<PAGE>

                                 UNITED STATES
                      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, 2000

                                      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  000-27579

                                CoorsTek, Inc.
            (Exact name of Registrant as specified in its charter)

        Delaware                                           84-0178380
(State of incorporation)                       (IRS Employer Identification No.)

  16000 Table Mountain Parkway, Golden, Colorado             80403
(Address of principal executive offices)                   (Zip Code)

                                (303) 277-4000
             (Registrant's telephone number, including area code)

                            ______________________

       Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

                              Title of Each Class
                    Common Stock, par value $.01 per share

     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 16, 2001, there were 10,576,674 shares of common stock
outstanding. As of such date, the aggregate market value of such shares, other
than shares held by persons who may be deemed affiliates of the Registrant, was
$274,993,524.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Certain portions of the Registrant's definitive Proxy Statement for the
2001 Annual Meeting of Stockholders to be held on May 8, 2001, are incorporated
by reference in Part III of this Form 10-K to the extent stated herein.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Part I                                                                                Page No.
                                                                                      --------
<S>                                                                                   <C>
Item 1.    Business                                                                     3-13
           Factors Affecting CoorsTek's Business, Operating Results,
             Financial Condition and Common Stock                                      14-23
Item 2.    Properties                                                                    23
Item 3.    Legal Proceedings                                                             24
Item 4.    Submission of Matters to a Vote of Security Holders                           24
Part II
Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters         25
Item 6.    Selected Consolidated Financial Data                                          26
Item 7.    Management's Discussion and Analysis of
             Financial Condition and Results of Operations                             27-32
Item 7A.   Quantitative and Qualitative Disclosure About Market Risk                     32
Item 8.    Financial Statements and Supplementary Data                                 33-54
Item 9.    Changes In and Disagreements with Accountants
            on Accounting and Financial Disclosure                                       55
Part III
Item 10.   Directors and Executive Officers of the Registrant                          55-56
Item 11.   Executive Compensation                                                        57
Item 12    Security Ownership of Certain Beneficial Owners and Management                57
Item 13.   Certain Relationships and Related Transactions                                57
Part IV
Item 14.   Exhibits and Reports on Form 8-K                                            58-59
             Signatures                                                                  60
</TABLE>


    The page numbers in the Table of Contents reflect actual page numbers,
                          not EDGAR page tag numbers

CoorsTek, Inc., the stylized CoorsTek, Inc. logo and the names of all other
products and services of CoorsTek used herein are trademarks of CoorsTek, Inc.
All other product and service names used are trademarks or registered trademarks
of their respective owners.

                                       2

<PAGE>

                                    PART I

         This Annual Report on Form 10-K and the documents incorporated herein
by reference contain forward-looking statements that have been made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates, and
projections about CoorsTek's industry, management beliefs, and certain
assumptions made by CoorsTek's management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," variations of
such words, and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties, and assumptions
that are difficult to predict; therefore, actual results may differ materially
from those expressed or forecasted in any such forward-looking statements. Such
risks and uncertainties include those set forth herein under "Factors Affecting
CoorsTek's Business, Operating Results, Financial Condition and Common Stock" on
pages 14 through 23. Unless required by law, we undertake no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events, or otherwise. However, you should carefully review
the risk factors set forth in other reports and documents that CoorsTek files
from time to time with the Securities and Exchange Commission, particularly the
Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

Item 1:  BUSINESS

Overview

         CoorsTek is a leading designer and manufacturer of components and
assemblies for the semiconductor capital equipment market and for industrial,
telecommunications, electronics, automotive and other applications. During our
90-year history, we have developed core competencies in the design, engineering,
manufacturing and assembly of critical components made from advanced materials.
We use precision-machined metals, technical ceramics and engineered plastics to
design solutions that enable our customers' products to overcome technological
barriers and enhance performance. We offer a full range of services from initial
prototype design to volume manufacturing, worldwide distribution and customer
support.

         Our objective is to establish and expand our leadership position in the
design, manufacture and assembly of components and integrated systems for high
growth markets. We are specifically focusing our resources on growing our
business in the semiconductor capital equipment market, which we believe
currently represents our primary growth opportunity. We have been providing
critical ceramic components to the semiconductor capital equipment market for 20
years. By leveraging our long-standing relationships with key original equipment
manufacturers, or OEMs, as well as our materials and precision manufacturing
expertise, we have expanded our historical product offerings from supplying only
technical ceramic components to include precision-machined metals and engineered
plastics, as well as value-added assembly services. Building on our success in
the semiconductor capital equipment market, we are targeting other high growth
industries where our advanced materials expertise, customer relationships and
full service capabilities give us an advantage over other competitors. In
addition, we are maintaining our technological expertise in advanced materials
and expanding our product and service offerings to meet evolving customer needs.

         The breadth of our competencies and experience has made us a supplier
of choice with key customers in the semiconductor capital equipment market and
many other industries that are currently experiencing a consolidating supplier
base. We offer custom-designed products to over 6,500 customers worldwide,
including leading manufacturers such as Applied Materials, LAM Research and
Texas Instruments.

                                       3
<PAGE>

Industry Background

         Growth of the Semiconductor Market

         The semiconductor industry has grown significantly over the past decade
and is expected to continue to grow in the future. The Semiconductor Industry
Association estimates that worldwide semiconductor sales were $205.0 billion in
2000, which would be a 42% increase from $144.1 billion in 1999. Growth in
traditional markets for semiconductors, such as computers, as well as growth in
telecommunications and wireless communications has driven this increase. In
addition, the rapid growth of the Internet and the proliferation of advanced
consumer electronic products have made semiconductors appear in virtually all
electronic products.

         There are several technological factors fueling the growth for
semiconductor devices. First, demand for smaller, faster and more powerful
semiconductors is requiring improved technology and is prompting semiconductor
manufacturers to develop chips that are more dense with line spacing of 0.18
micron or less. Second, to reduce manufacturing costs, semiconductor
manufacturers are increasingly upgrading fabrication machinery to a 300mm, or
12-inch, wafer design, from 200mm, or eight-inch, thus allowing more
semiconductor devices to be produced on a single wafer. Third, to increase
performance, new materials are being used to produce semiconductor devices, such
as copper interconnects for better conductivity. Finally, semiconductor
manufacturers have developed new processes, such as chemical mechanical
planarization, or CMP, allowing them to manufacture semiconductors with reduced
defects and increased overall throughput.

         All of these recent developments have required semiconductor
manufacturers to undergo significant machinery upgrades to incorporate these new
technologies. This represents one of the largest capital equipment retooling
efforts ever in this industry.

Outsourcing to Large Suppliers

         The requirement for sophisticated process equipment from OEMs has been
a major factor in the consolidation of semiconductor OEMs into a few, large
vendors providing a complete range of highly specialized process equipment. Such
OEMs have historically either manufactured the components for their equipment
internally or have been forced to rely on a large number of small,
undercapitalized suppliers who have largely provided only a limited subset of
these products and services. In response, OEMs are increasingly seeking to
outsource the engineering, prototyping, manufacturing, assembly and testing of
components and integrated systems to larger, turnkey suppliers in order to focus
on their core processing technology.

Need for Precision Engineering and Advanced Materials

         Technological advancements in the semiconductor manufacturing process,
such as smaller circuit patterns and larger wafers, require highly sophisticated
manufacturing equipment. This machinery must be able to perform under harsh
conditions, which may include highly corrosive chemicals and gases or rapidly
changing temperatures. In addition to producing integrated circuits with smaller
and more precise geometries, semiconductor device manufacturers must also offer
greater functionality at higher speeds.

         These requirements are increasing the need for advanced semiconductor
processing equipment and have led to growing demand for more durable and
dependable materials. With the transition to 300mm wafer design, the number of
integrated circuits per wafer more than doubles. Consequently, manufacturers
have a heightened emphasis on uptime, yield and throughput as well as a greater
need for precise process controls. As a result, the design and performance of
components and integrated systems are becoming even more critical to the
semiconductor manufacturing process.

         Precision-machined metals are used extensively in semiconductor capital
equipment. Usually machined from aluminum and stainless steel, these components
are used for process chambers, bases, lids and other parts for semiconductor
capital equipment. These components, often complex in configuration, must be
machined to precise specifications in order to ensure the performance of the
manufacturing equipment. Tolerances must be strictly adhered to and quality is
of utmost importance.

                                       4

<PAGE>

         In addition to this demand for precision-machined metal, there are
substantial requirements for other advanced materials, such as technical
ceramics and engineered plastics, in the semiconductor capital equipment market
and a wide range of industrial, telecommunications, electronics, automotive and
other applications. To ensure optimum performance, component materials must
exhibit certain properties including corrosion/oxidation resistance and thermal,
electrical, magnetic and optical properties. For example, technical ceramics are
used in fiber optic connectors for telecommunications applications because
ceramic components can be machined to tolerances of less than one micron and can
maintain these tolerances in harsh environments across a broad range of
temperatures. Advanced materials are typically more expensive than competing
materials, but produce higher value by extending product life and enhancing
performance.

Our Competitive Advantages

         Our core competencies are in the design, engineering, manufacturing and
assembly of critical components made from advanced materials. The breadth of our
competencies and experience has made us a supplier of choice with key customers
in many industries that are currently experiencing a consolidating supplier
base. We believe that we have the following competitive advantages:

         .   Advanced Materials Expertise. We engineer solutions incorporating
             technical ceramics, precision-machined metals, engineered plastics
             or combinations of these materials. The breadth of our materials
             expertise permits us to provide our customers with the optimal
             materials solutions to meet their performance needs. We deliver
             solutions with specifically designed properties including chemical,
             electrical, magnetic, optical, structural and thermal. For example,
             we have developed solutions ranging from products for semiconductor
             etch chambers that withstand highly corrosive environments to
             telecommunications fiber optic connectors that maintain structural
             stability over a range of temperatures.

         .   Comprehensive Design and Prototype Services. Our engineering
             professionals and our technical sales force work in tandem with our
             customers' engineers from product concept through early design and
             prototyping. Our involvement at an early stage allows us to respond
             to anticipated customer needs, identify their requirements early in
             the manufacturing process and partner with customers to derive a
             design, manufacturing and production solution. Once our solution is
             qualified and integrated into our customers' products, the cost to
             our customers to qualify alternate suppliers is relatively high.

         .   Full Range of Engineering, Manufacturing, Assembly, Automation and
             Support Services. The scope of our competencies enables us to
             conceptualize new products, develop manufacturing specifications,
             design and build prototypes, validate product introductions,
             provide automation technology to enhance reliable, accurate and
             repeatable manufacturing, assemble integrated systems, and bring
             products to market in a timely and cost effective manner. Coupled
             with our worldwide distribution and service support, these
             capabilities enable us to provide our customers with a complete
             solution.

         .   Global Scale and Infrastructure. We are geographically positioned
             to service our customers' product and service requirements
             worldwide. We have manufacturing facilities near a number of our
             major customers and periodically place engineers and other
             personnel on-site with many of our key customers. We employ
             flexible manufacturing techniques that allow us to re-deploy and
             re-tool our facilities to meet our customers' changing
             requirements.

         .   Semiconductor Capital Equipment Expertise. We have been providing
             critical ceramic components to the semiconductor equipment industry
             for 20 years. By leveraging our long-standing relationships with
             key OEMs as well as our precision materials and manufacturing
             expertise, we have expanded our historical product offerings to
             include precision-machined metals and engineered plastics, as well
             as value-added assembly services. We believe that by expanding into
             these new service offerings, we are strengthening our customer
             relationships, increasing our market share and achieving design
             wins with major OEMs.

         .   Diversified product mix. Our extensive product mix allows us to not
             only better serve our customers, but to maximize our manufacturing
             capacity and quickly adjust to changing market conditions and
             customer demands.

                                       5

<PAGE>

Our Strategy

         Our objective is to enhance our leadership position in the
semiconductor capital equipment market and expand our position in other high
growth markets. To achieve this objective, we are pursuing the following
strategies:

         .   Focus on the Semiconductor Capital Equipment Market. We are
             focusing our resources on growing our business in the semiconductor
             capital equipment market, which we believe currently represents our
             primary growth opportunity. We intend to use our strong customer
             relationships, reputation for quality and on-time delivery and our
             range of services to take advantage of this opportunity. In
             addition, we are working with our customers on manufacturing
             equipment prototypes; automation technology and assembly, including
             300mm semiconductor machine and copper interconnect designs.

         .   Target Other High Growth Markets. Building on our success in the
             semiconductor capital equipment market, we intend to target other
             high growth industries where our advanced materials expertise,
             customer relationships and full service capabilities give us an
             advantage over other competitors. We believe our reputation as a
             high quality supplier of advanced materials gives us a strategic
             foothold in these markets, allowing us to build on existing
             customer relationships, and identify and solve OEMs' complex
             problems using our full complement of design, engineering, and
             materials capabilities. For example, we are expanding our capacity
             to produce ceramic ferrules and also enhancing our capabilities to
             include assembled connectors and terminated fiber optic cables in
             the optoelectronics arena.

         .   Use Customer Relationships to Expand Product and Service Offerings.
             We have developed strong customer relationships with leading
             manufacturers. These relationships have enabled us to expand our
             product offerings in the past. For example, based on our strong
             relationship and 20-year history of successfully supplying critical
             ceramic components to Applied Materials, we expanded our product
             offerings to provide machined metals, engineered plastics, complex
             assemblies and automation technology. We intend to continue to
             enhance these relationships to offer new products such as
             additional advanced materials and integrated systems.

         .   Maintain Technological Expertise in Advanced Materials. We intend
             to maintain our technological expertise in engineered solutions
             incorporating precision-machined metals, technical ceramics,
             engineered plastics or combinations of these materials. In
             addition, we plan to continue working with our customers to enhance
             existing materials and incorporate new materials, which will allow
             our customers to successfully develop new generations of equipment.
             For example, we recently developed three materials to enhance
             semiconductor machine processing performance, PureSiC(TM) (CVD
             Silicon Carbide), Plasmaresist(TM) (Low-Ion Alumina) and
             Semilon(TM) (Self-Dampening PPS).

         .   Enhance Semiconductor Capital Equipment OEM Customer Base. We
             intend to enhance our customer base within the semiconductor
             capital equipment market through two approaches. First, we plan to
             extend our product offerings to existing customers, such as Applied
             Materials, ASM Lithography, LAM Research, Novellus and Varian by
             targeting additional customer product lines. Second, we intend to
             leverage our leadership position with semiconductor OEMs to
             actively pursue new relationships with additional key customers.

         .   Pursue Selective Acquisitions. We successfully completed one
             acquisition in 2000, four in 1999 and one in 1998. We are pursuing
             strategic and opportunistic acquisitions that would enable us to
             expand our geographic reach, add manufacturing capacity, secure new
             customers, diversify into complementary product markets, and
             broaden our technological capabilities and value-added service
             offerings.

Recent Acquisitions

         Since our decision in late 1998 to focus our resources on the
semiconductor capital equipment market, we have completed a series of strategic
acquisitions to expand capacity, increase capability and broaden our global
presence to address the evolving service requirements of this market. The
facilities we have acquired are

                                       6


<PAGE>

strategically located to support our customers. Our acquisition activity in this
market has also been influenced by supplier consolidation and the trend to
outsource engineering, prototyping, manufacturing, assembly and testing of
components and integrated systems to large, turnkey suppliers.

         On March 31, 2000, we acquired certain assets and liabilities of
Liberty Machine, Inc. for approximately $4.0 million. In conjunction with the
transaction, we entered into seven-year operating leases for the manufacturing
equipment of Liberty Machine. Liberty Machine, located in Fremont, California,
manufactures small, medium and large metal parts and assemblies for the
semiconductor, aerospace, analytical and medical industries. Through Liberty
Machine, we provide high volume manufacturing to a diverse customer base, and
have increased our machining and clean room assembly capacity.

         On December 17, 1999, we acquired Doo Young Semitek Co., Ltd., for
approximately $3.6 million. Renamed CoorsTek Korea Co., Ltd. and located in
Kyungbook, South Korea, this business manufactures technical ceramic parts for
the semiconductor industry and gives us a critical strategic location from which
to serve the Asian semiconductor capital equipment market. Through this
facility, we address our customers' needs for supplier infrastructure and
engineering, prototyping and quick-turn manufacturing support at a location near
our Asian semiconductor customers.

         On March 12, 1999, we acquired certain assets and liabilities of
Precision Technologies for approximately $22.0 million in cash and 300,000
warrants to purchase shares of Graphic Packaging common stock at an exercise
price equal to the fair market value at the date of closing. In connection with
our spin-off from Graphic Packaging, these warrants were converted into warrants
to purchase 168,767 shares of our common stock at an exercise price equal to
$22.22 per share. Precision Technologies, located in Livermore, California,
manufactures small to medium sized precision-machined parts for the
semiconductor and medical industries. This acquisition enabled us to further
broaden our precision-machining capabilities and allowed us to expand our
available capacity in this geographic region.

         On March 1, 1999, we acquired Edwards Enterprises for approximately
$18.0 million. Edwards Enterprises, a manufacturer of medium to large sized
precision-machined parts, is located in Newark, California in proximity to many
of our OEM customer facilities. Edwards Enterprises is the principal supplier of
chamber mainframes, the central component in Applied Materials' flagship Centura
and Endura platforms. This acquisition further diversified our business within
Applied Materials, expanded our manufacturing capabilities and enabled us to win
similar business from other large semiconductor OEM customers.

         These and other acquisitions enhanced our product and service offerings
and allowed us to provide a full range of precision-machining and assembly
capabilities and capacity in geographic areas of key strategic importance to our
OEM customers.

                                       7
<PAGE>

Financial Information About Industry Segments, Foreign Operations, and Foreign
Sales

     The table below summarizes information about reportable segments, in
thousands, as of and for the years ended December 31:

<TABLE>
<CAPTION>
                                                            Depreciation
                                    Net          Gross          and                         Capital
                                   Sales        Profit      Amortization      Assets      Expenditures
                                 ---------     ---------    ------------     ---------    ------------
<S>                              <C>           <C>          <C>              <C>          <C>
2000
Semiconductor                    $ 266,221     $  63,074     $   5,912       $ 164,853     $  17,652
Advanced Materials                 273,444        61,335        18,273         228,042        12,973
                                 ---------     ---------     ---------       ---------     ---------
   Consolidated total            $ 539,665     $ 124,409     $  24,185       $ 392,895     $  30,625
                                 =========     =========     =========       =========     =========

1999
Semiconductor                    $ 111,099     $  31,953     $   2,494       $  79,845     $   4,043
Advanced Materials                 253,962        58,710        20,217         247,645        10,518
                                 ---------     ---------     ---------       ---------     ---------
   Consolidated total            $ 365,061     $  90,663     $  22,711       $ 327,490     $  14,561
                                 =========     =========     =========       =========     =========

1998
Semiconductor                    $  17,061     $   4,976     $   1,337       $  20,626     $   1,015
Advanced Materials                 279,553        68,732        18,640         257,733        25,875
                                 ---------     ---------     ---------       ---------     ---------
   Consolidated total            $ 296,614     $  73,708     $  19,977       $ 278,359     $  26,890
                                 =========     =========     =========       =========     =========
</TABLE>

     Gross sales, in thousands, related to CoorsTek's operations by geographic
area are presented below:

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                              2000            1999           1998
                                            ---------       ---------      ---------
   <S>                                      <C>             <C>            <C>
   U.S.                                     $ 468,545       $ 304,599      $ 224,295
   Europe                                      43,470          35,896         39,338
   Asia                                        29,186          20,507         19,975
   Canada                                      11,354           8,995          8,446
   Other foreign                               14,793           7,279          6,696
   Less: discounts and allowances             (27,683)        (12,215)        (2,136)
                                            ---------       ---------      ---------
     Total                                  $ 539,665       $ 365,061      $ 296,614
                                            =========       =========      =========
</TABLE>

     Long-lived assets, in thousands, related to CoorsTek's operations by
geographic area are presented below:

<TABLE>
<CAPTION>
                                                          December 31,
                                              2000            1999           1998
                                            ---------       ---------      ---------
   <S>                                      <C>             <C>            <C>
   U.S.                                     $ 184,018       $ 174,728      $ 151,636
   Europe                                       3,291           3,705          3,486
   Asia                                         4,344           4,066             --
   Other foreign                                  572              --             --
                                            ---------       ---------      ---------
   Total                                    $ 192,225       $ 182,499      $ 155,122
                                            =========       =========      =========
</TABLE>

     Long-lived assets consist primarily of net property, plant and equipment
and goodwill.

