10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended June 27, 2015

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 1-14092

 

 

THE BOSTON BEER COMPANY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

MASSACHUSETTS   04-3284048

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

One Design Center Place, Suite 850, Boston, Massachusetts

(Address of principal executive offices)

02210

(Zip Code)

(617) 368-5000

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x    No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  x   Accelerated filer  ¨   Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

Yes  ¨    No   x

Number of shares outstanding of each of the issuer’s classes of common stock, as of July 24, 2015:

 

Class A Common Stock, $.01 par value

     9,702,469   

Class B Common Stock, $.01 par value

     3,467,355   

(Title of each class)

     (Number of shares

 

 

 


Table of Contents

THE BOSTON BEER COMPANY, INC.

FORM 10-Q

June 27, 2015

TABLE OF CONTENTS

 

              PAGE  

PART I.

  FINANCIAL INFORMATION   
  Item 1.    Consolidated Financial Statements      3   
     Consolidated Balance Sheets as of June 27, 2015 and December 27, 2014      3   
     Consolidated Statements of Comprehensive Income for the Thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014      4   
     Consolidated Statements of Cash Flows for the Twenty-six weeks ended June 27, 2015 and June 28, 2014      5   
     Notes to Consolidated Financial Statements      6-13   
  Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations      14-17   
  Item 3.    Quantitative and Qualitative Disclosures about Market Risk      18   
  Item 4.    Controls and Procedures      18   
PART II.   OTHER INFORMATION   
  Item 1.    Legal Proceedings      18   
  Item 1A.    Risk Factors      18   
  Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds      18   
  Item 3.    Defaults Upon Senior Securities      19   
  Item 4.    Mine Safety Disclosures      19   
  Item 5.    Other Information      19   
 

Item 6.

   Exhibits      19   
SIGNATURES      21   

EX-31.1 Section 302 CEO Certification

EX-31.2 Section 302 CFO Certification

EX-32.1 Section 906 CEO Certification

EX-32.2 Section 906 CFO Certification

 

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Table of Contents

PART I. FINANCIAL INFORMATION

 

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

     June 27,     December 27,  
     2015     2014  
Assets     

Current Assets:

    

Cash and cash equivalents

   $         146,983      $ 76,402   

Accounts receivable, net of allowance for doubtful accounts of $30 and $144 as of June 27, 2015 and December 27, 2014, respectively

     52,575        36,860   

Inventories

     57,119        51,307   

Prepaid expenses and other current assets

     13,776        12,887   

Income tax receivable

     3,517        21,321   

Deferred income taxes

     7,288        8,685   
  

 

 

   

 

 

 

Total current assets

     281,258        207,462   

Property, plant and equipment, net

     397,853        381,569   

Other assets

     9,719        12,447   

Goodwill

     3,683        3,683   
  

 

 

   

 

 

 

Total assets

   $ 692,513      $ 605,161   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Current Liabilities:

    

Accounts payable

   $ 46,012      $ 35,576   

Accrued expenses and other current liabilities

     72,356        74,594   
  

 

 

   

 

 

 

Total current liabilities

     118,368        110,170   

Deferred income taxes

     51,182        50,717   

Debt and capital lease obligations, less current portion

     471        528   

Other liabilities

     7,810        7,606   
  

 

 

   

 

 

 

Total liabilities

     177,831        169,021   

Commitments and Contingencies (See Note E)

    

Stockholders’ Equity:

    

Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 9,783,399 and 9,452,375 issued and outstanding as of June 27, 2015 and December 27, 2014, respectively

     98        95   

Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 3,467,355 and 3,617,355 issued and outstanding as of June 27, 2015 and December 27, 2014

     35        36   

Additional paid-in capital

     282,554        224,909   

Accumulated other comprehensive loss, net of tax

     (1,132     (1,133

Retained earnings

     233,127        212,233   
  

 

 

   

 

 

 

Total stockholders’ equity

     514,682        436,140   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 692,513      $ 605,161   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

     Thirteen weeks ended     Twenty-six weeks ended  
     June 27,     June 28,     June 27,     June 28,  
     2015     2014     2015     2014  

Revenue

   $ 268,721      $ 247,365      $ 481,555      $ 444,735   

Less excise taxes

     16,517        15,754        29,848        29,279   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

     252,204        231,611        451,707        415,456   

Cost of goods sold

     115,979        108,515        215,866        201,841   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     136,225        123,096        235,841        213,615   

Operating expenses:

        

Advertising, promotional and selling expenses

     71,370        65,922        131,618        127,179   

General and administrative expenses

     18,036        16,681        35,265        32,552   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     89,406        82,603        166,883        159,731   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     46,819        40,493        68,958        53,884   

Other income (expense), net:

        

Interest income (expense), net

     11        (5     7        (9

Other income (expense), net

     54        201        (271     65   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense), net

     65        196        (264     56   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax provision

     46,884        40,689        68,694        53,940   

Provision for income taxes

     16,952        15,261        25,019        20,197   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 29,932      $ 25,428      $ 43,675      $ 33,743   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share - basic

   $ 2.24      $ 1.95      $ 3.28      $ 2.59   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share - diluted

   $ 2.18      $ 1.88      $ 3.18      $ 2.49   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares - Class A basic

     9,748        9,196        9,673        9,097   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares - Class B basic

