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ADOLPH COORS COMPANY AND SUBSIDIARIES INDEX

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number 1-14829

ADOLPH COORS COMPANY
(Exact name of registrant as specified in its charter)

303-279-6565
(Registrant's telephone number, including area code)

        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 ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act. Yes ý    No o

        Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of May 4, 2003:

Class A Common Stock—1,260,000 shares
Class B Common Stock—35,081,853 shares

ADOLPH COORS COMPANY AND SUBSIDIARIES
INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ADOLPH COORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

See notes to unaudited condensed consolidated financial statements.

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ADOLPH COORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(Continued)

See notes to unaudited condensed consolidated financial statements.

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ADOLPH COORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE INFORMATION)

(Concluded)

See notes to unaudited condensed consolidated financial statements.

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ADOLPH COORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

See notes to unaudited condensed consolidated financial statements.

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ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED MARCH 30, 2003

1. BUSINESS

        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 tastes, styles, and price preferences. Our beverages are sold predominately throughout the United States (U.S.), the United Kingdom (U.K.), and in select international markets.

        We are the third-largest producer of beer in the United States based on volume and revenues. Since our acquisition of Coors Brewers Limited (CBL) on February 2, 2002, we are the eighth-largest brewer in the world based on volume. CBL is the United Kingdom's second-largest beer company based on total beer volume.

        Unless otherwise noted in this report, any description of us includes Adolph Coors Company (ACC), principally a holding company; its principal operating subsidiaries, Coors Brewing Company (CBC) and CBL; and our other corporate entities.

2. SIGNIFICANT ACCOUNTING POLICIES

Unaudited condensed consolidated financial statements

        In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements include our accounts and the accounts of our majority-owned domestic and foreign subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 29, 2002. The results of operations for the thirteen weeks ended March 30, 2003, are not necessarily indicative of the results that may be achieved for the full fiscal year and cannot be used to indicate financial performance for the entire year.

        The results of the CBL operations have been included in the consolidated financial statements since February 2, 2002, the date of acquisition.

        The year-end condensed balance sheet data was derived from audited financial statements.

Reclassifications

        Certain reclassifications have been made to the 2002 financial statements to conform to 2003 presentation.

Revenue recognition

        In accordance with Staff Accounting Bulletin No. 101, revenue is recognized when product is shipped and the risk of loss is transferred to unrelated customers, which are principally independent retailers in the United Kingdom and independent distributors or wholesalers in the United States. In the United Kingdom, excise taxes are included in the purchase price from the vendor on beverages purchased from third parties for resale (factored brands business) and are included in Cost of goods sold when ultimately sold. We pass those costs onto our customers and include the related amounts in Net sales. The cost of various programs, such as price promotions, rebates and coupon programs are treated as a reduction of Sales. Sales of products are for cash or credit terms based on a customer's

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credit worthiness. Outside of unusual circumstances, if product is retrieved, it is generally for failure to meet our quality standards, not caused by distributor actions. Products that do not meet our high quality standards are retrieved and destroyed and related amounts are recognized as a reduction in Sales. We do not have standard terms that permit return of product. We estimate the costs for product retrievals and record those costs in Cost of goods sold in the Consolidated Statements of Income each period. We reduce revenue at the value of the original sales price in the period that the product is returned.

Cost of goods sold

        The types of costs included in Cost of goods sold are beer raw materials, packaging materials (including promotional packaging), manufacturing costs, plant administrative support and overheads, and freight and warehouse costs (including distribution network costs). Distribution network costs include inbound and outbound freight charges, purchasing and receiving costs, inspection costs, warehousing and internal transfer costs.

