virginia, where the Shenandoah facility is located, and
132 acres in Shelby County, Tennessee, where the Memphis facility is
located.
We own waste treatment facilities in Golden and Shenandoah that process
waste from our manufacturing operations. The Golden facility also processes
waste from the City of Golden.
We believe that all of our facilities are well maintained and suitable for
their respective operations.
In 2000, our brewing facilities operated at an estimated annual average of
approximately 87% of capacity, and our packaging facilities operated at an
estimated annual average of approximately 87% of capacity. Annual
production capacity varies due to product and packaging mix, product
sourcing and seasonality. During the peak season, our capacities were fully
utilized with current mix and sourcing.
ITEM 3. Legal Proceedings
See the Environmental section of Item 7, Management's Discussion and
Analysis, for a discussion of our obligation for potential remediation
costs at the Lowry Landfill Superfund site and other legal proceedings.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Our Class B common stock has traded on the New York Stock Exchange since
March 11, 1999, under the symbol "RKY" and prior to that was quoted on the
NASDAQ National Market under the symbol "ACCOB."
The approximate number of record security holders by class of stock at
March 15, 2001, is as follows:
Title of class Number of record security holders
Class A common stock, voting, All shares of this class are
$1 par value held by the Adolph Coors, Jr. Trust
Class B common stock, non-voting,
no par value 2,921
Preferred stock, non-voting,
$1 par value None issued
The following table sets forth the high and low sales prices per share of
our Class B common stock as reported by the New York Stock Exchange for the
periods after March 10, 1999, and as reported on the NASDAQ National Market
for the periods prior to March 11, 1999:
2000
Market price
High Low Dividends
First quarter $53.75 $37.375 $ 0.165
Second quarter $66.5 $42.4375 $ 0.185
Third quarter $67.625 $57.125 $ 0.185
Fourth quarter $82.3125 $58.9375 $ 0.185
1999
Market price
High Low Dividends
First quarter $65.8125 $51.6875 $ 0.150
Second quarter $59.1875 $45.25 $ 0.165
Third quarter $61 $48.25 $ 0.165
Fourth quarter $57.6875 $47.9375 $ 0.165
ITEM 6. Selected Financial Data
Following is selected financial data for 11 years ended December 31, 2000:
(In thousands, except per share) 2000(1) 1999 1998 1997
Consolidated Statement of
Operations Data:
Gross sales $2,841,738 $2,642,712 $2,463,655 $2,378,143
Beer excise taxes (427,323) (406,228) (391,789) (386,080)
Net sales 2,414,415 2,236,484 2,071,866 1,992,063
Cost of goods sold (1,525,829) (1,397,251) (1,333,026) (1,302,369)
Gross profit 888,586 839,233 738,840 689,694
Other operating expenses:
Marketing, general
and administrative (722,745) (692,993) (615,626) (573,818)
Special (charges) credits (15,215) (5,705) (19,395) 31,517
Total other operating expenses (737,960) (698,698) (635,021) (542,301)
Operating income 150,626 140,535 103,819 147,393
Other income (expense) - net 18,899 10,132 7,281 (500)
Income before income taxes 169,525 150,667 111,100 146,893
Income tax expense (59,908) (58,383) (43,316) (64,633)
Income from
continuing operations $ 109,617 $ 92,284 $ 67,784 $ 82,260
Per share of common stock
- basic $ 2.98 $ 2.51 $ 1.87 $ 2.21
- diluted $ 2.93 $ 2.46 $ 1.81 $ 2.16
Consolidated Balance Sheet Data:
Cash and cash equivalents
and short-term and long-term
marketable securities $ 386,195 $ 279,883 $ 287,672 $ 258,138
Working capital $ 118,415 $ 220,117 $ 165,079 $ 158,048
Properties, at cost and net $ 735,793 $ 714,001 $ 714,441 $ 733,117
Total assets $1,629,304 $1,546,376 $1,460,598 $1,412,083
Long-term debt $ 105,000 $ 105,000 $ 105,000 $ 145,000
Other long-term liabilities $ 45,446 $ 52,579 $ 56,640 $ 23,242
Shareholders' equity $ 932,389 $ 841,539 $ 774,798 $ 736,568
Cash Flow Data:
Cash provided by operations $ 285,417 $ 200,068 $ 203,583 $ 273,803
Cash used in investing
activities $ (297,541) $ (121,043) $ (146,479) $ (141,176)
Cash used in financing
activities $ (31,556) $ (76,431) $ (66,029) $ (72,042)
Other Information:
Barrels of malt beverages sold 22,994 21,954 21,187 20,581
Dividends per share of
common stock $ 0.720 $ 0.645 $ 0.60 $ 0.55
EBITDA (2) $ 299,112 $ 273,213 $ 243,977 $ 236,984
Capital expenditures $ 154,324 $ 134,377 $ 104,505 $ 60,373
Operating income as a
percentage of net sales (5) 6.9% 6.5% 5.9% 5.8%
Total debt to total
capitalization 10.1% 11.1% 15.8% 19.0%
(1) 53-week year versus 52-week year.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes special charges (credits).
(5) Excluding special charges (credits).
(In thousands, except per share) 1996 1995(1)(3) 1994(3) 1993(3)
Consolidated Statement of
Operations Data:
Gross sales $2,287,338 $2,075,917 $2,050,911 $1,960,378
Beer excise taxes (379,312) (385,216) (377,659) (364,781)
Net sales 1,908,026 1,690,701 1,673,252 1,595,597
Cost of goods sold (1,297,661) (1,106,635) (1,073,370) (1,050,650)
Gross profit 610,365 584,066 599,882 544,947
Other operating expenses:
Marketing, general
and administrative (523,250) (518,888) (505,668) (467,138)
Special (charges) credits (6,341) 15,200 13,949 (122,540)
Total other operating expenses (529,591) (503,688) (491,719) (589,678)
Operating income (loss) 80,774 80,378 108,163 (44,731)
Other expense - net (5,799) (7,100) (3,943) (12,099)
Income (loss) before income taxes 74,975 73,278 104,220 (56,830)
Income tax (expense) benefit (31,550) (30,100) (46,100) 14,900
Income (loss) from
continuing operations $ 43,425 $ 43,178 $ 58,120 $ (41,930)
Per share of common stock
- basic $ 1.14 $ 1.13 $ 1.52 $ (1.10)
- diluted $ 1.14 $ 1.13 $ 1.51 $ (1.10)
Consolidated Balance Sheet Data:
Cash and cash equivalents
and short-term and long-term
marketable securities $ 116,863 $ 32,386 $ 27,168 $ 82,211
Working capital $ 124,194 $ 36,530 $ (25,048) $ 7,197
Properties, at cost and net $ 814,102 $ 887,409 $ 922,208 $ 884,102
Total assets $1,362,536 $1,384,530 $1,371,576 $1,350,944
Long-term debt $ 176,000 $ 195,000 $ 131,000 $ 175,000
Other long-term liabilities $ 32,745 $ 33,435 $ 30,884 $ 34,843
Shareholders' equity $ 715,487 $ 695,016 $ 674,201 $ 631,927
Cash Flow Data:
Cash provided by operations $ 194,603 $ 90,097 $ 186,426 $ 168,493
Cash used in investing
activities $ (56,403) $ (116,172) $ (174,671) $ (119,324)
Cash (used in) provided by
financing activities $ (59,284) $ 30,999 $ (67,020) $ (6,627)
Other Information:
Barrels of malt beverages sold 20,045 20,312 20,363 19,828
Dividends per share of
common stock $ 0.50 $ 0.50 $ 0.50 $ 0.50
EBITDA (2) $ 213,725 $ 191,426 $ 220,979 $ 197,865
Capital expenditures $ 65,112 $ 157,599 $ 160,314 $ 120,354
Operating income (loss) as a
percentage of net sales (5) 4.6% 3.9% 5.6% (4.9%)
Total debt to total
capitalization 21.2% 24.9% 20.6% 26.3%
(1) 53-week year versus 52-week year.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes special charges (credits).
(3) Freight expense has not been reclassified out of sales and into cost of
goods sold for these years, as it is impracticable to do so due to system
conversions.
(5) Excluding special charges (credits).
(In thousands, except per share) 1992(3)(4) 1991(3) 1990(3)
Consolidated Statement of
Operations Data:
Gross sales $1,927,593 $1,903,886 $1,670,629
Beer excise taxes (360,987) (360,879) (186,756)
Net sales 1,566,606 1,543,007 1,483,873
Cost of goods sold (1,051,362) (1,052,228) (986,352)
Gross profit 515,244 490,779 497,521
Other operating expenses:
Marketing, general
and administrative (441,943) (448,393) (409,085)
Special charges -- (29,599) (30,000)
Total other operating expenses (441,943) (477,992) (439,085)
Operating income 73,301 12,787 58,436
Other expense - net (14,672) (4,403) (5,903)
Income before income taxes 58,629 8,384 52,533
Income tax (expense) benefit (22,900) 8,700 (20,300)
Income from
continuing operations $ 35,729 $ 17,084 $ 32,233
Per share of common stock
- basic $ 0.95 $ 0.46 $ 0.87
- diluted $ 0.95 $ 0.46 $ 0.87
Consolidated Balance Sheet Data:
Cash and cash equivalents
and short-term and long-term
marketable securities $ 39,669 $ 14,715 $ 63,748
Working capital $ 112,302 $ 110,043 $ 201,043
Properties, at cost and net $ 904,915 $ 933,692 $1,171,800
Total assets $1,373,371 $1,844,811 $1,761,664
Long-term debt $ 220,000 $ 220,000 $ 110,000
Other long-term liabilities $ 52,291 $ 53,321 $ 58,011
Shareholders' equity $ 685,445 $1,099,420 $1,091,547
Cash Flow Data:
Cash provided by operations $ 155,776 $ 164,148 $ 231,038
Cash used in investing
activities $ (140,403) $ (349,781) $ (309,033)
Cash provided by financing
activities $ 9,581 $ 136,600 $ 97,879
Other Information:
Barrels of malt beverages sold 19,569 19,521 19,297
Dividends per share of
common stock $ 0.50 $ 0.50 $ 0.50
EBITDA (2) $ 189,168 $ 151,144 $ 179,455
Capital expenditures $ 115,450 $ 241,512 $ 183,368
Operating income as a
percentage of net sales (5) 4.7% 2.7% 6.0%
Total debt to total
capitalization 24.3% 19.5% 9.2%
Note: Numbers in italics include results of discontinued operations.
(2) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and excludes special charges (credits).
(3) Freight expense has not been reclassified out of sales and into cost of
goods sold for these years, as it is impracticable to do so due to system
conversions.
(4) Reflects the dividend of ACX Technologies, Inc. to our shareholders during
1992.
(5) Excluding special charges (credits).
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
We are the third-largest producer of beer in the United States. Our
portfolio of brands is designed to appeal to a range of consumer taste,
style and price preferences. Our beverages are sold throughout the United
States and in select international markets.
This discussion summarizes the significant factors affecting our
consolidated results of operations, liquidity and capital resources for the
three-year period ended December 31, 2000, and should be read in
conjunction with the financial statements and notes thereto included
elsewhere in this report. Our fiscal year is the 52 or 53 weeks that end on
the last Sunday in December. Our fiscal year 2000 consisted of 53 weeks.
Our 1999 and 1998 fiscal years each consisted of 52 weeks.
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; prior year financial statements
have been reclassified for consistency as to where freight expense is
reported.
Summary of operating results:
Fiscal year ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands, except percentages)
Gross sales $2,841,738 $2,642,712 $2,463,655
Beer excise taxes (427,323) (406,228) (391,789)
Net sales 2,414,415 100% 2,236,484 100% 2,071,866 100%
Cost of goods sold (1,525,829) 63% (1,397,251) 62% (1,333,026) 64%
Gross profit 888,586 37% 839,233 38% 738,840 36%
Other operating expenses:
Marketing, general
and administrative (722,745) 30% (692,993) 31% (615,626) 30%
Special charges (15,215) 1% (5,705) -- (19,395) 1%
Total other operating
expenses (737,960) 31% (698,698) 31% (635,021) 31%
Operating income 150,626 6% 140,535 7% 103,819 5%
Other income - net 18,899 1% 10,132 -- 7,281 --
Income before taxes 169,525 7% 150,667 7% 111,100 5%
Income tax expense (59,908) 2% (58,383) 3% (43,316) 2%
Net income $ 109,617 5% $ 92,284 4% $ 67,784 3%
CONSOLIDATED RESULTS OF OPERATIONS - 2000 VS. 1999 AND 1999 VS. 1998
2000 vs. 1999: Our gross and net sales for 2000 were $2,841.7 million and
$2,414.4 million, respectively, resulting in a $199.0 million and $177.9
million increase over our 1999 gross and net sales of $2,642.7 million and
$2,236.5 million, respectively. Gross and net sales were favorably impacted
by a 4.7% increase in barrel unit volume. We sold 22,994,000 barrels of
beer and other malt beverages in 2000, compared to sales of 21,954,000
barrels in 1999. Year-to-date net sales were also favorably impacted by a
continuing shift in consumer preferences toward higher-net-revenue
products, domestic price increases and a longer fiscal year (2000 consisted
of 53 weeks, versus 52 weeks in 1999). Excluding our 53rd week, unit volume
was up approximately 4.1% compared to the 52-week period ended December 26,
1999. Excise taxes as a percent of gross sales decreased slightly in 2000
compared to 1999 primarily as a result of a shift in the geographic mix of
our sales.
Cost of goods sold was $1,525.8 million in 2000, an increase of 9.2%,
compared to $1,397.3 million in 1999. Cost of goods sold as a percentage of
sales was 63.2% for 2000, compared to 62.5% for 1999. On a per barrel
basis, cost of goods sold increased 4.3% in 2000 compared to 1999. This
increase was primarily due to an ongoing mix shift in demand toward more
expensive products and packages, including longneck bottles and import
products sold by Coors-owned distributors, as well as higher aluminum,
energy and freight costs. Cost of goods sold also increased as a result of
higher labor costs in 2000 from wage increases and overtime incurred during
our peak season in order to meet unprecedented demand for our products,
higher depreciation expense because of higher capital expenditures and
additional fixed costs as a result of our 53rd week in 2000.
Gross profit for 2000, was $888.6 million, a 5.9% increase over gross
profit of $839.2 million for 1999. As a percentage of sales, gross profit
decreased to 36.8% in 2000, compared to 37.5% of net sales in 1999.
Marketing, general and administrative costs were $722.7 million in 2000
compared to $693.0 million in 1999. The $29.7 million or 4.3% increase over
the prior year was primarily due to higher spending on marketing and
promotions, both domestically and internationally. We continued to invest
behind our brands and sales forces - domestic and international - during
2000, which included reinvesting incremental revenues that were generated
from the volume and price increases achieved and discussed earlier. Our
2000 corporate overhead and information technology spending was also up
slightly over 1999.
In 2000, our net special charges were $15.2 million, or $0.13 per basic and
diluted share, after tax. We incurred a total special charge of $20.6
million triggered by our decision to close our Spain brewery and commercial
operations. The decision to close the Spain operations came as a result of
an unfavorable outlook from various analyses we performed which focused on
the potential for improved distribution channels, the viability of Coors
brands in the Spain market and additional contract brewing opportunities.
Of the approximately $20.6 million charge, approximately $11.3 million
related to severance and other related closure costs for approximately 100
employees, approximately $4.9 million related to a fixed asset impairment
charge and approximately $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. These payments were funded from current
cash balances. The remaining $1.7 million reserve related to severance and
other related closure costs is expected to be paid by the end of the first
quarter of 2001 and will also be funded from current cash balances. Closing
our Spain operations will eliminate annual operating losses of
approximately $7.0 million to $8.0 million. The anticipated payback period
is less than three years. We intend to invest much of the annual savings
into our domestic and international businesses. The closure resulted in
small savings in 2000, and we expect greater annual savings beginning in
fiscal 2001. The Spain closure special charge was partially offset by a
credit of $5.4 million related to an insurance claim settlement.
In 1999, we recorded a special charge of $5.7 million, or $0.10 per basic
and diluted share, after tax. 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 accepted severance packages under
this reorganization. During 1999 and 2000, approximately $0.9 million and
$2.3 million, respectively, of severance costs were paid. The remaining
$0.5 million of severance costs at December 31, 2000, are expected to be
paid in the first quarter of 2001.
As a result of these factors, our operating income was $150.6 million for
the year ended December 31, 2000, an increase of $10.1 million or 7.2% over
operating income of $140.5 million for the year ended December 26, 1999.
Excluding special charges, operating earnings were $165.8 million for 2000,
an increase of $19.6 million or 13.4% over operating earnings of $146.2
million for 1999.
Net other income was $18.9 million for 2000, compared to net other income
of $10.1 million for 1999. The significant increase in 2000 is primarily
due to higher net interest income, resulting from higher average cash
investment balances with higher average yields and lower average debt
balances in 2000 compared to 1999.
Including the impact of special items, our effective tax rate for 2000, was
35.3% compared to 38.8% for 1999. The primary reasons for the decrease in
our effective rate were: the realization of a tax benefit pertaining to the
Spain brewery closure, the resolution of an Internal Revenue Service audit,
and reduced state tax rates. Excluding the impact of special charges, our
effective tax rate for the year ended December 31, 2000, was 38.0%,
compared to 38.8% for the year ended December 26, 1999.
Net income for the year increased $17.3 million or 18.8% over last year.
For 2000, net income was $109.6 million, or $2.98 per basic share ($2.93
per diluted share), which compares to net income of $92.3 million, or $2.51
per basic share ($2.46 per diluted share), for 1999. Excluding special
charges, after-tax earnings for 2000, were $114.5 million, or $3.11 per
basic share ($3.06 per diluted share). This was an $18.8 million or 19.6%
increase over after-tax earnings, excluding special charges, of $95.8
million, or $2.61 per basic share ($2.56 per diluted share), for 1999.
1999 vs. 1998: Our gross and net sales for 1999 were $2,642.7 million and
$2,236.5 million, respectively, representing a $179.1 million and $164.6
million increase over 1998. Gross and net sales were impacted favorably by
a unit volume increase of 3.6%. Net sales per barrel for 1999 were also
favorably impacted by improved net realizations per barrel due to increased
pricing, reduced domestic discounting and mix improvement toward higher-
net-revenue product sales. Excise taxes as a percent of gross sales
decreased slightly in 1999 compared to 1998 primarily as a result of a
shift in the geographic mix of our sales.
Cost of goods sold was $1,397.3 million in 1999, which was a $64.2 million
or 4.8% increase over 1998. Cost of goods sold per barrel increased due to
a shift in product demand toward more expensive products and packages,
including import beers sold by Coors-owned distributors, higher glass costs
as well as increased production and labor costs incurred in the packaging
areas during the first quarter of 1999. These increases were partially
offset by decreases primarily due to reduced aluminum material costs.
Gross profit increased 13.6% to $839.2 million from 1998 due to the 7.9%
net sales increase coupled with a lower increase in cost of goods sold of
4.8%, both discussed above. As a percentage of net sales, gross profit in
1999 increased to 37.5% from 35.7% in 1998.
Marketing, general and administrative expenses increased to $693.0 million
in 1999. Of the total $77.4 million or 12.6% increase, advertising costs
increased $47.6 million over 1998 due to increased investments behind our
core brands, both domestically and internationally. General and
administrative expenses for our international business, as well as
information technology expenses, were also higher in 1999 compared to 1998.
In 1999, we recorded a special charge of $5.7 million, or $0.10 per basic
and diluted share, after tax. 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 accepted severance packages under
this reorganization. During 1999 and 2000, approximately $0.9 million and
$2.3 million, respectively, of severance costs were paid. The remaining
$0.5 million of severance costs at December 31, 2000, are expected to be
paid in the first quarter of 2001.
During 1998, we recorded a $17.2 million pretax charge for severance and
related costs of restructuring the production operations and a $2.2 million
pretax charge for the impairment of certain long-lived assets for one of
our distributorships. These items resulted in a total special pretax charge
of $19.4 million in 1998.
As a result of the factors noted above, operating income grew 35.4% to
$140.5 million in 1999 from $103.8 million in 1998. Excluding special
charges, operating income rose 18.7% to $146.2 million in 1999 from $123.2
million in 1998.
Net other income of $10.1 million in 1999 increased from $7.3 million in
1998. This $2.8 million increase was primarily due to reductions in net
interest expense, which was attributable to increased capitalized interest
due to higher capital spending and lower levels of debt.
Our effective tax rate decreased to 38.8% in 1999 from 39.0% in 1998
primarily due to higher tax-exempt income. The 1999 and 1998 effective tax
rates exceeded the statutory rate primarily because of state tax expense.
Our effective tax rates for fiscal years 1999 and 1998 were not impacted by
special charges.
Net income for 1999 was $92.3 million, or $2.51 per basic share ($2.46 per
diluted share), compared to $67.8 million, or $1.87 per basic share ($1.81
per diluted share), for 1998, representing increases of 34.2% (basic) and
35.9% (diluted) in earnings per share. Excluding special charges, after-tax
earnings for 1999 were $95.8 million, or $2.61 per basic share ($2.56 per
diluted share), compared to $79.6 million, or $2.19 per basic share ($2.12
per diluted share) for 1998.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash provided by operating activities,
marketable securities and external borrowings. In 2000, our financial
condition remained strong. At the end of 2000, our cash, cash equivalents
and marketable securities totaled $386.2 million, up from $279.9 million at
the end of 1999. Although our cash and cash equivalents and working capital
balances decreased from $163.8 million and $220.1 million, respectively, in
1999 to $119.8 million and $118.4 million, respectively, in 2000, this was
largely a result of a strategic shift in our investing activities. In 2000,
we shifted from investing in shorter-term securities to investing in
longer-term securities which currently provide better yields. These long-
term securities include investment grade corporate, government agency and
municipal debt instruments. Our total investments in marketable securities
increased $150.3 million to $266.4 million at the end of 2000 compared to
$116.1 million at the end of 1999. This increase was primarily funded by
current year maturities of short-term investments, cash from operations and
distributions received from joint ventures. All of these securities can be
easily converted to cash, if necessary. Our decrease in cash and cash
equivalents and working capital was also a result of increased capital
expenditures in 2000. We believe that cash flows from operations, cash from
sales of highly liquid securities and cash provided by short-term
borrowings, when necessary, will be more than sufficient to meet our
ongoing operating requirements, scheduled principal and interest payments
on debt, dividend payments, anticipated capital expenditures and potential
repurchases of common stock under our stock repurchase plan.
Operating activities: Net cash provided by operating activities was $285.4
million for 2000, compared to $200.1 million and $203.6 million for 1999,
and 1998, respectively. Operating cash flows in 1999 were $85.3 million
lower than in 2000 because of a $48.0 million contribution we made to our
defined benefit pension plan in January 1999 with no similar contribution
being made in 2000. The 1999 contribution was made as a result of benefit
improvements made to our defined benefit pension plan that resulted in an
increase in the projected benefit obligation of approximately $48 million.
The remaining increase in 2000 operating cash flow was due to higher net
income, slightly higher depreciation expense, the non-cash portion of the
special charge related to Spain, higher cash distributions received from
our joint venture entities and working capital changes. The increase in
distributions received was a result of higher earnings of the joint
ventures in 2000 compared to 1999. The fluctuations in working capital were
primarily due to timing between the two years; our accounts receivable were
lower at December 31, 2000, as a result of the 53rd week in 2000, which
tends to be our slowest week, and our accounts payable were higher at
December 31, 2000, due to increased capital expenditures at the end of 2000
compared to 1999. These increases in operating cash flows were partially
offset by increases in the equity earnings of our joint ventures and gains
on sale of properties.
The decrease in operating cash flows in 1999 from 1998 of $3.5 million was
a result of the $48 million contribution made to our defined benefit
pension plan in January 1999, as discussed above, with no similar
contribution being made in 1998. This decrease in operating cash flows was
partially offset by working capital changes, an increase in deferred tax
expense, higher cash distributions received from our joint venture entities
and an increase in depreciation and amortization. The working capital
fluctuations were due to increased operating activity and timing of
payments between the two years. The increase in deferred tax expense was
due to timing differences arising between book income and taxable income.
The increase in distributions received was a result of higher net earnings
of the joint ventures in 1999 compared to 1998. The increase in
depreciation and amortization was due to an increase in capitalized assets
in 1999 compared to 1998.
Investing activities: During 2000, we used $297.5 million in investing
activities compared to a use of $121.0 million in 1999 and $146.5 million
in 1998. As discussed under the Liquidity section above, we have shifted to
investing in longer-term marketable securities by investing cash from
short-term investment maturities into longer term corporate, government
agency and municipal debt instruments. The net impact of our marketable
securities activities was a cash outflow of $148.6 million compared to a
net inflow of $11.0 million in 1999 and an outflow of $39.3 million in
1998. In 1999, we allocated less of our cash resources to marketable
securities than in both 1998 and 2000, and instead allocated more resources
to cash equivalents. In 2000, we also increased our capital expenditures to
$154.3 million compared to $134.4 in 1999 and $104.5 million in 1998. Our
2000 capital expenditures included additional spending on capacity-related
projects, as well as expenditures for upgrades and improvements to our
facilities.
Financing activities: During 2000, we used approximately $31.6 million in
financing activities, primarily for dividend payments of $26.6 million on
our Class B common stock and $20.0 million for purchases of our Class B
common stock under our stock repurchase program. These cash uses were
partially offset by cash inflows of $17.2 million related to the exercise
of stock options under our stock option plans.
During 1999, we used $76.4 million in financing activities consisting
primarily of principal payments of $40.0 million on our medium-term notes,
net purchases of $11.0 million for Class B common stock and dividend
payments of $23.7 million.
During 1998, we used $66.0 million in financing activities consisting of
principal payments of $27.5 million on our medium-term notes, net purchases
of $17.8 million for Class B common stock and dividend payments of $21.9
million.
Debt obligations: At December 31, 2000, we had $100 million in Senior
Notes outstanding, $80 million of which is due in 2002 and the remaining
$20 million is due in 2005. Fixed interest rates on these notes range from
6.76% to 6.95%. Interest is paid semiannually in January and July. No
principal payments were due or made on our debt in 2000. In 1999, we repaid
the last $40.0 million of outstanding medium-term notes that were due.
Payments on these notes in 1998 were $27.5 million.
Our debt-to-total capitalization ratio declined to 10.1% at the end of
2000, from 11.1% at year end 1999 and 15.8% at year end 1998.
Revolving line of credit: In addition to the Senior Notes, we have an
unsecured, committed credit arrangement totaling $200 million, all of which
was available as of December 31, 2000. This line of credit has a five-year
term which expires in 2003, with one remaining optional one-year extension.
A facilities fee is paid on the total amount of the committed credit. Under
the arrangement, we are required to maintain a certain debt-to-total
capitalization ratio and were in compliance at year end 2000.
We also have two revolving lines of credit used for our operations in
Japan. Each of these facilities provides up to 500 million yen
(approximately $4.4 million each as of December 31, 2000) in short-term
financing. As of December 31, 2000, the approximate yen equivalent of $2.6
million was outstanding under these arrangements.
Advertising and promotions: As of December 31, 2000, our aggregate
commitments for advertising and promotions, including marketing at sports
arenas, stadiums and other venues and events, were approximately $125.5
million over the next eight years.
Stock repurchase plan: In November 2000, the board of directors authorized
the extension of our stock repurchase program through 2001. The program
authorizes repurchases of up to $40 million of our outstanding Class B
common stock. Repurchases will be financed by funds generated from
operations or by our cash and cash equivalent balances. In 2000, we used
$20.0 million to repurchase common stock of which $17.6 million related to
repurchases under this stock purchase program.
Capital improvements: During 2000, we spent approximately $150.3 million
in capital expenditures (excluding capital improvements for the container
joint ventures, which were recorded on the books of the respective joint
ventures). We will continue to invest in our business and we expect our
capital expenditures in 2001 to be in the range of approximately $200
million to $240 million for improving and enhancing our facilities,
infrastructure, information systems and environmental compliance.
Molson USA, LLC: On January 2, 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, known as Molson USA, LLC,
has been formed to import, market, sell and distribute Molson's brands of
beer in the United States. We used a portion of our current cash balances
to pay the $65 million acquisition price.
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995
This report contains "forward-looking statements" within the meaning of the
federal securities laws. You can identify these statements by forward-
looking words such as "expect," "anticipate," "plan," "believe," "seek,"
"estimate," "internal," "outlook," "trends," "industry forces,"
"strategies," "goals" and similar words. These forward-looking statements
may include, among others, statements concerning our outlook for 2001;
overall volume trends; pricing trends and industry forces; cost reduction
strategies and their anticipated results; our expectations for funding our
2001 capital expenditures and operations; and other statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends and similar expressions concerning matters that are not historical
facts. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from the
expectations we describe in our forward-looking statements.
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:
- - Our success depends largely on the success of one product, the failure of
which would materially adversely affect our financial results.
- - Because our primary production facilities are located at a single site,
we are more vulnerable than our competitors to transportation disruptions
and natural disasters.
- - We are smaller than our two primary competitors, and we are more
vulnerable than our competitors to cost and price fluctuations.
- - We are vulnerable to the pricing actions of our primary competitors,
which we do not control.
