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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

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): October 28, 2003

The Boston Beer Company, Inc.

Registrant’s telephone number, including area code (617) 368-5000

 

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	Item 12. Results of Operations and Financial Condition.
SIGNATURES
Exhibit
EX-99.1 PRESS RELEASE DATED 10-28-03

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Table of Contents

Item 12. Results of Operations and Financial Condition.

     On October 28, 2003, The Boston Beer Company, Inc. disclosed unaudited financial information for the third quarter of 2003 in an earnings release, a copy of which is set forth in the attached Exhibit 99.1.

     The information in this Form 8-K and the Exhibit 99.1 attached hereto is being furnished and 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, unless expressly incorporated by specific reference in such filing.

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.

*Print name and title of the signing officer under his signature.

Exhibit

          99.1 Press release of The Boston Beer Company, Inc. dated October 28, 2003.

 

 

Exhibit 99.1

BOSTON BEER REPORTS THIRD QUARTER VOLUME,
REVENUE AND EARNINGS

BOSTON, MA (10/28/03) — The Boston Beer Company, Inc. (NYSE: SAM) today announced third quarter 2003 volume, revenue and earnings compared to the third quarter 2002.

3rd Quarter Results

Distributor sales of Boston Beer brands to retail (depletions) during the 2003 third quarter totaled 329,000 barrels; approximately a 1.5% increase from the same period in 2002. This marked the ninth consecutive quarter of growth in wholesaler depletions.

For the three month period ended September 27, 2003, Boston Beer recorded net revenue of $55.5 million, a 1.8% decrease from the 3rd quarter in 2002, due to a 0.8% decline in shipment volume coupled with a 1% decline in net revenue per barrel. The following chart compares reported shipment volume for the current period to the prior year.

(in barrels)		Q3-2003				Q3-2002				%Chg
Total Boston Beer Brands			331,281				334,569				-1.0
3rd Party Contract Brewing			1,758				1,211				45.2
Total Company			333,039				335,780				-0.8

The decrease in shipment volume is primarily related to a reduction in shipments in Sam Adams Light® which were higher during the third quarter 2002, as a result of the pipeline fill associated with the completion of the Sam Adams Light® product launch. While wholesaler sales to retailers (depletions) were up approximately 5,000 barrels, wholesaler inventories decreased approximately 8,300 barrels resulting in a decline in Boston Beer shipments to wholesalers of 3,300 barrels.

The 1% decline in net revenue per barrel was due to a shift in the package mix towards kegs from bottles as the selling price per equivalent barrel is higher for bottles than for kegs. This shift is primarily due to the higher shipment volume of Sam Adams Light® bottles during the third quarter 2002 product launch.

The Company earned $4.0 million in net income and $.28 per diluted share for the quarter versus net income of $362,000 and $.02 per diluted share for the same period last year. Gross margins as a percent of net revenue were 58.9% as compared to 58.3% in the prior year third quarter. Advertising, selling and promotion expenses decreased by $7.1 million or 24.3% as compared to the prior year quarter, primarily due to the high level of support for the launch of Sam Adams Light® during the quarter ended September 28, 2002. General and administrative expenses for the quarter increased $951,000 compared to the third quarter of 2002, primarily due to legal fees and related expenses incurred during the third quarter 2003 in connection with the arbitration proceedings with Miller Brewing Company.

 

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Year to Date Results

Year to date Boston Beer Brand distributor sales to retail (depletions) totaled 902,000 barrels, a 2.0% increase from the same period in 2002.

For the nine month period ended September 27, 2003, Boston Beer recorded net revenue of $157.2 million, a 2.4% decrease from the same period in 2002, primarily due to a 3.1% decline in shipment volume. The following chart compares reported sales volume for the current nine months to the same period last year.

Barrels		YTD-2003				YTD-2002				%Chg
Total Boston Beer Brands			927,731				958,738				-3.2
3rd Party Contract Brewing			5,581				4,645				20.2
Total Company			933,312				963,383				-3.1

Wholesaler sales to retailers (depletions) were up approximately 18,000 barrels, while wholesaler inventory build was approximately 49,000 barrels less in this period versus the prior year, resulting in a decline in Boston Beer shipments to wholesalers of 31,000 barrels. Net revenue per barrel increased during the nine months due to price increases.