Stock-based compensation

        We use the intrinsic value method when accounting for options issued to employees in accordance with Accounting Principles Board No. 25, Accounting for Stock Issued to Employees (APB No. 25). Accordingly, we do not recognize compensation expense related to employee stock options, since options are always granted at a price equal to the market price on the day of grant. The following table illustrates the effect on net income and earnings per share if we had applied the fair value provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-based Compensation (SFAS No. 123) to stock-based compensation using the Black-Scholes valuation model:

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Statement of cash flows data

        The following presents our supplemental cash flow information:

Recent accounting pronouncements

        In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, (SFAS No. 143) which is applicable to financial statements issued for fiscal years beginning after June 15, 2002. Under SFAS No. 143, the fair value of a liability for an asset retirement obligation would be recognized in the period in which the liability is incurred, with an offsetting increase in the carrying amount of the related long-lived asset. Over time, the liability would be accreted to its present value, and the capitalized cost would be depreciated over the useful life of the related asset. Upon settlement of the liability, an entity would either settle the obligation for its recorded amount or incur a gain or loss upon settlement. We adopted this standard effective December 30, 2002, the beginning of our 2003 fiscal year, with no material impact to our financial statements.

        In November 2002, the FASB issued Interpretation No. 45 (FIN No. 45), Guarantor's Accounting and Disclosure Requirements for Guarantees of Indebtedness of Others, which is effective for guarantees issued after December 31, 2002. FIN No. 45 requires the recording of the fair value of the guarantee as a liability, with the offsetting entry recorded based on the circumstances in which the guarantee is issued. FIN No. 45 had no impact on our historical results, as existing guarantees are not subject to the measurement provisions of FIN No. 45. We applied the initial recognition and measurement provisions prospectively for all guarantees issued after December 31, 2002. The impact on our first quarter financial statements was immaterial. We had no significant warranties requiring disclosure as of March 30, 2003 (see Item 2, Management Discussion and Analysis, Contractual Obligations and Commercial Commitments).

        In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN No. 46), which is effective immediately for all enterprises with variable interests in variable interest entities created after January 31, 2003. FIN No. 46 must be applied to variable interests in variable interest entities created before February 1, 2003, beginning in the first interim period beginning after June 15, 2003. After initial measurement of all enterprises that we have a relationship with for status as a variable interest entity, a further assessment must be made to determine if we are the primary beneficiary. A primary beneficiary absorbs the majority of the entity's expected losses if they occur, receives a majority of the entity's expected residual returns if they occur, or both. A primary beneficiary relationship requires consolidation treatment. Where it is reasonably possible that the information about our variable interest entity relationships must be disclosed or consolidated, we must disclose the nature, purpose, size and activity of the variable interest entity and the maximum exposure to loss as a result of our involvement with the variable interest entity in all financial statements issued after January 31, 2003.

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        We are still assessing our relationships with variable interest entities to determine if the adoption of FIN No. 46 will require consolidation of certain previously unconsolidated entities because we are deemed the primary beneficiary. The adoption of FIN No. 46 has resulted in additional disclosure about our joint venture relationships currently accounted for under the equity method of accounting (see Footnote 13, Investments).

3. COORS BREWERS LIMITED ACQUISITION

        On February 2, 2002, we acquired 100% of the outstanding shares of Bass Holdings Ltd. and certain other intangible assets from Interbrew S.A., for a total purchase price of 1.2 billion British pound sterling (GBP) (approximately $1.7 billion at then-prevailing exchange rates), plus associated fees and expenses. The acquisition supported our key strategic goal of growing our beer business internationally to broaden our geographic platform; diversify revenues, profits and cash flows, and increase our brand portfolio, which we believe will significantly enhance our competitive position in the worldwide beer industry.

        One of the largest factors that contributed to a purchase price that resulted in the recognition of goodwill was the existence of financial and operating synergies. In addition to these synergies, there were a number of other factors, including the existence of a strong management team, a proven track record of introducing and marketing successful brands, an efficient sales and distribution system, complementary products and a good sales force (see Footnote 5, Goodwill and Other Intangibles, for further discussion of goodwill).