- - If demand for our products continues to grow at current rates, we may
lack the capacity needed to meet demand or we may be required to increase
our capital spending significantly.
- - If any of our suppliers 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 conceivably increase our
costs or our 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
increase our costs disproportionately and could limit our ability to meet
consumer demand.
- - We depend on independent distributors to sell our products, and we cannot
provide any assurance that these distributors will sell our products
effectively.
- - Because our sales volume is more concentrated in fewer geographic areas
in the United States than our competition, any loss of market share in
the states where we are concentrated could have a material adverse effect
on our results of operations.
- - Because we lack a significant presence in international markets, we are
dependent on the U.S. market.
- - We are subject to environmental regulation by federal, state and local
agencies, including laws that impose liability without regard to fault.
These and other risks and uncertainties affecting us are discussed in
greater detail in this report and in our other filings with the Securities
and Exchange Commission.
OUTLOOK FOR 2001
Our performance in 2000 benefited from strong domestic and export volume
gains, as well as a positive industry environment. For 2001, we are
committed to the basic goal of growing our unit volume more than twice as
fast as the industry. Also in 2001, the beer price environment is again
expected to be positive. Nonetheless, increased sales of value-packs or an
increase in price discounting could have an unfavorable impact on our top-
line performance, resulting in lower margins.
The outlook for cost of goods sold in 2001 includes many of the same
challenges that we saw in 2000 - although we are working hard to reduce the
growth rate in some key areas. Following are the cost factors that we
anticipate will be most important in 2001:
- - First, in the area of operating efficiencies, we have put additional
bottle and value-pack packaging capacity on line and are working to
improve many processes to relieve stress points in our production
capacity. These projects should help us to meet growing demand at a lower
cost. During peak season 2000, we were operating close to full capacity,
which increased our costs. In 2001, savings from incremental capacity
will be largely offset by startup and other one-time expenses related to
completing these capacity projects.
- - Second, input costs as a group are likely to increase again in 2001.
Early in 2001, the outlook is for slightly higher aluminum can costs for
the year. We anticipate modestly higher glass bottle costs because of
higher natural gas rates. Paper rates are expected to be flat to down
slightly. We expect that freight rates will be up early in the year, with
rates in the back half unknown, but perhaps offering some opportunity to
moderate. Agricultural commodity costs are expected to be down slightly
due to lower prices for rice and corn.
- - Third, package and product mix shifts will increase costs in 2001. Aside
from changes in raw material rates, we plan to spend more on glass in
2001 because of the continuing shift in our package mix toward longneck
bottles, which cost more and are less profitable than most of our other
package configurations. We plan to increase longneck bottles as a percent
of our bottle mix to more than 80% this year, up from just over 70% last
year. Cost of goods sold per barrel is likely to be increased by higher
anticipated sales of import beers by Coors-owned distributorships. We
expect mix shifts to be the largest group of factors increasing our cost
of goods sold per barrel in 2001, as they were in 2000.
- - All in all, our expectations early in 2001 are for total cost of goods
sold to be up modestly per barrel for the year -- and we are focusing
throughout our operations to reduce the growth rate per barrel versus
last year. It is important to note that a large shift in raw material
prices or consumer demand toward other packages could alter this outlook.
Marketing and sales spending is expected to increase in 2001, while general
and administrative costs are expected to be flat to up slightly. We
continue to focus on reducing costs so that we can invest in our brands and
sales efforts incrementally. Additional sales and marketing spending is
determined on an opportunity-by-opportunity basis. Incremental revenue
generated by price increases is likely to be spent on advertising and
marketplace support because the competitive landscape has shifted during
the past three years toward much more marketing, promotional and
advertising spending.
Net interest income growth will slow because of our lower cash position as
a result of our $65 million payment for a 49.9% interest in our new Molson
joint venture and our increase in capital expenditures in 2000 and 2001.
The increase in our capital expenditures in 2001 will result in higher
capitalized interest, which will partially offset the slower interest
income growth. Of course, net interest income could be less favorable than
expected in 2001 if we invest a substantial portion of our cash balances in
operating assets or other investments with longer-term returns, or if
interest rates decline. Also, cash may be used to repurchase additional
shares of outstanding common stock as approved by our board of directors.
Our effective tax rate for 2001 is not expected to differ significantly
from the 2000 effective tax rate applied to income, excluding special
items. However, the level and mix of pretax income for 2001 could affect
the actual rate for the year.
In 2001, we have planned capital expenditures (excluding capital
improvements for our container joint ventures, which will be recorded on
the books of the respective joint ventures) in the range of approximately
$200 million to $240 million for improving and enhancing our facilities,
infrastructure, information systems and environmental compliance. This
capital spending plan is up from $154 million in 2000. All of the planned
increase for 2001 is the result of strong growth in consumer demand for our
products, particularly in longneck bottles and value-packs.
While most of the incremental capital spending in 2001 is intended to
increase available beer packaging capacity for 2002, a portion is focused
on increasing our brewing capacity. The largest single project is the
addition of a longneck bottle line in our Elkton, Virginia, facility.
Our 2001 capacity investments play a critical role in our long-term plan to
increase productivity and lower our costs. Additionally, some of these
investments will provide a foundation for future capacity investments. We
are approaching these capacity projects with a strong bias for utilizing
current assets fully before building new assets, and we will continue to
apply rigorous discipline to our capital process, ensuring that it is
carefully paced, competitively priced and designed to lower costs and
improve returns. We are prepared to fund our growth in 2001 and well into
the future largely from our strong operating cash flow. In addition to our
2001 planned capital expenditures, incremental strategic investments will
be considered on a case-by-case basis.
CONTINGENCIES
Environmental: We were one of numerous parties named by the Environmental
Protection Agency (EPA) as a "potentially responsible party" at the Lowry
site, a landfill owned by the City and County of Denver. In 1990, we
recorded a special pretax charge of $30 million, representing our portion,
for potential cleanup costs of the site based upon an assumed present value
of $120 million in total site remediation costs. We also agreed to pay a
specified share of costs if total remediation costs exceeded this amount.
The City and County of Denver; Waste Management of Colorado, Inc.; and
Chemical Waste Management, Inc. are expected to implement site remediation.
Chemical Waste Management's projected costs to meet the remediation
objectives and requirements are currently below the $120 million assumption
used for our settlement. We have no reason to believe that total
remediation costs will result in additional liability to us.
We were one of several parties named by the EPA as a "potentially
responsible party" 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.
From time to time, we have been notified that we are or may be a
potentially responsible party 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.
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. As a result, we are required to pay certain fines or other costs by
implementing a supplemental environmental project. We settled with the
Colorado Department of Public Health and Environment regarding violations
of our permit in the amount of $98,000 on February 22, 2001. This money
will be paid to the Clear Creek Watershed Foundation to construct a waste
rock repository in Clear Creek County. We have not yet settled with the
Division of Wildlife for damage to the fish population but have proposed
funding the remaining costs for construction of the waste rock repository.
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 or our financial or competitive position. We believe adequate
reserves have been provided for losses that are probable.
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 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 or results of
operations.
ITEM 7a. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to fluctuations in
interest rates, the value of foreign currencies and production and
packaging materials prices. We have established policies and procedures
that govern the management of these exposures through the use of a variety
of financial instruments. We employ various financial instruments,
including forward foreign exchange contracts, options and swap agreements,
to manage certain of the exposures when practical. By policy, we do not
enter into such contracts for the purpose of speculation and are
continually enhancing our disciplines around these risk mitigation efforts.
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 foreign exchange contracts, options and
swap agreements whose values change in the opposite direction of the
anticipated cash flows. We do not hedge the value of net investments in
foreign-currency-denominated operations and translated earnings of foreign
subsidiaries. Our primary foreign currency exposures are the Canadian
dollar and the Japanese yen.
A sensitivity analysis has been prepared to estimate our exposure to market
risk of interest rates, foreign currency exchange rates and commodity
prices. The sensitivity analysis reflects the impact of a hypothetical 10%
adverse change in the applicable market interest rates, foreign currency
exchange rates and commodity prices. The volatility of the applicable rates
and prices are dependent on many factors that cannot be forecasted with
reliable accuracy. Therefore, actual changes in fair values could differ
significantly from the results presented in the table below.
The following table presents the results of the sensitivity analysis of our
derivative and debt portfolio:
As of As of
Estimated fair value volatility December 31, 2000 December 26, 1999
(In millions) (In millions)
Foreign currency risk: forwards, options $ (3.0) $ (2.8)
Interest rate risk: swaps, debt $ (1.3) $ (1.3)
Commodity price risk: swaps, options $ (9.1) $(11.3)
ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page(s)
Consolidated Financial Statements:
Report of Independent Accountants 32
Consolidated Statements of Income for each of
the three years in the period ended December 31, 2000 33
Consolidated Balance Sheets at December 31, 2000,
and December 26, 1999 34-35
Consolidated Statements of Cash Flows for each of
the three years in the period ended December 31, 2000 36
Consolidated Statements of Shareholders' Equity
for each of the three years in the period ended
December 31, 2000 37
Notes to Consolidated Financial Statements 38-63
Report of Independent Accountants
To the Board of Directors and Shareholders of Adolph Coors Company:
In our opinion, the accompanying consolidated balance sheets and related
consolidated statements of income, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of Adolph
Coors Company and its subsidiaries at December 31, 2000, and December 26,
1999, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2000, 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 7, 2001
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands, except per share data)
Sales - domestic and international $ 2,841,738 $ 2,642,712 $ 2,463,655
Beer excise taxes (427,323) (406,228) (391,789)
Net sales (Note 13) 2,414,415 2,236,484 2,071,866
Cost of goods sold (1,525,829) (1,397,251) (1,333,026)
Gross profit 888,586 839,233 738,840
Other operating expenses:
Marketing, general and
administrative (722,745) (692,993) (615,626)
Special charges (Note 9) (15,215) (5,705) (19,395)
Total other operating expenses (737,960) (698,698) (635,021)
Operating income 150,626 140,535 103,819
Other income (expense):
Interest income 21,325 11,286 12,136
Interest expense (6,414) (4,357) (9,803)
Miscellaneous - net 3,988 3,203 4,948
Total 18,899 10,132 7,281
Income before income taxes 169,525 150,667 111,100
Income tax expense (Note 5) (59,908) (58,383) (43,316)
Net income 109,617 92,284 67,784
Other comprehensive income (expense),
net of tax (Note 12):
Foreign currency translation
adjustments 2,632 (3,519) 1,430
Unrealized (loss) gain on available-
for-sale securities and
derivative instruments (729) 6,438 440
Reclassification adjustments 366 -- --
Comprehensive income $ 111,886 $ 95,203 $ 69,654
Net income per common
share - basic $ 2.98 $ 2.51 $ 1.87
Net income per common
share - diluted $ 2.93 $ 2.46 $ 1.81
Weighted-average common
shares-basic 36,785 36,729 36,312
Weighted-average common
shares-diluted 37,450 37,457 37,515
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 26,
2000 1999
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 119,761 $ 163,808
Short-term marketable securities 72,759 113,185
Accounts and notes receivable:
Trade, less allowance for doubtful accounts
of $139 in 2000 and $55 in 1999 104,484 123,861
Affiliates 7,209 13,773
Other, less allowance for certain claims of
$104 in 2000 and $133 in 1999 15,385 22,026
Inventories:
Finished 40,039 44,073
In process 23,735 19,036
Raw materials 37,570 34,077
Packaging materials, less allowance for
obsolete inventories of $1,993 in 2000
and $1,195 in 1999 8,580 10,071
Total inventories 109,924 107,257
Other supplies, less allowance for obsolete
supplies of $1,621 in 2000 and $1,975
in 1999 23,703 23,584
Prepaid expenses and other assets 19,847 24,858
Deferred tax asset (Note 5) 24,679 20,469
Total current assets 497,751 612,821
Properties, at cost and net (Notes 2 and 13) 735,793 714,001
Excess of cost over net assets of businesses
acquired, less accumulated amortization
of $9,319 in 2000 and $7,785 in 1999 29,446 31,292
Long-term marketable securities 193,675 2,890
Other assets (Note 10) 172,639 185,372
Total assets $1,629,304 $1,546,376
See notes to consolidated financial statements.
December 31, December 26,
2000 1999
(In thousands)
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable:
Trade $ 186,105 $ 155,344
Affiliates 11,621 24,271
Accrued salaries and vacations 57,041 60,861
Taxes, other than income taxes 32,469 53,974
Federal and state income taxes (Note 5) -- 8,439
Accrued expenses and other liabilities 92,100 89,815
Total current liabilities 379,336 392,704
Long-term debt (Note 4) 105,000 105,000
Deferred tax liability (Note 5) 89,986 78,733
Postretirement benefits (Note 8) 77,147 75,821
Other long-term liabilities 45,446 52,579
Total liabilities 696,915 704,837
Commitments and contingencies
(Notes 3, 4, 5, 6, 7, 8, 10 and 14)
Shareholders' equity (Notes 6, 11 and 12):
Capital stock:
Preferred stock, non-voting, $1 par
value (authorized: 25,000,000
shares; issued and outstanding: none) -- --
Class A common stock, voting, $1
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: 100,000,000 shares;
issued and outstanding: 35,871,121 in
2000 and 35,462,034 in 1999) 8,541 8,443
Total capital stock 9,801 9,703
Paid-in capital 11,203 5,773
Retained earnings 908,123 825,070
Accumulated other comprehensive income 3,262 993
Total shareholders' equity 932,389 841,539
Total liabilities and shareholders' equity $1,629,304 $1,546,376
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended
December 31, December 26, December 27,
2000 1999 1998
Cash flows from operating activities: (In thousands)
Net income $ 109,617 $ 92,284 $ 67,784
Adjustments to reconcile net
income to net cash provided by
operating activities:
Equity in net earnings of joint
ventures (42,395) (36,958) (33,227)
Distributions from joint ventures 55,379 30,280 22,438
Non-cash portion of special charges 11,068 4,769 10,543
Depreciation, depletion and
amortization 129,283 123,770 115,815
Net (gain) loss on sale or
abandonment of properties and
intangibles, net (4,729) 2,471 7,687
Deferred income taxes 6,870 20,635 (8,751)
Change in operating assets and
liabilities:
Accounts and notes receivable 28,260 (21,036) 2,140
Inventories (3,087) (4,373) 4,176
Prepaid expenses and other assets 3,107 (49,786) 8,977
Accounts payable 18,324 35,261 9,899
Accrued expenses and other
liabilities (26,280) 2,751 (3,898)
Net cash provided by
operating activities 285,417 200,068 203,583
Cash flows from investing activities:
Purchases of investments (356,741) (94,970) (101,682)
Sales and maturities of investments 208,176 105,920 62,393
Additions to properties and intangible
assets (154,324) (134,377) (104,505)
Proceeds from sales of properties
and intangible assets 6,427 3,821 2,264
Other (1,079) (1,437) (4,949)
Net cash used in investing
activities (297,541) (121,043) (146,479)
Cash flows from financing activities:
Issuances of stock under stock
plans 17,232 9,728 9,823
Purchases of stock (19,989) (20,722) (27,599)
Dividends paid (26,564) (23,745) (21,893)
Payments of long-term debt -- (40,000) (27,500)
Other (2,235) (1,692) 1,140
Net cash used in financing
activities (31,556) (76,431) (66,029)
Cash and cash equivalents:
Net (decrease) increase in cash
and cash equivalents (43,680) 2,594 (8,925)
Effect of exchange rate changes on
cash and cash equivalents (367) 1,176 88
Balance at beginning of year 163,808 160,038 168,875
Balance at end of year $ 119,761 $ 163,808 $ 160,038
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Accumulated
other
Common stock compre-
issued Paid-in Retained hensive
Class A Class B capital earnings income Total
(In thousands, except per share data)
Balances, December 28,
1997 $ 1,260 $ 8,476 $ -- $730,628 $(3,796) $736,568
Shares issued under
stock plans 145 17,923 18,068
Purchases of stock (193) (7,418) (19,988) (27,599)
Other comprehensive income 1,870 1,870
Net income 67,784 67,784
Cash dividends-$0.60 per
share (21,893) (21,893)
Balances, December 27,
1998 1,260 8,428 10,505 756,531 (1,926) 774,798
Shares issued under
stock plans 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, December 26,
1999 1,260 8,443 5,773 825,070 993 841,539
Shares issued under
stock plans 181 25,336 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, December 31,
2000 $ 1,260 $ 8,541 $11,203 $908,123 $ 3,262 $932,389
See notes to consolidated financial statements.
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). 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 year ended December 31, 2000, was a 53-week
period. Fiscal years ended December 26, 1999, and December 27, 1998, were
both 52-week periods.
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. At
December 31, 2000, $72.8 million of these securities were classified as
current assets and $193.7 million were classified as non-current assets, as
their maturities exceeded one year, ranging from 2002 through 2003. 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 relating to these securities
totaled $1.9 million and $0.1 million at December 31, 2000, and December
26, 1999, respectively. Net gains realized on sales of available-for-sale
securities were immaterial in 2000, 1999 and 1998.
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 $42.9 million and $41.0 million at December 31, 2000,
and December 26, 1999, 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. 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.
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. We have established policies and
procedures that govern the management of these exposures through the use of
a variety of financial instruments. We employ various financial
instruments, including forward foreign exchange contracts, options and swap
agreements, to manage certain of the exposures when practical. 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.
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 foreign exchange contracts, options and
swap agreements whose values change in the opposite direction of the
anticipated cash flows. Derivative instruments related to forecasted
transactions are considered to hedge future cash flows, and the effective
portion of any gains or losses are included in other comprehensive income
until earnings are affected by the variability of cash flows. Any remaining
gain or loss is recognized currently in earnings. In calculating
effectiveness, 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 were to be sold or
extinguished, we would recognize the gain or loss on the designated
financial instruments concurrent with when the sale or extinguishment of
the hedged assets or liabilities would be recognized in earnings. Cash
flows from our derivative instruments are classified in the same category
as the hedged item in the Consolidated Statements of Cash Flows.
At December 31, 2000, we have certain forward foreign exchange 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. The terms of these derivative
instruments extend from January 2001 through August 2002 and relate to
exposures extending through March 2003 (see Note 14).
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. At December 31, 2000, we
did not have any outstanding interest rate swap agreements.
During 2000, there were no significant gains or losses recognized in
earnings for hedge ineffectiveness. Also, we did not discontinue any hedges
as a result of an expectation that the forecasted transaction would no
longer occur. Accordingly, there were no gains or losses reclassified into
earnings as a result of a discontinuance of a hedge. At December 31, 2000,
the estimated deferred net gain 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, is $4.2 million.
Excess of cost over net assets of businesses acquired: The excess of cost
over the net assets of businesses acquired in transactions accounted for as
purchases is being amortized on a straight-line basis, generally over a 40-
year period. During 1998, we recorded a $2.2 million impairment charge,
which has been classified as a Special charge in the accompanying
Consolidated Statements of Income, related to long-lived assets at one of
our distributorships. The long-lived assets were considered impaired in
light of both historical losses and expected future, undiscounted cash
flows. The impairment charge represented a reduction of the carrying
amounts of the impaired assets to their estimated fair market values, which
were determined using a discounted cash flow model.
Impairment policy: We periodically evaluate our assets to assess their
recoverability from future operations using undiscounted cash flows.
Impairment is recognized in operations if a permanent diminution in value
is judged to have occurred.
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; prior year financial
statements have been reclassified to reflect this change in where freight
expense is reported.
Advertising: Advertising costs, included in Marketing, general and
administrative, are expensed when the advertising is run. Advertising
expense was $477.3 million, $443.4 million and $395.8 million for years
2000, 1999 and 1998, respectively. We had $18.7 million and $17.7 million
of prepaid advertising costs reported as current and non-current assets at
December 31, 2000, and December 26, 1999, respectively.
Research and development: Research and project development costs, included
in Marketing, general and administrative, are expensed as incurred. These
costs totaled $15.9 million, $15.5 million and $15.2 million in 2000, 1999
and 1998, respectively.
Environmental expenditures: Environmental expenditures that relate to
current operations are expensed or capitalized, as appropriate.
Expenditures that relate to an existing condition caused by past
operations, which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable and the costs can be
estimated reasonably.
Statement of Cash Flows: Cash equivalents represent highly liquid
investments with original maturities of 90 days or less. The fair value of
these investments approximates their carrying value. During 1999 and 1998,
we issued restricted common stock under our management incentive program.
We did not issue any restricted stock under this plan in 2000. These
issuances, net of forfeitures, resulted in net non-cash (decreases)
increases to the equity accounts of ($5.8) million, ($0.7) million and $2.4
million in 2000, 1999 and 1998, respectively. Also during 2000, 1999 and
1998, equity was increased by the non-cash tax effects of the exercise of
stock options under our stock plans of $14.2 million, $7.0 million and $5.9
million, respectively. Income taxes paid were $49.6 million in 2000, $42.4
million in 1999 and $39.6 million in 1998.
Use of estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires our management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
Reclassifications: Certain reclassifications have been made to the 1999
and 1998 financial statements to conform with the 2000 presentation.
NOTE 2:
Properties
The cost of properties and related accumulated depreciation, depletion and
amortization consists of the following:
As of
December 31, December 26,
2000 1999
(In thousands)
Land and improvements $ 93,507 $ 94,687
Buildings 508,443 501,013
Machinery and equipment 1,731,463 1,680,600
Natural resource properties 7,373 7,423
Construction in progress 91,964 44,845
2,432,750 2,328,568
Less accumulated depreciation,
depletion and amortization (1,696,957) (1,614,567)
Net properties $ 735,793 $ 714,001
Interest incurred, capitalized, expensed and paid were as follows:
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands)
Interest costs $ 9,567 $ 8,478 $12,532
Interest capitalized (3,153) (4,121) (2,729)
Interest expensed $ 6,414 $ 4,357 $ 9,803
Interest paid $ 7,664 $ 9,981 $12,808
NOTE 3:
Leases
We lease certain office facilities and operating equipment under cancelable
and non-cancelable agreements accounted for as operating leases. At
December 31, 2000, the minimum aggregate rental commitment under all non-
cancelable leases was (in thousands):
Fiscal year Amount
(In thousands)
2001 $ 6,065
2002 5,412
2003 4,494
2004 4,337
2005 3,855
Thereafter 6,686
Total $ 30,849
Total rent expense was (in thousands) $11,502, $10,978 and $11,052 for
years 2000, 1999 and 1998, respectively.
NOTE 4:
Debt
Long-term debt consists of the following:
As of
December 31, 2000 December 26, 1999
Carrying Fair Carrying Fair
value value value value
(In thousands)
Senior Notes $100,000 $100,300 $100,000 $ 99,000
Industrial development bonds 5,000 5,000 5,000 5,000
$105,000 $105,300 $105,000 $104,000
Fair values were determined using discounted cash flows at current interest
rates for similar borrowings.
On July 14, 1995, we completed a $100 million private placement of
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.
The principal amount of the Notes is payable as follows: $80 million in
2002 and $20 million in 2005. The terms of our private placement Notes
allow for maximum liens, transactions and obligations. At December 31,
2000, we were in compliance with these requirements.
We are obligated to pay the principal, interest and premium, if any, on the
$5 million, City of Wheat Ridge, Colorado Industrial Development Bonds
(Adolph Coors Company Project) Series 1993. The bonds mature in 2013 and
are secured by a letter of credit. They are currently variable rate
securities with interest payable on the first of March, June, September and
December. The interest rate on December 31, 2000, was 5.0%. We are required
to maintain a minimum tangible net worth and a certain debt-to-total
capitalization ratio under the Bond agreements. At December 31, 2000, we
were in compliance with these requirements.
We have an unsecured, committed credit arrangement totaling $200 million,
all of which was available as of December 31, 2000. This line of credit has
a five-year term which expires in 2003, with one remaining optional one-
year extension. A facilities fee is paid on the total amount of the
committed credit. Under the arrangement, we are required to maintain a
certain debt-to-total capitalization ratio and were in compliance at year-
end 2000.
Our distribution subsidiary in Japan has two revolving lines of credit that
it utilizes in its normal operations. Each of these facilities provides up
to 500 million yen (approximately $4.4 million each as of December 31,
2000) in short-term financing. As of December 31, 2000, the approximate yen
equivalent of $2.6 million was outstanding under these arrangements and is
included in Accrued expenses and other liabilities in the accompanying
Consolidated Balance Sheets.
NOTE 5:
Income Taxes
Income tax expense (benefit) includes the following current and deferred
provisions:
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands)
Current:
Federal $ 29,573 $ 24,088 $ 35,351
State and foreign 9,282 6,686 10,867
Total current tax expense 38,855 30,774 46,218
Deferred:
Federal 6,669 19,035 (7,401)
State and foreign 201 1,600 (1.350)
Total deferred tax
expense (benefit) 6,870 20,635 (8,751)
Other:
Allocation to paid-in capital 14,183 6,974 5,849
Total income tax expense $ 59,908 $ 58,383 $ 43,316
Our income tax expense varies from the amount expected by applying the
statutory federal corporate tax rate to income as follows:
For the years ended
December 31, December 26, December 27,
2000 1999 1998
Expected tax rate 35.0% 35.0% 35.0%
State income taxes, net of
federal benefit 3.7 3.7 3.1
Effect of foreign investments (3.1) 1.1 2.5
Non-taxable income (0.2) (0.8) (1.7)
Other, net (0.1) (0.2) 0.1
Effective tax rate 35.3% 38.8% 39.0%
Our deferred taxes are composed of the following:
As of
December 31, December 26,
2000 1999
(In thousands)
Current deferred tax assets:
Deferred compensation and other
employee related $ 14,212 $ 12,052
Balance sheet reserves and accruals 11,613 13,258
Other -- 211
Valuation allowance (1,146) (1,146)
Total current deferred tax assets 24,679 24,375
Current deferred tax liabilities:
Balance sheet reserves and accruals -- 3,906
Net current deferred tax assets $ 24,679 $ 20,469
Non-current deferred tax assets:
Deferred compensation and other
employee related $ 9,602 $ 14,578
Balance sheet reserves and accruals 8,410 4,913
Retirement benefits 11,365 9,947
Environmental accruals 2,274 2,264
Deferred foreign losses 1,395 1,623
Partnership investments 3,297 --
Total non-current deferred tax assets 36,343 33,325
Non-current deferred tax liabilities:
Depreciation and capitalized interest 110,225 109,425
Deferred benefit on foreign investment 16,104 --
Other -- 2,633
Total non-current deferred tax liabilities 126,329 112,058
Net non-current deferred tax liabilities $ 89,986 $ 78,733
The deferred tax assets have been reduced by a valuation allowance, because
management believes it is more likely than not that such benefits will not
be fully realized. The valuation allowance remained unchanged during 2000.
In 2000, we realized a tax benefit pertaining to the Spain brewery closure.
We also resolved the Internal Revenue Service (IRS) examination of our
federal income tax returns through 1995. The IRS is currently examining the
federal income tax returns through 1998. 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 31, 2000, 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 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:
2000 1999 1998
(In thousands, except
per share data)
Net income As reported $109,617 $ 92,284 $ 67,784
Pro forma $ 96,164 $ 82,222 $ 61,484
Earnings per share - basic As reported $ 2.98 $ 2.51 $ 1.87
Pro forma $ 2.61 $ 2.24 $ 1.69
Earnings per share - diluted As reported $ 2.93 $ 2.46 $ 1.81
Pro forma $ 2.57 $ 2.20 $ 1.64
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:
2000 1999 1998
Risk-free interest rate 6.72% 5.03% 5.78%
Dividend yield 1.27% 1.09% 1.63%
Volatility 31.41% 30.66% 32.56%
Expected term (years) 6.2 7.8 10.0
Weighted average fair market value $ 20.17 $ 23.28 $ 14.96
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. During
2000, we discontinued our 1983 Stock Option Plan. No options had been
granted under this plan since 1989. The 716,886 shares available for grant
under the 1983 plan were transferred to the 1990 plan. Total authorized
shares for issuance under the 1990 EI Plan are 8 million.
A summary of the status of our 1990 EI Plan as of December 31, 2000,
December 26, 1999, and December 27, 1998, and changes during the years
ending on those dates is presented below:
Options
exercisable
at year-end
Weighted- Weighted-
Options average average
available Outstanding exercise exercise
for grant options price Shares price
As of December 28, 1997 4,675,195 2,252,179 $19.61 769,202 $18.25
Granted (794,283) 794,283 33.83
Exercised -- (616,914) 18.66
Forfeited 99,331 (99,331) 25.06
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
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 2,153,635 2,761,597 $45.91 910,548 $35.21
The following table summarizes information about stock options outstanding
at December 31, 2000:
Options outstanding Options exercisable
Weighted-
average Weighted- Weighted-
Range of remaining average average
exercise contractual exercise exercise
prices Shares life (years) price Shares price
$16.75-$22.00 382,801 5.8 $19.59 382,801 $19.59
$26.88-$33.41 427,227 7.0 $33.35 236,933 $33.31
$35.81-$59.25 1,886,248 8.6 $53.41 268,507 $56.67
$60.53-$75.22 65,321 9.7 $65.65 22,307 $64.85
$16.75-$75.22 2,761,597 7.8 $45.91 910,548 $35.21
We issued 4,953 shares and 85,651 shares of restricted stock in 1999 and
1998, respectively, under the 1990 EI Plan. No restricted shares were
issued under this plan in 2000. For the 1999 shares, the vesting period is
two years from the date of grant. For the 1998 shares, the vesting period
is three years from the date of the grant and is either prorata for each
successive year or cliff vesting. The compensation cost associated with
these awards is amortized over the vesting period. Compensation cost
associated with these awards was immaterial in 2000, 1999 and 1998.