                                       8
<PAGE>

Markets and Products

     We offer customers in the semiconductor capital equipment market and a
multitude of other markets engineered solutions using our expertise in design,
engineering and manufacturing. The solutions we offer are enabling technologies
that allow our customers' products to function efficiently in adverse
environments, such as corrosive chemicals and gases, extreme heat or pressure.

Semiconductor Market

     We supply products for semiconductor capital equipment used to manufacture
integrated circuits. We manufacture, assemble and integrate precision-machined
metal, technical ceramic and engineered plastic components for use in
semiconductor processing equipment. We manufacture and assemble components that
can be used in almost every semiconductor manufacturing process. These processes
include deposition, etch, CMP, ion implantation, metrology and photolithography.
Our capability in metals, ceramics, plastics and assembly allows us to optimize
the solutions we provide to our customers.

     We have been successful in vertically integrating our components business
and are now supplying assemblies to customers to whom we had previously only
sold components. We assemble 200mm and 300mm CMP equipment for a major
semiconductor capital equipment manufacturer. We have used our successes in
these projects to capture other assembly opportunities, specifically in the
areas of ion implantation, automation technology and photolithography.

Advanced Materials Markets

     In addition to the semiconductor capital equipment market, we provide
components and assemblies for a variety of markets, including
telecommunications, electronics, automotive, medical and other industrial
applications. Our diverse array of products includes:

   . Telecommunications products for personal communication devices and
     communications infrastructure. Applications include ceramic integrated
     circuit packages for portable communication devices and fiber optic
     connectors used to connect fiber together in data distribution networks;

   . Electronic products for radio amplification, computer, defense and power
     distribution. Applications include electron tubes for signal amplification
     used in broadcasting and radar and computer tape guides used for high-speed
     data storage;

   . Automotive products for control and safety systems and engine parts.
     Applications include ceramic substrates for anti-lock braking systems and
     metering plungers for fuel injectors, where our ability to produce a part
     that will hold extremely small tolerances despite fluctuations in
     temperature is critical to the correct operation of the engine;

   . Medical products for blood filtration, blood testing and surgery.
     Applications include sheer valves for blood sampling and ceramic cutting
     tools, which allow simultaneous cutting and cauterizing; and

   . Other industrial products for the chemical, fluid handling, mechanical,
     paper and petroleum industries. Applications include valves and process
     flow components for fluid handling and ceramic beams for coordinate
     measuring equipment.

Customers

     Our customers include industry leaders such as Applied Materials, Inc., CTS
Corporation, Delphi Delco Electronics Systems, Eaton Corporation -Cutler-Hammer
division, Engineering Ceramic Technologies, Inc, Flowserve Corporation, IMI
Cornelius, John Crane, Inc., Kavlico Corporation, LAM Research Corporation, and
Texas Instruments Incorporated. Our largest customer, Applied Materials,
accounted for 41.3% of net sales for 2000 and 22.5% for 1999. No other customer
accounted for more than 10% of net sales in either of these periods.

                                       9
<PAGE>

     Our top three customers in 2000 for each of the following markets were:

     .    Semiconductor capital equipment: Applied Materials, Inc., LAM Research
          Corporation and ASM Lithography Holding N.V.;

     .    Telecommunications: Micro Crystal Switzerland, CTS Corporation and
          Avaya Inc.;

     .    Electronic: Cooper-Industries, Inc., Bussman Division, Perkin-Elmer
          Corporation and Universal Scientific Industrial Co., Ltd.;

     .    Automotive: Texas Instruments Incorporated, Kavlico Corporation and
          Delphi Delco Electronics Systems;

     .    Medical: Beckman / Coulter, Baxter International, Inc. and Gyrus
          Medical, Ltd.; and

     .    Industrial: John Crane, Inc., Flowserve Corporation and Eaton
          Corporation - Cutler-Hammer division.

Sales and Distribution

     We sell products primarily to OEMs for incorporation into semiconductor
capital equipment and other industrial applications. We generate sales through
direct sales employees, manufacturers' representatives, and distributors located
throughout North America, Asia and Europe. Our sales personnel, many with
engineering expertise, receive substantial technical assistance and engineering
support because of the highly technical nature of our products. Initial sales
are typically the result of a multi-level sales effort that involves senior
management, design engineers, and our sales personnel interacting with our
customers' decision-makers throughout the product development and purchasing
processes.

     International sales, primarily in European and Asian markets, constituted
17.4%, 19.3% and 24.9% of our gross sales in 2000, 1999 and 1998, respectively.

Research, Development and Engineering

     To maintain and improve our competitive position, our research, design and
engineering teams work directly with customers to design custom products for
specific applications. The majority of our advanced materials research and
development is a result of our customers experiencing product performance
limitations or failures. As a result, our development encompasses failure
analysis, materials selection, and engineering to enable our customers to
overcome technological barriers and enhance their products' performance.

     We believe our design and engineering capabilities offer critical benefits
to our customers. Using our broad array of capabilities, we are able to take our
customers' products from the concept stage to production. This allows our
customers to focus their efforts on their core competencies and limits the risk
involved in separating design from manufacturing. We foster innovation as part
of our product development process in response to customer requests or needs.

Manufacturing and Assembly

     Our manufacturing operations consist of formulating, forming and firing of
ceramics; formulating, forming and processing of plastics; and precision-
machining of ceramics, metals and plastics. We specialize in highly complex and
sophisticated components and assemblies. We have a full range of machining
capabilities from small to large parts manufacturing and can provide customized
service from initial prototyping to high volume production. For example, we can
consistently precision-machine ceramics to exact tolerances within ten-
millionths of an inch.

                                       10
<PAGE>

     We precision-machine metal parts from aluminum, stainless steel and other
metals. These components, often complex in configuration, must be machined to
precise specifications in order to ensure the performance of our customers'
products. Because of the sophistication of our customers' products, we must
strictly adhere to design tolerances and specifications. To enable such precise
machining, we primarily use computer numerically controlled machines that have
the ability to hold very close tolerances in three, four and even five axes.
Particularly in our metals capability, much of the equipment is palletized and
automated. We also use sophisticated software for computer aided design and
solid modeling capability.

     Ceramic manufacturing involves several steps. From raw material preparation
to completion of the finished product, the typical component will be formed,
fired, and if necessary, machined into complex geometries. Our proprietary raw
material preparation involves blending complex formulations to create material
with desired properties. Our broad forming capabilities range from isostatic
pressing to injection molding. The firing process is specifically designed to
meet product and materials requirements by strictly controlling variables such
as time, temperature and atmosphere. We also coat ceramic components with metals
such as copper, gold and nickel in order to give them desired electrical and
mechanical properties. We may then precision machine parts to meet customer
specifications such as surface finish, dimensions and geometries.

     The manufacturing of plastics involves similar steps as the manufacture of
ceramics. We formulate, form and process plastics into complex components. In
the first stage in this process, we use a proprietary formulation and blending
of raw materials. We then press or extrude the material into the desired shape.
The product is then fired and precision-machined to exact tolerances.

     We provide assembly services for major OEMs in various markets. The
assembly process involves managing the procurement of components, some of which
we manufacture while others we purchase from outside vendors. Our competency of
managing this supply chain ensures that our assemblies, many with thousands of
components and numerous configurations, are built cost effectively and finished
product delivery satisfies our customer's just-in-time manufacturing objectives.
As a value-added part of our assembly service, we also work directly with our
customers to achieve design enhancements.

     We have class 100 to 10,000 clean room capabilities for our semiconductor
capital equipment and other assembly markets, which enable us to meet strict
quality requirements and customer specifications. These clean rooms are located
in our facilities near our major OEM customers.

Materials and Suppliers

     Our raw materials primarily consist of alumina, aluminum, silicon carbide,
polytetrafluoroethylene, tungsten, stainless steel and zirconia. These raw
materials are either readily available or are procured from suppliers with whom
we have long-standing relationships.

     We procure many of the components used in our assembly services from our
customers' qualified suppliers. We generally have supply contracts with these
vendors. Some of our components, such as motors and actuators, are sole-sourced.

Competition

     The market for precision engineering, manufacturing and assembly is highly
fragmented. As customers have increasingly demanded fewer, larger, more
financially stable suppliers that offer more complete or turnkey solutions, the
competitive landscape has changed dramatically, and suppliers are being forced
to consolidate and expand their service offerings.

     We compete in the market for precision metal machining and assembly of
semiconductor capital equipment and in the market for advanced materials. Our
competitors in precision metal machining are typically small, privately-held
companies. In addition, we compete with the in-house manufacturing and assembly
capabilities of our current and potential customers, who continually evaluate
the relative benefits of internal manufacturing compared to outsourcing. Our
competitors in the advanced materials industry are typically divisions

                                       11
<PAGE>

of large, multinational companies such as Kyocera Corporation (Japan), Morgan
Crucible Co. (United Kingdom), NGK Insulators, Ltd. (Japan), CeramTec AG
(Germany) and Saint Gobain (France).

     In addition to quality and price, the principal competitive factors in the
worldwide markets we serve are:

     .   breadth of product and service offerings and capabilities;

     .   technological and materials expertise;

     .   customer service;

     .   flexible manufacturing capabilities and capacity;

     .   financial resources;

     .   and delivery capabilities and geographic scope.

     We provide a comprehensive solution that includes advanced material
expertise, precision metal machining, and assembly. We believe that we are a
significant competitor in many of our markets and hold a prominent position in
many product lines. We have maintained long-standing relationships with major
corporations by providing consistent, high product quality and customer service.

Intellectual Property

     As of March 16, 2001, we held 71 patents and had 29 pending patent
applications in the U.S. and in foreign countries. Generally, our policy is to
obtain patent protection that is considered necessary or advisable for the
patentable inventions and technological improvements of the business. We 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 our
competitive position.

     We consider the name "Coors" and the goodwill associated with it to be
important to our customer recognition. We have received certain licensing rights
to use the Coors name.

     We believe that we own or have the right to use the proprietary technology
and other intellectual property necessary for our operations. Except as noted
above, we do not believe that our success is materially dependent on the
existence or duration of any individual patent, trademark or license or related
group of patents, trademarks or licenses.

Employees

     As of December 31, 2000, we had 4,051 employees. None of our employees is
subject to a collective bargaining agreement. We have never experienced a work
stoppage and consider our employee relations to be good.

Backlog

     As of December 31, 2000, we had backlog orders of $175.2 million, compared
with $101.2 million as of December 31, 1999. Approximately $102.1 million of the
backlog at December 31, 2000 had been shipped as of March 1, 2001. Our customers
may place annual orders with shipments scheduled over a twelve-month period.
Backlog orders may be higher for certain industrial products than others due to
longer time periods between order and delivery dates under purchase orders.
Sales are not seasonal but can be sensitive to overall economic conditions that
affect markets that use our components and assemblies. Backlog is not
necessarily indicative of past or future operating results.

                                       12
<PAGE>

Environmental Matters

     Our operations are subject to 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. We believe we are in substantial compliance with applicable
environmental and health and safety laws and regulations and do not believe that
the cost of compliance with these laws and regulations will have a material
adverse effect on our financial condition or results of operations.

     The site of one of our former subsidiaries was the subject of a Colorado
state compliance order for clean up of soil and ground water contamination that
occurred prior to the time we purchased and subsequently sold the subsidiary.
Although we do not believe we are responsible for the contamination or the clean
up, we agreed to join a consortium of former owners of the site to jointly share
in the cost of the clean up. We will be responsible for 10% of any remediation
costs in excess of $500,000 and 15% of any remediation costs in excess of $3.0
million. We do not have a firm estimate of the total potential clean up costs
but based on site specific information developed within the past six months we
believe that the total remediation cost will be in excess of the earlier
projected cost of $1.0 million and may ultimately be as much as $3.0 million. A
reliable estimate of costs cannot be developed until the consortium of former
owners and the State of Colorado reach final agreement on clean up standards and
long term monitoring and reporting requirements. Notwithstanding this
uncertainty, we do not believe this matter will have a material adverse effect
on our financial condition or results of operations.

     A Unilateral Administrative Order issued by the Environmental Protection
Agency, or the EPA, relating to the Rocky Flats Industrial Park Site has been
negotiated and signed by all parties participating in the Rocky Flats Industrial
Park group. Under the EPA order, the Rocky Flats group performed an Engineering
Evaluation/Cost Analysis on the property, including investigation and sampling.
The EPA selected a remedy consisting of removal of volatile organic compounds in
the soil and groundwater, groundwater monitoring and institutional controls. We
do not believe our share of the remediation cost will have a material adverse
effect on our financial condition or results of operations.

     As reported in prior filings, some of our facilities may be or have been
named as potentially responsible parties under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar state laws with
respect to the remediation of certain sites where hazardous substances have been
released into the environment. We cannot predict with certainty the total costs
of remediation, our 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 our
investigations, we do not believe that any liability with respect to these sites
will have a material adverse effect on our financial condition or our results of
operations.

     In addition, we have received demands or requests for information relating
to alleged contamination of various properties we currently own or formerly
owned, or to which we allegedly shipped waste. We do not believe that any
liability with respect to these sites will have a material adverse effect on our
financial condition or our results of operations.

                                       13
<PAGE>

    Factors Affecting CoorsTek's Business, Operating Results, Financial
Condition and Common Stock

         In addition to other information contained in this Annual Report on
Form 10-K, and in the documents incorporated by reference herein, the following
risk factors should be considered carefully in evaluating CoorsTek and our
business because such factors currently have a significant impact, or may have a
significant impact, on the future of our business, operating results or
financial condition, and the market for our common stock.

Our quarterly revenues and operating results may fluctuate due to a variety of
factors, any of which may result in volatility or a decrease in the price of our
common shares.

         Our quarterly revenues and operating results may vary significantly due
to a number of factors, including:

         .    cyclicality and other economic conditions in the semiconductor
              industry;

         .    fluctuation in demand for our products;

         .    production capacity constraints;

         .    the timing of customer orders, cancellations and shipments;

         .    the length and variability of the sales cycle for our products;

         .    product obsolescence;

         .    the introduction of new products and enhancements by us and our
              competitors;

         .    disruptions in sources of supply;

         .    the timing of our expenditures in anticipation of future orders;

         .    our ability to fund our capital requirements;

         .    changes in our pricing and pricing by our suppliers and
              competitors;

         .    our product and revenue mix;

         .    exchange rate fluctuations;

         .    interest rate fluctuations;

         .    the emergence of new industry standards; and

         .    economic conditions generally or in various geographic areas
              where we or our customers do business.

         These factors are difficult or impossible to forecast and any of them
could harm our business and results of operations.

We derive a significant percentage of our net sales from a small number of large
customers, and if we are not able to retain these customers, or they reschedule,
reduce or cancel orders, our net sales could be reduced and our financial
results could suffer.

         We derive, and believe that in the future we will continue to derive, a
significant portion of our revenue from a limited number of customers. For
example, our ten largest customers represented 53.0%, 39.5% and 22.0% of our net
sales for the years ended December 31, 2000, 1999 and 1998, respectively. For
the years ended

                                       14
<PAGE>

December 31, 2000, 1999 and 1998, Applied Materials accounted for 41.3%, 22.5%
and 2.3%, respectively, of our net sales. We expect to depend on a small number
of customers, particularly Applied Materials, for a significant portion of our
net sales for the foreseeable future. The loss of or decrease in orders from one
or more major customers could reduce our revenues and profitability.

         The level and timing of orders placed by our customers vary due to a
number of factors, including customer attempts to manage inventory, changes in
customer manufacturing strategies and variations in demand for customer
products. Because we do not obtain long-term purchase orders or commitments from
most of our customers, we must anticipate the future volume of orders based on
discussions with our customers. We rely on our estimates of anticipated future
volumes when making commitments regarding the level of business that we will
seek and accept, the mix of products that we intend to manufacture, the timing
of production schedules and the levels and utilization of personnel and other
resources. A customer may cancel, reduce or delay orders that were previously
made or anticipated. A significant portion of our backlog at any time may be
subject to cancellation or postponement without penalty. We may not be able to
timely replace canceled or delayed orders. Significant or numerous
cancellations, reductions or delays in orders by a customer or group of
customers could lead to under-utilization of our installed capacity and harm our
results of operations.

The semiconductor industry is highly cyclical; therefore, a downturn may result
in poor operating performance.

         Our business depends, and in the future will increasingly depend, on
the procurement expenditures of semiconductor capital equipment manufacturers,
which, in turn, depend on the current and anticipated demand for semiconductors
and products using semiconductors. The semiconductor industry is highly cyclical
and historically has experienced significant periodic downturns, which often
have resulted in substantial decreases in expenditures by semiconductor capital
equipment manufacturers. These downturns generally have adversely affected the
sales, gross profits and operating results of semiconductor materials and
equipment suppliers. From 1996 through 1998, the semiconductor industry
experienced a downturn, which led semiconductor manufacturers to delay or cancel
capital expenditures. During this downturn, some of our customers delayed or
canceled purchases of semiconductor components and materials, which had a
negative impact on our sales, gross profits and operating results. While this
downturn was not significant to us because the semiconductor capital equipment
market represented only a small percentage of our net sales at that time, future
downturns may have a greater impact on our net sales and financial results as
the semiconductor capital equipment market now represents a significantly
greater portion of our net sales. We cannot predict when downturns will occur
and how severely we will be affected.

Our semiconductor capital equipment business requires substantial resources, and
we may not be able to increase our revenue or maintain our market share if we do
not increase our manufacturing capacity.

         The process by which semiconductor capital equipment components are
manufactured is becoming increasingly complex. This trend is driving the need
for substantial investments in advanced production facilities, engineering and
manufacturing expertise and technology. A significant portion of the costs
associated with these investments is fixed costs. We believe our long-term
competitive position depends in part on our ability to increase manufacturing
capacity. We may need to invest in additional plants and equipment to expand our
capacity either through acquisitions or expansion of our current facilities.
Either of these alternatives would require substantial additional capital, which
we may not be able to access on favorable terms or may not be able to obtain at
all. Further, we may not be able to acquire sufficient capacity or successfully
integrate and manage additional facilities. Even if we are able to obtain
sufficient capital, expansion of some of our current facilities may take more
than one year. The failure to obtain capacity when needed or to successfully
integrate and manage additional manufacturing facilities could adversely impact
our relationships with our customers and materially harm our business and
results of operation.

