Edgar Filing: COORS ADOLPH CO

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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Adolph Coors Company
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This filing consists of an investor presentation given on October 1, 2004 by Daniel J. O'Neill, President and Chief Executive Officer of Molson Inc., in connection with the proposed transaction between Adolph Coors Company and Molson Inc.

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Molson Coors Brewing Company
Reshaping the Competitive Brewing Landscape

Leo Kiely	Daniel J. O’Neill	October 2004
President and	President and
Chief Executive Officer	Chief Executive Officer
Coors Brewing Company	Molson Inc.

[LOGO]

Forward Looking Statements

This presentation includes “forward-looking statements” within the meaning of the U.S. federal securities laws. Forward-looking statements are commonly identified by such terms and phrases as “would”, “may”, “will”, “expects” or “expected to” and other terms with similar meaning indicating possible future events or actions or potential impact on the businesses or shareholders of Adolph Coors Company and Molson Inc. (separately and together the “Companies”). Such statements include, but are not limited to, statements about the anticipated benefits, savings and synergies of the merger between Adolph Coors Company and Molson, Inc., including future financial and operating results, Coors’ and Molson’s plans, objectives, expectations and intentions, the markets for Coors’ and Molson’s products, the future development of Coors’ and Molson’s business, and the contingencies and uncertainties to which Coors and Molson may be subject and other statements that are not historical facts. The presentation also includes information that has not been reviewed by the Companies’ independent auditors. There is no assurance the transaction contemplated in this presentation will be completed at all, or completed upon the same terms and conditions described. All forward-looking statements in this presentation are expressly qualified by information contained in each company’s filings with regulatory authorities. The Companies do not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain required approvals of the merger on the proposed terms and schedule; the failure of Coors and Molson stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer to realize than expected; and disruption from the merger making it more difficult to maintain relationships with customers, employees or suppliers. Additional factors that could cause Coors’ and Molson’s results to differ materially from those described in the forward-looking statements can be found in the periodic reports filed by Coors with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov). Neither Coors nor Molson undertakes and each specifically disclaims, any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

Stockholders are urged to read the joint proxy statement/management information circular regarding the proposed transaction when it becomes available, because it will contain important information. Stockholders will be able to obtain a free copy of the joint proxy statement/management information circular, as well as other filings containing information about Coors, without charge, at the Securities and Exchange Commission’s internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the Securities and Exchange Commission that will be incorporated by reference in the joint proxy statement/management information circular can also be obtained, without charge, by directing a request to Adolph Coors Company, 311 10th Street, Golden, Colorado 80401, Attention: Investor Relations, (303) 279-6565. The respective directors and executive officers of Coors and Molson and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information regarding Coors’s directors and executive officers is available in the 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission by Coors on March 12, 2004, and information regarding Molson’s directors and executive officers will be included in the joint proxy statement/management information circular. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained the joint proxy statement/prospectus and other relevant materials to be filed with the Securities and Exchange Commission when they become available.

Molson’s Vision Has Remained Consistent

1. To become one of the best performing brewers in the world, as measured by…

2. To remain one of the best performing brewers in the world, as measured by…

3. To regain the position as one of the best performing brewers in the world, as measured by…

[GRAPHIC]

Long Term Returns to Shareholders

Molson Has Delivered Best in Class Returns to Shareholders in Last Five Years

Last Five Fiscal Years

[CHART]

Fiscal 2004

[CHART]

Source: Bloomberg

Total returns in US$ at March 31, 2004

* Since IPO – November 2000

Current Footprint has Experienced Challenges in Last Six Months Increasing Risks of Previous Plan

Clear Priorities Exist in Each of the Existing Businesses				Growth Beyond Core
			Export	Growth Beyond Core
Canada	Brazil	USA	Strategy	M&A Activity

Share Gain:	Share Gain:	Resolve growth	Build international	Address risks from
• Segments	• With price	strategy with	volume through	continued market
• Regions		Coors	focus on 2-3	consolidation
• Outlets	Volume		investment
		Gain import	markets	Provide potential for
Strategic Pricing	Distribution	price status		sustained growth
			Seek to export to	and shareholder
Innovation		Identify product	additional markets	value potential
		portfolio	with limited
Deliver P125			investment of
			people or dollars