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 is amortized over the director's term.
Compensation cost associated with this plan was immaterial in 2000, 1999
and 1998. Common stock reserved for the 1991 plan as of December 31, 2000,
was 29,296 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 2000. Awards under the plan in 1999 and
1998 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 31, 2000, 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 $14.7
million in 2000, $11.6 million in 1999 and $11.9 million in 1998. These
amounts include our matching for the savings and investment (thrift) plan
of $7.3 million in 2000, $6.1 million in 1999 and $6.1 million in 1998. The
increase in pension expense from 1999 to 2000 is primarily due to the full-
year effect of the improvements to the retirement plan benefit formula that
became effective July 1, 1999. In November 1998, our board of directors
approved changes to one of the plans that were effective July 1, 1999. The
changes increased the projected benefit obligation at the effective date by
approximately $48 million. To offset the increase in the projected benefit
obligation of the defined benefit pension plan, we made a $48 million
contribution to the plan in January 1999. In 2000, the funded position of
the Coors Retirement Plan was eroded somewhat due to the combined effects
of a lower discount rate and a challenging investment environment.
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. Our actuary
calculates pension expense 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.
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands)
Components of net periodic
pension cost:
Service cost-benefits earned
during the year $ 16,467 $ 16,456 $ 14,449
Interest cost on projected
benefit obligation 44,192 38,673 33,205
Expected return on plan assets (58,108) (52,173) (42,498)
Amortization of prior service cost 5,906 4,161 2,274
Amortization of net transition amount (1,690) (1,690) (1,691)
Recognized net actuarial loss 590 75 28
Net periodic pension cost $ 7,357 $ 5,502 $ 5,767
The changes in the benefit obligation and plan assets and the funded status
of the pension plans are as follows:
As of
December 31, December 26,
2000 1999
(In thousands)
Change in projected benefit obligation:
Projected benefit obligation at
beginning of year $ 548,428 $ 532,556
Service cost 16,467 16,456
Interest cost 44,192 38,673
Amendments 871 48,573
Actuarial loss (gain) 31,974 (63,326)
Benefits paid (27,512) (24,504)
Projected benefit obligation at end of year $ 614,420 $ 548,428
Change in plan assets:
Fair value of assets at beginning of year $ 627,153 $ 480,000
Actual return on plan assets (20,376) 124,840
Employer contributions 2,561 50,078
Benefits paid (27,512) (24,504)
Expenses paid (3,326) (3,261)
Fair value of plan assets at end of year $ 578,500 $ 627,153
Funded status - (shortfall) excess $ (35,920) $ 78,725
Unrecognized net actuarial loss (gain) 7,722 (105,473)
Unrecognized prior service cost 53,680 58,715
Unrecognized net transition amount 962 (728)
Prepaid benefit cost $ 26,444 $ 31,239
2000 1999 1998
Weighted average assumptions as of year-end:
Discount rate 7.75% 8.00% 7.00%
Rate of compensation increase 4.75% 5.25% 4.50%
Expected return on plan assets 10.50% 10.50% 10.50%
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 8.0% in
2000 to 5.25% in 2007. The discount rate used in determining the
accumulated postretirement benefit obligation was 7.75%, 8.00% and 7.00% at
December 31, 2000, December 26, 1999, and December 27, 1998, respectively.
In November 1998, our board of directors approved changes to one of the
plans. The changes were effective July 1, 1999, and increased the
accumulated postretirement benefit obligation at the effective date by
approximately $6.7 million.
The changes in the benefit obligation and plan assets and the funded status
of the postretirement benefit plan are as follows:
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands)
Components of net periodic
postretirement benefit cost:
Service cost - benefits earned
during the year $ 1,477 $ 1,404 $ 1,484
Interest cost on projected
benefit obligation 5,613 5,112 4,707
Recognized net actuarial gain (51) (138) (207)
Net periodic postretirement
benefit cost $ 7,039 $ 6,378 $ 5,984
As of
December 31, December 26,
2000 1999
(In thousands)
Change in projected postretirement
benefit obligation:
Projected benefit obligation at beginning of year $ 72,400 $ 72,122
Service cost 1,477 1,404
Interest cost 5,613 5,112
Amendments -- 554
Actuarial loss (gain) 3,264 (2,497)
Benefits paid (5,004) (4,295)
Projected postretirement benefit
obligation at end of year $ 77,750 $ 72,400
Change in plan assets:
Fair value of assets at beginning of year $ -- $ --
Actual return on plan assets -- --
Employer contributions 5,004 4,295
Benefits paid (5,004) (4,295)
Fair value of plan assets at end of year $ -- $ --
Funded status - shortfall $(77,750) $(72,400)
Unrecognized net actuarial gain (4,662) (7,958)
Unrecognized prior service cost 261 242
Accrued postretirement benefits (82,151) (80,116)
Less current portion 5,004 4,295
Long-term postretirement benefits $(77,147) $(75,821)
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:
One-percentage- One-percentage-
point increase point decrease
(In thousands)
Effect on total of service and interest
cost components $ 485 $ (427)
Effect of postretirement benefit obligation $4,120 $(3,660)
NOTE 9:
Special Charges (Credits)
Our annual results for 2000 include net pretax special charges of $15.2
million, which resulted in after-tax expense of $0.13 per basic and diluted
share. We incurred a total special charge of $20.6 million related to our
decision to close our Spain brewery and commercial operations. The brewery
was acquired in March 1994 and provided services for the production and
sales to unaffiliated distributors of Coors products in Spain and certain
European markets outside of Spain. The decision to close the Spain
operations came as a result of an unfavorable outlook from various analyses
we performed which focused on the potential for improved distribution
channels, the viability of Coors brands in the Spain market and additional
contract brewing opportunities. Of the $20.6 million charge, $11.3 million
related to severance and other related closure costs for approximately 100
employees, $4.9 million related to a fixed asset impairment charge and $4.4
million for the write-off of our cumulative translation adjustments,
previously recorded in equity, related to our Spain operations. In 2000,
approximately $9.6 million of severance and other related closure costs
were paid out. These payments were funded out of current cash balances. At
December 31, 2000, there was a remaining reserve of approximately $1.7
million for severance and other related closure costs. These costs are
expected to be paid by the end of the first quarter of 2001 and will also
be funded out of current cash balances. Our 2000 special charge was
partially offset by a credit of $5.4 million related to an insurance claim
settlement.
Our annual results for 1999 included a pretax special charge of $5.7
million, which resulted in after-tax expense of $0.10 per basic and diluted
share. Approximately $3.7 million of this charge related to a restructuring
of part of our operations which primarily included a voluntary severance
program involving our engineering and construction work force.
Approximately 50 engineering and construction employees accepted severance
packages under the voluntary program. Also included in the $5.7 million
charge was approximately $2.0 million of special charges incurred to
facilitate distributor network improvements. During 1999 and 2000 we paid
out $0.9 million and $2.3 million, respectively, of severance costs and at
December 31, 2000, a severance reserve of $0.5 million remained. These
severance costs are expected to be paid out in the first quarter of 2001.
Our annual results for 1998 included a pretax net special charge of $19.4
million, which resulted in after-tax expense of $0.32 per basic share
($0.31 per diluted share). This charge included a $17.2 million pretax
charge for severance and related costs of restructuring our production
operations. The severance costs related to the restructuring were comprised
of costs under a voluntary severance program involving our production work
force plus severance costs incurred for a small number of salaried
employees. Approximately 200 production employees accepted severance
packages under the voluntary program. These severance costs have all been
paid as of December 31, 2000. Also included in the 1998 results was a $2.2
million pretax charge for the impairment of certain long-lived assets at
one of our distributorships.
NOTE 10:
Investments
Equity method investments: We have investments in affiliates that are
accounted for using the equity method of accounting. These investments
aggregated $56.3 million and $69.2 million at December 31, 2000, and
December 26, 1999, respectively. These investment amounts are included in
Other assets on our accompanying Consolidated Balance Sheets.
Summarized condensed balance sheet and income statement information for our
equity method investments are as follows:
Summarized condensed balance sheets:
As of
December 31, December 26,
2000 1999
(In thousands)
Current assets $75,464 $99,539
Non-current assets $87,353 $84,945
Current liabilities $34,907 $34,317
Non-current liabilities $ 264 $ 75
Summarized condensed statements of operations:
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands)
Net sales $490,227 $449,238 $453,246
Gross profit $132,805 $116,970 $ 97,478
Net income $ 77,575 $ 68,375 $ 59,650
Company's equity in net income $ 42,395 $ 36,958 $ 33,227
Coors Canada, Inc. (CCI), one of our fully owned subsidiaries, formed a
partnership, Coors Canada, with Molson, Inc. to market and sell Coors
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 Coors 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 the Coors brands less
production, distribution, sales and overhead costs related to these sales.
During 2000, CCI received a distribution from the partnership of a U.S.
dollar equivalent of approximately $25.8 million. Our share of net income
from this partnership, which was approximately $25.4 million in 2000, is
included in Sales on the accompanying Consolidated Statements of Income.
Also see discussion in Note 13.
In December 2000, we made certain changes to the Canadian partnership
arrangement. Also in December 2000, we entered into a 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 is expected to reach an annual contract brewing
rate of up to 500,000 barrels over the next few years.
We operate a production joint venture partnership with Owens-Brockway Glass
Container, Inc. (Owens), the Rocky Mountain Bottle Company (RMBC), to
produce glass bottles at our glass manufacturing facility. The
partnership's initial term is until 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 bottles for our bottle requirements not met
by RMBC. In 2000, RMBC produced approximately 1.1 billion bottles. We
purchased all of the bottles produced by RMBC.
The expenditures under this agreement in 2000, 1999 and 1998 were
approximately $86 million, $69 million and $67 million, respectively. Our
commitment for our 2001 bottle purchases from the joint venture is
estimated to be approximately $86 million. During 2000, we received a $20.2
million cash distribution from this joint venture. Our share of net income
from this partnership is included within Cost of goods sold on the
accompanying Consolidated Statements of Income.
In 1994, we formed a 50/50 production joint venture with American National
Can Company (ANC) to produce beverage cans and ends at our manufacturing
facilities for sale to us and outside customers. In 2000, we purchased all
the cans and ends sold by the joint venture. The agreement has an initial
term of seven years and can be extended for two additional three-year
periods. In 2000, we notified ANC of our intent to terminate the joint
venture in 2001. We are evaluating other alternatives, including a new
arrangement with Rexam LLC, who recently acquired ANC. The aggregate amount
paid to the joint venture for cans and ends in 2000, 1999 and 1998 was
approximately $230 million, $223 million and $231 million, respectively.
The estimated cost in 2001 under this agreement for cans and ends is $203
million. Additionally, during 2000, we received an $8.5 million cash
distribution from this joint venture. Our share of net income from this
partnership is included within Cost of goods sold on the accompanying
Consolidated Statements of Income.
In 1992, we spun off our wholly owned subsidiary, ACX Technologies, Inc.,
which has subsequently changed its name to Graphic Packaging International
Corporation. We are a limited partner in a partnership in which a
subsidiary of Graphic Packaging is the general partner. The partnership
owns, develops, operates and sells certain real estate previously owned
directly by us. Under the agreement, cash distributions and income or
losses are allocated equally between the partners until we recover our
investment. After we recover our investment, cash distributions are split
80% to the general partner and 20% to CBC, while income or losses are
allocated in such a manner to bring our partnership interest to 20%. In
late 1999, we recovered our investment. In 2000, we received an $814,000
cash distribution from the partnership.
Cost investments: In 1991, we entered into an agreement with Colorado
Baseball Partnership 1993, Ltd. for an equity 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. The carrying value of this investment approximates its fair
value at December 31, 2000, and December 26, 1999. 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 Fieldr. This liability is included in the total
advertising and promotion commitment discussed in Note 14.
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.
Activity in our Class A and Class B common stock, net of forfeitures, for
each of the three years ended December 31, 2000, December 26, 1999, and
December 27, 1998, is summarized below:
Common stock
Class A Class B
Balances at December 28, 1997 1,260,000 35,599,356
Shares issued under stock plans -- 684,808
Purchases of stock -- (888,858)
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
At December 31, 2000, December 26, 1999, and December 27, 1998, 25 million
shares of $1 par value preferred stock were authorized but unissued.
The board of directors authorized the repurchase during 2000, 1999 and 1998
of up to $40 million each year of our outstanding Class B common stock on
the open market. During 2000, 1999 and 1998, 308,000 shares, 232,300 shares
and 766,200 shares, respectively, were repurchased for approximately $17.6
million, $12.2 million and $24.9 million, respectively, under this stock
repurchase program. In November 2000, the board of directors extended the
program and authorized the repurchase during 2001 of up to $40 million of
stock.
Earnings per share: Basic and diluted net income per common share were
arrived at using the calculations outlined below:
For the years ended
December 31, December 26, December 27,
2000 1999 1998
(In thousands, except per share data)
Net income available to
common shareholders $109,617 $92,284 $67,784
Weighted-average shares
for basic EPS 36,785 36,729 36,312
Effect of dilutive securities:
Stock options 606 640 1,077
Contingent shares not included in
shares outstanding for basic EPS 59 88 126
Weighted-average shares
for diluted EPS 37,450 37,457 37,515
Basic EPS $2.98 $2.51 $1.87
Diluted EPS $2.93 $2.46 $1.81
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 option exercises. Stock options to purchase 6,555
and 871,409 shares of common stock were not included in the computation of
2000 and 1999 earnings per share, respectively, because the stock options'
exercise prices were greater than the average market price of the common
shares.
NOTE 12:
Other Comprehensive Income
Unrealized
Foreign gain on available- Accumulated
currency for-sale securities other
translation and derivative comprehensive
adjustments instruments income
(In thousands)
Balances, December 28, 1997 $(3,796) $ -- $(3,796)
Foreign currency translation
adjustments 2,344 2,344
Unrealized gain on available-
for-sale securities 721 721
Tax expense (914) (281) (1,195)
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 of derivative
instruments (3,221) (3,221)
Reclassification adjustment for
net gains released in net income
on available-for-sale securities
and derivative instruments (4,058) (4,058)
Reclassification adjustment for
accumulated translation
adjustment of 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
NOTE 13:
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 external customers, operating income and
pretax income attributable to the United States and all foreign countries
for
the years ended December 31, 2000, December 26, 1999, and December 27,
1998, are as follows:
2000 1999 1998
(In thousands)
United States and its territories:
Net revenues $2,331,693 $2,177,407 $2,028,485
Operating income $ 163,563 $ 148,823 $ 103,411
Pretax income $ 185,082 $ 161,281 $ 115,880
Other foreign countries:
Net revenues $ 82,722 $ 59,077 $ 43,381
Operating (loss) income $ (12,937) $ (8,288) $ 408
Pretax (loss) income $ (15,557) $ (10,614) $ (4,780)
Included in 2000, 1999 and 1998 foreign revenues are earnings from CCI, our
investment accounted for using the equity method of accounting (see Note
10). Included in operating income and pretax income are net special charges
of $15.2 million, $5.7 million and $19.4 million, for 2000, 1999 and 1998,
respectively. 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 and 1998 related entirely to the United States and its territories.
The net long-lived assets located in the United States and its territories
and all other foreign countries as of December 31, 2000, and December 26,
1999, are as follows:
2000 1999
(In thousands)
United States and its territories $732,171 $705,062
Other foreign countries 3,622 8,939
Total $735,793 $714,001
The total net export sales (in thousands) during 2000, 1999 and 1998 were
$202,832, $185,260 and $150,964, respectively.
NOTE 14:
Commitments and Contingencies
Insurance: It is our policy to act as a self-insurer for certain insurable
risks consisting primarily of employee health insurance programs, workers'
compensation and general liability contract deductibles. During 2000, 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 31, 2000, we had approximately $5.6
million outstanding in letters of credit with certain financial
institutions. These letters generally expire within 12 months from the
dates of issuance, with expiration dates ranging from March 2001 to October
2001. These letters of credit are being maintained as security for
performance on certain insurance policies and for operations of underground
storage tanks, as well as to secure principal and interest on industrial
revenue bonds issued by us.
Financial guarantees: We have financial guarantees outstanding on behalf
of our subsidiary, Coors Japan, and certain third parties. These subsidiary
guarantees are primarily for working capital lines of credit and payments
of certain duties and taxes. The third-party guarantees relate to bank
loans provided to companies that acquired certain strategic
distributorships. At December 31, 2000, our financial guarantees totaled
approximately $17.1 million, of which $13.9 million were on behalf of our
subsidiary, Coors Japan.
Power supplies: In 1995, Coors Energy Company (CEC), a fully owned
subsidiary of ours, sold a portion of its coal reserves to Bowie Resources
Ltd. (Bowie). CEC also entered into a 10-year agreement to purchase 100% of
the brewery's coal requirements from Bowie. The coal then is sold to
Trigen-Nations Energy Corporation, L.L.L.P. (Trigen).
In 1995, we sold our power plant and support facilities to Trigen. In
conjunction with this sale, we agreed to purchase the electricity and steam
needed to operate the brewery's Golden facilities through 2020. Our
financial commitment under this agreement is divided between a fixed, non-
cancelable cost of approximately $13.7 million for 2001, which adjusts
annually for inflation, and a variable cost, which is generally based on
fuel cost and our electricity and steam use.
Supply contracts: We have various long-term supply contracts with
unaffiliated third parties 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:
Fiscal year Amount
(In thousands)
2001 $ 162,000
2002 115,000
2003 115,000
2004 115,000
2005 24,000
Total $ 531,000
Our total purchases (in thousands) under these contracts in fiscal year
2000, 1999 and 1998 were approximately $149,000, $108,900 and $95,600,
respectively.
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. 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 43% of Graphic Packaging's common stock and 100% of Graphic
Packaging's convertible preferred stock. Peter H. Coors is also a trustee
of some of these trusts.
We have a packaging supply agreement with a subsidiary of Graphic Packaging
under which we purchase a large portion of our paperboard requirements.
This contract expires in 2002. Our purchases under the packaging agreement
in 2000 totaled approximately $112 million. We expect purchases in 2001
under the packaging agreement to be approximately $133 million.
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 31, 2000, the
future commitments are as follows:
Fiscal year Amount
(In thousands)
2001 $ 37,750
2002 37,205
2003 12,432
2004 10,598
2005 8,297
Thereafter 19,244
Total $125,526
Environmental: We were one of numerous parties named by the Environmental
Protection Agency (EPA) as a "potentially responsible party" at the Lowry
site, a landfill owned by the City and County of Denver. In 1990, we
recorded a special pretax charge of $30 million, representing our portion,
for potential cleanup costs of the site based upon an assumed present value
of $120 million in total site remediation costs. We also agreed to pay a
specified share of costs if total remediation costs exceeded this amount.
The City and County of Denver; Waste Management of Colorado, Inc.; and
Chemical Waste Management, Inc. are expected to implement site remediation.
Chemical Waste Management's projected costs to meet the remediation
objectives and requirements are currently below the $120 million
assumption. We have no reason to believe that total remediation costs will
result in additional liability to us.
We were one of several parties named by the EPA as a "potentially
responsible party" 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 is
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 although we believe they would be immaterial to our financial
position.
From time to time, we have been notified that we are or may be a
potentially responsible party 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.
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. As a result, we are required to pay certain fines or other costs by
implementing a supplemental environmental project. We settled with the
Colorado Department of Public Health and Environment regarding violations
of our permit in the amount of $98,000 on February 22, 2001. This money
will be paid to the Clear Creek Watershed Foundation to construct a waste
rock repository in Clear Creek County. We have not yet settled with the
Division of Wildlife for damage to the fish population but have proposed
funding the remaining costs for construction of the waste rock repository.
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 or our financial or competitive position. We believe adequate
reserves have been provided for losses that are probable.
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 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 or results of
operations.
Restructuring: At December 31, 2000, 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 2000, 1999 and 1998, see
discussion at Note 9.
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 took effect in early 1997 and extends to 2001.
NOTE 15:
Quarterly Financial Information (Unaudited)
The following summarizes selected quarterly financial information for each
of the two years in the period ended December 31, 2000.
In 2000 and 1999, certain adjustments were made which were not of a normal
and recurring nature. As described in Note 9, income in 2000 was decreased
by a net special pretax charge of $15.2 million, or $0.13 per basic share
($0.13 per diluted share) after tax, and income in 1999 was decreased by a
special pretax charge of $5.7 million, or $0.10 per basic share ($0.10 per
diluted share) after tax. 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. Partially as a result of these
favorable adjustments, we increased certain other spending in the fourth
quarter, primarily for advertising, for a comparable amount.
First Second Third Fourth Year
2000 (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
First Second Third Fourth Year
1999 (In thousands, except per share data)
Gross sales $563,774 $741,766 $697,605 $639,567 $2,642,712
Beer excise taxes (85,972) (115,123) (107,029) (98,104) (406,228)
Net sales 477,802 626,643 590,576 541,463 2,236,484
Cost of goods sold (310,322) (366,295) (367,089) (353,545) (1,397,251)
Gross profit $167,480 $260,348 $223,487 $187,918 $ 839,233
Net income $ 11,982 $ 46,231 $ 21,836 $ 12,235 $ 92,284
Net income per
common share-basic $ 0.33 $ 1.26 $ 0.59 $ 0.33 $ 2.51
Net income per
common share-diluted $ 0.32 $ 1.23 $ 0.58 $ 0.33 $ 2.46
NOTE 16:
Subsequent Event
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, known as Molson USA, LLC, will import, market,
sell and distribute Molson's brands of beer in the United States. Under the
agreement, the joint venture owns the exclusive right to import Molson
brands into the United States, including Molson Canadian, Molson Golden,
Molson Ice and any Molson brands that may be developed in the future for
import into the United States. We will be responsible for the sales of
these brands. Production for these brands will be handled in Canada by
Molson and marketing of these brands will be managed by the joint venture.
ITEM 9. Disagreements on Accounting and Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
(a) Directors
WILLIAM K. COORS (Age 84) is chairman of the board of Adolph Coors Company
(ACC) and has served in such capacity since 1970. He was president
from 1989 until May 11, 2000. He has served as a director since
1940. He is the chairman of the Executive Committees of ACC and
Coors Brewing Company (CBC). He is also a director of CBC and
Graphic Packaging International, Inc. (Graphic).
PETER H. COORS (Age 54) is chairman of CBC and was chief executive officer
until May 2000. He has been a director of ACC and CBC since 1973. Prior to
1993, he served as executive vice president and chairman of the brewing
division, before it was organized as CBC. He served as interim treasurer
and chief financial officer of ACC from December 1993 to February 1995. He
has served in a number of different executive and management positions for
CBC. Since March 1996, he has been a director of U.S. Bancorp. He also has
been a director of Energy Corporation of America since March 1996.
W. LEO KIELY III (Age 54) became president and chief operating officer of
CBC as of March 1, 1993, and was named chief executive officer in
May 2000. He has been a director of ACC and CBC since August 1998.
Prior to joining CBC, he held executive positions with Frito-Lay,
Inc., a subsidiary of PepsiCo in Plano, Texas. He also serves on
the board of directors of Sunterra Resorts, Inc., and the SEI Center for
Advanced Studies Board for the Wharton School of Finance.
LUIS G. NOGALES (Age 57) has served as one of our directors since 1989. He
is a member of the Audit Committee and chairman of the Compensation
Committee. From 1990 to the present, he has served as president of
Nogales Partners, an acquisition firm. He was chairman and chief
executive officer of Embarcadero Media (1992-1997); president of
Univision, the nation's largest Spanish language television network
(1986-1988); and chairman and chief executive officer of United
Press International (1983-1986). He is also a director of Edison
International, Kaufman and Broad Home Corporation and Kaufman and
Broad S.A., and serves as trustee of the Ford Foundation and the
J. Paul Getty Trust.
PAMELA H. PATSLEY (Age 44) has served as a director since November 1996.
She chairs the Audit Committee and is a member of the Compensation
Committee. In March 2000, she became executive vice president of
First Data Corp. and president of First Data Merchant Services,
First Data Corp.'s merchant processing enterprise, which also
includes the TeleCheck check guarantee and approval business. Prior
to joining First Data, Patsley served as president, chief executive
officer and director of Paymentech. She began her Paymentech career
as a founding officer of First USA, Inc. when it was established in
1985. Before joining First USA, Patsley was with KPMG Peat Marwick.
She is also a director of Message Media, Inc.
WAYNE R. SANDERS (Age 53) has served as a director since February 1995. He
is a member of the Compensation Committee and the Audit Committee.
He is chairman of the board and chief executive officer of
Kimberly-Clark Corporation in Dallas. Sanders joined Kimberly Clark
in 1975 and has served in a number of positions there over the
years. He was named to his current position in 1992. He was elected
to Kimberly Clark's board of directors in August 1989. He is also a
director of Texas Instruments Incorporated and Chase Bank of Texas.
ALBERT C. YATES (Age 58) has served as a director since August 1998. He is
a member of the Compensation Committee and the Audit Committee. He
is president of Colorado State University in Fort Collins,
Colorado, and chancellor of Colorado State University System. He is
a member of the board of the Federal Reserve Board of Kansas City-
Denver Branch and has served on the board of First Interstate Bank.
Joseph Coors retired from our board in May 2000 and was elected a director
emeritus. William K. Coors and Joseph Coors are brothers. Peter H. Coors is
a son of Joseph Coors.
(b) Executive Officers
Of the above directors, William K. Coors, Peter H. Coors and W. Leo Kiely
III are executive officers of ACC and CBC. The following also were
executive officers of ACC and/or CBC at March 1, 2001:
DAVID G. BARNES (Age 39) joined us in March 1999 as vice president of
finance and treasury. Prior to joining us, he was based in Hong
Kong as vice president of finance and development for Tricon Global
Restaurants. At Tricon, he also held positions as vice president of
mergers and acquisitions and vice president of planning. From 1990-
1994, he worked at Asea Brown Boveri in various strategy, planning
and development roles of increasing responsibility. He started his
career at Bain and Company where he worked as a consultant for 5
years.
CARL L. BARNHILL (Age 52) was named senior vice president of sales in May
1994. He has more than 20 years of marketing experience with
consumer goods companies. Previously, he was vice president of
selling systems development for the European and Middle East
division of Pepsi Foods International. Prior to joining Pepsi in
1993, he spent 16 years with Frito-Lay, Inc. in various senior
sales and marketing positions.
L. DON BROWN (Age 55) joined us in July 1996 as senior vice president of
container operations and technology. Mr. Brown has announced his
retirement effective in June 2001 and is currently serving in a reduced
capacity. Prior to joining us, he served as senior vice president of
manufacturing and engineering at Kraft Foods where his responsibilities
included manufacturing, engineering and operations quality functions.
During his years at Kraft from 1971-1996, he held several positions of
increasing responsibility in the manufacturing and operations areas.
PETER M. R. KENDALL (Age 54) joined us in January 1998 as senior vice
president and chief international officer. Before joining Coors, he
was executive vice president of operations and finance for Sola
International, Inc., a manufacturer and marketer of eyeglass lenses
in Menlo Park, California. From 1995-1996, Kendall was president of
international book operations for McGraw Hill Companies. From 1981-
1994, Kendall worked in leadership positions for Pepsi
International, PepsiCo and PepsiCo Wines and Spirits. Prior to
working for Pepsi, he spent six years at McKinsey & Co. in New
York.
ROBERT D. KLUGMAN (Age 53) was named our senior vice president of corporate
development in May 1994. In 1993, he served as vice president of
corporate development. Prior to 1993, he was vice president of
brand marketing, and also served as vice president of
international, development and marketing services. Before joining
us, Klugman was a vice president of client services at Leo Burnett
USA, a Chicago-based advertising agency.
OLIVIA M. THOMPSON (Age 50) was named our vice president and controller in
August 1997. Prior to joining us, she was vice president of finance
and systems for Kraft Foods, Inc.'s Foodservice Division. Ms.
Thompson also previously served as vice president of business
analysis for Kraft Foods. Prior to joining Kraft, she worked at
Inland Steel Industries, where she served as vice president of
finance and corporate controller.
M. CAROLINE TURNER (Age 51) has been senior vice president since February
1997, and general counsel since 1993. In March 2000, she was also
named Corporate Secretary. Previously, she served as vice president
and assistant secretary. Since joining us in 1986, she has served
primarily as our chief legal officer. Prior to joining us, she was
a partner at the law firm of Holme Roberts & Owen.
WILLIAM H. WEINTRAUB (Age 58) was named as our senior vice president of
marketing in 1994. He joined us as vice president of marketing in
July 1993. Prior to joining us, he directed marketing and
advertising for Tropicana Products as senior vice president. From
1982-1991, Mr. Weintraub was with the Kellogg Company, with
responsibility for marketing and sales.
