-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkRv9xGJWBMOub3V8d5linbczSm7h2BAomHzCpDNxxrZWPhvCPFomMTXnexLHmZc JmiMLimkVu8awQ9EuFlaqg== 0000892793-97-000015.txt : 19970328 0000892793-97-000015.hdr.sgml : 19970328 ACCESSION NUMBER: 0000892793-97-000015 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACX TECHNOLOGIES INC CENTRAL INDEX KEY: 0000892793 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD CONTAINERS & BOXES [2650] IRS NUMBER: 841208699 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14060 FILM NUMBER: 97564500 BUSINESS ADDRESS: STREET 1: 16000 TABLE MOUNTAIN PKWY CITY: GOLDEN STATE: CO ZIP: 80403 BUSINESS PHONE: 3032717000 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 0-20704 ACX TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Colorado 84-1208699 (State of incorporation) (I.R.S. Employer Identification No.) 16000 Table Mountain Parkway, Golden, Colorado 80403 (Address of principal executive offices) (Zip Code) (303) 271-7000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class None Name of each exchange on which registered None Securities registered pursuant to Section 12(g) of the Act: $.01 par value Common Stock (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] As of March 24, 1997, there were 27,970,554 shares of common stock outstanding. The aggregate market value of such shares, other than shares held by persons who may be deemed affiliates of the Registrant, was $280,276,879. DOCUMENTS INCORPORATED BY REFERENCE Registrant's Proxy Statement filed in connection with the 1997 Annual Meeting of Shareholders is incorporated by reference into Part III. ACX TECHNOLOGIES, INC. Unless the context otherwise requires, references herein to the Company include ACX Technologies, Inc. (ACX Technologies) and its subsidiaries, including Graphic Packaging Corporation and its subsidiaries (collectively referred to as Graphic Packaging), Coors Porcelain Company and its subsidiaries (collectively referred to as Coors Ceramics), Golden Aluminum Company and its subsidiaries (collectively referred to as Golden Aluminum) and Golden Technologies Company, Inc. and its subsidiaries (collectively referred to as Golden Technologies). PART I ITEM 1. BUSINESS (a) General Development of Business The Company, through its wholly-owned subsidiaries, manufactures advanced technical ceramics products for industrial markets and high-performance consumer and industrial packaging products. In addition to these core businesses, the Company owns technology-based developmental businesses. The Company's strategy is to maximize the competitive positions and growth opportunities of its core businesses and develop promising new technologies with potential for profitable commercial industrial application. The strategy includes review of business acquisitions, joint ventures and dispositions of under-performing assets. The Company was incorporated in Colorado in August 1992 as a holding company for the packaging, ceramics, aluminum and developmental businesses formerly owned by Adolph Coors Company (ACCo). Effective December 27, 1992, ACCo distributed to its shareholders all outstanding shares of the Company. In 1996, the Board of Directors adopted a plan to dispose of the Company's aluminum rigid container sheet business, Golden Aluminum. On March 1, 1997, the sale of Golden Aluminum was completed for $70 million, $10 million of which was received at closing and $60 million is due within two years. During the two year period, the purchaser has the right to return Golden Aluminum to the Company rather than pay the $60 million obligation. The initial payment of $10 million is non-refundable. The working capital of Golden Aluminum, which was not part of the sale agreement, will be liquidated during the first half of 1997 and is expected to produce between $50 million and $55 million in cash. The Company's principal executive offices are located at 16000 Table Mountain Parkway, Golden, Colorado 80403. The Company's telephone number is (303) 271-7000. (b) Financial Information About Industry Segments Certain financial information for the Company's business segments is included in the following summary: Operating Depreciation Additions Net Income and to (In thousands) Sales (Loss) Assets Amortization Properties 1996 Ceramics $276,352 $44,204 $214,635 $16,159 $30,291 Packaging 346,547 41,048 205,705 19,959 13,314 Developmental businesses 89,481 (48,447) 104,138 5,757 12,558 Discontinued operations --- --- 116,552 7,307 1,036 Corporate --- (8,169) 35,662 341 327 $712,380 $28,636 $676,692 $49,523 $57,526 1995 Ceramics $270,877 $47,395 $189,191 $14,046 $25,122 Packaging 308,109 34,551 197,587 16,945 20,149 Developmental businesses 81,867 (13,740) 80,350 5,643 7,426 Discontinued operations --- --- 268,260 12,618 7,177 Corporate --- (9,500) 50,098 605 153 $660,853 $58,706 $785,486 $49,857 $60,027 1994 Ceramics $231,288 $33,091 $165,804 $11,831 $18,949 Packaging 258,833 27,889 197,330 13,632 8,407 Developmental businesses 88,584 (13,174) 88,852 8,842 5,920 Discontinued operations --- --- 297,962 11,573 9,768 Corporate --- (9,355) 10,342 222 53 $578,705 $38,451 $760,290 $46,100 $43,097 Operating income (loss) for reportable segments is exclusive of certain unallocated corporate expenses. Corporate assets include cash and cash equivalents and certain properties. (c) Narrative Description of Business Segments Ceramics Business General. Coors Ceramics develops, manufactures and sells advanced technical ceramic products across a wide range of product lines for a variety of structural and electronic applications. Coors Ceramics, which has been in business for over 75 years, is the largest U.S.-owned, independent manufacturer of advanced technical ceramics. Markets and Products. Coors Ceramics participates in two major markets of the advanced technical ceramics industry: structural and mechanical applications (structural), and electronic applications and advanced electronic ceramic packages (electronics). Ceramic materials are ideal for structural applications because of their hardness, strength, wear resistance and ability to withstand extremely high temperatures and be precisely machined. They are widely used in electronics applications because of their high electrical resistivity, superior strength and heat resistance. The primary uses of structural ceramics are as components in mechanical devices. Examples include slitting knives and other processing and sizing devices used in high-speed paper making machines; seals and other components of pumps installed in automobiles, home appliances, chemical processing and blood analysis equipment; fixtures for holding silicon wafers in semiconductor chip fabrication; valves used in fluid handling; precipitators used in pollution control equipment; power tubes used in electrical power generation installations; and linings for pipe used in the processing of coal and other abrasive materials. Some principal users of structural ceramics include the automotive, semiconductor processing equipment, appliance, chemical, pulp and paper processing, pollution control, power generation and wire manufacturing industries. A major application of electronic ceramics is the substrate or base for various electronic circuits, pressure sensors and semiconductor chips, which are critical components in computers, communications systems, automotive controls and military electronics. Electronic ceramics are also part of electronic components, such as capacitors and insulators, used in electrical devices. Advanced electronic ceramic packages are casings that surround a semiconductor chip, both insulating it and connecting it to printed circuitry. These packages are used in applications which require high reliability such as cellular telephones, pagers and radar detection devices. Primary users of electronic ceramic components include the computer, telecommunications, defense, automotive and electronic components industries. Applications of electronic ceramic components include global positioning systems, automotive anti-lock brake systems, electronic ignition systems and substrates in computers and telephone switching systems. Coors Ceramics' products are engineered and custom designed to meet specific customer requirements. Successful product design requires consultation with customers in their choice of the correct base material and selection by Coors Ceramics of appropriate manufacturing processes. Because advanced ceramic products are sold primarily to industrial manufacturers for incorporation into their products or processes, the industry is sensitive to changes in economic conditions that affect the end users of ceramic products. For example, sales fluctuations in the domestic automobile industry could directly affect Coors Ceramics' sales to the automotive market because an American car currently contains approximately 17 ceramic components. This sensitivity was demonstrated by the increase in operating income in 1995 compared to 1994 of 43.2% which was driven in large part by the expanding semiconductor and telecommunications industries. In 1996, these industries experienced declines and Coors Ceramics' operating income decreased 6.7%. Strategy. Among Coors Ceramics' most valuable assets is its reputation for expert custom product design, product quality and customer service. Its strategy emphasizes alliances with key customers to develop value-added, engineered ceramic products. Coors Ceramics has cooperative development and sole-supplier agreements with several major customers. It continuously evaluates new ceramic materials, often in partnership with customers, in order to anticipate and satisfy customers' future needs and to offer a greater range of products with improved performance characteristics. Coors Ceramics also aggressively pursues new applications for ceramic to replace metal and other conventional materials. Coors Ceramics has developed zirconia, tungsten carbide and silicon carbide based ceramic products and is developing other materials to complement and enhance its conventional alumina based product lines. It is a leader in introducing new commercial uses of ceramic components to replace metal or plastics in applications such as components in paper making machines and valves for fluid dispensing. In 1997, Coors Ceramics will continue to devote resources to new product and material development and will be challenged to manage the cyclicality of its business, which fluctuates with certain key segments of the U.S. and foreign economies. Coors Ceramics targets proven industrial markets and new market segments that it expects to provide growth potential, especially markets which are expected to grow more rapidly than the overall economy. These markets include power distribution, both in actual distribution equipment and in high temperature electrostatic precipitators that remove particulates from power plant emissions, and fluid handling, primarily in the area of ceramic components in valves, pumps and flow meters for chemical, food processing and petro-chemical applications. Management believes there are significant near-term growth opportunities in the power tube and pressure sensor markets. In addition, long- term growth opportunities are expected in the semiconductor and telecommunications industries which economists generally believe will begin to recover in late 1997 or early 1998. Growth is also expected in electronic ceramic packages as the use of pagers and cellular telephones expands worldwide. Technology license agreements present additional growth opportunities. In the fourth quarter of 1995, a licensing agreement with a major U.S. company was entered into for the production of "Controlled Collapse Chip Connection" (C4) ceramic packages. These products are extremely sophisticated and are used in high-end semiconductor applications. Coors Ceramics is completing installation of equipment necessary for full scale production. In addition, customers are currently evaluating the Coors Ceramics' C-4 pilot-line products. Completion of the scale-up and product testing and receipt of customer approvals and customer orders, if any, could take up to a year or more, depending upon the specifications established by customers and the testing required. Manufacturing and Raw Materials. Ceramic manufacturing involves several successive operations. Initially, a powder such as zirconia or alumina is mixed with binding and other materials that will provide the ultimate product with the desired performance characteristics. The second step involves forming operations, such as dry or isostatic pressing of powder or casting of a liquefied form of base material. The ceramic components may then undergo grinding or cutting operations to approximate the desired final configuration. The parts are usually then fired in a high temperature furnace and may require further grinding, finishing, metal plating or additional firing, depending upon component specifications. Coors Ceramics' manufacturing operations involve extensive testing and quality assurance procedures. Raw materials used in Coors Ceramics' operations are readily available from diverse sources. Coors Ceramics purchases alumina powder, the primary raw material for its manufacturing process, and other ceramic powders, binders and raw materials from multiple sources. Coors Ceramics owns or leases approximately 1.7 million square feet of manufacturing space in the United States and abroad. Overall, Coors Ceramics operated at approximately 67% of its available capacity in 1996 primarily due to lower capacity utilization at plants servicing the telecommunications and semiconductor industries. Capacity, which is not currently a major constraint, ranged between 29% and 90% at Coors Ceramics' 21 manufacturing facilities. These facilities, each of which specializes to some extent in a particular market, are for the most part strategically located to optimize customer service while minimizing manufacturing and transportation costs. Coors Ceramics continues to invest in computerized, high precision manufacturing equipment and believes it is well positioned for growth opportunities in both domestic and foreign markets. During 1996, Coors Ceramics invested in material preparation and other capacity expansion at some of its locations and the above mentioned C4 project. Sales and Distribution. Products are sold primarily to manufacturers, including original equipment manufacturers, for incorporation into industrial applications and products. Sales are made through direct sales employees located throughout the United States and Europe and through manufacturers' representatives. Coors Ceramics' sales personnel, many of whom are engineers, receive substantial internal technical assistance and engineering support because of the highly technical nature of its products. International sales, primarily in Western European and Far East markets, constituted approximately 29%, 28% and 27% of ceramic product sales in 1996, 1995 and 1994, respectively. Although most of these sales are denominated in U.S. dollars, Coors Ceramics selectively hedges the U.S. dollar against foreign currencies used in these markets in order to mitigate the effects of adverse currency fluctuations. Structural products represented approximately 71%, 64% and 60% of Coors Ceramics' total net sales for 1996, 1995 and 1994, respectively, with electronic products representing the remainder of net sales. No single product line or class accounted for more than 10% of the Company's consolidated net revenue although sales of various product lines to the petro-chemical, power generation and mining, and automotive industries comprised 14.2%, 13.2% and 11.0%, respectively, of Coors Ceramics' 1996 consolidated net revenue. Sales to the semiconductor/data processing and telecommunications industries represented 9.5% and 8.4% of Coors Ceramics' 1996 consolidated net revenue, respectively. Coors Ceramics' 25 largest customers accounted for approximately 38% of its net sales for 1996, with no single customer representing more than 10% of Coors Ceramics' annual sales. Commitment to consistent high quality and customer service has earned Coors Ceramics sole supplier status with several major U.S. manufacturers and a dominant position with several other major customers. As of March 1, 1997, Coors Ceramics had backlog orders of approximately $95.5 million, as compared to $96.2 million as of March 1, 1996. Most of the 1997 backlog is expected to be shipped before the end of the second quarter of 1997. Customers may place annual orders, with shipments scheduled over a twelve month period. Backlog orders tend to be higher in the structural products segment because of the longer time between order and delivery dates under purchase orders. Sales are not seasonal, although they are sensitive to overall economic conditions that affect the users of advanced ceramic products. Backlog is not necessarily indicative of past or future operating results. Competition. Competition in the advanced ceramics industry is vigorous and comes chiefly from Kyocera Corporation (Japan), Morgan Crucible Co. (United Kingdom), NGK Insulators, Ltd. (Japan), Cerasiv (Germany) and Hoechst Group (Germany). Principal competitive factors in the worldwide market are price (including the impact of currency fluctuations), quality and delivery schedules. In recent years, competitive pressures have caused former major domestic manufacturers to go out of business or be acquired by foreign entities. Coors Ceramics is a major competitor in most structural and electronic markets it serves and enjoys a prominent position in some product lines. For worldwide advanced electronic ceramic packages, Kyocera Corporation is dominant. Coors Ceramics is the largest U.S.-owned independent manufacturer of advanced technical ceramics and has long standing relationships with major corporations based on consistent high quality and service, which Coors Ceramics believes gives it an advantage in domestic and certain foreign markets. Ceramic materials offer advantages over conventional materials for applications in which certain properties are important, such as high electrical resistivity, hardness, high- temperature strength, wear and abrasion resistance and precise machinability. Ceramic products, however, face competition from metals and other materials. Plastics, for example, are being substituted for ceramic in certain computer and telecommunications applications because of their lower cost and lighter weight. Coors Ceramics believes that the overall value of ceramic products will continue to be attractive to customers. Product Development. New product and process improvement efforts are continually undertaken within the manufacturing operations including new or improved materials and processes. For information about the Company's expenditures for research and development and other information, see "Research and Development" below. Packaging Business General. Graphic Packaging develops, manufactures and sells value-added paperboard folding carton and flexible packaging products. Value-added packaging has special characteristics such as high-impact graphics, resistance to abrasion, and barriers to moisture, gas penetration, solvent penetration and leakage. Graphic Packaging's products are sold to manufacturers that use them as primary packaging for end products. Graphic Packaging's folding carton manufacturing business, which includes four folding carton facilities, began in 1974 as part of the vertical integration of ACCo's beer business operated through its subsidiary, Coors Brewing Company (Coors Brewing). Of the four folding carton operations, two were added in 1996; one through acquisition (see below) and one through construction. Sales of beer can wraps, bottle cartons, carriers, wraps and labels accounted for approximately 31%, 37% and 41% of Graphic Packaging's total sales for 1996, 1995 and 1994, respectively. Graphic Packaging has six flexible packaging operations: two were acquired in 1988; the remaining four were acquired in 1994. On March 1, 1996, Graphic Packaging acquired Gravure Packaging, Inc., a leading manufacturer of high-quality, rotogravure-printed folding cartons for the packaged consumer goods industry, including tobacco, quick service restaurant, and personal care product companies. Gravure Packaging, located in Richmond, Virginia, had fiscal 1996 sales of over $44 million. Graphic Packaging believes that this acquisition rounds out its specialty and surface printing capabilities, provides an east coast folding carton manufacturing operation and provides greater customer diversity and higher unit volume. Markets and Products. The product packaging industry consists of three market segments: paperboard packaging, which includes corrugated products, folding cartons and food service containers such as disposable plates and cups; flexible packaging, such as printed and laminated bags, pouches and roll stock films and foils used for lids, overwraps and labels; and rigid packaging, such as cans and bottles. Packaging manufacturers generally fall into two groups: value-added and commodity. The manufacture of value-added packaging requires numerous and complex operations that are not necessary in the production of commodity packaging. Graphic Packaging classifies its adhesive and in-mold labels as a part of its folding carton operations while roll stock film labels are included under the flexible packaging operations. The folding carton industry is a $5 billion annual industry that has grown at an annualized rate of about 2% per year between 1993 and 1996. The industry was flat in 1996 compared to 1995 primarily due to the significant decrease in board prices, which is typically passed through to customers, and the industry's continuing efforts to minimize package bulk. From 1993 to 1996, the majority of Graphic Packaging's internal folding carton growth came from packaging for Coors Brewing, detergent, cereal, and premium bar soap markets. In addition, the 1996 acquisition of Gravure Packaging, with sales primarily to the tobacco and quick service restaurant markets, provided substantial growth in 1996. The concentrated detergent and premium bar soap markets are now in their mature life cycle which may result in moderate continued growth. However, with the purchase of a new label press in 1996, Graphic Packaging has increased capacity and believes it has state of the art technology and unique capabilities with which to enter and expand its presence in the label market. In manufacturing folding cartons, Graphic Packaging uses an internally developed, patented composite packaging technology, Composipac[TM] (Composipac), which provides finished products with high quality graphics that have enhanced abrasion protection and moisture, air or other special barrier properties. Graphic Packaging's Composipac technology is designed to meet the continuing specialized needs of its beverage, powdered detergents and soap customers. Graphic Packaging believes that the technology also has applications in other significant market niches. The flexible packaging industry is a $16 billion annual industry which has grown approximately 4% on an annualized basis between 1993 and 1996. The mid-1994 acquisition of four flexible packaging plants contributed significantly to Graphic Packaging's flexible sales increases during this period. Flexible packaging offers advantages over other packaging mediums, such as light weight, high barrier protection and cost-effectiveness. Significant product lines for flexible packaging include packages for pet foods and personal care products, laminated rollstock for labels, snack foods and candies and bags used to package photographic development paper, as well as bags that resist penetration of moisture and leakage of contents for use by manufacturers of powdered herbicides, fertilizers and other agricultural chemicals. These bags require complex laminations and extensive printing and instructional labeling. Other flexible packaging