Boston Beer Reports Fourth Quarter 2008 Results
BOSTON,
Key highlights of the fourth quarter and year were:
-- Depletions grew 2% for the quarter and 8% for the year.
-- Net pricing increased approximately 5% for the year.
-- The initial capital investment for the Pennsylvania Brewery start-up
was completed in line with expectations for capital cost and timing.
-- The Pennsylvania Brewery continued to ramp up brewing of the Company's
beers and the Company fulfilled the product demands of its wholesalers
and drinkers without disruption.
-- The product recall process was substantially completed and there were
no material changes to the Company's estimated recall costs during the
quarter.
-- In the fourth quarter, the Company stopped brewing at the Latrobe
Brewery and incurred an impairment charge for machinery and equipment
it owns at the brewery of $1.9 million , or $0.08 per diluted share,
net of tax benefit.
-- Current estimate of earnings per diluted share for 2009 is between
$1.40 and $1.70 .
-- The Company finished the year with $9.1 million in cash and no
borrowings under its $50.0 million line of credit. The Company
expects to end 2009 with no borrowings under its line of credit or
incur any other debt.
For the fiscal year ended
Mr. Roper continued, "Brewing and packaging volumes at the Pennsylvania
Brewery increased compared to third quarter levels but is yet to reach its
expected full potential, as we continue to co-pack for
Commenting on the recall, Mr. Roper said, "On
4th Quarter Results
Core shipment volume for the three months ended
The Company's net income of
The Company expects that its cash and investment balances as of
Year-to-Date Results
Core shipment volume for the fiscal year ended
The Company's net income of
Other matters
The
During the third quarter of 2008, the Company submitted a settlement
proposal and made a payment of
Looking forward to 2009, based on information of which the Company is
currently aware, the Company sees cost increases of between 7% and 9%,
primarily in packaging costs due to a new contract for its glass bottles and
due to the depreciation and operating costs of the Pennsylvania Brewery. While
the costs of operating the new brewery are higher than rates under the
Company's historic brewing arrangements under contracts with others, the
Company believes that such costs may be lower than future available contract
brewing rates and that the advantages of controlling the brewing process and
security of supply outweigh any potential additional costs. These cost
increases will be somewhat offset by price increases, currently targeted at
3%, and operational efficiency initiatives currently underway, but the Company
anticipates that its 2009 gross margin percentage could be lower than its
full-year 2008 gross margin, excluding the impact of the recall on gross
margin in 2008. While the Company continues to experience a healthy pricing
environment, there is no guarantee that it will be able to achieve the planned
price increases. It is also difficult to predict what full year volume trends
for shipments and depletions will be based on current conditions. The Company
is committed to trying to grow market share and to maintain volume and healthy
pricing, and is prepared to invest to accomplish this even if this causes
short term earnings decreases. Based upon the Company's best estimates at this
time, the Company is targeting 2009 earnings per diluted share to be between
During the three months ended
The
Today, the Company brews more than 21 styles of beer. The Company uses
the traditional four vessel brewing process and often takes extra steps like
dry-hopping and a secondary fermentation known as krausening. It passionately
pursues the development of new styles and the perfection of its classic beers
by constantly searching for the world's finest ingredients. While resurrecting
traditional brewing methods, the Company has earned a reputation as a pioneer
in another revolution, the "extreme beer" movement, where it seeks to
challenge drinkers' perceptions of what beer can be. The
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 years ended
THE BOSTON BEER COMPANY, INC.