TIMOTHY V. WOLF (Age 47) was named vice president and chief financial
officer of ACC and senior vice president and chief financial
officer of CBC in February 1995. Prior to CBC, he served as senior
vice president of planning and human resources for Hyatt Hotels
Corporation from 1993-1994 and in several executive positions for
The Walt Disney Company, including vice president, controller and
chief accounting officer, from 1989-1993. Prior to Disney, Wolf
spent 10 years in various financial planning, strategy and control
roles at PepsiCo. He currently serves on the Science and Technology
Commission for the State of Colorado.
Terms for all officers and directors are for a period of one year, except
that vacancies may be filled and additional officers elected at any regular
or special meeting. Directors are elected at the Annual meeting of Class A
voting shareholders held in May. There are no arrangements or
understandings between any officer or director pursuant to which any
officer or director was elected.
ITEM 11. Executive Compensation
I. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUTS
OTHER RESTRIC- SECURITIES LTIP ALL
ANNUAL TED UNDERLYING PAY- OTHER
NAME & PRINCIPAL SALARY BONUS COMP STOCK OPTIONS OUTS COMP
POSITION YEAR ($) ($)(a) ($)(b) ($)(c) (#)(d) ($) ($)(e)
William K. Coors,
Chairman of the 2000 339,360 0 153,334 0 0 0 0
Board of Adolph 1999 320,800 0 0 0 0 0 0
Coors Company 1998 307,100 0 0 0 0 0 0
Peter H. Coors,
President of
Adolph Coors
Company,
Chairman of 2000 726,750 563,760 0 0 170,908 0 78,699
Coors Brewing 1999 655,765 380,294 0 0 62,751 0 55,504
Company 1998 599,065 292,032 0 241,484 82,200 0 32,807
W. Leo Kiely III,
Vice President of
Adolph Coors
Company & CEO 2000 569,250 428,644 0 0 103,708 0 57,139
Of Coors 1999 516,750 304,722 0 0 87,429 0 41,723
Brewing Company 1998 468,000 271,500 0 76,496 50,514 0 43,653
L. Don Brown,
Senior VP,
Operations &
Technology of 2000 392,700 191,636 0 0 18,656 0 18,432
Coors Brewing 1999 367,502 166,672 0 0 15,218 0 18,132
Company (f) 1998 374,504 144,202 61,476 42,008 18,859 0 21,195
Timothy V. Wolf,
Senior VP & CFO 2000 360,500 189,525 0 0 35,024 0 11,835
of Coors Brewing 1999 343,020 160,022 0 0 28,790 0 11,535
Company 1998 326,528 130,611 0 38,033 17,081 0 13,684
(a) Amounts awarded under the Management Incentive Compensation Program.
(b) In 2000, William K. Coors received compensation under our non-qualified
supplemental executive retirement plan of $146,595. This plan is offered in
addition to the qualified retirement income plan to executive officers
whose salaries exceed $170,000. Of the payment made in 2000, $46,435
related to 1999 and $100,160 to 2000. In 1999, none of the named executives
received perquisites in excess of the lesser of $50,000 or 10% of salary
plus bonus. In 1998, L. Don Brown received perquisites including moving and
relocation expenses of $31,476.
(c) In 1999, the 45,390 shares of restricted stock which were granted to L.
Don Brown in 1996 vested. The value at vesting date was $2,282,268.
No restricted stock grants were made to any of the named executives during
2000 or 1999. In 1998, 6,743 shares of restricted stock were granted to
Peter H. Coors, 2,136 shares to W. Leo Kiely III, 1,173 shares to L. Don
Brown and 1,062 shares to Timothy V. Wolf. These restricted stock awards
have a three-year vesting period from the date of grant and are based on
continuous service during the vesting period. Dividends are paid to the
holder of the grant during the vesting period. The values of the unvested
1998 restricted stock grants as of December 31, 2000 were as follows:
Peter H. Coors - $333,779; W. Leo Kiely III - $171,548; L. Don Brown -
$94,207; and Timothy V. Wolf - $85,292.
(d) See discussion under Item 11, Part II, for options issued in 2000.
(e) The amounts shown in this column are attributable to the officer life
insurance other than group life, as well as 401(k) match.
(f) Mr. Brown has announced his retirement effective June 25, 2001. As of
the date of this filing, he is serving in a reduced capacity.
Of the named executives, Peter H. Coors receives officer life insurance
provided by us until retirement. At the time of retirement, the officer's
life insurance program terminates and a salary continuation agreement
becomes effective. The officer's life insurance provides six times the
executive base salary until retirement, at which time we become the
beneficiary. We provide term life insurance for W. Leo Kiely III, L. Don
Brown and Timothy V. Wolf. The officer's life insurance provides six times
the executive base salary until retirement when the benefit terminates. The
2000 annual benefit for each executive was: Peter H. Coors - $73,599; W.
Leo Kiely III - $52,039; L. Don Brown - $13,332; and Timothy V. Wolf -
$6,735.
Our 50% match on the first 6% of salary contributed by the officer to ACC's
qualified 401(k) plan was $5,100 each for Peter H. Coors, W. Leo Kiely III,
L. Don Brown and Timothy V. Wolf. Peter H. Coors, W. Leo Kiely III and
Timothy V. Wolf exercised stock options in 2000. See discussion in Item 11,
Part III, for stock option exercises in 2000.
In response to Code Section 162 of the Revenue Reconciliation Act of 1993,
we appointed a special compensation committee to approve and monitor
performance criteria in certain performance-based executive compensation
plans for 2000.
II. OPTION/SAR GRANTS TABLE
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Rates of Stock
Individual Grants Price Appreciation
for Option Terms
% of Total
Number of Options
Securities Granted
Underlying to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
(#)(a) Year ($/Share) Date 5% 10%
Peter H. 71,956 6.1% $51.5938 01/03/10 $2,334,761 $5,916,743
Coors 76,645 6.5% $48.4375 02/17/10 $2,334,766 $5,916,756
15,752 1.3% $60.5313 05/24/10 $ 599,644 $1,519,616
6,555 0.6% $75.2188 12/22/10 $ 310,082 $ 785,809
W. Leo Kiely 45,790 3.9% $51.5938 01/03/10 $1,485,751 $3,765,185
III 48,774 4.1% $48.4375 02/17/10 $1,485,758 $3,765,202
9,144 0.8% $63.1563 08/17/10 $ 363,187 $ 920,388
L. Don Brown 18,656 1.6% $51.5938 01/03/10 $ 605,332 $1,534,031
Timothy V. 16,959 1.4% $51.5938 01/03/10 $ 550,270 $1,394,492
Wolf 18,065 1.5% $48.4375 02/17/10 $ 550,298 $1,394,562
(a) Grants vest one-third in each of the three successive years after the
date of grant. As of December 31, 2000, the 2000 grants were 0% vested
because of the one-year vesting requirement; however, they will vest 33-
1/3% on the one-year anniversary of the grant dates.
III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Value
NUMBER OF
SECURITIES VALUE OF UN-
UNDERLYING UN- EXERCISED IN-
EXERCISED OPTIONS THE-MONEY OPTIONS
SHARES AT FY-END (#) AT FY-END
ACQUIRED ON VALUE
EXERCISE REALZIED Exer- Unexer- Exer- Unexer-
NAME (#) (a) cisable cisable cisable cisable
Peter H.
Coors 221,256 $11,849,562 120,233 214,251 $4,668,308 $6,781,393
W. Leo
Kiely III 15,000 $544,544 158,423 178,833 $8,120,836 $5,263,142
L. Don
Brown 0 0 109,577 35,089 $6,511,526 $1,095,051
Timothy V.
Wolf 14,713 $628,026 20,983 59,912 $764,443 $1,087,457
(a) Values stated are the bargain element realized in 2000, which is the
difference between the option price and the market price at the time of
exercise.
IV. PENSION PLAN TABLE
The following table sets forth annual retirement benefits for
representative years of service and average annual earnings.
AVERAGE ANNUAL YEARS OF SERVICE
COMPENSATION
10 20 30 40
$125,000 $25,000 $50,000 $75,000 $100,000
150,000 30,000 60,000 90,000 120,000
175,000(a) 35,000 70,000 105,000 140,000(a)
200,000(a) 40,000 80,000 120,000 160,000(a)
225,000(a) 45,000 90,000 135,000(a) 180,000(a)
250,000(a) 50,000 100,000 150,000(a) 200,000(a)
275,000(a) 55,000 110,000 165,000(a) 220,000(a)
300,000(a) 60,000 120,000 180,000(a) 240,000(a)
325,000(a) 65,000 130,000 195,000(a) 260,000(a)
350,000(a) 70,000 140,000(a) 210,000(a) 280,000(a)
375,000(a) 75,000 150,000(a) 225,000(a) 300,000(a)
400,000(a) 80,000 160,000(a) 240,000(a) 320,000(a)
425,000(a) 85,000 170,000(a) 255,000(a) 340,000(a)
450,000(a) 90,000 180,000(a) 270,000(a) 360,000(a)
475,000(a) 95,000 190,000(a) 285,000(a) 380,000(a)
500,000(a) 100,000 200,000(a) 300,000(a) 400,000(a)
525,000(a) 105,000 210,000(a) 315,000(a) 420,000(a)
550,000(a) 110,000 220,000(a) 330,000(a) 440,000(a)
575,000(a) 115,000 230,000(a) 345,000(a) 460,000(a)
600,000(a) 120,000 240,000(a) 360,000(a) 480,000(a)
(a) Maximum permissible benefit under ERISA from the qualified retirement
income plan for 2000 was $135,000. Annual compensation exceeding $170,000
is not considered in computing the maximum permissible benefit under the
qualified plan. The Company has a non-qualified supplemental retirement
plan to provide full accrued benefits to all employees in excess of IRS
maximums.
Annual average compensation covered by the qualified and non-qualified
retirement plans and credited years of service for individuals named in
Item 11(a) are as follows: William K. Coors - $317,420 and 61 years; Peter
H. Coors - $655,527 and 29 years; W. Leo Kiely III - $518,000 and 7 years;
L. Don Brown - $378,235 and 5 years; and Timothy V. Wolf - $343,349 and 6
years.
Our principal retirement income plan is a defined benefit plan. The amount
of contribution for officers is not included in the above table since total
plan contributions cannot be readily allocated to individual employees. In
November 1998, our board of directors approved changes to one of our
defined benefit pension plans. The changes were effective July 1, 1999, and
will generally increase the benefits by approximately 20%. Also in conjunction
with this plan amendment, a $48 million contribution was made in January 1999
and that contribution's ratio to total compensation was approximately 20%.
Covered compensation is defined as the total base salary (average of three
highest consecutive years out of the last 10) of employees participating in the
plan, including commissions but excluding bonuses and overtime pay.
Compensation also includes amounts deferred by the individual under Internal
Revenue Code Section 401(k) and any amounts deferred into a plan under
Internal Revenue Code Section 125. Normal retirement age under the plan is 65.
An employee with at least 5 years of vesting service may retire as early as age
55. Benefits are reduced for early retirement based on an employee's age and
years of service at retirement; however, benefits are not reduced if: (1) the
employee is at least age 62 when payments commence; or (2) the employee's
age plus years of service equal at least 85 and the employee has worked for
us at least 25 years. The amount of pension actuarially accrued under the
pension formula is based on a single life annuity.
In addition to the annual benefit from the qualified retirement plan, Peter
H. Coors is covered by a salary continuation agreement. This agreement
provides for a lump sum cash payment to the officer upon normal retirement
in an amount actuarially equivalent in value to 30% of the officer's last
annual base salary, payable for the remainder of the officer's life, but
not less than 10 years. The interest rate used in calculating the lump sum
is determined using 80% of the annual average yield of the 10-year Treasury
constant maturities for the month preceding the month of retirement. Using
2000 eligible salary amounts as representative of the last annual base
salary, the estimated lump sum amount for Peter H. Coors would be based
upon an annual benefit of $222,750, paid upon normal retirement.
V. COMPENSATION OF DIRECTORS
We adopted the Equity Compensation Plan for Non-Employee Directors (EC
Plan) effective as amended and restated August 14, 1997. The EC Plan
provides for two grants of ACC's Class B common stock (non-voting) to non-
employee (NE) directors. The first grant is automatic and equals 20% of the
annual retainer. The second grant is elective and allows the NE directors
to take a portion, or all, of the remaining annual retainer in stock.
Amounts of both grants are determined by the fair market value of the
shares on the date of grant. Shares received under either grant may not be
sold or disposed of before completion of the annual term. We reserved
50,000 shares of stock to be issued under the EC Plan. The NE directors'
annual retainer is $36,000.
In 2000, the NE members of the board of directors were paid 50% of the
$36,000 annual retainer for the 1999-2000 term and 50% of the $36,000
annual retainer for the 2000-2001 term, as well as reimbursement of
expenses incurred to perform their duties as directors. Directors who are
our full-time employees receive $18,000 annually. All directors are
reimbursed for any expenses incurred while attending board or committee
meetings and in connection with any other business.
VI. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Except for agreements with certain of our executive officers relating to their
employment upon a change of control of our Company, we have no agreements with
executives or employees providing employment for a set period. The change in
control agreements, which apply to certain officers of Coors Brewing Company,
generally provide that, for a period of 2 years following a change of control
as defined in the agreements, the officer will be entitled to certain
compensation upon certain triggering events. These events include: termination
without cause, resignation for good reason, or resignation by the officer for
any reason during a 30 day window beginning one year after a change of
control. Upon a triggering event, officers would be paid a multiple of their
annual salary and bonus, plus health, pension and life insurance benefits for
additional years. For the chairman and the chief executive officer, the
compensation would equal three times annual salary and bonus, plus benefits for
the equivalent of three years coverage, plus three years credit for additional
service toward pension benefits. All other officers who are party to these
agreements would receive two times annual salary and bonus, plus two years
equivalent benefit coverage, plus credit for two years additional service
toward pension benefits.
Under our equity incentive plan, vesting of stock options held by a participant
would not be accelerated upon a change of control unless the transaction were
not approved by the Board. Under the agreements, if the Board is unsuccessful
in negotiating a one-year exercise period for substitute options issued
following a change of control, then vesting of any substitute options received
by the officer from the successor company would be accelerated if the officer
is terminated without cause or resigns for good reason within two years of the
change of control. The agreements also contain other provisions including
payment of outplacement fees, a gross-up provision for any excise tax that is
triggered by payments under the CIC agreement and the reimbursement of
reasonable legal fees incurred by the officer in any dispute about the
agreement.
The standard severance program for officers is one year of base salary plus
a prorated portion of any earned bonus for the year of severance.
Under the 1990 Equity Incentive Plan, if there is a change in our
ownership, the options and restricted shares vest immediately.
VII. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Luis G. Nogales, Pamela H. Patsley, Wayne R. Sanders and Albert C. Yates
served on the Compensation Committee during 2000.
VIII. AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors is composed of four
independent directors and operates under a written charter adopted by the
Board of Directors. The Audit Committees' primary duties and
responsibilities are to:
- - monitor the integrity of our financial reporting process, the system of
internal controls and significant legal matters and ethics.
- - review and appraise the independence and performance of our internal
auditors and independent accountants.
- - provide an open avenue of communication for the independent accountants,
financial and senior management, internal auditors and the Board of
Directors.
The Committee held seven meetings during the fiscal year ended December 31,
2000. Discussions were held with our management and the independent
auditors. Management represented to the Committee that our consolidated
financial statements were prepared in accordance with generally accepted
accounting principles. The Committee has reviewed and discussed the
consolidated financial statements with our management and the independent
auditors. The Committee discussed with the independent auditors matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
In addition, the Committee has discussed with the independent auditors the
auditors' independence, including the matters in the written disclosures
and the letter we received from the auditors, as required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). The fees billed by the auditors for non-audit services were
also considered in the discussions of independence.
Based on the Committees' reviews and discussions referred to above, the
Committee recommended that the Board of Directors include our audited
consolidated financial statements in our Annual Report on Form 10-K for the
year ended December 31, 2000.
Submitted by the Audit Committee,
Pamela H. Patsley (Chair)
Luis G. Nogales
Wayne R. Sanders
Albert C. Yates
IX. INDEPENDENT PUBLIC ACCOUNTANTS' FEES
During fiscal year 2000, fees billed for professional services rendered by
PricewaterhouseCoopers LLP, our independent public accountants, were as
follows:
- -Audit fees $ 623,182
- -Financial information systems design and
implementation fees 0
- -All other fees 1,675,833
Total fees $ 2,299,015
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a)(b) Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of March 15, 2001, as to the
beneficial ownership of Class A Stock and Class B Stock by beneficial owners of
more than five percent of our Class A Stock and Class B Stock, each director,
our named executive officers and by all directors and executive officers as
group. Unless otherwise indicated, the person or persons named have sole voting
and investment power and that person's address is c/o Adolph Coors Company, 311
10th Street, P.O. Box 4030, Golden, Colorado 80401. Shares of common stock
subject to options currently exercisable or exercisable within 60 days
following the date of the tables are deemed outstanding for computing the
share ownership and percentage of the person holding such options, but are
not deemed outstanding for computing the percentage of any other person.
Amount and Nature of Beneficial Ownership
Number of Percent Number of Percent
Class A of Class B of
Name of Beneficial Owner Shares Class (1) Shares Class (1)
Adolph Coors, Jr. Trust,
William K. Coors, Jeffrey H.
Coors, Peter H. Coors, J.
Bradford Coors and Melissa E.
Coors, trustees 1,260,000(2) 100.0% 2,940,000(2) 8.1%
William K. Coors 0 0.0% 2,910,787(2)(3) 8.0%
Peter H. Coors 0 0.0% 2,945,325(2)(4) 8.1%
May K. Coors Trust(5) 0 0.0% 2,589,980 7.2%
W. Leo Kiely III 0 0.0% 250,348(6) *
Luis G. Nogales 0 0.0% 2,429(7) *
Pamela H. Patsley 0 0.0% 1,748(7) *
Wayne R. Sanders 0 0.0% 5,846(7) *
Albert C. Yates 0 0.0% 565(7) *
L. Don Brown 0 0.0% 35,860(8) *
Timothy V. Wolf 0 0.0% 50,349(9) *
All directors and executive
officers as a group,
including persons named above
(19 persons) 0 0.0% 13,257,679 35.9%
* Less than one percent.
(1) Based solely upon reports of beneficial ownership required filed with the
Securities and Exchange Commission pursuant to Rule 13d-1 under the Securities
and Exchange Act of 1934, we do not believe that any other person beneficially
owned, as of March 15, 2001, greater than five percent of our outstanding Class
B Stock.
(2) William K. Coors and Peter H. Coors disclaim beneficial ownership of the
shares held by the Adolph Coors, Jr. Trust.
(3) This includes 2,589,980 shares owned by the May K. Coors Trust of which
William K. Coors disclaims beneficial ownership. It does not include an
aggregate of 14,160,114 shares of Class B common stock owned by a number of
other trusts that hold the shares for the benefit of certain Coors family
members. William K. Coors is a beneficiary of certain of these trusts. The
Commission does not require disclosure of these shares.
(4) This includes 2,589,980 shares owned by the May K. Coors Trust of which
Peter H. Coors disclaims beneficial ownership. It does not include an aggregate
of 4,801,691 shares of Class B common stock owned by a number of other trusts
that hold the shares for the benefit of certain Coors family members. Peter H.
Coors is a beneficiary of certain of these trusts. The Commission does not
require disclosure of these shares. This includes 2,660 shares held in the
names of Peter H. Coors's wife and some of his children, as to which he
disclaims beneficial ownership. This number includes options to purchase
214,501 shares of Class B common stock exercisable within 60 days.
(5) William K. Coors, Joseph Coors, Jr., Jeffrey H. Coors and Peter H. Coors
serve as co-trustees.
(6) This number includes options to purchase 235,925 shares of Class B common
stock exercisable within 60 days.
(7) These shares were issued as restricted stock under our 1991 Equity
Compensation Plan for Non-Employee Directors. Vesting in the restricted stock
occurs at the end of the one-year term for outside directors. These numbers
include the following number of shares which will vest in May 2001: Luis G.
Nogales, 122; Pamela H. Patsley, 292; Wayne R. Sanders, 122; Albert C. Yates,
365.
(8) This number includes options to purchase 35,222 shares of Class B common
stock exercisable within 60 days. Mr. Brown has announced his retirement
effective June 2001 and is currently serving in a reduced capacity.
(9) This number includes options to purchase 47,948 shares of Class B common
stock exercisable within 60 days.
(c) Changes in Control
There are no arrangements that would later result in a change of our
control.
ITEM 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
None.
(b) Certain Business Relationships
In 1992, we spun off our wholly owned subsidiary, ACX Technologies, Inc.,
which has subsequently changed its name to Graphic Packaging International
Corporation. 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 43% of Graphic Packaging's
common stock and 100% of Graphic Packaging's convertible preferred stock.
Peter H. Coors is also a trustee of some of these trusts.
We have a packaging supply agreement with a subsidiary of Graphic Packaging
under which we purchase a large portion of our paperboard requirements.
This contract expires in 2002. Our purchases under the packaging agreement
in 2000 totaled approximately $112 million. We expect purchases in 2001
under the packaging agreement to be approximately $133 million.
We are also a limited partner in a real estate development partnership in
which a subsidiary of Graphic Packaging is the general partner. The
partnership owns, develops, operates and sells certain real estate
previously owned directly by us. In 2000, we received distributions of
$814,000 from this partnership.
(c) Indebtedness of Management
No member of management or another with a direct or indirect interest in us
was indebted to us in excess of $60,000 in 2000.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements: See index of financial statements in Item
8.
(2) Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors and Shareholders of Adolph Coors Company:
Our audits of the consolidated financial statements referred to in our
report dated February 7, 2001, appearing on page 32 of this Form 10-K also
included an audit of the financial statement schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated
financial statements.
PricewaterhouseCoopers LLP
Denver, Colorado
February 7, 2001
SCHEDULE II
ADOLPH COORS COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at charged to Balance
beginning costs and at end
of year expenses Deductions of year
Allowance for doubtful (In thousands)
accounts
Year ended
December 31, 2000 $ 55 $ 84 $ -- (a) $ 139
December 26, 1999 $ 299 $ 53 ($ 297)(a) $ 55
December 27, 1998 $ 557 $ 42 ($ 300)(a) $ 299
Allowance for certain
claims
Year ended
December 31, 2000 $ 133 $ -- ($ 29)(a) $ 104
December 26, 1999 $ 584 $ 44 ($ 495)(a) $ 133
December 27, 1998 $1,500 $ 400 ($1,316)(a) $ 584
Allowance for obsolete
inventories and supplies
Year ended
December 31, 2000 $3,170 $2,664 ($2,220)(a) $3,614
December 26, 1999 $4,986 $3,778 ($5,594)(a) $3,170
December 27, 1998 $5,214 $4,569 ($4,797)(a) $4,986
(a) Write-offs of uncollectible accounts, claims or obsolete inventories
and supplies.
(3) Exhibits:
Exhibit 3.1 - Amended and restated Articles of Incorporation of Adolph
Coors Company. (Incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-3, SEC file No. 333-48194
filed October 27, 2000)
Exhibit 3.2 - By-laws, as amended and restated in May 2000. (Incorporated
by reference to Exhibit 3.2 to Registration Statement on
Form S-3, SEC file No. 333-48194 filed October 27, 2000)
Exhibit 10.1* - 1983 non-qualified Adolph Coors Company Stock Option Plan,
as amended effective February 13, 1992. (Incorporated by
reference to Exhibit 10.3 to Form 10-K for the fiscal year
ended December 29, 1991)
Exhibit 10.2* - Adolph Coors Company 1990 Equity Incentive Plan.
(Incorporated by reference to Exhibit 10.6 to Form 10-K for
the fiscal year ended December 28, 1997)
Exhibit 10.3 - Form of Coors Brewing Company Distributorship Agreement.
(Incorporated by reference to Exhibit 10.20 to Form 10-K
for the fiscal year ended December 29, 1996)
Exhibit 10.4 - Adolph Coors Company Equity Compensation Plan for Non-
Employee Directors (Incorporated by reference to Exhibit
10.12 to Form 10-K for the fiscal year ended December 28,
1997)
Exhibit 10.5 - Distribution Agreement, dated as of October 5, 1992,
between the Company and ACX Technologies, Inc.
(Incorporated herein by reference to the Distribution
Agreement included as Exhibits 2, 19.1 and 19.1A to the
Registration Statement on Form 10 filed by ACX
Technologies, Inc. (file No. 0-20704) with the Commission
on October 6, 1992, as amended)
Exhibit 10.6 - Revolving Credit Agreement, dated as of October 23, 1997.
(Incorporated by reference to Exhibit 10.15 to Form 10-K
for the fiscal year ended December 28, 1997)
Exhibit 10.7 - Adolph Coors Company Stock Unit Plan. (Incorporated by
reference to Exhibit 10.16 to Form 10-K for the fiscal year
ended December 28, 1997)
Exhibit 10.8* - Adolph Coors Company 1998 Deferred Compensation Plan.
(Incorporated by reference to Exhibit 10.21 to Form 10-K
for the fiscal year ended December 27, 1998)
Exhibit 10.9* - Coors Brewing Company 2000 Annual Management Incentive
Compensation Plan.
Exhibit 10.10* - 1999 Amendment to Adolph Coors Company 1990 Equity
Incentive Plan. (Incorporated by reference to Exhibit 10.6
to Form 10-K for the fiscal year ended December 27, 1998)
Exhibit 10.11 - 1999 Amendment to Adolph Coors Company Stock Unit Plan.
(Incorporated by reference to Exhibit 10.16 to Form 10-K for
the fiscal year ended December 27, 1998)
Exhibit 10.12 - 1999 Amendment to Adolph Coors Company Equity Compensation
Plan for Non-Employee Directors. (Incorporated by reference
to Exhibit 10.12 to Form 10-K for the fiscal year ended
December 27, 1998)
Exhibit 10.13 - Adolph Coors Company Water Augmentation Plan. (Incorporated
by reference to Exhibit 10.12 to Form 10-K for the fiscal
year ended December 31, 1989)
Exhibit 10.14 - Supply Agreement between Coors Brewing Company and Graphic
Packaging Corporation dated September 1, 1998.
(Incorporated by reference to Exhibit 10.1 to current
report on Form 8-K filed November 2, 1998 by ACX
Technologies, Inc., SEC file No. 001-14060)
Exhibit 10.15 - 2000 Amendment to Adolph Coors Company 1990 Equity
Incentive Plan. (Incorporated by reference to Exhibit 10.12
to Form 10-K for the fiscal year ended December 26, 1999)
Exhibit 10.16 - Audit Committee Charter adopted May 11, 2000.
Exhibit 10.17 - Amendment to Adolph Coors Company Deferred Compensation
Plan approved February 16, 2001.
Exhibit 10.18 - Form of change in control agreements for Chairman and for
Chief Executive Officer.
Exhibit 10.19 - Form of change in control agreements for other officers.
Exhibit 10.20 - 2001 Amendment to Adolph Coors Company 1990 Equity
Incentive Plan approved February 16, 2001.
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Accountants.
*Represents a management contract.
(b) Reports on Form 8-K
None.
(c) Other Exhibits
None.
(d) Other Financial Statement Schedules
None.
EXHIBIT 21
ADOLPH COORS COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
The following table lists our significant subsidiaries and the respective
jurisdictions of their organization or incorporation as of December 31, 2000.
All subsidiaries are included in our consolidated financial statements.
State/country of
organization or
Name incorporation
Coors Brewing Company Colorado
Coors Distributing Company Colorado
Coors Japan Company, Ltd. Japan
Coors Canada, Inc. Canada
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 33-33831 and 333-48194) and in the
Registration Statements on Form S-8 (Nos. 33-35035,33-40730, 33-59979, 333-
45869 and 333-38378) of Adolph Coors Company of our report dated February
7, 2001, relating to the consolidated financial statements which appear in
this Annual Report on Form 10K.
We also consent to the incorporation by reference of our report dated
February 7, 2001, relating to the financial statement schedule, which
appears in this Form 10K.
PricewaterhouseCoopers LLP
Denver, Colorado
March 30, 2001
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ADOLPH COORS COMPANY
By /s/ William K. Coors
William K. Coors
Chairman
By /s/ Peter H. Coors
Peter H. Coors
President
By /s/ Timothy V. Wolf
Timothy V. Wolf
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following directors on behalf of the
Registrant and in the capacities and on the date indicated.
By /s/ W. Leo Kiely III By /s/ Luis G. Nogales
W. Leo Kiely III Luis G. Nogales
Vice President and Director
Director
By /s/ Pamela H. Patsley By /s/ Wayne R. Sanders
Pamela H. Patsley Wayne R. Sanders
Director Director
By /s/ Albert C. Yates
Albert C. Yates
Director
March 30, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>auditcharter.txt
<DESCRIPTION>CHARTER
<TEXT>
ADOLPH COORS COMPANY
AUDIT COMMITTEE CHARTER
Purpose
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
Monitor the integrity of the Company's financial reporting process, system of
internal controls, significant legal matters and ethics.
Review and appraise the independence and performance of the Company's
independent accountants and internal auditing department.
Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department and the
Board of Directors.
Composition
The Audit Committee shall be comprised of not less than three (3) directors as
determined by the Board, each of whom shall be independent directors and shall
meet the requirements of the Securities and Exchange Commission and the New
York Stock Exchange. All members of the Audit Committee shall be financially
literate as determined by the Board. One or more members of the Audit
Committee shall possess accounting or related financial management expertise
as interpreted by the Board. If an audit committee chair is not designated or
present, the members of the Audit Committee may designate a chair for the
meeting by majority vote of the Audit Committee membership.