products made by Graphic Packaging include gift wrap paper, coffee bag and beverage laminations and medical health care packaging. Graphic Packaging believes that recently completed capital additions and upgrades to printing and bag making equipment puts it in a position to increase sales in existing flexible packaging markets. Strategy. Graphic Packaging's strategy is to establish market leadership in selected existing market segments by increasing its customer base and adding significant new high- margin products. Graphic Packaging intends to emphasize its ability to provide innovative products with value-added characteristics to meet exacting customer specifications. Graphic Packaging continues to focus on commercializing new products and processes to serve existing and new markets, and to pursue niche acquisitions that complement its existing business. Graphic Packaging is in the process of developing a unique packaging system, known as ComposiGard[TM] (a film-lined carton), that management believes will provide a cost effective alternative with numerous advantages over the conventional "bag- in-box" packaging, such as cracker or cereal cartons. Graphic Packaging has completed a pilot line to produce limited quantities of ComposiGard[TM] and is in the process of discussing applications with potential customers. Graphic Packaging believes that this product has a strong market potential, primarily in the food industry, although orders from consumer products companies and the subsequent construction of a full- scale production line are necessary before its potential can be realized. Manufacturing and Raw Materials. Graphic Packaging's patented Composipac process involves multiple processing stages, including extruding plastic film, color printing on the film, laminating the film layer or layers to paperboard and cutting and gluing the lamination to the final specifications. Graphic Packaging's flexible packaging division produces printed, laminated and coated bags, and pouches; laminated materials in roll stock form; and other products. Its technical capability centers around a proprietary line of heat sealed bags, coating formulations and processes and other package characteristics, such as reclosure and tamper evident features. Graphic Packaging uses a variety of raw materials, such as paper, paperboard, inks, aluminum foil, plastic films, plastic resins, adhesives and other materials, which are available from domestic and foreign suppliers. Little or no difficulty has been experienced in obtaining adequate supplies of raw materials and difficulty is not anticipated in the future. While multiple sources of these materials are available, Graphic Packaging prefers to develop strategic long standing alliances with vendors in order to provide a guaranteed supply of materials, satisfy customer specifications and obtain the best quality, service and price. Business disruptions or financial difficulties of a sole source supplier, which Graphic Packaging does not anticipate, could have an adverse effect by increasing the cost of these materials and causing delays in manufacturing while other suppliers are being qualified. Sales and Distribution. Products are sold primarily to consumer product manufacturers in the United States and Canada. Sales are made through direct sales employees working from Graphic Packaging's manufacturing facilities and sales offices around the United States, and through independent sales representatives. Graphic Packaging's selling activities are supported by its technical service and research staff. Folding carton sales accounted for approximately 56%, 50% and 57% of Graphic Packaging's total sales for each of the years ended 1996, 1995 and 1994, respectively, with the remainder coming from flexible packaging sales. The increase in Graphic Packaging's 1996 folding carton sales is primarily due to the 1996 acquisition of Gravure Packaging, Inc. Gravure Packaging's 1996 sales were 23% of Graphic Packaging's total 1996 folding carton sales. Approximately 54%, 73% and 72% of folding carton sales were to Coors Brewing for the same periods, with detergent, soap and tobacco manufacturers and quick service restaurants accounting for most of the balance. Flexible packaging sales during this period consisted primarily of personal care, snack foods and beverage label products and cookie, photographic and pet food bags. Most of Graphic Packaging's sales are made under sales contracts at prices that are subject to periodic adjustment for raw material and other cost increases. Products are made in accordance with customer specifications. Including the effect of acquisitions, Graphic Packaging had approximately $57.5 million in unshipped backlog orders, as compared to approximately $53.5 million as of March 1, 1997 and 1996 respectively. Of the 1997 backlog, most is expected to be shipped before the end of the second quarter of 1997. Backlog numbers and comparisons vary because of a number of factors and are not necessarily indicative of past or future operating results. Competition. Graphic Packaging is subject to strong competition in most markets it serves. The packaging industry continues to experience intense price pressures. The installation of state of the art equipment by manufacturers intensifies this competitive pricing situation. A relatively small number of large suppliers dominate a significant portion of the folding carton segment of the paperboard packaging market. Major U.S. competitors in the paperboard packaging segments include Jefferson Smurfit Corporation, James River Corporation of Virginia, Field Container Corporation and Riverwood International Corporation. There are an increasing number of competitors offering packaging with Composipac-like qualities. The flexible packaging market has numerous competitors, varying in size. Graphic Packaging's flexible competitors include Bemis Company, Inc., James River Corporation of Virginia, Union Camp Corporation and American National Can Company. Although price is an important factor in the packaging market, Graphic Packaging believes that the quality, range and technical innovation of products and the timeliness and quality of customer service are significant competitive factors. Product Development. Graphic Packaging's research and development staff work directly with the sales and marketing staff in meeting with customers and pursuing new business. Graphic Packaging's development efforts include extending shelf life of evaporative bar soaps, reducing production costs and enhancing package appearance through quality printing and other graphics. Potential new product development efforts are expected to involve sift-proof cartons, linerless cartons and liquid containment packages and other packaging innovations. In addition, Graphic Packaging maintains a pilot line at its Boulder, Colorado folding carton operation and at its Malvern, Pennsylvania flexible packaging operation for product development and to perform test runs in limited quantities for customers. Developmental Businesses General. The Company's developmental businesses and the major part of research and development efforts are operated through Golden Technologies. In 1996, Golden Technologies operated the following businesses either directly or through one of its subsidiaries: a solar energy distribution business; a corn-wet milling business; a real estate partnership; and other operations focused on the development and commercialization of new technologies, primarily biodegradable polymers. In 1997, the Company decided to exit the high-fructose corn syrup portion of the corn-wet milling business and Golden Technologies is currently in the process of converting the operation to a starch- only facility. Golden Technologies focuses on the development and commercialization of new technologies. Ongoing evaluation of the growth and profit potential of a project is an inherent strategy of Golden Technologies and may result in a decision to exit the activity. Corn-Wet Milling. In 1996, Golden Technologies' corn wet milling plant, located in Johnstown, Colorado, produced and distributed carbohydrate products, including high-fructose corn syrup and refined corn starch. The Johnstown facility contributed approximately 11% of the Company's consolidated net sales for both 1996 and 1995 and 12% for 1994. Nearly all refined corn starch produced at the Johnstown plant has been sold to Coors Brewing for use in beer production. The corn wet milling industry in the United States is highly competitive. The three largest manufacturers account for approximately 67% of the total domestic fructose market, with the Johnstown mill producing approximately 1%. Because of the oversupply present in the corn fructose marketplace and significant declines in fructose selling prices, Golden Technologies decided in February 1997 to exit the high-fructose corn syrup business. As a result of this decision, the facility is in the process of being converted to a starch-only operation in conjunction with Golden Technologies' three year contract to provide starch to Coors Brewing. Under a marketing agreement with Coors Brewing, Golden Technologies will continue to market yeast and other brewery by-products produced by Coors Brewing to the livestock feed and pet foods industries. The major raw material for the starch operation is corn, which is purchased from various sources. For additional information on the decision to exit the high- fructose corn syrup business, see the discussion under the caption "Asset Impairment and Restructuring Charges" in Note 3 of Notes to Consolidated Financial Statements included in Item 8 of Part II of this report. Solar Energy: In 1996, Golden Technologies acquired a majority interest in Photocomm, Inc., (Photocomm) one of the world's largest integrators and distributors of solar electric power systems and products. Photocomm markets complete electric power systems and system components. More than 60% of Photocomm's net sales are for industrial applications, targeted principally toward the growing wireless and cellular communications markets. Photocomm's markets are primarily in the United States but also include international customers. Real Estate Partnership. In connection with the Company's spin-off from ACCo, a limited partnership was formed between Coors Brewing, as the limited partner, and a subsidiary of Golden Technologies, as the general partner. The partnership owns certain real estate previously owned directly by ACCo or Coors Brewing. The partnership's purpose is to own, develop or maintain and dispose of the partnership's properties. Biodegradable Polymers. Golden Technologies is developing a proprietary technology for the production and application of polymers from renewable resources which are biodegradable. The major goal of the project is to develop a cost-effective manufacturing process that would make biodegradable materials a viable choice for a wide variety of uses such as consumer packaging, disposable hygiene products and food service packaging. Golden Technologies began construction of a semi- works lactide monomer facility in 1996 to evaluate the market and make a determination on the viability of a large scale commercial operation. This facility is targeted to become operational around the end of the first quarter of 1997. In addition, a polylactide facility is expected to be completed by the second quarter of 1997. In general, Golden Technologies' projects are high risk ventures and may take years before any potential is realized. The Company's philosophy is to manage net spending on research projects to between $6 million and $12 million annually. During 1996, Golden Technologies received approximately $3.4 million in funds from federally sponsored best efforts cost sharing programs related to certain of these research projects. Discontinued Operations In 1996, the Board of Directors adopted a plan to dispose of the Company's aluminum rigid container sheet business operated by Golden Aluminum. The sale of Golden Aluminum was completed on March 1, 1997 for $70 million, of which $10 million was paid at closing and $60 million is due within two years. In accordance with the purchase agreement, the purchaser has the right to return Golden Aluminum to the Company at any time during the two year period rather than pay the $60 million obligation. The initial payment of $10 million is non-refundable. The working capital of Golden Aluminum, which was not part of the sale agreement, will be liquidated during the first half of 1997 and is expected to produce between $50 million and $55 million in cash. See "Discontinued Aluminum Operations" in Note 2 of Notes to Consolidated Financial Statements included in Item 8 of Part II of this report. Dependence on Major Customer At the time of the spin-off from ACCo, Graphic Packaging, Golden Aluminum and Golden Technologies entered into five year supply agreements with Coors Brewing, and have relied on these agreements for a significant portion of their revenues. During 1995, Golden Aluminum canceled its supply agreement with Coors Brewing for 1996 and 1997 and entered into one year agreements for each of these years. Sales to Coors Brewing of packaging products and refined corn starch accounted for approximately 17%, 19% and 21% of the Company's consolidated sales for 1996, 1995 and 1994, respectively; however, future sales may vary from historical levels. In early 1997, Graphic Packaging entered into a new supply agreement with Coors Brewing to supply packaging products under a three year, rolling term contract commencing January 1, 1997 that provides stated quantity commitments and annual repricing. In addition, the corn starch and brewery byproducts agreements with Golden Technologies were extended through 1999. Of Graphic Packaging's total sales for 1996, approximately 31% consisted of sales to Coors Brewing. This percentage represented a decrease from approximately 37% and 41% of Graphic Packaging's total sales in 1994 and 1993, respectively. Also, between $12 million and $13 million of the Company's consolidated sales for each of the past three years resulted from sales to Coors Brewing of refined corn starch produced at the Johnstown corn wet milling plant. Golden Technologies also has a marketing arrangement with Coors Brewing under which it purchases and resells yeast and other brewery by-products. In recent years, Graphic Packaging has sought to increase sales to unaffiliated customers. The addition of four flexible packaging plants in July 1994 and a folding carton facility in March 1996 reduced the percentage of Graphic Packaging's sales to Coors Brewing. The Company will continue to attempt to increase its sales to unaffiliated customers in order to decrease its dependence on Coors Brewing. There can be no assurance that Graphic Packaging's or Golden Technologies' supply agreements will be renewed or that the terms of renewal will be favorable to the Company. The loss of Coors Brewing as a customer for the Company's products could have an adverse affect on the Company's results of operations. Research and Development The Company's ability to commercialize its technologies and compete effectively in its various markets depends significantly on its continued and timely development of innovative technology, materials, products and processes using advanced and cost- efficient manufacturing processes. See "Packaging Business-- Product Development," "Ceramics Business--Product Development," and "Developmental Businesses--Biodegradable Polymers." See also "Patents, Proprietary Rights and Licenses." Total research and development expenditures for the Company were $15.3 million, $16.3 million and $14.4 million for 1996, 1995 and 1994, respectively. The Company's research and development expenditures are not expected to increase significantly as a percentage of net sales for the foreseeable future. The Company believes such expenditures will be adequate to meet its strategic objectives. Patents, Proprietary Rights and Licenses Graphic Packaging, Coors Ceramics and Golden Technologies each hold a number of patents and pending patent applications in the U.S. and in foreign countries. Their policy generally is to pursue patent protection that they consider necessary or advisable for the patentable inventions and technological improvements of their respective businesses. They also rely significantly on trade secrets, technical expertise and know-how, continuing technological innovations and other means, such as confidentiality agreements with employees, consultants and customers, to protect and enhance their competitive positions in their respective markets. Coors Ceramics considers the name "Coors" and the goodwill associated with it to be material to its customer recognition. As part of the spin-off from ACCo, Coors Ceramics received certain licensing rights to use the Coors name. In addition, the patent protection of Composipac is significant to Graphic Packaging's operations. The Company believes that its subsidiaries own or have the right to use the proprietary technology and other intellectual property necessary to their operations. Except as noted above, the Company does not believe that its success is materially dependent on the existence or duration of any individual patent, trademark or license or related group of patents, trademarks or licenses. The developmental businesses also hold several patents and patent applications and licenses related to their businesses and technology development pursuits, which will be critical to the success of some of the Company's research projects. Environmental Matters The manufacturing operations of the Company's subsidiaries are subject to all federal, state and local environmental, health and safety laws and regulations and, in a few instances, foreign laws, that regulate health and safety matters and the discharge of materials into air, land and water, and govern the handling and disposal of solid and hazardous wastes. The Company believes it is in substantial compliance with applicable environmental and health and safety laws and regulations and does not believe that costs of compliance with these laws and regulations will have a material effect upon its capital expenditures, earnings or competitive position. In 1990, Coors Ceramics was notified that the State of California was seeking reimbursement for response costs from various parties relating to the Chatham Brothers Barrel Yard site under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and California's analog to CERCLA. Coors Ceramics' estimated share has been reduced to 0.7%, based on volume and toxicity of its contribution. The Company believes the amount recorded is adequate to cover Coors Ceramics' liability related to this site. In May 1993, Graphic Packaging and Coors Ceramics reached an agreement with the City and County of Denver and Chemical Waste Management, Inc. for the resolution of claims relating to the Lowry Landfill Superfund Site in Denver, Colorado. This settlement agreement provided for the resolution of remediation costs, if total site remediation costs do not exceed an assumed present value. The Company does not believe that significant cost overruns in excess of this assumed amount are likely. In conjunction with the acquisition of four flexible packaging facilities in mid 1994, the former shareholders of the acquired company deposited ACX Technologies common stock, valued at $10 million at the date of acquisition, into escrow and severally agreed to indemnify the Company against certain liabilities including environmental liabilities through June 30, 2002. See ITEM 3. LEGAL PROCEEDINGS. Coors Ceramics has received a demand for payment arising out of contamination of a semiconductor manufacturing facility formerly owned by a subsidiary of Coors Ceramics, Coors Components, Inc. (CCI). Colorado State environmental authorities are negotiating with the party to whom Coors Ceramics sold the property (Buyer) to clean up soil and ground water contamination on this parcel of property. In addition, Buyer is seeking indemnification for damages paid in 1995 arising out of litigation by the adjacent landowner. The contamination is believed to have occurred prior to Coors Ceramics' ownership of CCI. CCI was sold to Buyer in November 1987. Coors Ceramics does not believe it has any responsibility for the contamination or the cleanup, and has notified the party from whom it acquired the property that Coors Ceramics will seek indemnification under the terms of its purchase agreement in the event of liability. The Company has received requests from the Environmental Protection Agency for information related to other disposal sites; however, the Company believes its potential liability is minimal. Some of the Company's subsidiaries have been notified that they may be potentially responsible parties (PRPs) under CERCLA or similar state laws with respect to the remediation of certain sites where hazardous substances have been released into the environment. The law governing Superfund sites provides that PRPs may be jointly and severally liable for the total costs of remediation. Generally, however, liability is determined through litigation and/or settlement among the PRPs based on equitable factors including waste volume contribution. The ultimate magnitude of liability for any PRP under CERCLA depends upon a number of factors such as their equitable share of liability, the selected method of remediation, the timing of work, the number of financially solvent PRPs ultimately responsible for payment, the effect of inflation, the ability to recover costs from former and current insurance carriers and the development of new remediation technologies. The Company cannot predict with certainty the total costs of remediation, its share of the total costs, the extent to which contribution will be available from other parties, the amount of time necessary to complete the remediation, or the availability of insurance. However, based on investigations to date, the Company believes that any liability with respect to these sites would not be material to the financial condition and results of operations of the Company, without consideration of insurance recoveries. There can be no certainty, however, that the Company will not be named as a PRP at additional Superfund sites or be subject to other environmental matters in the future or that the costs associated with those additional sites or matters would not be material. The Clean Air Act Amendments of 1990 (CAAA) establish new permitting requirements. Regulations promulgated and continuing to be promulgated under Title V and Title III of the CAAA require new permits at several of the Company's facilities to be obtained during 1996 and 1997. The Company's subsidiaries continue to address the requirements under these regulations and, until the permitting process is complete, the full economic impact of these regulations cannot be determined. Congress and state legislatures have considered and continue to consider various proposals that, if passed, could impose significant new requirements on the packaging industry related to recyclability, recycled content or minimization of packaging products. Although Graphic Packaging believes its products compare favorably to known competitors' products in these areas, these legislative requirements, if adopted, could adversely affect Graphic Packaging's operations. The Company is unable to predict whether, or when, such legislative changes, if any, may be made. Graphic Packaging continually strives to minimize the amount of material required to fabricate packaging for its customers and to use recycled materials to produce packaging that can be recycled or safely incinerated. Various local, state and federal laws, rules and regulations relating to the environment, health and safety are applicable to the Company's ongoing operations. The complexity and number of these regulations continue to proliferate. The resulting impact of these actions increases