We are growing and may be unable to manage our growth effectively.

         We have been experiencing a period of growth that is placing
significant demands on our management and our operating systems. We need to
continue to improve and expand our management, operational and financial

                                       15
<PAGE>

systems, controls, procedures, and delivery and service capabilities. We cannot
assure you that we will be able to locate and hire qualified individuals to fill
the management positions that may become available.

         In order to manage our growth, we may also need to spend significant
amounts of cash to:

         .    fund increases in expenses;

         .    take advantage of unanticipated opportunities, such as major
              strategic alliances or other special marketing opportunities,
              acquisitions of complementary businesses or assets, or the
              development of new products; and

         .    respond to unanticipated developments or competitive pressures.

         If we do not have enough cash on hand, cash generated from our
operations, or cash available under our credit facility to meet these cash
requirements, then we will need to seek alternative sources of financing to
carry out our growth and operating strategies. We may not be able to raise
needed cash on terms acceptable to us or may not be able to obtain cash at all.
Financing may be on terms that are dilutive or potentially dilutive. If
alternative sources of financing are required but are insufficient or
unavailable, we will be required to modify our growth and operating plans to the
extent of available funding.

We may make future acquisitions that may be costly, difficult to integrate,
divert management resources or dilute stockholder value.

         Part of our continuing business strategy is to make acquisitions of, or
investments in, companies, products or technologies that complement our current
products, augment our market coverage, enhance our technical capabilities or
production capacity or offer other growth opportunities. Future acquisitions
could pose numerous risks to our operations, including:

         .    difficulty integrating the purchased operations, technologies or
              products;

         .    unanticipated costs;

         .    diversion of management's attention from our core business;

         .    adverse effects on existing business relationships with suppliers
              and customers;

         .    entrance into markets in which we have no or limited prior
              experience; and

         .    potential loss of key employees, particularly those of the
              purchased operation.

In connection with these acquisitions or investments, we could incur debt,
assume liabilities, incur amortization expenses related to goodwill and other
intangible assets, incur large and immediate write-offs or issue stock that
would dilute our current stockholders' percentage ownership. We may not be able
to complete one or more acquisitions or integrate the operations, products or
personnel gained through any such acquisition without a material adverse effect
on our business, financial condition and results of operations.

Our dependence on sole and limited source suppliers could materially and
adversely harm our business and results of operations.

         We rely on sole and limited source suppliers for some of our raw
materials, components and subassemblies that are critical to our business. This
reliance involves several risks, including the following:

         .    the potential inability to obtain an adequate supply of required
              raw materials, components or subassemblies;

         .    the reduced control over pricing and timing of delivery of raw
              materials, components or subassemblies; and

                                       16
<PAGE>

         .    the potential inability of our suppliers to develop
              technologically advanced products to support our growth and
              development of new products and assemblies.

         We believe that in time we could obtain and qualify alternative sources
for most sole and limited source parts. Seeking alternative sources of the parts
could require us to redesign our products, resulting in increased costs and
likely shipping delays. We may be unable to redesign our products. These
increased costs would decrease our profit margins if we could not pass the costs
on to our customers. Further, if we experience shipping delays or if we do not
maintain acceptable product quality or reliability in the future, our
relationships with current and potential customers could be damaged, which would
cause a material adverse effect on our business and results of operations.

If the Internal Revenue Service determines that our recent spin-off from Graphic
Packaging International Corporation, formerly named ACX Technologies, Inc., is
not tax-free, we would be liable to Graphic Packaging for any tax liability
related to the spin-off.

         During 1999, we were a wholly owned subsidiary of Graphic Packaging. On
December 31, 1999, we spun off from Graphic Packaging through a 100%
distribution of our shares to Graphic Packaging stockholders. We have agreed to
indemnify Graphic Packaging against any tax liability or other tax related
expense Graphic Packaging may incur if the spin-off is determined to be taxable
as a result of a breach by us of any covenant or representation contained in our
tax sharing agreement with Graphic Packaging.

Sales to foreign markets constitute 17.4% of our gross sales and, therefore, our
gross sales and results of operations could be adversely affected by downturns
in economic conditions in countries outside of the U.S., by exchange rate
fluctuations and by our failure to comply with U.S. or international laws.

         We are subject to the risks inherent in doing business internationally,
including:

         .    unexpected changes in regulatory requirements, including laws
              governing exports, embargoes, boycotts and sanctions, sales of
              products used in atomic energy applications and the Foreign
              Corrupt Practices Act;

         .    fluctuations in exchange rates and currency controls;

         .    political and economic conditions and instability;

         .    imposition of trade barriers and restrictions, including changes
              in tariff and freight rates;

         .    the difficulty of coordinating our management and operations in
              several different countries;

         .    limited intellectual property protection in some countries;

         .    longer accounts receivable payment cycles in some countries; and

         .    the burdens of complying with a variety of foreign laws.

         International sales, which include sales by our foreign manufacturing
facilities, accounted for 17.4% of gross sales for the year ended December 31,
2000, 19.3% of gross sales for 1999 and 24.9% of gross sales for 1998. We
anticipate that international sales will continue to account for a significant
portion of our gross sales. In addition, certain of our key domestic customers
derive a significant portion of their revenues from sales in international
markets. Therefore, our sales and results of operations could be adversely
affected by economic slowdowns and other risks associated with our customers'
international sales.

         An increase in the exchange value of the U.S. dollar would reduce the
value of revenue and profits generated by our international operations in
Scotland and Korea. The strength of the dollar relative to the currency of our
customers or competitors may have a material adverse effect on our profit
margins or sales to international customers.

         We are required to comply with various federal laws and regulations
regarding the sale of our products in

                                       17
<PAGE>

foreign markets. Although we believe we comply in all material aspects with
applicable laws and regulations, we cannot assure you that additional liability
may not arise in the future where we do not currently know of a problem or
liability.

Because we maintain floating interest rate debt, changes in interest rates will
impact our earnings.

         We had approximately $98.1 million of floating interest rate debt as of
December 31, 2000. The Company had one interest rate swap contract for a
notional amount of $25.0 million to hedge a portion of the exposure to interest
rate fluctuations related to its floating interest rate debt. As interest rates
fluctuate, we may experience increases in interest expense that may materially
impact financial results. For example, if interest rates were to increase or
decrease 1%, the result would be an annual increase or decrease of interest
expense of approximately $0.7 million.

We have invested significant resources in the development of 300mm wafer
technology. If 300mm fabrication is not widely accepted or we fail to
successfully develop 300mm products that are accepted by the marketplace, our
long-term growth could be diminished.

         To date, we have invested significantly, and expect to continue
investing significantly, in the development of 300mm wafer technology for high
performance semiconductor manufacturing. The development of this technology is
emerging and complex. We cannot assure you that our efforts in this area will be
timely, technologically successful or commercially accepted. If we fail to
achieve commercial success in our pursuit of 300mm manufacturing technology for
the semiconductor capital equipment market, our long-term growth prospects could
be diminished.

A breach of any of the restrictive covenants in our bank credit facility could
result in a default. If we are unable to repay our debt, the lender has the
right to foreclose on our assets pledged as security.

         Our bank credit facility contains restrictive covenants and requires us
to maintain specified financial ratios and satisfy financial condition tests at
the end of each quarter. Our ability to meet these financial ratios and tests
may be affected by events beyond our control, and there can be no assurance that
we will meet those tests. A breach of any of these covenants could result in a
default under our bank credit facility. All of our inventory and accounts are
pledged as security under our bank credit facility. If the lender accelerates
all amounts owed under the bank credit facility because of a default, and we are
unable to pay such amounts, the lender has the right to foreclose on our assets.

Our business is difficult to evaluate because we have a limited operating
history as an independent company.

         We were a wholly owned subsidiary of Graphic Packaging until January
2000. As a result, until recently we relied on Graphic Packaging for cash
management, tax, legal, risk management, investor relations and access to
capital markets. Our continued implementation of these functions as an
independent company may not be cost-effective. Not only is our operating history
as an independent company short, but we refocused our business strategy in 1998
to emphasize supplying the semiconductor capital equipment market. Accordingly,
we have a limited operating history from which you can evaluate our present
business and future prospects and face risks and uncertainties relating to our
ability to implement our business plan successfully. Our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by newly public companies that have recently changed their business
strategies, particularly companies in the intensely competitive semiconductor
capital equipment component industry. If we are unsuccessful in addressing these
risks and uncertainties, our business, results of operations, financial
condition and prospects will be materially harmed.

We are parties to litigation that, if we are found to be liable, could have a
material adverse effect on our business and results of operations.

         In the ordinary course of business, we are subject to various pending
claims, lawsuits and contingent liabilities. We are currently subject to a claim
by five former employees alleging gender discrimination, sexual harassment and
retaliation. These five plaintiffs are seeking class certification, which we are
resisting based on the distinctions among their respective claims. If the class
were to be certified, our management's attention would be

                                       18
<PAGE>

diverted from the operation of our business and we would likely incur
substantial costs defending ourselves. Additionally, if these plaintiffs were
ultimately successful, we could incur costs that would materially harm our
business or financial condition.

If we lose key personnel, we could experience reduced sales, delayed product
development and diversion of management resources.

         Our success depends largely on the continued contributions of our key
management, engineering, sales, marketing, and professional services personnel,
many of whom would be difficult to replace. If one or more members of our senior
management or other key employees were to resign, we could experience loss of
sales, delays in new product development and diversion of management resources.
We do not maintain "key man" insurance policies on any of our personnel and do
not require our personnel to enter into non-compete agreements with us.

Competition in the markets we serve is intense and diverse and could reduce our
sales and prevent us from maintaining profitability.

         We compete in the market for precision metal machining and assembly of
semiconductor capital equipment and in the market for advanced materials. Our
competitors in precision metal machining are typically smaller, privately-held
companies. In addition, we compete with the in-house manufacturing and assembly
capabilities of our current and potential customers, who continually evaluate
the relative benefits of internal manufacturing compared to outsourcing. Our
competitors in the advanced materials industry are typically divisions of large,
multinational companies such as Kyocera Corporation (Japan), Morgan Crucible Co.
(United Kingdom), NGK Insulators, Ltd. (Japan), CeramTec AG (Germany) and Saint
Gobain (France). We believe that some of these competitors in the advanced
materials industry may enter the market for precision metal machining for
semiconductor capital equipment.

Some of our competitors and potential competitors may have significant
advantages over us, some of which may include the following:

         .    greater financial, technical, marketing and manufacturing
              resources;

         .    preferred vendor status with our existing and potential customers;

         .    more extensive delivery capabilities and geographic scope; and

         .    larger customer bases.

         In addition, these competitors may have the ability to respond more
quickly to new or emerging technologies, may adapt more quickly to changes in
customer requirements and may devote greater resources to the development,
promotion and sale of their products than us. We must continually develop
improved manufacturing processes to meet our customers' needs for complex
products. Furthermore, our basic manufacturing technology is not subject to
significant proprietary protection. We may not be able to maintain or expand our
sales if competition increases and we are unable to respond effectively. During
downturns in the semiconductor industry, our customers may become more price
sensitive, thereby reducing the importance of our competitive advantages in the
areas of providing an integrated manufacturing solution and responsive customer
service.

Our success depends, in part, on intellectual property, which may be difficult
to protect and could affect our ability to compete effectively.

         We believe that our success depends, in part, on our ability to obtain
and protect patents. As of March 16, 2001, we held 71 U.S. and foreign patents
and had 29 patent applications pending.

         We cannot assure you that:

         .    pending patent applications or any future applications will be
              approved;

                                       19
<PAGE>

         .   any patents will provide us with competitive advantages or will not
             be challenged by third parties; and

         .   the patents of others will not have an adverse effect on our
             ability to do business.

         Others may independently develop similar products, duplicate our
products or, if patents are issued to us, design around our patents. In
addition, we may be forced to expend time and resources on protracted litigation
to defend our intellectual property rights against third parties. Further,
because patents may afford less protection under foreign law than is available
under U.S. law, we cannot assure you that any foreign patents issued to us will
adequately protect our proprietary rights.

         In addition to patents, we rely on trade secrets to protect our
manufacturing and sales processes and products. We take certain measures to
protect our trade secrets, including executing non-disclosure agreements with
our employees, customers and suppliers. Despite these efforts,

         .    others may independently develop substantially equivalent
              proprietary information and techniques;

         .    competitors may otherwise gain access to our trade secrets;

         .    others may disclose our technology; and

         .    we may not be able to meaningfully protect our trade secrets.

Successful infringement claims by third parties could result in substantial
damages, lost product sales and the loss of important proprietary rights.

         There has been substantial litigation regarding patent and other
intellectual property rights in the semiconductor capital equipment and other
high technology industries. In the future, we may be notified of allegations
that we may be infringing on the intellectual property rights possessed by
others. Even if we are ultimately successful in our defense, any litigation of
this type could result in substantial cost and diversion of time and effort by
our management, which by itself could have a negative impact on our business.
Adverse determinations in that litigation could:

         .    result in our loss of proprietary rights;

         .    subject us to significant liabilities, including treble damages in
              some instances;

         .    require us to seek licenses from third parties, which licenses may
              not be available on reasonable terms, if at all; and

         .    prevent us from manufacturing and selling our products.

Our results of operations and reputation could be harmed by environmental
regulation and associated costs.

         We are required to comply with foreign, federal, state, county and
local laws and regulations regarding health and safety and the protection of the
environment including those governing the storage, use, handling, discharge and
disposal of hazardous substances in the ordinary course of our manufacturing
processes. We are required to obtain and comply with various permits under
current environmental laws and regulations, and new laws and regulations may
require us to obtain and comply with additional permits. We may be unable to
obtain or comply with, and could be subject to revocation of, permits necessary
to conduct our business.

         Environmental laws and regulations may be enacted or interpreted to
impose environmental liability on us with respect to our facilities and
operations. Under various foreign, federal, state and local laws and regulations
relating to the protection of the environment, an owner or operator of real
property may be held liable for the costs of investigation or remediation of
certain substances located at or emanating from the property. These laws often
impose liability without regard to fault for the presence of such substances.
The costs of investigation or remediation of such substances may be substantial,
and the presence of such substances may adversely affect the ability to sell or
lease the property or borrow using such property as collateral. The presence of
such substances

                                       20
<PAGE>

may also expose the owner or operator to liability resulting from any release of
or exposure to such substances, including toxic tort claims. Persons who arrange
for the disposal or treatment of certain substances may also be liable for the
costs of investigation and remediation of such substances at the disposal
facility, whether or not such facility is owned or operated by such person.
Third parties may also seek recovery from owners or operators of real properties
for personal injury associated with the release of certain substances.

         We are currently involved in environmental remediation efforts. In
connection with our ownership and operation of our current and former
facilities, we may be liable for other investigation or remediation costs, as
well as certain related costs, including fines and penalties, and for injuries
to persons and property. Further, we cannot assure you that additional
environmental matters will not arise in the future at our sites where no problem
is currently known to us or at sites that we may acquire in the future. More
stringent environmental laws as well as more vigorous enforcement policies or
discovery of previously unknown conditions requiring remediation could have a
material adverse effect on our business, financial condition and results of
operations.

We may have difficulty responding to rapidly changing technology, materials and
processes, which may harm our financial condition and results of operations.

         The market for semiconductor capital equipment components is
characterized by rapidly changing technology and continuing process development.
Our future success will depend in large part upon our ability to timely and
cost-effectively:

         .   maintain and enhance our technological capabilities;

         .   develop and market products and services that meet changing
             customer needs; and

         .   successfully anticipate or respond to technological changes.

         In addition, the semiconductor capital equipment component market could
encounter competition from new technologies that render existing semiconductor
capital equipment component technology less competitive or obsolete, including
technologies that may reduce the number of semiconductors required in electronic
equipment. We may not be able to effectively respond to the technological
requirements of the evolving market. If we determine that new technologies and
equipment are required to remain competitive, we may have to invest significant
capital in the development, acquisition and implementation of these technologies
and equipment. We may not be able to access sufficient capital for this purpose
in the future. In addition, investments in new technologies may not provide us
with commercially viable technological processes, or there may not be commercial
applications for the technologies we acquire or develop. If we are unable to
develop or utilize new technologies, or if our competitors are more effective at
developing or utilizing new technologies, our business could be harmed.

Defects in our products could diminish demand for our products and result in
loss of revenue, delay in market acceptance and injury to our reputation.

     Complex components and assemblies like ours may contain undetected errors
or defects that may be subsequently detected at any point in the life of the
product. We have in the past discovered errors in our products and, as a result,
have experienced delays in the shipment of products during the period required
to correct these errors. Defects in our products may result in loss of sales,
delay in market acceptance, injury to our reputation or increased warranty
costs.

If we become subject to product liability litigation, it could be costly and
time consuming to defend.

         Since our products are used in applications that are integral to our
customers' businesses, errors, defects or other performance problems could
result in financial or other damages to our customers. Although our purchase
orders generally contain provisions designed to limit our exposure to product
liability claims, existing or future laws or unfavorable judicial decisions
could negate such limitation of liability provisions. Product liability
litigation, even if we were to be successful defending ourselves, would be time
consuming and costly. Additionally, even though we carry product liability
insurance, our insurance may not be adequate to cover claims.

                                       21
<PAGE>

The market price of our common stock has been and may continue to be highly
volatile.

     The market price of our common stock has fluctuated widely and may continue
to do so. For example, for the period from our spin-off from Graphic Packaging
through March 16, 2001, the closing trading price of our common stock ranged
from a high of $49.38 per share to a low of $16.00 per share. Many factors could
cause the market price of our common stock to rise and fall. Some of these
factors include:

     .   actual or anticipated variations in our quarterly operating results;

     .   limited average daily trading volume of our common stock; announcement
         of technological innovations;

     .   conditions or trends in the semiconductor capital equipment component
         industry;

     .   acquisitions and alliances by others in the industries we serve;

     .   changes in estimates of our performance or recommendations by financial
         analysts;

     .   market conditions in our industries and the economy as a whole;
         introduction of new products by us or our competitors;

     .   announcements by us or our competitors of significant acquisitions,
         strategic partnerships, joint ventures or capital commitments;

     .   additions or departures of key personnel; and

     .   other events or factors, many of which are beyond our control.

     The financial markets in the U.S. have experienced significant price and
volume fluctuations, and the market prices of companies in the semiconductor
industry have been and continue to be extremely volatile. Historically,
following periods of volatility in the market price of a public company's
securities, securities class action litigation has been initiated against that
company. Such litigation could result in substantial costs and a diversion of
our management's attention and resources.

Coors family trusts, in the aggregate, own a significant amount of our common
stock and may exert influence over our business regardless of the opposition of
other stockholders or the desire of other stockholders to pursue an alternate
course of action.

     Coors family trusts, in the aggregate, own approximately 31.7% of our
outstanding shares of common stock. The interests of these stockholders may not
always coincide with our interests or those of our other stockholders. These
stockholders, if acting together, could have significant influence over all
matters submitted to our stockholders, including the election of our directors
and approval of business combinations, and could delay, deter or prevent a
change of control of our company. These stockholders are able to exercise
significant control over our business, policies and affairs.

Our charter documents and Delaware law may inhibit a takeover or change in our
control that a stockholder may consider beneficial.