Meetings
The Audit Committee shall meet at least four times annually or more frequently
per the annual agenda and at such other times as determined by the Chair of
the Audit Committee. A majority of the members of the Audit Committee shall
constitute a quorum for the transaction of business. The Audit Committee Chair
shall prepare and/or approve an agenda in advance of each meeting. The Audit
Committee should meet privately, at least annually, in executive session with
management, the director of the internal auditing department, the independent
accountants and as a committee to discuss any matters that the Audit Committee
or each of these groups believe should be discussed. In addition, the Audit
Committee should meet with the independent accountants and management
quarterly to review the Company's financial statements.
Responsibilities and Duties
Review Procedures
Review and reassess the adequacy of this charter at least annually. Submit the
charter to the Board of Directors for approval and have the document published
at least every three years in accordance with Securities and Exchange
Commission regulations.
Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and independent
accountants of significant issues regarding accounting principles, practices,
and judgments.
Consider and approve major changes to the Company's accounting principles and
practices and any items required to be communicated by the independent
accountants in accordance with SAS 61.
In consultation with the management, the independent accountants and the
internal auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor control and report such exposures.
Monitor the Company's processes for management's identification and control of
significant business and financial risk.
Review the Company's quarterly results with financial management and the
independent accountants prior to the release of earnings Review the company's
quarterly financial statements (10-Q) prior to filing. The Chair of the
Committee may determine to represent the entire Audit Committee for purposes
of these reviews.
Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
Independent Accountants
The independent accountants are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the independence
and performance of the independent accountants and annually recommend to the
Board of Directors the re-appointment of the independent accountants or
recommend their discharge when circumstances warrant.
Review the fees and other significant compensation to be paid to the
independent accountants. At least annually, the Audit Committee should review
and discuss with the independent accountants all significant relationships
they have with the Company that could impair the independent accountant's
independence.
Review the independent accountant's audit plan - discuss scope, staffing,
locations, reliance upon management and internal auditing, and general audit
approach. Review significant findings by independent accountants, management's
responses and follow-up.
Consider the independent accountant's judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Internal Auditing
Review the audit project plan, significant changes in plan, activities,
organizational structure and qualifications of the internal auditing
department annually.
Review the appointment, performance, and replacement of the head of internal
auditing.
Review significant reports prepared by the internal auditing department,
management's responses and follow-up.
Ethical and Legal Compliance
Review reports from the Company's General Counsel regarding significant
litigation, including any matters that could have a significant impact on the
Company's financial statements with due consideration for protecting the
attorney-client privilege where determined appropriate by the General Counsel.
Review with the Company's General Counsel any significant issues
involving the Company's compliance with applicable laws and regulations,
including corporate securities trading policies, and any inquiries of a
significant nature received from regulators or governmental agencies.
Establish, review, and update periodically a Code of Ethics and ensure
that management has established a system to enforce this code.
Review management's monitoring of the Company's compliance with the Code
of Ethics.
Review all reports concerning any significant fraud or regulatory non-
compliance that occurs at the Company. This review should include
consideration of the internal controls that should be strengthened to reduce
the risk of a similar event in the future.
Other Audit Committee Responsibilities
Annually, publish a report to shareholders as required by the Securities and
Exchange Commission.
Minutes of the Audit Committee meetings shall be distributed to each board
member prior to the subsequent Board of Directors meeting.
The Audit Committee will annually present to the Board of Directors a review
and recommendation for approval of the Annual Report to shareholders and Form
10-K.
The Audit Committee may ask members of management or others to attend meetings
and provide pertinent information as necessary.
Perform any other activities consistent with this Charter, the Company's
Bylaws, and governing law, as the Audit Committee or the Board deems necessary
or appropriate.
Management Support and Powers of the Audit Committee
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities. It shall have direct access to the
independent accountants as well as anyone in the Company. The Audit Committee
shall have access to the Company's General Counsel and the ability to retain,
at the Company's expense, special legal, accounting or other experts it deems
necessary in the performance of its responsibilities.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>exhibitcicthree.txt
<DESCRIPTION>CIC THREE
<TEXT>
AGREEMENT
AGREEMENT by and among Adolph Coors Company, a Colorado corporation ("ACC"),
Coors Brewing Company, a Colorado corporation ("CBC") (ACC and CBC are
hereinafter referred to as the "Company"), and _________________ (the
"Executive"), dated as of February 20, 2001.
The Executive is employed by the Company. The Board of Directors of the
Company (the "Board") has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the
continued dedication of the Executive, in the event of the threat or
occurrence of a Change of Control (as defined below) of the Company. The
Board believes that it is important to diminish the distraction of the
Executive from Company business because of personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control.
The parties agree as follows:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date on which a
Change of Control (as defined in Section 2) becomes effective during the
Term (as defined in Section 1(b)). If a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date on
which the Change of Control becomes effective, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at
the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this Agreement
the "Effective Date" shall mean the date immediately prior to the date of
such termination of employment.
(b) The "Term" shall mean the period commencing on the date
hereof and ending on the second anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Term shall be automatically extended so as to
terminate two years from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Board shall give notice to the Executive that the Term
not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall occur if:
(a) a Person other than Existing Shareholders or a Person controlled
by Existing Shareholders becomes the ultimate Beneficial Owner of more than
20% of the total voting power of the Voting Stock of the Company and such
ownership represents a greater percentage of the total voting power of the
Voting Stock of the Company than is Beneficially Owned by Existing
Shareholders on such date; except the following acquisitions are not a
Change of Control: (i) an acquisition of Voting Stock by the Company or one
of its wholly-owned subsidiaries or (ii) an acquisition of Voting Stock that
meets the conditions in clauses (i), (ii) and (iii) of paragraph (b) of this
Section 2 or (iii) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or by any corporation
controlled by the Company;
(b) the Company consolidates with, or merges with or into, another
Person or the Company or a subsidiary of the Company sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all
of its assets to any Person in a transaction that would require approval of
the Company's shareholders under Section 7-112-101 and Section 7-112-102 of
the Colorado Business Corporation Act (except a transfer to an entity
wholly-owned by the Company or one of its wholly-owned subsidiaries), or any
Person consolidates with, or merges with or into, the Company, (each a
"Business Combination") unless, immediately following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the Beneficial Owners, respectively, of the Company Common Stock
and Company Voting Stock immediately prior to such Business Combination
Beneficially Own, directly or indirectly, 50% or more of, respectively, the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding Voting Stock of the corporation resulting from such
Business Combination (including, without limitation, a corporation that as a
result of such transaction owns the Company and all or substantially all of
the Company's assets either directly or though one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Company Common Stock and Company Voting
Stock, (ii) no Person (other than (A) Existing Shareholders and any Person
controlled by Existing Shareholders, (B) any corporation resulting from such
Business Combination or (C) any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
Beneficially Owns, directly or indirectly, 20% or more of the then-
outstanding voting power of the Voting Stock of such corporation and
Beneficially Owns a greater percentage of the voting power of such Voting
Stock of such Person than the Existing Shareholders and any Person
controlled by Existing Shareholders and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Board at the time of the action of
the Board, if any, providing for such Business Combination or if there was
not such action, at the time of the execution of this Agreement;
(c) individuals who on the date of this Agreement constitute the
Board (together with any thereafter elected directors whose election by the
Board or whose nomination by the Board for election by the Company's
shareholders was approved by a vote of at least a majority of the members of
the Board then in office who either were members of the Board on the date of
this Agreement or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the members of
the Board then in office; or
(d) the shareholders of the Company approve a complete liquidation
or dissolution of the Company.
(e) For purposes of this Section 2, the following definitions shall
apply:
(i) "Beneficial Owner and Beneficially Own" shall mean
beneficial ownership as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to beneficially own all securities
that such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
(ii) "Company Common Stock" shall mean the Company's
Class B Common Stock and any other common stock (whether voting or
non-voting) that may be hereafter issued.
(iii) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(iv) "Existing Shareholder" shall mean the Adolph Coors,
Jr. Trust, any individual who or entity which has been, is or in the future
becomes a trustee thereof or any beneficiary thereof, any other trust the
primary beneficiaries of which are descendants of Adolph Coors, Sr. or
spouses or former spouses of such descendants, and/or any individual who or
entity which has been, is or in the future becomes a trustee of any such
trusts or any beneficiary thereof.
(v) "Person" shall mean any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
(vi) "Voting Stock" shall mean any and all shares, interests,
participations, rights in or other equivalents of capital stock and warrants
or options exchangeable for or convertible into such capital stock which
ordinarily has the power to vote for the election of directors, managers or
other voting members of the governing body (the "Governing Board") of a
Person. If any members of the Governing Board are elected by classes of
common stock voting as separate classes, Voting Stock shall mean the stock
of the class of common stock entitled to elect the majority of the Governing
Board, provided, if the separate classes are entitled to elect equal numbers
of the Governing Board, then all such shares of common stock shall be deemed
to be Voting Stock, but the voting power of Voting Stock held by a Person
(including the Existing Shareholders) shall be separately calculated for
each class and the result for each class shall be deemed to be Beneficial
Ownership of Voting Stock of the Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the second
anniversary of such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be commensurate in all material respects
with the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office or location less than thirty-five miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period Executive
may (A) serve on civic or charitable boards or committees of not for profit
or similar organizations, (B) teach, and (C) manage personal investments, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. To the extent that any such activities have
been conducted by the Executive and by other executives of the Company prior
to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be
paid at a monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has been earned
but deferred, to the Executive by the Company and its affiliated companies
in respect of the twelve-month period immediately preceding the month in
which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than twelve months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling
or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be entitled to participate, with respect to each fiscal year ending
during the Employment Period, in the Company's Management Incentive
Compensation Plan, or any comparable successor plans, under terms
(including measures of performance, targets and payout potential) at least
as favorable as the terms under such bonus plan as in effect during the
Company's fiscal year ending immediately prior to the Effective Date (the
"Annual Bonus"). Each such Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the end of the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect
to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities or
retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies
and programs as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to the Executive, those
provided generally during the two year Employment Period following the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Stock Options and Other Equity Grants. During the Employment
Period, the Executive shall receive stock option grants pursuant to the
Company's 1990 Equity Incentive Plan or any successor plan for each fiscal
year ending during the Employment Period on the same basis as those provided
to other peer executives of the Company for each such fiscal year. In
addition, during the Employment Period, the Executive shall receive
restricted stock grants pursuant to the Company's 1990 Equity Incentive Plan
or any successor plan for each fiscal year during the Employment Period on
the same basis as those provided to other peer executives of the Company for
each such fiscal year.
(v) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans, practices, policies
and programs in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(vi) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vii) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, or cash payments in lieu of such
fringe benefits, including but not limited to, tax and financial planning
services, payment of club dues, use of an automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs
and policies of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(viii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(ix) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies
as in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If
the Company determines in good faith that the Disability of the Executive
has occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be a disability pursuant to the
Company's then existing Long Term Disability Plan or, in the absence of such
a plan, a disability determined to be total and permanent by a physician
selected by the Company and acceptable to the Executive or the Executive's
legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is a violation of fiduciary duties or is materially
and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean:
(i) a demotion in rank, title, responsibility or authority; the
assignment to the Executive, following the Effective Date, of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of such notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, including but not limited to the failure
by the Company to pay the Executive any portion of his compensation, or to
provide an Annual Bonus under terms (including but not limited to measures,
targets and payout potential) at least as favorable as the terms for such
Bonus as in effect during the Company's fiscal year immediately prior to the
Effective Date or to pay the Executive any portion of an installment of
deferred compensation under any deferred compensation program of the Company
when such compensation is due, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof for
more than 60 days or the Company's requiring the Executive to travel on
Company business to a substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination
of "Good Reason" made by the Executive shall be conclusive. If an event
constituting Good Reason occurs prior to a Change of Control but after there
is knowledge of a potential Change of Control, it shall be deemed to
constitute Good Reason for purposes of this Agreement. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive
for any reason during the thirty-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(b)
of this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason (other than a termination by the Executive during
the 30-day window period described in the last sentence of Section 5(c)
above), the date of receipt of the Notice of Termination or any later date
up to six months thereafter specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Executive during the 30-day
window period described in the last sentence of Section 5(c) above, the date
that is six months following the date of receipt of the Notice of
Termination or such earlier date as may be agreed in writing by the
Executive and the Company, (iii) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive of such
termination and (iv) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death
of the Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall
terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within thirty days after the Date of Termination the aggregate of the
following amounts:
(A) the sum of (1) the Executive's Annual Base Salary (which
for this purpose shall include any allowance for perquisites that is paid
directly to the Executive) through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the target bonus for the Executive
under the Company's Management Incentive Compensation Plan, or any
comparable successor plans, for the fiscal year of the Company which
contains the Date of Termination (the "Target Bonus"), and (y) a fraction,
the numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365 and (3)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) pursuant to the Company's Deferred
Compensation Plan or any successor plan (with such amounts paid in
accordance with the provisions of such plan) and any accrued vacation pay,
in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2), and (3) shall be hereinafter referred to as
the "Accrued Obligations"); and
(B) the amount equal to the product of (1) [two] [three] and (2) the
sum of (x) the Executive's Annual Base Salary (which for this purpose
shall include any allowance for perquisites that is paid directly to the
Executive) and (y) the Target Bonus, with the product of (1) and (2) reduced
by the amounts paid, if any, to the Executive under the Company's Severance
Pay Plan or pursuant to any other contractual arrangement with the Executive
or plan providing coverage to the Executive as a result of such termination.
(ii) for [twenty-four] [thirty-six] months after the Executive's
Date of Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's family, including
life insurance, at least equal (on an after-tax basis) to those which would
have been provided to them in accordance with the plans, programs, practices
and policies described in Section 4(b)(v) of this Agreement if the
Executive's employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility.
(iii) The Company shall pay to the Executive a cash lump
sum equal to (A) the present value of the increased pension benefit,
determined on an actuarial basis, that would result under the Coors
Retirement Plan (or any successor thereto) if the Executive received credit
for benefit calculation purposes for [two] [three] additional years of
service, minus (B) the present value of the benefit actually accrued under
the Coors Retirement Plan on the Date of Termination. The actuarial factors
then being used under the Coors Retirement Plan (or any successor thereto)
on the Date of Termination shall be used to calculate the lump sum amount
and payment of such lump sum shall be made at the same time as the payment
provided under Section 6(a)(i) above;
(iv) for [twenty-four] [thirty-six] months following the Date of
Termination the Company shall, at its sole expense, reimburse the Executive
for the cost (but not in excess of $25,000 in the aggregate), as incurred,
for outplacement services the scope and provider of which shall be selected
by the Executive in his sole discretion;
(v) for [twenty-four] [thirty-six] months following the Date of
Termination the Company shall, to the extent not otherwise paid or provided,
pay or provide to the Executive, all other fringe benefits and executive
perquisites provided on the date of this Agreement, or on the Date of
Termination to the extent they are more extensive, including, but not
limited to, luncheon club dues, annual physical examination, parking, health
club dues, and financial planning assistance ("Other Benefits"); and
(vi) with respect to any options, restricted stock or other
stock based awards held by the Executive pursuant to the Company's Equity
Incentive Plan, or any successor plan, the Company shall use its best
efforts to negotiate with the successor company, if any, to grant substitute
stock-based awards, including options that shall give the Executive one year
to exercise the substitute options if the Date of Termination occurs before
the Executive is eligible for retirement. If the substitute options do not
provide such extended period for exercise, on the Date of Termination all
restrictions on awards of restricted stock will be canceled, and all
outstanding stock options and stock appreciation rights and other stock
based awards that have not fully vested, shall vest immediately and become
fully exercisable and shall not thereafter be forfeitable; provided,
however, that outstanding stock options and stock appreciation rights and
other stock-based awards shall not become fully vested and become
exercisable and nonforfeitable if the Executive's termination of employment
occurred as a result of notice by the Executive to the Company during the
30-day window period referred to in Section 5(c).
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty days of the Date of
Termination. The term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to
death benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive's estate
and/or the Executive's beneficiaries, as in effect on the date of the
Executive's death with respect to other peer executives of the Company and
its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within thirty days of the Date of
Termination. The term "Other Benefits" as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to
the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (i) his Annual Base Salary
through the Date of Termination, (ii) the amount of any compensation
previously deferred by the Executive, and (iii) Other Benefits, in each case
to the extent theretofore earned and accrued but unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the
timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within
thirty days of the Date of Termination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to
Section 13(f), shall anything herein limit or otherwise affect such rights
as the Executive may have under any contract or agreement with the Company
or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any
of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment, except as specifically provided with respect to
medical and other welfare benefits under another employer-provided plan
pursuant to subsection 6(a)(ii). The Company agrees to pay as incurred, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or
any guarantee of performance thereof (including as a result of any contest
by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement or in any other agreement between the
Company and the Executive or in any stock option or other benefit plan to
the contrary notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made
by such nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm"), which shall provide
detailed supporting calculations both to the Company and the Executive
within fifteen business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the Company or the individual, entity or group effecting the
Change of Control, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to the Executive within five business days of
the receipt of the Accounting Firms' determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it
is possible that a Gross-Up Payment which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the thirty-day period following the date on which it gives such notice to
the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or to contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
10. Confidential Information. In addition to, and not in lieu of, any
other agreement the Executive may have with the Company with respect to
similar subject matters, including but not limited to the Inventions and
Non-Disclosure Agreement and Covenant Not to Compete, the Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of
the Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by
law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
11. Arbitration. All claims and controversies that may arise under
this Agreement shall be submitted to, and determined through, binding
arbitration in the Denver, Colorado metropolitan area in accordance with the
employment arbitration procedures of the American Arbitration Association
("AAA") existing at the time the arbitration is conducted, before a single
arbitrator chosen in accordance with AAA procedures. The decision of the
arbitrator shall be enforceable as a court judgment.
12. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
If to the Company:
Coors Brewing Company
311 10th St.
P.O. Box 4030, NH312
Golden, CO 80401-0030
Attention: General Counsel
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i) through (v) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is
"at will" and, subject to Section 1(a) hereof, prior to the Effective Date,
the Executive's employment and/or this Agreement may be terminated by either
the Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof,
except to the extent provided herein.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as
of the day and year first above written.
________________________________________
[Executive]
ADOLPH COORS COMPANY
By:_____________________________________
COORS BREWING COMPANY
By:_____________________________________
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>exhibitcictwo.txt
<DESCRIPTION>CIC TWO
<TEXT>
AGREEMENT
AGREEMENT by and among Adolph Coors Company, a Colorado corporation
("ACC"), Coors Brewing Company, a Colorado corporation ("CBC") (ACC and CBC
are hereinafter referred to as the "Company"), and _________________ (the
"Executive"), dated as of February 20, 2001.
The Executive is employed by the Company. The Board of Directors of the
Company (the "Board") has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the
continued dedication of the Executive, in the event of the threat or
occurrence of a Change of Control (as defined below) of the Company. The
Board believes that it is important to diminish the distraction of the
Executive from Company business because of personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control.
The parties agree as follows:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date on which a
Change of Control (as defined in Section 2) becomes effective during the
Term (as defined in Section 1(b)). If a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date on
which the Change of Control becomes effective, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at
the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this Agreement
the "Effective Date" shall mean the date immediately prior to the date of
such termination of employment.
(b) The "Term" shall mean the period commencing on the date hereof
and ending on the second anniversary of the date hereof; provided, however,
that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Term shall be automatically extended so as to
terminate two years from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Board shall give notice to the Executive that the Term
not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change
of Control" shall occur if:
a) a Person other than Existing Shareholders or a Person controlled
by Existing Shareholders becomes the ultimate Beneficial Owner of more than
20% of the total voting power of the Voting Stock of the Company and such
ownership represents a greater percentage of the total voting power of the
Voting Stock of the Company than is Beneficially Owned by Existing
Shareholders on such date; except the following acquisitions are not a
Change of Control: (i) an acquisition of Voting Stock by the Company or one
of its wholly-owned subsidiaries or (ii) an acquisition of Voting Stock that
meets the conditions in clauses (i), (ii) and (iii) of paragraph (b) of this
Section 2 or (iii) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or by any corporation
controlled by the Company;
(b) the Company consolidates with, or merges with or into,
another Person or the Company or a subsidiary of the Company sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all
of its assets to any Person in a transaction that would require approval of
the Company's shareholders under Section 7-112-101 and Section 7-112-102 of
the Colorado Business Corporation Act (except a transfer to an entity
wholly-owned by the Company or one of its wholly-owned subsidiaries), or any
Person consolidates with, or merges with or into, the Company, (each a
"Business Combination") unless, immediately following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the Beneficial Owners, respectively, of the Company Common Stock
and Company Voting Stock immediately prior to such Business Combination
Beneficially Own, directly or indirectly, 50% or more of, respectively, the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding Voting Stock of the corporation resulting from such
Business Combination (including, without limitation, a corporation that as a
result of such transaction owns the Company and all or substantially all of
the Company's assets either directly or though one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Company Common Stock and Company Voting
Stock, (ii) no Person (other than (A) Existing Shareholders and any Person
controlled by Existing Shareholders, (B) any corporation resulting from such
Business Combination or (C) any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
Beneficially Owns, directly or indirectly, 20% or more of the then-
outstanding voting power of the Voting Stock of such corporation and
Beneficially Owns a greater percentage of the voting power of such Voting
Stock of such Person than the Existing Shareholders and any Person
controlled by Existing Shareholders and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Board at the time of the action of
the Board, if any, providing for such Business Combination or if there was
not such action, at the time of the execution of this Agreement;
(c) individuals who on the date of this Agreement constitute
the Board (together with any thereafter elected directors whose election by
the Board or whose nomination by the Board for election by the Company's
shareholders was approved by a vote of at least a majority of the members of
the Board then in office who either were members of the Board on the date of
this Agreement or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the members of
the Board then in office; or
(d) the shareholders of the Company approve a complete
liquidation or dissolution of the Company.
(e) For purposes of this Section 2, the following definitions
shall apply:
(i) "Beneficial Owner and Beneficially Own" shall mean
beneficial ownership as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to beneficially own all securities
that such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
(ii) "Company Common Stock" shall mean the Company's
Class B Common Stock and any other common stock (whether voting or
non-voting) that may be hereafter issued.
(iii) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(iv) "Existing Shareholder" shall mean the Adolph Coors,
Jr. Trust, any individual who or entity which has been, is or in the future
becomes a trustee thereof or any beneficiary thereof, any other trust the
primary beneficiaries of which are descendants of Adolph Coors, Sr. or
spouses or former spouses of such descendants, and/or any individual who or
entity which has been, is or in the future becomes a trustee of any such
trusts or any beneficiary thereof.
(v) "Person" shall mean any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
(vi) "Voting Stock" shall mean any and all shares,
interests, participations, rights in or other equivalents of capital stock
and warrants or options exchangeable for or convertible into such capital
stock which ordinarily has the power to vote for the election of directors,
managers or other voting members of the governing body (the "Governing
Board") of a Person. If any members of the Governing Board are elected by
classes of common stock voting as separate classes, Voting Stock shall mean
the stock of the class of common stock entitled to elect the majority of the
Governing Board, provided, if the separate classes are entitled to elect
equal numbers of the Governing Board, then all such shares of common stock
shall be deemed to be Voting Stock, but the voting power of Voting Stock
held by a Person (including the Existing Shareholders) shall be separately
calculated for each class and the result for each class shall be deemed to
be Beneficial Ownership of Voting Stock of the Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the second
anniversary of such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be commensurate in all material respects
with the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office or location less than thirty-five miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period Executive
may (A) serve on civic or charitable boards or committees of not for profit
or similar organizations, (B) teach, and (C) manage personal investments, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. To the extent that any such activities have
been conducted by the Executive and by other executives of the Company prior
to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be
paid at a monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has been earned
but deferred, to the Executive by the Company and its affiliated companies
in respect of the twelve-month period immediately preceding the month in
which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than twelve months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling
or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be entitled to participate, with respect to each fiscal year
ending during the Employment Period, in the Company's Management Incentive
Compensation Plan, or any comparable successor plans, under terms
(including measures of performance, targets and payout potential) at least
as favorable as the terms under such bonus plan as in effect during the
Company's fiscal year ending immediately prior to the Effective Date (the
"Annual Bonus"). Each such Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the end of the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect
to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities or
retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies
and programs as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to the Executive, those
provided generally during the two year Employment Period following the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Stock Options and Other Equity Grants. During the
Employment Period, the Executive shall receive stock option grants pursuant
to the Company's 1990 Equity Incentive Plan or any successor plan for each
fiscal year ending during the Employment Period on the same basis as those
provided to other peer executives of the Company for each such fiscal year.
In addition, during the Employment Period, the Executive shall receive
restricted stock grants pursuant to the Company's 1990 Equity Incentive Plan
or any successor plan for each fiscal year during the Employment Period on
the same basis as those provided to other peer executives of the Company for
each such fiscal year.
(v) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans, practices, policies
and programs in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(vi) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, or cash payments in lieu of
such fringe benefits, including but not limited to, tax and financial
planning services, payment of club dues, use of an automobile and payment of
related expenses, in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(viii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided generally
at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(ix) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies
as in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the thirty days after such receipt,
the Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with the Company on
a full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to be a
disability pursuant to the Company's then existing Long Term Disability Plan
or, in the absence of such a plan, a disability determined to be total and
permanent by a physician selected by the Company and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is a violation of fiduciary duties or is materially
and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean:
(i) a demotion in rank, title, responsibility or authority; the
assignment to the Executive, following the Effective Date, of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of such notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, including but not limited to
the failure by the Company to pay the Executive any portion of his
compensation, or to provide an Annual Bonus under terms (including but not
limited to measures, targets and payout potential) at least as favorable as
the terms for such Bonus as in effect during the Company's fiscal year
immediately prior to the Effective Date or to pay the Executive any portion
of an installment of deferred compensation under any deferred compensation
program of the Company when such compensation is due, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof for
more than 60 days or the Company's requiring the Executive to travel on
Company business to a substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be conclusive. If
an event constituting Good Reason occurs prior to a Change of Control but
after there is knowledge of a potential Change of Control, it shall be
deemed to constitute Good Reason for purposes of this Agreement. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the thirty-day period immediately following
the first anniversary of the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with
Section 13(b) of this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after
the giving of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason (other than a termination by the Executive during
the 30-day window period described in the last sentence of Section 5(c)
above), the date of receipt of the Notice of Termination or any later date
up to six months thereafter specified therein, as the case may be, (ii) if
the Executive's employment is terminated by the Executive during the 30-day
window period described in the last sentence of Section 5(c) above, the date
that is six months following the date of receipt of the Notice of
Termination or such earlier date as may be agreed in writing by the
Executive and the Company, (iii) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive of such
termination and (iv) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death
of the Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall
terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within thirty days after the Date of Termination the aggregate of the
following amounts:
(A) the sum of (1) the Executive's Annual Base Salary (which
for this purpose shall include any allowance for perquisites that is paid
directly to the Executive) through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the target bonus for the Executive
under the Company's Management Incentive Compensation Plan, or any
comparable successor plans, for the fiscal year of the Company which
contains the Date of Termination (the "Target Bonus"), and (y) a fraction,
the numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365 and (3)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) pursuant to the Company's Deferred
Compensation Plan or any successor plan (with such amounts paid in
accordance with the provisions of such plan) and any accrued vacation pay,
in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2), and (3) shall be hereinafter referred to as
the "Accrued Obligations"); and
(B) the amount equal to the product of (1) two and (2) the sum
of (x) the Executive's Annual Base Salary (which for this purpose shall
include any allowance for perquisites that is paid directly to the
Executive) and (y) the Target Bonus, with the product of (1) and (2) reduced
by the amounts paid, if any, to the Executive under the Company's Severance
Pay Plan or pursuant to any other contractual arrangement with the Executive
or plan providing coverage to the Executive as a result of such termination.
(ii) for twenty-four months after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family, including life
insurance, at least equal (on an after-tax basis) to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(v) of this Agreement if the Executive's
employment had not been terminated or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and their families,
provided, however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
(iii) The Company shall pay to the Executive a cash lump
sum equal to (A) the present value of the increased pension benefit,
determined on an actuarial basis, that would result under the Coors
Retirement Plan (or any successor thereto) if the Executive received credit
for benefit calculation purposes for two additional years of service, minus
(B) the present value of the benefit actually accrued under the Coors
Retirement Plan on the Date of Termination. The actuarial factors then being
used under the Coors Retirement Plan (or any successor thereto) on the Date
of Termination shall be used to calculate the lump sum amount and payment of
such lump sum shall be made at the same time as the payment provided under
Section 6(a)(i) above;
(iv) for twenty-four months following the Date of Termination
the Company shall, at its sole expense, reimburse the Executive for the cost
(but not in excess of $25,000 in the aggregate), as incurred, for
outplacement services the scope and provider of which shall be selected by
the Executive in his sole discretion;
(v) for twenty-four months following the Date of Termination
the Company shall, to the extent not otherwise paid or provided, pay or
provide to the Executive, all other fringe benefits and executive
perquisites provided on the date of this Agreement, or on the Date of
Termination to the extent they are more extensive, including, but not
limited to, luncheon club dues, annual physical examination, parking, health
club dues, and financial planning assistance ("Other Benefits"); and
(vi) with respect to any options, restricted stock or other
stock based awards held by the Executive pursuant to the Company's Equity
Incentive Plan, or any successor plan, the Company shall use its best
efforts to negotiate with the successor company, if any, to grant substitute
stock-based awards, including options that shall give the Executive one year
to exercise the substitute options if the Date of Termination occurs before
the Executive is eligible for retirement. If the substitute options do not
provide such extended period for exercise, on the Date of Termination all
restrictions on awards of restricted stock will be canceled, and all
outstanding stock options and stock appreciation rights and other stock
based awards that have not fully vested, shall vest immediately and become
fully exercisable and shall not thereafter be forfeitable; provided,
however, that outstanding stock options and stock appreciation rights and
other stock-based awards shall not become fully vested and become
exercisable and nonforfeitable if the Executive's termination of employment
occurred as a result of notice by the Executive to the Company during the
30-day window period referred to in Section 5(c).