     3,532        3,770        3,575        3,837   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares - diluted

     13,667        13,486        13,650        13,461   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income, net of tax:

        

Foreign currency translation adjustment

     (5     —          1        —     

Comprehensive income

   $ 29,927      $ 25,428      $ 43,676      $ 33,743   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Twenty-six weeks ended  
     June 27,     June 28,  
     2015     2014  

Cash flows provided by operating activities:

    

Net income

   $ 43,675      $ 33,743   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     20,455        15,391   

Loss on disposal of property, plant and equipment

     339        71   

Bad debt (recovery) expense

     (49     120   

Stock-based compensation expense

     3,632        3,937   

Excess tax benefit from stock-based compensation arrangements

     (12,847     (8,131

Deferred income taxes

     1,862        (101

Changes in operating assets and liabilities:

    

Accounts receivable

     (15,666     (15,881

Inventories

     (5,812     (7,935

Prepaid expenses, income tax receivable and other assets

     33,201        (3,500

Accounts payable

     11,570        2,724   

Accrued expenses and other current liabilities

     (2,430     17,766   

Other liabilities

     424        116   
  

 

 

   

 

 

 

Net cash provided by operating activities

     78,354        38,320   
  

 

 

   

 

 

 

Cash flows used in investing activities:

    

Purchases of property, plant and equipment

     (38,880     (88,451

Cash paid for other intangible assets

     (100     —     

Decrease in restricted cash

     57        55   
  

 

 

   

 

 

 

Net cash used in investing activities

     (38,923     (88,396
  

 

 

   

 

 

 

Cash flows provided by financing activities:

    

Repurchase of Class A Common Stock

     (22,782     —     

Proceeds from exercise of stock options

     40,332        23,126   

Cash paid on note payable

     (54     (53

Excess tax benefit from stock-based compensation arrangements

     12,847        8,131   

Net proceeds from sale of investment shares

     807        630   
  

 

 

   

 

 

 

Net cash provided by financing activities

     31,150        31,834   
  

 

 

   

 

 

 

Change in cash and cash equivalents

     70,581        (18,242

Cash and cash equivalents at beginning of year

     76,402        49,524   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 146,983      $ 31,282   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Income taxes paid

   $ 9,738      $ 7,605   
  

 

 

   

 

 

 

(Decrease) increase in accounts payable for purchase of property, plant and equipment

   $ (1,134   $ 7,950   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

A. Organization and Basis of Presentation

The Boston Beer Company, Inc. and certain subsidiaries (the “Company”) are engaged in the business of brewing and selling alcohol beverages throughout the United States and in selected international markets, under the trade names, “The Boston Beer Company,” “Twisted Tea Brewing Company,” “Angry Orchard Cider Company,” and “Lazy River Cider Company.” The Company’s Samuel Adams® beers are produced and sold under the trade name “The Boston Beer Company.” A&S Brewing Collaborative LLC, d/b/a Alchemy & Science (“A&S”), a wholly-owned subsidiary of the Company, sells beer under various trade names that is produced under its own license and other licenses.

The accompanying unaudited consolidated balance sheet as of June 27, 2015, and the consolidated statements of comprehensive income and consolidated statements of cash flows for the interim periods ended June 27, 2015 and June 28, 2014 have been prepared by the Company in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required for complete financial statements by generally accepted accounting principles and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014.

In the opinion of the Company’s management, the Company’s unaudited consolidated balance sheet as of June 27, 2015 and the results of its consolidated operations and consolidated cash flows for the interim periods ended June 27, 2015 and June 28, 2014, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

 

B. Inventories

Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops, apple juice, other brewing materials and packaging, are stated at the lower of cost, determined on the first-in, first-out basis, or market. The Company’s goal is to maintain on-hand a supply of at least one year for essential hop varieties, in order to limit the risk of an unexpected reduction in supply. Inventories are generally classified as current assets. The Company classifies hops inventory in excess of two years of forecasted usage in other long term assets. The cost elements of work in process and finished goods inventory consist of raw materials, direct labor and manufacturing overhead. Inventories consist of the following:

 

     June 27,      December 27,  
     2015      2014  
     (in thousands)  

Raw materials

   $         36,879       $ 39,535   

Work in process

     10,665         7,391   

Finished goods

     13,690         10,793   
  

 

 

    

 

 

 
     61,234         57,719   

Less portion in other long term assets

     (4,115      (6,412
  

 

 

    

 

 

 
   $ 57,119       $ 51,307   
  

 

 

    

 

 

 

 

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Table of Contents
C. Net Income per Share

The Company calculates net income per share using the two-class method which requires the Company to allocate net income to its Class A Common Shares, Class B Common Shares and unvested share-based payment awards that participate in dividends with common stock, in the calculation of net income per share.

The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the Class A Common Stock is required for (a) certain future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) certain alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles of Organization of the Company, (c) other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and (e) sales or dispositions of any significant portion of the Company’s assets.

The Class B Common Stock has full voting rights, including the right to (1) elect a majority of the members of the Company’s Board of Directors and (2) approve all (a) amendments to the Company’s Articles of Organization, (b) mergers or consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Company’s assets, and (d) equity-based and other executive compensation and other significant corporate matters. The Company’s Class B Common Stock is not listed for trading. Each share of the Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of any Class B holder, and participates equally in dividends.