        The business, renamed CBL, includes the majority of the assets that previously made up Bass Brewers, including the Carling®, Worthington® and Caffrey's® beer brands; the U.K. and Republic of Ireland distribution rights to Grolsch® (via and subject to the continuation of a joint venture arrangement, in which CBL has a 49% interest with Royal Grolsch N.V.); several other beer and flavored-alcohol beverage brands; related brewing and malting facilities in the United Kingdom; and a 49.9% interest in the distribution logistics provider, Tradeteam. CBL is the second-largest brewer in the United Kingdom based on total beer volume, and Carling lager is the best-selling beer brand in the United Kingdom. The brand rights for Carling, which is the largest acquired brand by volume, are mainly for territories in Europe. In addition, CBL wholesales other companies' beers, wines, liquors, ciders, soft drinks and other products. Since CBL purchases and resells these products, they are included in both Net sales and Cost of goods sold but are not included in reported sales volumes.

        As noted in Footnote 2, Significant Accounting Policies, the results of CBL operations have been included in the consolidated financial statements since February 2, 2002, the date of acquisition.

        The following table shows the proforma results of our consolidated operations for the thirteen weeks ended March 31, 2002, as if the business combination had occurred at the beginning of that fiscal year, as well as comparative actual consolidated results for the thirteen weeks ended March 30, 2003, when we owned CBL for the whole period. The 2002 pro forma results are not necessarily indicative of the results of operations that would have occurred if the business combination had

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occurred at the beginning of that year and are not intended to be indicative of future results of operations:

4. BUSINESS SEGMENTS

        Our segment information is presented in accordance with Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS No. 131), which establishes standards for reporting information about operating segments in interim and annual financial statements. In accordance with this standard, we categorize our operations into three segments: the Americas, Europe and Corporate. These segments are managed and reviewed by separate operating teams, even though both consist primarily of the manufacture, marketing, and sale of beer and other beverage products.

        The Americas segment primarily consists of our production, marketing, and sales of the Coors family of brands in the United States and its territories. This segment also includes the Coors Light® business in Canada that is conducted through a partnership investment with Molson, Inc. (Molson) and the sale of Molson products in the United States that is conducted through a separate joint venture investment with Molson. The Americas also include a small amount of primarily U.S. sourced products that are exported and sold outside of the United States and its possessions, exclusive of Europe.

        The Europe segment consists of our production and sale of the CBL brands, principally in the United Kingdom but also in other parts of the world, our joint venture arrangement relating to the production and distribution of Grolsch in the United Kingdom and the Republic of Ireland, and our joint venture arrangement with Exel Logistics for the physical distribution of products throughout Great Britain (Tradeteam).

        The Corporate segment currently includes interest and certain other corporate costs that are not attributable to either the Americas or Europe operating segments. Beginning in 2003, we began allocating certain general and administrative expenses to the Corporate segment. Prior year segment amounts have been restated to conform to the new presentation. The large majority of corporate costs relate to worldwide finance and administrative functions such as legal, human resources, insurance, and risk management.

        No single customer accounted for more than 10% of our sales.

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        Summarized financial information concerning our reportable segments is shown in the following table:

THIRTEEN WEEKS ENDED MARCH 30, 2003

THIRTEEN WEEKS ENDED MARCH 31, 2002

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The following tables represent net sales and long-lived assets by geographic segment:

(1)

Net sales attributed to geographic areas are based on the location of the customer.

(2)

Long-lived assets include tangible and intangible assets.

5. GOODWILL AND OTHER INTANGIBLES

        In June 2001, the FASB issued Statements of Financial Accounting Standards No. 141, Business Combinations, (SFAS No. 141) and No. 142, Goodwill and Other Intangible Assets, (SFAS No. 142). SFAS No. 141 requires that all business combinations be accounted for using the purchase method of accounting and that certain intangible assets acquired in a business combination be recognized as assets apart from goodwill. SFAS No. 141 was effective for all business combinations initiated after June 30, 2001. SFAS No. 142 requires goodwill to be tested for impairment under certain circumstances, and written down when impaired, rather than being amortized as previously required. Furthermore, SFAS No. 142 requires purchased intangible assets other than goodwill to be amortized over their useful lives unless those lives are determined to be indefinite. Purchased intangible assets are carried at cost less accumulated amortization.

