10-Q
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Table of Contents 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM
10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarterly period ended September 28, 2019
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)
 
Securities registered pursuant to Section 12(b) of the Act.
         
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Class A Common Stock. $0.
0
1 par value
 
SAM
 
New York Stock Exchange
Class B Common Stock, $0.
0
1 par value
 
Not applicable
 
Unregistered
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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  
    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
             
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated
 filer
 
 
Small
er
 reporting company
 
             
Emerging growth company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Act.)    Yes  
    No  
 
Number of shares outstanding of each of the issuer’s classes of common stock, as of October 25, 2019:
         
Class A Common Stock, $.01 par value
   
9,216,022
 
Class B Common Stock, $.01 par value
   
2,817,983
 
(Title of each class)
 
 
(Number of shares
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Table of Contents 
THE BOSTON BEER COMPANY, INC.
FORM
10-Q
September 28, 2019
TABLE OF CONTENTS
                     
PART I.
 
FINANCIAL INFORMATION
 
PAGE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7-
19
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
20-
26
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
 
 
 
 
26
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 4.
 
 
 
 
27
 
 
 
 
 
 
 
PART II.
 
OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
27
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1A.
 
 
 
 
27
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
 
 
 
 
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 4.
 
 
 
 
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 5.
 
 
 
 
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 6.
 
 
 
 
29
 
 
 
 
 
 
 
 
 
 
 
30
 
 
 
 
 
 
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
 
2
 
 
 
 
 

 
 
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)
                 
 
September 28,
 
 
December 29,
 
 
2019
 
 
2018
 
Assets
 
 
 
 
 
 
Current Assets:
   
     
 
Cash and cash equivalents
  $
27,128
    $
108,399
 
Accounts receivable
   
68,687
     
34,073
 
Inventories
   
92,632
     
70,249
 
Prepaid expenses and other current assets
   
14,965
     
13,136
 
Income tax receivable
   
5,980
     
5,714
 
                 
Total current assets
   
209,392
     
231,571
 
Property, plant and equipment, net
   
521,316
     
389,789
 
Operating
right-of-use
assets
   
38,943
     
—  
 
Goodwill
   
112,529
     
3,683
 
Intangible assets
   
104,335
     
2,099
 
Other assets
   
29,661
     
12,709
 
                 
Total assets
  $
1,016,176
    $
639,851
 
                 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
Current Liabilities:
   
     
 
Accounts payable
  $
71,035
    $
47,102
 
Accrued expenses and other current liabilities
   
92,850
     
73,412
 
Current operating lease liabilities
   
2,599
     
—  
 
                 
Total current liabilities
   
166,484
     
120,514
 
Deferred income taxes, net
   
81,653
     
49,169
 
Non-current
operating lease liabilities
   
41,215
     
—  
 
Other liabilities
   
7,844
     
9,851
 
                 
Total liabilities
   
297,196
     
179,534
 
Commitments and Contingencies (See Note
J
)
   
     
 
Stockholders’ Equity:
   
     
 
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 9,216,022 and 8,580,593 issued and outstanding as of September 28, 2019 and December 29, 2018, respectively
   
92
     
86
 
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,817,983 and 2,917,983 issued and outstanding as of September 28, 2019 and December 29, 2018, respectively
   
28
     
29
 
Additional
paid-in
capital
   
568,047
     
405,711
 
Accumulated other comprehensive loss, net of tax
   
(1,154
)    
(1,197
)
Retained earnings
   
151,967
     
55,688
 
                 
Total stockholders’ equity
   
718,980
     
460,317
 
                 
Total liabilities and stockholders’ equity
  $
 1,016,176
    $
 639,851
 
                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
3
 

 
 
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited
)
                                 
 
Thirteen weeks ended
   
Thirty-nine weeks ended
 
 
 
September 28,
 
 
September 29,
 
 
September 28,
 
 
September 29,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Revenue
  $
402,691
    $
326,852
    $
1,008,893
    $
818,257
 
Less excise taxes
   
24,225
     
19,982
     
60,369
     
47,830
 
                                 
Net revenue
   
378,466
     
306,870
     
948,524
     
770,427
 
Cost of goods sold
   
190,631
     
149,643
     
477,147
     
375,133
 
                                 
Gross profit
   
187,835
     
157,227
     
471,377
     
395,294
 
Operating expenses:
   
     
     
     
 
Advertising, promotional and selling expenses
   
96,570
     
87,765
     
262,372
     
241,796
 
General and administrative expenses
   
31,429
     
22,734
     
81,552
     
65,951
 
Impairment of assets
   
—  
     
—  
     
243
     
517
 
                                 
Total operating expenses
   
127,999
     
110,499
     
344,167
     
308,264
 
                                 
Operating income
   
59,836
     
46,728
     
127,210
     
87,030
 
Other income (expense), net:
   
     
     
     
 
Interest (expense) income, net
   
(138
)    
343
     
472
     
821
 
Other income (expense), net
   
(764
)    
(51
)    
(818
)    
(539
)
                                 