the cost structure of the Company's subsidiaries and the price of their products. The Company seeks to proactively take steps to decrease its potential for environmental liabilities, and has remediated potential sites and taken actions to avoid using hazardous substances. Employees As of March 1, 1997, the Company had 4,500 full-time employees. A total of approximately 400 employees of the Company are covered by collective bargaining agreements. Management considers its employee relations to be good. ITEM 2. PROPERTIES The Company believes that its facilities are well maintained and suitable for their respective operations. The table below lists the Company's plants and most other physical properties and their locations and general character: Facility Location Character ACX Technologies: Co. Headquarters Golden, Colorado Coors Ceramics: Manufacturing Benton, Arkansas(1) Structural Ceramics Manufacturing Milpitas, California(2) Structural Ceramics Manufacturing Grand Junction, Colorado Electronic Ceramics Manufacturing Chattanooga, Tennessee Electronic Ceramic Packages Manufacturing Hillsboro, Oregon Structural Ceramics Manufacturing Lawrence, Pennsylvania(2) Structural Ceramics Manufacturing Norman, Oklahoma Structural Ceramics Manufacturing Oklahoma City, Oklahoma Structural Ceramics Manufacturing Glenrothes, Scotland Electronic Ceramics Manufacturing Oak Ridge, Tennessee(3) Structural Ceramics Manufacturing Austin, Texas(2) Structural Ceramics Manufacturing & Company Offices Golden, Colorado(4) Structural and Electronic Ceramics Graphic Packaging: Manufacturing Boulder, Colorado(2) Folding Carton/Labels Manufacturing Lawrenceburg, Tennessee Folding Carton Manufacturing Richmond, Virginia Folding Carton Manufacturing Golden, Colorado Labels Manufacturing Malvern, Pennsylvania Flexible Packaging Manufacturing Franklin, Ohio Flexible Packaging Manufacturing Richmond, British Columbia(2) Flexible Packaging Manufacturing Winnipeg, Manitoba Flexible Packaging Manufacturing Mississauga, Ontario(2) Flexible Packaging Manufacturing Charlotte, North Carolina Flexible Packaging Company Offices Wayne, Pennsylvania(2) Huntersville, North Carolina(2) Golden Aluminum(5): Rolling Mill Ft. Lupton, Colorado Aluminum Sheet Stock Rolling Mill and Company Offices San Antonio, Texas Aluminum Sheet Stock Developmental Businesses: Grain Processing Johnstown, Colorado Refined Starch and Fructose Grain Elevator Johnstown, Colorado Corn Handling and Storage Research Facilities Golden, Colorado Research and Pilot Operations Integration and Distribution Scottsdale, Arizona Solar Panel Integration and Distribution Manufacturing Safford, Arizona(2) Solar Panel Distribution Manufacturing Houston, Texas(2) Solar Panel Distribution Company Offices Golden, Colorado(2) (1) Two facilities. (2) Leased facilities. (3) Four facilities, two of which are leased. (4) Four facilities, one of which is leased, one is a land lease only. (5) Business was disposed of March 1, 1997. Graphic Packaging is currently utilizing approximately 85% of its folding carton manufacturing capacity and 85% of its flexible packaging manufacturing capacity. Graphic Packaging's management continually review plans to expand its manufacturing capacity via equipment upgrades and plant expansions. The other operating facilities of the Company have excess capacity. ITEM 3. LEGAL PROCEEDINGS In the ordinary course of business, the Company's subsidiaries are subject to various pending claims, lawsuits and contingent liabilities, including claims by current or former employees relating to employment or termination. In addition, the Company has brought a suit relating to a fixed-price construction contract dispute in which a counterclaim has been filed. In each of these cases, the Company is denying the allegations made against it and is vigorously defending against them. The Company does not believe that disposition of these matters will have a material adverse effect on the Company's consolidated financial position or results of operations. For specific information regarding environmental legal proceedings, see "Environmental Matters." Coors Ceramics and a beryllium supplier have been named as defendants in a lawsuit brought by several current and former employees of a defense equipment manufacturer and their spouses. Plaintiffs are seeking damages in connection with the manufacture, sale and distribution of certain products containing beryllium and allege that they contracted chronic beryllium disease from products supplied by Coors Ceramics and the beryllium supplier. The suit is in the early stages of litigation; however, the Company believes it has meritorious defenses to the allegations raised and intends to defend itself vigorously against these allegations. Golden Technologies and several other defendants have recently been sued by a candy company claiming violation of federal and state antitrust laws in sales of high-fructose corn syrup and corn syrup from 1988 to 1996. The Company was only an occasional and minor supplier of high-fructose corn syrup to the plaintiff and Golden Technologies intends to vigorously defend itself against these allegations. This action is only in the preliminary stages. As part of the 1994 acquisition of four flexible packaging facilities, the former shareholders of the acquired company deposited ACX Technologies' common stock, valued at $10 million at the date of acquisition, into escrow and severally agreed to indemnify the Company against certain liabilities including: (i) environmental liabilities if the Company makes a successful claim for indemnification by June 30, 2002; (ii) tax liabilities, if the claim is made within 30 days after expiration of applicable statutes of limitation or appeals; and (iii) other liabilities, if the claim was made by June 30, 1996. In March 1995, an action was brought against the Company in Calgary, Alberta for which the Company is seeking indemnification under the escrow agreement in the event that the Company suffers a loss. The action is being held in abeyance until the resolution of the underlying tax issue with Revenue Canada. The Company believes that it will prevail in the litigation or be indemnified against a loss. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter ended December 31, 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is currently quoted on the New York Stock Exchange under the symbol ACX. During 1994 and through November 30, 1995, the Company's common stock was quoted on the NASDAQ Stock Market National Market under the symbol ACX. The range of the high and low sales price per share for each quarter of 1996 and 1995, restated for the September 18, 1995 two-for-one stock split, were as follows: Market Price 1996 1995 High Low High Low First Quarter $18 1/4 $14 5/8 $20 5/8 $18 7/8 Second Quarter $22 $17 1/2 $22 $19 1/2 Third Quarter $20 1/2 $16 3/8 $30 3/4 $19 1/2 Fourth Quarter $20 $16 7/8 $20 $13 3/4 During 1996 and 1995, no dividends were paid by the Company. At this time, the Company anticipates that it will retain any earnings and that the Company will not pay dividends to its shareholders in the foreseeable future. Also, the Company's credit facilities require maintenance of certain financial ratios that may affect its ability to pay dividends. On March 1, 1997, there were approximately 2,850 shareholders of record of the Company's common stock. ITEM 6. SELECTED FINANCIAL DATA Financial Highlights - Five Year Overview (In thousands, except per share and ratio data) 1996 1995 1994 1993 1992 Summary of Operations Net sales $712,380 $660,853 $578,705 $513,037 $474,023 Gross profit $156,525 $152,824 $120,172 $ 98,689 $ 78,768 Marketing, general and administrative 77,947 75,071 67,311 60,886 56,055 Research and development 15,300 16,312 14,410 13,499 17,150 Asset impairment and restructuring charges[a] 34,642 2,735 --- --- 13,720 Operating income (loss) $ 28,636 $ 58,706 $ 38,451 $ 24,304 $ (8,157) Income (loss) from continuing operations $ 11,409 $ 31,247 $ 19,683 $ 13,014 $ (7,412) Per share of common stock from: Continuing operations[a] $ 0.40 $ 1.13 $ 0.74 $ 0.51 $ (0.29) Net income (loss)[b] $ (3.21) $ 0.86 $ 0.75 $ 0.49 $ (1.34) Financial Position Working capital $154,626 $168,801 $146,678 $ 51,845 $ 21,375 Total assets $676,692 $785,486 $760,290 $656,217 $631,788 Short-term debt $ --- $ --- $ 3,600 $ 71,000 $ 73,000 Long-term debt $100,000 $100,000 $108,295 $ --- $ --- Shareholders' equity $397,903 $488,374 $457,454 $418,602 $399,980 Other Information Total debt to capitalization 20.1% 17.0% 19.7% 14.5% 15.4% Net book value per share of common stock $ 14.24 $ 18.14 $ 17.19 $ 16.32 $ 15.90 [a] Asset impairment and restructuring charges of $34.6 million, $2.7 million and $13.7 million were recorded in 1996, 1995 and 1992, resulting in a loss per share impact of $0.80, $0.06 and $0.34, respectively. [b] During 1996 the Company discontinued the operations of Golden Aluminum Company. The income (loss) per share for Golden Aluminum was $(3.61), $(0.27), $0.01, $(0.02) and $(0.48) for the periods between 1996 and 1992, respectively. In 1992, the Company adopted the accounting standards related to postretirement benefits and income taxes which increased the 1992 loss per share by $0.57. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Overview ACX Technologies, Inc. (the Company), together with its subsidiaries, is a diversified, value-added manufacturing organization focused on pioneering differentiated customer solutions. Two business segments comprise the majority of the Company's results from operations: the packaging business, operated through Graphic Packaging Corporation (Graphic Packaging) and the ceramics business, operated through Coors Ceramics Company (Coors Ceramics). Graphic Packaging manufactures both folding carton and flexible packages and participates in the beverage, detergent, cereal, tobacco, pet food, confection and personal care markets. Coors Ceramics manufactures structural ceramics, electronic ceramic components and advanced electronic ceramic packages for the telecommunications, semiconductor, power generation, petrochemical, automotive and pulp and paper industries, along with numerous others. In addition to the primary operating businesses, the Company owns technology-based developmental businesses operated through Golden Technologies Company, Inc. (Golden Technologies). Golden Technologies' focus is on assembling and distributing solar electric systems, developing biodegradable plastics and marketing a health food ingredient. The solar electric systems business was enhanced by Golden Technologies' November 1996 acquisition of a controlling interest in Photocomm, Inc. (Photocomm), a publicly traded company (NASDAQ: PCOM). Additionally, the historical results for the developmental businesses include its interest as the general partner of a real estate development partnership and the operations of a corn-wet milling facility that produced high- fructose corn syrup and refined corn starch. The Company has recently decided to exit the high-fructose corn syrup business amid rising corn costs and excess high-fructose corn syrup supply. This financial review presents the Company's operating results for each of the three years in the period ended December 31, 1996, and its financial condition at December 31, 1996 and 1995. This review should be read in connection with the information presented in the Consolidated Financial Statements and the related notes thereto. Discontinued Operations In 1996, the Board of Directors adopted a plan to dispose of the Company's aluminum rigid container sheet business operated by Golden Aluminum Company (Golden Aluminum). In conjunction with this decision, the Company recorded pretax charges of $155 million for anticipated losses for the sale and estimated operating losses of the business through the disposition date. On March 1, 1997, the sale of Golden Aluminum was completed for $70 million, $10 million of which was received at closing and $60 million is due within two years. In accordance with the purchase agreement, the purchaser has the right to return Golden Aluminum to the Company during the two year period rather than pay the $60 million obligation. The initial payment of $10 million is non- refundable. The historical operating results and the estimated loss on the sale of this business have been segregated as discontinued operations on the accompanying Consolidated Statement of Income for all periods presented. The assets and liabilities of Golden Aluminum which were held for sale at December 31, 1996 have been separately identified on the December 31, 1996 Consolidated Balance Sheet as net current or noncurrent assets of discontinued operations. The Consolidated Balance Sheet as of December 31, 1995 has not been restated. Discontinued operations have not been segregated on the Consolidated Statement of Cash Flows and therefore, includes sources and uses of cash for Golden Aluminum. Results from Continuing Operations Consolidated Net sales for 1996 were $712.4 million, an increase of $51.5 million or 7.8% over 1995. Net sales for 1995 of $660.9 million increased 14.2% over 1994 net sales of $578.7 million. The Company's sales growth benefited from acquisitions by Graphic Packaging in mid-1994 and in March of 1996. Coors Ceramics' sales also grew, primarily due to internally generated sales opportunities. Net sales to Coors Brewing Company (Coors Brewing) consisted of packaging products and refined corn starch and comprised 16.7%, 19.0% and 20.6%, of 1996, 1995 and 1994 total revenues, respectively. The Company continues to pursue new markets and customers in an effort to be less dependent upon Coors Brewing. International sales to Western European and Canadian markets in 1996 and 1995 were 18.9% and 20.3% of net sales, respectively. In 1994, these sales accounted for 15.4% of consolidated net sales and were principally to Western European markets. Future years' sales growth is expected to be solid in both the packaging and ceramics businesses, fostered by the pursuit of niche acquisitions, additional base business revenues and by building strong relationships with existing customers for their future needs. The developmental businesses are expected to experience a significant decline in sales due to the decision to exit the high-fructose corn syrup business, although this decline will be offset in part by the fourth quarter 1996 acquisition of a controlling interest in Photocomm. Operating Income From Continuing Operations By Segment (In millions) 1996 1995 1994 Coors Ceramics $44.2 $47.4 $33.1 Graphic Packaging 41.0 34.5 27.9 Golden Technologies Before Asset Impairment and Restructuring Charges (13.8) (11.4) (13.2) Corporate (8.2) (9.5) (9.3) Operating Income Before Golden Technologies' Charges 63.2 61.0 38.5 Golden Technologies' Asset Impairment and Restructuring Charges (34.6) (2.3) --- Operating Income After Charges $28.6 $58.7 $38.5 Consolidated operating income for 1996 included $34.6 million in asset impairment and restructuring charges related to the elimination of non-strategic operations at Golden Technologies versus $2.3 million in restructuring charges reported in 1995. The 1996 asset impairment charges of $32.2 million were taken primarily to reflect the impact of unfavorable market conditions for high-fructose corn syrup and the Company's inability at this time to demonstrate the commercial viability of its cadmium telluride solar panel production process. The 1996 restructuring charges of $2.4 million consist primarily of severance charges and pertain to a reorganization of administrative functions at Golden Technologies and management realignments in the solar energy distribution business. Excluding these charges, operating income grew $2.2 million in 1996 to $63.2 million, primarily attributable to Graphic Packaging's 1996 folding carton facility acquisition. The comparable increase in operating income in 1995 over 1994 was $22.5 million or 58.4% to $61.0 million. Coors Ceramics led this increase through additional sales with relatively few additional fixed costs. Graphic Packaging's contribution to the 1995 increase was primarily attributable to the 1995 full year inclusion of the flexible packaging acquisition that occurred in mid-1994. Consolidated gross margin (gross profit as a percentage of net sales) was 22.0%, 23.1% and 20.8% for 1996, 1995 and 1994, respectively. Gross margin improved at Graphic Packaging during both 1996 and 1995 due to increased sales volumes, productivity gains, shop floor improvements and the acquisitions. Coors Ceramics' telecommunication and semiconductor business contributed to the 1995 gross margin improvement while downturns in these same businesses in the following year reduced overall margins for 1996. Marketing, general and administrative expenses for 1996, 1995 and 1994 were $77.9 million, $75.1 million and $67.3 million, which represented 10.9%, 11.4% and 11.6% of net sales, respectively. Research and development costs decreased $1.0 million to $15.3 million in 1996 after having increased $1.9 million between 1994 and 1995. Changes in research and development expenses are attributable primarily to changes in activity levels at Golden Technologies. During 1995, additional expenses were incurred in developing photovoltaic panels and biodegradable polymer technologies while the 1996 decrease was related to the 1995 decision to exit certain non-strategic ceramic research projects. Ongoing research and development efforts at Golden Technologies will be directed primarily toward the biodegradable polymer technologies. Interest expense for 1996, 1995 and 1994 was $8.2 million, $9.3 million and $6.4 million, respectively. The $1.1 million decrease in 1996 pertains to reduced borrowing costs associated with the committed bank facility and fewer short-term borrowings during the year. The 1995 increase was due to higher interest rates associated with the transition from short-term borrowings to long-term debt. The consolidated effective tax rate for the Company in 1996 was 49% compared to 39% in 1995 and 40% in 1994. Contributing to the higher tax rate for 1996 was a lower 1996 earnings base which increased the impact of the Company's non-deductible items. In addition, no tax benefit was taken for built-in-losses on an entity experiencing tax losses and for capital losses that may not be deductible due to a lack of offsetting capital gains. The Company anticipates that non-deductible goodwill associated with acquisitions will produce an ongoing effective tax rate of approximately 42%. As a result of the asset impairment and restructuring charges discussed above, consolidated income from continuing operations declined $19.8 million to $11.4 million in 1996. Excluding these charges for both years, 1996 income from continuing operations was $34.2 million or $1.20 per share while 1995 income from continuing operations was $32.9 million or $1.19 per share. Coors Ceramics Coors Ceramics' net sales for 1996 increased $5.5 million to $276.4 million over 1995 net sales of $270.9 million. This 2.0% increase was achieved despite the loss of more than $15 million in revenues in the telecommunications industry and the loss of over $8 million in revenues from the semiconductor and data processing industries. Increases in these industries between 1994 and 1995 helped drive Coors Ceramics' 1995 sales growth of 17.1%. Offsetting the 1996 declines in semiconductor processing and telecommunications sales were increased volumes for power tubes, beverage valves, precipitators and pulp and paper industry products. Although customers continue to seek price reductions, Coors Ceramics competes primarily on quality and thus volume, not price, has been the primary catalyst behind the changes in sales dollars. International sales continued to prosper and comprised 30.5% of total sales in 1996, 28.1% in 1995 and 26.7% in 1994. During 1996, structural products contributed 71% of Coors Ceramics' sales, up from 64% in 1995 and 60% in 1994. Electronic products and advanced ceramic electronic packages, which comprise the remainder of sales, declined as a percentage of total sales, primarily due to the severe decline in the volume of advanced ceramic electronic packages sold to the telecommunications industry. Coors Ceramics' operating income for 1996 declined $3.2 million, or 6.7%, when compared to the record-setting operating income of $47.4 million reported in 1995. The 1995 results improved $14.3 million or 43.2% over the $33.1 million recorded in 1994. Operating margins were 16.0% in 1996, down from 17.5% in 1995, which were improved over 1994 operating margins of 14.3%. Operating results for 1996 turned downward in correlation with the telecommunications and semiconductor processing industries. The 1996 declines were offset in part by stronger margins in the petrochemical and pulp and paper industry. As applications for ceramic materials continue to increase, Coors Ceramics believes its commitment to uncompromising quality and its focus on new ceramic materials and synergistic acquisitions will propel it squarely into the next century. The 1997 outlook for Coors Ceramics is in part dependent upon the turnaround expected in mid to late 1997 in the telecommunications and semiconductor processing industries. Graphic Packaging Graphic Packaging's net sales for 1996 were $346.5 million, an increase of $38.4 million, or 12.5%, over 1995 net sales of $308.1 million. Net sales for 1995 increased 19.0% over 1994 net sales of $258.8 million. Acquisitions in mid-1994 and at the beginning of 1996 accounted for a significant portion of the increases reported in both periods. The 1996 acquisition contributed $44.4 million in 1996 revenues while the mid-1994 acquisition provided approximately $44 million in incremental 1995 revenues because of the full year inclusion of this acquisition in operations for 1995. The remaining 1995 improvement related to higher sales prices in the folding carton division primarily due to higher raw materials prices which are generally passed along to customers. Sales to Coors Brewing were approximately 31%, 37% and 41% of Graphic Packaging's net sales for 1996, 1995 and 1994, respectively. The acquisitions have enhanced Graphic Packaging's customer base thereby reducing its dependence upon Coors Brewing. In addition, the acquisitions have expanded Graphic Packaging's geographic reach, especially into Canadian markets, which were approximately 14% of 1996 net sales. In 1996, 1995 and 1994, folding carton sales accounted for 56%, 50% and 57%, respectively, with flexible sales accounting for the balance of the business. Net folding carton sales were $194.3 million in 1996, an increase of $39.7 million over net sales of $154.6 million in 1995. Excluding the effect of the 1996 acquisition, folding carton net sales were down $4.7 million related primarily to volume declines in folding carton sales to the beverage industry, offset in part by increased volumes for specialty packaging to the cereal markets and the fast service restaurant industry and added sales of ComposiCups. Flexible packaging sales for 1996 declined $2.2 million to $152.2 million due to a combination of: (i) lower volumes in the snack food business; (ii) the elimination of less profitable extruded film business in 1996; (iii) lower raw material costs passed through to customers in the form of lower prices; and (iv) customer- initiated packaging specification changes that reduce total package cost. Graphic Packaging posted superior growth in 1996 operating income, which rose $6.5 million or 18.8% to $41.0 million over 1995 when operating income was $34.5 million. 