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Boston Beer Reports First Quarter Volume, Revenue And Earnings

BOSTON, Apr 26, 2004 /PRNewswire-FirstCall via COMTEX/ -- The Boston Beer Company, Inc. (NYSE: SAM) today announced first quarter 2004 volume, revenue and earnings compared to the first quarter 2003.

1st Quarter Results

For the 13-week period ended March 27, 2004, The Boston Beer Company recorded net sales of $44.7 million, a 1.5% decline from the 1st quarter in 2003. Net revenue per barrel increased by 1.1% during the quarter primarily due to price increases. As reflected on the following chart, reported shipment volume for the period was 263,000 barrels, a 2.6% decline from prior year.

    Barrels                         Q1-2004         Q1-2003          %Chg
    Total Boston Beer Brands        261,000         269,000         -3.0%
    3rd Party Contract Brewing        2,000           1,000          100%
    Total Company                   263,000         270,000         -2.6%

The Company recorded net income of $1.3 million or $.09 per diluted share for the quarter versus a net loss of $0.1 million and ($.01) per diluted share for the same period last year. Gross margins as a percent of net sales increased to 59.5% as compared to 58.6% in the prior year first quarter, principally due to net price increases implemented in the 1st quarter 2004 and certain operating efficiencies at its Cincinnati brewery, partially offset by changes in package mix. Advertising, promotional and selling expenses for the quarter were down by $1.8 million or 7.7% in comparison to the same period last year. The decrease was primarily driven by more effective purchasing of media. Additionally, point-of-sale expenditures declined by $0.8 million from the same period in 2003 that included an investment in new style tap handles. General and administrative expenses decreased by $0.6 million or 15.6% in comparison to the same period last year, due to reductions in employee-related costs and legal expenses.

Boston Beer Brand distributor sales to retail (depletions) totaled 248,000 barrels, a 1.8% decrease from the first quarter 2003, primarily as result of declines in Sam Adams Light(R) volume. Shipments and orders in-hand suggest that core shipments for April and May 2004 will be up approximately 8% as compared to the same period 2003. Actual shipments for the current quarter may differ, however, and no inferences should be drawn with respect to shipments in future periods.

Jim Koch, Chairman of The Boston Beer Company, said, "Samuel Adams Boston Lager and Seasonals combined depletions grew approximately 6% in the first quarter, helped by strong growth trends in our on-premise draft business. This growth was offset by the declines of Sam Adams Light as compared to the first quarter 2003 when the brand was still experiencing strong trial sales. We see similar trends in the order mix received for the second quarter 2004. We continue to be pleased with the current Samuel Adams Boston Lager advertising, while working aggressively to develop stronger Sam Adams Light messaging. We are supporting Sam Adams Light in the second quarter with TV and print advertising but it is too early to determine what effect this investment will have on Light volumes."

Martin Roper, Boston Beer's Chief Executive Officer, commented on the Company's core initiatives, "We are committed to growing Lager, Light and Seasonal brands and continue to focus on developing optimal advertising campaigns. We expect the continued difficult comparables for Sam Adams Light to drag down aggregate depletion volumes during the next two quarters, even if our other brands continue the growth patterns seen in the first quarter. We completed Sam Adams Light positioning research during the first quarter and expect new programs to be introduced in the third quarter to position Light more strongly for growth within the Better Light Beer segment. We are pleased with our overall financial performance in the first quarter 2004. Our gross margins improved over 2003 due to planned price increases and some operational improvements at our Cincinnati brewery. We continue to work on optimizing all of our resources and our pricing strategies given competitive activities. While the Company is beginning to face cost pressures related to freight and brewing costs, based on current information, we still expect double-digit earnings growth for 2004. We remain prepared to increase investment in our brand to drive long term growth at the expense of earnings, if we have proven growth vehicles worthy of such investments."

The Boston Beer Company's balance sheet remains strong with $46.0 million in cash and short-term investments and no debt. The Company's cash flow also remains strong, delivering $2.8 million in operating cash flow for the 1st Quarter of 2004. Although the Company did not repurchase any of its shares during the first quarter, it remains committed to re-investing in its stock and has $5.2 million remaining under an $80 million board authorized spending limit related to the Stock Repurchase Program. Through April 23, 2004 the Company has repurchased a total of 7.1 million shares of Class A Common Stock for an aggregate purchase price of $74.8 million.

The Boston Beer Company plans on filing the first quarter 2004 10Q on May 6, 2004.

The Boston Beer Company is America's leading brewer of world-class beer. Founded in 1984 by sixth-generation brewer Jim Koch, the Company has won more than 650 international awards for its better-tasting beers. Samuel Adams Boston Lager(R) is the Company's flagship brand, celebrated worldwide for its high-quality ingredients and traditional brewing techniques. The result is a beer renowned by drinkers for its full flavor, balance, complexity, and consistent quality. For more information, visit the web-site at or visit for financial information.

Statements made in this press release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward- looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K for the year ended December 27, 2003 and for December 28, 2002. Copies of these documents may be found on the Company's website,, or may be obtained by contacting the Company or the SEC.