        We adopted the provisions of SFAS No. 142 effective the beginning of fiscal year 2002. In accordance with SFAS No. 142, we ceased amortizing goodwill and other intangible assets considered to

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have indefinite lives totaling $76.3 million. Additionally, we have $17.4 million of intangible assets considered to have indefinite lives that were previously not amortized.

        SFAS No. 142 stipulates that we are required to perform impairment tests on at least an annual basis and more frequently in certain circumstances. We identified no goodwill or indefinite-lived intangibles that are impaired under the guidelines of SFAS No. 142 as a result of our most recent evaluation performed during the third quarter of the 2002 fiscal year. Furthermore, while we did not perform our annual impairment testing during the first quarter, we are not aware of any event that occurred during the first quarter which would have caused goodwill or indefinite-lived intangible assets to become impaired.

        The following tables present details of our intangible assets as of March 30, 2003:

        Based on average foreign exchange rates for the thirteen weeks ended March 30, 2003, the estimated future amortization expense of intangible assets is as follows:

        Amortization expense of intangible assets was $5.0 million and $3.5 million for the thirteen weeks ended March 30, 2003 and March 31, 2002, respectively.

        Upon the acquisition of CBL on February 2, 2002, we recorded $637 million of goodwill. The total goodwill was determined using the residual method under SFAS No. 141. This goodwill was allocated between our Europe and Americas segments based on which segment would benefit from certain synergies created by the acquisition. A portion of the acquired goodwill was attributable to operating and financial synergies resulting from the combination. The financial synergy goodwill was calculated by comparing the risk premiums expected by investors associated with the CBC business with and without the CBL acquisition. This synergy was then associated with the segments based on an analysis of the Europe segment with and without the weighted average cost of capital differential as well as the two segments' relative earnings contributions. Operating synergies were allocated to reporting segments

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based on where the savings were expected to occur. Application of this methodology resulted in the following allocations:

        As of March 30, 2003, goodwill was allocated between our reportable segments as follows:

        Changes in our Europe goodwill balance from February 2, 2002, and from our fiscal year end, to March 30, 2003, were the result of GBP foreign currency exchange rate fluctuation.

6. RESTRUCTURING

        During 2002, we incurred restructuring charges related to restructuring initiatives in our Golden Brewery business in an effort to consolidate and lower our future overhead costs. In addition, we incurred other charges related to the closing of our Cape Hill brewery and Alloa malting facility in the United Kingdom. The following summarizes the activity during the first quarter of 2003 related to these restructurings.

Golden Brewery

        The 2002 charge consisted primarily of employee severance costs and was accounted for under Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring) (EITF No. 94-3), because the charge was initiated prior to our adoption of Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (FASB No. 146). Payouts on this accrual are expected to be completed by the end of the 2003 fiscal year. As of March 30, 2003, 78 employees had been terminated and an estimated 52 more will be terminated over the course of the year. The following table illustrates the changes in the liability balance since December 29, 2002:

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        The adjustments made during the first quarter consist primarily of differences between the initial accrual estimate and the actual amount paid out.

Cape Hill and Alloa

        In March 2002, we announced plans to close our Cape Hill brewery and the Alloa malting facility. The majority of production at the Cape Hill brewery related to brands that were retained by Interbrew. The production at the Alloa malting facility has been moved to other existing malting facilities. The alternative use value for these sites, and the associated estimated exit costs were reflected in the purchase price of CBL. Our restructuring reserve consists of charges related to employee severance and site closure costs.

        The following table illustrates the changes in the liability balance since our last fiscal year end:

        Cash payments consist of severance and other employee benefits related to the closure and are expected to be completed in mid-2003. Adjustments due to site closure costs are differences between estimated costs to close and actual amounts to close.