The Company’s unvested share-based payment awards include unvested shares (1) issued under the Company’s investment share purchase program which permits employees who have been with the Company for at least one year to purchase shares of Class A Common Stock and to purchase those shares at a discount ranging from 20% to 40% below market value based on years of employment starting after two years of employment, and (2) awarded as restricted stock awards at the discretion of the Company’s Board of Directors. The investment shares and restricted stock awards generally vest over five years in equal number of shares. The unvested shares participate equally in dividends. See Note I for a discussion of the current year unvested stock awards and issuances.

Included in the computation of net income per diluted common share are dilutive outstanding stock options that are vested or expected to vest. At its discretion, the Board of Directors grants stock options to senior management and certain key employees. The terms of the employee stock options are determined by the Board of Directors at the time of grant. To date, stock options granted to employees vest over various service periods and/or based on the attainment of certain performance criteria and generally expire after ten years. The Company also grants stock options to its non-employee directors upon election or re-election to the Board of Directors. The number of option shares granted to non-employee directors is calculated based on a defined formula and these stock options vest immediately upon grant and expire after ten years.

 

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Table of Contents

Net Income per Common Share - Basic

The following table sets forth the computation of basic net income per share using the two-class method:

 

     Thirteen weeks ended      Twenty-six weeks ended  
     June 27.      June 28,      June 27.      June 28,  
     2015      2014      2015      2014  
     (in thousands, except per share data)      (in thousands, except per share data)  

Net Income

   $ 29,932       $ 25,428       $ 43,675       $ 33,743   
  

 

 

    

 

 

    

 

 

    

 

 

 

Allocation of net income for basic:

           

Class A Common Stock

   $ 21,870       $ 17,935       $ 31,740       $ 23,600   

Class B Common Stock

     7,923         7,353         11,729         9,955   

Unvested participating shares

     139         140         206         188   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 29,932       $ 25,428       $ 43,675       $ 33,743   

Weighted average number of shares for basic:

           

Class A Common Stock

     9,748         9,196         9,673         9,097   

Class B Common Stock*

     3,532         3,770         3,575         3,837   

Unvested participating shares

     62         72         63         73   
  

 

 

    

 

 

    

 

 

    

 

 

 
     13,342         13,038         13,311         13,007   

Net income per share for basic:

           

Class A Common Stock

   $ 2.24       $ 1.95       $ 3.28       $ 2.59   
  

 

 

    

 

 

    

 

 

    

 

 

 

Class B Common Stock

   $ 2.24       $ 1.95       $ 3.28       $ 2.59   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* Change in Class B Common Stock resulted from the conversion of 150,000 shares to Class A Common Stock on May 6, 2015, with the 26-week number of shares reflecting the weighted average for the period.

Net Income per Common Share - Diluted

The Company calculates diluted net income per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the two-class method, which assumes the participating securities are not exercised.

 

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Table of Contents

The following table sets forth the computation of diluted net income per share, assuming the conversion of all Class B Common Stock into Class A Common Stock and using the two-class method for unvested participating shares:

 

     Thirteen weeks ended June 27,      Thirteen weeks ended June 28,  
     2015      2014  
     Earnings to                    Earnings to                
     Common      Common             Common      Common         
     Shareholders      Shares      EPS      Shareholders      Shares      EPS  
     (in thousands, except per share data)  

As reported - basic

   $ 21,870         9,748       $ 2.24       $ 17,935         9,196       $ 1.95   

Add: effect of dilutive potential common shares

                 

Share-based awards

     —           387            —           520      

Class B Common Stock

     7,923         3,532            7,353         3,770      

Net effect of unvested particpating shares

     4         —              5         —        
  

 

 

    

 

 

       

 

 

    

 

 

    

Net income per common share - diluted

   $ 29,797         13,667       $ 2.18       $ 25,293         13,486       $ 1.88   
  

 

 

    

 

 

       

 

 

    

 

 

    
     Twenty-six weeks ended June 27,      Twenty-six weeks ended June 28,  
     2015      2014  
     Earnings to                    Earnings to                
     Common      Common             Common      Common         
     Shareholders      Shares      EPS      Shareholders      Shares      EPS  
     (in thousands, except per share data)  

As reported - basic

   $ 31,740         9,673       $ 3.28       $ 23,600         9,097       $ 2.59   

Add: effect of dilutive potential common shares

                 

Share-based awards

     —           402            —           527      

Class B Common Stock

     11,729         3,575            9,955         3,837      

Net effect of unvested particpating shares

     6         —              7         —        
  

 

 

    

 

 

       

 

 

    

 

 

    

Net income per common share - diluted

   $ 43,475         13,650       $ 3.18       $ 33,562         13,461       $ 2.49   
  

 

 

    

 

 

       

 

 

    

 

 

    

During the thirteen and twenty-six weeks ended June 27, 2015, weighted-average stock options to purchase approximately 6,000 and 5,000 shares, respectively, of Class A Common Stock were outstanding but not included in computing diluted income per common share because their effects were anti-dilutive. During the thirteen and twenty-six weeks ended June 28, 2014, weighted-average stock options to purchase approximately 2,000 and 1,000 shares, respectively, of Class A Common Stock were outstanding but not included in computing diluted income per common share because their effects were anti-dilutive. Additionally, performance-based stock options to purchase 37,000 and 47,000 shares of Class A Common Stock were outstanding as of June 27, 2015 and June 28, 2014, respectively, but not included in computing diluted income per common share because the performance criteria of these stock options was not met as of the end of the reporting period.