                        The Boston Beer Company, Inc.
                              Financial Results
                    (in thousands, except per share data)

    Operating Results:
                                                           Quarter Ended
                                                     March 27,      March 29,
                                                        2004           2003

    Barrels sold                                         263            270

    Gross revenue                                    $49,307        $50,123
    Less excise taxes                                  4,652          4,804
    Net revenue                                       44,655         45,319
    Cost of goods sold                                18,073         18,772
    Gross profit                                      26,582         26,547
    Advertising, promotional and selling expenses     21,522         23,310
    General and administrative expenses                3,209          3,803
    Total operating expenses                          24,731         27,113
    Operating income (loss)                            1,851          (566)
    Interest income, net                                 200            394
    Other expense, net                                   (8)            (8)
    Income (loss) income before income taxes           2,043          (180)
    Provision (benefit) for income taxes                 772           (71)
    Net income (loss)                                 $1,271         $(109)

    Net income (loss) income per share - basic         $0.09        $(0.01)
    Net income (loss) income per share - diluted       $0.09        $(0.01)

    Weighted average number
     of common shares - basic                         14,019         15,734
    Weighted average number
     of common shares - diluted                       14,352         15,991

    Consolidated Balance Sheets:
                                                    March 27,     December 27,
                                                      2004             2003

       Current Assets:
        Cash and cash equivalents                    $24,746        $27,792
        Short-term investments                        21,233         15,098
        Accounts receivable, net of allowance
          for doubtful accounts of
          $515 and $450 as of March 27, 2004
          and December 27, 2003, respectively          9,571         10,432
       Inventories                                    10,467          9,890
       Prepaid expenses                                1,448          1,126
       Deferred income taxes                           1,337          1,177
       Other current assets                              965          2,304
          Total current assets                        69,767         67,819

     Property, plant and equipment, net               16,889         17,059
     Other assets                                      1,178          1,099
     Goodwill                                          1,377          1,377
         Total assets                                $89,211        $87,354

    Liabilities and Stockholders' Equity
    Current Liabilities:
      Accounts payable                                $6,343         $6,395
      Accrued expenses                                14,550         15,504
         Total current liabilities                    20,893         21,899

    Deferred income taxes                              2,103          2,191
    Other long-term liabilities                          693            740

    Commitments and Contingencies

    Stockholders' Equity
       Class A Common Stock, $.01 par value;
        22,700,000 shares authorized;
        17,076,750 and 16,945,418 issued
        as of March 27, 2004 and
        December 27, 2003, respectively                  171            169
       Class B Common Stock, $.01 par value;
        4,200,000 shares authorized;
        4,107,355 issued and outstanding                  41             41
       Additional paid-in capital                     64,398         62,517
       Unearned compensation                           (374)          (229)
       Other comprehensive income                         34             45
       Retained earnings                              76,029         74,758
       Treasury stock, at cost
        7,102,467 shares as of March 27, 2004 and
        December 27, 2003                           (74,777)       (74,777)
         Total stockholders' equity                   65,522         62,524
         Total liabilities and stockholders' equity  $89,211        $87,354

    Consolidated Statements of Cash Flows:

                                                           Quarter Ended
                                                      March 27,      March 29,
                                                        2004           2003

    Cash flows from operating activities:
    Net income (loss)                                 $1,271         $(109)
    Adjustments to reconcile net income
     to net cash from operating activities:
      Depreciation and amortization                    1,251          1,383
      Bad debt expense                                    65              -
      Stock option compensation expense                   31             22
    Changes in assets and liabilities:
    Accounts receivable                                  795          (156)
    Inventories                                        (577)        (2,399)
    Prepaid expenses                                   (322)           (21)
    Other current assets                               1,377             98
    Other assets                                       (114)              -
    Deferred taxes                                        52              -
    Accounts payable                                    (51)          2,917
    Accrued expenses                                   (953)        (2,304)
    Other long-term liabilities                         (46)            132
       Net cash provided by (used in)
        operating activities                           2,779          (437)

    Cash flows from investing activities:
    Purchases of property, plant and equipment         (862)          (595)
    Purchases of available-for-sale securities       (6,138)        (3,337)
         Net cash used in investing activities       (7,000)        (3,932)

    Cash flows from financing activities:
    Purchase of treasury stock                             -        (4,995)
    Proceeds from exercise of stock options            1,136            320
    Net proceeds from the sale of Investment Shares       39             44
         Net cash provided by (used in)
          financing activities                         1,175        (4,631)

    Change in cash and cash equivalents              (3,046)        (9,000)

    Cash and cash equivalents at beginning of period  27,792         20,608

    Cash and cash equivalents at end of period       $24,746        $11,608

    Supplemental disclosure of cash flow information:
      Taxes paid                                         $87         $1,073

Copies of The Boston Beer Company's press releases, including quarterly financial results, are available on the Internet at Contact: Michelle Sullivan (617) 368-5165

SOURCE The Boston Beer Company, Inc.

Michelle Sullivan of Boston Beer Company, +1-617-368-5165