UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 29, 2003 The Boston Beer Company, Inc. (Exact name of registrant as specified in its chapter) Massachusetts 01-14092 04-328-4048 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 75 Arlington Street, Boston, MA 02116 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 368-5000
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 29, 2003, The Boston Beer Company, Inc. disclosed unaudited financial information for the second quarter of 2003 in an earnings release, which is set forth in the attached Exhibit 99. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing. EXHIBIT 99.1 Press release of The Boston Beer Company, Inc. dated July 29, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. The Boston Beer Company, Inc. (Registrant) /s/ Martin F. Roper --------------------------------- Date July 29, 2003 Martin F. Roper President, C.E.O. and Treasurer (Signature)* *Print name and title of the signing officer under his signature. -2-
EXHIBIT 99.1 BOSTON BEER REPORTS SECOND QUARTER VOLUME, REVENUE AND EARNINGS BOSTON, MA (7/29/03) -- The Boston Beer Company, Inc. (NYSE: SAM) today announced second quarter 2003 volume, revenue and earnings compared to the second quarter 2002. 2ND QUARTER RESULTS For the 13 week period ended June 28, 2003, The Boston Beer Company recorded net sales of $56.3 million, a 4.3% decline from the second quarter in 2002. Net revenue per barrel increased by 2.3% during the quarter due to normal price increases and product mix changes. As reflected on the following chart, reported sales volume for the period was 330,000 barrels, a 6.5% decline from prior year. (in barrels) Q2-2003 Q2-2002 %Chg ------- ------- ---- Total Boston Beer Brands 328,000 351,000 -6.5% 3rd Party Contract Brewing 2,000 2,000 0% ------- ------- ----- Total Company 330,000 353,000 -6.5% The Company recorded net income of $3.1 million or $.20 per diluted share for the quarter versus net income of $4.8 million and $.29 per diluted share for the same period last year. Gross margins as a percentage of net sales were 61.0% as compared to 60.3% in the prior year second quarter. This approximately 1.2% increase in gross profit percentage is due to an increase in pricing partially offset by normal increases in brewing costs at the contract breweries. Operating expenses for the quarter were up 3.2% in comparison to the same period last year, driven by an increase in advertising and promotional expenses that were partially offset by a reduction in administrative costs. Selling expenditures were higher due to national television advertising to support the entire Samuel Adams(R) brand product line and higher point of sale costs due to the purchase of new tap handles. During the second quarter 2002, the Company received shares of stock from the demutualization of a third party insurance provider. The Company recorded the value of this stock receipt in second quarter 2002 Other Income. The impact to earnings, net of tax, was approximately $820,000, or $.05 per share. Based on the information available to the Company, distributor sales of Boston Beer brands to retail (depletions) during the 2003 second quarter totaled 319,000 barrels, approximately a 2% increase from the same period in 2002. The disparity between shipments and depletions during the second quarter 2003 is due to an inventory build that occurred at the wholesaler level during the second quarter 2002. Shipments and orders in-hand suggest that core shipments for July and August 2003 will be down approximately 5% as compared to the same period 2002. Actual shipments for the current quarter may differ, however, and no inferences should be drawn with respect to shipments in future periods. YEAR TO DATE RESULTS
For the 26 week period ended June 28, 2003, Boston Beer Company recorded net sales of $101.6 million, a 2.8% decrease from the same period in 2002. Net revenue per barrel increased by 1.8% during the six months due to normal price increases and package mix changes. As reflected on the following chart, reported sales volume for the period was 600,000 barrels, a 4.5% decrease from prior year. (in barrels) 6 MOS-2003 6 MOS-2002 %Chg ---------- ---------- ---- Total Boston Beer Brands 596,000 625,000 -4.6% 3rd Party Contract Brewing 4,000 3,000 33.3% ------- ------- ----- Total Company 600,000 628,000 -4.5% Based on the information available to the Company, distributor sales of Boston Beer brands to retail (depletions) totaled 572,000 barrels, a 2.0% increase from 2002. The Company recorded $3.0 million in net income or $.19 per diluted share for the six months versus net income of $6.1 million and $.37 per diluted share for the same period last year. Gross margins as a percent of net