 

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Table of Contents

Of the performance-based stock options to purchase 37,000 shares of Class A Common Stock that were excluded from computing diluted net income per common share as of June 27, 2015, 30,000 shares were granted in 2009 to two key employees. The vesting of these shares requires annual depletions, or sales by distributors to retailers, of certain of the Company’s brands to attain various thresholds during the period from 2015 to 2018. The remaining 7,000 shares were granted in 2015 to executive officers and the vesting of these shares requires annual depletions to attain various thresholds during 2015.

On January 1, 2008, the Company granted the Chief Executive Officer a stock option to purchase 753,864 shares of its Class A Common Stock, which vests over a five-year period, commencing on January 1, 2014, at the rate of 20% per year. The exercise price is determined by multiplying $42.00 by the aggregate change in the DJ Wilshire 5000 Index from and after January 1, 2008 through the close of business on the trading date next preceding each date on which the option is exercised. The exercise price will not be less than $37.65 per share and the excess of the fair value of the Company’s Class A Common Stock cannot exceed $70 per share over the exercise price. At June 27, 2015 and June 28, 2014, 452,319 shares and 603,092 shares of the stock option remained outstanding, respectively. If the outstanding shares at June 27, 2015 were exercised on that date, the exercise price would have been $167.62 per share. If the outstanding shares at June 28, 2014 were exercised on that date, the exercise price would have been $152.33 per share.

 

D. Comprehensive Income or Loss

Comprehensive income or loss represents net income or loss, plus defined benefit plans liability adjustment, net of tax effect and foreign currency translation adjustment. The defined benefit plans liability and foreign currency translation adjustments for the interim periods ended June 27, 2015 and June 28, 2014 were not material.

 

E. Commitments and Contingencies

Purchase Commitments

The Company had outstanding total non-cancelable purchase commitments of $138.7 million at June 27, 2015. These commitments are made up of hops, barley and wheat totaling $60.5 million, equipment and machinery of $25.3 million, apples and other ingredients of $22.2 million, advertising contracts of $16.2 million, glass bottles of $10.6 million and other commitments of $3.9 million.

The Company has entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2018 and specify both the quantities and prices, denominated in Euros and U.S. Dollars, to which the Company is committed. Hops purchase commitments outstanding at June 27, 2015 totaled $36.4 million, based on the exchange rates on that date.

Currently, the Company has entered into contracts for barley and wheat with two major suppliers. The contracts include crop years 2014 and 2015 and cover the Company’s barley, wheat, and malt requirements for 2015 and part of 2016. These purchase commitments outstanding at June 27, 2015 totaled $24.1 million.

The Company sources some of its glass bottles needs pursuant to a Glass Bottle Supply Agreement with Anchor Glass Container Corporation (“Anchor”), under which Anchor is the supplier of certain glass bottles for the Company’s Cincinnati Brewery and its Pennsylvania Brewery. This agreement also establishes the terms on which Anchor may supply glass bottles to other breweries where the Company brews its beers. Under the agreement with Anchor, the Company has minimum purchase commitments that are based on Company-provided production estimates which, under normal business conditions, are expected to be fulfilled. Minimum purchase commitments under the agreement, assuming the supplier is unable to replace lost production capacity cancelled by the Company, as of June 27, 2015 totaled $10.6 million.

Currently, the Company brews and packages more than 95% of its core brands volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. Pursuant to these arrangements, the Company purchases the liquid produced by those brewing companies, including the raw materials that are used in the liquid, at the time such liquid goes into fermentation. The Company is required to repurchase all unused raw materials purchased by the brewing company specifically for the Company’s beers at the brewing company’s cost upon termination of the production arrangement. The Company is also obligated to meet annual volume requirements in conjunction with certain production arrangements. These requirements are not material to the Company’s operations.

 

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Litigation

The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or the results of its operations. In general, while the Company believes it conducts its business appropriately in accordance with laws, regulations and industry guidelines, claims, whether or not meritorious, could be asserted against the Company that might adversely impact the Company’s results.

 

F. Income Taxes

As of June 27, 2015 and December 27, 2014, the Company had approximately $0.3 million and $0.4 million, respectively, of unrecognized income tax benefits.

The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. As of June 27, 2015 and December 27, 2014, the Company had $0.3 million and $0.3 million, respectively, accrued for interest and penalties.

During the first quarter of 2015, the Company received a $17.2 million refund from the Internal Revenue Service of an overpayment of its 2014 estimated tax. The refund resulted from the Tax Increase Prevention Act, H.R. 5771, that was enacted after payment of 2014 corporate estimated tax payments that were due on December 15, 2014. The Tax Increase Prevention Act allows the Company to claim accelerated tax depreciation on qualified property, plant, and equipment additions, and the research & development tax credit on its 2014 federal corporate income tax return.

The Company’s federal and state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. The Company is being audited by one state as of June 27, 2015. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits.

 

G. Debt

Line of Credit

The Company has a credit facility in place that provides for a $150.0 million revolving line of credit which expires on March 31, 2019. As of June 27, 2015, the Company was not in violation of any of its covenants to the lender under the credit facility and there were no borrowings outstanding, so that the line of credit was fully available to the Company for borrowing.