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty days of the Date of
Termination. The term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to
death benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive's estate
and/or the Executive's beneficiaries, as in effect on the date of the
Executive's death with respect to other peer executives of the Company and
its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within thirty days of the Date of
Termination. The term "Other Benefits" as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to
the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (i) his Annual Base Salary
through the Date of Termination, (ii) the amount of any compensation
previously deferred by the Executive, and (iii) Other Benefits, in each case
to the extent theretofore earned and accrued but unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the
timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within
thirty days of the Date of Termination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to
Section 13(f), shall anything herein limit or otherwise affect such rights
as the Executive may have under any contract or agreement with the Company
or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any
of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment, except as specifically provided with respect to
medical and other welfare benefits under another employer-provided plan
pursuant to subsection 6(a)(ii). The Company agrees to pay as incurred, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or
any guarantee of performance thereof (including as a result of any contest
by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement or in any other agreement
between the Company and the Executive or in any stock option or other
benefit plan to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by such nationally recognized certified public
accounting firm as may be designated by the Executive (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Company and the Executive within fifteen business days of the receipt of
notice from the Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting Firm
is serving as accountant or auditor for the Company or the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive
within five business days of the receipt of the Accounting Firms'
determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that a Gross-
Up Payment which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the thirty-day period following the date on which it gives such notice to
the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or to contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
Section 9(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. In addition to, and not in lieu of, any
other agreement the Executive may have with the Company with respect to
similar subject matters, including but not limited to the Inventions and
Non-Disclosure Agreement and Covenant Not to Compete, the Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of
the Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by
law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
11. Arbitration. All claims and controversies that may arise under
this Agreement shall be submitted to, and determined through, binding
arbitration in the Denver, Colorado metropolitan area in accordance with the
employment arbitration procedures of the American Arbitration Association
("AAA") existing at the time the arbitration is conducted, before a single
arbitrator chosen in accordance with AAA procedures. The decision of the
arbitrator shall be enforceable as a court judgment.
12. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
If to the Company:
Coors Brewing Company
311 10th St.
P.O. Box 4030, NH312
Golden, CO 80401-0030
Attention: General Counsel
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for
Good Reason pursuant to Section 5(c)(i) through (v) of this Agreement, shall
not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is
"at will" and, subject to Section 1(a) hereof, prior to the Effective Date,
the Executive's employment and/or this Agreement may be terminated by either
the Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof,
except to the extent provided herein.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as
of the day and year first above written.
________________________________________
[Executive]
ADOLPH COORS COMPANY
By:_____________________________________
COORS BREWING COMPANY
By:_____________________________________
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>5
<FILENAME>exhibitdefcomp.txt
<DESCRIPTION>DEFERRED COMP
<TEXT>
ADOLPH COORS COMPANY
DEFERRED COMPENSATION PLAN
As Amended and Restated Effective February 16, 2001
ADOLPH COORS COMPANY
DEFERRED COMPENSATION PLAN
RECITALS:
Adolph Coors Company, a Colorado corporation (the "Company"), previously
established the Adolph Coors Company Deferred Compensation Plan (the
"Plan"), effective as of February 1, 1998. The Plan is hereby amended and
restated in its entirety, effective as of February 16, 2001. The Plan is
intended to provide a mechanism whereby certain of the highly compensated
and select management employees of the Company and those affiliates that
adopt the Plan may defer compensation and have such amounts, together with
credited earnings, if applicable, paid out upon the participants retirement,
death, disability or other termination of service with the Company or
affiliate and upon certain other specified events. The Company intends that
the Plan shall not be treated as a funded plan for purposes of either the
Internal Revenue Code of 1986, as amended (the "Code") or the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
ARTICLE I
Definitions
Defined terms used in this Plan shall have the meanings set forth below:
1.1 Affiliated Entity means any corporation or other entity, including but
not limited to partnerships and joint ventures, affiliated with Adolph Coors
Company, directly or indirectly through ownership, control or otherwise, as
determined by the Committee.
1.2 Base Salary means the actual amount of base remuneration payable to an
employee by the Company from time to time before reduction for contributions
to plans covered by sections 401(k) and 125 of the Code.
1.3 Beneficiary means the person or persons, trust or other entity
designated by a Participant, pursuant to Section 5.7, to receive any amounts
distributable under the Plan at the time of the Participants death.
1.4 Change in Control means such time as:
(a) a Person other than Existing Shareholders or a Person controlled by
Existing Shareholders becomes the ultimate Beneficial Owner of more than 20%
of the total voting power of the Voting Stock of the Company and such
ownership represents a greater percentage of the total voting power of the
Voting Stock of the Company than is Beneficially Owned by Existing
Shareholders on such date; except the following acquisitions are not a
Change in Control: (i) an acquisition of Voting Stock by the Company or one
of its wholly-owned subsidiaries or (ii) an acquisition of Voting Stock that
meets the conditions in clauses (i), (ii) and (iii) of Section 1.4(b) below
or (iii) an acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company, or by any corporation controlled by
the Company;
(b) the Company consolidates with, or merges with or into, another Person
or the Company or a subsidiary of the Company sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person in a transaction that would require approval of the
Company's shareholders under Section 7-112-101 and Section 7-112-102 of the
Colorado Business Corporation Act (except a transfer to an entity wholly-
owned by the Company or one of its wholly-owned subsidiaries), or any Person
consolidates with, or merges with or into, the Company, (each a "Business
Combination") unless, immediately following such Business Combination,
(i) all or substantially all of the individuals and entities who were the
Beneficial Owners, respectively, of the Company Common Stock and Company
Voting Stock immediately prior to such Business Combination Beneficially
Own, directly or indirectly, 50% or more of, respectively, the then-
outstanding shares of common stock and the combined voting power of the
then-outstanding Voting Stock of the corporation resulting from such
Business Combination (including, without limitation, a corporation that as a
result of such transaction owns the Company and all or substantially all of
the Company's assets either directly or though one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Company Common Stock and Company Voting
Stock, (ii) no Person (other than (A) Existing Shareholders and any Person
controlled by Existing Shareholders, (B) any corporation resulting from such
Business Combination or (C) any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
Beneficially Owns, directly or indirectly, 20% or more of the then-
outstanding voting power of the Voting Stock of such corporation and
Beneficially Owns a greater percentage of the voting power of such Voting
Stock of such Person than the Existing Shareholders and any Person
controlled by Existing Shareholders and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Board at the time of the action of
the Board, if any, providing for such Business Combination or if there was
not such action, on the effective date of this amended and restated Plan;
(c) individuals who on the date of this Agreement constitute the Board
(together with any thereafter elected directors whose election by the Board
or whose nomination by the Board for election by the Company's shareholders
was approved by a vote of at least a majority of the members of the Board
then in office who either were members of the Board on the date of this
Agreement or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of
the Board then in office; or
(d) the shareholders of the Company approve a complete liquidation or
dissolution of the Company.
In addition, a "Change in Control" shall also mean, with respect to any
individual Participant, a "Change in Control" as defined in any separate
agreement between the Company or Affiliated Entity and the Participant.
(e) For purposes of this Section, the following definitions shall apply:
(i) "Beneficial Owner and Beneficially Own" shall mean beneficial
ownership as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a person shall be deemed to beneficially own all securities that such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
(ii) "Company Common Stock" shall mean the Company's Class B Common Stock
and any other common stock (whether voting or non-voting) that may be
hereafter issued.
(iii) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(iv) "Existing Shareholder" shall mean the Adolph Coors, Jr. Trust, any
individual who or entity which has been, is or in the future becomes a
trustee thereof or any beneficiary thereof, any other trust the primary
beneficiaries of which are descendants of Adolph Coors, Sr. or spouses or
former spouses of such descendants, and/or any individual who or entity
which has been, is or in the future becomes a trustee of any such trusts or
any beneficiary thereof.
(v) "Person" shall mean any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
(vi) "Voting Stock" shall mean any and all shares, interests,
participations, rights in or other equivalents of capital stock and warrants
or options exchangeable for or convertible into such capital stock which
ordinarily has the power to vote for the election of directors, managers or
other voting members of the governing body (the "Governing Board") of a
Person. If any members of the Governing Board are elected by classes of
common stock voting as separate classes, Voting Stock shall mean the stock
of the class of common stock entitled to elect the majority of the Governing
Board, provided, if the separate classes are entitled to elect equal numbers
of the Governing Board, then all such shares of common stock shall be deemed
to be Voting Stock, but the voting power of Voting Stock held by a Person
(including the Existing Shareholders) shall be separately calculated for
each class and the result for each class shall be deemed to be Beneficial
Ownership of Voting Stock of the Company.
1.5 Committee means the administrative committee provided for in Section
6.
1.6 Company means Adolph Coors Company and, where the context requires,
any Affiliated Entity that has elected to participate in this Plan in
accordance with the provisions of Article VIII.
1.7 "Company Stock" means the Class B Common Stock of Adolph Coors
Company.
1.8 Compensation means an employee's Base Salary, Executive Bonus and the
amount of income, in the form of shares of Company Stock, attributable to
the exercise of a Stock Option through payment of the exercise price with
shares of Company Stock.
1.9 Credited Earnings means the amount of earnings credited to the
Participants Plan Account as of the date specified for such purpose in the
applicable provision of the Plan. Credited Earnings shall be determined
based upon the deemed investment elections made by the Participant in
accordance with the provisions of Article IV. Except as otherwise provided
in Section 4.1, Credited Earnings shall be accounted for and credited to a
Participants Plan Account beginning upon the date that the Participant's
deemed investment elections pursuant to Article IV are implemented within
the Trust.
1.10 Disability shall have the same meaning given to such term from time to
time in the Company's Long-Term Disability Plan.
1.11 Election Agreement means an agreement between an eligible employee and
the Company providing for the employees participation in the Plan and for
the employees elections with respect to deferrals under Article III, the
deemed investment of the Participant's Plan Account under Article IV and
distributions under Article V, execution of which by an eligible employee is
required under Article II for Plan participation.
1.12 Executive Bonus means a bonus paid pursuant to the Company's
Management Incentive Compensation Plan or such other incentive or bonus
programs as may be designated for this purpose by the Committee.
1.13 Participant means any eligible employee of the Company selected to
participate in this Plan by the Committee who has completed an Election
Agreement and is entitled to the distribution of benefits hereunder. A
Participant shall remain a Participant for all purposes of this Plan so long
as the Participant is entitled to the distribution of benefits hereunder,
except to the extent provided in Section 2.3.
1.14 Participant Deferrals means the amounts of a Participants Compensation
which he elects to defer and have allocated to his Plan Account pursuant to
Article III.
1.15 Plan Account means a bookkeeping account maintained by the Company
which shall show at all times the amounts of Participant Deferrals made by a
Participant and all Credited Earnings allocable to such amounts.
1.16 Plan Year means the twelve month period on which the Plan records are
kept, which shall be the calendar year.
1.17 Retirement means an employee's termination of employment with the
Company after the normal retirement age established by the Company's
Retirement Plan, which is presently age 65.
1.18 "Stock Option" means an option to acquire shares of the Company's
Common Stock granted pursuant to the Company's 1990 Equity Incentive Plan.
1.19 Trust means the trust created by the Company or any Affiliated Entity
which has adopted the Plan pursuant to Article VIII which may be used to
provide funding for the distribution of benefits hereunder in accordance
with the provisions of the Plan.
1.20 Trust Agreement means the written instrument pursuant to which the
Trust is created.
1.21 Trustee means the bank, trust company or individual appointed by the
Company or any Affiliated Entity pursuant to Article VII and acting from
time to time as the trustee of the Trust formed to provide benefits under
the Plan.
ARTICLE II
Eligibility and Participation
2.1 Eligibility and Participation.
From time to time the Committee, in its sole discretion, shall determine the
eligibility requirements for participation and shall designate those highly
compensated and select management employees of the Company and those
Affiliated Entities that have adopted this Plan pursuant to Article VIII to
whom the opportunity to participate in this Plan shall be extended. The
transfer of employment by a Participant between the Company and an
Affiliated Entity, or between Affiliated Entities, shall not be considered a
termination of employment and shall not cause a disruption in participation
in this Plan.
2.2 Enrollment.
Employees who have been selected by the Committee to participate in this
Plan shall enroll in the Plan, prior to the calendar year during which the
employee will participate in the Plan (or in the case of an individual who
becomes an eligible employee of the Company after the beginning of a
calendar year, within 30 days after the date the individual becomes an
eligible employee), by (a) entering into an Election Agreement with the
Company, which shall contain the Participants election as to the
Compensation to be deferred under the Plan for the subsequent calendar year,
the period of deferral, the method of payment, the initial investment
elections of the Participant pursuant to Article IV, and such other terms as
the Company deems appropriate and necessary, and (b) completing such other
forms and furnishing such other information as the Company may reasonably
require. In the case of an employee who becomes eligible to and elects to
participate in the Plan during a calendar year, any election to defer
Compensation shall apply only to Compensation earned after the effective
date of such election. A Participant shall enter into a new Election
Agreement with respect to each Plan Year of participation under the Plan.
2.3 Failure of Eligibility.
If a Participant ceases to meet the eligibility criteria as determined by
the Committee for participation herein for any reason but continues to be a
Company employee, participation herein and benefits hereunder shall cease as
of the effective date of the change in employment status, position or title
which results in termination of eligibility for participation herein. The
determination of the Committee with respect to the termination of
participation in the Plan shall be final and binding on all parties affected
thereby. Any benefits accrued hereunder at the time of such change, together
with Credited Earnings, shall be distributed to such Participant on the
third anniversary of the date on which such Participants eligibility ceased,
or, at the sole election of the Committee, at any time prior to such third
anniversary.
ARTICLE III
Contribution Deferrals
Each Plan Year, a Participant may elect to have Participant Deferrals
withheld from his Base Salary and credited to his Plan Account in any whole
percentage of his Base Salary from 1-100%. In addition, a Participant may
elect to have the Company withhold from his Executive Bonus any amount up to
100% of such Executive Bonus and have such amount credited to his Plan
Account as a Participant Deferral. Participant Deferrals shall be deducted
from a Participants Base Salary and Executive Bonus through payroll
withholding in accordance with the Participants election and credited to the
Participants Plan Account at such time. If a Participant exercises a Stock
Option during a Plan Year through payment of the exercise price with shares
of Company Stock, the Participant may elect to defer the receipt of the
shares of Company Stock representing the shares in excess of the shares used
to exercise the Stock Option (the "Gain Shares"). The shares of Company
Stock representing the Gain Shares that would otherwise be issued to the
Participant upon the exercise of a Stock Option through payment of the
exercise price with shares of Company Stock shall be withheld by the
Company, transferred to the Trust and treated as a deemed investment of the
Participant in accordance with the provisions of Article IV. All elections
with respect to the deferral of Compensation, including Gain Shares, must be
made in accordance with the provisions of Section 2.2.
ARTICLE IV
Accounting and Investments
4.1 Accounting.
The Company shall maintain or cause to be maintained a book accounting
record of the Participants Plan Account, showing the amounts of Participant
Deferrals and the Credited Earnings thereon, based upon the deemed
investment elections of each Participant pursuant to Section 4.2. The
Company shall also maintain or cause to be maintained appropriate accounting
records of the Trust.
4.2 Deemed Investment Elections.
Each Participant shall elect from time to time, in accordance with such
procedures as may be established for this purpose by the Committee, the
manner in which Credited Earnings shall be determined with respect to the
Participant's Plan Account, based upon the deemed investment elections made
by the Participant. The deemed investment options available to Participants
shall be determined from time to time by the Committee and may be changed
from time to time. In the case of Participant Deferrals attributable to
Stock Options, such Participant Deferrals shall be deemed to be invested
only in Company Stock and the Participant may not change the deemed
investment election with respect to such amounts. Subject to the foregoing
restriction, the Participant shall be permitted to change his deemed
investment elections in accordance with such procedures as may be
established for this purpose by the Committee. If at any time the Committee
does not possess deemed investment directions for all of a Participant's
Plan Account, the Participant shall be deemed to have directed that the
undesignated portion of the Plan Account be deemed to be invested in a money
market, fixed income or similar fund made available under the Plan as
determined by the Committee in its discretion. Each Participant hereunder,
as a condition to his or her participation hereunder, agrees to indemnify
and hold harmless the Company, the Committee and their agents and
representatives from any losses or damages of any kind relating to the
Participant's choice of deemed investments and the investment results of
such deemed investments.
ARTICLE V
Distributions
5.1 Time of Distribution.
(a) Unless a Participant otherwise elects in accordance with the
provisions of subsection 5.1(b), or unless Section 5.3, 5.4 or 5.5 applies,
the amount credited to a Participant's Plan Account shall be distributed to
the Participant (or his Beneficiary), or distributions shall begin, on the
first day of the month next following 60 days after the date on which the
Participant's service with the Company terminates, whether such service
terminates because of death, Disability, Retirement, voluntary termination
or termination by the Company. The transfer of a Participant between the
Company and an Affiliated Entity, or between Affiliated Entities, shall not
be considered a termination of employment for purposes of this Plan.
(b) At the time a Participant elects to make Participant Deferrals in
accordance with Section 3.1 with respect to a specified Plan Year, the
Participant may also elect to receive payment of the amounts deferred under
Article III of the Plan with respect to such Plan Year, together with
Credited Earnings thereon, immediately upon termination of employment in
accordance with subsection 5.1(b) or one, three, five, ten, fifteen or
twenty years following termination of employment or, regardless of when
service terminates, after a period of three, five, ten, fifteen or twenty
years. A Participant shall also be permitted to elect to receive payment of
the Participant Deferrals with respect to a Plan Year at such other times as
may be permitted by the Committee from time to time. If a Participant makes
an election to receive payment after a specified number of years, regardless
of employment termination, then the amounts deferred under Article III with
respect to such Plan Year, together with Credited Earnings thereon, shall be
distributed to the Participant (or his Beneficiary) on the first business
day of the calendar year that is three, five, ten, fifteen or twenty years
after the calendar year of the deferrals as elected by the Participant, or
at such other time as may be elected by the Participant with the permission
of the Committee. Amounts payable under this subsection after a specified
period of years shall be paid in a lump sum, except as provided in Section
5.2.
5.2 Method and Amount of Distribution.
(a) Unless a Participant otherwise elects with respect to a Plan Year in
accordance with the provisions of this Section 5.2, or unless Section 5.4
applies, payment of all Participant Deferrals, together with Credited
Earnings, shall be made at the time determined in accordance with the
provisions of Section 5.1 in a lump sum in an amount equal to the amount
credited to his Plan Account as of the last day of the month prior to the
date of payment.
(b) At the time a Participant elects to make Participant Deferrals in
accordance with Section 3.1 with respect to a specified Plan Year, the
Participant may also elect to receive payment of the amounts deferred under
Article III of the Plan with respect to such Plan Year, together with
Credited Earnings thereon, over a three, five, ten, fifteen or twenty year
installment payout instead of a lump sum. In order to be valid, an election
under this subsection must be filed, in writing, with the Committee at least
two years before the date of the Participant's termination of service with
the Company. Payments in accordance with this subsection shall be made in
annual installments, with the first installment payable upon the first day
of the month next following 60 days after the termination of service of the
Participant, or the date specified by the Participant in accordance with the
provisions of subsection 5.1(b), as the case may be. Each annual installment
shall be determined by dividing the value of the Participant's Plan Account
as of the last day of the month prior to the date of payment by the number
of remaining annual installments to be made in accordance with the
Participant's election.
(c) Notwithstanding the foregoing provisions of this Section 5.2, in the
event of the death or Disability of the Participant, whether prior to or
following Retirement, the Participant or his Beneficiary, as the case may
be, may request a lump sum payout of the Participant's entire Plan Account.
Any such request shall be considered by the Committee, which shall have the
sole discretion to either approve such a payment or to deny such a payment.
If a lump sum payment is authorized by the Committee under these
circumstances, payment of the Participant's Plan Account, based upon the
amount credited to such Plan Account as of the last day of the month prior
to the date of payment, shall be made within 60 days after the date on which
the Committee approves such payment.
(d) During the period following a Participant's termination of employment
with the Company and before payment of his Plan Account begins, and during
the period that a Participant's Plan Account is being distributed in
accordance with an installment payout election, the Plan Account shall
continue to be credited with Credited Earnings in accordance with the
provisions of Article IV and the Participant shall be entitled to make
deemed investment elections with respect to the investment of his or her
Plan Account.
(e) Notwithstanding the foregoing provisions of this Section 5, to the
extent that a Participant's Plan Account is deemed to be invested in Company
Stock at the time that distribution commences hereunder, such distribution
shall be made, to the extent thereof, in whole shares of Company Stock,
rather than in cash, with the value of any fractional share distributed in
cash. In all other instances, a Participant's Plan Account shall be
distributed in cash.
5.3 Early Distribution With Penalty.
Instead of receiving the distribution of a Participants Plan Account at the
time and in the manner otherwise specified in this Article V, a Participant
may elect to receive his entire Plan Account in a lump sum at any time. If a
Participant so elects, the amount of his Plan Account shall be reduced by
10% as a penalty for early distribution and the amount in such Plan Account
as of the last day of the month prior to receipt by the Company of the
Participants election under this subsection, reduced by the 10% penalty
amount, shall be paid to the Participant in a lump sum within 30 days after
receipt by the Company of the Participants election. To the extent that a
Participant's Plan Account is invested in Company Stock, the lump sum
distribution shall be made in whole shares of Company Stock, with the value
of any fractional share distributed in cash. A Participant who makes such an
election shall no longer be eligible to participate in the Plan. All
elections under this section shall be made in writing, shall be effective
when delivered to the Company and shall be irrevocable once made.
5.4 Distribution Upon Change in Control.
At the time a Participant elects to make Participant Deferrals in accordance
with Section 3.1 with respect to a specified Plan Year, the Participant may
also elect to receive payment of the amounts deferred under Article III of
the Plan with respect to such Plan Year, or any or all earlier Plan Years,
together with Credited Earnings thereon, in a lump sum or over a three,
five, ten, fifteen or twenty year installment payout in the event of a
Change in Control of the Company. A Participant may also elect to commence
receiving payment in such circumstances, either immediately following the
date of the Change in Control, after a period of one, three, five, ten,
fifteen or twenty years following the date of the Participants termination
of employment, or, regardless of when service terminates, after a period of
three, five, ten, fifteen or twenty years, as elected by the Participant. A
Participant may also make such an election with respect to the payment of
his or her Plan Account in the event of a Change in Control at any other
time, provided, however, that any such election, whether in connection with
the Participants Participant Deferrals Election or otherwise, must be
received by the Company at least six months before the date of the closing
of the transaction that constitutes a Change in Control. If a Participant
does not otherwise elect, or if any such election is ineffective because
made within six months of a Change in Control, then such Participant shall
receive an immediate lump sum payment of the amount allocated to his Plan
Account as of the date of such Change in Control. Any Beneficiary receiving
payments from the Plan at the time of a Change in Control of the Company
shall receive an immediate lump sum payment of the amount allocated to his
or her Plan Account as of the date of such Change in Control. All lump sum
payments shall be made as soon as administratively possible following the
date of the Change in Control.
5.5 Hardship Distributions.
In the event of hardship endured by a Participant and recognized as such by
the Committee, and upon receipt by the Committee of a written application
for the early distribution of amounts deferred, the Committee shall direct
the distribution to the Participant of all amounts allocated to the Plan
Account to the extent reasonably required to satisfy the hardship need. For
purposes of this Plan, hardship shall mean a Participants severe,
unforeseeable financial hardship resulting from a sudden unexpected illness
or accident of the Participant (or any of his family), loss of the
Participants property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control
of the Participant. In no event may a distribution be made to the extent
that such hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, or (ii) by liquidation of the
Participants assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship. If the Committee grants a hardship
distribution pursuant to this Section 5.5, the Committee may also permit the
Participant to reduce or eliminate his deferrals under the Plan for the
remainder of the Plan Year. The Committees decision with respect to the
existence or nonexistence of hardship with respect to a particular
Participant shall be final and binding on all parties.
5.6 Source of Payments.
All amounts payable to any person under this Plan shall be paid from the
general assets of the Company as such amounts become due and payable or, in
the sole discretion of the Company, such amounts may be paid from the Trust
in accordance with the provisions of the Trust and upon the written
direction of the Company. If a Participant is employed by more than one
entity during his period of participation in the Plan, the various employers
shall agree among themselves with respect to the allocation of the
obligation to make payments to the Participant in accordance with the
provisions of this Plan.
5.7 Beneficiaries.
Each Participant shall designate one or more persons, trusts or other
entities as his Beneficiary to receive any amounts distributable hereunder
at the time of the Participants death. Such designation shall be made by the
Participant on a Beneficiary Designation Form supplied by the Committee at
his initial enrollment and may be changed from time to time by the
Participant. Any such beneficiary designation shall apply to all amounts
payable to a Participant hereunder. All payments to a Participant's
Beneficiary under the Plan shall be made at the times and in the manner
previously elected by the Participant with respect to distributions under
the Plan, except as otherwise provided in Section 5.4. In the absence of an
effective beneficiary designation as to part or all of a Participant's
interest in the Plan, such amount shall be distributed to the personal
representative of the Participant's estate.
5.8 Withholding.
All amounts payable under the provisions of this Plan to any person shall be
subject to withholding of applicable tax and other items in accordance with
federal, state and local law.
ARTICLE VI
Administration
6.1 The Committee Plan Administrator.
(a) The Company's Retirement Committee, or a subcommittee thereof
appointed by the Retirement Committee, shall serve as the Administrative
Committee for this Plan. The Committee shall administer the Plan in
accordance with its terms and purposes.
(b) The Committee may designate an individual to serve as Plan
Administrator and may at any time revoke a prior designation and select a
different individual to serve as Plan Administrator.
6.2 Committee to Administer and Interpret Plan.
The Committee shall administer the Plan and shall have all powers necessary
for that purpose, including, but not by way of limitation, power to
interpret the Plan, to determine the eligibility, status and rights of all
persons under the Plan and, in general, to decide any dispute. The Committee
shall maintain all Plan records except records of the Trust fund.
6.3 Organization of Committee.
The Committee shall adopt such rules as it deems desirable for the conduct
of its affairs and for the administration of the Plan. It may appoint agents
(who need not be members of the Committee) to whom it may delegate such
powers as it deems appropriate, except that any dispute shall be determined
by the Committee. The Committee may make its determinations with or without
meetings. It may authorize one or more of its members or agents to sign
instructions, notices and determinations on its behalf. The action of a
majority of the Committee shall constitute the action of the Committee.
6.4 Indemnification.
The Committee, the Plan Administrator and all of the other agents and
representatives of the Committee shall be indemnified and saved harmless by
the Company against any claims, and the expenses of defending against such
claims, resulting from any action or conduct relating to the administration
of the Plan, except claims judicially determined to be attributable to gross
negligence or willful misconduct.
6.5 Agent for Process.
The Committee shall be agent of the Plan for service of all process.
6.6 Determination of Committee Final.
The decisions made by the Committee shall be final and conclusive on all
persons.
6.7 The Trustee.
The Trustee shall be responsible for: (a) the investment of the Trust fund
to the extent and in the manner provided herein and in the Trust Agreement;
the custody and preservation of Trust assets delivered to it; and (c) for
making such distributions from the Trust fund as the Company shall direct.
The Trustee shall have only the responsibilities specified in this section
and in the Trust Agreement.
ARTICLE VII
Trust
7.1 Trust Agreement.
The Company and each Affiliated Entity which has adopted the Plan have each
entered into a Trust Agreement with the Trustee, which shall initially be
Fidelity Management Trust Company, to provide for the holding, investment
and administration of the funds of the Plan for the Participants who are
employed by each such entity. The Trust Agreement shall be part of the Plan,
and the rights and duties of any person under the Plan shall be subject to
all of the terms and provisions of the Trust Agreement.
7.2 Expenses of Trust.
The parties expect that the Trust will be treated as though it were not a
separate taxpaying entity for federal and state income tax purposes and
that, as a consequence, the Trust will not be subject to income tax with
respect to its income. However, if the Trust should be taxable, the Company
shall contribute the amount necessary to pay such taxes to the Trust and the
Trustee shall pay all such taxes out of the Trust. All expenses of
administering the Trust shall be paid by the Company.