7. OTHER COMPREHENSIVE INCOME

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8. EARNINGS PER SHARE (EPS)

        Basic and diluted net income per common share were arrived at using the calculations outlined below:

        The dilutive effects of stock options were determined by applying the treasury stock method, assuming we were to purchase common shares with the proceeds from stock option exercises. Anti-dilutive securities were not included in our calculation because the stock options' exercise prices were greater than the average market price of the common shares.

9. CONTINGENCIES

Environmental

        We are one of a number of entities named by the Environmental Protection Agency (EPA) as a potentially responsible party (PRP) at the Lowry Superfund site. This landfill is owned by the City and County of Denver (Denver) and is managed by Waste Management of Colorado, Inc. (Waste Management). In 1990, we recorded a pretax charge of $30 million, a portion of which was put into a trust in 1993 as part of a settlement with Denver and Waste Management regarding the then outstanding litigation. Our settlement was based on an assumed cost of $120 million (in 1992 adjusted dollars). We are obligated to pay a portion of future costs in excess of that amount.

        On an annual basis, Waste Management provides us with cost estimates through 2032. We review these estimates in conjunction with a third party expert and assess our expected liability. Based on the assumptions we were provided, we estimate that the present value and gross amount of the discounted costs were approximately $1 million and $5 million, respectively, as of December 29, 2002, our last fiscal year end. No significant changes in this estimate have occurred since December 29, 2002.

        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.

        From time to time, we have been notified that we are or may be a PRP under the Comprehensive Environmental Response, Compensation and Liability Act or similar state laws for the cleanup of other sites where hazardous substances have allegedly been released into the environment. We cannot predict with certainty the total costs of cleanup, our share of the total cost, the extent to which contributions will be available from other parties, the amount of time necessary to complete the cleanups, or insurance coverage.

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        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 consolidated operating results, cash flows or our financial or competitive position. We believe adequate reserves have been provided for losses that are probable and estimable.

Disputes

        In February 2003, an arbitration panel found in favor of CBC in a contract interpretation issue between CBC and one of its wholesalers. The revenues that were the subject of the arbitration were generated by sales during 2002 and totaled approximately $4.2 million. This revenue was recorded in Net sales during the first quarter.

        We are involved in certain disputes and legal actions arising in the ordinary course of our business aside from the environmental issues discussed above. While it is not feasible to predict or determine the outcome of these proceedings, in our opinion, based on a review with legal counsel, none of these disputes and legal actions is expected to have a material impact on our consolidated financial position, results of operations, or cash flows. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

10. DEBT

        Our total long-term borrowings as of March 30, 2003, and December 29, 2002, were composed of the following:

        The aggregate principal debt maturities of long-term debt for the next five fiscal years and thereafter are as follows:

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Senior Private Placement Notes

        At March 30, 2003, we had $20 million in unsecured Senior notes at a fixed interest rate of 6.95% per annum. Interest on the notes is due semi-annually in January and July. At March 30, 2003, $20 million was classified as long-term debt, as this balance is due in July 2005. Our private placement notes require that we conduct our business with certain restrictions on indebtedness, liens, mergers, consolidations, asset sales, and certain other types of business activities in which we can engage. We were in compliance with these requirements at March 30, 2003.

6³/8% Senior Notes due 2012

        On May 7, 2002, CBC completed a private placement of $850 million principal amount of 6³/8% Senior notes, due 2012, with interest payable semi-annually. The notes are unsecured, are not subject to any sinking fund provision and include a redemption provision (make-whole provision) which allow us to retire the notes at whole or any time at a redemption price. The redemption price is equal to the greater of (1) 100% of the principal amount of the notes plus accrued and unpaid interest and (2) the make whole amount of the notes being redeemed, which is equal to the present value of the principal amount of the notes and interest to be redeemed. The notes were originally issued as part of our financing for the acquisition of CBL. The notes were issued with registration rights and are guaranteed by Adolph Coors Company and certain domestic subsidiaries.