Financial Results
(In thousands, except per share data)
Operating Results:
(unaudited)
Three Months Ended Twelve Months Ended
December 27, December 29, December 27, December 29,
2008 2007 2008 2007
Barrels sold 618 497 2,341 1,876
Revenue, net of product
recall returns of ($85 )
and $13,222 for the
three and twelve months
ended December 27, 2008 ,
respectively $112,886 $101,382 $436,332 $380,575
Less excise taxes 9,109 9,195 37,932 38,928
Net revenue 103,777 92,187 398,400 341,647
Cost of goods sold 55,305 39,004 205,040 152,288
Costs associated with
product recall (73) - 9,473 -
Gross profit 48,545 53,183 183,887 189,359
Operating expenses:
Advertising, promotional
and selling expenses 31,652 32,375 132,901 124,457
General and
administrative
expenses 8,971 6,579 34,988 24,574
Impairment of
long-lived assets 1,936 - 1,936 3,443
Total operating
expenses 42,559 38,954 169,825 152,474
Operating income 5,986 14,229 14,062 36,885
Other income, net:
Interest income 288 1,051 1,604 4,252
Other income (expense),
net (26) 3 174 507
Total other income,
net 262 1,054 1,778 4,759
Income before income taxes 6,248 15,283 15,840 41,644
Income tax provision 2,651 8,528 7,752 19,153
Net income $3,597 $6,755 $8,088 $22,491
Net income per common
share - basic $0.26 $0.48 $0.58 $1.58
Net income per common
share - diluted $0.25 $0.46 $0.56 $1.53
Weighted-average number
of common
shares - basic 14,039 14,214 13,927 14,193
Weighted-average number
of common
shares - diluted 14,365 14,731 14,341 14,699
Consolidated Balance Sheets:
(in thousands, except share data)
December 27, December 29,
2008 2007
Assets
Current Assets:
Cash and cash equivalents $9,074 $79,289
Short-term investments - 16,200
Accounts receivable, net of
allowance for doubtful
accounts of $255 and $249
as of December 27, 2008 and
December 29, 2007, respectively 18,057 17,972
Inventories 22,708 18,090
Prepaid expenses and
other assets 16,281 4,252
Deferred income taxes 2,734 2,090
Total current assets 68,854 137,893
Property, plant and equipment,
net 147,920 46,198
Other assets 1,606 12,487
Goodwill 1,377 1,377
Total assets $219,757 $197,955
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $20,203 $17,708
Accrued expenses 46,854 42,449
Total current liabilities 67,057 60,157
Deferred income taxes 9,617 1,215
Other liabilities 3,055 2,995
Total liabilities 79,729 64,367
Commitments and Contingencies
Stockholders' Equity:
Class A Common Stock, $.01
par value; 22,700,000 shares
authorized; 10,068,486 and
10,095,573 issued and
outstanding as of December 27,
2008 and December 29, 2007 ,
respectively 101 101
Class B Common Stock, $.01 par
value; 4,200,000 shares authorized;
4,107,355 issued and outstanding 41 41
Additional paid-in capital 102,653 88,754
Accumulated other comprehensive
loss, net of tax (431) (204)
Retained earnings 37,664 44,896
Total stockholders' equity 140,028 133,588
Total liabilities and
stockholders' equity $219,757 $197,955
Consolidated Statements of Cash Flows:
(in thousands)
Twelve Months Ended
December 27, December 29,
2008 2007
Cash flows provided by operating
activities:
Net income $8,088 $22,491
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 12,503 6,654
Impairment of long-lived assets 1,936 3,443
Loss on disposal of property, plant
and equipment 119 161
Bad debt expense 57 34
Stock-based compensation expense 4,148 3,058
Excess tax benefit from stock-based
compensation arrangements (4,065) (1,792)
Deferred income taxes 7,758 (1,702)
Purchases of trading securities - (47,520)
Proceeds from sale of trading
securities 16,200 50,543
Changes in operating assets and
liabilities:
Accounts receivable (142) (236)
Inventories (4,618) (1,056)
Prepaid expenses and other assets (8,875) 963
Accounts payable 2,495 (234)
Accrued expenses 4,405 19,521
Other liabilities (167) (534)
Net cash provided by operating
activities 39,842 53,794
Cash flows used in investing activities:
Purchases of property, plant and
equipment (59,539) (25,607)
Proceeds from disposal of property,
plant and equipment 11 5
Acquisition of brewery assets (44,960) (11,507)
Net cash used in investing activities (104,488) (37,109)
Cash flows used in financing activities:
Repurchase of Class A Common Stock (15,324) (6,084)
Proceeds from exercise of stock options 5,274 3,448
Excess tax benefit from stock-based
compensation arrangements 4,065 1,792
Net proceeds from sale of investment
shares 416 301
Net cash used in financing activities (5,569) (543)
Change in cash and cash equivalents (70,215) 16,142
Cash and cash equivalents at beginning of
period 79,289 63,147
Cash and cash equivalents at end of period $9,074 $79,289
Supplemental disclosure of cash flow
information:
Income taxes paid $8,837 $14,721
Reclassification of deposits and costs
related to brewery acquisition to
property, plant and equipment $11,507 $-
Copies of The Boston Beer Company's press releases, including quarterly
financial results, are available on the Internet at www.bostonbeer.com
SOURCE
CONTACT:
+1-617-368-5165
/Web Site: http://www.bostonbeer.com
http://www.samueladams.com