1995 results reflected an increase of $6.6 million when compared to 1994 operating income of $27.9 million. Improvements in 1996 were generated by a combination of increased shop floor efficiencies, the 1996 acquisition which contributed $3.8 million in operating income and a favorable product mix with higher margins. In addition, the elimination of certain extruded film business contributed to a more favorable product mix in the flexible packaging division and improved 1996 operating margins for this division when compared to 1995. The 1995 improvement over 1994 related principally to the mid-1994 acquisition and the resultant synergies realized from that acquisition. The 1994 acquisition contributed $6.6 million of operating income in 1995 while the 1994 six-month contribution was $2.3 million. Operating margins were 11.8%, 11.2% and 10.8% in 1996, 1995 and 1994, respectively. This trend reflects Graphic Packaging's focus on high-margin, value-added products, improved performances at the acquired facilities, and the benefit of synergies realized subsequent to the acquisitions. Graphic Packaging continues to focus on commercializing new products and processes to serve existing and new markets, and to pursue niche acquisitions that complement its existing business. Graphic Packaging believes its strategy of being a niche packaging provider for higher margin markets will continue to sustain its profitable growth into the future. The combination of innovative products, new state of the art facilities and focused acquisitions will continue to support its growth objectives in a highly competitive, consolidating industry. Golden Technologies Golden Technologies' 1996 net sales were $89.5 million, an increase of $7.6 million or 9.3% compared to 1995 net sales of $81.9 million. Net sales in 1995 declined $6.7 million compared to 1994 net sales of $88.6 million. Almost $3 million of the 1996 increase was the impact of the November, 1996 acquisition of a majority interest in Photocomm, a solar electric distributor. The remaining increase was the result of increased selling prices for commodities that are byproducts of the high-fructose corn syrup operation, offset in part by lower selling prices for fructose. The 1995 decrease in sales was the result of businesses that were disposed of in 1994. Golden Technologies reported an operating loss of $48.4 million in 1996, which included asset impairment and restructuring charges of $34.6 million. Operating losses for 1995 were $13.7 million, including $2.3 million in restructuring costs. The 1996 asset impairment charges were taken primarily to reflect the impact of unfavorable market conditions for high- fructose corn syrup and the Company's inability at this time to demonstrate the commercial viability of its cadmium telluride solar panel production process. The 1996 restructuring charges pertain to a reorganization of administrative functions at Golden Technologies and management realignments in the solar energy distribution business. The 1995 restructuring charge related to the exit of certain non-strategic ceramic research projects. Excluding the impact of the asset impairment and restructuring charges, Golden Technologies' operating loss increased from $11.4 million in 1995 to $13.8 million in 1996. The 1995 results included approximately $5.0 million of operating income from the corn-wet milling business while 1996 operating results of this business were approximately break-even. Because of the oversupply present in the corn fructose marketplace and significant declines in fructose selling prices, a decision was reached in February of 1997 to exit the high- fructose corn syrup business. Golden Technologies' net sales for 1997 will decline significantly as an outcome of this decision, although 1997 net sales will reflect an entire year of sales from the November acquisition of Photocomm. An additional charge of approximately $2 million to $3 million is expected to be recorded in the first quarter related to the 1997 decision to exit the high-fructose corn syrup business. Future activity at Golden Technologies will be directed primarily toward the solar electric distribution business and the development of biodegradable polymers. Start-up of a 2 million pound per year semi-works lactide monomer facility in Johnstown, Colorado, is targeted to begin near the end of the first quarter of 1997. This facility, combined with a polylactide facility currently under construction, is intended to enable Golden Technologies to put biodegradable polymers in the hands of customers for qualification tests in mid to late 1997. Financial Resources and Liquidity ACX Technologies' liquidity is generated from both internal and external sources and is used to fund short-term working capital needs, capital expenditures and acquisitions. Internally generated liquidity is measured by net cash from operations as discussed below and working capital. At December 31, 1996, the Company's working capital (excluding the net current assets of the discontinued operation) was $101.6 million with a current ratio of 1.9 to 1. The Company considers its working capital sufficient to meet its anticipated short-term requirements. In addition, in March of 1997, the Company completed the sale of Golden Aluminum. This sale generated $10 million in cash at closing and is expected to generate an additional $60 million in cash within two years if the buyer does not return Golden Aluminum to the Company as permitted by the purchase agreement. The working capital of Golden Aluminum, which was not part of the sale agreement, will be liquidated during the first half of 1997 and is expected to produce between $50 million and $55 million in cash. For long-term requirements, the Company has a multi-year unsecured revolving credit facility with a total commitment of $125.0 million, under which no borrowings were outstanding at December 31, 1996 and 1995. The Company also has a Canadian bank credit facility with a total commitment of C$7.5 million. Under this facility, no borrowings were outstanding at December 31, 1996 and 1995. In addition, the Company has in place a shelf registration statement, which allows the Company to borrow or sell up to $100 million in securities. The Company currently expects that cash flows from operations and the sale of Golden Aluminum and borrowings under its revolving credit facilities will be adequate to meet the Company's needs for working capital, temporary financing for capital expenditures and acquisitions. As shown in the Consolidated Statement of Cash Flows, net cash provided by operations was $46.2 million, $97.2 million and $45.2 million for the years 1996, 1995 and 1994, respectively. The decrease from 1995 to 1996 was primarily attributable to increased losses experienced in discontinued operations as well as declines in accounts payable and the reduction in deferred revenue associated with aluminum and corn commodities hedging programs. During 1996, 1995 and 1994, net cash from operations was used to fund capital requirements and acquisitions. Over this three year period, total capital expenditures for the Company, excluding corporate, were $160.0 million, as follows: (In millions) 1996 1995 1994 Coors Ceramics $30.3 $25.1 $18.9 Graphic Packaging 13.3 20.1 8.4 Golden Technologies 12.6 7.4 5.9 Golden Aluminum - Discontinued in 1996 1.0 7.2 9.8 $57.2 $59.8 $43.0 Consolidated capital spending during 1996 has been primarily for technological upgrades to machinery and equipment and related computer systems as well as costs associated with facility expansions and reconfigurations. The Company expects its capital expenditures for 1997 to be more than $60 million, primarily at Coors Ceramics and Graphic Packaging. Coors Ceramics has planned facility and material preparation expansions while Graphic Packaging's 1997 capital will be used for performance improvements to existing equipment and to increase capacity for growing markets. Golden Technologies' 1997 plans are to complete the semi-works facilities for its biodegradable polymer technology. Acquisitions during 1996 consumed over $30 million in cash, primarily for the fourth quarter acquisition of a majority interest in a solar energy distribution company. Cash was also used to fund part of Graphic Packaging's acquisition of a folding carton facility in Virginia and Coors Ceramics' acquisition of assets of an Oklahoma-based manufacturer that services the oilfield industry. Although a future strategy of the Company is to pursue niche acquisitions that provide growth and synergies with the base businesses, there are currently no planned acquisitions that would put a constraint on the Company's cash position. The impact of inflation on the Company's financial position and results of operations has been minimal and is not expected to adversely affect future results. Environmental Coors Ceramics has received a demand for payment arising out of contamination of a semiconductor manufacturing facility formerly owned by a subsidiary of Coors Ceramics, Coors Components, Inc. (CCI). Colorado State environmental authorities are negotiat- ing with the party to whom Coors Ceramics sold the property (Buyer) to clean up soil and ground water contamination on this parcel of property. In addition, Buyer is seeking indemnification for damages paid in 1995 arising out of litigation by the adjacent landowner. The contamination is believed to have occurred prior to Coors Ceramics' ownership of CCI. CCI was sold to Buyer in November 1987. Coors Ceramics does not believe it has any responsibility for the contamination or the cleanup, and has notified the party from whom it acquired the property that Coors Ceramics will seek indemnification under the terms of its purchase agreement in the event of liability. In 1990, Coors Ceramics was notified that the State of California was seeking reimbursement for response costs from various parties relating to the Chatham Brothers Barrel Yard site under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and California's analog to CERCLA. Coors Ceramics' estimated share has been reduced to 0.7%, based on volume and toxicity of its contribution. The Company believes the amount recorded is adequate to cover Coors Ceramics' liability related to this site. The Company has received requests from the Environmental Protection Agency for information related to other disposal sites; however, the Company believes its potential liability is minimal. Factors That May Affect Future Results Certain statements in this document constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of ACX Technologies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things: (i) general economic and business conditions; (ii) changes in industries in which ACX Technologies does business, such as beverage, telecommunications, semiconductor and automotive; (iii) the loss of major customers; (iv) the loss of market share and increased competition in certain markets; (v) industry shifts to alternative materials, such as replacement of ceramics by plastics and competitors offering products with characteristics similar to ACX Technologies' products, including packaging; (vi) changes in consumer buying habits; (vii) governmental regulation including environmental laws; and (viii) other factors over which ACX Technologies has little or no control. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements Page(s) Consolidated Financial Statements: Report of Independent Accountants 27 Consolidated Statement of Income for the years ended December 31, 1996, 1995 and 1994 28 Consolidated Balance Sheet at December 31, 1996 and December 31, 1995 29-30 Consolidated Statement of Cash Flows for the years ended December 31 1996, 1995 and 1994 31 Consolidated Statement of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 32 Notes to Consolidated Financial Statements 33-45 Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 1996, 1995 and 1994 46 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of ACX Technologies, Inc. In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of ACX Technologies, Inc. and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Denver, Colorado February 18, 1997 MANAGEMENT'S REPORT TO SHAREHOLDERS Management is responsible for the preparation, integrity and objectivity of the financial statements and all other financial information included in this annual report. The financial statements, which include amounts using management's best judgments and estimates, have been prepared in accordance with generally accepted accounting principles. Management believes that all material uncertainties have been either appropriately accounted for or disclosed. Other financial information appearing in this annual report is consistent with that in the financial statements. Management has established and maintains accounting and reporting systems supported by an internal accounting control system, which management believes are adequate to provide reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition and financial records are reliable for the preparation of financial statements. On the recommendation of management, Price Waterhouse LLP was selected by the Board of Directors to render a professional opinion on the consolidated financial statements. The opinion of the independent accountants, based on their audits, is shown above. The Board of Directors, through its Audit Committee of directors who are not officers or employees of the Company, is responsible for reviewing and monitoring the Company's financial and accounting practices. The Audit Committee meets regularly, either separately or jointly, with representatives of management, Price Waterhouse LLP and the Company's internal auditors to discuss auditing, accounting and financial matters. To ensure complete independence, Price Waterhouse LLP and the Company's internal auditors have unrestricted access to the Audit Committee and may meet with or without the presence of management. JED J. BURNHAM GAIL A. CONSTANCIO Chief Financial Officer Controller and Principal and Treasurer Accounting Officer ACX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share data) Years Ended December 31, 1996 1995 1994 Sales $593,493 $535,419 $459,688 Sales to Coors Brewing 118,887 125,434 119,017 Total sales 712,380 660,853 578,705 Costs and expenses: Cost of goods sold 555,855 508,029 458,533 Marketing, general and administrative 77,947 75,071 67,311 Research and development 15,300 16,312 14,410 Asset impairment and restructuring charges 34,642 2,735 --- Total operating expenses 683,744 602,147 540,254 Operating income 28,636 58,706 38,451 Other income (expense): Interest expense (8,177) (9,306) (6,370) Interest income 1,254 1,395 603 Miscellaneous--net 696 452 99 Total other expense (6,227) (7,459) (5,668) Income from continuing operations before income taxes 22,409 51,247 32,783 Income tax expense 11,000 20,000 13,100 Income from continuing operations 11,409 31,247 19,683 Discontinued operations: Income (loss) from discontinued operations of Golden Aluminum (5,033) (7,376) 142 Loss on disposal of Golden Aluminum (98,400) --- --- Net income (loss) $(92,024) $23,871 $19,825 Net income (loss) per share of common stock: Continuing operations $ 0.40 $ 1.13 $0.74 Discontinued operations (3.61) (0.27) 0.01 Net income (loss) per share $(3.21) $ 0.86 $0.75 Weighted average shares outstanding 28,651 27,655 26,587 See Notes to Consolidated Financial Statements ACX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands, except share data) December 31, December 31, 1996 1995 ASSETS Current assets Cash and cash equivalents $15,671 $52,686 Accounts receivable, less allowance for doubtful accounts of $2,085 in 1996 and $2,724 in 1995 68,840 88,913 Accounts receivable from Coors Brewing 3,046 9,148 Inventories 101,520 117,500 Deferred income taxes 18,218 7,275 Other assets 11,571 16,986 Net current assets of discontinued operations 53,052 --- Total current assets 271,918 292,508 Properties, net 244,615 426,832 Goodwill, net 46,799 34,828 Other assets 49,860 31,318 Noncurrent assets of discontinued operations 63,500 --- Total assets $676,692 $785,486 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $33,021 $51,029 Accounts payable to Coors Brewing 753 2,237 Accrued salaries and vacation 20,175 21,070 Taxes other than income 7,598 6,349 Accrued expenses and other liabilities 55,745 43,022 Total current liabilities 117,292 123,707 Long-term debt 100,000 100,000 Accrued postretirement benefits 27,890 27,008 Deferred income taxes --- 22,970 Other long-term liabilities 19,002 15,861 Total liabilities 264,184 289,546 Minority interest 14,605 7,566 Shareholders' equity Preferred stock, non-voting, $0.01 par value, 20,000,000 shares authorized and no shares issued or outstanding --- --- Common stock, $0.01 par value, 100,000,000 shares authorized and 27,934,000 and 26,917,000 issued and outstanding at December 31, 1996 and 1995, respectively 279 269 Paid-in capital 443,302 441,220 Retained earnings (deficit) (47,271) 45,587 Cumulative translation adjustment and other 1,593 1,298 Total shareholders' equity 397,903 488,374 Total liabilities and shareholders' equity $676,692 $785,486 See Notes to Consolidated Financial Statements ACX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) Years Ended December 31, 1996 1995 1994 Cash flows from operating activities: Net income (loss) $(92,024) $23,871 $19,825 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss on disposal of discontinued operations, net of tax 98,400 --- --- Asset impairment and restructuring charges 34,642 2,735 --- Depreciation and amortization 49,523 49,857 46,100 Change in deferred income taxes (6,058) 731 2,063 Change in accrued postretirement benefits 882 1,309 1,851 (Gain) loss on sale of properties 98 (476) 3,097 Change in current assets and current liabilities net of effects from acquisitions: Accounts receivable 10,882 5,343 (20,206) Inventories (2,893) 272 (9,108) Other assets (3,855) 8,549 (1,531) Accounts payable (13,561) 5,330 (6,696) Accrued expenses and other liabilities (31,656) (21) 5,082 Change in deferred items 1,939 (121) 1,905 Other (161) (195) 2,816 Net cash provided by operating activities 46,158 97,184 45,198 Cash flows from investing activities: Additions to properties (57,526) (60,027) (43,097) Acquisitions, net of cash acquired (34,313) --- (18,354) Proceeds from sale of properties 8,764 13,253 4,882 Other (1,250) (199) (106) Net cash used in investing activities (84,325) (46,973) (56,675) Cash flows from financing activities: Proceeds from long-term debt --- --- 100,000 Payments on short-term borrowings --- (3,600) (86,746) Payments on long-term debt --- (8,295) (950) Stock option exercises and other 1,152 4,593 2,191 Net cash provided (used) by financing activities 1,152 (7,302) 14,495 Cash and cash equivalents: Net increase (decrease) in cash and cash equivalents (37,015) 42,909 3,018 Balance at beginning of year 52,686 9,777 6,759 Balance at end of year $ 15,671 $52,686 $ 9,777 See Notes to Consolidated Financial Statements ACX TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands) Retained Common Paid-in Earnings Stock Capital (Deficit) Other Total Balance at December 31, 1993 $128 $417,480 $1,891 $(897) $418,602 Exercise of stock options 1 1,207 --- --- 1,208 Tax benefit of option exercise --- 238 --- --- 238 Issuance of common stock 4 16,892 --- --- 16,896 Net income --- --- 19,825 --- 19,825 Cumulative translation adjustment and other --- --- --- 685 685 Balance at December 31, 1994 133 435,817 21,716 (212) 457,454 Exercise of stock options 1 3,246 --- --- 3,247 Tax benefit of option exercise --- 875 --- --- 875 Issuance of common stock --- 1,417 --- --- 1,417 Stock split 135 (135) --- --- --- Net income --- --- 23,871 --- 23,871 Cumulative translation adjustment and other --- --- --- 1,510 1,510 Balance at December 31, 1995 269 441,220 45,587 1,298 488,374 Exercise of stock options --- 308 --- --- 308 Tax benefit of option exercise --- 48 --- --- 48 Issuance of common stock 10 1,726 --- --- 1,736 Net loss --- --- (92,024) --- (92,024) Cumulative translation adjustment and other --- --- (834) 295 (539) Balance at December 31, 1996 $279 $443,302 $(47,271) $1,593 $397,903 See Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies Nature of Operations The operations of ACX Technologies, Inc. (the Company) include two reportable business segments. Coors Ceramics Company (Coors Ceramics) participates in three markets of the advanced technical ceramics industry. Structural ceramics are components in mechanical devices used in various applications including automotive, fluid handling and power generation. Electronic ceramics are the base for various electronic circuits, pressure sensors and semiconductor chips in computers, telecommunications and automotive controls. Advanced electronic packages are casings that surround computer chips used in the telecommunications and computing industries. Graphic Packaging Corporation (Graphic Packaging) develops and sells value-added paperboard folding cartons and flexible packaging products. The end use for Graphic Packaging's flexible packaging products are principally pet foods, personal care, beverages, confections and baking/snacks. Primary folding carton products include beverages, concentrated detergents, bar soaps and cereals. In 1996, Coors Ceramics and Graphic Packaging contributed approximately 40% and 50%, respectively, of consolidated revenues. In addition, the Company owns technology-based developmental businesses operated through Golden Technologies Company, Inc. (Golden Technologies). The Company's markets include the United States, Western Europe, Canada, South America and the Far East. In 1996, the Company adopted a plan to dispose of Golden Aluminum Company (Golden Aluminum), which produces rigid container sheet used in making can lids, tabs and bodies for the beverage and food can industry and other flat-rolled aluminum products used principally in the building industry. In March 1997, the sale of Golden Aluminum was completed. Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All material intercompany transactions have been eliminated. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles, using management's best estimates and judgments where appropriate. Significant estimates have been made by management with respect to 1996 asset impairment and restructuring charges. Actual results could differ from these estimates making it reasonably possible that a change in these estimates could occur in the near term. Inventories: Inventories are stated at the lower-of-cost or market. Cost is determined by the first-in, first-out (FIFO) method for the majority of inventories. At Graphic Packaging, cost is determined on the last-in, first-out (LIFO) method for certain inventories. For such inventories, FIFO cost, which approximates replacement cost, exceeded LIFO cost by $2.4 million and $3.2 million at December 31, 1996 and 1995, respectively. Properties: Land, buildings and equipment are stated at cost. Real estate properties are non-operating properties held for sale. For financial reporting purposes, depreciation is recorded principally on the straight-line method over the estimated useful lives of the assets as follows: Buildings 10 to 40 years Machinery and equipment 3 to 10 years Building and leasehold improvements The shorter of the useful life, lease term or 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. Ordinary repairs and maintenance are expensed as incurred. Impairment of Long-Lived Assets and Identifiable Intangibles: In 1996, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The statement requires the recognition of an impairment loss for an asset held for use when the estimate of undiscounted future cash flows expected to be generated by the asset is less than its carrying amount. Measurement of the impairment loss is based on fair value of the asset. The Company periodically reviews long-lived assets, identifiable intangibles and goodwill for impairment whenever events or changes in business circumstances indicate the carrying amount of the assets may not be fully recoverable. See Note 3. Start-Up Costs: Start-up costs that are unrelated to construction and associated with manufacturing facilities are expensed as incurred. Goodwill and Other Intangibles: Goodwill and other intangibles are amortized on a straight-line basis over the estimated future periods to be benefited (not exceeding 40 years). Goodwill and other intangibles were $65.1 million at December 31, 1996, and $50.3 million at December 31, 1995, less accumulated amortization of $14.1 million and $11.3 million, respectively. Hedging Transactions: The Company periodically enters into forward, future and option contracts for commodities to hedge its exposure to price fluctuations primarily for raw materials used in the production of high-fructose corn syrup. The gains and losses on qualified hedge contracts are deferred and recognized in cost of goods sold as part of the product cost. Statement of Cash Flows: The Company defines cash equivalents as highly liquid investments with original maturities of 90 days or less. The carrying value of the Company's cash equivalents approximates their fair market value. Income taxes paid were $8.8 million, $13.9 million and $9.7 million in 1996, 1995 and 1994, respectively. Interest capitalized, expensed and paid, in thousands, for the years ended December 31, were as follows: 1996 1995 1994 Total interest costs $8,921 $10,381 $6,826 Interest capitalized $ 744 $ 1,075 $ 456 Interest expensed $8,177 $ 9,306 $6,370 Interest paid $9,554 $ 9,421 $5,163 During 1994, the Company exchanged approximately $8.0 million of assets held by a wholly-owned subsidiary of Golden Technologies for an equity interest in a privately-held company. Miscellaneous - net: Income attributable to minority interests and activity for certain royalty arrangements are included in "Miscellaneous - net" in the Consolidated Statement of Income. 