 

H. Fair Value Measures

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

 

    Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

 

    Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

 

    Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

 

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All financial assets or liabilities that are measured at fair value on a recurring basis (at least annually) have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The assets or liabilities measured at fair value on a recurring basis are summarized in the table below (in thousands):

 

     As of June 27, 2015  
     Level 1      Level 2      Level 3      Total  

Assets:

           

Cash equivalents

   $ 145,038       $ —         $ —         $ 145,038   
     As of December 27, 2014  
     Level 1      Level 2      Level 3      Total  

Assets:

           

Cash equivalents

   $ 68,846       $ —         $ —         $ 68,846   

The Company’s cash equivalents listed above represent money market mutual fund securities and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments.

Cash, certificates of deposit, receivables and payables are carried at their cost, which approximates fair value, because of their short-term nature. Financial instruments not recorded at fair value in the consolidated financial statements are summarized in the table below (in thousands):

 

     As of June 27, 2015  
     Level 1      Level 2      Level 3      Total  

Note payable

   $ —         $ 458       $ —         $ 458   
     As of December 27, 2014  
     Level 1      Level 2      Level 3      Total  

Note payable

   $ —         $ 513       $ —         $ 513   

 

I. Stock-Based Compensation

On January 1, 2015, the Company granted options to purchase an aggregate of 18,723 shares of the Company’s Class A Common Stock to senior management with a weighted average fair value of $130.43 per share.

On January 1, 2015, the Company granted 6,092 shares of restricted stock awards to certain senior managers and key employees of which 5,402 shares vest ratably over service periods of five years and 690 shares vest ratably over service periods of three years. On January 1, 2015 employees elected to purchase 8,313 shares under the investment share program. The weighted average fair value of the restricted stock awards and investment shares, which are sold to employees at discount under its investment share program, was $289.54 and $125.84 per share, respectively.

On May 27, 2015, the Company granted options to purchase an aggregate of 5,640 shares of the Company’s Class A Common Stock to the Company’s non-employee Directors. These options have a weighted average fair value of $122.25 per share. All of the options vested immediately on the date of the grant.

Stock-based compensation expense related to share-based awards recognized in the thirteen and twenty-six weeks ended June 27, 2015 was $2.0 million and $3.6 million, respectively, and was calculated based on awards expected to vest. Stock-based compensation expense related to share-based awards recognized in the thirteen and twenty-six weeks ended June 28, 2014 was $2.0 million and $3.9 million, respectively, and was calculated based on awards expected to vest.

 

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J. Subsequent Events

On July 29, 2015, the Board of Directors approved an increase of $75.0 million to the previously approved $400.0 million share buyback expenditure limit, for a new limit of $475.0 million.

The Company evaluated subsequent events occurring after the balance sheet date, June 27, 2015, and concluded that there were no other events of which management was aware that occurred after the balance sheet date that would require any adjustment to or disclosure in the accompanying consolidated financial statements.

 

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the significant factors affecting the consolidated operating results, financial condition and liquidity and cash flows of The Boston Beer Company, Inc. (the “Company” or “Boston Beer”) for the thirteen and twenty-six week periods ended June 27, 2015, as compared to the thirteen and twenty-six week periods ended June 28, 2014. This discussion should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements of the Company and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014.

RESULTS OF OPERATIONS

For purposes of this discussion, Boston Beer’s “core brands” or “core products” include all products sold under the Samuel Adams®, Twisted Tea®, Angry Orchard®, Lazy River® and various Alchemy & Science trade names including Traveler. “Core products” do not include the products brewed or packaged at the Company’s brewery in Cincinnati, Ohio (the “Cincinnati Brewery”) under a contract arrangement for a third party. Sales of such products are not significant to the Company’s total sales in 2015 or 2014.

Thirteen Weeks Ended June 27, 2015 compared to Thirteen Weeks Ended June 28, 2014

Net revenue. Net revenue increased by $20.6 million, or 8.9 %, to $ 252.2 million for the thirteen weeks ended June 27, 2015, as compared to $231.6 million for the thirteen weeks ended June 28, 2014, due primarily to increased shipments.

Volume. Total shipment volume increased by 6.8 % to 1,125,000 barrels for the thirteen weeks ended June 27, 2015, as compared to 1,054,000 barrels for the thirteen weeks ended June 28, 2014, due to gains in core products shipment volume. Shipment volume for the core brands increased by 6.8 % to 1,120,000 barrels, due primarily to increases in shipments of Angry Orchard, Twisted Tea and Traveler brand products offset by declines in Samuel Adams brand products.

Depletions, or sales by distributors to retailers, of the Company’s core products for the thirteen weeks ended June 27, 2015 increased by approximately 5.9 % compared to the comparable thirteen week period in 2014, primarily due to increases in depletions of Angry Orchard, Twisted Tea and Traveler brand products offset by declines in Samuel Adams brand products. The Company believes distributor inventory at June 27, 2015 was at an appropriate level. Inventory at distributors participating in the Freshest Beer Program at June 27, 2015 was equal in terms of days of inventory on hand when compared to June 28, 2014. The Company has over 69% of its volume on the Freshest Beer Program and it believes participation in the Program could reach 75% of its volume by the end of 2015.