     Provisions in our Certificate of Incorporation and Bylaws may have the
effect of delaying or preventing a merger or acquisition of us, or making a
merger or acquisition less desirable to a potential acquirer, even where the
stockholders may consider the acquisition or merger favorable. Our Certificate
of Incorporation provides for a staggered board of directors, which will make it
more difficult for a group of stockholders to elect board members of their
choice. Our stockholders have adopted a stockholder rights plan, or "poison
pill," which may have the effect of delaying or prohibiting our acquisition and
may also make a merger or acquisition of us less desirable.

                                       22
<PAGE>

 Provisions of the Delaware General Corporation Law may also delay, prevent or
 discourage someone from merging with or acquiring us.

 We do not plan to pay dividends in the foreseeable future.

         We do not anticipate paying cash dividends to the holders of our common
 stock in the foreseeable future. Additionally, we are currently restricted from
 paying dividends under our credit facility. Accordingly, investors must rely on
 sales of their common stock after price appreciation, which may never occur, as
 the only way to realize a return on their investment. Investors seeking cash
 dividends should not purchase our common stock.

 Item 2: PROPERTIES

         We believe that our facilities are well maintained, suitable and
 adequate for their respective operations. Our headquarters and corporate
 offices are located in Golden, Colorado. The table below lists our
 manufacturing plants and other properties (including distribution facilities)
 as of March 16, 2001:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                Location                                 Business Segments                          Leased / Owned
                --------                                 -----------------                          --------------
 <S>                                             <C>                                           <C>
-------------------------------------------------------------------------------------------------------------------------
 Austin, Texas                                   Semiconductor                                 Leased
-------------------------------------------------------------------------------------------------------------------------
 Benton, Arkansas (3 facilities)                 Advanced Materials, Semiconductor             All owned
-------------------------------------------------------------------------------------------------------------------------
 Chattanooga, Tennessee                          Advanced Materials, Semiconductor             Owned
-------------------------------------------------------------------------------------------------------------------------
 El Segundo, California                          Advanced Materials                            Leased
-------------------------------------------------------------------------------------------------------------------------
 Fremont, California                             Semiconductor                                 Leased
-------------------------------------------------------------------------------------------------------------------------
 Glenrothes, Scotland                            Advanced Materials                            Owned
-------------------------------------------------------------------------------------------------------------------------
 Golden, Colorado (7 facilities)                 Advanced Materials, Semiconductor             Four owned, three leased
-------------------------------------------------------------------------------------------------------------------------
 Grand Junction, Colorado                        Advanced Materials                            Owned
-------------------------------------------------------------------------------------------------------------------------
 Hillsboro, Oregon                               Advanced Materials, Semiconductor             Owned
-------------------------------------------------------------------------------------------------------------------------
 Kyungbook, South Korea                          Semiconductor                                 Owned
-------------------------------------------------------------------------------------------------------------------------
 Livermore, California (6 facilities)            Semiconductor                                 All leased
-------------------------------------------------------------------------------------------------------------------------
 Newark, California                              Semiconductor                                 Owned
-------------------------------------------------------------------------------------------------------------------------
 Norman, Oklahoma                                Advanced Materials, Semiconductor             Owned
-------------------------------------------------------------------------------------------------------------------------
 Oak Ridge, Tennessee (3 facilities)             Semiconductor, Advanced Materials             Two owned, one leased
-------------------------------------------------------------------------------------------------------------------------
 Odessa, Texas                                   Advanced Materials                            Owned
-------------------------------------------------------------------------------------------------------------------------
 Oklahoma City, Oklahoma (2 facilities)          Advanced Materials                            One leased, one owned
-------------------------------------------------------------------------------------------------------------------------
 Red Deer, Alberta, Canada                       Advanced Materials                            Leased
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

         We believe we have sufficient capacity to meet current needs. However,
 from time to time, we have experienced capacity constraints in the
 semiconductor capital equipment market due to increased orders. Depending on
 demand, we may increase capacity, either by expanding current facilities or
 acquiring additional facility space in this market. We believe that we have
 adequate financial resources to address our foreseeable production capacity
 issues.

                                       23
<PAGE>

Item 3: LEGAL PROCEEDINGS

        In the ordinary course of business, we are subject to various pending
claims, lawsuits and contingent liabilities. In each of these cases, we are
vigorously defending ourselves. We do not believe that the outcome of these
matters will have a material adverse effect on our financial condition or
results of operations.

        On August 12, 1999, six current and former employees sued one of our
subsidiaries in the U.S. District Court for the Eastern District of Arkansas
claiming gender discrimination, sexual harassment and retaliation. These legal
proceedings were filed as two separate claims. The first claim filed by an
individual employee was dismissed in the Company's favor on a motion for summary
judgment. An appeal has been filed with the U.S. Court of Appeals for the Eighth
Circuit. In the second case, the remaining five plaintiffs have filed a motion
to certify a class action for a class of potentially 120 female employees. This
motion has been pending for over one year and recently was denied by the court.
Plaintiffs, however, have been given another chance to attempt to certify the
case as a class action. CoorsTek expects a ruling on the motion for class action
some time in 2001. Our preliminary evaluation indicates the remaining case is
largely without merit; however, the Company does not have sufficient information
to determine the ultimate outcome or any potential liability related to these
claims.

        Specific information regarding environmental legal proceedings is
discussed under the caption "Environmental Matters" contained in Item 1 of this
Annual Report on Form 10-K.

Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Not applicable.

                                       24
<PAGE>

                                    PART II

Item 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

        CoorsTek's common stock has been traded on the Nasdaq National Market
under the symbol "CRTK" since January 4, 2000. The following table sets forth
for the periods indicated the high and the low reported closing trading prices
per share for our stock as reported by the Nasdaq National Market.

Year Ended December 31, 2000                    High             Low
----------------------------                    ----             ---

First Quarter                                   $42.00           $16.00
Second Quarter                                  $47.13           $32.00
Third Quarter                                   $49.38           $37.00
Fourth Quarter                                  $37.31           $23.50

        There were 2,591 stockholders of record of our common stock on March 16,
2001. On March 16, 2001, the last reported sale price of our stock as reported
on the Nasdaq National Market was $26.00.

        CoorsTek is currently restricted from paying dividends under its credit
facility. The Company paid no dividends to stockholders in 2000. We do not
anticipate paying cash dividends to the holders of our common stock in the
foreseeable future.

                                       25
<PAGE>

Item 6: SELECTED CONSOLIDATED FINANCIAL DATA

        The following selected consolidated financial data should be read in
conjunction with:

        .   our consolidated financial statements and the related notes thereto
            set forth in response to Item 8 of this Annual Report on Form 10-K;
        .   Management's Discussion and Analysis of Financial Condition and
            Results of Operations set forth in response to Item 7 of this Annual
            Report on Form 10-K; and
        .   the matters set forth in "Factors Affecting CoorsTek's Business,
            Operating Results, Financial Condition and Common Stock" contained
            in Item 1 of this Annual Report on Form 10-K.

        The selected consolidated statement of income data for the fiscal years
ended December 31, 2000, 1999, 1998 and 1997, and selected consolidated balance
sheet data at December 31, 2000, 1999, 1998 and 1997, are derived from our
audited consolidated financial statements. The selected consolidated statement
of income data for the fiscal year ended December 31, 1996 and the selected
consolidated balance sheet data at December 31, 1996 are derived from our
unaudited consolidated financial statements.

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                               ----------------------------------------------------------
                                                                  2000         1999        1998        1997        1996
                                                               ---------    ---------   ---------   ---------   ---------
                                                                          (in thousands, except per share data)
<S>                                                            <C>          <C>         <C>         <C>         <C>
Statement of Income Data:
Net sales                                                      $ 539,665    $ 365,061   $ 296,614   $ 304,824   $ 276,352
Cost of goods sold                                               415,256      274,398     222,906     219,821     200,220
                                                               ---------    ---------   ---------   ---------   ---------
Gross profit                                                     124,409       90,663      73,708      85,003      76,132
Selling, general and administrative                               66,408       53,202      37,758      41,754      35,928
Asset impairment charges                                            --           --        11,814        --          --
                                                               ---------    ---------   ---------   ---------   ---------
Operating income                                                  58,001       37,461      24,136      43,249      40,204
Interest and other expense, net                                   15,136        4,981       3,524          68           6
                                                               ---------    ---------   ---------   ---------   ---------
Income before income taxes                                        42,865       32,480      20,612      43,181      40,198
Income tax expense                                                15,653       12,425       7,682      16,192      14,996
                                                               ---------    ---------   ---------   ---------   ---------
Income before extraordinary item                                  27,212       20,055      12,930      26,989      25,202
Loss on debt extinguishment, net of $520 tax benefit                (886)        --          --          --          --
                                                               ---------    ---------   ---------   ---------   ---------
Net income                                                     $  26,326    $  20,055   $  12,930   $  26,989   $  25,202
                                                               =========    =========   =========   =========   =========

Net income per basic share of common stock:
            Income before extraordinary item                   $    3.15    $    2.81   $    1.81   $    3.78   $    3.53
            Loss on debt extinguishment                            (0.10)        --          --          --          --
                                                               ---------    ---------   ---------   ---------   ---------
   Net income per basic share of common stock                  $    3.05    $    2.81   $    1.81   $    3.78   $    3.53
                                                               =========    =========   =========   =========   =========

Net income per diluted share of common stock:
            Income before extraordinary item                   $    3.08    $    2.81   $    1.81   $    3.78   $    3.53
            Loss on debt extinguishment                            (0.10)        --          --          --          --
                                                               ---------    ---------   ---------   ---------   ---------
   Net income per diluted share of common stock                $    2.98    $    2.81   $    1.81   $    3.78   $    3.53
                                                               =========    =========   =========   =========   =========
<CAPTION>

                                                                                        December 31,
                                                               ----------------------------------------------------------
                                                                  2000         1999        1998        1997        1996
                                                               ---------    ---------   ---------   ---------   ---------
                                                                                      (in thousands)
<S>                                                            <C>          <C>         <C>         <C>         <C>
Balance Sheet Data:
Total assets                                                   $ 392,895    $ 327,490   $ 278,359   $ 262,687   $ 216,635
Working capital                                                  128,626       83,674      89,295      71,649      62,480
Long-term debt                                                    97,230      191,600      50,000        --          --
Total stockholders' equity                                       208,960       59,388     165,825     203,155     163,463
</TABLE>

     Statement of income data appearing above includes the results of operations
of each of the companies that we acquired since the date of acquisition. Prior
to December 31, 1999, CoorsTek was not a public company and the capital
structure was not indicative of the current structure. As such, earnings per
share for each period presented prior to 2000 have been calculated using the
actual number of shares distributed on December 31, 1999.

                                       26
<PAGE>

Item 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Overview

        CoorsTek is a leading designer and manufacturer of components and
assemblies for the semiconductor capital equipment market and for
telecommunications, electronics, automotive, medical and other industrial
applications. We use materials such as precision-machined metals, technical
ceramics, and engineered plastics to design solutions that enable our customers'
products to overcome technological barriers and enhance performance. We
presently offer custom-designed products to over 6,500 customers worldwide,
including leading manufacturers such as Applied Materials, LAM Research and
Texas Instruments.

        Since our founding 90 years ago, we have developed expertise in
designing, engineering, manufacturing and assembling critical advanced ceramic
components. We have leveraged these core competencies to expand our product
offerings to include metals and plastics, and targeted new opportunities in
selected high growth industries.

        At the end of 1998, we began focusing our resources on growing our
business, both internally and through acquisitions, to the semiconductor capital
equipment industry. Since 1998, we have completed four strategic acquisitions of
suppliers to this market. In March 2000, we acquired Liberty Machine, Inc., a
manufacturer of metal parts and assemblies located in Fremont, California. In
December 1999, we acquired Doo Young Semitek Co., Ltd., a manufacturer of
technical ceramic parts located in Kyungbook, South Korea. In March 1999, we
acquired two manufacturers of precision-machined metal products: Edwards
Enterprises, located in Newark, California, and Precision Technologies, located
in Livermore, California.

        As a result of these acquisitions and internal growth, our net sales to
the semiconductor capital equipment market have increased significantly to
$266.2 million, or 49.3%, for 2000, from $111.1 million, or 30.4%, for 1999 and
$17.1 million, or 5.8%, for 1998. Our largest semiconductor customer, Applied
Materials, accounted for 41.3% of net sales for 2000, compared with 22.5% in
1999 and 2.3% in 1998.

Strategic Events in 2000

        .   Fourth quarter

        We expanded the capacity of our subsidiary, CoorsTek Korea, to include
lasered substrates. These ceramic substrates are used in the production of
electronic circuits for the telecommunications and automotive markets. The
expansion in Korea extends our offering of lasered thick-film and thin-film
substrates to critical global markets.

        We began volume manufacturing devices that automatically open and close
a semiconductor standard, 300mm wafer pod. We acquired this automation
technology via a licensing arrangement with a California-based engineering firm.
This technology is applicable to most front-end semiconductor chip manufacturing
processes and most notably, the new generation 300mm tools. This technology's
compatibility with a variety of sensor technologies and its use of electrical
servo drives versus conventional pneumatic devices distinguish it from
traditional automation technology.

        .   Third quarter

        We began manufacturing in Sonora, Mexico through a Maquiladora
operation. We transferred certain labor intensive, high volume component
manufacturing to a 35,000 square foot leased facility.

        We expanded our manufacturing and clean room facilities in Livermore,
California. The expansion includes 35,000 square feet for manufacturing and
11,000 square feet for clean rooms as well as additional administrative and
engineering office space.

                                       27
<PAGE>

         . First quarter

         We began providing clean room assembly services for a major
semiconductor capital equipment customer. These services include assembling
various components, some of which are manufactured by us, for inclusion in the
customer's final products. In providing assembly services, we have furthered our
objective of being a leading strategic supplier for major customers in the
markets that we serve. Compared with our semiconductor component business, our
assembly services have lower gross margins but significantly higher returns on
invested capital.

         We recognize revenue when our products are shipped or our services have
been rendered. We sell products primarily to OEMs for incorporation into
semiconductor capital equipment and other industrial applications. We generate
sales through direct sales employees, manufacturers' representatives and
distributors located throughout North America, Asia and Europe. Our sales
personnel, many with engineering expertise, receive substantial technical
assistance from our development engineers because of the highly technical nature
of our products. Initial sales are typically the result of a multi-level sales
effort that involves senior management, design engineers and our sales personnel
interacting with our customers' decision-makers throughout the product
development and purchasing-processes.

         We were formerly named Coors Porcelain Company and operated our
business as Coors Ceramics Company. Prior to December 31, 1999, we were a
wholly owned subsidiary of Graphic Packaging. On December 31, 1999, we spun off
from Graphic Packaging through a 100% distribution of our shares to Graphic
Packaging stockholders. Prior to the spin-off, Graphic Packaging provided us
with general management, legal, treasury, cash management, tax, internal audit,
financial reporting, investor relations and environmental services. Graphic
Packaging allocated these costs to us in the form of an annual management fee.
We no longer incur these fees but have experienced costs in 2000 to administer
similar functions as a stand-alone company. Graphic Packaging also provided
centralized cash management and allocated interest income or interest expense to
us based on intercompany balances. We currently manage our own cash as a stand-
alone company,

Results of Operations

          The following table sets forth, for the periods indicated, our
consolidated statement of income data reflected as a percentage of our net
sales.

                                            Year Ended December 31,
                                        2000           1999         1998
                                       ------         ------       ------
Net sales                               100.0 %        100.0 %      100.0 %
cost of goods sold                       76.9           75.2         75.2
                                       ------         ------       ------
Gross profit                             23.1           24.8         24.8
Selling, general and administrative      12.3           14.6         12.7
Asset impairment charges                    -              -          4.0
                                       ------         ------       ------
Operating income                         10.8           10.2          8.1
Interest expense net                      2.8            1.3          1.2
                                       ------         ------       ------
Income before income taxes                8.0            8.9          6.9
Income tax expense                        2.9            3.4          2.6
                                       ------         ------       ------
Income before extraordinary item          5.1            5.5          4.3
Loss on debt extinguishment              (0.2)             -            -
                                       ------         ------       ------
Net income                                4.9 %          5.5 %        4.3 %
                                       ======         ======       ======

                                       28
<PAGE>

Results of Operations for the Years Ended December 31, 2000 and 1999

     Net sales. Our net sales for 2000 totaled $539.7 million, an increase of
$174.6 million, or 47.8%, from net sales of $365.1 million for 1999. Our
Semiconductor segment net sales for 2000 of $266.2 million, increased $155.1
million, or 139.6%, from $111.1 million for 1999. This increase resulted from
the start of the clean room assembly business in 2000 and strong demand in the
semiconductor capital equipment market. Our Advanced Materials segment net sales
for 2000 of $273.4 million, increased $19.4 million, or 7.6%, from $254.0
million for 1999. Although this segment serves nearly every sector of the global
industrial economy, the increase generally related to strong growth in the
electronic components and oil and gas sectors.

     The semiconductor capital equipment market accounted for 49.3% of our 2000
net sales compared with 30.4% of our 1999 net sales. This increase in
concentration is a result of strong demand in the semiconductor capital
equipment market complemented by our semiconductor segment business acquisitions
in 1999 and 2000 and the development of our integrated assembly business in
2000. One customer, Applied Materials, accounted for 41.3% of our 2000 net
sales.

     Cost of goods sold and gross profit. Our gross profit for 2000 equaled
$124.4 million, an increase of $33.7 million, or 37.2%, from $90.7 million for
1999. As a result of increased net sales, the Semiconductor segment gross profit
for 2000 of $63.1 million increased $31.1 million from $32.0 million for 1999.
The Semiconductor segment gross margin decreased to 23.7% for 2000 from 28.8%
for 1999 as a result of the start of the clean room assembly business, which has
a high return on invested capital but a lower gross margin than the
semiconductor component manufacturing business. The Advanced Materials segment
gross profit for 2000 of $61.3 million increased $2.6 million from $58.7 million
for 1999. The Advanced Materials segment gross margin decreased to 22.4% for
2000 from 23.1% for 1999, primarily due to production inefficiencies at certain
facilities and higher natural gas costs in the fourth quarter of 2000.

     Selling, general and administrative expenses. Our selling, general and
administrative expenses for 2000 totaled $66.4 million, an increase of $13.2
million, or 24.8%, from $53.2 million for 1999. Our selling, general and
administrative expenses as a percentage of net sales decreased to 12.3% for 2000
from 14.6% for 1999. This decrease is primarily attributable to the focus on
cost containment and centralization of administrative functions. Additionally in
1999, we incurred $2.1 million of nonrecurring costs related to our spin-off
from Graphic Packaging.

     Operating income. Our operating income for 2000 increased $20.5 million, or
54.7%, to $58.0 million, from $37.5 million for 1999. Our operating margin for
2000 of 10.7% compared with 10.3% for 1999. The increase in operating margin was
primarily due to lower selling, general and administrative costs as a percentage
of sales.

     Interest expense, net. Our interest expense for 2000 of $15.1 million
compared with $5.0 million for 1999. Interest expense for 1999 was a result of
an allocation of debt from Graphic Packaging. In conjunction with the spin-off,
we paid Graphic Packaging $200.0 million to satisfy intercompany obligations and
as a one-time dividend. Borrowings under our $270.0 million credit facility
funded the obligations and the dividend. Credit facility borrowings were reduced
by the proceeds from the follow-on offering of common stock in the third quarter
of 2000.