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, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Per Share of Common Stock: Per share information is based on the weighted average number of common shares outstanding during the year. Per share information for all periods presented is adjusted for a two-for-one stock split in 1995. Reclassifications: Certain 1995 and 1994 information has been reclassified to conform to the 1996 presentation. Note 2. Discontinued Aluminum Operations In 1996, the Board of Directors adopted a plan to dispose of the Company's aluminum rigid container sheet business operated by Golden Aluminum. In conjunction with this decision, the Company recorded pretax charges of $155 million for anticipated losses upon the disposition and estimated operating losses of the business through the disposition date. In March of 1997, the sale of Golden Aluminum was completed for $70 million, of which $10 million was paid at closing and $60 million is due within two years. In accordance with the purchase agreement, the purchaser has the right to sell the property, plant and equipment back to the Company during the two year period in discharge of the $60 million obligation. The initial payment of $10 million is non- refundable. The historical operating results and the estimated loss on the sale of this business have been segregated as discontinued operations on the accompanying Consolidated Statement of Income for all periods presented. The assets and liabilities of Golden Aluminum which were held for sale at December 31, 1996 have been separately identified on the December 31, 1996 Consolidated Balance Sheet as net current or noncurrent assets of discontinued operations. The current assets consist primarily of accounts receivable and inventory, partially offset by accounts payable. The noncurrent assets are composed of the fixed assets of Golden Aluminum. The Consolidated Balance Sheet as of December 31, 1995 has not been restated. Discontinued operations have not been segregated on the Consolidated Statement of Cash Flows. Accordingly, the Consolidated Statement of Cash Flows includes sources and uses of cash for Golden Aluminum. Selected financial data for Golden Aluminum, in thousands, are summarized as follows: Years Ended December 31, 1996 1995 1994 Net sales $168,446 $250,001 $152,798 Income (loss) from operations before income taxes $(8,033) $(10,076) $ 142 Income tax benefit 3,000 2,700 --- Income (loss) from operations (5,033) (7,376) 142 Loss on disposal before income taxes (124,700) --- --- Loss on operations during disposition period before income taxes (30,300) --- --- Income tax benefit 56,600 --- --- Net income (loss) $(103,433) $(7,376) $ 142 Per common share: Income (loss) from operations $ (0.18) $ (0.27) $ 0.01 Estimated loss on disposal (3.43) --- --- Net income (loss) $ (3.61) $ (0.27) $ 0.01 Note 3. Asset Impairment and Restructuring Charges In the fourth quarter of 1996, the Company recorded $32.2 million in asset impairment charges at Golden Technologies. The charges relate primarily to the corn-wet milling business and solar panel manufacturing activity. The assets of the corn-wet milling business became impaired when unfavorable market conditions in the high-fructose corn syrup market reduced selling prices by half and decreased ongoing customer purchase commitments and anticipated future net cash flows. Additional future expense and cash outlays are expected to be approximately $2.0 million to $3.0 million and consist primarily of employee severance to be paid out in the first quarter related to the 1997 decision to exit the high-fructose corn syrup business. The following circumstances in Golden Technologies' solar panel manufacturing activity resulted in an impairment of the assets associated with this activity: (i) the lack of a currently viable market for cadmium telluride solar panels; (ii) the lack of an alternative use for panel manufacturing assets; and (iii) management's new focus on solar energy distribution. Certain administrative functions at Golden Technologies were restructured in the fourth quarter of 1996 and management realignments were made in the solar energy distribution business. This resulted in a restructuring charge of $2.4 million, primarily consisting of estimated severance costs for 16 employees in administrative functions. Cash outlays related to the restructuring charges are expected to occur in the first quarter of 1997. Note 4. Acquisitions 1996 Acquisitions During 1996, the Company consummated several acquisitions, including: (i) a controlling interest in the stock of Photocomm, Inc., a publicly traded company headquartered in Scottsdale, Arizona, engaged in the manufacture and marketing of solar electric systems; and (ii) the operating assets of H.B. Company, Inc., a manufacturer of oilfield pump components based in Oklahoma City, Oklahoma. These acquisitions were accounted for under the purchase method of accounting, and accordingly, the Company's results of operations for 1996 include the results of Photocomm since November 21, 1996 and of H.B. Company since March 19, 1996. The aggregate consideration in connection with these acquisitions was $24.2 million, which was allocated to the net assets acquired based upon their estimated fair market values. The excess of the purchase price over the estimated fair market values of the net assets acquired was $14.3 million, which is being amortized over 15 years on a straight-line basis. On March 1, 1996, the Company acquired Gravure Packaging, Inc., based in Richmond, Virginia. Gravure is a manufacturer of high-quality folding cartons for the packaged consumer goods industry and had annual net sales of approximately $44 million in 1996. Under terms of the acquisition, which was accounted for as a pooling of interests, the Company issued 911,000 shares of its common stock and paid $2.4 million in exchange for all of Gravure's stock. In addition, the Company paid $7.5 million at closing to reduce the short-term borrowings of Gravure. The above acquisitions were not material to the Company's balance sheet or results of operations. Accordingly, prior period financial statements have not been restated to include the results of the Gravure pooling of interests transaction. 1994 Acquisition In mid-1994 the Company acquired the stock of a flexible packaging company with plants in Canada and the United States. Consideration for the transaction included approximately $17 million in cash and notes, 845,000 shares of the Company's common stock and assumption of $56 million in liabilities. The transaction was accounted for under the purchase method of accounting and accordingly, the results of the acquired company have been included in the Company's results of operations since July 1, 1994. Goodwill recorded in the transaction of approximately $28 million is being amortized over 15 years on a straight-line basis. Note 5. Inventories The classification of inventories, in thousands, at December 31, was as follows: 1996 1995 Finished $ 46,312 $ 41,228 In process 28,837 41,712 Raw materials 26,371 34,560 Total inventories $101,520 $117,500 Note 6. Properties The cost of properties and related accumulated depreciation, in thousands, at December 31, consists of the following: 1996 1995 Land and improvements $ 11,107 $ 19,110 Buildings 90,136 125,706 Machinery and equipment 342,304 557,312 Real estate properties 10,261 11,084 Construction in progress 25,055 35,883 478,863 749,095 Less accumulated depreciation 234,248 322,263 Net properties $244,615 $426,832 Note 7. Operating Leases The Company has leases for a variety of equipment and facilities that expire in various years. Future minimum lease payments, in thousands, required as of December 31, 1996, under non-cancelable operating leases with terms exceeding one year, are as follows: 1997 $ 6,432 1998 4,424 1999 3,502 2000 3,159 2001 and thereafter 5,073 Total $22,590 Operating lease rentals for warehouse, production and office facilities and equipment amounted to $6.2 million in 1996, $4.6 million in 1995 and $4.4 million in 1994. Note 8. Long-Term Debt Long-term debt, in thousands, consists of the following as of December 31: 1996 1995 7.8% Unsecured notes due November 1, 1999 $ 70,000 $ 70,000 8.1% Unsecured notes due November 1, 2001 30,000 30,000 Total long-term debt $100,000 $100,000 The Company also has an unsecured $125 million revolving credit facility under which no amounts were outstanding at December 31, 1996 and 1995. The fair value of the Company's debt approximates its carrying value. Note 9. Income Taxes The components of income from continuing operations before income taxes were: Years Ended December 31, (In thousands) 1996 1995 1994 Domestic $14,694 $44,470 $30,502 Foreign 7,715 6,777 2,281 Total income from continuing operations before income taxes $22,409 $51,247 $32,783 The total provision for income taxes includes the following: Years Ended December 31, (In thousands) 1996 1995 1994 Current provision: Federal $ 3,524 $ 9,549 $ 7,780 State 2,995 3,232 2,467 Foreign 2,941 3,936 779 Total current tax expense 9,460 16,717 11,026 Deferred provision: Federal (53,640) 1,064 2,167 State (4,254) 53 (494) Foreign (166) (534) 401 Total deferred tax expense (benefit) (58,060) 583 2,074 Total income tax expense (benefit) $(48,600) $17,300 $13,100 The total provision for income taxes is included in the Consolidated Statement of Income as follows: Years Ended December 31, (In thousands) 1996 1995 1994 Continuing operations $ 11,000 $20,000 $13,100 Discontinued operations (59,600) (2,700) --- Total income tax expense (benefit) $(48,600) $17,300 $13,100 Temporary differences that give rise to a significant portion of deferred tax assets (liabilities) at December 31, 1996 and 1995, were as follows: (In thousands) 1996 1995 Pension and employee benefits $ 18,996 $ 16,430 Alternative minimum tax 15,435 15,424 Depreciation and other property related (9,324) (56,145) Inventory 3,649 1,110 Capitalized interest 3,044 2,674 Amortization of intangibles 2,252 551 All other 13,085 4,261 Gross deferred tax assets (liabilities) 47,137 (15,695) Less valuation allowance (1,800) --- Net deferred tax assets (liabilities) $ 45,337 $(15,695) The valuation allowance of $1.8 million was established due to the uncertainty surrounding the ultimate deductibility of capital losses, which are deductible only to the extent of offsetting capital gains. The principal differences between the effective income tax rate attributable to continuing operations and the U.S. statutory federal income tax rate are as follows: Years Ended December 31, 1996 1995 1994 Expected tax rate 35.0% 35.0% 35.0% State income taxes (net of federal benefit) 7.1% 4.0% 3.7% Non-deductible expenses and losses 9.6% 0.1% 1.8% Foreign tax expense (net of federal benefit) 0.3% 0.8% 0.5% Change in valuation allowance 7.6% --- --- Research and development and other tax credits (12.1%) --- --- Other - net 1.6% (0.9%) (1.0%) Effective tax rate 49.1% 39.0% 40.0% The Internal Revenue Service (IRS) has completed its examination of the Company's federal income tax returns through 1992. The IRS is currently reviewing the federal income tax returns for fiscal years 1993, 1994 and 1995. In the opinion of management, adequate accruals have been provided for all income tax matters and related interest. The Company has not provided for U.S. or additional foreign taxes on $11.3 million of undistributed earnings of foreign subsidiaries to the extent they are considered to be reinvested indefinitely. If these earnings were distributed, foreign tax credits should become available under current law to reduce or eliminate the resulting U.S. income tax liability. When the Company identifies exceptions to the general reinvestment policy, additional taxes will be provided. Note 10. Stock Compensation The Company's Equity Incentive Plan provides for the granting of non-qualified stock options to certain key employees. The Equity Incentive Plan also provides for the grant of restricted stock, bonus shares, stock units and offers to officers of the Company to purchase stock. The Company has authorized 4.8 million shares for issuance under this plan. Generally, options outstanding under the Company's Equity Incentive Plan are subject to the following terms: (i) grant price equal to fair market value of the stock on the date of grant; (ii) ratable vesting over either a three or four year service period; and (iii) maximum term of ten years from the date of grant. Transactions in options for the years ended December 31, 1996, 1995 and 1994 were as follows: 1996 1995 1994 Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise (Shares in thousands) Shares Price Shares Price Shares Price Options outstanding at January 1 2,374 $16.08 2,313 $15.27 1,359 $12.64 Granted 479 $15.29 369 $19.34 1,088 $18.22 Exercised (29) $12.75 (271) $13.15 (110) $12.56 Expired or forfeited (36) $17.36 (37) $19.38 (24) $12.44 Options outstanding at December 31 2,788 $15.96 2,374 $16.08 2,313 $15.27 Exercisable at December 31 1,593 $15.33 1,251 $14.81 1,077 $13.96 Available for future grant 806 1,368 1,713 Options outstanding at December 31, 1996 had exercise prices between $9.93 and $20.88 per share and had a weighted average remaining contractual life of 6.7 years. The Company applies APB Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans. Accordingly, no compensation expense has been recognized for its Equity Incentive Plan and employee stock purchase plan. If the Company had elected to recognize compensation cost based on the fair value of the options at grant date as allowed by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," compensation expense of $2.2 million and $0.5 million would have been recorded for 1996 and 1995, respectively. Net income and earnings per share would have been reduced to the pro forma amounts indicated below: 1996 1995 Net income (loss) in thousands: As reported $(92,024) $23,871 Pro forma $(93,411) $23,591 Earnings (loss) per share: As reported $ (3.21) $ 0.86 Pro forma $ (3.26) $ 0.85 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 22.6%; (iii) risk-free interest rate ranging from 5.2% to 6.8%; and (iv) expected life of 3 to 6.37 years. The weighted average per share fair value of options granted during 1996 and 1995 was $5.16 and $6.65, respectively. Note 11. Employee Retirement Plans The Company maintains several defined benefit pension plans for the majority of the Company's employees. Benefits are based on years of service and average base compensation levels over a period of years. Plan assets consist primarily of equity, real estate and interest-bearing investments. The Company's funding policy is to contribute annually not less than the ERISA minimum funding standards nor more than the maximum amount that can be deducted for federal income tax purposes. Total expense for these plans, the Company's 401(k) plan and other defined contribution plans was $8.3 million in 1996, $6.7 million in 1995 and $9.4 million in 1994. The funded status of the pension plans and amounts recognized in the Consolidated Balance Sheet as of December 31, were as follows: (In thousands) 1996 1995 Actuarial present value of accumulated plan benefits (including vested benefits of $84,093 in 1996 and $79,447 in 1995) $ 90,940 $ 87,720 Projected benefit obligation for service rendered to date 118,505 111,340 Plan assets available for benefits 97,308 83,654 Plan assets less than projected benefit obligation (21,197) (27,686) Unrecognized net loss 11,798 25,744 Prior service cost not yet recognized 7,321 3,668 Unrecognized net assets being recognized over 15 years (689) (954) Net prepaid pension asset (liability) $ (2,767) $ 772 The components of net pension expense for the years ended December 31, were as follows: (In thousands) 1996 1995 1994 Service cost for benefits earned during the year $ 4,196 $ 3,100 $ 4,331 Interest cost on projected benefit obligation 8,331 7,458 7,455 Actual gain on plan assets (14,172) (14,877) (522) Net amortization and deferral 8,287 9,287 (4,163) Net pension expense $ 6,642 $ 4,968 $ 7,101 Significant assumptions used in determining the valuation of the projected benefit obligation were: 1996 1995 1994 Settlement rate 7.8% 7.3% 8.3% Increase in compensation levels 5.3% 5.3% 5.3% Rate of return on plan assets 9.8% 9.8% 9.8% Note 12. Other Postretirement Benefits Certain subsidiaries of the Company provide health care and life insurance benefits to retirees and eligible dependents. Eligible employees may receive these benefits after reaching age 55 with 10 years of service. Prior to reaching age 65, eligible retirees may receive certain health care benefits identical to those available to active employees. Retirees who meet the age and service requirement necessary to retire early without any actuarial reductions from the Company's retirement plan for early retirement, either pay no premium or the same premium as active employees. Eligible retirees who do not meet this age and service requirement pay a greater amount. These plans are not funded. The amounts recognized in the Consolidated Balance Sheet as of December 31, were as follows: (In thousands) 1996 1995 Accumulated Postretirement Benefit Obligation (APBO) Retirees $ 9,315 $ 1,089 Fully eligible, active plan participants 2,898 3,035 Other active plan participants 8,487 8,176 20,700 22,300 Unrecognized net gain 3,872 525 Unrecognized prior service cost 4,443 4,905 Accrued other postretirement benefit cost $29,015 $27,730 The components of net periodic other postretirement benefit cost for the years ended December 31, were as follows: (In thousands) 1996 1995 1994 Service cost for benefits earned during the year $ 891 $ 889 $1,114 Interest cost on APBO 1,452 1,824 1,832 Recognized amortized gain (428) (157) (118) Net periodic postretirement benefit cost $ 1,915 $ 2,556 $ 2,828 The accumulated postretirement benefit obligation was determined based on the terms of the pertinent health and life insurance plans, together with relevant actuarial assumptions and health care cost trend rates ranging ratably from 10.0% in 1996 to 5.0% through the year 2006. The discount rate used to determine the APBO at December 31, 1996 and 1995, was 7.8% and 7.3%, respectively. If the health care cost trend rate was increased 1%, the APBO as of December 31, 1996, would have increased by approximately $2.0 million. The effect of this change on the ongoing annual cost would be approximately $0.3 million. Note 13. Related Party Transactions The Company sells packaging and refined corn starch products to Coors Brewing Company (Coors Brewing), a subsidiary of Adolph Coors Company (ACCo). Additionally, the Company sold aluminum products to Coors Brewing until the sale of Golden Aluminum on March 1, 1997. On December 28, 1992, the Company was spun off from ACCo and since that time, ACCo has had no ownership interest in the Company. However, certain Coors family trusts have significant interests in both the Company and ACCo. At the time of spin-off from ACCo, the Company entered into agreements (operating agreements) with Coors Brewing for the sale of aluminum, packaging and starch products and the resale of brewery byproducts. The operating agreements had a stated term of five years and have resulted in substantial revenues to the Company. During 1995, the Golden Aluminum operating agreement was canceled. In early 1997, the supply agreement with Graphic Packaging was modified to a three year, rolling term contract that provides stated quantity commitments and annual repricing. In addition, the corn starch and brewery byproduct agreements were extended through 1999. The Company will continue to attempt to increase its sales to unaffiliated customers to decrease dependence on Coors Brewing. Sales of packaging products and refined corn starch to Coors Brewing accounted for approximately 16.7%, 19.0% and 20.6% of the Company's consolidated net sales for 1996, 1995 and 1994, respectively. Included in the results of discontinued operations are sales of aluminum products of $25.9 million, $121.1 million and $82.5 million for 1996, 1995 and 1994, respectively. Sales were at terms comparable to those that could have been obtained on an arms-length basis between unaffiliated parties. The loss of Coors Brewing as a customer in the foreseeable future could have a material effect on the Company's results of operations. Note 14. Commitments and Contingencies It is the policy of the Company generally to act as a self- insurer for certain insurable risks consisting primarily of employee health insurance programs. With respect to workers' compensation, the Company uses a variety of fully or partially self-funded insurance vehicles. The Company maintains certain stop-loss and excess insurance policies that reduce overall risk of financial loss. The Company is named as defendant in various actions and proceedings arising in the normal course of business, including claims by current or former employees relating to employment or termination. In addition, the Company is a plaintiff in a fixed price construction contract dispute under which a counterclaim has been filed. In all of these cases, the Company is denying the allegations made against it and is vigorously defending them. Although the eventual outcome of the various lawsuits cannot be predicted, it is management's opinion that these suits will not result in liabilities to such extent that they would materially affect the Company's financial position or results of operations. Coors Ceramics and a beryllium supplier have been named as defendants in a lawsuit brought by several current and former employees of a defense equipment manufacturer and their spouses. Plaintiffs are seeking damages in connection with the manufacture, sale and distribution of certain products containing beryllium and allege that they contracted chronic beryllium disease from products supplied by Coors Ceramics and the beryllium supplier. The suit is in the early stages of litigation; however, the Company believes it has meritorious defenses to the allegations raised and intends to defend itself vigorously against these allegations. Golden Technologies and several other defendants have recently been sued by a candy company claiming violation of federal and state antitrust laws in sales of corn syrup from 1988 to 1996. It appears that the Company was only an occasional and minor supplier to the plaintiff and Golden Technologies intends to vigorously defend itself against these allegations. The Company has agreed to grant or guarantee a line of credit for two years not to exceed $8.0 million for National Empowerment Television, Inc. (NET). This agreement will grant the Company the right to purchase a portion of NET's common stock at a discount from the current market value under certain circumstances. NET is a privately-held cable television network located in Washington, D.C. If the Company is called upon to satisfy the guarantee, the Company has the option to convert the loan into an equity position of NET. Coors Ceramics has received a demand for payment arising out of contamination of a semiconductor manufacturing facility formerly owned by a subsidiary of Coors Ceramics, Coors Components, Inc. (CCI). Colorado State environmental authorities are negotiating with the party to whom Coors Ceramics sold the property (Buyer) to clean up soil and ground water contamination on this parcel of property. In addition, Buyer is seeking indemnification for damages paid in 1995 arising out of litigation by the adjacent landowner. The contamination is believed to have occurred prior to Coors Ceramics' ownership of CCI. CCI was sold to Buyer in November 1987. Coors Ceramics does not believe it has any responsibility for the contamination or the cleanup, and has notified the party from whom it acquired the property that Coors Ceramics will seek indemnification under the terms of its purchase agreement in the event of liability. Some of the Company's subsidiaries have been notified that they may be potentially responsible parties (PRPs) under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) or similar state laws with respect to the remediation of certain sites where hazardous substances have been released into the environment. The Company cannot predict with certainty the total costs of remediation, its share of the total costs, the extent to which contributions will be available from other parties, the amount of time necessary to complete the remediation or the availability of insurance. However, based on investigations to date, the Company believes that any liability with respect to these sites would not be material to the financial condition and results of operations of the Company, without consideration for insurance recoveries. There can be no certainty, however, that the Company will not be named as a PRP at additional sites or be subject to other environmental matters in the future or that the costs associated with those additional sites or matters would not be material. Note 15. Quarterly Financial Information (Unaudited) The following information summarizes selected quarterly financial information, in thousands, for each of the two years in the period ended December 31, 1996. 