ARTICLE VIII
Affiliated Entities
8.1 Adoption of Plan.
Any Affiliated Entity, whether or not presently existing, may with the
consent of the Committee become a party to the Plan by adopting the Plan for
one or more of its highly- compensated and select management employees. In
accordance with the provisions of Section 2.1, the Committee shall have the
sole discretion to determine which employees of such an Affiliated Entity,
if any, may participate in the Plan. Thereafter, such Affiliated Entity
shall promptly deliver to the Company a copy of the document evidencing its
adoption of the Plan. The Company and each such Affiliated Entity shall
enter into such written agreements as they may consider necessary and
appropriate in order to allocate the responsibility for payments due under
the provisions of the Plan with respect to employees who transfer employment
between participating employers.
8.2 Agency of the Company.
Each Affiliated Entity by becoming a party to the Plan constitutes the
Company its agent with authority to act for it in all transactions in which
the Company believes such agency will facilitate the administration of the
Plan and with authority to amend and terminate the Plan.
8.3 Disaffiliation and Withdrawal From Plan.
Any Affiliated Entity which has adopted the Plan and which thereafter ceases
for any reason to be an Affiliated Entity shall forthwith cease to be a
party to the Plan. Any Affiliated Entity may, by resolution of its governing
body and written notice thereof to the Company provide from and after the
end of any plan year for the discontinuance of Plan participation by such
employer and its employees.
8.4 Effect of Disaffiliation or Withdrawal.
At the time of disaffiliation or withdrawal, the disaffiliating or
withdrawing employer shall by resolution of its governing body determine
whether to continue the Plan for its covered employees or to terminate the
Plan as to such employees.
ARTICLE IX
Amendment and Termination
9.1 Termination of Deferrals.
The Company, through action of its Board of Directors, may terminate future
Participant Deferrals under the Plan at any time, for any reason. If
deferrals are discontinued, the Plan and Trust shall continue to operate in
accordance with their respective terms and distributions shall be made to
Participants (and Beneficiaries) in accordance with the provisions of the
Plan.
9.2 Termination of Plan.
The Company and each Affiliated Entity which has adopted the Plan expect to
continue this Plan indefinitely, but the Company and each such Affiliated
Entity may terminate this Plan as to its employees at any time.
Notwithstanding the foregoing, the Company and each such Affiliated Entity
shall not terminate this Plan as to its employees solely for the purpose of
accelerating the distribution of benefits to its employees.
9.3 Benefits Distributable Upon Termination.
Notwithstanding 9.1 above, the Company or the Affiliated Entity, as the case
may be, shall distribute, or cause the Trustee to distribute, all benefits
that have accrued under the Plan for Participants employed by the entity
that terminates its participation in the Plan, together with all benefits
that have accrued under the Plan for former Participants or Beneficiaries,
as of the date of termination of the Plan, with such benefits computed and
distributed as though all Participants terminated employment with the
Company or the Affiliated Entity on the date of Plan termination.
9.4 Amendment by Company.
The Company may amend this Plan at any time and from time to time, but no
amendment shall reduce any benefit that has accrued on the effective date of
the amendment.
ARTICLE X
Miscellaneous
10.1 Funding of Benefits - No Fiduciary Relationship.
All benefits payable under this Plan shall be distributed as they become due
and payable either by the Company out of its general assets or from the
Trust, as determined by the Company in its sole discretion. The Company and
each Affiliated Entity that adopts the Plan pursuant to Article VIII shall
be responsible for providing the benefits only for its own employees who are
Participants in the Plan. Nothing contained in this Plan shall be deemed to
create any fiduciary relationship between the Company and the Participants.
To the extent that any person acquires a right to receive benefits under
this Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company.
10.2 Reimbursement for Certain Expenses.
The Plan and Trust have been established with the intent and understanding
that, for federal income tax purposes, Participants in the Plan will not be
subject to tax with respect to their participation in the Plan until such
time as distributions are actually made to the Participants in accordance
with the provisions of the Plan. If a Participant is treated by the Internal
Revenue Service as having received income with respect to the Plan in a year
prior to the actual receipt of distributions under the Plan, the Company
shall reimburse the Participant for all reasonable legal and accounting
costs incurred by the Participant in contesting such proposed treatment.
10.3 Right to Terminate Employment.
The Company and each Affiliated Entity may terminate the employment of any
Participant as freely and with the same effect as if this Plan were not in
existence.
10.4 Inalienability of Benefits.
No Participant shall have the right to assign, transfer, hypothecate,
encumber or anticipate his interest in any benefits under this Plan, nor
shall the benefits under this Plan be subject to any legal process to levy
upon or attach the benefits for payment for any claim against the
Participant or his spouse. If any Participants benefits are garnished or
attached by the order of any court, the Company may bring an action for
declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be distributed pursuant to the Plan.
During the pendency of the action, any benefits that become distributable
shall be paid into the court as they become distributable, to be distributed
by the court to the recipient it deems proper at the conclusion of the
action. Notwithstanding the foregoing provisions of this Section 10.4, a
Participant shall have the right to assign any amounts that may become
payable hereunder for any reason other than the death of the Participant to
a revocable trust of which the Participant is the grantor or a family
partnership controlled by the Participant, provided that any such assignment
shall not enable the Participant to anticipate or otherwise receive current
economic benefit from such assignment.
10.5 Claims Procedure.
(a) All claims shall be filed in writing by the Participant, his spouse or
the authorized representative of the claimant, by completing such procedures
as the Committee shall require. Such procedures shall be reasonable and may
include the completion of forms and the submission of documents and
additional information.
(b) If a claim is denied, notice of denial shall be furnished by the
Committee to the claimant within 90 days after the receipt of the claim by
the Committee, unless special circumstances require an extension of time for
processing the claim, in which event notification of the extension shall be
provided to the Participant or beneficiary and the extension shall not
exceed 90 days.
(c) The Committee shall provide adequate notice, in writing, to any
claimant whose claim has been denied, setting forth the specific reasons for
such denial, specific reference to pertinent Plan provisions, a description
of any additional material or information necessary for the claimant to
perfect his claims and an explanation of why such material or information is
necessary, all written in a manner calculated to be understood by the
claimant. Such notice shall include appropriate information as to the steps
to be taken if the claimant wishes to submit his claim for review. The
claimant or the claimants authorized representative may request such review
within the reasonable period of time prescribed by the Committee. In no
event shall such a period of time be less than 60 days. A decision on review
shall be made not later than 60 days after the Committees receipt of the
request for review. If special circumstances require a further extension of
time for processing, a decision shall be rendered not later than 120 days
following the Committees receipt of the request for review. If such an
extension of time for review is required, written notice of the extension
shall be furnished to the claimant prior to the commencement of the
extension. The decision on review shall be furnished to the claimant. Such
decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant,
as well as specific references to the pertinent Plan provisions on which the
decision is based.
10.6 Disposition of Unclaimed Distributions.
Each Participant must file with the Company from time to time in writing his
address and each change of address. Any communication, statement or notice
addressed to a Participant at his last address filed with the Company, or if
no address is filed with the Company, then at his last address as shown on
the Company's records, will be binding on the Participant and his spouse for
all purposes of the Plan. The Company shall not be required to search for or
locate a Participant or his spouse. If the Committee notifies a Participant
(or Beneficiary) that he is entitled to a distribution and also notifies him
of the provisions of this section, and the individual fails to claim his
benefits under this Plan or make his address known to the Committee within
five calendar years after the notification, the benefits under the Plan of
such individual shall be forfeited as of the end of the Plan Year coincident
with or following the five year waiting period. If the individual should
later make a claim for his forfeited benefit, the Company shall cause the
amount of the forfeited benefit to be distributed to the individual, either
through a direct payment by the Company or through a payment from the Trust.
10.7 Distributions Due Minors or Incompetents.
If any person entitled to a distribution under the Plan is a minor, or if
the Committee determines that any such person is incompetent by reason of
physical or mental disability, whether or not legally adjudicated an
incompetent, the Committee shall have the power to cause the distributions
becoming due to such person to be made to another for his or her benefit,
without responsibility of the Committee or the Trustee to see to the
application of such distributions. Distributions made pursuant to such power
shall operate as a complete discharge of the Company, the Trust fund, the
Trustee and the Committee.
10.8 Governing Law.
This Plan shall be governed by the laws of the State of Colorado.
Dated: _____________________
ATTEST: ADOLPH COORS COMPANY
By:__________________________
By:__________________________
TABLE OF CONTENTS Page
RECITALS 1
ARTICLE I Definitions 1
1.1 Affiliated Entity 1
1.2 Base Salary 1
1.3 Beneficiary 1
1.4 Change in Control 1
1.5 Committee 3
1.7 "Company Stock" 3
1.8 Compensation 4
1.9 Credited Earnings 4
1.10 Disability 4
1.11 Election Agreement 4
1.12 Executive Bonus 4
1.13 Participant 4
1.14 Participant Deferrals 4
1.15 Plan Account 4
1.16 Plan Year 4
1.17 Retirement 4
1.18 "Stock Option" 5
1.19 Trust 5
1.20 Trust Agreement 5
1.21 Trustee 5
ARTICLE II Eligibility and Participation 5
2.1 Eligibility and Participation 5
2.2 Enrollment 5
2.3 Failure of Eligibility 5
ARTICLE III Contribution Deferrals 6
ARTICLE IV Accounting and Investments 6
4.1 Accounting 6
4.2 Deemed Investment Elections 6
ARTICLE V Distributions 7
5.1 Time of Distribution 7
5.2 Method and Amount of Distribution 8
5.3 Early Distribution With Penalty 9
5.4 Distribution Upon Change in Control 9
5.5 Hardship Distributions 10
5.6 Source of Payments 10
5.7 Beneficiaries 10
5.8 Withholding 10
ARTICLE VI Administration 11
6.1 The Committee Plan Administrator 11
6.2 Committee to Administer and Interpret Plan 12
6.3 Organization of Committee. 12
6.4 Indemnification 12
6.5 Agent for Process 12
6.6 Determination of Committee Final 12
6.7 The Trustee 12
ARTICLE VII Trust 13
7.1 Trust Agreement 13
7.2 Expenses of Trust 13
ARTICLE VIII Affiliated Entities 13
8.1 Adoption of Plan 13
8.2 Agency of the Company 13
8.3 Disaffiliation and Withdrawal From Plan 14
8.4 Effect of Disaffiliation or Withdrawal 14
ARTICLE IX Amendment and Termination 14
9.1 Termination of Deferrals 14
9.2 Termination of Plan 14
9.3 Benefits Distributable Upon Termination 14
9.4 Amendment by Company 15
ARTICLE X Miscellaneous 15
10.1 Funding of Benefits - No Fiduciary Relationship 15
10.2 Reimbursement for Certain Expenses 15
10.3 Right to Terminate Employment 15
10.4 Inalienability of Benefits 15
10.5 Claims Procedure 16
10.6 Disposition of Unclaimed Distributions 16
10.7 Distributions Due Minors or Incompetents 17
10.8 Governing Law 17
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>6
<FILENAME>exhibiteqincent.txt
<DESCRIPTION>EQUITY INCENTIVE
<TEXT>
ADOLPH COORS COMPANY
EQUITY INCENTIVE PLAN
Amended and restated,
effective February 16, 2001
TABLE OF CONTENTS Page
Section 1 - Introduction 1
1.1 Establishment and Amendment 1
1.2 Purposes 1
1.3 Effective Date 1
Section 2 - Definitions 1
2.1 Definitions 1
2.2 Gender and Number 2
Section 3 - Plan Administration 2
3.1 General 2
3.2 Delegation by Committee 3
3.3 Claims 3
Section 4 - Stock Subject to the Plan 3
4.1 Number of Shares 3
4.2 Other Shares of Stock 4
4.3 Adjustments for Stock Split, Stock Dividend, Etc 4
4.4 Other Distributions and Changes in the Stock 4
4.5 General Adjustment Rules 4
4.6 Determination by the Committee, Etc 4
Section 5 - Reorganization or Liquidation 4
5.1 Adjustment of Awards 5
Section 6 - Participation 6
6.1 In General 6
6.2 Restriction on Award Grants to Certain Individuals 7
6.3 General Restrictions on Awards 7
Section 7 - Stock Options 7
7.1 Grant of Stock Options 7
7.2 Stock Option Certificates 7
7.3 Shareholder Privileges 10
Section 8 - Restricted Stock Awards 10
8.1 Grant of Restricted Stock Awards 10
8.2 Restrictions 10
8.3 Privileges of a Stockholder, Transferability 10
8.4 Enforcement of Restrictions 10
Section 9 - Purchase of Stock 11
9.1 General 11
9.2 Other Terms 11
Section 10 - Other Common Stock Grants 11
Section 11 - Company Right To Purchase Stock 11
11.1 Right of First Refusal 11
11.2 Marking of Certificates 12
Section 12 - Change in Control 12
12.1 In General 12
12.2 Limitation on Payments 12
Section 13 - Rights of Employees; Participants 13
13.1 Employment 13
13.2 Nontransferability 13
Section 14 - General Restrictions 14
14.1 Investment Representations 14
14.2 Compliance with Securities Laws 14
14.3 Changes in Accounting Rules 14
Section 15 - Other Employee Benefits 14
Section 16 - Plan Amendment, Modification and Termination 14
Section 17 - Withholding 15
17.1 Withholding Requirement 15
17.2 Withholding With Stock 15
Section 18 - Requirements of Law 15
18.1 Requirements of Law 15
18.2 Federal Securities Law Requirements 15
18.3 Governing Law 15
Section 19 - Duration of the Plan. 15
ADOLPH COORS COMPANY
EQUITY INCENTIVE PLAN
Amended and restated,
effective February 16, 2001
Section 1
Introduction
1.1 Establishment and Amendment. Adolph Coors Company, a Colorado
corporation (hereinafter referred to, together with its Affiliated
Corporations (as defined in subsection 2.1(a)) as the "Company" except
where the context otherwise requires), has established the Adolph Coors
Company Equity Incentive Plan (the "Plan") for certain employees of the
Company. The Plan, which permits the grant of stock options and restricted
stock awards to certain employees of the Company, was originally effective
January 1, 1990. Pursuant to the power granted in Section 16, the Company
hereby amends and restates the Plan in its entirety.
1.2 Purposes. The purposes of the Plan are to provide the employees
selected for participation in the Plan with added incentives to continue in
the service of the Company and to create in such employees a more direct
interest in the future success of the operations of the Company by relating
incentive compensation to the achievement of long-term corporate economic
objectives, so that the income of such employees is more closely aligned
with the income of the Company's shareholders. The Plan is also designed to
attract employees and to retain and motivate participating employees by
providing an opportunity for investment in the Company.
1.3 Effective Date. The original effective date of the Plan (the
"Effective Date") was January 1, 1990. The Plan as hereby amended and
restated in its entirety, is effective February 16, 2001. The Plan, as
amended and restated, and each option or other award granted hereunder is
conditioned on and shall be of no force or effect until approval of the Plan
by the holders of the shares of voting stock of the Company unless the
Company, on the advice of counsel, determines that shareholder approval is
not necessary.
Section 2
Definitions
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Adolph
Coors Company through stock ownership or otherwise and is designated as an
"Affiliated Corporation" by the Board.
(b) "Award" means an Option or a Restricted Stock Award issued hereunder,
an offer to purchase Stock made hereunder, or a grant of Stock made
hereunder.
(c) "Board" means the Board of Directors of the Company.
(c) "Committee" means a committee consisting of members of the Board who
are empowered hereunder to take actions in the administration of the Plan.
Members of the Committee shall be appointed from time to time by the Board,
shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board.
(e) "Effective Date" means the original effective date of the Plan,
January 1, 1990.
(f) "Eligible Employees" means those employees (including, without
limitation, officers and members of the Board who are also employees) of the
Company or any division thereof, upon whose judgment, initiative and efforts
the Company is, or will become, largely dependent for the successful conduct
of their business. For purposes of the Plan, an employee is any individual
who provides services to the Company or any subsidiary or division thereof
as a common law employee and whose remuneration is subject to the
withholding of federal income tax pursuant to section 3401 of the Code.
Employee shall not include any individual (i) who provides services to the
Company or any subsidiary or division thereof under an agreement, contract,
or any other arrangement pursuant to which the individual is initially
classified as an independent contractor or (ii) whose remuneration for
services has not been treated initially as subject to the withholding of
federal income tax pursuant to section 3401 of the Code even if the
individual is subsequently reclassified as a common law employee as a result
of a final decree of a court of competent jurisdiction or the settlement of
an administrative or judicial proceeding. Leased employees shall not be
treated as employees under this Plan.
(g) "Fair Market Value" means the average of the high and low sales prices
for a share of Stock on the New York Stock Exchange on a particular date. If
there are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions. In the event that the method for determining the Fair Market
Value of a share of Stock provided for above shall not be practicable, then
such Fair Market Value shall be determined by such other reasonable
valuation method as the Committee shall, in its discretion, select and apply
in good faith as of the given date. If, upon exercise of an Option, the
exercise price is paid by a broker's transaction as provided in section
7.2(g)(ii)(D), Fair Market Value, for purposes of the exercise, shall be the
price at which the Stock is sold by the broker.
(h) "Internal Revenue Code" means the Internal Revenue Code of 1986, as it
may be amended from time to time.
(i) "Option" means a right to purchase Stock at a stated price for a
specified period of time. All Options granted under the Plan shall be "non-
qualified stock options" whose grant is not intended to fall under the
provisions of Section 422A of the Internal Revenue Code.
(j) "Option Price" means the price at which shares of Stock subject to an
Option may be purchased, determined in accordance with subsection 7.2(b).
(k) "Participant" means an Eligible Employee designated by the Committee
from time to time during the term of the Plan to receive one or more of the
Awards provided under the Plan.
(l) "Restricted Stock Award" means an award of Stock granted to a
Participant pursuant to Section 8 that is subject to certain restrictions
imposed in accordance with the provisions of such Section.
(m) "Stock" means the no par value Class B (non-voting) Common Stock of
the Company.
(n) "Voting Stock" means the $1.00 par value Class A Common Stock of the
Company.
2.2 Gender and Number tc \l2 "2.2 Gender and Number . Except when
otherwise indicated by the context, the masculine gender shall also include
the feminine gender, and the definition of any term herein in the singular
shall also include the plural.
Section 3
Plan Administration
3.1 General. The Plan shall be administered by the Committee. In
accordance with the provisions of the Plan, the Committee shall, in its sole
discretion, select the Participants from among the Eligible Employees,
determine the Options, Restricted Stock Awards and other Awards to be
granted pursuant to the Plan, the number of shares of Stock to be issued
thereunder and the time at which such Options and Restricted Stock Awards
are to be granted, fix the Option Price, period and manner in which an
Option becomes exercisable, establish the duration and nature of Restricted
Stock Award restrictions, establish the terms and conditions on which an
offer to purchase Stock will be made, and establish such other terms and
requirements of the various compensation incentives under the Plan as the
Committee may deem necessary or desirable and consistent with the terms of
the Plan. The Committee shall determine the form or forms of the agreements
with Participants which shall evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Participants with
respect to Awards granted pursuant to the Plan, which provisions need not be
identical except as may be provided herein. The Committee may from time to
time adopt such rules and regulations for carrying out the purposes of the
Plan as it may deem proper and in the best interests of the Company. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement entered into hereunder in the
manner and to the extent it shall deem expedient and it shall be the sole
and final judge of such expediency. No member of the Committee shall be
liable for any action or determination made in good faith. The
determinations, interpretations and other actions of the Committee pursuant
to the provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.
3.2 Delegation by Committee. The Committee may, from time to time,
delegate, to specified officers of the Company, the power and authority to
grant Awards under the Plan to specified groups of employees, subject to
such restrictions and conditions as the Committee, in its sole discretion,
may impose. The delegation shall be as broad or as narrow as the Committee
shall determine. To the extent that the Committee has delegated the
authority to determine certain terms and conditions of an Award, all
references in the Plan to the Committee's exercise of authority in
determining such terms and conditions shall be construed to include the
officer or officers to whom the Committee has delegated the power and
authority to make such determination. The power and authority to grant
Awards to any employee who is covered by Section 16(b) of the Securities and
Exchange Act of 1934 (the "1934 Act") shall not be delegated by the
Committee.
3.3 Claims.
(a) A Participant who wishes to appeal any determination of the Committee
concerning an Award granted pursuant to the Plan shall notify the Committee
in a writing, which shall state the basis for the appeal. The appeal shall
be filed with the Committee within 30 days after the date the Participant
received the notice from the Committee. The written appeal may be filed by
the Participant's authorized representative. The Committee shall review the
appeal and issue its decision within 90 days after it receives the
Participant's appeal. If the Committee needs additional time to review the
appeal, it shall notify the Participant in writing and specify when it
expects to render its decision. After completion of its review, the
Committee shall notify the Participant of its decision in writing, which
shall state the reasons for the Committee's decision.
(b) If, after the completion of the procedure set forth in the preceding
paragraph, the Participant wishes to further pursue the appeal, the appeal
shall be submitted to, and determined through, binding arbitration in
Denver, Colorado in accordance with the arbitration procedures of the
American Arbitration Association ("AAA") existing at the time the
arbitration is conducted, before a single arbitrator chosen in accordance
with AAA procedures. The decision of the arbitrator shall be enforceable as
a court judgment.
Section 4
Stock Subject to the Plan
4.1 Number of Shares. Ten Million Seven Hundred and Fifty Thousand
(10,750,000) shares of Stock are authorized for issuance under the Plan in
accordance with the provisions of the Plan and subject to such restrictions
or other provisions as the Committee may from time to time deem necessary.
This authorization may be increased from time to time by approval of the
Board and by the shareholders of the Company if, in the opinion of counsel
for the Company, such shareholder approval is required. Shares of Stock that
may be issued upon exercise of Options, that are issued as Restricted Stock
Awards, that are purchased under the Plan, and that are used as incentive
compensation under the Plan shall be applied to reduce the maximum number of
shares of Stock remaining available for use under the Plan. The Company
shall at all times during the term of the Plan and while any Options are
outstanding retain as authorized and unissued Stock at least the number of
shares from time to time required under the provisions of the Plan, or
otherwise assure itself of its ability to perform its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to an
Option that expires or for any reason is terminated unexercised, any shares
of Stock that are subject to an Award (other than an Option) and that are
forfeited, any shares of Stock withheld for the payment of taxes or received
by the Company as payment of the exercise price of an Option and any shares
of Stock that for any other reason are not issued to an Eligible Employee or
are forfeited shall automatically become available for use under the Plan.
However, any shares of Stock that are subject to an Award (other than an
Option) and that are forfeited and any shares of Stock that are withheld for
the payment of taxes or received by the Company as payment of the exercise
price of an Option shall be available for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall
at any time increase or decrease the number of its outstanding shares of
Stock or change in any way the rights and privileges of such shares by means
of the payment of a stock dividend or any other distribution upon such
shares payable in Stock, or through a stock split, subdivision,
consolidation, combination, reclassification or recapitalization involving
the Stock, then in relation to the Stock that is affected by one or more of
the above events, the numbers, rights and privileges of the following shall
be increased, decreased or changed in like manner as if they had been issued
and outstanding, fully paid and nonassessable at the time of such
occurrence: (i) the shares of Stock as to which Awards may be granted under
the Plan; (ii) the shares of the Stock then included in each outstanding
Award granted hereunder; and (iii) the maximum number of Shares available
for grant to any one person pursuant to Section 6.3 of the Plan.
4.4 Other Distributions and Changes in the Stock. If
(a) the Company shall at any time distribute with respect to the Stock
assets or securities of persons other than the Company (excluding cash or
distributions referred to in Section 4.3),
(b) the Company shall at any time grant to the holders of its Stock rights
to subscribe pro rata for additional shares thereof or for any other
securities of the Company, or
(d) there shall be any other change (except as described in Section 4.3),
in the number or kind of outstanding shares of Stock or of any stock or
other securities into which the Stock shall be changed or for which it shall
have been exchanged,
and if the Committee shall in its discretion determine that the event
described in subsection (a), (b), or (c) above equitably requires an
adjustment in the number or kind of shares subject to an Option or other
Award, an adjustment in the Option Price or the taking of any other action
by the Committee, including without limitation, the setting aside of any
property for delivery to the Participant upon the exercise of an Option or
the full vesting of an Award, then such adjustments shall be made, or other
action shall be taken, by the Committee and shall be effective for all
purposes of the Plan and on each outstanding Option or Award that involves
the particular type of stock for which a change was effected.
Notwithstanding the foregoing provisions of this Section 4.4, pursuant to
Section 8.3 below, a Participant holding Stock received as a Restricted
Stock Award shall have the right to receive all amounts, including cash and
property of any kind, distributed with respect to the Stock upon the
Participant's becoming a holder of record of the Stock.
4.4 General Adjustment Rules. No adjustment or substitution provided for
in this Section 4 shall require the Company to sell a fractional share of
Stock under any Option, or otherwise issue a fractional share of Stock, and
the total substitution or adjustment with respect to each Option and other
Award shall be limited by deleting any fractional share. In the case of any
such substitution or adjustment, the total Option Price for the shares of
Stock then subject to the Option shall remain unchanged but the Option Price
per share under each such Option shall be equitably adjusted by the
Committee to reflect the greater or lesser number of shares of Stock or
other securities into which the Stock subject to the Option may have been
changed, and appropriate adjustments shall be made to Restricted Stock
Awards to reflect any such substitution or adjustment.
4.5 Determination by the Committee, Etc. Adjustments under this Section 4
shall be made by the Committee, whose determinations with regard thereto
shall be final and binding upon all parties thereto.
Section 5
Reorganization or Liquidation
5.1 Adjustment of Awards.
(a) Upon the occurrence of a Corporate Transaction (as defined in
subsection 5.1(b)), and if the provisions of Section 12 do not apply, the
Committee, or the board of directors of any corporation assuming the
obligations of the Company, shall, as to the Plan and outstanding Options
and other Awards, either (i) make appropriate provision for the adoption and
continuation of the Plan by the acquiring or successor corporation and for
the protection of any such outstanding Options and other Awards by the
substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation that will be
issuable with respect to the Stock, provided that the excess of the
aggregate Fair Market Value of the shares subject to the Options immediately
after such substitution over the Option Price thereof is not more than the
excess of the aggregate Fair Market Value of the shares subject to such
Options immediately before such substitution over the Option Price thereof,
or (ii) upon written notice to the Participants, provide that all
unexercised Options must be exercised within a specified number of days of
the date of such notice or they will be terminated. In the latter event, the
Committee shall accelerate the exercise dates of outstanding Options and
accelerate the restriction period and modify the performance requirements
for any outstanding Awards so that all Options and other Awards become fully
vested prior to any such Corporate Transaction, provided, however, that any
acceleration shall be subject to the limitations and provisions of Section
12.2.
(b) Corporate Transaction. A Corporate Transaction shall include any of
the following:
(i) with the consent of the Board, a Person other than Existing
Shareholders or a Person controlled by Existing Shareholders becomes the
ultimate Beneficial Owner of more than 20% of the total voting power of the
Voting Stock of the Company and such ownership represents a greater
percentage of the total voting power of the Voting Stock of the Company than
is Beneficially Owned by Existing Shareholders on such date; except the
following acquisitions are not a Corporate Transaction: (A) an acquisition
of Voting Stock by the Company or one of its wholly-owned subsidiaries or
(B) an acquisition of Voting Stock that meets the conditions in clauses (A),
(B) and (C) of paragraph (ii) of this Section 5.1(b) below, or (C) an
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or by any corporation controlled by the Company;
(ii) the Company consolidates with, or merges with or into, another Person
or the Company or a subsidiary of the Company sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person in a transaction that would require approval of the
Company's shareholders under Section 7-112-101 and 7-112-102 of the Colorado
Business Corporation Act (except a transfer to an entity wholly-owned by the
Company or one of its wholly-owned subsidiaries), or any Person consolidates
with, or merges with or into, the Company, (each a "Business Combination")
unless, immediately following such Business Combination, (A) all or
substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the Company Common Stock and Company Voting Stock
immediately prior to such Business Combination Beneficially Own, directly or
indirectly, 50% or more of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding Voting
Stock of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such
transaction owns the Company and all or substantially all of the Company's
assets either directly or though one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination of the Company Common Stock and Company Voting Stock, (B) no
Person (other than (1) Existing Shareholders and any Person controlled by
Existing Shareholders, (2) any corporation resulting from such Business
Combination or (3) any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
Beneficially Owns, directly or indirectly, 20% or more of the then-
outstanding voting power of the Voting Stock of such corporation and
Beneficially Owns a greater percentage of the voting power of such Voting
Stock of such Person than the Existing Shareholders and any Person
controlled by Existing Shareholders and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Board at the time of the action of
the Board, if any, providing for such Business Combination or if there was
not such action, on the effective date of this amended and restated Plan; or
(iii) with the consent of the Board individuals who, on the effective date
of this amended and restated Plan, constitute the Board (together with any
thereafter elected directors whose election by the Board or whose nomination
by the Board for election by the Company's shareholders was approved by a
vote of at least a majority of the members of the Board then in office who
either were members of the Board on the effective date of this amended and
restated Plan, or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the members of
the Board then in office.