sales were 59.9% for the six months ended 2003 and 2002. Advertising, promotional and selling expenditures increased by $3.0 million to $49.3 million for the period ended June 28, 2003 due to continued support of the Samuel Adams brand. Other operating expenses were consistent with normal cost inflation compared to the first half of 2002. The Company's effective tax rate was 38.0% for the six months ended June 28, 2003, down from 41.4% during the same period 2002. The decline is due to both shifting a significant portion of the Company's investments from taxable to tax-exempt instruments, as well as a restructuring of the Company's corporate entities. Jim Koch, Chairman of The Boston Beer Company, said, "The second quarter 2003 was another challenging quarter for the beer industry, driven primarily by soft on-premise business. Also, we continue to strive to minimize any cannibalization effects on Samuel Adams Boston Lager and Seasonals by Sam Adams Light that may have affected our total growth rate. Although too soon to measure actual impact, we are encouraged by the reaction to the Samuel Adams Boston Lager advertising campaign that began airing at the end of March 2003. Our strategy continues to focus on total family growth, through continued investment behind the entire Samuel Adams Brand Family. Sam Adams Light continues to contribute approximately 20% of the Company's volume and is established as a leading brand in the Better Light Beer segment." Martin Roper, Boston Beer President and CEO, reported on the Company's outlook, "Negatively impacting our shipment volume for the first six months 2003 as compared to the same period 2002 was an inventory build that began in January 2002 as we were rolling out Sam Adams Light. As a result we expect wholesalers to continue reducing their inventory levels, which should result in lower shipments than depletions during the remainder of 2003." Looking forward, Jim said, "During the second half of 2003, the company expects to spend approximately $10 million less in total brand support than in the same period 2002, when the Company was investing heavily in the Sam Adams Light national launch. This spending may vary based on the impact of our current advertising campaign. Assuming
this investment level and pricing stability, we continue to anticipate slightly higher margins than 2002 for the full year which should result in low double digit percent earnings improvement for the full year of 2003 as compared to the pre Sam Light launch base year of 2001, after adjusting for a charge related to the disposal of excess hop inventories." The Company earned $.47 per share during 2001, and $.62 per share after adjusting for the charge related to the hop disposal. During the three and six months ended June 28, 2003, the Company repurchased 908,000 and 1.3 million shares, respectively of its Class A Common Stock for an aggregate purchase price of $12.4 and $17.4 million, respectively. In June 2003, the Company's Board of Directors increased the aggregate expenditure limitation on the Company's Class A Common Stock from $60.0 million to $70.0 million. As of July 25, 2003, the Company had $774,000 remaining on the authorized share buyback expenditure limit. Since the beginning of the share repurchase program, the Company has repurchased a total of approximately 6.8 million shares of its Class A Common Stock for an aggregate purchase price of $69.2 million through July 25, 2003. As of July 25, 2003, the Company has 10.0 million shares of Class A Common Stock outstanding and 4.1 million shares of Class B Common Stock outstanding. 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 500 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 www.samadams.com or visit www.bostonbeer.com 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 28, 2002 and for December 29, 2001. Copies of these documents may be obtained by contacting the Company or the SEC. Tuesday, July 29, 2003
THE BOSTON BEER COMPANY, INC. FINANCIAL RESULTS (IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATING RESULTS: (unaudited) (unaudited) QUARTER ENDED 6 MONTHS ENDED ------------- -------------- JUNE 28, JUNE 29, JUNE 28, JUNE 29, 2003 2002 2003 2002 ---- ---- ---- ---- Barrels sold 330 353 600 628 Gross sales $ 62,161 $ 65,217 $ 112,284 $ 115,696 Less excise taxes 5,842 6,345 10,645 11,164 --------- --------- --------- --------- Net sales 56,319 58,872 101,639 104,532 Cost of goods sold 21,965 23,369 40,737 41,881 --------- --------- --------- --------- Gross profit 34,354 35,503 60,902 62,651 Advertising, promotional and selling expenses 26,006 24,592 49,316 46,277 General and administrative expenses 3,669 4,153 7,472 7,573 --------- --------- --------- --------- Total operating