1996 First Second Third Fourth Year Net sales $ 177,138 $183,987 $175,154 $176,101 $712,380 Cost of goods sold 138,478 142,585 137,218 137,574 555,855 Marketing, general & administrative 19,588 19,507 18,459 20,393 77,947 Research & development 3,623 3,771 3,602 4,304 15,300 Asset impairment and restructuring charges --- --- --- 34,642 34,642 Other expense 1,589 2,158 1,693 787 6,227 Total costs & expenses 163,278 168,021 160,972 197,700 689,971 Income (loss) from continuing operations before income taxes 13,860 15,966 14,182 (21,599) 22,409 Income tax expense (benefit) 5,700 6,200 5,600 (6,500) 11,000 Income (loss) from continuing operations 8,160 9,766 8,582 (15,099) 11,409 Discontinued operations: Loss from discontinued operations of Golden Aluminum (5,033) --- --- --- (5,033) Loss on disposal of Golden Aluminum (70,000) --- --- (28,400) (98,400) Net income (loss) $(66,873) $ 9,766 $ 8,582 $(43,499) $(92,024) Per share of common stock: Continuing operations $ 0.29 $ 0.34 $ 0.30 $ (0.53) $ 0.40 Discontinued operations (2.62) --- --- (0.99) (3.61) Net income (loss) $ (2.33) $ 0.34 $ 0.30 $ (1.52) $ (3.21) 1995 Net sales $155,884 $169,235 $171,210 $164,524 $660,853 Cost of goods sold 121,073 128,776 130,248 127,932 508,029 Marketing, general & administrative 18,265 19,237 18,475 19,094 75,071 Research & development 4,447 4,763 3,161 3,941 16,312 Restructuring charges --- --- --- 2,735 2,735 Other expense 2,362 2,170 1,794 1,133 7,459 Total costs & expenses 146,147 154,946 153,678 154,835 609,606 Income from continuing operations before income taxes 9,737 14,289 17,532 9,689 51,247 Income tax expense 3,850 5,550 6,900 3,700 20,000 Income from continuing operations 5,887 8,739 10,632 5,989 31,247 Discontinued operations: Income (loss) from discontinued operations of Golden Aluminum 2,763 1,180 (3,676) (7,643) (7,376) Net income (loss) $ 8,650 $ 9,919 $ 6,956 $ (1,654) $ 23,871 Per share of common stock: Continuing operations $ 0.21 $ 0.32 $ 0.38 $ 0.22 $ 1.13 Discontinued operations 0.10 0.04 (0.13) (0.28) (0.27) Net income (loss) $ 0.31 $ 0.36 $ 0.25 $ (0.06) $ 0.86 Included in the 1996 fourth quarter loss from continuing operations were asset impairment and restructuring charges of $34.6 million at Golden Technologies. The after-tax effect of these charges was $22.8 million, or $0.80 per share. See Note 3. Note 16. Segment Information Certain financial information for the Company's business segments, in thousands, is included in the following summary: Operating Depreciation Additions Net Income and to (In thousands) Sales (Loss) Assets Amortization Properties 1996 Ceramics $276,352 $44,204 $214,635 $16,159 $30,291 Packaging 346,547 41,048 205,705 19,959 13,314 Developmental businesses 89,481 (48,447) 104,138 5,757 12,558 Discontinued operations --- --- 116,552 7,307 1,036 Corporate --- (8,169) 35,662 341 327 $712,380 $28,636 $676,692 $49,523 $57,526 1995 Ceramics $270,877 $47,395 $189,191 $14,046 $25,122 Packaging 308,109 34,551 197,587 16,945 20,149 Developmental businesses 81,867 (13,740) 80,350 5,643 7,426 Discontinued operations --- --- 268,260 12,618 7,177 Corporate --- (9,500) 50,098 605 153 $660,853 $58,706 $785,486 $49,857 $60,027 1994 Ceramics $231,288 $33,091 $165,804 $11,831 $18,949 Packaging 258,833 27,889 197,330 13,632 8,407 Developmental businesses 88,584 (13,174) 88,852 8,842 5,920 Discontinued operations --- --- 297,962 11,573 9,768 Corporate --- (9,355) 10,342 222 53 $578,705 $38,451 $760,290 $46,100 $43,097 Operating income (loss) for reportable segments is exclusive of certain unallocated corporate expenses. Corporate assets include cash and cash equivalents and certain properties. SCHEDULE II ACX TECHNOLOGIES, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (In thousands) Allowance for doubtful receivables (deducted from accounts receivable) Additions Balance at charged to Balance Year Ended beginning costs and at end December 31 of year expenses Other Deductions of year 1994 $2,899 $1,335 $ 6(1) $ (796)(2) $3,444 1995 $3,444 $ 742 $ 7(1) $(1,469)(2) $2,724 1996 $2,724 $1,272 $(30)(1) $ (931)(2) $3,035 (1) The effect of translating foreign subsidiaries' financial statements into U.S. dollars. (2) Write-off of uncollectible accounts. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Within the last two years there have been no changes in the Company's independent accountants or disagreements on accounting and financial statement disclosure matters. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding the Registrant's Directors is incorporated by reference to the Proxy Statement in connection with the 1997 Annual Meeting of Shareholders. The following executive officers of the Company serve at the pleasure of the Board: Jeffrey H. Coors, 52, President of the Company since its formation in August 1992. Chairman of Graphic Packaging and Golden Technologies since 1985 and 1989, respectively; Executive Vice President of ACCo from 1991 to 1992; President of Coors Technology Companies from 1989 to 1992; Director of Photocomm, Inc. since November 1996. Joseph Coors, Jr., 55, President of the Company since its formation in August 1992; President and Chief Executive Officer of Coors Ceramics since March 1997 and Chairman of Coors Ceramics since 1989; President of Coors Ceramics from 1985 to 1993; Chairman of Golden Aluminum from 1993 to 1997; Executive Vice President of ACCo from 1991 to 1992; also a director of Hecla Mining Company. Jed J. Burnham, 52, Chief Financial Officer and Treasurer of the Company since March 1995 and August 1992, respectively; Chief Credit Officer for non-metro Denver banks at Norwest Bank from 1990 to 1992; Director of Photocomm, Inc. since November 1996. Jill B. W. Sisson, 49, General Counsel and Secretary of the Company since September 1992; Of Counsel to the Denver law firm of Bearman Talesnick & Clowdus Professional Corporation from 1984 to 1992. Gail A. Constancio, 36, Controller and Principal Accounting Officer of the Company since May 1994; Manager of Financial Reporting and Investor Relations from 1992 to 1994; Financial Reporting Specialist for ACCo from 1989 to 1992. The following table identifies and provides information regarding the principal executives of the Company's major subsidiaries: David H. Hofmann, 59, President and Chief Executive Officer of Graphic Packaging since October 1989; President of the Health Care Division of Paper Manufacturers Company from 1980 to 1989. Dean A. Rulis, 49, President of Golden Technologies since 1992; President of Wilbanks International, Inc., a subsidiary of Coors Ceramics, from 1984 to 1992. ITEM 11. EXECUTIVE COMPENSATION This information is incorporated by reference to the Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT This information is incorporated by reference to the Proxy Statement ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS This information is incorporated by reference to the Proxy Statement. 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 Part II, Item 8. (2) Financial Statement Schedule: See index of financial statements in Part II, Item 8: Schedule II- Valuation and Qualifying Accounts for the years ended December 31, 1996, 1995 and 1994 Schedules other than those referred to above are omitted because they are not required or the information is shown in the financial statements or notes thereto. (3) Exhibits: Exhibit Number Document Description 2.1 Plan of disposition for Golden Aluminum Company. (Incorporated by reference to Exhibit 2.1 to Form 10-Q filed on May 3, 1996, file No. 0-20704) 3.1 Articles of Incorporation of Registrant. (Incorporated by reference to Exhibit 3.1 to Form 10 filed on October 6, 1992, file No. 0- 20704) 3.1A Articles of Amendment to Articles of Incorporation of Registrant. (Incorporated by reference to Exhibit 3.1A to Form 8 filed on December 3, 1992, file No. 0-20704) 3.2 Bylaws of Registrant, as amended. (Incorporated by reference to Exhibit 3.2 to Form 10-Q filed on November 7, 1996, file No. 0- 20704) 4 Form of Stock Certificate of Common Stock. (Incorporated by reference to Exhibit 4 to Form 10-K filed on March 7, 1996, file No. 0-20704) 10.1 Stock Purchase Agreement Among Golden Aluminum Company, Crown Cork & Seal, Inc. and ACX Technologies, Inc. (Incorporated by reference to Exhibit 10.1 to 8-K filed on March 14, 1997, file No. 0-20704) 10.2 Supply Agreement between Graphic Packaging Corporation and Coors Brewing Company, dated January 1, 1997. (Confidential treatment has been requested for portions of this Exhibit) 10.6 Gravure International Capital Corporation Purchase Agreement. (Incorporated by reference to Form 8-K filed on July 1, 1994, file No. 0-20704) 10.7* Description of Officers' Life Insurance Program. 10.8* Form of Officers' Salary Continuation Agreement, as amended. (Incorporated by reference to Exhibit 10.10 to Form 10-K filed on March 20, 1995, file No. 0-20704) 10.9* ACX Technologies, Inc. Equity Incentive Plan, as amended. (Incorporated by reference to Exhibit 10.9 to Form 10-K filed on March 7, 1996, file No. 0-20704) 10.10* ACX Technologies, Inc. Equity Compensation Plan for Non-Employee Directors, as amended. (Incorporated by reference to Exhibit A to the Proxy Statement filed in connection with the May 17, 1994, Annual Meeting of Shareholders) 10.11* ACX Technologies, Inc. Phantom Equity Plan. (Incorporated by reference to Exhibit 10.11 to Form 8 filed on November 19, 1992, file No. 0-20704) 10.15* ACX Technologies, Inc. Deferred Compensation Plan, as amended. (Incorporated by reference to Exhibit 10.15 to Form 10-K filed on March 7, 1996, file No. 0-20704) 10.16* ACX Technologies, Inc. Executive Incentive Plan. (Incorporated by reference to Exhibit 10.16 to Form 10-K filed on March 7, 1996, file No. 0-20704) 12 Statement of Computation of Ratio of Earnings to Fixed Charges. 21 Subsidiaries of Registrant. 23 Consent of Price Waterhouse LLP. 27 Financial Data Schedule * Management contracts or compensatory plans, contracts or arrangements required to be filed as an Exhibit pursuant to Item 14(c). The Registrant will furnish to a requesting security holder any Exhibit requested upon payment of the Registrant's reasonable copying charges and expenses in furnishing the Exhibit. (b) Reports on Form 8-K. There were no reports filed on Form 8-K for the quarter ended December 31, 1996. (c) Other Exhibits. No exhibits in addition to those previously filed or listed in Item 14(a)(3) are filed herein. (d) Other Financial Statement Schedules. No additional financial statement schedules are required. 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. ACX TECHNOLOGIES, INC. Date: March 24, 1997 By /s/ Jeffrey H. Coors Jeffrey H. Coors President Date: March 24, 1997 By /s/ Joseph Coors, Jr. Joseph Coors, Jr. President Date: March 24, 1997 By /s/ Jed J. Burnham Jed J. Burnham Chief Financial Officer and Treasurer Date: March 24, 1997 By /s/ Gail A. Constancio Gail A. Constancio Controller and Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Date: March 24, 1997 By /s/ William K. Coors William K. Coors Chairman of the Board of Directors and Director Date: March 24, 1997 By /s/ John D. Beckett John D. Beckett Director Date: March 24, 1997 By /s/ Jeffrey H. Coors Jeffrey H. Coors Principal Executive Officer and Director Date: March 24, 1997 By /s/ John K. Coors John K. Coors Director Date: March 24, 1997 By /s/ Joseph Coors, Jr. Joseph Coors, Jr. Principal Executive Officer and Director Date: March 24, 1997 By /s/ Richard P. Godwin Richard P. Godwin Director Date: March 24, 1997 By /s/John H. Mullin,III John H. Mullin, III Director Date: March 24, 1997 By /s/ John Hoyt Stookey John Hoyt Stookey Director EX-10.2 2 EXHIBIT 10.2 NOTE: CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT SUPPLY AGREEMENT This Supply Agreement (this "Agreement") is made effective as of the 1st day of January 1997 by and between Coors Brewing Company ("COORS"), a Colorado corporation with its principal place of business in Golden, Colorado, and Graphic Packaging Corporation ("GPC"), a Delaware corporation with its principal place of business in Wayne, Pennsylvania. Upon execution of this Agreement by representatives of both parties, this Agreement shall supersede and replace the Supply Agreement between the parties dated December 28, 1992. 1.0 PURPOSE The purpose of this Agreement is to set forth the terms and conditions under which GPC will provide to COORS those paperboard and paper label and film label packaging products: (i) listed on Schedule A, and (ii), provided the parties agree upon pricing for such, for new brands to be packaged in the COORS Plants (as hereinafter defined) and for brand extensions of those COORS' brands currently being labeled with, or packaged in, products listed on Schedule A , such products described in clauses (i) and (ii) being collectively referred to herein as "Products". Upon any paperboard, paper label or film label packaging product becoming a "Product" in accordance with clause (ii) of the prior sentence, Schedule A shall be automatically amended thereafter to include such Product. Notwithstanding any provision to the contrary, COORS agrees that, in the event the parties cannot agree as to pricing of a paperboard, paper label or film label packaging product in accordance with clause (ii) of the first sentence of this Section 1.0, COORS shall not enter into an agreement with a third party to supply any such product at a price greater than the lowest price proposed by GPC to COORS for such product without GPC first having the opportunity to supply such product at such greater price. 2.0 TERM This Agreement shall commence on January 1, 1997 and shall continue in effect through December 31, 1999 (the "Initial Term"). No later than twenty-four months prior to the expiration of the Term (as hereinafter defined), the parties may agree to extend the remaining term of this Agreement for an additional one year term on terms and conditions mutually acceptable to the parties (including COORS' satisfaction that GPC has made adequate progress toward competitive pricing), each such additional one-year term being a "Renewal Term" and all Renewal Terms together with the Initial Term being referred to jointly as the "Term". So long as the parties are under common control, the annual decision of the parties, whether or not to extend the term by one year, shall be presented to the board of directors of each party for ratification no later than December 31 of each year (unless an election not to extend has been made by a party and ratified by the board of directors of such party in accordance with this Section 2.0 prior to such time), and shall not be effective unless (a) in the event of an election to extend the Term, such election has been ratified by the boards of directors of both parties hereto or (b) in the event of an election not to extend the Term, such election has been ratified by the board of directors of the party electing to not extend the Term. 3.0 QUANTITY AND OPPORTUNITY TO SUPPLY 3.1 During the Term and except as otherwise provided, COORS agrees to purchase and GPC agrees to supply 100% of COORS requirements, as such requirements may exist from time to time, for Products at its three current locations: Golden, Colorado ("COORS-Golden"), Memphis, Tennessee ("COORS-Memphis") and Elkton, Virginia ("COORS-Shenandoah" and, together with COORS-Golden and COORS-Memphis, the "COORS Plants"). COORS makes no representation as to volume requirements for any Product hereunder. 3.2 During the Term, COORS shall provide GPC with a bona fide right to compete for all opportunities to supply paperboard and paper label and film label packaging products that are: (i) not Products or (ii) related to the acquisition or construction of new brewing and beverage production facilities by COORS, the contract brewing of beverages by COORS or the outsourcing to any third party by means of contract or license of any brewing or packaging by COORS; provided, however, that COORS shall be excused from the foregoing if by doing so, COORS reasonably believes that it may violate commitments to third parties: (a) existing on the date hereof, (b) existing at a brewing or beverage production facility as of the date COORS acquires such brewing or beverage production facilities, or (c) existing with such contract brewer or such third party as of the date COORS enters into such contract or license. If COORS selects GPC to supply paperboard and paper label and film label packaging products pursuant to this paragraph, then such products shall become Products hereunder. 4.0 CONSIDERATION 4.1 In consideration for GPC's ongoing performance of its obligations pursuant to the terms and provisions set forth herein, COORS hereby agrees to pay GPC on an ongoing basis for the supply of Products in accordance with the pricing schedule set forth on Schedule B hereto, incorporated herein by reference (such pricing schedule, as amended from time to time in accordance with the provisions of this Agreement, being the "Pricing Schedule"). 4.2 All invoices for products supplied by GPC to COORS pursuant to this Agreement shall be mailed to: Coors Brewing Company Accounts Payable Department P.O. Box 889 Golden, CO 80402 Payment terms hereunder shall be *** for invoices issued on the *** day through the *** day of any month that are paid on or before the *** day of such month (or the ***, if shorter) and invoices issued on the *** day of any month through the *** day of the subsequent month that are paid on or before the *** day of such subsequent month. GPC shall mail invoices within *** days of shipment for items other than those set forth on the Pricing Schedule for which the payment terms shall be that invoices issued on any day of a calendar month shall be paid as billed (without discount) on or before the *** day of the subsequent month. Amounts due and owing by COORS and not paid in accordance with the payment terms herein shall accrue interest at a rate of ***. Invoices not billed by GPC within *** days of GPC shipment or performance of services shall give COORS the right to not pay such invoices as provided in Section 5.6. 4.3 Except with respect to *** as provided for pursuant to Section 4.4, GPC shall be responsible for and *** during the Initial Term; provided, however, that with respect to any Renewal Term, GPC and COORS shall have the right to negotiate amendments to ***. 4.4 *** of the label paper, paperboard, film, inks and resins used in the production of the Products *** and the Pricing Schedule shall be adjusted accordingly. *** adjustments will be made January 1 and July 1 of each year provided that COORS receives written *** no later than forty-five days prior to the above review dates. 4.5 *** 4.6 *** 4.7 GPC and COORS shall initiate a joint benchmarking process to identify GPC's competitiveness. The benchmarking process shall take into account the present single source supply reality of GPC's patented and proprietary processes, the quality and service expectations demanded by COORS to supply packaging and labels, the prices of Products, technological advances by GPC's competitors which may fulfill COORS packaging needs, and other relevant factors. GPC and COORS each agree to use its best efforts to mutually establish the full parameters of the benchmarking process on an annual basis and to commence the benchmarking process so established with the objective of creating an annual benchmark report by the first business day of July of each year of the Term. 4.8 COORS shall reimburse GPC for the reasonable costs incurred by GPC for raw materials acquired by GPC for the purpose of fulfilling the obligations of GPC hereunder in the event that, as a result of changes by COORS in specifications or artwork, such materials are rendered obsolete. Obsolete raw material shall be valued at its original price. The determination of any amounts to be reimbursed pursuant to this Section 4.8 and the payment thereof shall be completed within 3 months of such materials being rendered obsolete. In no event shall the amount of reimbursement for such raw materials exceed the corresponding finished goods inventory authorized by COORS. 4.9 The parties acknowledge that completing an order for any Products of non-promotional sustaining copy will be controlled by the minimum/maximum inventory provisions of Paragraph 5.4. Promotional material requirements and new artwork conversions will be negotiated on a case-by-case basis. Both parties will do everything possible to reach a fair and reasonable range for over or under the targeted run quantity. COORS will use its best commercial efforts to provide GPC a promotional volume requirement form two weeks prior to the print date; provided however, that COORS initiated changes within such two-week period may be subject to additional charges to COORS in accordance with Section 4.10. 