Total other income (expense), net
   
(902
)    
292
     
(346
)    
282
 
                                 
Income before income tax provision
   
58,934
     
47,020
     
126,864
     
87,312
 
Income tax provision
   
14,205
     
9,013
     
30,585
     
16,460
 
                                 
Net income
  $
44,729
    $
38,007
    $
96,279
    $
70,852
 
                                 
Net income per common share
basic
  $
3.70
    $
3.25
    $
8.16
    $
6.02
 
                                 
Net income per common share
diluted
  $
3.65
    $
3.21
    $
8.07
    $
5.96
 
                                 
Weighted-average number of common shares
Class A basic
   
9,136
     
8,557
     
8,797
     
8,646
 
                                 
Weighted-average number of common shares
Class B basic
   
2,862
     
3,018
     
2,899
     
3,018
 
                                 
Weighted-average number of common shares
diluted
   
12,150
     
11,702
     
11,823
     
11,773
 
                                 
Net income
  $
44,729
    $
38,007
    $
96,279
    $
70,852
 
                                 
Other comprehensive income:
   
     
     
     
 
Foreign currency translation adjustment
   
1
     
(13
)    
43
     
4
 
                                 
Comprehensive income
  $
44,730
    $
37,994
    $
96,322
    $
70,856
 
                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
4
 

 
 
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Thirteen and Thirty-nine weeks ended September 28, 2019 and September 29, 2018
(in thousands)
(unaudited)
                                                                 
 
Class A
Common
Shares
 
 
Class A
Common
Stock,
Par
 
 
Class B
Common
Shares
 
 
Class B
Common
Stock, Par
 
 
Additional
Paid-in

Capital
 
 
Accumulated
Other
Comprehensive
Loss, net of tax
 
 
Retained
Earnings
 
 
Total
Stockholders’
Equity
 
Balance at December 29, 2018
 
 
8,580
 
 
$
  86
 
 
 
2,918
 
 
$
  29
 
 
$
  405,711
 
 
$
 (1,197
)
 
$
55,688
 
 
$
  460,317
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,694
 
 
 
23,694
 
Stock options exercised and restricted shares activities
 
 
54
 
 
 
—  
 
 
 
 
 
 
 
 
 
3,704
 
 
 
 
 
 
 
 
 
3,704
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,066
 
 
 
 
 
 
 
 
 
2,066
 
Currency translation adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37
 
 
 
 
 
 
37
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 30, 2019
 
 
8,634
 
 
$
86
 
 
 
2,918
 
 
$
29
 
 
$
411,481
 
 
$
 (1,160
)
 
$
79,382
 
 
$
489,818
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27,856
 
 
 
27,856
 
Stock options exercised and restricted shares activities
 
 
21
 
 
 
1
 
 
 
 
 
 
 
 
 
1,377
 
 
 
 
 
 
 
 
 
1,378
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,744
 
 
 
 
 
 
 
 
 
3,744
 
Currency translation adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 29, 2019
 
 
8,655
 
 
$
87
 
 
 
2,918
 
 
$
29
 
 
$
416,602
 
 
$
 (1,155
)
 
$
 107,238
 
 
$
522,801
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44,729
 
 
 
44,729
 
Stock options exercised and restricted shares activities
 
 
31
 
 
 
—  
 
 
 
 
 
 
 
 
 
3,473
 
 
 
 
 
 
 
 
 
3,473
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,233
 
 
 
 
 
 
 
 
 
3,233
 
Shares issued in connection with Dogfish Head merger
 
 
430
 
 
 
4
 
 
 
 
 
 
 
 
 
144,739
 
 
 
 
 
 
 
 
 
144,743
 
Conversion from Class B to Class A
 
 
100
 
 
 
1
 
 
 
(100
)
 
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
—  
 
Currency translation adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
 
 
 
 
 
 
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at September 28, 2019
 
 
9,216
 
 
$
92
 
 
 
2,818
 
 
$
28
 
 
$
568,047
 
 
$
 (1,154
)
 
$
 151,967
 
 
$
718,980
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class A
Common
Shares
 
 
Class A
Common
Stock,
Par
 
 
Class B
Common
Shares
 
 
Class B
Common
Stock, Par
 
 
Additional
Paid-in

Capital
 
 
Accumulated
Other
Comprehensive
Loss, net of tax
 
 
Retained
Earnings
 
 
Total
Stockholders’
Equity
 
Balance at December 30, 2017
 
 
8,603
 
 
$
86
 
 
 
3,018
 
 
$
30
 
 
$
372,590
 
 
$
 (1,288
)
 
$
52,105
 
 
$
423,523
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,310
 
 
 
9,310
 
Stock options exercised and restricted shares activities
 
 
188
 
 
 
2
 
 
 
 
 
 
 
 
 
20,232
 
 
 
 
 
 
 
 
 
20,234
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,491
 
 
 
 
 
 
 
 
 
1,491
 
Repurchase of Class A Common Stock
 
 
(91
)
 
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(16,638
)
 
 
(16,639
)
Currency translation adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(11
)
 
 
 
 
 
(11
)
One time effect of adoption of ASU
2014-09,
Revenue from Contracts with Customers, net of tax of $329
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(982
)
 
 
(982
)
One time effect of adoption of ASU
2018-02,
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(210
)
 
 
210
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2018
 
 
8,700
 
 
$
87
 
 
 
3,018
 
 
$
30
 
 
$
394,313
 
 
$
 (1,509
)
 
$
44,005
 
 
$
436,926
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,535
 
 
 
23,535
 
Stock options exercised and restricted shares activities
 
 
32
 
 
 
—  
 
 
 
 
 
 
 
 
 
2,224
 
 
 
 
 
 
 
 
 
2,224
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,079