(c) For purposes of subsection 5.1(b) and Section 12.3, the following
definitions are applicable:
(i) Beneficial Owner and Beneficially Own" mean beneficial ownership as
defined in Rules 13d-3 and 13d-5 under the 1934 Act, except that a person
shall be deemed to beneficially own all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time.
(ii) "Company Common Stock" means the Company's Class B Common Stock and
any other common stock (whether voting or non-voting) that may be hereafter
issued.
(iii) "Existing Shareholder" means the Adolph Coors, Jr. Trust, any
individual who or entity which has been, is or in the future becomes a
trustee thereof or any beneficiary thereof, any other trust the primary
beneficiaries of which are descendants of Adolph Coors, Sr. or spouses or
former spouses of such descendants, and/or any individual who or entity
which has been, is or in the future becomes a trustee of any such trusts or
any beneficiary thereof.
(iv) "Person" means any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the 1934 Act).
(v) "Voting Stock" means any and all shares, interests, participations,
rights in or other equivalents of capital stock and warrants or options
exchangeable for or convertible into such capital stock which ordinarily has
the power to vote for the election of directors, managers or other voting
members of the governing body (the "Governing Board") of a Person. If any
members of the Governing Board are elected by classes of common stock voting
as separate classes, Voting Stock shall mean the stock of the class of
common stock entitled to elect the majority of the Governing Board,
provided, if the separate classes are entitled to elect equal numbers of the
Governing Board, then all such shares of common stock shall be deemed to be
Voting Stock, but the voting power of Voting Stock held by a Person
(including the Existing Shareholders) shall be separately calculated for
each class and the result for each class shall be deemed to be Beneficial
Ownership of Voting Stock of the Company.
Section 6
Participation
6.1 In General. Participants in the Plan shall be those Eligible Employees
who, in the judgment of the Committee, are performing, or during the term of
their incentive arrangement will perform, vital services in the management,
operation and development of the Company or an Affiliated Corporation, and
significantly contribute, or are expected to significantly contribute, to
the achievement of long-term corporate economic objectives. Participants may
be granted from time to time one or more Awards; provided, however, that the
grant of each such Award shall be separately approved by the Committee, and
receipt of one such Award shall not result in automatic receipt of any other
Award. Upon determination by the Committee that an Award is to be granted to
a Participant, written notice shall be given to such person, specifying the
terms, conditions, rights and duties related thereto. Each Participant
shall, if required by the Committee, enter into an agreement with the
Company, in such form as the Committee shall determine and that is
consistent with the provisions of the Plan, specifying such terms,
conditions, rights and duties. Awards shall be deemed to be granted as of
the date specified in the grant resolution of the Committee, which date
shall be the date of any related agreement with the Participant. In the
event of any inconsistency between the provisions of the Plan and any such
agreement entered into hereunder, the provisions of the Plan shall govern.
6.2 Restriction on Award Grants to Certain Individuals. Notwithstanding
the foregoing provisions of Section 6.1, no Awards shall be granted to any
lineal descendant of Adolph Coors, Jr. without the prior written approval of
counsel to the Company as to the effect of any such grant on the possible
status of the Company as a "personal holding company" within the meaning of
Section 542 of the Internal Revenue Code.
6.3 General Restrictions on Awards. Awards covering no more than 500,000
shares of Stock may be granted to any Participant under this Plan during any
calendar year.
Section 7
Stock Options
7.1 Grant of Stock Options. Coincident with or following designation for
participation in the Plan, a Participant may be granted one or more Options.
In no event shall the exercise of one Option affect the right to exercise
any other Option or affect the number of shares of Stock for which any other
Option may be exercised, except as provided in subsection 7.2(j).
7.2 Stock Option Certificates. Each Option granted under the Plan shall be
evidenced by a written stock option certificate or agreement. A stock option
certificate or agreement shall be issued by the Company in the name of the
Participant to whom the Option is granted (the "Option Holder") and shall
incorporate and conform to the conditions set forth in this Section 7.2, as
well as such other terms and conditions, not inconsistent herewith, as the
Committee may consider appropriate in each case.
(a) Number of Shares. Each stock option certificate or agreement shall
state that it covers a specified number of shares of the Stock, as
determined by the Committee.
(b) Price. The price at which each share of Stock covered by an Option may
be purchased shall be determined in each case by the Committee and set forth
in the stock option certificate or agreement.
(c) Duration of Options; Restrictions on Exercise. Each stock option
certificate or agreement shall state the period of time, determined by the
Committee, within which the Option may be exercised by the Option Holder
(the "Option Period"), and shall also set forth any installment or other
restrictions on Option exercise during such period, if any, as may be
determined by the Committee.
(d) Termination of Employment, Death, Disability, Etc. The Committee may
specify and cause to be reflected in the Option certificate or agreement the
period, if any, during which an Option may be exercised following
termination of the Option Holder's services. The effect of this subsection
7.2(d) shall be limited to determining the consequences of a termination and
nothing in this subsection 7.2(d) shall restrict or otherwise interfere with
the Company's discretion with respect to the termination of any individual's
services. If the Committee does not otherwise specify, the following shall
apply:
(i) If the employment of the Option Holder is terminated within the Option
Period for cause, as determined by the Company, the Option shall thereafter
be void for all purposes. As used in this subsection 7.2(d)(i), "cause"
shall mean a gross violation, as determined by the Company, of the Company's
established policies and procedures.
(ii) If the Option Holder retires from employment by the Company or its
affiliates during the Option Period pursuant to the Company's retirement
policy, or if the Option Holder becomes disabled (as determined pursuant to
the Company's Long-Term Disability Plan), the Option may be exercised by the
Option Holder, or in the case of death by the persons specified in
subsection (iii) of this subsection 7.2(d), within thirty-six months
following his or her retirement or disability (provided that such exercise
must occur within the Option Period), but not thereafter. In any such case,
the Option may be exercised only as to the shares as to which the Option had
become exercisable on or before the date of the Option Holder's termination
of employment.
(iv) If the Option Holder dies during the Option Period while still
employed or within the one year period referred to in (iv) below, or within
the thirty-six-month period referred to in (ii) above, the Option may be
exercised by those entitled to do so under the Option Holder's will or by
the laws of descent and distribution within fifteen months following the
Option Holder's death, (provided that such exercise must occur within the
Option Period), but not thereafter. In any such case, the Option may be
exercised only as to the shares as to which the Option had become
exercisable on or before the date of the Option Holder's death.
(iv) If the employment of the Option Holder by the Company is terminated
(which for this purpose means that the Option Holder is no longer employed
by the Company or by an Affiliated Corporation) within the Option Period for
any reason other than cause, retirement pursuant to the Company's retirement
policy, disability or the Option Holder's death, the Option may be exercised
by the Option Holder within one year following the date of such termination
(provided that such exercise must occur within the Option Period), but not
thereafter. In any such case, the Option may be exercised only as to the
shares as to which the Option had become exercisable on or before the date
of termination of employment.
(e) Transferability.
(i) Except as specifically provided in subsection 7.2(e)(ii) below, an
Option shall not be transferable by the Option Holder except by will or
pursuant to the laws of descent and distribution. An Option shall be
exercisable during the Option Holder's lifetime only by him or her, or in
the event of Disability or incapacity, by his or her guardian or legal
representative. The Option Holder's guardian or legal representative shall
have all of the rights of the Option Holder under this Plan.
(ii) The Committee may, however, provide at the time of grant or thereafter
that the Option Holder may transfer an Option to a member of the Option
Holder's immediate family, a trust of which members of the Option Holder's
immediate family are the only beneficiaries, or a partnership of which
members of the Option Holder's immediate family or trusts for the sole
benefit of the Option Holder's immediate family are the only partners (the
"InterVivos Transferee"). Immediate family means the Option Holder's spouse,
issue (by birth or adoption), parents, grandparents, siblings (including
half brothers and sisters and adopted siblings) and nieces and nephews. No
transfer shall be effective unless the Option Holder shall have notified the
Company of the transfer in writing and has furnished a copy of the documents
that effect the transfer to the Company. The InterVivos Transferee shall be
subject to all of the terms of this Plan and the Option, including, but not
limited to, the vesting schedule, termination provisions, and the manner in
which the Option may be exercised. The Committee may require the Option
Holder and the InterVivos Transferee to enter into an appropriate agreement
with the Company providing for, among other things, the satisfaction of
required tax withholding with respect to the exercise of the transferred
Option and the satisfaction of any Stock retention requirements applicable
to the Option Holder, together with such other terms and conditions as may
be specified by the Committee. Except to the extent provided otherwise in
such agreement, the InterVivos Transferee shall have all of the rights and
obligations of the Option Holder under this Plan.
(f) Agreement to Continue in Employment. Each stock option certificate or
agreement shall contain the Option Holder's agreement to remain in the
employment of the Company, at the pleasure of the Company, for a continuous
period of at least one year after the date of such stock option agreement,
at the salary rate in effect on the date of such agreement or at such
changed rate as may be fixed, from time to time, by the Company.
(g) Exercise, Payments, Etc.
(i) Each stock option certificate or agreement shall provide that the
method for exercising the Option granted therein shall be by delivery to the
Corporate Secretary of the Company of written notice specifying the number
of shares with respect to which such Option is exercised and payment of the
Option Price. Such notice shall be in a form satisfactory to the Committee
and shall specify the particular Option (or portion thereof) which is being
exercised and the number of shares with respect to which the Option is being
exercised. The exercise of the Stock Option shall be deemed effective upon
receipt of such notice by the Corporate Secretary and payment to the
Company. If requested by the Company, such notice shall contain the Option
Holder's representation that he or she is purchasing the Stock for
investment purposes only and his or her agreement not to sell any Stock so
purchased in any manner that is in violation of the Securities Act of 1933,
as amended, or any applicable state law. Such restrictions, or notice
thereof, shall be placed on the certificates representing the Stock so
purchased. The purchase of such Stock shall take place at the principal
offices of the Company upon delivery of such notice, at which time the
purchase price of the Stock shall be paid in full by any of the methods or
any combination of the methods set forth in (ii) below. A properly executed
certificate or certificates representing the Stock shall be issued by the
Company and delivered to the Option Holder. If certificates representing
Stock are used to pay all or part of the exercise price, separate
certificates for the same number of shares of Stock shall be issued by the
Company and delivered to the Option Holder representing each certificate
used to pay the Option Price, and an additional certificate shall be issued
by the Company and delivered to the Option Holder representing the
additional shares, in excess of the Option Price, to which the Option Holder
is entitled as a result of the exercise of the Option (the "Additional
Shares"). Notwithstanding the foregoing, if a Participant has validly
elected, in accordance with the provisions of the Adolph Coors Company
Deferred Compensation Plan, or any successor plan, to defer the receipt of
such Additional Shares, then such Additional Shares shall be issued and
delivered to the trustee of the trust formed pursuant to the provisions of
such Deferred Compensation Plan, or otherwise deferred in accordance with
the provisions of such Deferred Compensation Plan, and the rights of the
Participant with respect to such Additional Shares shall be determined in
accordance with the provisions of the Deferred Compensation Plan.
(ii) The exercise price shall be paid by any of the following methods or
any combination of the following methods:
(A) in cash;
(B) by certified or cashier's check payable to the order of the Company;
(C) by delivery to the Company of certificates representing the number of
shares then owned by the Option Holder, the Fair Market Value of which
equals the purchase price of the Stock purchased pursuant to the Option,
properly endorsed for transfer to the Company; provided however, that no
Option may be exercised by delivery to the Company of certificates
representing Stock, unless such Stock has been held by the Option Holder for
more than six months; for purposes of this Plan, the Fair Market Value of
any shares of Stock delivered in payment of the purchase price upon exercise
of the Option shall be the Fair Market Value as of the exercise date; the
exercise date shall be the day of delivery of the certificates for the Stock
used as payment of the Option Price; or
(D) by delivery to the Company of a properly executed notice of exercise
together with irrevocable instructions to a broker to deliver to the Company
promptly the amount of the proceeds of the sale of all or a portion of the
Stock or of a loan from the broker to the Option Holder necessary to pay the
exercise price.
(h) Date of Grant. An option shall be considered as having been granted on
the date specified in the grant resolution of the Committee.
(i) Notice of Sale of Stock; Withholding. Each stock option certificate or
agreement shall provide that, upon exercise of the Option, the Option Holder
shall make appropriate arrangements with the Company to provide for the
amount of additional withholding required by Sections 3102 and 3402 of the
Internal Revenue Code and applicable state income tax laws, including
payment of such taxes through delivery of shares of Stock or by withholding
Stock to be issued under the Option, as provided in Section 17.
(j) Issuance of Additional Option. If an Option Holder pays all or any
portion of the exercise price of an Option with Stock, or pays all or any
portion of the applicable withholding taxes with respect to the exercise of
an Option with Stock which has been held by the Option Holder for more than
six months, the Committee shall grant to such Option Holder a new Option
covering the number of shares of Stock used to pay such exercise price
and/or withholding tax. The new Option shall have an Option Price per share
equal to the Fair Market Value of a share of Stock on the date of the
exercise of the Option and shall have the same terms and provisions as the
Option, except as otherwise determined by the Committee in its sole
discretion. Effective for Options granted on and after January 1, 1994, this
subsection 7.2(j) shall be null and void.
7.3 Shareholder Privileges. No Option Holder shall have any rights as a
shareholder with respect to any shares of Stock covered by an Option until
the Option Holder becomes the holder of record of such Stock, and no
adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date such Option
Holder becomes the holder of record of such Stock, except as provided in
Section 4.
Section 8
Restricted Stock Awards
8.1 Grant of Restricted Stock Awards. Coincident with or following
designation for participation in the Plan, the Committee may grant a
Participant one or more Restricted Stock Awards consisting of shares of
Stock. The number of shares granted as a Restricted Stock Award shall be
determined by the Committee.
8.2 Restrictions. A Participant's right to retain a Restricted Stock Award
granted to him under Section 8.1 shall be subject to such restrictions,
including but not limited to his continuous employment by the Company or an
Affiliated Corporation for a restriction period specified by the Committee
or the attainment of specified performance goals and objectives, as may be
established by the Committee with respect to such Award. The Committee may
in its sole discretion require different periods of employment or different
performance goals and objectives with respect to different Participants, to
different Restricted Stock Awards or to separate, designated portions of the
Stock shares constituting a Restricted Stock Award. In the event of the
death or disability (as defined in subsection 7.2(d)) of a Participant, or
the retirement of a Participant in accordance with the Company's established
retirement policy, all employment period and other restrictions applicable
to Restricted Stock Awards then held by him shall lapse with respect to a
pro rata part of each such Award based on the ratio between the number of
full months of employment completed at the time of termination of employment
from the grant of each Award to the total number of months of employment
required for such Award to be fully nonforfeitable, and such portion of each
such Award shall become fully nonforfeitable. The remaining portion of each
such Award shall be forfeited and shall be immediately returned to the
Company. In the event of a Participant's termination of employment for any
other reason, any Restricted Stock Awards as to which the employment period
or other restrictions have not been satisfied (or waived or accelerated as
provided herein) shall be forfeited, and all shares of Stock related thereto
shall be immediately returned to the Company.
8.3 Privileges of a Stockholder, Transferability. A Participant shall have
all voting, dividend, liquidation and other rights with respect to Stock in
accordance with its terms received by him as a Restricted Stock Award under
this Section 8 upon his becoming the holder of record of such Stock;
provided, however, that the Participant's right to sell, encumber, or
otherwise transfer such Stock shall be subject to the limitations of
Sections 9 and 11.2.
8.4 Enforcement of Restrictions. The Committee shall cause a legend to be
placed on the Stock certificates issued pursuant to each Restricted Stock
Award referring to the restrictions provided by Sections 8.2 and 8.3 and, in
addition, may in its sole discretion require one or more of the following
methods of enforcing the restrictions referred to in Sections 8.2 and 8.3:
(a) Requiring the Participant to keep the Stock certificates, duly
endorsed, in the custody of the Company while the restrictions remain in
effect; or
(b) Requiring that the Stock certificates, duly endorsed, be held in the
custody of a third party while the restrictions remain in effect.
Section 9
Purchase of Stock
9.1 General. From time to time the Company may make an offer to certain
Participants, designated by the Committee in its sole discretion, to
purchase Stock from the Company. The number of shares of Stock offered by
the Company to each selected Participant shall be determined by the
Committee in its sole discretion. The purchase price for the Stock shall be
as determined by the Committee in its sole discretion and may be less than
the Fair Market Value of the Stock. The Participants who accept the
Company's offer shall purchase the Stock at the time designated by the
Committee. The purchase shall be on such additional terms and conditions as
may be determined by the Committee in its sole discretion.
9.2 Other Terms. The Committee may, in its sole discretion, grant Options,
Restricted Stock, or any combination thereof, on terms and conditions
determined by the Committee, in its sole discretion, to the Participants who
purchase Stock pursuant to Section 9.1.
Section 10
Other Common Stock Grants
From time to time during the duration of this Plan, the Board may, in its
sole discretion, adopt one or more incentive compensation arrangements for
Participants pursuant to which the Participants may acquire shares of Stock,
whether by purchase, outright grants, or otherwise. Any such arrangements
shall be subject to the general provisions of this Plan and all shares of
Stock issued pursuant to such arrangements shall be issued under this Plan.
Section 11
Company Right To Purchase Stock
11.1 Right of First Refusal. (a) The Committee may, in its sole discretion,
provide at the time of the grant of an Award and cause to be reflected in
the certificate or agreement with respect to such Award that the Stock
acquired pursuant to the Plan shall be subject to the Company's right of
first refusal set forth in the following subsections of this Section 11.1.
The Committee may also, in its sole discretion, waive the Company's rights
under this Section 11 with respect to outstanding Awards and may modify
outstanding Awards accordingly.
(b) In the event of the death of a Participant, or if a Participant at any
time proposes to transfer any of the Stock acquired pursuant to the Plan to
a third party, the Participant (or his personal representative or estate, as
the case may be) shall make a written offer (the "Offer") to sell all of the
Stock acquired pursuant to the Plan then owned by the Participant (or
thereafter acquired by the Participant's estate or personal representative
pursuant to any Award hereunder) to the Company at the "purchase price" as
hereinafter defined. In the case of a proposed sale of any of the Stock to a
third party, the Offer shall state the name of the proposed transferee and
the terms and conditions of the proposed transfer. In a case of a proposed
sale through or to a registered broker/dealer, the Offer shall state the
name and address of the broker. The Company shall have the right to elect to
purchase all (but not less than all) of the shares of Stock. The Company
shall have the right to elect to purchase the shares of Stock for a period
of ten (10) days after the receipt by the Company of the Offer. The
provisions of this Section 11 shall apply to proposed sales through or to a
registered broker/dealer at the prevailing market price, even if the
prevailing market price should fluctuate between the date the Company
receives the Offer and the date the Company elects to purchase the shares of
Stock. In all cases, the purchase price for the Stock shall be determined
pursuant to subsection 11.1(e).
(c) The Company shall exercise its right to purchase the Stock by given
written notice of its exercise to the Participant (or his personal
representative or estate, as the case may be). If the Company elects to
purchase the Stock, payment for the shares of Stock shall be made in full by
Company check. Any such payments shall be made within ten (10) days after
the election to purchase has been exercised.
(e) If the Stock is not purchased pursuant to the foregoing provisions,
the shares of Stock may be transferred by the Participant to the proposed
transferee named in the Offer to the Company, in the case of a proposed sale
to a third party. However, if such transfer is not made within 120 days
following the termination of the Company's right to purchase, a new offer
must be made to the Company before the Participant can transfer any portion
of his shares and the provisions of this Section 11 shall again apply to
such transfer. If the Company's right of first refusal under this Section 11
is created by an event other than a proposed transfer to a third party, the
shares of Stock shall remain subject to the provisions of this Section 11 in
the hands of the registered owner of the Stock.
(e) The purchase price for each share of Stock purchased by the Company
pursuant to this Section 11 shall be equal to the Fair Market Value of the
Stock on the date the Company receives the Offer under subsection 11.1(a).
11.2 Marking of Certificates. The Committee shall require that certificates
representing shares of Stock acquired pursuant to this Plan that are subject
to the provisions of subsections 11.1(b) through (e) bear the following
legend:
The shares of stock represented by this Certificate are subject to all the
terms of the Adolph Coors Company Equity Incentive Plan, as the Plan may be
amended from time to time (the "Plan") and to the terms of a [Non-Qualified
Stock Option Agreement] [Restricted Stock Agreement] [Stock Purchase
Agreement] between the Company and the Participant (the "Agreement"). Copies
of the Plan and the Agreement are on file at the office of the Company. The
Plan and the Agreement, among other things, limit the right of the Owner to
transfer the shares represented hereby and provides that in certain
circumstances the shares may be purchased by the Company.
Section 12
Change in Control
12.1 In General. In the event of a Change in Control of the Company as
defined in Section 12.3, then, subject to the provisions of Section 12.2,
(a) all Options shall become immediately exercisable in full during the
remaining term thereof, and shall remain so, whether or not the Participants
to whom such Options have been granted remain employees of the Company or an
Affiliated Corporation; and (b) all restrictions with respect to outstanding
Restricted Stock Awards shall immediately lapse. The Committee shall, in the
event of a Change in Control of the Company, either (x) make appropriate
provision for the adoption and continuation of the Plan and the outstanding
Options by the acquiring or successor corporation and for the protection of
outstanding Options by the substitution on an equitable basis of appropriate
stock of the Company or of the merged, consolidated or other reorganized
corporation that will be issuable with respect to the Stock, provided that
the excess of the aggregate Fair Market Value of the shares subject to the
Options immediately after such substitution over the Option Price thereof is
not more than the excess of the aggregate Fair Market Value of the shares
subject to such Options immediately before such substitution over the Option
Price thereof, or (y) upon written notice to the Participants, provide that
all unexercised Options must be exercised within a specified number of days
of the date of such notice or they will be terminated.
12.2 Limitation on Payments. If the provisions of Section 5 or 12 would
result in the receipt by any Participant of a payment within the meaning of
Section 280G of the Internal Revenue Code and the regulations promulgated
thereunder and if the receipt of such payment by any Participant would, in
the opinion of independent tax counsel of recognized standing selected by
the Company, result in the payment by such Participant of any excise tax
provided for in Section 4999 of the Internal Revenue Code, then either (a)
the amount of such payment shall be reduced in the manner determined by the
Committee to the extent required, in the opinion of such independent tax
counsel, to prevent the imposition of such excise tax; or (b) the amount of
such payment shall not be reduced, depending upon whichever approach results
in the greatest net after-tax benefit to the Participant, as determined by
such independent tax counsel.
12.3 Definitions. (a) For purposes of the Plan, a "Change in Control" means
such time as:
(i) without the consent of the Board, a Person other than Existing
Shareholders or a Person controlled by Existing Shareholders becomes the
ultimate Beneficial Owner of more than 20% of the total voting power of the
Voting Stock of the Company and such ownership represents a greater
percentage of the total voting power of the Voting Stock of the Company than
is Beneficially Owned by Existing Shareholders on such date; except the
following acquisitions are not a Change in Control: (A) an acquisition of
Voting Stock by the Company or one of its wholly-owned subsidiaries or (B)
an acquisition of Voting Stock that complies with clauses (A), (B) and (C)
of Section 5.1(b)(ii) or (C) an acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company, or by any corporation
controlled by the Company, or
(iii) without the consent of the Board, individuals who on the effective
date of this amended and restated Plan constitute the Board (together with
any thereafter elected directors whose election by the Board or whose
nomination by the Board for election by the Company's shareholders was
approved by a vote of at least a majority of the members of the Board then
in office who either were members of the Board on the effective date of this
amended and restated Plan or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board then in office; or
(iii) the shareholders of the Company approve a complete liquidation or
dissolution of the Company.
(b) The definitions set forth in subsection 5.1(c) shall apply for
purposes of this Section 12.3.
Section 13
Rights of Employees; Participants
13.1 Employment. Nothing contained in the Plan or in any Option or
Restricted Stock Award granted under the Plan shall confer upon any
Participant any right with respect to the continuation of his or her
employment by the Company or any Affiliated Corporation, or interfere in any
way with the right of the Company or any Affiliated Corporation, subject to
the terms of any separate employment agreement to the contrary, at any time
to terminate such employment or to increase or decrease the compensation of
the Participant from the rate in existence at the time of the grant of an
Option or Restricted Stock Award. Whether an authorized leave of absence, or
absence in military or government service, shall constitute a termination of
employment shall be determined by the Committee at the time.
13.2 Nontransferability. Except as provided otherwise by the Committee at
the time of grant or thereafter, no right or interest of any Participant in
an Option or a Restricted Stock Award (prior to the completion of the
restriction period applicable thereto), granted pursuant to the Plan, shall
be assignable or transferable during the lifetime of the Participant, either
voluntarily or involuntarily, or subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy. In the event of a
Participant's death, a Participant's rights and interests in Options and
Restricted Stock Awards shall, to the extent provided in Sections 7, 8 and
9, be transferable by testamentary will or the laws of descent and
distribution, and payment of any amounts due under the Plan shall be made
to, and exercise of any Options may be made by, the Participant's legal
representatives, heirs or legatees. If in the opinion of the Committee a
person entitled to payments or to exercise rights with respect to the Plan
is disabled from caring for his affairs because of mental condition,
physical condition or age, payment due such person may be made to, and such
rights shall be exercised by, such person's guardian, conservator or other
legal personal representative upon furnishing the Committee with evidence
satisfactory to the Committee of such status.
Section 14
General Restrictions
14.1 Investment Representations. The Company may require any person to whom
an Option, Restricted Stock Award, Stock is granted, or to whom Stock is
sold, as a condition of exercising such Option or receiving such Restricted
Stock Award or Stock, or purchasing such Stock, to give written assurances
in substance and form satisfactory to the Company and its counsel to the
effect that such person is acquiring the Stock subject to the Option,
Restricted Stock Award, Stock grant, or purchase of Stock, for his own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company
deems necessary or appropriate in order to comply with Federal and
applicable state securities laws.
14.2 Compliance with Securities Laws. Each Option and Restricted Stock
Award, and Stock grant or purchase shall be subject to the requirement that,
if at any time counsel to the Company shall determine that the listing,
registration or qualification of the shares subject to such Option,
Restricted Stock Award, Stock grant or purchase upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance or purchase of shares thereunder, such Option,
Restricted Stock Award, or Stock grant or purchase may not be accepted or
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.
14.3 Changes in Accounting Rules. Notwithstanding any other provision of
the Plan to the contrary, if, during the term of the Plan, any changes in
the financial or tax accounting rules applicable to Options or Restricted
Stock Awards shall occur that, in the sole judgment of the Committee, may
have a material adverse effect on the reported earnings, assets or
liabilities of the Company, the Committee shall have the right and power to
modify as necessary, any then outstanding and unexercised Options and
outstanding Restricted Stock Awards as to which the applicable employment or
other restrictions have not been satisfied.
Section 15
Other Employee Benefits
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option, the sale of shares received upon such
exercise, the vesting of any Restricted Stock Award, or the purchase or
grant of Stock, shall not constitute "earnings" with respect to which any
other employee benefits of such employee are determined, including without
limitation benefits under any pension, profit sharing, life insurance or
salary continuation plan.
Section 16
Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time to time may amend or
modify the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
shareholders if shareholder approval is required to enable the Plan to
satisfy any applicable statutory or regulatory requirements, or if the
Company, on the advice of counsel, determines that shareholder approval is
otherwise necessary or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Restricted Stock Awards or Stock theretofore
granted or purchased under the Plan, without the consent of the Participant
holding such Options, Restricted Stock Awards or Stock.
Section 17
Withholding
17.1 Withholding Requirement. The Company's obligations to deliver shares
of Stock upon the exercise of any Option, the vesting of any Restricted
Stock Award, or the grant or purchase of Stock shall be subject to the
Participant's satisfaction of all applicable federal, state and local income
and other tax withholding requirements.
17.2 Withholding With Stock. The withholding obligation with respect to the
grant of Restricted Stock shall be satisfied by the Company's withholding
from the shares otherwise issuable to the Participant shares of Stock having
a value equal to the amount required to be withheld. The value of shares of
Stock to be withheld shall be based on the Fair Market Value of the Stock on
the date that the amount of tax to be withheld is to be determined.
Section 18
Requirements of Law
18.1 Requirements of Law. The issuance of Stock and the payment of cash
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
18.2 Federal Securities Law Requirements. If a Participant is an executive
officer or director of the Company within the meaning of Section 16, the
Committee may require that Awards granted hereunder shall be subject to all
conditions required under Rule 16b-3, or any successor rule promulgated
under the 1934 Act, to qualify the Award for any exception from the
provisions of Section 16(b) of the 1934 Act available under that Rule. Such
conditions shall be set forth in the agreement with the Participant which
describes the Award.
18.3 Governing La. The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws of the State of Colorado.
Section 19
Duration of the Plan.
The Plan shall terminate at such time as may be determined by the Board of
Directors, and no Option or Restricted Stock Award, or Stock shall be
granted or purchased after such termination. Options and Restricted Stock
Awards outstanding at the time of the Plan termination may continue to be
exercised, or become free of restrictions, or paid, in accordance with their
terms.
Dated: ___________________________
ADOLPH COORS COMPANY
ATTEST:
____________________________ By:_____________________________________________
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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