Net Revenue per barrel. The net revenue per barrel for core brands increased by 2% to $ 225.02 per barrel for the thirteen weeks ended June 27, 2015, as compared to $220.75 per barrel for the comparable period in 2014, due primarily to price increases and product and package mix.

Gross profit. Gross profit for core products was $121.65 per barrel for the thirteen weeks ended June 27, 2015, as compared to $117.28 per barrel for the thirteen weeks ended June 28, 2014. Gross margin for core products was 54.1% for the thirteen weeks ended June 27, 2015, as compared to 53.1% for the thirteen weeks ended June 28, 2014. The increase in gross profit per barrel of $4.37 is primarily due to an increase in net revenue per barrel and a slight decrease in cost of goods sold per barrel.

Cost of goods sold for core brands was $103.36 per barrel for the thirteen weeks ended June 27, 2015, as compared to $103.47 per barrel for the thirteen weeks ended June 28, 2014. The 2015 decrease in cost of goods sold of $0.11 per barrel of core products is primarily due to a decrease in ingredient costs.

The Company includes freight charges related to the movement of finished goods from its manufacturing locations to distributor locations in its advertising, promotional and selling expense line item. As such, the Company’s gross margins may not be comparable to those of other entities that classify costs related to distribution differently.

Advertising, promotional and selling. Advertising, promotional and selling expenses increased by $5.4 million, or 8.3%, to $71.4 million for the thirteen weeks ended June 27, 2015, as compared to $65.9 million for the thirteen weeks ended June 28, 2014. The increase was primarily a result of increased investments in media advertising, increased costs for additional sales personnel and commissions, point of sale and increased freight to distributors due to higher volumes.

 

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Advertising, promotional and selling expenses for core brands were 28% of net revenue, or $63.73 per barrel, for the thirteen weeks ended June 27, 2015, as compared to 29% of net revenue, or $62.87 per barrel, for the thirteen weeks ended June 28, 2014. The Company invests in advertising and promotional campaigns that it believes will be effective, but there is no guarantee that such investments will generate sales growth.

The Company conducts certain advertising and promotional activities in its distributors’ markets, and the distributors make contributions to the Company for such efforts. These amounts are included in the Company’s statements of comprehensive income as reductions to advertising, promotional and selling expenses. Historically, contributions from distributors for advertising and promotional activities have amounted to between 2% and 4% of net sales. The Company may adjust its promotional efforts in the distributors’ markets if changes occur in these promotional contribution arrangements, depending on industry and market conditions.

General and administrative. General and administrative expenses increased by $1.4 million, or 8.1%, to $18.0 million for the thirteen weeks ended June 27, 2015, as compared to $16.7 million for the thirteen weeks ended June 28, 2014. The increase was primarily due to increases in salary and benefit costs and consulting costs.

Provision for income taxes. The Company’s effective tax rate for the thirteen weeks ended June 27, 2015 of 36.2% decreased from the thirteen weeks ended June 28, 2014 rate of 37.5%, primarily due to the favorable impact of lower state tax rates.

Twenty-six Weeks Ended June 27, 2015 compared to Twenty-six Ended June 28, 2014

Net revenue. Net revenue increased by $36.3 million, or 8.7%, to $451.7 million for the twenty-six weeks ended June 27, 2015, as compared to $415.5 million for the twenty-six weeks ended June 28, 2014, due primarily to increased shipments.

Volume. Total shipment volume increased by 6.5% to 2,014,000 barrels for the twenty-six weeks ended June 27, 2015, as compared to 1,892,000 barrels for the twenty-six weeks ended June 28, 2014, due to gains in core products shipment volume. Shipment volume for the core brands increased by 6.5 % to 2,005,000 barrels, due primarily to increases in shipments of Angry Orchard, Twisted Tea and Traveler brand products offset by declines in Samuel Adams brand products.

Depletions, or sales by distributors to retailers, of the Company’s core products for the twenty-six weeks ended June 27, 2015 increased by approximately 6.7% compared to the comparable twenty-six week period in 2014, primarily due to increases in depletions of Angry Orchard, Twisted Tea and Traveler brand products offset by declines in Samuel Adams brand products.

Net Revenue per barrel. The net revenue per barrel for core brands increased by 2% to $225.07 per barrel for the twenty-six weeks ended June 27, 2015, as compared to $220.53 per barrel for the comparable period in 2014, due primarily to price increases and product and package mix.

Gross profit. Gross profit for core products was $117.62 per barrel for the twenty-six weeks ended June 27, 2015, as compared to $113.37 per barrel for the twenty-six weeks ended June 28, 2014. Gross margin for core products was 52.3% for the twenty-six weeks ended June 27, 2015, as compared to 51.4% for the twenty-six weeks ended June 28, 2014. The increase in gross profit per barrel of $4.25 is primarily due to an increase in net revenue per barrel, partially offset by an increase in cost of goods sold per barrel.

Cost of goods sold for core brands was $107.45 per barrel for the twenty-six weeks ended June 27, 2015, as compared to $107.16 per barrel for the twenty-six weeks ended June 28, 2014. The 2015 increase in cost of goods sold of $0.29 per barrel of core products is due to higher brewery operating costs.

The Company includes freight charges related to the movement of finished goods from its manufacturing locations to distributor locations in its advertising, promotional and selling expense line item. As such, the Company’s gross margins may not be comparable to those of other entities that classify costs related to distribution differently.