4.10 The parties acknowledge that under certain conditions additional shipping, production or other charges related to the Products and not otherwise set forth on the Pricing Schedule will be incurred subject to COORS prior approval and will subsequently be invoiced to COORS. Certain of such additional charges are set forth on the "pricing extras" schedule set forth on Schedule C hereto, incorporated herein by reference (such pricing extras schedule, as amended from time to time in accordance with the provisions of this Agreement, being the "Pricing Extras Schedule"). The Pricing Extras Schedule shall be subject to good faith renegotiation prior to January 1 of each year to take effect in such new year; provided, however, that the prices set forth in the Pricing Extras Schedule may not be changed or amended during the course of any calendar year. Items not covered in the Pricing Extras Schedule may be covered in a purchase order separate from this Agreement if requested by either COORS or GPC. 5.0 DUTIES OF GPC 5.1 GPC shall supply the Products in accordance with the orders of a COORS Plant Services Designated Representative (as defined in Section 8.2), provided that sufficient time for production and delivery is given. If the lead time for any order by COORS is less than allowed for in Schedule D hereto, GPC shall inform a COORS Plant Services Designated Representative within 24 hours as to whether or not the delivery can be met. GPC will use it best commercial efforts to give requests and orders by COORS top priority and to fulfill the timetable requested by COORS regardless of whether any such request or order allows for normal lead times. 5.2 A GPC Designated Representative (as defined in Section 8.3) and a representative from each supplying plant of GPC shall meet weekly with a COORS Packaging Purchasing Designated Representative (as defined in Section 8.1) for the purpose of reviewing GPC and COORS inventories and current and forecasted requirements of COORS. GPC shall deliver to a COORS Packaging Purchasing Designated Representative prior to 8:00a.m. (MST) each Tuesday a perpetual inventory, accurate as of the prior Sunday, which shall consist of finished goods, in transit and work-in-process for all Products at all GPC locations. 5.3 All Products shall be at a quality level which meets or exceeds current material specifications of COORS as set forth in writing and provided to GPC prior to the date hereof (with respect to each Product, the "Material Specifications"). Julian dates reflect current artwork and are listed on the Artwork Table published by the COORS Technical Documents Department, and GPC will be required to sign off on all new and revised specifications. GPC shall issue without delay and upon request from a COORS Designated Representative (as defined in Section 8.2) a returned goods authorization (a "Returned Goods Authorization") with respect to any Products supplied by GPC that do not meet or exceed the Material Specifications, and such Products will be returned to GPC if they do not meet or exceed the Material Specifications, or if they do not run on the COORS' lines for which they are intended following a good faith effort by the parties to assign responsibility and resolve those instances where it is not readily apparent if the Products are within or out of specification. A COORS Designated Representative shall make a good-faith effort to obtain a Returned Goods Authorization prior to returning any rejected Products to GPC. 5.4 GPC shall maintain finished goods inventories of the Products which will not go below two weeks or exceed 12 weeks based on the weekly requirement schedules supplied by COORS. The requirements of COORS shall be made available to GPC in accordance with procedures in effect on the date hereof. Exceptions to the two-week minimum, 12-week maximum finished goods inventory for the Products shall be considered on a case-by-case basis with the involvement of the affected brand coordinated by the appropriate COORS Packaging Purchasing Designated Representative who shall provide approval in writing by means of a written release. GPC must have inventory of finished product available to COORS Plants within the time periods provided as follows: (a) if final production point is GPC-Boulder or GPC-Golden, then: to COORS-Golden, 2 hours; to COORS-Memphis, 72 hours; to COORS-Shenandoah, 96 hours, or (b) if final production point is GPC-Lawrenceburg, then: to to COORS-Golden, 48 hours; to COORS- Memphis, 24 hours; to COORS-Shenandoah, 48 hours. The parties agree that finished goods do not include anything deemed to be work-in-process which includes, but is not limited to, film and printed or laminated roll stock. 5.5 GPC shall use its expertise to make recommendations which will improve the Products from a quality, runability or pricing standpoint. GPC shall present all recommendations in the COORS' Technical Meeting or Cost Savings Meeting, and if a conceptual document is approved, testing will be conducted and Material Specifications revised as required. Pricing documentation shall be submitted to a COORS Packaging Purchasing Designated Representative. Savings identified from COORS' approved specification changes to the Products, the manufacturing processes used to make the Products, freight or any other associated COORS' approved activities or materials shall be passed on to COORS to the extent identified in writing by GPC to COORS. 5.6 Within 60 days after the delivery of Products to COORS or within 60 days after a project has been put "on hold," GPC shall bill for all costs quoted or otherwise incurred. Failure to bill within the 60 days shall result in the right of COORS to refuse payment relating to any goods supplied, work-in-progress or services received for which payment is sought by such late billing. 5.7 GPC shall pay for all cylinder and flexoplate maintenance and for all GPC-initiated changes. GPC shall pay for backup cylinders and flexoplates which GPC determines are required. Subject to Section 6.5, GPC shall be responsible for all backup cylinder re- etch costs. As requested, GPC will provide a COORS Packaging Purchasing Designated Representative with a by-brand update of COORS-owned cylinders and flexoplates. This update will be provided within one week of any such request. 5.8 Written authorization to strip cylinders must be obtained from a COORS Designated Representative. GPC will be responsible for all costs associated with unauthorized stripping of cylinders. 5.9 During the Term and for a period of three years following expiration or termination of this Agreement, GPC agrees to maintain its financial information in accordance with generally accepted accounting principles and practices consistently applied. GPC shall grant to COORS, or to others designated by COORS, reasonable access to specific accounting records, invoices and records of payment with respect to a) COORS inventories of finished goods held by GPC and b) GPC's suppliers of raw materials and services specifically used in Products. 6.0 DUTIES OF COORS BREWING COMPANY 6.1 For non-promotional Products, COORS shall use its best commercial efforts to provide a firm two-week Products requirement list and an additional ten-week Products requirement forecast. COORS initiated changes within such two-week period may be subject to additional charges to COORS in accordance with Section 4.10. 6.2 COORS Designated Representatives shall release to GPC in writing weekly shipment requirements of each COORS Plant for the Products. The time parameters set forth in any such release shall be consistent with the lead times to be provided GPC in accordance with Schedule D hereto or as otherwise agreed to among the parties. Any changes to the weekly shipment requirements of COORS subsequent to the release of such requirements to GPC shall be made by a COORS Designated Representative. COORS shall be responsible for any costs or expenses incurred by GPC to revise any supply shipments previously sent pursuant to the release of a COORS Designated Representative; provided, however, that GPC will use its best commercial efforts to keep any such costs or expenses to a minimum. 6.3 With respect to any new Product or revision of an existing Product, a COORS Designated Representative shall provide GPC with the applicable Material Specifications. Frozen artwork shall be given to GPC through the COORS Company/Technical Documents, Quality Assurance or Product Managers. Presentation of frozen artwork shall be GPC's authorization to proceed. All frozen artwork presented to GPC shall include three Fiery thermal outputs, a digital tape/disk and a signed checklist sheet. 6.4 COORS shall provide purchase orders to cover previously approved cost estimate expenditures. These purchase orders shall be required prior to GPC making any production runs. 6.5 COORS shall be required to purchase all original cylinders. As set forth in Section 5.7, backup cylinders or cylinder sets and cylinder maintenance costs, including re-etching of current artwork, shall be the responsibility of GPC. COORS shall be responsible for re-etch costs on original and backup cylinders and flexoplates resulting from COORS- initiated specification changes. If specification or artwork changes require new cylinders or flexoplates, COORS shall purchase these through GPC. All costs for cylinders, flexoplates, etching and artwork preparation shall be on a pass-through basis with no markup by GPC. Appropriate backup will be attached to each GPC invoice for cylinders, flexoplates, etching and artwork preparation. 6.6 COORS shall pay for finished goods inventories run by GPC at the request of COORS which are not released within 12 weeks from the date they were produced. These will be referred to as "Billed Not Shipped" ("BNS") inventory and will incur a $3.00 per pallet per month warehousing charge. 6.7 COORS shall determine to ship or destroy obsolete or BNS inventories within six months from date of production. Exceptions must be negotiated on a case-by- case basis; provided, however, storage beyond six months will be $10.00 per pallet per month and may be stored off site. 7.0 SHIPPING TERMS Unless specified otherwise, all shipments made pursuant to this Agreement shall be made under the terms "FOB shipping point, freight prepaid." The shipping point for all Products with a COORS-Golden or Rocky Mountain Bottle Company destination shall be Boulder, Colorado, freight collect. The shipping point for all Products, except bottle labels and bottle carriers, with a COORS-Memphis or COORS- Shenandoah destination shall be Lawrenceburg, Tennessee. The shipping point for all bottle carriers and labels (until such labels are shipped from GPC-Golden plant) shall be Boulder, Colorado. Any premium freight shipments that are to be charged to COORS shall have the prior approval of COORS and COORS shall be responsible for any approved incremental freight costs. 8.0 DESIGNATED REPRESENTATIVES 8.1 For purposes of this Agreement, any individual serving in the capacity and at the address set forth below shall be a "COORS Packaging Purchasing Designated Representative:" COORS-Golden Primary: Purchasing Projects Manager - Packaging Materials Coors Brewing Company Mail Number BC335 Golden, CO 80401 Telephone: (303) 277-6537 Alternate: Buyer Coors Brewing Company Mail Number BC335 Golden, CO 80401 Telephone: (303) 277-5261 or 277-2888 Alternate: Packaging Purchasing Team Manager Coors Brewing Company Mail Number BC335 Golden, CO 80401 Telephone: (303) 277-5883 COORS-Shenandoah Primary: Purchasing Manager Coors Brewing Company - Shenandoah P.O. Box 25 Route 4, Highway 340 Elkton, VA 22827 Telephone: (703) 289-8138 Alternate: Director-Logistics Coors Brewing Company - Shenandoah P.O. Box 25 Route 4, Highway 340 Elkton, VA 22827 Telephone: (703) 289-8227 COORS-Memphis Primary: Purchasing Manager Coors Brewing Company - Memphis 5151 East Raines Road Mail Number M100 Memphis, TN 38118 Telephone: (901) 375-2024 Alternate: Finance Director Telephone: (901) 375-2026 8.2 For purposes of this Agreement, any individual serving in the capacity and at the address set forth below shall be a "COORS Plant Services Designated Representative" (who, together with each of the COORS Packaging Purchasing Designated Representatives, shall each be a "COORS Designated Representative"): COORS-Golden Primary: Packaging Supplies Analyst Multi-Plant Scheduling Purchasing Coors Brewing Company Mail Number BC110 Golden, CO 80401 Telephone: (303) 277-2426 Alternate: Packaging Supplies Manager Multi-Plant Scheduling Purchasing Coors Brewing Company Mail Number BC110 Golden, CO 80401 Telephone: (303) 277-3277 COORS-Shenandoah Primary: Critical Materials Analyst Coors Brewing Company - Shenandoah P.O. Box 25 Route 4, Highway 340 Elkton, VA 22827 Telephone: (703) 289-8086 Alternate: Inventory Analyst Coors Brewing Company - Shenandoah P.O. Box 25 Route 4, Highway 340 Elkton, VA 22827 Telephone: (703) 289-8089 COORS-Memphis Primary: Inventory Control Analyst Coors Brewing Company - Memphis 5151 East Raines Road Mail Number M100 Memphis, TN 38118 Telephone: (901) 375-2878 Alternate: Plant Services Supervisor Coors Brewing Company - Memphis 5151 East Raines Road Mail Number M100 Memphis, TN 38118 Telephone: (901) 375-2035 8.3 For purposes of this Agreement, any individual serving in the capacity and at the address set forth below shall be a "GPC Designated Representative:" COORS-Golden Primary: Account Representative Graphic Packaging Corporation 350 Indiana Street, Suite 620 Golden, CO 80401 Telephone: (303) 271-0167 Alternate: Account Representative Graphic Packaging Corporation 350 Indiana Street, Suite 620 Golden, CO 80401 Telephone: (303) 271-0103 Alternate: Graphic Packaging Corporation - Boulder, CO 3825 Walnut Street Boulder, CO 80403 Telephone: (303) 444-4674 Graphic Packaging Corporation - Lawrenceburg, TN 2006 Liberty Avenue Lawrenceburg, TN 38464 Telephone: (615) 762-6486 9.0 COMMITMENT TO RECYCLING GPC understands that COORS places a high priority on being able to have its packaging products be 100% recyclable and for those same packaging products to be produced from as high a percentage of post-consumer, recycled material as is possible. GPC shall use its best commercial efforts, including, but not limited to, committing research and development funds, to the mutually beneficial effort to finding sources and testing materials. 10.0 PERFORMANCE EVALUATION CRITERIA A representative from each COORS Plant shall meet with representatives from GPC at least once every three months (or more frequently as the parties may agree from time to time) for a performance review according to criteria and format detailed in the Supplier Quality Management Program, Coors Brewing Company, a copy of which has been supplied to GPC prior to the date hereof. 11.0 INSPECTION COORS may, at its option, inspect and test any Products ordered hereunder at any time and place to the extent practicable, including during the period of manufacturer and prior to delivery. GPC agrees to permit reasonable access to its facilities during normal business hours for such inspections and test; provided, however, that COORS shall not materially interfere with the operations of GPC during the course of any such inspections or tests. All Products shall be received subject to final inspection by COORS within a commercially reasonable time. GPC must obtain COORS' written consent prior to shipment if GPC desires other inspection arrangements. The inspection, testing, approval or acceptance by COORS of any Products provided hereunder shall not relieve GPC of its obligations with respect thereto. 12.0 EARLY TERMINATION 12.1 Notwithstanding any other provision of this Agreement, either party may terminate this Agreement upon (a) a breach of any term of this Agreement by the other party if such breach is not cured or remedied in accordance with Section 13.1; (b) the entry of a decree or order by a court for relief in respect of the other party under bankruptcy or similar laws or the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of or for the other party or any substantial part of its property; or (c) the commencement by the other party of a voluntary case under bankruptcy or similar laws, or the consent or acquiescence by the other party to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such other party or any substantial part of its property, or the making by it of an assignment for the benefit of creditors. 12.2 No termination of this Agreement shall relieve COORS from paying amounts due for Products produced by GPC prior to such termination to the extent such Products are produced in accordance with the provisions hereof, which amounts will become immediately due and payable upon any termination of this Agreement. 13.0 BREACH AND CURE; EXCUSABLE DELAYS 13.1 In the event that any party believes the other party is in breach of the terms hereof, it shall provide written notice of such purported breach describing such breach with particularity (in fact and in legal impact) and the purported breaching party shall be granted 30 days from its actual receipt of such notice to cure said breach if it concurs that the acts or omissions described in the notice do constitute breach, in which case the breach shall be deemed to have never occurred. If, pursuant to Section 22.0, it is determined that (a) any action or inaction of the purported breaching party in fact constitutes a breach of the terms hereof and (b) such purported breaching party had bona fide grounds to challenge the accusation of such breach, then the breaching party shall have 15 days from the date of such determination to cure said breach and if so cured by the breaching party the breach shall be deemed to have never occurred. 13.2 Upon written notice to the other party, COORS or GPC may suspend performance hereunder in the event of war, fire, labor difficulties, acts of God and other forces which are beyond the control of the parties affected. *** 14.0 WARRANTIES 14.1 TITLE GPC warrants good title to all Products furnished to COORS by GPC. This warranty of title shall continue without limitation as to time. If any failure to comply with this warranty appears at any time, GPC shall defend the sale of the Products at issue against all and every person or persons whomsoever and shall indemnify and save COORS harmless from and against any losses, damages, expenses and liabilities of every kind arising out of such failure. 14.2 DESIGN Where GPC, under this Agreement is to furnish, or is responsible for, the design for any Products or for a process, GPC guarantees that the same shall meet the performance requirements specified therefor in this Agreement. 14.3 GOODS GPC warrants that all Products will be free from defects in materials and workmanship, will conform to applicable Material Specifications, will be merchantable and will be fit for the purpose for which they were made, advertised or intended. Unless otherwise provided herein, GPC warrants all Products for a period of six months from the date of production; provided, however, that any warranty provided under this Section 14.3 shall be based on, and adjudged pursuant to, the Material Specifications applicable to the Product in question at the time such Product was produced. These warranties are in addition to all other express or implied warranties required by law. All warranties shall survive acceptance and payment and shall run to COORS and its customers. COORS shall not be required to obtain GPC's permission to return any Products to GPC which are not in conformity with this warranty; provided, however, that a COORS Designated Representative shall make a good-faith effort to obtain a Returned Goods Authorization prior to returning non-conforming Products to GPC. Products not manufactured or supplied in conformity to COORS' Material Specifications may, at COORS' option: (a) be retained at an equitable adjustment in price, or (b) be returned for replacement, correction, credit or refund. GPC shall not ship replacement Products or repaired Products to COORS unless expressly requested and authorized by COORS. All returns, replacements and corrections resulting from nonconforming Products pursuant to this Section 14.3 shall be at GPC's expense, including all labor, materials, repair service, transportation and other necessary charges. GPC assumes all risk of loss or damage to goods returned by COORS while such goods are in transit. 15.0 INDEMNIFICATION 15.1 GPC shall, at its expense, hold harmless and defend COORS against any claim or action for the infringement of any patent, copyright or trademark by GPC and shall indemnify COORS against all damages, costs and expenses arising from such alleged infringement by reason of the manufacture, sale or the use of the Products. COORS agrees to give GPC prompt notice in writing of any such claim or action for infringement and full opportunity to conduct the defense thereof. Upon such notice GPC shall, at its expense, either procure for COORS the right to continue using the Products, replace same with noninfringing goods, or modify same so they become noninfringing. Said replacement or modification shall be acceptable to COORS. At COORS' election, GPC shall remove the Products and refund the purchase price, including transportation costs thereof. 15.2 COORS shall, at its expense, hold harmless and defend GPC against any claim or action for the infringement of any copyright or trademark of COORS incorporated or otherwise used in the artwork or other Material Specifications to be conformed with or reproduced by GPC in the production of any Product and shall indemnify and hold harmless GPC against all damages, costs and expenses arising from such alleged infringement by reason of the manufacture, supply, sale or use of any Product. GPC agrees to give COORS prompt notice in writing of any such claim or action for infringement and full opportunity to conduct the defense thereof. Upon such notice, COORS shall, at its expense, either procure for GPC the right to continue to produce the Products using the artwork or applying the Material Specifications in question or instruct GPC to modify such artwork or Material Specifications so as to cause the applicable Products to become noninfringing. The cost of any modification to a Product in accordance with this Section 15.2, both at the time of such modification and going forward to the extent there are ongoing costs, shall be at the sole expense of COORS or may be otherwise rejected by GPC. 16.0 COMPLIANCE 16.1 GPC warrants that the facilities used and processes employed in the manufacture and delivery of the Products provided hereunder comply with all applicable federal, state, local or agency laws or regulations. GPC agrees to indemnify and hold COORS harmless for any expenses, including legal fees and fines, resulting from GPC failure to comply with said laws or regulations. 16.2 COORS warrants that all artwork and Material Specifications with respect to each Product complies with all applicable federal, state, local or agency laws or regulations. COORS agrees to indemnify and hold GPC harmless for any expenses, including legal fees and fines, resulting from the failure of such artwork or Material Specifications to comply with such laws or regulations. 17.0 EQUAL OPPORTUNITY If this Agreement is subject to the regulations of the Office of Federal Contract Compliance Programs and Executive Orders 11246 and 11758 as amended, the Equal Opportunity Regulations at 41 CFR Subsection 601.4 and Affirmative Action Regulations at 41 CFR Subsections 250.4 and 741.4 are incorporated herein by reference, and GPC shall comply with all the requirements of these regulations in performing hereunder. 18.0 ASSIGNMENT Except in the case of a merger, consolidation or sale of all or substantially of the capital stock or assets of COORS or GPC, neither COORS nor GPC shall have the right or power to assign or subcontract its rights or obligations hereunder without the express written consent of the other party Any attempt to do so without such consent shall be null and void and shall give the non-consenting party the right to cancel and terminate this Agreement. In the event consent is properly given, the provisions of this Agreement shall bind and benefit the parties hereto and their representatives, successors and assigns. 