     Income tax expense. Income tax expense for 2000 was $15.7 million compared
with $12.4 million for 1999. Our consolidated effective tax rate equaled 36.5%
for 2000, compared with 38.3% for 1999. The decrease in the consolidated
effective tax rate was due to federal tax credits in 2000.

     Extraordinary loss. We recorded an extraordinary loss of $886,000, net of
taxes of $520,000, during the third quarter of 2000. The extraordinary loss
represents a partial write-off of unamortized loan origination costs related to
the $122.7 million debt repayment.

Results of Operations for the Years Ended December 31, 1999 and 1998

     Net sales. Our net sales for 1999 were $365.1 million, an increase of $68.5
million, or 23.1%, from net sales of $296.6 million for 1998. The acquisitions
of Edwards Enterprises and Precision Technologies in March

                                      29
<PAGE>

1999 accounted for the increase in our net sales. Excluding these acquisitions,
our net sales decreased $2.6 million for the year ended December 31, 1999 as
compared with 1998. This decrease is primarily attributable to reduced sales in
the industrial and electronic markets within our Advanced Materials segment as a
result of price competition and weakened demand mainly experienced in the first
half of 1999. Our Advanced Materials segment sales strengthened in the second
half of 1999 as demand and pricing improved in these markets.

     The semiconductor capital equipment market accounted for approximately
30.4% of our 1999 net sales compared with 5.8% of our 1998 net sales. This
increase in concentration is a result of the Edwards Enterprises and Precision
Technologies acquisitions and strong demand in the semiconductor capital
equipment market. One customer, Applied Materials, accounted for 22.5% of our
1999 net sales.

     Cost of goods sold and gross profit. Our gross profit for 1999 increased
$17.0 million, or 23.0%, to $90.7 million, from $73.7 million for 1998. This
increase is attributed to the acquisition of Edwards Enterprises and Precision
Technologies, which contributed $18.2 million to gross profit. Our gross margin
remained constant at 24.8% for 1999 and 1998.

     Selling, general and administrative expenses. Our selling, general and
administrative expenses for 1999 equaled $53.2 million, an increase of $15.4
million, or 40.9%, from $37.8 million for 1998. Our selling, general and
administrative expenses as a percentage of net sales increased to 14.6% for 1999
from 12.7% for 1998. This increase is primarily attributable to increased sales
volume and $2.1 million of nonrecurring costs related to our spin-off from
Graphic Packaging. Included in our selling, general and administrative expenses
were $5.0 million and $4.7 million in management fees paid to Graphic Packaging
for 1999 and 1998, respectively. While we will not incur these management fees
in the future, we will experience costs to administer the corporate functions
required of a public company.

     Asset impairment charges. During 1998, we recorded $11.8 million in asset
impairment charges. We recorded no asset impairment charges for 1999. In the
first quarter of 1998, we recorded $6.2 million in asset impairment charges in
conjunction with the cancellation of the C-4 technology agreement with IBM.
Changes in the market for C-4 applications extended the time frame for achieving
commercial sales beyond original expectations. The lack of near term commercial
sales opportunities, combined with increasing overhead costs, prompted us to
terminate the agreement with IBM. In the third quarter of 1998, we recorded an
additional $5.6 million asset impairment charge related to the Chattanooga,
Tennessee operation. Strong offshore competition in the electronic package
market made it uneconomical to have a manufacturing facility dedicated to the
Chattanooga product line. Consequently, we wrote down the long-lived assets of
the Chattanooga operation to their estimated fair value using the asset held for
use model.

     Operating income. Our operating income for 1999 totaled $37.5 million, an
increase of $13.4 million, or 55.6%, from $24.1 million for 1998. Our operating
margin for 1999 was 10.3% compared with 12.1% for 1998, excluding the asset
impairment charges. The decrease in operating margin was primarily attributable
to nonrecurring costs associated with our spin-off from Graphic Packaging.

     Interest expense, net. Our interest expense for 1999 of $5.0 million
compared with $4.1 million for 1998. Interest expense for both periods was a
result of an allocation of debt from Graphic Packaging. In conjunction with the
spin-off, we paid Graphic Packaging $200 million to satisfy intercompany
obligations and as a one-time dividend. This payment was funded through
borrowings under our $270 million credit facility.

     Income tax expense. Income tax expense for 1999 was $12.4 million compared
with $7.7 million for 1998. Our consolidated effective tax rate was 38.3% for
1999 compared with 37.3% for 1998.

Liquidity and Capital Resources

     Our liquidity is generated by both internal and external sources and is
used to fund short-term working capital requirements, capital expenditures and
acquisitions. We manage our cash balances and short-term borrowings to minimize
interest expense and maintain adequate liquidity.

                                       30
<PAGE>

     In December 1999, we negotiated a $270.0 million credit facility, which
consisted of a $95.0 million revolving line of credit and an $85.0 million
Senior Term A facility, both maturing in five years, and a $90.0 million Senior
Term B facility maturing in seven years. In January 2000, we used the credit
facility to pay Graphic Packaging $200 million for intercompany borrowings and a
one-time dividend. Additionally, we use the revolving credit facility to fund
working capital, capital expenditures, and acquisitions.

     On July 20, 2000, we sold 3.0 million shares of common stock in a follow-on
offering. We used the total net proceeds of $113.3 million from the offering to
repay debt under the credit facility. On August 23, 2000, the underwriters of
the follow-on public offering purchased 250,000 additional shares of our common
stock. We used the total net proceeds of $9.4 million to repay debt under the
credit facility. The credit facility required that 75% of the net proceeds be
used to repay, ratably, the Senior Term A and Senior Term B facilities. The
Company voluntarily used the remaining proceeds to repay borrowings under the
revolving line of credit.

     Under the terms of the credit facility, Senior Term B note holders had the
ability to reject any prepayment so long as there was a balance remaining on the
Senior Term A facility. Accordingly, most of the Senior Term B note holders
rejected the prepayment. Therefore, the net proceeds from the follow-on offering
reduced the revolving line of credit by $30.6 million, extinguished the $81.3
million remaining on Term Loan A, and reduced Term Loan B by $10.8 million.
There are no prepayment penalties under the credit facility.

     As a result of the repayment, our debt to capitalization ratio equaled
32.0% at December 31, 2000 compared with 77.1% at December 31, 1999. Our current
ratio of 2.94 at December 31, 2000 compared with 2.51 at December 31, 1999.

     As of December 31, 2000, we had $75.2 million of borrowings available under
the credit facility. We are subject to commitment fees of 0.375% on the unused
borrowings under the revolving line of credit. The interest rate spreads on the
credit facility vary based on the Company's financial performance. As of March
16, 2001, the interest rate on the revolving line of credit was LIBOR plus 1.5%
and the interest rate on the Senior Term B facility was LIBOR plus 2.5%. As of
December 31, 2000, the interest rates on the credit facilities were as follows:

  .  8.23% for the revolving line of credit; and
  .  9.23% for the Senior Term Loan B facility.

     The credit facility contains customary covenants, including covenants
limiting indebtedness, dividends and distributions on, and redemptions and
repurchases of, capital stock and other similar payments, and the acquisition
and disposition of assets. The credit facility also requires that we comply with
specified financial covenants, including interest coverage ratios and
indebtedness to total capital ratios and other covenants. We are currently in
compliance with all covenants under the credit facility.

     On January 11, 2001, we amended our credit facility to increase the
revolver to $125.0 million from $95.0 million. This additional capacity will be
used to fund working capital, capital expenditures and for other corporate
purposes.

     Capital expenditures for the years ended December 31, 2000 and December 31,
1999 totaled $30.6 million and $14.6 million, respectively. We primarily funded
the addition of production capacity, computerized manufacturing equipment and
upgrades to existing computer systems.

Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether
or not a derivative is designated as part of a hedge transaction and, if

                                       31
<PAGE>

so, the type of hedge transaction. Due to our limited use of derivative
instruments, we do not expect the adoption of SFAS No. 133 to have a significant
effect on the Company's results of operations, financial position or cash flows.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), as amended. SAB 101 summarizes certain of the Securities and Exchange
Commission's views in applying generally accepted accounting principles to
revenue recognition in financial statements. CoorsTek adopted SAB 101 in 2000.

Inflation

         Inflation has not had a material adverse effect on our results of
operations.

Item 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         We are exposed to certain market risks that are inherent in our
financial instruments. These instruments arise from transactions entered into in
the normal course of business. We are currently subject to interest rate risk on
our existing senior credit facility. Our variable rate debt consists of
borrowings made under our senior credit facility.

         We had $98.1 million of floating interest rate debt as of December 31,
2000. The Company also had one interest rate swap contract for a notional amount
of $25.0 million to hedge a portion of the exposure to interest rate
fluctuations related to the floating interest rate debt. As interest rates
fluctuate, we may experience increases in interest expense that may materially
impact financial results. For example, if interest rates were to increase or
decrease 1%, the result would be an annual increase or decrease of interest
expense of approximately $0.7 million. In the event of an adverse change in
interest rates, we would likely take actions that would further mitigate our
exposure to interest rate risk, through interest rate swaps or otherwise;
however, due to the uncertainty of the actions that would be taken and their
possible effects, this analysis assumes no such action. Further, this analysis
does not consider the effects of the change in the level of overall economic
activity that could exist in such an environment.

         We maintain an interest rate risk management strategy that uses
derivative instruments to minimize significant, unanticipated earnings
fluctuations caused by interest rate volatility. We use interest rate swaps to
convert a portion of our variable rate debt to fixed rates. The resulting cost
of funds is lower than it would have been had fixed rate borrowings been issued
directly. The level of fixed rate debt, after the effects of interest rate swaps
have been considered, is maintained at between 20% and 60% of total company
debt.

         By using derivative financial instruments to hedge exposures to changes
in interest rates, we expose ourselves to credit risk and market risk. Credit
risk is the failure of the counterparty to perform under the terms of the
derivative contract. When the fair value of a derivative contract is positive,
the counterparty owes us, which creates repayment risk for us. When the fair
value of a derivative is negative, we owe the counterparty and, therefore, it
does not possess payment risk. We minimize the credit (or repayment) risk in
derivative instruments by (1) entering into transactions with high-quality
counterparties whose credit ratings are AA/Aa or higher, (2) limiting the amount
of exposure to each counterparty, and (3) monitoring the financial condition of
our counterparties.

         In September 2000, we entered into a two year interest rate swap
agreement for a notional amount of $25.0 million, with a fixed interest rate of
6.69%, to hedge a portion of our exposure to interest rate fluctuations related
to our credit facility. At December 31, 2000, the fair value of the interest
rate swap was $(0.4) million. In January 2001, we hedged our exposure to
interest rate fluctuations with an additional $25.0 million, two year interest
rate swap, with a fixed interest rate of 5.19%.

                                       32
<PAGE>

Item 8:  FINANCIAL STATEMENTS AND SUPLEMENTARY DATA



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                               Page
                                                               ----
<S>                                                            <C>
Report of Independent Accountants                               34
Consolidated Statement of Income and Comprehensive Income       35
Consolidated Balance Sheet                                      36
Consolidated Statement of Cash Flows                            37
Consolidated Statement of Stockholders' Equity                  38
Notes to Consolidated Financial Statements                     39-53
Schedule II - Valuation and Qualifying Accounts                 54
</TABLE>

                                       33
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of CoorsTek, Inc.:

         In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of CoorsTek, Inc. and its subsidiaries at December 31, 2000 and 1999,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements and the financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Denver, Colorado
January 23, 2001

                                       34
<PAGE>

                                COORSTEK, INC.
           CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
                     (In thousand, except per share data)

<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                                2000        1999        1998
                                                             ---------    ---------   ---------
<S>                                                          <C>          <C>         <C>
Net sales                                                    $ 539,665    $ 365,061   $ 296,614
Cost of goods sold                                             415,256      274,398     222,906
                                                             ---------    ---------   ---------
Gross profit                                                   124,409       90,663      73,708

Selling, general and administrative                             66,408       53,202      37,758
Asset impairment charges                                            --           --      11,814
                                                             ---------    ---------   ---------
Operating income                                                58,001       37,461      24,136

Interest expense, net                                           15,136        4,981       3,524
                                                             ---------    ---------   ---------

Income before income taxes                                      42,865       32,480      20,612
Income tax expense                                              15,653       12,425       7,682
                                                             ---------    ---------   ---------
Income before extraordinary item                                27,212       20,055      12,930

Loss on debt extinguishment, net of $520 tax benefit              (886)          --          --
                                                             ---------    ---------   ---------
Net income                                                      26,326       20,055      12,930
                                                             ---------    ---------   ---------

Other comprehensive income (expense):

Minimum pension liability adjustment,
         net of $167 tax benefit                                    --           --        (281)
Foreign currency translation adjustments                          (991)          77         (56)
                                                              --------    ---------   ---------
         Comprehensive income                                 $ 25,335    $  20,132   $  12,593
                                                              ========    =========   =========

Net income per basic share of common stock:
         Income before extraordinary item                     $   3.15    $    2.81   $    1.81
         Loss on debt extinguishment                             (0.10)          --          --
                                                             ---------    ---------   ---------
     Net income per basic share of common stock              $    3.05    $    2.81   $    1.81
                                                             =========    =========   =========


Net income per diluted share of common stock:
         Income before extraordinary item                    $    3.08    $    2.81   $    1.81
         Loss on debt extinguishment                             (0.10)          --          --
                                                             ---------    ---------   ---------
     Net income per diluted share of common stock            $    2.98    $    2.81   $    1.81
                                                             =========    =========   =========

Weighted average shares outstanding - basic                      8,637        7,142       7,142
                                                             =========    =========   =========

Weighted average shares outstanding - diluted                    8,842        7,142       7,142
                                                             =========    =========   =========
</TABLE>


  The accompanying notes are an integral part of these Consolidated Financial
                                  Statements.

                                       35
<PAGE>

                                COORSTEK, INC.
                          CONSOLIDATED BALANCE SHEET
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                               December 31,          December 31,
                                                                                  2000                  1999
                                                                               -----------           -----------
<S>                                                                            <C>                   <C>
                                   ASSETS
Current assets:
    Cash and cash equivalents                                                    $      -              $      --
    Accounts receivable, less allowance for doubtful
       accounts of $2,341 in 2000 and $2,765 in 1999                                75,915                50,318
    Inventories                                                                    101,973                73,015
    Deferred tax assets                                                              9,019                 9,118
    Other assets                                                                     8,159                 6,483
                                                                                 ---------             ---------
               Total current assets                                                195,066               138,934

Properties, net                                                                    151,250               142,898
Goodwill, less accumulated amortization of $6,056 in 2000 and
    $3,466 in 1999                                                                  40,975                39,601
Other noncurrent assets                                                              5,604                 6,057
                                                                                 ---------              ---------
    Total assets                                                                 $ 392,895              $ 327,490
                                                                                 =========              =========

                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current maturities of debt                                                   $     900              $   8,400
    Accounts payable                                                                29,634                 15,846
    Accrued salaries and vacation                                                   19,150                 14,038
    Taxes other than income                                                          4,319                  3,959
    Other current liabilities                                                       12,437                 13,017
                                                                                 ---------              ---------
               Total current liabilities                                            66,440                 55,260

Long-term debt                                                                      97,230                191,600
Accrued postretirement benefits                                                     15,899                 15,489
Other long-term liabilities                                                          4,366                  5,753
                                                                                 ---------              ---------
    Total liabilities                                                              183,935                268,102
                                                                                 ---------              ---------

Commitments and contingencies (Note 12)

Stockholders' equity:
Preferred stock, $0.01 par value, 20,000,000 shares authorized,
    no shares issued or outstanding                                                     --                     --
Common stock, $0.01 par value, 100,000,000 shares authorized,
    10,539,080 and 7,141,984 shares issued and outstanding
    in 2000 and 1999, respectively                                                     105                     72
Paid-in capital                                                                    182,006                 57,802
Paid-in capital - warrants                                                           1,600                  1,600
Retained earnings                                                                   26,326                     --
Accumulated other comprehensive loss                                                (1,077)                   (86)
                                                                                 ---------              ---------
    Total stockholders' equity                                                     208,960                 59,388
                                                                                 ---------              ---------

Total liabilities and stockholders' equity                                       $ 392,895              $ 327,490
                                                                                 =========              =========
</TABLE>

  The accompanying notes are an integral part of these Consolidated Financial
                                  Statements.

                                       36
<PAGE>

                                COORSTEK, INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                             2000          1999         1998
                                                           ---------     ---------    ---------
<S>                                                        <C>           <C>          <C>
Cash flows from operating activities:
  Net income                                               $  26,326     $  20,055    $  12,930
  Adjustments to reconcile net income to net
  cash provided by operating activities:
     Depreciation and amortization                            24,185        22,711       19,977
     Asset impairment charges                                     --            --       11,814
     Loss on debt extinguishment                               1,406            --           --
     Change in current assets and current
     liabilities and other:
        Accounts receivable                                  (25,138)       (5,027)       5,386

        Inventories                                          (28,630)       (7,321)      (1,640)

        Accounts payable                                      13,600         6,485       (5,460)
        Other                                                    494         1,497         (492)
                                                           ---------     ---------    ---------
Net cash provided by operating activities                     12,243        38,400       42,515
                                                           ---------     ---------    ---------

Cash flows from investing activities:
  Additions to properties                                    (30,625)      (14,561)     (26,890)
  Acquisitions, net of cash acquired                          (4,530)      (58,053)        (915)

  Other                                                          545        (1,629)       1,520
                                                           ---------     ---------    ---------
Net cash used in investing activities                        (34,610)      (74,243)     (26,285)
                                                           ---------     ---------    ---------

Cash flows from financing activities:

  Proceeds from issuance of debt                             299,692            --           --
  Payments on debt                                          (401,562)           --           --
  Proceeds from issuance of stock                            124,237            --           --
  Net capital contributions from (to) Parent                      --        18,640          (15)
                                                           ---------     ---------    ---------
Net cash provided by (used in) financing activities           22,367        18,640          (15)
                                                           ---------     ---------    ---------

Cash and cash equivalents:
  Net increase (decrease) in cash and cash
  equivalents                                                     --       (17,203)      16,215
  Balance at beginning of period                                  --        17,203          988
                                                           ---------     ---------    ---------
  Balance at end of period                                 $      --     $      --    $  17,203
                                                           =========     =========    =========
</TABLE>

       The accompanying notes are an integral part of these Consolidated
                             Financial Statements.