        Simultaneously with the private placement, we entered into a registration rights agreement pursuant to which we exchanged the unregistered notes for substantially identical notes registered with the Securities and Exchange Commission. The exchange of all the notes was completed on September 16, 2002.

        Under the terms of the notes, we must comply with certain restrictions. These restrictions include restrictions on debt secured by certain types of mortgages, secured debt above certain threshold percentages of consolidated net tangible assets, and restrictions on certain types of sale-leaseback transactions. As of March 30, 2003, we were in compliance with all of these restrictions.

Senior Credit Facility

        At March 30, 2003, we had $526.9 million outstanding in unsecured Senior Credit facilities consisting of a U.S. dollar denominated amortizing term loan in an aggregate principal amount of $168 million and a 228 million GBP denominated amortizing term loan. Based on foreign exchange rates at March 30, 2003, the aggregate principal amount outstanding related to the 228 million GBP amortizing term loan was $358.9 million.

        Our term loan is payable quarterly in arrears beginning June 27, 2003, and matures February 1, 2007. Amounts outstanding under our term loan bear interest at a rate per annum equal to either an adjusted LIBOR or an alternate base rate, at our option, in each case plus an additional margin. The additional margin is set based upon our investment grade debt rating which is BBB+ (S&P) and Baa2 (Moody's). If our debt rating changes, the additional margin is subject to adjustment. Interest is payable quarterly unless the selected LIBOR is for a time period less than 90 days, in which case the interest is payable at the end of the time period corresponding to the selected LIBOR.

        We and all of our existing and future, direct and indirect, domestic subsidiaries, other than immaterial domestic subsidiaries, have guaranteed our term loan borrowings.

        Our term loan requires us to meet certain periodic financial tests, including maximum total leverage ratio and minimum interest coverage ratio. There are also certain restrictions on indebtedness,

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liens, and guarantees; mergers, consolidations, and some types of acquisitions and assets sales; and certain types of business in which we can engage. As of March 30, 2003, we were in compliance with all of these restrictions.

Revolving Line of Credit

        At March 30, 2003, we had an unsecured committed credit arrangement totaling $300 million, of which $268.5 million was available to us. This line of credit has a five-year term expiring 2007. On a quarterly basis, we pay a facilities fee based on the total amount of available committed credit. Under the terms of this credit facility, we are required to maintain the same leverage ratio and interest coverage ratio as those defined in our term loan, as well as operate our business with the same restrictions as defined in our term loan. We were in compliance with these requirements at March 30, 2003. Amounts outstanding under our revolving line of credit bear interest at a rate per annum equal to either an adjusted LIBOR plus margin or an alternate base rate, at our option. The additional margin is set based upon our investment grade debt rating which is BBB+ (S&P) and Baa2 (Moody's). If our debt rating changes, the additional margin is subject to adjustment. Interest is payable when principal payments are made or, if principal amounts are outstanding for more than 90 days, at the end of each 90-day period and upon final repayment of principal amounts.

Uncommitted Lines of Credit

        At March 30, 2003, we had two USD uncommitted lines of credit totaling $40.0 million. The lines of credit are with two different lenders. We had $38.7 million outstanding under these lines of credit as of March 30, 2003. Amounts outstanding under the lines of credit bear interest at a rate stated by the lender.

        In addition, CBL had two 10 million GBP uncommitted lines of credit and a 10 million GBP overdraft facility, totaling approximately $47.2 million based on foreign exchange rates at March 30, 2003. Approximately 10.7 million GBP, or $16.8 million based on prevailing exchange rates, was outstanding under the lines of credit and overdraft facility at March 30, 2003. These lines of credit bear interest at a floating rate determined by the lender.

        Tradeteam, the joint venture between CBL and Exel Logistics, had one uncommitted line of credit totaling 15 million GBP, or approximately $24 million based on foreign exchange rates at March 30, 2003. No amount was outstanding on this line of credit at March 30, 2003; however, Tradeteam is required to pay a 0.5% commitment fee on any undrawn amount.