19.0 WAIVER No waiver, amendment or modification of any of the provisions of this Agreement shall be binding on COORS or GPC unless evidenced by a written amendment duly signed by COORS and GPC. 20.0 TAXES All prices set forth on the Pricing Schedule and the Extras Pricing Schedule are exclusive of taxes, which shall be added to the cost of all Products supplied hereunder in accordance with applicable federal, state and local tax regulations and provisions. 21.0 GOVERNING LAW AND VENUE This Agreement shall be deemed to have been made and accepted in Jefferson County, Colorado, and the laws of the State of Colorado shall govern this Agreement and any interpretations or constructions thereof. 22.0 DISPUTES Except as otherwise provided, any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination or validity thereof, including but not limited to any disagreement or impasse regarding negotiations over pricing adjustments or amounts due and owing in accordance with Section 4.3, 4.4, 4.5, 4.6 or 4.10, shall be resolved in accordance with the procedures set forth in this Section 22.0. These procedures shall be the sole and exclusive process for the resolution of any such dispute. If the parties are unable to resolve any disagreement or dispute, either party may refer the matter to the Chief Executive Officers (the "CEO") of the other party by giving the other party written notice ("NOTICE"). Within 20 days after delivery of NOTICE, the CEO of both parties shall meet at a mutually acceptable time and place to exchange relevant information and to attempt to resolve the dispute. if the matter has not been resolved within 45 days after delivery of NOTICE, or if the CEO fail to meet within 20 days after delivery of NOTICE, either party may initiate mediation and, if applicable, arbitration proceedings as set forth herein. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and State Rules of Evidence. In the event a dispute exists between COORS and GPC and the respective CEOs are unable to resolve the dispute, the parties agree to participate in a nonbinding mediation procedure as follows: A mediator will be selected by having counsel for each party agree on a person to act as mediator. The parties' counsel as well as the CEO's of each party and not more than two (2) other participants from each party will appear before the mediator at a time and place determined by the mediator, but not more than sixty (60) days after delivery of NOTICE. The fees of the mediator or other costs of mediation will be shared equally by the parties. Each party's counsel will have 45 minutes to present a review of the issue and argument before the mediator. After each counsel's presentation, the other counsel may present specific counter-arguments not to exceed 10 minutes. The 45-minute and 10-minute periods will be exclusive of the time required to answer questions from the mediator or attendees. After both presentations, the CEO may ask questions of the other side. At the conclusion of both presentations and the question periods, the CEO and their counsels will meet together to try and resolve the dispute. The length of the meeting will be as agreed between the parties. Either party may abandon the procedure at the end of the presentations and question periods if it feels it is not productive to go further. This mediation procedure is not binding on either party. The duties of the mediator are to be sure that the above set- out time periods are adhered to and to ask questions so as to clarify the issues and understanding of the parties. The mediator may also offer possible resolutions of the issue but has no duty to do so. After applying the mediation procedure set forth above, or if either party refuses to take part in the mediation process, the parties hereby agree to submit all controversies, claims and mattes of difference that are unresolved to arbitration in Denver, Colorado,, according to the rules and practices of the American Arbitration Association from time to time in force, except that insofar as such rules and practices are unenforceable under or directly supplemented by the Colorado Rules of Civil Procedure or any other provisions of Colorado law then in force, such Colorado rules and provisions shall govern. This submission and agreement to arbitrate shall be specifically enforceable. Arbitration may proceed in the absence of either party if notice of the proceedings has been given to such party. The arbitrators are not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably waives any damages in excess of compensatory damages. The parties agree to abide by all awards rendered in such proceedings. Such awards shall be final and binding on all parties to the extent and in the manner provided by the Colorado Rules of Civil Procedure. All awards may be filed with the clerk of one or more courts, state or federal, having jurisdiction over the party against whom such award is rendered or such party's property, as a basis of judgment and of the issuance of execution or its collection. 23.0 AMENDMENTS This Agreement may not be amended except in writing properly executed by the parties hereto. Except as specifically amended, this Agreement shall remain in full force and effect. 24.0 RISK OF LOSS GPC shall bear the risk of loss on rejected goods after receipt of notice or rejection from COORS. If risk of loss passes at the shipping point and if GPC fails to label, pack or load the goods in an appropriate manner or to ship in the manner directed by COORS, GPC shall reimburse COORS for any loss, liability or claim resulting therefrom. 25.0 CONFIDENTIAL INFORMATION 25.1 Any specifications, drawings, business or technical information that may be furnished or disclosed to either party in conjunction with this Agreement or that either party may be exposed to as a result of entering the property of the other while acting or performing pursuant to the terms of this Agreement shall be kept confidential, shall not be used for other purposes and shall be returned to the owner or originator thereof at such party's request. 25.2 So long as this Agreement is in effect, without the prior consent of the other party, which may be withheld for any reason or no reason at the sole discretion of that party, neither COORS nor GPC shall, nor shall either of them permit their respective affiliates to, issue or cause the publication of any press release or other public statement or announcement of any nature with respect to this Agreement (including the existence hereof) or the transactions contemplated hereby except as may be required by law or by obligations pursuant to any listing agreement with a national securities exchange. If either COORS or GPC is required by law or obligation pursuant to any applicable listing agreement to disclose any information with respect to this Agreement or the transactions contemplated hereby, such party shall provide the other party with prompt notice of such required disclosure. 26.0 INSURANCE Both parties shall purchase and maintain during the performance of this Agreement at least the following types of insurance and minimum coverages: A) Comprehensive General Liability Insurance with a combined single limit, including bodily injury and property damage, of $1,000,000 per occurrence; B) Automobile Liability Insurance with a combined single limit, including bodily injury and property damage, of $1,000,000 per occurrence; C) Statutory Workers' Compensation and Occupational Disease Disability Insurance; D) Employers Liability Insurance with a limit of $500,000 per occurrence. Notwithstanding the above requirements, either party may self-insure item C above. In the event of any material changes to either party's existing coverages, that party shall furnish to the other party evidence of such insurance coverage in the form of Certificates of Insurance, together with evidence that the insurance carrier has assumed the liability of the other party hereunder by way of contractual liability coverage provided either under a properly executed Assumption of Contractual Liability endorsement, a properly executed Broad Form Liability endorsement, or by a Certificate of Contractual Liability Insurance. All Certificates of Insurance shall provide that the other party shall be given at least 30 days written notice prior to any material change, substitution or cancellation prior to the stated expiration date. With regard to items A and B above, all insurance policies shall be "occurrence" policies rather than "claims-made" policies. 27.0 INDEPENDENT CONTRACTOR The parties expressly understand and agree that GPC is acting as an independent contractor unrelated to COORS or its subsidiaires or affiliates. GPC shall be solely responsible for the supervision, control and direction of its employees, servants, agents, or subcontractors performing work under this Agreement. GPC shall be responsible for paying its employees, agents, servants, or subcontractors; for witholding any and all required filing and payments for income atxes, unemployment taxes and social security taxes; and for all benefit payments and programs. Nothing in this Agreement is intended to create a relationship, express or implied, of employer/employee or principal/agent or master/servant between COORS and GPC or between COORS and any of GPC's employees, agents, servants, or subcontractors. GPC shall not incur any expense or obligation or make any representations or warranties to third parties binding upon or in the name of COORS or any of COORS' subsidiaries or affiliates. In this section, COORS shall mean COORS and its subsidiaries and affiliated companies and their respective officers, agents, representatives and employees. GPC shall mean GPC and its subsidiaries and affiliated companies and their respective officers, agents, representatives and employees. 28.0 ENTIRE AGREEMENT These terms and conditions, together with any other terms stated in any Order Releases issued by COORS pursuant to this Agreement and in any referenced attachments, constitute the entire agreement and shall terminate and supersede all prior oral or written agreements, including that certain Blanket Supply Agreement dated December 22, 1992, between COORS and GPC for this Transaction. GPC's acceptance of orders from COORS is expressly conditioned on GPC's acceptance of the terms and conditions stated herein. COORS hereby notifies GPC of its objection to any additional or different terms proposed by GPC in connection with this Agreement. 29.0 COUNTERPARTS This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by both of the parties and delivered to the other party. 30.0 HEADINGS The headings contained in this Agreement are for reference only and shall not affect in any way the meaning or interpretation of this Agreement. 31.0 SEVERABILITY Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction. [SIGNATURE PAGE FOLLOWS] BY SIGNING BELOW, both parties hereto accept this Agreement. COORS BREWING COMPANY GRAPHIC PACKAGING CORPORATION By:/s/ W. Leo Kiely III By:/s/ David H. Hofmann W. Leo Kiely III David H. Hofmann Title: President & Chief Title: President & Chief Operating Officer Executive Officer Date: February 14, 1997 Date: February 14, 1997 *** Confidential portions omitted and filed separately with the Securities and Exchange Commission. SCHEDULE A CAN PACKAGES - COMPOSIPAC COORS ORIGINAL 6-PACK CAN WRAP - GOLDEN 12-PACK CAN SLEEVE - GOLDEN 18-PACK CAN SLEEVE - GOLDEN 24-PACK FLAT CAN SLEEVE - GOLDEN 24-PACK TWIN STACK CAN SLEEVE - GOLDEN 30-PACK TWIN STACK CAN SLEEVE - GOLDEN 24 T.S. DIVIDER - GOLDEN 30 T.S. DIVIDER - GOLDEN COORS ORIGINAL I.S. 12-PACK CAN SLEEVE - MEMPHIS COORS LEGEND 6-PACK CAN WRAP - GOLDEN 12-PACK CAN WRAP - GOLDEN 24-PACK CAN WRAP - GOLDEN 12 OZ. LNNR BOTTLE CARRIERS - GOLDEN 12 OZ. AUSTRALIA BOTTLE CARRIER - GOLDEN 12 OZ. AUSTRALIA BODY LABELS - GOLDEN 12 OZ. AUSTRALIA NECK LABELS - GOLDEN COORS LIGHT 6-PACK CAN WRAP - GOLDEN/MEMPHIS/SHENANDOAH 12-PACK CAN SLEEVE - GOLDEN/MEMPHIS/SHENANDOAH 18-PACK CAN SLEEVE - GOLDEN/SHENANDOAH 24-PACK FLAT CAN SLEEVE - GOLDEN/MEMPHIS/SHENANDOAH 24-PACK TWIN STACK CAN SLEEVE - GOLDEN/SHENANDOAH 30-PACK TWIN STACK CAN SLEEVE - GOLDEN/SHENANDOAH 10 OZ. 12-PACK CAN SLEEVE - MEMPHIS 10 OZ. 24-PACK CAN SLEEVE - MEMPHIS 24 T.S. DIVIDER - GOLDEN/SHENANDOAH 30 T.S. DIVIDER - GOLDEN/SHENANDOAH COORS LIGHT I.S. 12-PACK CAN SLEEVE - MEMPHIS EXTRA GOLD 6-PACK CAN WRAP - GOLDEN 12-PACK CAN SLEEVE - GOLDEN 15-PACK CAN SLEEVE - GOLDEN 24-PACK FLAT CAN SLEEVE - GOLDEN 30-PACK TWIN STACK CAN SLEEVE - GOLDEN 30 T.S. DIVIDER - GOLDEN CAN PACKAGES - COMPOSIPAC KEYSTONE 6-PACK CAN WRAP - GOLDEN 12-PACK CAN SLEEVE - GOLDEN 24-PACK FLAT CAN SLEEVE - GOLDEN KEYSTONE LIGHT 6-PACK CAN WRAP - GOLDEN 12-PACK CAN SLEEVE - GOLDEN 18-PACK CAN SLEEVE - GOLDEN/SHENANDOAH 24-PACK FLAT CAN SLEEVE - GOLDEN 30-PACK TWIN STACK CAN SLEEVE - GOLDEN 30 T.S. DIVIDER - GOLDEN KEYSTONE ICE 6-PACK CAN WRAP - GOLDEN 12-PACK CAN SLEEVE - GOLDEN 24-PACK FLAT CAN SLEEVE - GOLDEN KEYSTONE DRY 6-PACK CAN WRAP - GOLDEN 12-PACK CAN SLEEVE - GOLDEN CUTTER 6-PACK CAN WRAP - MEMPHIS 12-PACK CAN SLEEVE - MEMPHIS 24-PACK FLAT CAN SLEEVE - MEMPHIS KILLIAN RED 6-PACK CAN WRAP - GOLDEN/SHENANDOAH ZIMA 6-PACK CAN WRAP - MEMPHIS ZIMA BERRY 6-PACK CAN WRAP - MEMPHIS ZIMA CITRUS 6-PACK CAN WRAP - MEMPHIS ARTIC ICE 12-PACK CAN SLEEVE - GOLDEN 24-PACK FLAT CAN SLEEVE - GOLDEN BOTTLE PACKAGES - NON-COMPOSIPAC COORS ORIGINAL CONVENIENCE BOTTLE CARRIER - GOLDEN LNNR BOTTLE CARRIER - GOLDEN 16 OZ. 4-PACK BOTTLE CARRIER - GOLDEN BASEBALL BAT BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN 16 OZ. LABELS - GOLDEN 22/24 OZ. LABELS - MEMPHIS 32 OZ. LABELS - GOLDEN 40 OZ. LABELS - GOLDEN W/M NECK LABELS - GOLDEN COORS LIGHT CONVENIENCE BOTTLE CARRIER - GOLDEN/MEMPHIS/SHENANDOAH LNNR BOTTLE CARRIER - GOLDEN/MEMPHIS/SHENANDOAH 7 OZ. BOTTLE CARRIER - MEMPHIS 16 OZ. 4-PACK BOTTLE CARRIER - GOLDEN/MEMPHIS BASEBALL BAT BOTTLE CARRIER - GOLDEN/MEMPHIS 12 OZ. BODY LABELS - GOLDEN/MEMPHIS/SHENANDOAH 12 OZ. NECK LABELS - GOLDEN/MEMPHIS/SHENANDOAH 7 OZ. LABELS - MEMPHIS 16 OZ. LABELS - GOLDEN/MEMPHIS 22/24 OZ. LABELS - MEMPHIS 32 OZ. LABELS - GOLDEN/MEMPHIS 40 OZ. LABELS - GOLDEN/MEMPHIS W/M NECK LABELS - GOLDEN/MEMPHIS EXTRA GOLD CONVENIENCE BOTTLE CARRIER - GOLDEN LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN 32 OZ. LABELS - GOLDEN 40 OZ. LABELS - GOLDEN W/M NECK LABELS - GOLDEN KEYSTONE LIGHT LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN 32 OZ. LABELS - GOLDEN BOTTLE PACKAGES - NON-COMPOSIPAC CUTTER LNNR BOTTLE CARRIER - MEMPHIS 12 OZ. BODY LABELS - MEMPHIS 12 OZ. NECK LABELS - MEMPHIS KILLIAN RED LNNR BOTTLE CARRIER - GOLDEN/SHENANDOAH 12 OZ. BODY LABELS - GOLDEN/SHENANDOAH 12 OZ. NECK LABELS - GOLDEN/SHENANDOAH 22/24 OZ. LABELS - MEMPHIS KILLIAN BROWN LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN KILLIAN HONEY LNNR BOTTLE CARRIER - MEMPHIS 12 OZ. BODY LABELS - MEMPHIS 12 OZ. NECK LABELS - MEMPHIS 22/24 OZ. BODY LABELS - MEMPHIS ZIMA LNNR BOTTLE CARRIER - MEMPHIS 12 OZ. BODY LABELS - MEMPHIS 12 OZ. NECK LABELS - MEMPHIS 22/24 OZ. LABELS - MEMPHIS 8 OZ. 4-PACK BOTTLE CARRIER - MEMPHIS 8 OZ. BODY LABELS - MEMPHIS 8 OZ. NECK LABELS - MEMPHIS 12 OZ. JAPAN BODY LABELS - MEMPHIS 12 OZ. JAPAN NECK LABELS - MEMPHIS ZIMA BERRY LNNR BOTTLE CARRIER - MEMPHIS 12 OZ. BODY LABELS - MEMPHIS 12 OZ. NECK LABELS - MEMPHIS ZIMA CITRUS LNNR BOTTLE CARRIER - MEMPHIS 12 OZ. BODY LABELS - MEMPHIS 12 OZ. NECK LABELS - MEMPHIS BOTTLE PACKAGES - NON-COMPOSIPAC ARTIC ICE LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN COORS DRY LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN WINTERFEST 12 OZ. LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABEL - GOLDEN 12 OZ. NECK LABEL - GOLDEN HERMAN JOSEPHS LNNR BOTTLE CARRIER - GOLDEN 12 OZ. BODY LABELS - GOLDEN 12 OZ. NECK LABELS - GOLDEN 22 OZ. BODY LABELS - GOLDEN MEMPHIS BROWN LNNR BOTTLE CARRIER - MEMPHIS 12 OZ. BODY LABELS - MEMPHIS 12 OZ. NECK LABELS- MEMPHIS SCHEDULE B COORS BREWING COMPANY JANUARY 1997 PRICE LIST 1997 SALES PRICE BASE PRICING PACKAGE PER THOUSAND RUN QUANTITY 6 - PACKS *** *** LIGHT ORIGINAL COORS LEGEND EXTRA GOLD KEYSTONE KEYSTONE LIGHT KEYSTONE ICE CUTTER KILLIAN RED ZIMA 12 - PACKS *** *** LIGHT LIGHT I/S LIGHT 10 OZ. ORIGINAL COORS ORIGINAL COORS I/S LEGEND EXTRA GOLD KEYSTONE KEYSTONE LIGHT KEYSTONE DRY KEYSTONE ICE CUTTER ARTIC ICE 15 - PACKS *** *** EXTRA GOLD 18 - PACKS *** *** LIGHT ORIGINAL COORS KEYSTONE LIGHT 24 - PACKS FLAT *** *** LIGHT ORIGINAL COORS LEGEND EXTRA GOLD KEYSTONE KEYSTONE LIGHT KEYSTONE ICE CUTTER ARTIC ICE 24 - PACKS TWIN-STACK *** *** LIGHT ORIGINAL COORS DIVIDER - PLAIN DIVIDER - WITH PRINTING 30 - PACKS *** *** LIGHT ORIGINAL COORS EXTRA GOLD KEYSTONE LIGHT DIVIDER - PLAIN 12 OZ. LNNR BOTTLE CARRIERS *** *** LIGHT ORIGINAL COORS LEGEND EXTRA GOLD COORS DRY KEYSTONE LIGHT CUTTER KILLIAN RED KILLIAN BROWN KILLIAN HONEY ZIMA ZIMA CITRUS OR BERRY ARTIC ICE HERMAN JOSEPHS MEMPHIS BROWN WINTERFEST BLANK 12 OZ. CONVENIENCE BOTTLE CARRIERS *** *** LIGHT ORIGINAL COORS EXTRA GOLD 7 OZ. BOTTLE CARRIERS *** *** LIGHT 8 OZ. 4 - PACK BOTTLE CARRIERS *** *** ZIMA 16 OZ. 4 - PACK BOTTLE CARRIERS *** *** LIGHT ORIGINAL COORS BASEBALL BAT BOTTLE CARRIERS *** *** LIGHT ORIGINAL COORS 12 OZ. BODY LABELS *** *** LIGHT ORIGINAL COORS EXTRA GOLD COORS DRY KEYSTONE LIGHT CUTTER KILLIAN RED KILLIAN BROWN KILLIAN HONEY ZIMA ZIMA CITRUS OR BERRY ARTIC ICE HERMAN JOSEPHS MEMPHIS BROWN WINTERFEST 12 OZ. NECK LABELS *** *** LIGHT ORIGINAL COORS EXTRA GOLD COORS DRY KEYSTONE LIGHT CUTTER KILLIAN RED KILLIAN BROWN KILLIAN HONEY ZIMA ZIMA CITRUS OR BERRY ARTIC ICE HERMAN JOSEPH MEMPHIS BROWN WINTERFEST 7 OZ. LABELS *** *** LIGHT BODY LIGHT NECK 8 OZ. LABEL *** *** ZIMA BODY 16 OZ. BODY LABELS *** *** LIGHT ORIGINAL COORS 22 OZ. & 24 OZ. LABELS *** *** LIGHT ORIGINAL COORS ZIMA BODY ZIMA NECK KILLIAN RED HERMAN JOSEPHS QUART BODY LABELS *** *** LIGHT ORIGINAL COORS EXTRA GOLD KEYSTONE LIGHT 40 OZ. BODY LABELS *** *** LIGHT ORIGINAL COORS EXTRA GOLD WIDEMOUTH NECK LABELS *** *** LIGHT ORIGINAL COORS EXTRA GOLD *** Confidential portions omitted and filed separately with the Securities and Exchange Commission. SCHEDULE C PRICING EXTRAS ITEM COST Over-the-road freight versus *** standard piggyback trailers. *** Freight costs for cylinders. *** Obsolete raw material. *** Obsolete finished product. *** Expedited artwork preparation and *** proofing costs to meet the target date. BRIDGE RUNS/MAKE-READIES Print runs below the base quantities listed on Schedule B may be subject to Make-Ready charges in the following amount: 6 - Packs *** 12 - Packs 15 - Packs 18 - Packs 24 - Packs Flat 24 - Packs Twin Stack 30 - Packs Twin Stack Bottle Cariers Labels *** MIX LOAD HANDLING FEES *** *** Confidential portions omitted and filed separately with the Securities and Exchange Commission. SCHEDULE D REQUIRED LEAD TIMES FOR PRODUCTION, SHIPPING OR CHANGES EVENT NORMAL LEAD TIME REQUIRED Delivery of finished goods GPC shall deliver finished goods to COORS in accordance with the time parameters set forth in Section 5.4. New Graphics with existing Straight-Line Graphics: Product types and material (i.e., maintenance, promotional specifications. (For snipe-primary or secondary) purposes of providing guidelines only. *** from receipt of COORS Deviations from these frozen final art to GPC. *** guidelines will be to print, finish and ship to necessary from time to time COORS. and will be negotiated on a case-by- case basis.) Process Graphics/Converted Graphics: *** from receipt of COORS frozen final art to GPC. (Three fiery thermal outputs must accompany any digital tapes along with transparencies or color keys from reference.) *** to print, finish and ship to COORS. Labels: *** from receipt of COORS frozen final art to GPC. *** to print, finish and ship to COORS. Any changes or short lead times will result in additional costs to expedite delivery. GPC will make best efforts to define those additional costs prior to final COORS decision. Repeat orders on existing Availability is *** from Products where COORS' receipt of order. requirements exceed inventory levels covered in Section 5.4. *** Confidential portions omitted and filed separately with the Securities and Exchange Commission. EX-10.7 3 Exhibit 10.7 ACX Technologies, Inc. Officers' Life Insurance Program The Company's life insurance program for executive officers is a non-qualified, forfeitable benefit wherein the Registrant purchases life insurance on the participating officer equal to six times his or her annual base salary and assigns the right to designate the beneficiary of the coverage to the officer. The Registrant is the owner of the policies and all the cash surrender value thereon. EX-12 4 EXHIBIT 12 ACX TECHNOLOGIES, INC. AND SUBSIDIARIES RATIO OF EARNINGS TO FIXED CHARGES For the Year Ended Dec. 27, Dec. 31, Dec. 31, Dec. 31, Dec. 31, 1992 1993 1994 1995 1996 Income (loss) from continuing operations $(10,012) $20,789 $32,783 $51,247 $22,409 Amortization of capitalized interest 344 427 443 465 573 Fixed charges related to pre-tax income (loss) from continuing operations 5,859 3,894 6,918 10,023 9,120 ADJUSTED EARNINGS (LOSS) $ (3,809) $25,110 $40,144 $61,735 $32,102 Fixed charges: Interest expense $ 5,379 $ 3,412 $ 6,370 $ 9,306 $ 8,177 Interest factor of rent expense 480 482 548 717 943 Fixed charges related to pre-tax income (loss) from continuing operations 5,859 3,894 6,918 10,023 9,120 Fixed charges related to discontinued operations 13,455 952 790 881 1,060 Interest capitalized for continued operations 828 163 223 885 744 TOTAL FIXED CHARGES $ 20,142 $ 5,009 $ 7,931 $11,789 $10,924 Ratio of earnings to fixed charges NA 5.01 5.06 5.24 2.94 NA Fixed charges exceeded 1992 adjusted earnings by $23.9 million. Included in these results were $13.7 million of restructuring charges associated with the spin-off from Adolph Coors Company. Without giving effect to such charges, the ratio of earnings to fixed charges for the year ended December 27, 1992 would have been 0.49. EX-21 5 EXHIBIT 21 ACX TECHNOLOGIES, INC. AND SUBSIDIARIES SUBSIDIARIES OF REGISTRANT The following table lists subsidiaries of the Registrant and the respective jurisdictions of their incorporation as of December 31, 1996. All subsidiaries are included in Registrant's consolidated financial statements. State/Country of Name Incorporation Coors Porcelain Company (operating under the trade name Coors Ceramics Company) Colorado Alumina Ceramics, Inc. Arkansas Coors Ceramics Electronics, Limited United Kingdom Coors Ceramics, GmbH Germany Coors Electronic Package Company Delaware Coors Technical Ceramics Company Tennessee Coors Wear Products, Inc. Colorado Wilbanks International, Inc. Oregon Golden Aluminum Company (1) Colorado GAC Technology Company Colorado Lauener Engineering, AG Switzerland Lauener Engineering Limited Delaware Graphic Packaging Corporation Delaware Gravure International Corporation, Inc. Delaware Graphic Packaging Flexible Corporation Delaware Hawkins Street Company North Carolina Graphic Packaging Holdings Corporation Canada Graphic Packaging Canada Corporation Canada Graphic Packaging Corporation of Virginia Virginia Golden Technologies Company, Inc. Colorado CLM2, Inc. Colorado Golden Equities, Inc. Colorado Chronopol, Inc. Colorado Golden Genesis Company (formerly Photon Energy, Inc.) Colorado GTC Nutrition Company Colorado Photocomm, Inc. Arizona New World Power do Brazil Brazil Solartec, Inc. Argentina (1) Golden Aluminum was sold on March 1, 1997. EX-23 6 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-55894 and 33-68898) and Forms S-3 (Nos. 33-94666 and 333-1988) of ACX Technologies, Inc. of our report dated February 18, 1997 appearing on page 27 of this Annual Report on Form 10-K. PRICE WATERHOUSE LLP Denver, Colorado March 27, 1997 EX-27 7
5 1,000 12-MOS DEC-31-1996 DEC-31-1996 15,671 0 71,886 2,085 101,520 271,918 478,863 234,248 676,692 117,292 0 0 0 279 397,624 676,692 712,380 712,380 555,855 683,744 (696) 0 (6,923) 22,409 11,000 11,409 (103,433) 0 0 (92,024) (3.21) (3.21)
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