The Company earned $6.9 million in net income or $.46 per diluted share for the nine months versus net income of $6.5 million and $.39 per diluted share for the same period last year. Gross margins as a percent of net revenue were up slightly to 59.5% as compared to 59.4% in the same period in the prior year. Advertising, promotional and selling expenses decreased by $4.1 million or 5.4%, primarily due to the high level of support for the launch of Sam Adams Light® during the nine months ended September 28, 2002. The increase in general and administrative expenses from the prior year was primarily due to legal fees and related expenses incurred during the nine months ended September 27, 2003 in connection with the arbitration proceedings with Miller Brewing Company.

The Company’s effective tax rate was 37.8% for the nine months ended September 27, 2003, down from 41.2% during the same period 2002. The decline is due to shifting a significant portion of the Company’s investments from taxable to tax-exempt instruments and restructuring the Company’s corporate legal entities.

Shipments and orders in-hand suggest that core business shipments for October and November 2003 will be down approximately 8% as compared to the same period 2002. Actual shipments for the fourth 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, “We are encouraged with the positive trends in Samuel Adams Boston Lager and our Seasonal Brands, with the current quarter up slightly, which is a significant change from the downward trends experienced in the first half of 2003. The current TV advertising appears to be having a positive impact on consumer pull. We believe that our strategy to focus on total family growth, through continued investment behind the Samuel Adams Brand Family, is correct. We are also working on developing the optimal advertising program for Sam Adams Light. There remains continued opportunity for Sam Adams Light growth, and we are committed to investing behind proven campaigns to drive that growth.”

 

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William Urich, the Company’s Chief Financial Officer commented on the Company’s security of production supply, “We are confident in our ability to maintain adequate sources of supply in the long-term. We expect a decision by the arbitrators regarding the pending dispute with Miller Brewing Company sometime during the fourth quarter 2003. The outcome of this arbitration may impact fourth quarter earnings, as well as capital expenditures and operating costs ongoing in securing future reliable capacity. The exact economic details will not be known until the decision is received and its implications are analyzed. We currently expect to achieve our previous earnings guidance of double digit earnings growth over the $.62 earned in 2001.”

During the three and nine months ended September 27, 2003, the Company repurchased 781,000 and 2.1 million shares, respectively, of its Class A Common Stock for an aggregate purchase price of $11.9 and $29.2 million, respectively. In August 2003, the Company’s Board of Directors increased the aggregate expenditure limitation on the Company’s Class A Common Stock from $70.0 million to $80.0 million. As of October 23, 2003, the Company had $5.3 million remaining on the authorized share buyback expenditure limit. Since the beginning of the share repurchase program, the Company has repurchased a total of approximately 7.1 million shares of its Class A Common Stock for an aggregate purchase price of $74.7 million through October 23, 2003. As of October 23, 2003, the Company has 9.7 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® 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 found on the Company’s website, www.bostonbeer.com, or be obtained by contacting the Company or the SEC.

Tuesday, October 28, 2003

 

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THE BOSTON BEER COMPANY, INC.
Financial Results
(In thousands, except per share data)

Operating Results:

		(unaudited)								(unaudited)
		Quarter Ended								9 Months Ended
		September 27,				September 28,				September 27,				September 28,
		2003				2002				2003				2002
Barrels sold			333				336				933				964
Gross revenue		$	61,584			$	62,602			$	173,868			$	178,298
Less excise taxes			6,039				6,043				16,684				17,207
Net revenue			55,545				56,559				157,184				161,091
Cost of goods sold			22,853				23,569				63,590				65,450
Gross profit			32,692				32,990				93,594				95,641
Advertising, promotional and selling expenses			22,239				29,366				71,555				75,643
General and administrative expenses			4,348				3,397				11,820				10,745
Total operating expenses			26,587				32,763				83,375				86,388
Operating income			6,105				227				10,219				9,253
Interest income, net			287				334				941				731
Other income (expenses), net			3				13				(1	)			1,039
Income before income taxes			6,395				574				11,159				11,023
Provision for income taxes			2,407				212				4,218				4,539
Net income		$	3,988			$	362			$	6,941			$	6,484
Net income per share — basic		$	0.28			$	0.02			$	0.46			$	0.40
Net income per share — diluted		$	0.28			$	0.02			$	0.46			$	0.39
Weighted average number of common shares — basic			14,183				15,878				15,001				16,196
Weighted average number of common shares — diluted			14,465				16,175				15,254				16,520