11. DERIVATIVE INSTRUMENTS

        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. By policy, we do not enter into such contracts for the purpose of speculation.

        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 affected by changes in the underlying rates and prices. To achieve this objective, we enter into foreign currency forward contracts, commodity swaps, interest rate swaps, and cross currency swaps, the values of which change in the opposite direction of the anticipated cash flows. We do not hedge the value of net investments in foreign-currency-denominated operations or translated earnings of foreign

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subsidiaries. Our primary foreign currency exposures are the GBP, the Canadian dollar (CAD), and the Japanese yen (YEN).

        Derivatives are either exchange-traded instruments or over-the-counter agreements entered into with highly rated financial institutions. No losses on over-the-counter agreements due to counterparty credit issues are anticipated. All over-the-counter agreements are entered into with counterparties rated no lower than A (S&P) or A2 (Moody's). In some instances we and our counterparties have reciprocal collateralization agreements regarding fair value positions in excess of certain thresholds. These agreements call for the posting of collateral in the form of cash, treasury securities or letters of credit if a fair value loss position to us or our counterparties exceeds a certain amount. At March 30, 2003, no collateral was posted by us or our counterparties.

        All derivatives are recognized on the balance sheet at their fair value. Unrealized gain positions are recorded as other current assets or other non-current assets. Unrealized loss positions are recorded as other liabilities or other long-term liabilities.

        The majority of all derivatives entered into by us qualify for, and are designated as, foreign-currency cash flow hedges, commodity cash flow hedges or fair value hedges, including those derivatives hedging foreign currency denominated firm commitments as per the definitions of Statement of Financial Accounting Standards No. 133 (SFAS No. 133).

        We consider whether any provisions in non-derivative contracts represent "embedded" derivative instruments as described in SFAS No. 133. As of March 30, 2003, we have concluded that no "embedded" derivative instruments warrant separate fair value accounting under SFAS No. 133.

        Changes in fair values of outstanding derivatives that are highly effective as per the definition of SFAS No. 133 are recorded in other comprehensive income, until earnings are affected by the variability of cash flows of the hedged transaction. In most cases amounts recorded in other comprehensive income will be released to earnings at maturity of the related derivative. The consolidated statement of income treatment of effective hedge results offsets the gains or losses on the underlying exposure.

        We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking hedge transactions. This process includes linking all derivatives that are designated as foreign-currency cash flow hedges and commodity cash flow hedges to either specific assets and liabilities on the balance sheet or specific firm commitments or forecasted transactions. We also formally assess, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not, or has ceased to be, highly effective as a hedge, we discontinue hedge accounting prospectively, as discussed below.

        We discontinue hedge accounting prospectively when (1) the derivative is no longer highly effective, as per SFAS No. 133, in offsetting changes in the cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.

        When we discontinue hedge accounting because it is no longer probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in accumulated other comprehensive income and is reclassified into earnings when the forecasted

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transaction affects earnings. However, if it is no longer probable that a forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses that were accumulated in other comprehensive income will be recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, we will carry the derivative at its fair value on the balance sheet until maturity, recognizing future changes in the fair value in current-period earnings. Any hedge ineffectiveness, as per SFAS No. 133, is recorded in current-period earnings. During the first quarter of 2003, we recorded an insignificant loss relating to such ineffectiveness of all derivatives in Other income, net. Effectiveness is assessed based on the comparison of current forward rates to the rates established on our hedges.

        As of March 30, 2003, $3.7 million of deferred net losses (net of tax) on both outstanding and matured derivatives accumulated in other comprehensive income are expected to be reclassified to earnings during the next twelve months as a result of expected gains or losses on underlying hedged transactions also being recorded in earnings. Actual amounts ultimately reclassified to earnings are dependent on the applicable rates in effect when derivatives contracts that are currently outstanding mature. As of March 30, 2003, the maximum term over which we are hedging exposures to the variability of cash flows for all forecasted and recorded transactions is 10 years.