Advertising, promotional and selling. Advertising, promotional and selling expenses increased $4.4 million, or 3.5%, to $131.6 million for the twenty-six weeks ended June 27, 2015, as compared to $127.2 million for the twenty-six weeks ended June 28, 2014. The increase of $4.4 million was primarily a result of increased investments in media advertising, increased costs for additional sales personnel and commissions, and increased freight to distributors due to higher volumes.

 

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Advertising, promotional and selling expenses for core brands were 29% of net revenue, or $65.65 per barrel, for the twenty-six weeks ended June 27, 2015, as compared to 31% of net revenue, or $67.56 per barrel, for the twenty-six weeks ended June 28, 2014.

General and administrative. General and administrative expenses increased by $2.7 million, or 8.3%, to $35.3 million for the twenty-six weeks ended June 27, 2015, as compared to $32.6 million for the comparable period in 2014. The increase was primarily due to increases in salary and benefit costs and consulting costs.

Provision for income taxes. The Company’s effective tax rate for the twenty-six weeks ended June 27, 2015 of 36.4% decreased from the twenty-six weeks ended June 28, 2014 rate of 37.4%, primarily due to the favorable impact of lower state tax rates.

LIQUIDITY AND CAPITAL RESOURCES

Cash increased to $147.0 million as of June 27, 2015 from $76.4 million as of December 27, 2014, reflecting cash provided by operating activities and cash provided by financing activities that was partially offset by purchases of property, plant and equipment.

Cash provided by or used in operating activities consists of net income, adjusted for certain non-cash items, such as depreciation and amortization, stock-based compensation expense and related excess tax benefit, other non-cash items included in operating results, and changes in operating assets and liabilities, such as accounts receivable, inventory, accounts payable and accrued expenses.

Cash provided by operating activities for the twenty-six weeks ended June 27, 2015 was $78.4 million and primarily consisted of net income of $43.7 million and a net decrease in operating assets and liabilities of $21.3 million which includes a $17.2 million tax refund in the first quarter of 2015, and non-cash items of $13.4 million. Cash provided in operating activities for the twenty-six weeks ended June 28, 2014 was $38.3 million and primarily consisted of net income of $33.7 million and non-cash items of $11.3 million, partially offset by a net increase in operating assets and liabilities of $6.7 million.

The Company used $38.9 million in investing activities during the twenty-six weeks ended June 27, 2015, as compared to $88.4 million during the twenty-six weeks ended June 28, 2014. Investing activities primarily consisted of discretionary equipment purchases to upgrade the Company-owned breweries and the purchase of additional kegs.

Cash provided by financing activities was $31.2 million during the twenty-six weeks ended June 27, 2015, as compared to $31.8 million during the twenty-six weeks ended June 28, 2014. The decrease in financing cash flow in 2015 from 2014 is primarily due to an increase in stock repurchases under the Company’s Stock Repurchase Program that were partially offset by an increase in proceeds from stock option exercises.

During the twenty-six weeks ended June 27, 2015 and the period from June 28, 2015 through July 24, 2015, the Company repurchased 169,825 shares of its Class A Common Stock for an aggregate purchase price of approximately $41.4 million. On May 8, 2015, the Board of Directors approved an increase of $50.0 million to the previously approved $350.0 million share buyback expenditure limit, for a new limit of $400.0 million. As of July 24, 2015, the Company had repurchased a cumulative total of approximately 11.1 million shares of its Class A Common Stock for an aggregate purchase price of $348.8 million and had approximately $51.2 million remaining on the $400.0 million stock repurchase expenditure limit set by the Board of Directors. On July 29, 2015, the Board of Directors approved an increase of $75.0 million to the previously approved $400.0 million share buyback expenditure limit, for a new limit of $475.0 million.

The Company expects that its cash balance as of June 27, 2015 of $147.0 million, along with future operating cash flow and the Company’s unused line of credit of $150 million, will be sufficient to fund future cash requirements. The Company’s $150.0 million credit facility has a term not scheduled to expire until March 31, 2019. As of the date of this filing, the Company was not in violation of any of its covenants to the lender under the credit facility and there were no amounts outstanding under the credit facility.

2015 Outlook

Year-to-date depletions through the 29 weeks ended July 18, 2015 are estimated by the Company to be up approximately 6% from the comparable period in 2014.

 

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The Company has left unchanged its projected 2015 earnings per diluted share of between $7.10 to $7.50, but actual results could vary significantly from this target. The Company currently anticipates depletions and shipments growth for the fifty-two week period ending December 26, 2015 of between 6% and 9%, a decrease from the previously communicated estimate of between 8% and 12%. The Company is targeting national price increases of between 1% and 2%, with full-year 2015 gross margins of between 51% and 53%. The Company intends to increase advertising, promotional and selling expenses by between $25 million and $35 million for the full year 2015. These increases exclude increases in freight costs for the shipment of products to the Company’s distributors. The Company estimates increased investments of between $10 million to $15 million for Traveler and other existing brands developed by Alchemy & Science, which are included in the full-year estimated increases in advertising, promotional and selling expenses. Brand investments in the Alchemy & Science brands could vary significantly from current estimates. The Company intends to increase its investment in its brands in 2015 commensurate with the opportunities for growth that it sees, but there is no guarantee that such increased investments will result in increased volumes.