expenses 29,675 28,745 56,788 53,850 --------- --------- --------- --------- Operating income 4,679 6,758 4,114 8,801 Interest income, net 260 198 654 397 Other income (expense), net 4 1,257 (4) 1,251 --------- --------- --------- --------- Income before income taxes 4,943 8,213 4,764 10,449 Provision for income taxes 1,881 3,410 1,811 4,327 --------- --------- --------- --------- Net income $ 3,062 $ 4,803 $ 2,953 $ 6,122 ========= ========= ========= ========= Net income per share - basic $ 0.20 $ 0.29 $ 0.19 $ 0.37 ========= ========= ========= ========= Net income per share - diluted $ 0.20 $ 0.29 $ 0.19 $ 0.37 ========= ========= ========= ========= Weighted average number of common shares - basic 15,087 16,354 15,411 16,353 ========= ========= ========= ========= Weighted average number of common shares - diluted 15,306 16,682 15,649 16,689 ========= ========= ========= ========= - -------------------------------------------------------------------------------- COPIES OF THE BOSTON BEER COMPANY'S PRESS RELEASES, INCLUDING QUARTERLY FINANCIAL RESULTS, ARE AVAILABLE ON THE INTERNET AT WWW.SAMADAMS.COM - -------------------------------------------------------------------------------- CONFERENCE CALL BEGINS AT 4:00 P.M. (ET) DIAL IN # (630) 395-0024 PASSWORD: SUMMER ALE Contact: Kara Rappaport (617) 368-5108
CONSOLIDATED BALANCE SHEETS: (unaudited) JUNE 28, DECEMBER 28, 2003 2002 ---- ---- Assets Current Assets: Cash and cash equivalents $ 1,050 $ 20,608 Short-term investments 30,940 32,001 Accounts receivable, net of allowance for doubtful accounts of $524 and $689 as of June 28, 2003 and December 28, 2002, respectively 22,957 17,830 Inventories 10,601 8,342 Prepaid expenses 1,183 1,284 Deferred income taxes 1,918 1,959 Other current assets 2,303 1,513 -------- --------- Total current assets 70,952 83,537 Property, plant and equipment, net 19,047 20,202 Other assets 1,254 1,690 Goodwill 1,377 1,377 -------- --------- Total assets $ 92,630 $ 106,806 ======== ========= Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 10,948 $ 8,997 Accrued expenses 14,270 15,874 -------- --------- Total current liabilities 25,218 24,871 Deferred income taxes 1,568 2,406 Other long-term liabilities 650 697 Commitments and Contingencies Stockholders' Equity Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 16,769,429 and 16,674,556 issued as of June 28, 2003 and December 28, 2002, respectively 168 166 Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 4,107,355 issued and outstanding 41 41 Additional paid-in capital 60,066 59,144 Unearned compensation (307) (189) Other comprehensive income 381 419 Retained earnings 67,153 64,200 Treasury stock, at cost 6,285,167 and 5,011,947 shares as of June 28, 2003 and December 28, 2002, respectively (62,308) (44,949) -------- --------- Total stockholders' equity 65,194 78,832 -------- --------- Total liabilities and stockholders' equity $ 92,630 $ 106,806 ======== =========
CONSOLIDATED STATEMENTS OF CASH FLOWS: (unaudited) 6 MONTHS ENDED ---------------- JUNE 28, JUNE 29, 2003 2002 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,953 $ 6,122 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 2,788 2,879 Loss on disposal of fixed assets 47 206 Bad debt expense (39) 116 Realized gain on sale of marketable equity security (28) -- Stock option compensation expense 43 42 Changes in assets and liabilities: Accounts receivable (5,086) (4,144) Inventories (2,259) (519) Prepaid expenses 101 (244) Other current assets (943) (598) Deferred taxes (796) 380 Other assets -- (899) Accounts payable 1,951 (1,566) Accrued expenses (1,339) 2,620 Other long-term liabilities (47) (206) -------- -------- Net cash (used in) provided by operating activities (2,654) 4,189 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (1,225) (947) Proceeds on disposal of fixed assets 14 202 Maturities of held-to-maturity investments -- 8,028 Purchases of available-for-sale securities (3,560) (33,832) Purchases of held-to-maturity securities -- (9,026) Proceeds from the sale of available-for-sale securities 4,610 -- -------- -------- Net cash used in investing activities (161) (35,575) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (17,359) (798) Proceeds from exercise of stock options 510 228 Net proceeds from the sale of investment shares 106 41 -------- -------- Net cash used in financing activities (16,743) (529) -------- -------- Change in cash and cash equivalents (19,558) (31,915) Cash and cash equivalents at beginning of period 20,608 45,838 -------- -------- Cash and cash equivalents at end of period $ 1,050 $ 13,923 ======== ======== Supplemental disclosure of cash flow information: Interest paid $ -- $ -- ======== ======== Taxes paid $ 4,356 $ 2,041 ======== ========