[GRAPHIC]	[GRAPHIC]	[GRAPHIC]	[GRAPHIC]

A-B like	Achieve targets	Execute plan to	Growth driver
consistency		become large

Three Year Focus / Immediate Priorities				Moved up in importance

Global Industry Consolidation Driving Partners to Moves that Could Impact Molson Value

• Interbrew / AmBev deal is a potential ‘trigger’ for ‘next wave’ of bigger consolidation moves

• All players revisiting their M&A growth game plan

• Mid-sized players realizing that they are likely sellers

• Giants are awake: AB and Heineken could accelerate the consolidation

• Molson’s major partners (Coors, Heineken) very likely to be involved in major deals impacting their Canadian and US strategies

Consolidation Could Lead to Value Destruction
Most Immediate Impact with Coors and/or Heineken

Potential Deals with Risk to Molson			Conflict with Molson Portfolio of Brands

Coors	Þ	Interbrew/AmBev	• Coors brand in Canada
			• Molson brands in US

	Þ	Heineken	• Heineken and Coors brands in Canada
			• Risk they go alone or team with other Cdn brewer

	Þ	SAB/Miller	• Moderate risk in Canada
			• US marginalized

Heineken	Þ	Anheuser-Busch	• Heineken brand in Canada
			• Increased domestic competition or pricing pressure

	Þ	Femsa	• Modelo brands in Canada

Risk to Molson is not only immediate impact, but loss of choice and options: Molson must preempt the outcome

Molson and Coors: The Right Combination

[LOGO]	&	[LOGO]
[GRAPHIC]	&	[GRAPHIC]

• North America’s oldest brewer		• Established in 1873 by Adolph Coors
• 13^thlargest brewer in the world		• 8^thlargest brewer in the world
• Leading position in Canada; opportunity in Brazil		• Leading brands in US and UK beer growth markets

Rich Brewing Heritage, Experienced Management, Leading Brands

Merger Improves Likelihood of Regaining the Vision

• To secure the current commercial relationship with Coors, which represents 20% of Molson’s total shareholder value

• To identify and obtain $175 million in synergies, which would not be available to Molson otherwise:

• Capitalizes on Molson’s proven track record in delivering cost savings

• To be able to drive top line sales in Canada through increased marketing investments behind Molson Canadian and Coors Light

• To reduce the financial impact of Brazil, allowing Molson shareholders greater time to receive the payback from the Brazil investment

• To expand brewing operations in Montreal and Toronto by adding 2M hl of beer: new jobs supported with new capital investment

Makes Perfect Sense

• Creates top-5 brewer with the operational scale to succeed in the global brewing industry

• Strong market positions in some of the world’s largest beer markets

• Broader geographic base provides diversified sources of revenue, profit and cash

• Experienced management team to ensure smooth integration and capitalize on growth opportunities

• 126 years of consumer industry experience

• Proven integration skills

• Natural strategic and cultural fit

• Complementary product lines and operational geography

• Existing strong working relationships

• Common values, operating philosophies and heritages

Objective is to deliver top quartile shareholder returns

With Broad Scope & Scale

• Pro forma LTM net sales and EBITDA(1)of approximately US$6.0 billion and US$1.0 billion, respectively

• Combined 2003 volume of 60M hl/51M US bbls

• Combined product portfolio of more than forty brands

[GRAPHIC]

• Distribution and/or licensing agreements with leading international brewers including Heineken, Grolsch, FEMSA, and Grupo Modelo

(1) EBITDA represents earnings before interest, tax, depreciation and amortization.