                                       37
<PAGE>

                                COORSTEK, INC.
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                (In thousands)

<TABLE>
<CAPTION>
                                                                             Paid-in                        Other
                                                Common         Paid-in       Capital       Retained     Comprehensive
                                                Stock          Capital       Warrants      Earnings     Income (Loss)     Total
                                               ---------      ---------      ---------     ---------    -------------   ---------
<S>                                            <C>            <C>            <C>           <C>          <C>             <C>
Balance at December 31, 1997                   $  10,000      $ 124,983      $      --     $  67,998      $     174     $ 203,155
Net income                                            --             --             --        12,930             --        12,930
Net capital distribution to Parent                    --        (49,923)            --            --             --       (49,923)
Minimum pension liability adjustment                  --             --             --            --           (281)         (281)
Cumulative translation adjustment                     --             --             --            --            (56)          (56)
                                               ---------      ---------      ---------     ---------      ---------     ---------
Balance at December 31, 1998                      10,000         75,060             --        80,928           (163)      165,825
Net income                                            --             --             --        20,055             --        20,055
Net capital contribution from Parent                  --          3,445             --            --             --         3,445
Issuance of warrants                                  --             --          1,600            --             --         1,600
Cumulative translation adjustment                     --             --             --            --             77            77
Spin-off recapitalization                         (9,928)       (20,703)            --      (100,983)            --      (131,614)
                                               ---------      ---------      ---------     ---------      ---------     ---------
Balance at December 31, 1999                          72         57,802          1,600            --            (86)       59,388
Net income                                            --             --             --        26,326             --        26,326
Issuance of stock                                     33        124,204             --            --             --       124,237
Cumulative translation adjustment                     --             --             --            --           (991)         (991)
                                               ---------      ---------      ---------     ---------      ---------     ---------
Balance at December 31, 2000                   $     105      $ 182,006      $   1,600     $  26,326      $  (1,077)    $ 208,960
                                               =========      =========      =========     =========      =========     =========
</TABLE>

       The accompanying notes are an integral part of these Consolidated
                             Financial Statements.

                                       38
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   General Information

          The accompanying financial statements and notes are based on the
separate historical financial statements of CoorsTek, Inc., which was formerly
named Coors Porcelain Company and operated its business as Coors Ceramics
Company (the "Company" or "CoorsTek"). Prior to 2000, CoorsTek was a wholly
owned subsidiary of Graphic Packaging International Corporation, which was
formerly named ACX Technologies, Inc. ("Graphic Packaging" or "Parent"). At the
close of business on December 31, 1999, Graphic Packaging distributed a dividend
to its stockholders of all outstanding shares of CoorsTek common stock based on
a ratio of one share of CoorsTek common stock for every four shares of Graphic
Packaging common stock held.

          Established in 1910, CoorsTek develops, manufactures and sells
engineered solutions for a multitude of industrial and commercial applications
that incorporate advanced materials such as technical ceramics, engineered
plastics and precision-machined metals into components, assemblies and systems.

Note 2.   Summary of Significant Accounting Policies

          Basis of Presentation: The consolidated financial statements include
the assets, liabilities, results of operations, cash flows and changes in
stockholders' equity of CoorsTek and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated. CoorsTek was a
wholly owned subsidiary of Graphic Packaging for 1998 and 1999. The consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles, using management's best estimates and judgments when
appropriate.

          For 1998 and 1999, the consolidated financial statements include
allocations of certain charges from Graphic Packaging for general management,
legal, treasury, tax, internal audit, financial reporting, investor relations,
environmental affairs and other miscellaneous services. Management believes the
charges are a reasonable estimate of the costs that would have been incurred by
CoorsTek on a stand-alone basis.

          Reclassifications: Certain prior year amounts have been reclassified
to conform to the 2000 presentation.

          Use of Estimates: The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as revenues and expenses reported for the
periods presented. Actual results can differ from these estimates.

          Cash and Cash Equivalents: CoorsTek defines cash equivalents as highly
liquid investments with original maturities of 90 days or less.

          Inventories: Inventories are stated at the lower-of-cost or market.
Cost is determined by the first-in, first-out (FIFO) method. The classification
of inventories, in thousands, was as follows:

                                               December 31,
                                            2000          1999
                                         ----------    ----------
     Finished                            $   43,681    $   30,856
     In process                              35,068        27,107
     Raw materials                           23,224        15,052
                                         ----------    ----------
          Total inventories              $  101,973    $   73,015
                                         ==========    ==========

                                       39
<PAGE>

         Properties: Land, buildings, equipment and goodwill are stated at cost.
Depreciation and amortization are recorded principally on a straight-line method
over the estimated useful lives of the asset as follows:

     Buildings and improvements          10 to 30 years
     Machinery and equipment             3 to 30 years
     Leasehold improvements              The shortest of the useful life, lease
                                         term or 20 years
     Goodwill                            The shorter of the useful life or 20
                                         years

         The cost of properties and related accumulated depreciation, in
thousands, consisted of the following:

                                            December 31,
                                               2000                 1999
                                            -----------         ------------

         Land and improvements              $     7,775         $     7,724
         Buildings                               78,061              75,244
         Machinery and equipment                243,126             233,904
         Construction in progress                23,709              13,624
                                            -----------         -----------
                                                352,671             330,496
         Less: accumulated depreciation        (201,421)           (187,598)
                                            -----------         -----------
         Net properties                     $   151,250         $   142,898
                                            ===========         ===========

         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. Depreciation expense was $21.7 million
in 2000, $20.7 million in 1999, and $19.0 million in 1998.

         Impairment of Long-Lived Assets and Identifiable Intangibles: CoorsTek
periodically reviews long-lived assets, identifiable intangibles and goodwill
for impairment whenever events or changes in business conditions indicate the
carrying amount of the assets may not be fully recoverable. Measurement of the
impairment loss is based on fair value of the asset, which is generally
determined by the discounting of future estimated cash flows. See Note 4.

         Revenue Recognition: Revenues are recognized when finished products are
shipped to customers or services have been rendered.

         Concentrations of Credit Risk: Sales to individual customers and
industries potentially subject the Company to concentrations of credit risk.
CoorsTek's largest customer, Applied Materials, accounted for 41.3%, 22.5% and
2.3% of the Company's net sales for the years ended December 31, 2000, 1999 and
1998, respectively. The semiconductor industry accounted for 49.3%, 30.4% and
5.8% of the Company's net sales for the years ended December 31, 2000, 1999 and
1998, respectively. No other customer or industry accounted for more than 10% of
CoorsTek's net sales in 2000, 1999 or 1998. Accounts receivable to individual
customers potentially subject the Company to concentrations of credit risk.
Applied Materials accounted for 35.0% and 15.9% of CoorsTek's accounts
receivable at December 31, 2000 and 1999, respectively. No other customer
accounted for more than 10% of the Company's accounts receivable at December 31,
2000 or 1999.

         Parent Allocations: Selling, general and administrative expense for
1999 and 1998 includes an allocation of $5.0 million and $4.7 million,
respectively, for certain Graphic Packaging corporate expenses for general
management, legal, treasury, tax, internal audit, financial reporting and
environmental services. In determining the allocation of Graphic Packaging
corporate costs, CoorsTek performed a review of 1) the services performed by
Graphic Packaging, 2) headcount, facilities and sales comparisons and 3)
management oversight provided to CoorsTek, as well as other factors.

                                       40
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Long-term debt at December 31, 1999 relates to the note issued to Graphic
Packaging in connection with the spin-off (see Note 10). Net interest expense
for the years ended December 31, 1999 and 1998 includes $5.0 million and $3.5
million, respectively, in connection with debt owed to Graphic Packaging.

     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 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.

     Derivative Instruments and Hedging Activities: CoorsTek does not enter into
financial instruments for trading or speculative purposes. The Company maintains
an interest rate risk management strategy that uses derivative instruments to
minimize significant, unanticipated earnings fluctuations caused by interest
rate volatility. CoorsTek uses interest rate swaps to convert a portion of its
variable rate debt to fixed rates. Interest rate swaps are accounted for on the
accrual basis.

     Swap payments made or received are recognized as an adjustment to interest
expense. By using derivative financial instruments to hedge exposures to changes
in interest rates, CoorsTek exposes itself to credit risk and market risk.
Credit risk is the failure of the counterparty to perform under the terms of the
derivative contract. When the fair value of a derivative contract is positive,
the counterparty owes CoorsTek, which creates repayment risk for CoorsTek. When
the fair value of a derivative is negative, CoorsTek owes the counterparty and,
therefore, it does not possess payment risk. CoorsTek minimizes the credit (or
repayment) risk in derivative instruments by 1) entering into transactions with
high-quality counterparties whose credit ratings are AA/Aa or higher, 2)
limiting the amount of exposure to each counterparty, and 3) monitoring the
financial condition of its counterparties.

     In September 2000, CoorsTek entered into a two-year interest rate swap
agreement for a notional amount of $25.0 million, with a fixed interest rate of
6.69%, to hedge a portion of its exposure to interest rate fluctuations related
to its credit facility. At December 31, 2000, the fair value of the interest
rate swap was $(0.4) million. In January 2001, the Company hedged its exposure
to interest rate fluctuations with an additional $25.0 million, two-year
interest rate swap, with a fixed interest rate of 5.19%.

     Earnings Per Share: Basic net income per share is computed using the
weighted average number of common shares outstanding during the period. Diluted
net income per share is computed using the weighted average number of common and
dilutive common equivalent shares outstanding during the period. Dilutive common
equivalent shares consist of stock options and warrants. Prior to December 31,
1999, CoorsTek was not a public company and the capital structure was not
indicative of the current structure. As such, earnings per share for 1999 and
1998 have been calculated using the actual number of shares distributed on
December 31, 1999. Following is a reconciliation of weighted average common
shares outstanding, in thousands, for purposes of calculating basic and diluted
net income per share:

<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                                2000          1999          1998
                                                            -----------   -----------   -----------
<S>                                                         <C>           <C>           <C>

     Weighted average shares outstanding - basic                 8,637         7,142         7,142
     Common stock equivalents                                      205             -             -
                                                            -----------   -----------   -----------
     Weighted average shares outstanding - diluted               8,842         7,142         7,142
                                                            ===========   ===========   ===========
</TABLE>
     The diluted share base for the twelve months ended December 31, 2000
excludes 0.3 million incremental shares related to employee stock options. These
shares are excluded due to their antidilutive effect as a result of their
exercise price.

                                       41
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Adoption of New Accounting Standards: In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities" (SFAS No. 133), which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether or not a derivative is designated as
part of a hedge transaction and, if so, the type of hedge transaction. Due to
our limited use of derivative instruments, we do not expect the adoption of SFAS
No. 133 to have a significant effect on the Company's results of operations,
financial position or cash flows.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), as amended. SAB 101 summarizes certain of the Securities and Exchange
Commission's views in applying generally accepted accounting principles to
revenue recognition in financial statements. The Company adopted SAB 101 in
2000.

 Note 3. Acquisitions

         On March 31, 2000, CoorsTek acquired certain assets and liabilities of
Liberty Machine, Inc. ("Liberty") for approximately $4.0 million. In conjunction
with the transaction, CoorsTek entered into seven-year operating leases for the
manufacturing equipment of Liberty. The acquisition was accounted for under the
purchase method of accounting, and goodwill of approximately $2.9 million is
being amortized over 20 years. Liberty, located in Fremont, California,
manufactures metal parts and assemblies for the semiconductor, aerospace,
analytical, and medical industries.

         On December 17, 1999, CoorsTek acquired all of the outstanding shares
of Doo Young Semitek Co., Ltd. for approximately $3.6 million. The Company's
name was subsequently changed to CoorsTek Korea Co., Ltd. ("CoorsTek Korea").
The acquisition has been accounted for under the purchase method of accounting
and goodwill of approximately $2.5 million is being amortized over 15 years.
CoorsTek Korea, located in Kyungbook, South Korea, manufactures technical
ceramic parts for the semiconductor industry.

         On March 12, 1999, CoorsTek acquired the net assets of Precision
Technologies for approximately $22.0 million in cash and 300,000 warrants to
receive shares of Graphic Packaging's common stock at an exercise price equal to
the fair market value at the date of close. Pursuant to the spin-off, these
warrants were converted into warrants to purchase 168,767 shares of CoorsTek
common stock at an exercise price of $22.22 per share. The acquisition has been
accounted for under the purchase method of accounting, and goodwill of
approximately $20.2 million is being amortized over 20 years. Precision
Technologies, located in Livermore, California, manufactures precision-machined
parts for the semiconductor, medical and aircraft industries.

         On March 1, 1999, CoorsTek acquired all of the outstanding shares of
Edwards Enterprises for approximately $18.0 million. The acquisition has been
accounted for under the purchase method of accounting and goodwill of
approximately $4.2 million is being amortized over 20 years. Edwards
Enterprises, located in Newark, California, manufactures precision-machined
parts for the semiconductor industry.

         In May of 1998, CoorsTek acquired the assets of Pulsation Equipment for
$0.9 million. The acquisition was accounted for under the purchase method of
accounting, and goodwill of approximately $0.8 million is being amortized over
15 years. Located in Oklahoma City, Oklahoma, the operation manufactures
stainless steel stabilizing components used in oil reclamation.

Note 4.  Asset Impairment Charges

         During 1998, CoorsTek recorded approximately $11.8 million in asset
impairment charges. A $6.2 million charge was taken in March of 1998 in
conjunction with the cancellation of the C-4 technology agreement with IBM.
Changes in the market for C-4 applications extended the time frame for achieving
commercial sales beyond original

                                       42
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


expectations. This lack of near term commercial sales opportunities, combined
with increasing overhead costs, prompted CoorsTek to negotiate termination of
the agreement with IBM. Consequently, CoorsTek wrote down the carrying value of
fixed assets associated with this project to their discounted expected future
cash flows of zero. During 1998, CoorsTek disposed of the C-4 fixed assets. The
disposition of the C-4 assets had no additional impact on the operating results
of CoorsTek. Prior to the impairment, these assets were included in the Advanced
Materials segment.

         As a result of strong offshore competition in the electronic package
market, CoorsTek recorded a $5.6 million asset impairment charge in September of
1998 at its Chattanooga, Tennessee operation. A review of estimated undiscounted
future cash flows indicated the carrying amount of property, plant and equipment
at Chattanooga may not be recoverable. Accordingly, the fixed assets were
written down to fair value calculated by discounting expected future cash flows
under the asset held for use model. These assets are included in the Advanced
Materials segment.

Note 5.  Operating Leases

         CoorsTek 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, 2000, under non-cancelable operating leases with terms
exceeding one year, are as follows:

                        Year                             Amount
                        ----                             ------

                        2001                           $  5,515
                        2002                              5,078
                        2003                              4,850
                        2004                              4,781
                        2005 and thereafter              13,498
                                                       --------
                             Total                      $33,722
                                                        =======

         Operating lease rentals for warehouse, production, office facilities
and equipment amounted to $3.6 million, $1.7 million and $0.9 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

Note 6.  Income Taxes

         CoorsTek and its U.S. subsidiaries file a consolidated federal income
tax return. In addition, CoorsTek files either consolidated or separate state
income tax returns as required by each state. CoorsTek's foreign subsidiaries
file separate returns with the applicable taxing authority.

         The components of income before income taxes, in thousands, were:

                                      Year Ended December 31,
                                   2000        1999       1998
                                 --------    --------   --------

     Domestic                    $ 42,883    $ 31,887   $ 20,319
     Foreign                          (18)        593        293
                                 --------   ---------   --------
     Total income before taxes   $ 42,865    $ 32,480   $ 20,612
                                 ========    ========   ========

                                       43
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              Year Ended December 31,

                                                           2000        1999        1998
                                                         --------    --------    --------
<S>                                                      <C>         <C>         <C>
Current provision:
     Federal                                             $  9,756    $ 11,879    $  9,209
     State                                                  2,041       1,842       1,764
     Foreign                                                  (11)        224          81
                                                         --------    --------    --------
          Total current tax expense                        11,786      13,945      11,054
                                                         --------    --------    --------
Deferred provision:

     Federal                                                3,628      (1,332)     (3,014)
     State                                                    239        (188)       (358)
                                                         --------    --------    --------
          Total deferred tax expense (benefit)              3,867      (1,520)     (3,372)
                                                         --------    --------    --------
Total income tax expense                                 $ 15,653    $ 12,425    $  7,682
                                                         ========    ========    ========
</TABLE>

         Temporary differences, which give rise to a significant portion of
deferred tax assets and liabilities, in thousands, are as follows:

                                                             December 31,

                                                           2000        1999
                                                         --------    --------
     Deferred tax asset arising from:

          Depreciation and other property related          $    --    $   106
          Pension and employee benefits                     10,647     14,145
          Inventory                                          3,879      3,767
          All other                                          2,875      3,674
          Valuation allowance                                   --     (3,621)
                                                           -------    -------
               Gross deferred tax assets                    17,401     18,071
                                                           -------    -------
     Deferred tax liabilities arising from:
          Depreciation and other property related           10,238      6,034
          Pension and employee benefits                        690      1,734
          All other                                             43          6
                                                           -------    -------
               Gross deferred tax liabilities               10,971      7,774
                                                           -------    -------
     Net deferred tax asset                                $ 6,430    $10,297
                                                           =======    =======

         The $3.6 million valuation allowance decrease in 2000 is due to the
write-off of the deferred tax asset and a corresponding valuation allowance
related to the net operating losses of a subsidiary liquidated in prior years.
It was determined in 2000 that the losses would never be utilizable by the
consolidated group due to the IRC (S)382 limitations.

         The principal differences between the effective income tax rate and the
U.S. statutory federal income tax rate were as follows:

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                          2000         1999         1998
                                                          ----         ----         ----
<S>                                                       <C>         <C>           <C>
     Expected tax rate                                    35.0%        35.0%        35.0%
     State income taxes (net of federal benefit)           4.1          3.5          4.9
     Federal tax credits                                  (3.0)         0.0         (2.2)
     Nontaxable income                                    (1.2)        (1.5)        (1.0)
     Foreign tax expense                                   0.8          0.0          0.1
     Non-deductible items                                  0.4          0.5          0.6
     Other--net                                            0.4          0.8         (0.1)
                                                          ----         ----        -----
     Effective tax rate                                   36.5%        38.3%        37.3%
                                                          ====         ====        =====
</TABLE>

                                      44
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



          Prior to 2000, CoorsTek and its U.S. subsidiaries filed a consolidated
federal income tax return with Graphic Packaging. The Internal Revenue Service
(IRS) has completed its examination of Graphic Packaging's federal income tax
returns through 1998. In the opinion of CoorsTek's management, adequate accruals
have been provided for all income tax matters and related interest.

          CoorsTek has not provided for U.S. or additional foreign taxes on $5.7
million of undistributed earnings of its foreign subsidiaries. These
undistributed earnings are considered to be reinvested indefinitely. If such
earnings were repatriated, foreign tax credits should be available under current
law to reduce or eliminate the resulting U.S. income tax liability.

          Graphic Packaging, CoorsTek and their respective subsidiaries
previously executed a tax sharing agreement that defines the parties' rights and
obligations with respect to deficiencies and refunds of federal, state and other
taxes relating to the CoorsTek business for tax years prior to the spin-off and
with respect to certain tax attributes of CoorsTek after the spin-off. The tax
sharing agreement is designed to preserve the status of the spin-off as a
tax-free distribution. CoorsTek has agreed that it will refrain from engaging in
certain transactions during the two-year period following the spin-off unless it
first provides Graphic Packaging with a ruling from the IRS or an opinion of tax
counsel acceptable to Graphic Packaging that the transaction will not adversely
affect the tax-free nature of the spin-off. The transactions subject to these
restrictions, which are not expected to materially impact CoorsTek's operating
flexibility, consist of liquidations, mergers or consolidations of CoorsTek,
redemptions by CoorsTek of certain amounts of its stock, sale of assets out of
the ordinary course of business, discontinuance of certain businesses and
certain issuances of CoorsTek's common stock. In addition, CoorsTek will agree
to indemnify Graphic Packaging against any tax liability or other expense it may
incur if the spin-off is determined to be taxable as a result of CoorsTek's
breach of any covenant or representation contained in the tax sharing agreement
or CoorsTek's action in effecting such transactions. By its terms, the tax
sharing agreement will terminate when the statutes of limitations under
applicable tax laws expire.