        We are exposed to credit-related losses in the event of non-performance by counterparties to hedging instruments and do not enter into master netting arrangements. The counterparties to derivative transactions are major financial institutions with investment grade credit ratings of at least A, A2 or better. However, this does not eliminate our exposure to credit risk with these institutions. This credit risk is generally limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted. To manage this risk, we have established counterparty credit guidelines that are monitored and reported to management according to prescribed guidelines. We utilize a portfolio of financial institutions either headquartered or operating in the same countries we conduct our business. As a result of the above considerations, we consider the risk of counterparty default to be minimal.

        On May 7, 2002, we entered into certain cross currency swaps totaling 530 million GBP (approximately $774 million at then-prevailing foreign exchange rates). The swaps included an initial exchange of principal on the settlement date of our 6³/8% private placement fixed rate debt (see Footnote 10, Debt) and will require final principal exchange 10 years later. The swaps also call for an exchange of fixed GBP interest payments for fixed U.S. dollar interest receipts. At the initial principal exchange, we paid U.S. dollars to a counterparty and received GBP. Upon final exchange, we will provide GBP to the counterparty and receive U.S. dollars. The cross currency swaps have been designated as cash flow hedges of the changes in value of the future GBP interest and principal receipts that result from changes in the U.S. dollar to GBP exchange rates on an intercompany loan between us and CBL.

        On May 28, 2002, we entered into an interest rate swap agreement related to our 6³/8% fixed rate debt. The interest rate swap converted $76.2 million notional amount from fixed rates to floating rates and matures in 2012. We will receive fixed U.S. dollar interest payments semi-annually at a rate of 6³/8% per annum and pay a rate to our counterparty based on a credit spread of 0.789% plus the three-month LIBOR rate, thereby exchanging a fixed interest obligation for a floating interest rate obligation. There was no exchange of principal at the inception of the swap. We designated the interest rate swap as a fair value hedge of the changes in the fair value of the $76.2 million fixed rate debt attributable to changes in the LIBOR swap rates.

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12. SUPPLEMENTAL GUARANTOR INFORMATION

        On May 7, 2002, our wholly-owned subsidiary, CBC (Issuer) completed a private placement of $850 million principal amount of 6³/8% Senior notes due 2012. The notes were issued with registration rights and were guaranteed on a senior and unsecured basis by Adolph Coors Company (Parent Guarantor) and certain domestic subsidiaries (Subsidiary Guarantors). The guarantees are full and unconditional and joint and several. A significant amount of the Issuer's income and cash flow is generated by its subsidiaries. As a result, funds necessary to meet the Issuer's debt service obligations are provided in large part by distributions or advances from its subsidiaries. Under certain circumstances, contractual and legal restrictions, as well as our financial condition and operating requirements and those of certain domestic subsidiaries, could limit the Issuer's ability to obtain cash for the purpose of meeting its debt service obligation including the payment of principal and interest on the notes.

        Simultaneously with the private placement, we entered into a registration rights agreement pursuant to which we registered the exchange of the notes for substantially identical notes. The exchange of all the notes was completed on September 16, 2002.

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        The following information sets forth our Condensed Consolidating Balance Sheets as of March 30, 2003, and December 29, 2002, and the Condensed Consolidating Statements of Income and Cash Flows for the thirteen weeks ended March 30, 2003 and March 31, 2002. Investments in our subsidiaries are accounted for on the equity method; accordingly, entries necessary to consolidate the Parent Guarantor, Issuer, and all of its subsidiaries are reflected in the eliminations column. Separate complete financial statements of the Issuer and the Subsidiary Guarantors would not provide additional material information that would be useful in assessing their financial composition.

ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE THIRTEEN WEEKS ENDED MARCH 30, 2003
(In thousands, unaudited)

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ADOLPH COORS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 2002
(In thousands, unaudited)