Enhanced Platform in Developed Markets, Balanced Emerging Market Exposure

• Strong positions in world’s highest margin beer markets

• Growth opportunities through underdeveloped regions/brands in mature markets and Brazil

2003 Volume 60M hl

[CHART]

LTM Net Sales US$6B

[CHART]

LTM EBITDA US$1B

[CHART]

(1) Includes Coors’ America’s segment

(2) Includes Coors’ Europe segment

Strong geographically diversified company

With Leading Positions in Key Markets

			All Brands
Country	Top Brand	Rank	Market Share		Rank

Canada	[GRAPHIC]	#1	43	%	#1

United Kingdom	[GRAPHIC]	#1	21	%	#2

United States	[GRAPHIC]	#3	11	%	#3

Brazil	[GRAPHIC]	#3	11	%	#3

Source: Datamonitor and Brewers of Canada (2003)

Strong brands in some of the world’s largest beer markets

Coors Growth Model

• Leverage strength in high-share markets to grow more strong markets

• U.S. – 1^st:distribution, 2^nd: invest with distributors (50/205)

• Drivers: YAM, Hispanic programming, trial channels

• U.K. – Scotland, SE/London, Carling X-Cold, Coors Fine Light

• International:

• Mexico: Export with FEMSA sales/distribution

• China: largest global beer market (volume), 20 cities (no breweries)

• Japan: Zima (Coors sales force)

Reduce costs to reinvest against the front-end, grow returns on capital

Coors Performance Overview: 2003

• Improvements made in key areas of the business

• Continued investments in future growth

• Generated cash and exceeded debt repayment goals

• Strengthened financial position; strengthened and grew returns on capital

In the most recent fiscal year, Coors emerged a stronger company in a very tough year.

Coors Americas Segment: Coors Brewing Company

• Continued strong U.S. pricing environment

• Share maintained in a flat, highly competitive beer market

• Refined marketing strategy gaining traction with key demographic groups

• Sales organization strengthened and making progress in key markets (Hispanic) and channels (national accounts, convenience stores)

• Proven track record in improving efficiency and reducing cost of U.S. operations (Goal: US$100mm in next 5 years)

• Consistently able to generate cash, pay down debt

• Canada: 7+% volume growth; 28% pretax income growth in 2003

Coors Europe Segment: Coors Brewers Limited

• Carling #1 U.K. beer brand – 30% larger than #2 brand

• Significant improvements in balancing volume and margins

• Achievements in productivity and cost reductions (new packaging lines in Burton, outsourcing of kegs and pub servicing)

• Long-term market trends play to Coors’ strengths: growth in lagers, move toward off-premise/chains, where brand building is key

• 2003: Grew volume 7% and share 1.2 percentage points to 20.3%

In the UK, Consistent Strong Growth in Both the On-Trade…

Owned Brand Market Share - On Trade

[CHART]

On-Trade (~65% of CBL volume)

…and the Off-Trade

Owned Brand Market Share - Off-Trade

[CHART]

Off-Trade (~35% of CBL volume)

Balanced Board & Management Team

Molson Independent		Chairman E. Molson		Coors Independent

Molson Independent	Office of Synergies & Integration			Coors Independent

Molson Independent	Vice Chairman D. J. O’Neill		CEO L. Kiely	Coors Independent

Molson Family				Coors Family

	Elected Independent	Elected Independent	Elected Independent	Coors Family

Synergies

	Expected Savings		% of Pro Forma Cost Base
	(US$M)

Brewery Network Optimization	$	60	1.1	%

Procurement Savings	43		0.8

SG&A	40		0.8

Best In Class Savings	12		0.2

Organizational Design	10		0.2

Other	10		0.2

Total	$	175	3.3	%

Molson Coors has identified a clear path to substantial synergies

Profit Impact and Estimated Timing

Impact on EBITDA of 100% Synergies

[CHART]

Expected Timing of Synergies

[CHART]

50% of synergy capture to occur in the first 18 months

Significant Opportunity for Margin Expansion

											Molson Coors
	EBITDA to Net Sales										Without		With 100%
	CY99		CY00		CY01		CY02		CY03		Synergies		Synergies

Molson*	18.3	%	18.9	%	20.3	%	22.9	%	22.8	%
											16.5	%	19.5	%
Coors	12.1	%	12.2	%	12.2	%	14.1	%	13.6	%