Note 7.   Stock Compensation

          CoorsTek has a stock option and incentive plan, which provides for the
granting of stock options, stock appreciation rights, restricted stock,
restricted stock units, deferred stock awards, unrestricted stock awards,
performance stock awards, dividend equivalent rights, performance awards and
annual incentive awards to certain key employees. Generally, options outstanding
under the stock option and incentive plan are subject to the following terms: 1)
grant price equal to 100% of the fair value of the stock on the date of grant;
2) ratable vesting over a three-year service period; and 3) maximum term of ten
years from the date of grant.

          Graphic Packaging had an equity incentive plan that provided for the
granting of nonqualified stock options and incentive stock options to certain
key employees of CoorsTek prior to the spin-off. The equity incentive plan also
provided for the granting of restricted stock, bonus shares, stock units and
offers to officers of Graphic Packaging to purchase stock. On December 31, 1999,
in conjunction with the spin-off, those CoorsTek employees who had Graphic
Packaging vested and unvested stock options were granted substitute CoorsTek
stock options that were equal in value to the original Graphic Packaging options
granted. CoorsTek did not incur any compensation charges because 1) the
aggregate intrinsic value of the options did not change, 2) the ratio of the
exercise price per option to the market value per share did not change, and 3)
the vesting provisions and option period of the original grant did not change.

                                       45
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          Stock option transactions for the years ended December 31, 2000, 1999
and 1998 were as follows (shares in thousands):

<TABLE>
<CAPTION>
                                                             2000                      1999                    1998
                                              -----------------------------------------------------------------------
                                                           Weighted                  Weighted                Weighted
                                                           Average                   Average                 Average
                                                           Exercise                  Exercise                Exercise
                                              Shares        Price        Shares       Price        Shares     Price
                                              -----------------------------------------------------------------------
<S>                                           <C>          <C>          <C>          <C>           <C>       <C>
Options outstanding at January 1               1,146       $27.79          675       $31.25          556       $29.42
Granted                                         391        $25.05          509       $23.48          125       $39.06
Exercised                                      (120)       $24.57           --           --           (6)      $24.31
Expired or forfeited                            (67)       $30.40          (38)      $31.48           --           --
                                              -----------------------------------------------------------------------
Options outstanding at December 31             1,350       $27.16        1,146       $27.79          675       $31.25
                                              =======================================================================
Exercisable at December 31                      925        $27.87          567       $29.78          482       $28.64
                                              =======================================================================
Available for future grant                      669                      1,000                        --
                                              =====                      =====                       ===
</TABLE>

          In 1998, shares available for future grant were pursuant to the
Graphic Packaging equity incentive plan.

          The following table summarizes information about stock options
outstanding and exercisable at December 31, 2000 (shares in thousands):

<TABLE>
<CAPTION>
                                  Options Outstanding                                                Options Exercisable
-------------------------------------------------------------------------------------------    ----------------------------------
                                                Weighted Average               Weighted                               Weighted
  Range of Exercise          Number                Remaining                    Average           Number               Average
      Prices               Of Shares            Contractual Life            Exercise Price      Of Shares          Exercise Price
-------------------------------------------------------------------------------------------    ----------------------------------
<S>                        <C>                  <C>                         <C>                 <C>                <C>
  $17.11 to $24.33            389                  6.8 years                    $20.66             210                  $21.32
  $24.44                      360                  8.1 years                    $24.44             333                  $24.44
  $24.62 to $32.89            414                  6.1 years                    $29.96             245                  $31.31
  $34.22 to $48.11            187                  7.0 years                    $39.69             137                  $40.03
------------------          -----                  ---------                    ------            ----                  ------
  $17.11 to $48.11          1,350                  7.0 years                    $27.16             925                  $27.87
==================          =====                  =========                    ======            ====                  ======
</TABLE>

          The Company applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its stock-based compensation plans.
Accordingly, no compensation expense has been recognized for its stock option
and incentive plan. If the Company had elected to recognize compensation cost
based on the fair value of the stock options at grant date as allowed by SFAS
No. 123, "Accounting for Stock-Based Compensation," compensation expense, net of
income tax, of $1.6 million, $1.0 million and $0.8 million would have been
recorded for 2000, 1999, and 1998, respectively. Pro forma net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:

                                                 Year Ended December 31,
                                       2000            1999            1998
                                       -----------------------------------------
Net income in thousands:
     As reported                         $26,326         $20,055         $12,930
     Pro forma                           $24,751         $19,043         $12,120
Basic Earnings per share:
     As reported                         $  3.05         $  2.81         $  1.81
     Pro forma                           $  2.87         $  2.67         $  1.70
Diluted Earnings per share:
     As reported                         $  2.98         $  2.81         $  1.81
     Pro forma                           $  2.80         $  2.67         $  1.70

                                       46
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          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: 1)
dividend yield of 0%; 2) expected volatility of 34.8% in 2000, 31.0% in 1999 and
28.1% in 1998; 3) risk-free interest rate ranging from 5.3% to 5.5% in 2000,
5.7% to 6.7% in 1999 and 4.8% to 4.9% in 1998; and 4) expected life of 3 years
to 8.94 years in 2000, 3 years to 9.11 years in 1999 and 3 years to 8.57 years
in 1998. The weighted average per share fair value of options granted during
2000, 1999, and 1998 was $25.05, $23.48, and $39.06, respectively.

Note 8.   Retirement and Other Postretirement Benefit Plans

          Pension Plan: CoorsTek provides a defined benefit retirement plan for
substantially all of its employees. CoorsTek manages the plan, including plan
assets, which consist primarily of equity and interest-bearing investments.
Benefits are based on years of service and average base compensation levels over
a period of years. The Company's funding policy is to contribute annually not
less than the ERISA minimum funding requirements nor more than the maximum
amount that can be deducted for federal income tax purposes.

          Retiree Medical Plan:   In addition to receiving pension benefits,
CoorsTek employees may participate in a medical plan, which provides health care
and life insurance benefits to eligible retirees and their 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 substantially similar to those available to active employees. The
amount the retiree pays is based on age and service at the time of retirement.
This plan is not funded.

          401(k) Plan: Eligible employees of CoorsTek may participate in
CoorsTek's 401(k) plan in which employees can contribute up to 18% of annual
eligible compensation subject to certain regulatory and plan limitations. The
Company matches 50% of the first 2% of the employees' contributions. Expense
related to the 401(k) match was $1.0 million in 2000, and $0.7 million in 1999
and 1998.

          The following table sets forth the estimated change in benefit
obligation, change in plan assets, funded status, net periodic benefit cost and
other information applicable to the CoorsTek, Inc. Retirement Plan and retiree
medical coverage. All information, except interest rates, is in thousands.

<TABLE>
<CAPTION>
                                                                 Pension Benefits             Other Benefits
                                                                2000          1999         2000           1999
                                                             ----------    ----------   ---------      ----------
<S>                                                          <C>          <C>           <C>           <C>
Change in benefit obligation:
     Benefit obligation at beginning of year                 $  97,294    $  97,815      $  13,280    $  13,162
     Service cost                                                2,992        2,407            409          341
     Interest cost                                               7,694        7,000          1,002          833
     Actuarial loss (gain)                                       5,429       (5,393)          (935)        (738)
     Benefits paid                                              (5,672)      (4,535)          (857)        (318)
                                                             ---------    ---------      ---------    ---------
     Benefit obligation at end of year                         107,737       97,294         12,899       13,280
                                                             ---------    ---------      ---------    ---------
Change in plan assets:
     Fair value of plan assets at beginning of year             97,041       77,229             --           --
     Actual return on plan assets                               (7,232)      17,056             --           --
     Company contributions                                       4,495        7,291             --           --
     Benefits paid                                              (5,672)      (4,535)            --           --
                                                             ---------    ---------      ---------    ---------
     Fair value of plan assets at end of year                   88,632       97,041             --           --
                                                             ---------    ---------      ---------    ---------
Funded status                                                  (19,105)        (253)       (12,899)     (13,280)
Unrecognized actuarial loss (gain)                              16,511       (5,139)        (2,603)      (2,175)
Unrecognized prior service cost                                  3,502        3,659           (396)        (594)
                                                             ---------    ---------      ---------    ---------
Net prepaid (accrued) benefit cost                           $     908    $  (1,733)     $ (15,898)   $ (16,049)
                                                             =========    =========      =========    =========
</TABLE>

                                       47
<PAGE>

                                 COORTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                 Pension Benefits           Other Benefits
                                                                               2000          1999          2000         1999
                                                                            ----------    ----------    -----------   ----------
Amounts recognized in the Consolidated Balance Sheet consist of:
<S>                                                                         <C>           <C>           <C>           <C>
     Net prepaid (accrued) benefit cost                                         $908         $(1,733)    $(15,898)     $(16,049)
     Intangible asset                                                             --              --           --            --
                                                                            ----------     ---------     --------     ---------
     Net amount recognized                                                      $908         $(1,733)    $(15,898)     $(16,049)
                                                                            ==========     =========     ========      ========

Weighted average assumptions at year end:
     Discount rate                                                              7.75%           6.80%        7.75%         6.80%
     Expected return on plan assets                                             9.75%           9.75%          --            --
     Rate of compensation increase                                              5.25%           4.30%          --            --
</TABLE>

         For measurement purposes, a 6.5% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2000. The rate was
assumed to decrease by 0.5% per annum to 4.75% and remain at that level
thereafter. All information is in thousands.

<TABLE>
<CAPTION>
                                                            Pension Benefits                   Other Benefits
                                                    2000         1999         1998        2000      1999        1998
                                                  --------     --------     --------     ------    ------      ------
Components of net periodic benefit cost
<S>                                             <C>            <C>          <C>
     Service cost                                 $  2,992       $  2,407    $ 2,290     $  409    $  341       $ 338
     Interest cost                                   7,694          7,000      6,439      1,002       832         892
     Actual return on plan assets                    7,232        (17,056)      (843)        --        --         --
     Amortization of prior service costs               625            644        651       (198)     (689)       (198)
     Recognized actuarial loss (gain)              (16,776)        10,445     (6,082)      (507)       --        (481)
                                                  --------       --------    -------     ------    ------       -----
     Net periodic benefit cost                    $ $1,767       $  3,440    $ 2,455     $  706    $  484       $ 551
                                                  ========       ========    =======     ======    ======       =====
</TABLE>

         Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one percentage point change in
assumed health care cost trend rates would have the following effects, in
thousands:

<TABLE>
<CAPTION>                                                             1% Point      1% Point
                                                                      Increase      Decrease
                                                                      --------      --------
<S>                                                                   <C>           <C>
     Effect on total of services and interest cost components          $   75         $   70
     Effect on postretirement benefit obligation                          875            775
</TABLE>

Note 9.   Supplemental Cash Flow Information

         All information in the following supplemental cash flow table is in
thousands.

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                          2000           1999           1998
                                                       ----------     ---------      ---------
<S>                                                    <C>            <C>            <C>
     Total interest incurred and expensed               $  15,171      $  5,066       $  4,125
     Interest paid                                         14,519         4,975          4,000
     Income taxes paid                                     11,440        12,576         11,882
</TABLE>

         Non-cash investing activities: See description of non-cash investing
activities with Graphic Packaging in Note 10.

                                       48
<PAGE>

                                 COORTEK, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10.   Related Party Transactions

         During 1999 and 1998, CoorsTek, as Graphic Packaging's wholly owned
subsidiary, engaged in several related party transactions with Graphic Packaging
and its subsidiaries. These included, but were not limited to, participation in
Graphic Packaging's cash management system, benefiting from administrative
services provided by Graphic Packaging, intercompany debt allocations, payments
of dividends, miscellaneous asset and liability transfers between the entities
as well as miscellaneous capital contributions of other forms between the
entities. The average amount due to Graphic Packaging during 1999 and 1998 was
$87.5 million and $45.8 million, respectively. At December 31, 1999 and 1998,
the Company owed Graphic Packaging $200.0 million and $50.0 million,
respectively.

         On December 31, 1999, CoorsTek issued to Graphic Packaging a $200
million, 8.9%, note, which was paid on January 4, 2000. This note was for the
payment of a $131.6 million dividend and $68.4 million of intercompany
obligations. For 1998, no dividends were paid to Graphic Packaging. Net capital
contributions from Graphic Packaging, in thousands, consisted of:

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                             1999                    1998
                                                        ---------------        ----------------
<S>                                                     <C>                    <C>
       Assets transferred from Parent                      $     3,445           $         13
       Bonuses paid in common stock of Parent                        -                     79
       Transfer of long-term debt from Parent                        -                (50,000)
       Capital contribution to Parent                                -                    (15)
                                                        ---------------        ----------------
               Total net capital contributions             $     3,445             $  (49,923)
                                                        ===============        ================
</TABLE>

         Operating leases paid to related parties were $0.7 million in 2000 and
$0.3 million in 1999.

Note 11.   Indebtedness

         Long-term debt, in thousands, consisted of the following:

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                              2000                   1999
                                                        ----------------      ------------------
<S>                                                     <C>                   <C>
Note to parent                                            $            -          $     200,000
Revolving credit facility due through 2004                        19,820                      -
Senior Term B facility due through 2006                           78,310                      -
                                                        ----------------      -----------------
                Total debt                                        98,130                200,000
Less current maturities                                              900                  8,400
                                                        ----------------      -----------------
                Total long-term debt                       $      97,230          $     191,600
                                                        ================      =================
</TABLE>

         In December 1999, CoorsTek negotiated a $270.0 million credit facility,
which consisted of a $95.0 million revolving line of credit and an $85.0 million
Senior Term A facility, both maturing in five years, and a $90.0 million Senior
Term B facility, maturing in seven years.

         On July 20, 2000, CoorsTek sold 3.0 million shares of common stock in a
follow-on offering. The Company used the total net proceeds of $113.3 million
from this offering to repay debt under the $270.0 million credit facility. On
August 23, 2000, the underwriters of the follow-on public offering purchased
250,000 additional shares of CoorsTek common stock. The Company used the total
net proceeds of $9.4 million to repay debt under the $270.0 million credit
facility. Under the terms of the credit facility, Senior Term B note holders had
the ability to reject any prepayment so long as there was a balance remaining on
the Senior Term A facility. Accordingly,

                                       49
<PAGE>

                                 COORTEK, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

most of the Senior Term B note holders rejected the prepayment. Therefore, the
net proceeds from the follow-on offering reduced the revolving line of credit by
$30.6 million, extinguished the $81.3 million remaining on the Senior Term A
facility, and reduced the Senior Term B facility by $10.8 million. As a result
of the $122.7 million debt repayment, an extraordinary loss of $886,000, net of
taxes of $520,000, was recorded during the third quarter of 2000. The
extraordinary loss represents a partial write-off of unamortized loan
origination costs.

        The credit facility has a commitment fee of 0.375% on the unused
portion of the revolving line of credit. The interest rate spreads on the credit
facility vary based on the Company's financial performance. As of December 31,
2000, the interest rates on the credit facilities were as follows:

     .  8.23% for the revolving line of credit; and
     .  9.23% for the Senior Term Loan B facility.

        The credit facility is collateralized by the accounts receivable and
inventory of the Company. The credit facility contains customary covenants,
including covenants limiting indebtedness, dividends and distributions on, and
redemptions and repurchases of, capital stock and other similar payments, and
the acquisition and disposition of assets. The credit facility also requires
that we comply with specified financial covenants, including interest coverage
ratios and indebtedness to total capital ratios and other covenants.

        On January 11, 2001, the Company amended its credit facility to increase
the revolver to $125.0 million from $95.0 million. This additional capacity will
be used to fund working capital, capital expenditures and for other corporate
purposes.

         At December 31, 2000, the Company had $19.8 million of borrowings
outstanding under the revolving line of credit, which is due in 2004. The
required principal payments on the Term B portion of the credit facility are as
follows, in thousands:

      Year                         Amount
      ----                         ------

       2001                         $ 900
       2002                           900
       2003                           900
       2004                           900
       2005 and thereafter         74,710
                                  -------
      Total                       $78,310
                                  =======


Note 12.  Commitments and Contingencies

          CoorsTek is self-insured for certain insurable risks consisting
primarily of employee health insurance programs and workers' compensation.
Certain stop-loss and excess insurance policies are also maintained to reduce
overall risk. In addition, CoorsTek maintains insurance policies to protect
against loss related to property, business interruption and general liability
risks.

          In the ordinary course of business, the Company is subject to various
pending claims, lawsuits and contingent liabilities. In each of these cases, the
Company is vigorously defending itself. The Company does not believe that the
outcome of these matters will have a material adverse impact on its financial
condition or results of operations.

          CoorsTek received a demand for payment arising out of contamination of
a semiconductor manufacturing facility formerly owned by a subsidiary of
CoorsTek, Coors Components, Inc. (CCI). Colorado state environmental authorities
are seeking clean up of soil and ground water contamination from a subsequent
owner. The contamination is believed to have occurred prior to CoorsTek's
ownership of CCI, which was sold in November 1987. Although the Company does not
believe it is responsible for the contamination or the clean up, it agreed to
join a consortium of former owners of the site to jointly share in the cost of
the clean up. CoorsTek will be

                                       50
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


responsible for 10% of any remediation costs in excess of $500,000 and 15% of
any remediation costs in excess of $3.0 million. The Company does not have a
firm estimate of the total potential clean up costs, but based on site specific
information developed within the past six months, it believes that the total
remediation cost will be in excess of the earlier projected cost of $1.0 million
and may ultimately be as much as $3.0 million. A reliable estimate of costs
cannot be developed until the consortium of former owners and the state of
Colorado reach final agreement on clean up standards and long-term monitoring
and reporting requirements. Notwithstanding this uncertainty, CoorsTek does not
believe this matter will have a material adverse effect on the Company's
financial condition or results of operations.

     A Unilateral Administrative Order (the Order) issued by the Environmental
Protection Agency (EPA) relating to the Rocky Flats Industrial Park Site has
been negotiated and signed by all parties participating in the Rocky Flats
Industrial Park group (the Group). Under the Order, the Group performed an
Engineering Evaluation/Cost Analysis on the property, including investigation
and sampling. The EPA selected a remedy consisting of removal of volatile
organic compounds in the soil and groundwater, groundwater monitoring and
institutional controls. The Company estimates that the remedy will cost between
$0.4 million and $0.6 million.

     Some of CoorsTek's facilities 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. CoorsTek 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, CoorsTek believes that any liability with respect to
these sites would not be material to the financial condition and results of
operations of CoorsTek. There can be no certainty, however, that CoorsTek 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.

     On August 12, 1999, six current and former employees sued one of the
Company's subsidiaries in the U.S. District Court for the Eastern District of
Arkansas claiming gender discrimination, sexual harassment and retaliation.
These legal proceedings were filed as two separate claims. The first claim filed
by an individual employee was dismissed in the Company's favor on a motion for
summary judgment. An appeal has been filed with the U.S. Court of Appeals for
the Eighth Circuit. In the second case, the remaining five plaintiffs have filed
a motion to certify a class action for a class of potentially 120 female
employees. This motion has been pending for over one year and recently was
denied by the court. Plaintiffs, however, have been given another chance to
attempt to certify the case as a class action. CoorsTek expects a ruling on the
motion for class action some time in 2001. The Company's preliminary evaluation
indicates the remaining case is largely without merit, however, the Company does
not have sufficient information to determine the ultimate outcome or any
potential liability related to these claims.