Copies of The Boston Beer Company’s press releases, including quarterly financial results,
are available on the Internet at www.bostonbeer.com

 

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Consolidated Balance Sheets:

						(unaudited)
						September 27,				December 28,
						2003				2002
Assets
	Current Assets:
		Cash and cash equivalents				$	19,626			$	20,608
		Short-term investments					15,131				32,001
		Accounts receivable, net of allowance for doubtful accounts of $524 and $689 as of September 27, 2003 and December 28, 2002, respectively					14,528				17,830
		Inventories					11,248				8,342
		Prepaid expenses					1,016				1,284
		Deferred income taxes					1,461				1,959
		Other current assets					1,950				1,513
				Total current assets			64,960				83,537
	Property, plant and equipment, net						18,134				20,202
	Other assets						2,495				1,690
	Goodwill						1,377				1,377
				Total assets		$	86,966			$	106,806
Liabilities and Stockholders’ Equity
	Current Liabilities:
		Accounts payable				$	9,603			$	8,997
		Accrued expenses					16,869				15,874
				Total current liabilities			26,472				24,871
	Deferred income taxes						2,143				2,406
	Other long-term liabilities						668				697
	Commitments and Contingencies
	Stockholders’ Equity
		Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 16,808,907 and 16,674,556 issued as of September 27, 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					60,658				59,144
		Unearned compensation					(284	)			(189	)
		Other comprehensive income					147				419
		Retained earnings					71,141				64,200
		Treasury stock, at cost 7,066,267 and 5,011,947 shares as of September 27, 2003 and December 28, 2002, respectively					(74,188	)			(44,949	)
			Total stockholders’ equity				57,683				78,832
			Total liabilities and stockholders’ equity			$	86,966			$	106,806

 

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Consolidated Statements of Cash Flows:

					(unaudited)
					9 Months Ended
					September 27,				September 28,
					2003				2002
Cash flows from operating activities:
	Net income				$	6,941			$	6,484
	Adjustments to reconcile net income to net cash from operating activities:
		Depreciation and amortization				4,232				4,497
		Loss on disposal of fixed assets				30				206
		Bad debt expense				(39	)			116
		Realized gain on sale of marketable equity security				(128	)			(21	)
		Stock option compensation expense				65				64
	Changes in assets and liabilities:
		Accounts receivable				3,344				(699	)
		Inventories				(2,906	)			(2,343	)
		Prepaid expenses				268				38
		Other current assets				(704	)			(623	)
		Deferred taxes				234				380
		Other assets				(1,411	)			(942	)
		Accounts payable				606				2,311
		Accrued expenses				1,392				2,413
		Other long-term liabilities				(29	)			(286	)
			Net cash provided by operating activities			11,895				11,595
Cash flows from investing activities:
	Purchases of property, plant and equipment					(1,504	)			(1,663	)
	Proceeds on disposal of fixed assets					32				202
	Purchases of available-for-sale securities					(3,685	)			(36,130	)
	Purchases of held-to-maturity securities					—				(9,027	)
	Proceeds from the sale of available-for-sale securities					20,410				16,080
		Net cash provided by (used in) investing activities				15,253				(30,538	)
Cash flows from financing activities:
	Purchase of treasury stock					(29,239	)			(9,877	)
	Proceeds from exercise of stock options					943				304
	Net proceeds from the sale of Investment Shares					166				84
		Net cash used in financing activities				(28,130	)			(9,489	)
Change in cash and cash equivalents						(982	)			(28,432	)
Cash and cash equivalents at beginning of period					$	20,608				45,838
Cash and cash equivalents at end of period					$	19,626			$	17,406
Supplemental disclosure of cash flow information:
	Taxes paid				$	3,339			$	3,773