The Company estimates a full-year 2015 effective tax rate of approximately 37% a decrease from the previously communicated estimate of 38% due to the favorable impact of lower state tax rates.

The Company is continuing to evaluate 2015 capital expenditures. Its current estimates are between $70 million and $100 million, a decrease from the previously communicated estimated range of $80 million to $110 million. Capital expenditures consist mostly of continued investments in the Company’s breweries, as well as additional keg purchases in support of growth. These estimates include capital expenditures for existing Alchemy & Science projects of between $3 million and $5 million. The actual total amount spent on 2015 capital expenditures could be higher dependent on capital required to meet future growth. Based on information currently available, the Company believes that its capacity requirements for 2015 can be covered by its Company-owned breweries and existing contracted capacity at third-party brewers.

THE POTENTIAL IMPACT OF KNOWN FACTS, COMMITMENTS, EVENTS AND UNCERTAINTIES

Off-balance Sheet Arrangements

At June 27, 2015, the Company did not have off-balance sheet arrangements as defined in 03(a)(4)(ii) of Regulation S-K.

Contractual Obligations

There were no material changes outside of the ordinary course of the Company’s business to contractual obligations during the three month period ended June 27, 2015.

Critical Accounting Policies

There were no material changes to the Company’s critical accounting policies during the three month period ended June 27, 2015.

FORWARD-LOOKING STATEMENTS

In this Quarterly Report on Form 10-Q and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “designed” and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, results of operations and financial position. These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no firm assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect subsequent events or circumstances. Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth below in addition to the other information set forth in this Quarterly Report on Form 10-Q and in the section titled “Other Risks and Uncertainties” in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014.

 

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since December 27, 2014, there have been no significant changes in the Company’s exposures to interest rate or foreign currency rate fluctuations. The Company currently does not enter into derivatives or other market risk sensitive instruments for the purpose of hedging or for trading purposes.

 

Item 4. CONTROLS AND PROCEDURES

As of June 27, 2015, the Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods and that such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended June 27, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. LEGAL PROCEEDINGS

During the twenty-six weeks ended June 27, 2015 there were no material changes to the disclosure made in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014.

 

Item 1A. RISK FACTORS

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014, which could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its business, financial condition and/or operating results.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 8, 2015, the Board of Directors of the Company increased the aggregate expenditure limit for the Company’s Stock Repurchase Program by $50.0 million, thereby increasing the limit from $350.0 million to $400.0 million. As of July 24, 2015, the Company has repurchased a cumulative total of approximately 11.1 million shares of its Class A Common Stock for an aggregate purchase price of $348.8 million and had $51.2 million remaining on the $400.0 million share buyback expenditure limit.

 

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During the twenty-six weeks ended June 27, 2015, the Company repurchased 87,656 shares of its Class A Common Stock as illustrated in the table below:

 

Period

   Total
Number of
Shares
Purchased
     Average
Price Paid
per Share
     Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
     Approximate Dollar Value
of Shares that May Yet be
Purchased Under the Plans
or Programs
 

December 28, 2014 to January 31, 2015

     2,460       $ 280.98         2,460       $ 41,920,501   

February 1, 2015 to February 28, 2015

     24         119.14         0         41,920,501   

March 1, 2015 to March 28, 2015

     32,871         268.15         32,693         33,122,126   

March 29, 2015 to May 2, 2015

     17,934         267.92         17,879         28,328,911   

May 3, 2015 to May 30, 2015

     0         0         0         78,328,911   

May 31, 2015 to June 27, 2015

     34,367         247.26         34,363         69,830,129   
  

 

 

       

 

 

    

Total

     87,656       $ 260.23         87,395       $ 69,830,129   
  

 

 

       

 

 

    

Of the shares that were repurchased during the period, 261 shares represent repurchases of unvested investment shares issued under the Investment Share Program of the Company’s Employee Equity Incentive Plan.

Mr. C. James Koch, the Company’s Founder and Chairman of the Board of Directors, converted 150,000 shares of his holdings in Class B Common Stock into 150,000 shares of Class A Common Stock on May 6, 2015.

As of July 24, 2015, the Company had 9.7 million shares of Class A Common Stock outstanding and 3.5 million shares of Class B Common Stock outstanding.

 

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

 

Item 4. MINE SAFETY DISCLOSURES

Not Applicable

 

Item 5. OTHER INFORMATION

Not Applicable

 

Item 6. EXHIBITS

 

Exhibit
No.

 

Title

    11.1   The information required by Exhibit 11 has been included in Note C of the notes to the consolidated financial statements.
  *31.1   Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  *31.2   Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  *32.1   Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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  *32.2   Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*101.INS   XBRL Instance Document
*101.SCH   XBRL Taxonomy Extension Schema Document
*101.CAL   XBRL Taxonomy Calculation Linkbase Document
*101.LAB   XBRL Taxonomy Label Linkbase Document
*101.PRE   XBRL Taxonomy Presentation Linkbase Document
*101.DEF   XBRL Definition Linkbase Document

 

* Filed with this report

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

 

     

THE BOSTON BEER COMPANY, INC.

(Registrant)

Date: July 30, 2015

     

/s/ Martin F. Roper

      Martin F. Roper
      President and Chief Executive Officer
      (principal executive officer)

Date: July 30, 2015

     

/s/ William F. Urich

      William F. Urich
      Chief Financial Officer
      (principal accounting and financial officer)

 

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