AmBev	21.1	%	28.7	%	30.5	%	36.9	%	35.4	%

A-B	25.9	%	26.4	%	27.6	%	28.2	%	28.8	%

Interbrew	23.3	%	21.2	%	21.0	%	21.0	%	21.3	%

Heineken	17.2	%	17.1	%	17.5	%	17.6	%	20.2	%

* Years aligned for comparison purposes; CY99 to CY01 as reported in F’02 annual report under the comparable basis; CY02 and CY03 exclude gains on sales and charges for rationalization

US$175M in synergies represent 300 basis points of margin improvement with significant opportunities for further margin expansion

Revenue Growth Opportunities

Canada

• Unleash Coors Light; redirect dollars from Canadian Light to Canadian

• Support value entry to regain share and drive volume savings

• Utilize the ARC technology from UK to drive on-premise listings

USA

• Continue to support Coors Light in developmental regions, capitalizing on improving brand attribute ratings

• Expand testing of Marca Bavaria

• Leverage Molson Canadian, Zima, and Molson XXX in the complete US system

• Opportunity for Molson Lager

Brazil

• Investigate the appeal of Coors Light

Funding from synergies provides additional support for critical brands in key markets

Enhanced Financial Strength

Pro Forma LTM Molson Coors

(US$M)

Net sales	$	6,036

Operating income	694

Margin	11.5		%

EBITDA	996

Margin	16.5		%

Free cash flow*	723

* Defined as EBITDA – CAPEX

CAD/USD exchange rate of 1.34

Excludes potential synergies

LTM (last twelve months) ended June 30, 2004

• Substantially enhanced financial strength, and financial flexibility

• Net Debt / LTM EBITDA ratio of 1.9x

• LTM Interest coverage of 7.1x

• US$175M in identified synergies

Financial strength and flexibility drives growth in revenue, profits and returns

Molson Coors – A Key Strategic Step

Value Creation		Critical Mass		Vision

•	Transaction unlocks shareholder value through US$175M of merger synergies	•	Creates top-5 brewer with global scale and diversity	•	Natural strategic and cultural fit – new company to combine best of both organizations


		•	Strong cash flow and balance sheet for further investment in business and Molson Coors’ future growth
•	Experienced management team can deliver upon key objectives			•	Vision shared by family owners who have been growing the business for generations


				•	Best-run global beer company

Enhanced position in consolidating global brewing industry

Q & A

Supplemental Information

Last Twelve Months Pro Forma Income Statement

					Combined
(US$M)	Molson		Coors		Pre-synergies		$175M Synergies
Net sales	1,890		4,146		6,036		6,036

EBIT	365		331		696		871

*Margin*	*19.3*	%	*8.0*	%	*11.5*	%	*14.4*	%

EBITDA	413		585		998		1,173

*Margin*	*21.8*	%	*14.1*	%	*16.5*	%	*19.4*	%

Net income	187		174		361		475	(1)

Free cash flow*	348		377		725		900

LTM as of June 30, 2004

CAD/USD exchange rate of 1.34

Excludes purchase accounting adjustments

* EBITDA – Capex

(1) Synergies taxed at 35%

Margin Expansion, Stronger Cash Flow, Increased Profits

Pro Forma Balance Sheet

(US$M)	Molson		Coors		Combined
Cash	$	10.8	$	36.2	$	47.1
Total current assets	$	367.6	$	1,128.5	$	1,496.1

PP&E	742.3		1,411.0		2,153.3
Total assets	$	2,931.2	$	4,532.0	$	7,463.1

Total current liabilities	$	760.9	$	1,175.9	$	1,936.8
Total debt	840.6		1,142.1		1,982.7
Minority interests	93.5		29.8		123.2

Shareholders equity	929.7		1,425.4		2,355.1
Total liabilities and shareholders equity	$	2,931.2	$	4,532.0	$	7,463.1

As of June 30, 2004

CAD/USD exchange rate of 1.34

Excludes purchase accounting adjustments

Low leverage provides Molson Coors the financial flexibility to grow