In 1990, Adolph Coors reported in its income statement a “special charge’ of $30 million. WWW.Coors.com On the following pages are some related disclosures from its 1990 and 1995 annual reports.

Required: Why did the income statement for 1990 include $30 million whereas Note 7 refers to $18.6 million? Why did the company record the amount in 1990? What does the term “jointly and severally liable” (in Management's Discussion) mean? Why did the company record $30 million instead of $4.5 billion? Why did the company record the effects of the insurance settlement only in 1994?

 TYK-1 CONSOLIDATED STATEMENT OF INCOME Adolph Coors Company and Subsidiaries For the years ended December 30, December 31, December 25, 1989 1988 (In thousands, except per share data)
Sales $2,050,110 $1,934,337 $1,680,968 Less—federal and state beer excise taxes 186,756 170,467 159,271 Net sales 1,863,354 1,763,870 1,521,697 Costs and expenses: ;
Cost of goods sold 1,273,840 1,232,028 1,021,084 Marketing, general and administrative 462,911 433,435 408,348 Research and project development 22,219 22,991 22,723 Special charge (Note 7) 30,000 _ = Asset write-downs (Note 7) - 41,670 —
Total operating expenses 1,788,970 1,730,124 1,452,155 Operating income 74,384 33,746 69,542 Other (income) expense:
Interest income (4,183) (6,119) (8,894)
Interest expense 371 1,699 2,642 Miscellaneous—net 13,996 12,534 (1,181)
Total other (income) expense 10,184 8,114 (7,433)
Income before income taxes 64,200 25,632 76,975 Income taxes (Note 4) 25,300 12,500 30,100 Net income $ 38,900 $213,152 $ 46,875 Net income per share of common stock $1.05 $0.36 $1.28 See notes to consolidated financial statements.
NOTE 7:
Special Charge and Asset Write-Downs Included in 1990 is a special pre-tax charge of $30,000,000 for potential costs related to remediation of the Lowry Landfill Superfund site. The Company has received notice from the US. Environmental Protection Agency that it is a “potentially responsible party” under the Comprehensive Environmental Response Compensation and Liability Act (as amended by the Superfund Amendment and Reauthorization Act) and may be required to share in the cost of study and any clean-up of the Lowry Landfill Superfund site. The impact of this charge on 1990 net earnings was $18,600,000, or $0.50 per share. The ultimate remediation methods and appropriate allocation of costs for Lowry are not yet final. The Company, in cooperation with certain other users of the landfill, is vigorously studying the site in an effort to understand the scope of the problem and recommend appropriate remedies.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Adolph Coors Company and Subsidiaries Environmental The Company has received notice from the U.S. Environmental Protection Agency (EPA) that it is a “potentially responsible party” (PRP) under the Comprehensive Environmental Response Compensation and Liability Act for the Lowry Landfill Superfund site (the site). Under the laws governing Superfund sites, PRPs may be jointly and severally liable for the entire amount of the clean-up at these sites. Lowry is a legally permitted landfill owned by the City and County of Denver that accepted waste materials from a variety of sources from the 1960s until 1980.
In mid-1988, the EPA released a “Preliminary Identification of Remedial Alternatives” (PIRA) for the site which included a wide range of cost estimates and time frames for clean-up. According to the EPA’s PIRA, the estimated total costs of the overall site remedies deemed plausible ranged from $151.3 million to $4.5 billion.
In December 1990, the EPA issued a revised list of volumes contributed. This list indicates the Company contributed approximately 20% of the volume at the site. During the fourth quarter of 1990, the Company recorded a special pretax charge of $30.0 million related to potential remediation costs for the site. Net income was reduced by $18.6 million, or $0.50 per share, as a result of this charge. The Company’s actual total cost of remediation will depend upon a number of factors, such as the selected method of remediation, timing of work, number of financially solvent PRPs ultimately responsible for payment, the allocation of the liability, effect of inflation and development of remediation technology. Until the ultimate remediation methods and appropriate allocation of costs for the site have been determined, the Company cannot accurately predict the total cost of remediation for the site.
The Company does not anticipate significant cash outlays for remediation within the near term. The Company, in cooperation with certain other users of the landfill, is vigorously studying the site in an effort to understand the scope of the problem and recommend appropriate remedies.
While it is impossible to predict the eventual aggregate cost to the Company for environmental and related matters, management believes that the payments for these matters will be made over a period of years in amounts which, except as set forth above with respect to the Lowry Landfill Superfund site, would not be material in any one year to the Company’s consolidated results of operations or financial position.