Note 13.   Segment Information

     Prior to 1999, the Company operated as a single segment that consisted
primarily of advanced ceramic products. In 1999, the Company acquired Edwards
Enterprises and Precision Technologies (see Note 3). These companies manufacture
precision-machined parts primarily for the semiconductor industry. As a
consequence of acquiring these companies and the resultant significance of the
semiconductor industry to the Company, the Company changed its internal
reporting to track two segments separately: Semiconductor and Advanced
Materials. The Semiconductor segment produces both ceramic and non-ceramic
products that are used in the semiconductor industry. The Advanced Materials
segment produces primarily ceramic products that are used outside the
semiconductor industry.

                                       51
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The accounting policies of the segments are the same as those described
in Note 2 and there are generally no intersegment transactions. The Company
evaluates the performance of its segments and allocates resources to them based
primarily on gross profit. The table below summarizes information about
reportable segments, in thousands, as of and for the years ended December 31:

<TABLE>
<CAPTION>
                                                             Depreciation
                                    Net          Gross           and                           Capital
                                   Sales        Profit       Amortization       Assets       Expenditures
                                 --------    -----------   ---------------    ----------   ----------------
<S>                             <C>         <C>           <C>               <C>          <C>
2000
Semiconductor                     $266,221      $ 63,074      $   5,912       $164,853        $  17,652
Advanced Materials                 273,444        61,335         18,273        228,042           12,973
                                  --------      --------      ---------       --------        ---------
     Consolidated total           $539,665      $124,409      $  24,185       $392,895        $  30,625
                                  ========      ========      =========       ========        =========

1999
Semiconductor                     $111,099      $ 31,953      $   2,494       $ 79,845        $   4,043
Advanced Materials                 253,962        58,710         20,217        247,645           10,518
                                  --------      --------      ---------       --------        ---------
     Consolidated total           $365,061      $ 90,663      $  22,711       $327,490        $  14,561
                                  ========      ========      =========       ========        =========

1998
Semiconductor                     $ 17,061      $  4,976      $   1,337       $ 20,626        $   1,015
Advanced Materials                 279,553        68,732         18,640        257,733           25,875
                                  --------      --------      ---------       --------        ---------
     Consolidated total           $296,614      $ 73,708      $  19,977       $278,359        $  26,890
                                  ========      ========      =========       ========        =========
</TABLE>

Gross sales by customer billing location were as follows, in thousands:

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                               2000            1999           1998
                                           ------------    ------------   ------------
   <S>                                   <C>             <C>            <C>
     U.S.                                   $468,545        $304,599        $224,295
     Europe                                   43,470          35,896          39,338
     Asia                                     29,186          20,507          19,975
     Canada                                   11,354           8,995           8,446
     Other foreign                            14,793           7,279           6,696
     Less: discounts and allowances          (27,683)        (12,215)         (2,136)
                                           ---------       ---------       ---------
         Total                              $539,665        $365,061        $296,614
                                           =========       =========       =========
</TABLE>


Long-lived assets, consisting of net property, plant and equipment and goodwill,
in thousands:

<TABLE>
<CAPTION>
                                                          December 31,
                                               2000            1999          1998
                                           ------------    ------------   ----------
    <S>                                <C>              <C>              <C>
     U.S.                                   $184,018        $174,728        $151,636
     Europe                                    3,291           3,705           3,486
     Asia                                      4,344           4,066              --
     Other foreign                               572              --              --
                                            --------        --------        --------
     Total                                  $192,225        $182,499        $155,122
                                            ========        ========        ========
</TABLE>

                                       52
<PAGE>

                                COORSTEK, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14. Quarterly Financial Information (unaudited)

          The following table summarizes selected quarterly financial
information, in thousands, except per share data, for each of the two years in
the periods ended December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                          First      Second      Third        Fourth        Year
                                                        --------    --------    --------     --------     --------
<S>                                                     <C>         <C>         <C>          <C>          <C>
     2OO0
     Net Sales                                          $120,819    $127,371    $136,547     $154,928     $539,665
     Cost of goods sold                                   93,400      97,558     102,420      121,878      415,256
                                                        --------    --------    --------     --------     --------
     Gross profit                                         27,419      29,813      34,127       33,050      124,409
     Selling, general and administrative                  14,449      15,943      18,810       17,206       66,408
                                                        --------    --------    --------     --------     --------
     Operating income                                     12,970      13,870      15,317       15,844       58,001
     Interest expense, net                                 4,713       4,916       2,950        2,557       15,136
                                                        --------    --------    --------     --------     --------
     Income before income taxes                            8,257       8,954      12,367       13,287       42,865
     Income tax expense                                    3,055       3,311       4,578        4,709       15,653
                                                        --------    --------    --------     --------     --------
     Income before extraordinary item                      5,202       5,643       7,789        8,578       27,212
     Loss on debt extinguishment, net of $520
     tax benefit                                               -           -        (886)          --         (886)
                                                        --------    --------    --------     --------     --------
     Net income                                         $  5,202    $  5,643    $  6,903     $  8,578     $ 26,326
                                                        ========    ========    ========     ========     ========

     Net income per basic share of common stock:
            Income before extraordinary item            $   0.73    $   0.79    $   0.80     $   0.82     $   3.15
            Loss on debt extinguishment                       --          --       (0.09)          --        (0.10)
                                                        --------    --------    --------     --------     --------
        Net income per basic share of common stock      $   0.73    $   0.79    $   0.71     $   0.82     $   3.05
                                                        ========    ========    ========     ========     ========

     Net income per diluted share of common stock
            Income before extraordinary item            $   0.72    $   0.76    $   0.78     $   0.81     $   3.08
            Loss on debt extinguishment                        -           -       (0.09)          --        (0.10)
                                                        --------    --------    --------     --------     --------
        Net income per diluted share of common stock    $   0.72    $   0.76    $   0.69     $   0.81     $   2.98
                                                        ========    ========    ========     ========     ========

     Weighted average shares outstanding - basic           7,143       7,170       9,709       10,483        8,637
                                                        ========    ========    ========     ========     ========
     Weighted average shares outstanding - diluted         7,220       7,442      10,037       10,622        8,842
                                                        ========    ========    ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                                          First      Second      Third        Fourth        Year
                                                        --------    --------    --------     --------     --------
<S>                                                     <C>         <C>         <C>          <C>          <C>
     1999
     Net sales                                          $ 76,579    $ 95,411    $ 94,946     $ 98,125     $365,061
     Cost of goods sold                                   58,305      71,646      70,504       73,943      274,398
                                                        --------    --------    --------     --------     --------
     Gross profit                                         18,274      23,765      24,442       24,182       90,663
     Selling, general and administrative                   9,008      13,180      13,768       17,246       53,202
                                                        --------    --------    --------     --------     --------
     Operating income                                      9,266      10,585      10,674        6,936       37,461
     Interest expense,  net                                  701       1,602       1,328        1,350        4,981
                                                        --------    --------    --------     --------     --------
     Income before income taxes                            8,565       8,983       9,346        5,586       32,480
     Income tax expense                                    3,355       3,137       3,609        2,324       12,425
                                                        --------    --------    --------     --------     --------
     Net income                                         $  5,210    $  5,846    $  5,737     $  3,262     $ 20,055
                                                        ========    ========    ========     ========     ========

     Net income per share of common stock (1)           $   0.73    $   0.82    $   0.80     $   0.46     $   2.81
                                                        ========    ========    ========     ========     ========

     Weighted average shares outstanding (1)               7,142       7,142       7,142        7,142        7,142
                                                        ========    ========    ========     ========     ========
</TABLE>

          (1) Prior to December 31, 1999, CoorsTek was not a public company and
              the capital structure was not indicative of the current structure.
              As such, earnings per share for each period presented for 1999
              have been calculated using the actual number of shares distributed
              on December 31, 1999

                                      53
<PAGE>

                                  SCHEDULE II

                                COORSTEK, INC.
                       VALUATION AND QUALIFYING ACCOUNTS


         The following summarizes the changes to allowance for doubtful
receivables (deducted from accounts receivable), in thousands, for each of the
three years ended December 31:

<TABLE>
<CAPTION>
                                         Additions
                  Balance at          charged to costs                             Balance at end
               beginning of year        and expenses        Other     Deductions       of year
            ----------------------  -------------------  ----------  ------------  --------------
        <S>                         <C>                  <C>         <C>           <C>
        2000              $  2,765                1,117        (15)       (1,526)        $  2,341
        1999              $  1,839                1,757          8          (839)        $  2,765
        1998              $  1,993                  547         (5)         (696)        $  1,839
</TABLE>

                                       54
<PAGE>

Item 9:   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

          None.


                                   PART III

Item 10:  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The information required by this item concerning our directors is
incorporated by reference to the information set forth in the sections titled
"Nominees for Director," "Compensation of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in our proxy statement for the 2001
Annual Meeting of Stockholders to be filed with the Commission within 120 days
after the end of our fiscal year ended December 31, 2000.

          The following are brief biographies of our officers:

          Executive Officers
          ------------------

          John K. Coors, 44, has been our President since October 1998 and our
director since January 2000. In November of 2000, Mr. Coors was elected to the
additional roles of Chairman of the Board and Chief Executive Officer. Mr. Coors
was the Chief Executive Officer of Golden Genesis Company (a former publicly
traded, majority owned subsidiary of Graphic Packaging), from January 1997 to
October 1998, and President of Golden Photon, Inc. from July 1992 to January
1997. From January 1992 to July 1992, he served as Vice President and Plant
Manager of Coors Brewing Company's Memphis, Tennessee brewery. Mr. Coors
received a B.S. in Chemical Engineering from the Colorado School of Mines, a
M.S. in Biochemistry from the University of Texas at Austin and a Ph.D. in
Engineering from the Technical University of Munich.

          Derek C. Johnson, 40, has been our Executive Vice President of Sales,
Marketing and Operations since August 1999. Mr. Johnson was Vice President of
Sales and Marketing from October 1998 to August 1999, Vice President of Golden
Operations from 1997 to 1998 and Manager of Manufacturing for Golden Operations
from 1992 to 1997. Mr. Johnson received a Higher National Diploma in Electrical
Engineering from the KirkCaldy Technical College of Scotland and a M.B.A. from
the University of Denver.

          Joseph G. Warren, Jr., 55, has been our Chief Financial Officer and
Treasurer since August 1999 and our Secretary since October 2000. Mr. Warren was
Vice President of Finance, Chief Financial Officer, Secretary and Treasurer of
White Electronics & Designs, Inc., a semiconductor manufacturer, from 1995 to
July 1999. From 1994 to 1995 he served as Vice President and Chief Financial
Officer of Axxess Technologies, Inc., a manufacturer of key duplicating
machines, and from 1993 to 1994 he served as Secretary, Treasurer and Vice
President of Golden Technologies Company, Inc., a wholly owned subsidiary of
Graphic Packaging. From 1992 to 1993, Mr. Warren was President of Coors
Ceramicon Designs, Ltd., our subsidiary, and our Vice President from 1985 to
1992. Mr. Warren received a B.S. in Accounting from Arizona State University.

          Other Officers
          --------------

          Mark J. Bernhard, 39, has been our Vice President of Operations for
Semiconductor since August 2000. Mr. Bernhard joined the Company in March 1999
as Managing Director when we acquired Precision Technologies. Prior to the
acquisition of Precision Technologies, Mr. Bernhard was a Partner of Precision
Technologies from 1988 to 1999. Mr. Bernhard completed a five year formal
Engineering Apprentice Program from Planzee School in Reutte, Austria.

                                       55
<PAGE>

          Rich A. Bilancia, 53, has been our Vice President of Information
Technology since June 2000. Mr. Bilancia was an independent consultant,
specializing in Activity Based Cost Management from August 1985 to June 2000. He
received a B.S. in Economics and a M.B.A. in Accountancy from the University of
Denver.

          Jeffrey C. Brines, 43, has been our Vice President of Accounting since
February 2000. Mr. Brines engaged in private investment activities from August
1999 to February 2000. He was the Vice President and Chief Financial Officer of
Golden Genesis Company from January 1997 to August 1999 and served as Plant
Manager of Golden Photon, Inc. (a wholly owned subsidiary of Graphic Packaging)
from August 1994 to January 1997. He received a B.B.A. and M.B.A. from Regis
University.

          J. Mark Chenoweth, 37, has been our Vice President of Operations for
Advanced Materials since August 2000. Mr. Chenoweth joined CoorsTek at the
Norman, Oklahoma facility in April 1986. Mr. Chenoweth was our Managing Director
of South East Operations from March 1998 to August 2000 and he served as General
Manager for the Oklahoma and Texas facilities from October 1995 to March 1998.
He received a B.S. in Chemical Engineering in 1987 from the University of
Oklahoma.

          Janet D. Comerford, 43, has been our Vice President of Human Resources
and Environmental Health and Safety since August 1998. Ms. Comerford was our
Regional Human Resources Manager from April 1997 to August 1998, served as
Manager of Administration from April 1994 to April 1997 and was a Production
Manager from April 1991 to April 1994. Ms. Comerford received a B.B.A. from the
University of Arizona.

          Mark A. Petty, 42, has been our Vice President of Sales and Marketing
for Semiconductor since November 2000. He joined CoorsTek in January 1983 and
has held various positions in sales and marketing. Mr. Petty was our Director of
Operations at our Oregon facility from July 1996 to October 2000 and European
Sales Manager from February 1993 to June 1996. Mr. Petty has a B.S. in Business
Management and Marketing from Mesa State College in Grand Junction, Colorado.

          Dean A. Rulis, 53, has been our Vice President of Acquisitions and
Technology since October 1998. He was President and General Manager of Wilbanks
International, Inc. (our wholly owned subsidiary) from December 1997 to October
1998, our Vice President of New Business Development from July 1997 to December
1997, and President of Golden Technologies Company, Inc. from 1992 to 1997. Mr.
Rulis received a B.S. in Mechanical Engineering from Purdue University.

          James P. Sufka, 38, has been our Vice President of Sales and Marketing
for Advanced Materials since August 2000. Mr. Suffice joined CoorsTek in
December 1993 as the New Business Development Manager and has held sales and
operational positions across various product lines and business units. From
November 1998 to August 2000, Mr. Suffice was our Director of Sales and
Marketing for Electronic Products and from August 1998 to October 1998 he was
the General Manager of our McIntyre Operations. Mr. Suffice received a B.S.
degree in Ceramic Engineering from Iowa State University in 1986 and a M.B.A.
degree in Marketing from the University of Chicago in 1992.

                                       56
<PAGE>

Item 11:  EXECUTIVE COMPENSATION

          The information required by this item is incorporated by reference to
the information set forth in the section titled "Executive Compensation" in our
2001 proxy statement.

Item 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The information required by this item is incorporated by reference to
the information set forth in the section titled "Security Ownership of Certain
Beneficial Owners and Management" in our 2001 proxy statement.

Item 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information required by this item is incorporated by reference to
the information set forth in the section titled "Certain Relationships and
Related Transactions" in our 2001 proxy statement.

                                       57
<PAGE>

                                    PART IV

Item 14:  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Annual Report on Form
    10-K:

1.  Financial statements

          The information required by this item is included in Item 8 of this
Annual Report on Form 10-K.

 2. Financial statement schedules

          The information required by this item is included in Item 8 of this
Annual Report on Form 10-K.

3.  Exhibits

          The following exhibits are filed as part of this report or are
incorporated by reference.

Exhibit Number        Description
--------------        -----------
2.1                   Distribution Agreement*
3.1                   Certificate of Incorporation of CoorsTek, Inc.**
3.2                   Bylaws of CoorsTek, Inc.**
4.1                   Rights Agreement*
4.3                   Certificate of Designation, Preferences and Rights of
                      Series A Junior Participating Preferred Stock*

10.1                  Description of Officers' Life Insurance Program**
10.2                  CoorsTek, Inc. Stock Option and Incentive Plan**
10.3                  Amendment No. 1 to CoorsTek, Inc. Stock Option and
                      Incentive Plan***
10.4                  CoorsTek, Inc. Executive Deferred Compensation Plan**
10.5                  CoorsTek, Inc. Employee Stock Purchase Plan, as amended***
10.6                  Tax Sharing Agreement*
10.7                  Environmental Responsibility Agreement*
10.8                  Master Transition Materials and Services Agreement*
10.9                  Amended Salary Continuation Agreement for John K. Coors**
10.10                 Amended Salary Continuation Agreement for Joseph Coors,
                      Jr.**
10.11                 Employment Agreement for John K. Coors**
10.12                 Employment Agreement for Derek C. Johnson**
10.13                 Employment Agreement for Joseph Coors, Jr.**
10.14                 Employment Agreement for Joseph G. Warren, Jr.**
10.15                 Employment, Severance and Legal Release for Katherine A.
                      Resler
10.16                 CoorsTek, Inc. Revolving Credit and Term Loan
                      Agreement****
10.17                 Amendment No. 1 to CoorsTek, Inc. Revolving Credit and
                      Term Loan Agreement
21.1                  List of subsidiaries
23.1                  Consent of PricewaterhouseCoopers LLP, Independent
                      Accountants


-------------
*    Incorporated by reference to amendment number 1 to CoorsTek's registration
     statement on Form 10, filed December 2, 1999 (SEC file No. 000-27579).

                                       58
<PAGE>

**   Incorporated by reference to amendment number 2 to CoorsTek's registration
     statement on Form 10, filed December 14, 1999 (SEC file No. 000-27579).

***  Incorporated by reference to CoorsTek's proxy statement on Schedule 14A to
     be filed in connection with its 2001 annual meeting of stockholders.

**** Incorporated by reference to CoorsTek's report on Form 10-K, filed March
     30, 2000 (SEC file No. 000-27579).


(b)  Reports on Form 8-K

       CoorsTek did not file any Current Reports on Form 8-K in the quarter
       ended December 31, 2000.

                                       59
<PAGE>

                                  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.

                                        CoorsTek, Inc.


Date:   March 16, 2001:                 By /s/ John K. Coors
     -----------------                  ---------------------
                                        John K. Coors
                                        Chairman, President and Chief Executive
                                        Officer

Date:   March 16, 2001:                 By /s/ Joseph G. Warren, Jr.
     ------------------                 -----------------------------
                                        Joseph G. Warren, Jr.
                                        Chief Financial Officer, Secretary and
                                        Treasurer

        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 16, 2001:                 By /s/ John K. Coors
     -----------------                  --------------------
                                        John K. Coors
                                        Chairman, President, Chief Executive
                                        Officer and Director

Date:   March 16, 2001:                 By /s/ John E. Glancy
     -----------------                  -----------------------
                                        John E. Glancy
                                        Director

Date:   March 16, 2001:                 By /s/ W. J. Kitchen
     -----------------                  -----------------------
                                        W.J. Kitchen
                                        Director

Date:   March 16, 2001:                 By /s/ John Markle, III
     -----------------                  ------------------------
                                        John Markle, III
                                        Director

Date:   March 16, 2001:                 By /s/ Donald E. Miller
     -----------------                  -------------------------
                                        Donald E. Miller
                                        Director

Date:   March 16, 2001:                 By /s/ Kimberly S. Patmore
     -----------------                  ----------------------------
                                        Kimberly S. Patmore
                                        Director

Date:   March 16, 2001:                 By /s/ Robert L. Smialek
     -----------------                  -------------------------
                                        Robert L. Smialek
                                        Director

                                       60