"Attached are the financial statements for Boston Beer Company that you are to use for the cash flow assignment. Note I have included all of the statements as you may want to look at statements other than the cash flow statement as you answer the questions in the assignment. 1) Over the most recent three years what has been the company?s experience with the production of net income? 2) Over the most recent three years what has been the company?s experience with the production of cash flow from operations? 3) Discuss why net income and cash from operation are different. Be specific and also discuss in your answer the major items that create these differences in the most recent year. 4) What are the major ongoing needs for cash outside of operations? 5) How has the company been able to pay for the cash needs outlined in question (4)? Comment on all three years. 6) In general, how does the company finance its business? Use data from the financial statements to support your answer. 7) Discuss whether you believe that the company will continue to provide sufficient cash from operations to support its cash needs. 8) Suppose that you were a banker who was evaluating the company for a potential loan. What would you see as the pros and cons with lending money to the company? "

Table of Contents THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 27, December 29, 2008 2007 ASSETS Current Assets: Cash and cash equivalents $ Short-term investments Accounts receivable, net of allowance for doubtful accounts of $255 and $249 as of December 27, 2008 and December 29, 2007, respectively Inventories Prepaid expenses and other assets Deferred income taxes Total current assets Property, plant and equipment, net Other assets Goodwill Total assets $ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable Accrued expenses Total current liabilities Deferred income taxes Other liabilities Total liabilities Commitments and contingencies Stockholders' Equity: Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,068,486 and 10,095,573 shares issued and outstanding as of December 27, 2008 and December 29, 2007, respectively Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 4,107,355 shares issued and outstanding Additional paid-in capital Accumulated other comprehensive loss, net of tax Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 79,289 16,200 18,057 22,708 16,281 2,734 68,854 147,920 1,606 1,377 219,757 $ 17,972 18,090 4,252 2,090 137,893 46,198 12,487 1,377 197,955 20,203 $ 46,854 67,057 9,617 3,055 79,729 17,708 42,449 60,157 1,215 2,995 64,367 101 $ The accompanying notes are an integral part of these consolidated financial statements. 37 9,074 $ 41 102,653 (431) 37,664 140,028 219,757 $ 101 41 88,754 (204) 44,896 133,588 197,955 Table of Contents THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Year Ended December 27, December 29, December 30, 2008 2007 2006 Revenue (net of product recall returns of $13,222 in fiscal 2008) Less excise taxes Net revenue Cost of goods sold (including costs associated with product recall of $9,473 in fiscal 2008) Gross profit Operating expenses: Advertising, promotional and selling expenses General and administrative expenses Impairment of long-lived assets Total operating expenses Operating income Other income, net: Interest income Other income, net Total other income, net Income before provision for income taxes Provision for income taxes Net income Net income per common share basic Net income per common share diluted Weighted-average number of common shares basic Weighted-average number of common shares diluted $ 380,575 $ 38,928 341,647 152,288 189,359 315,250 29,819 285,431 121,155 164,276 132,901 34,988 1,936 169,825 14,062 $ $ $ 436,332 $ 37,932 398,400 214,513 183,887 124,457 24,574 3,443 152,474 36,885 113,669 22,657 136,326 27,950 1,604 174 1,778 15,840 7,752 8,088 $ 0.58 $ 0.56 $ 13,927 14,341 The accompanying notes are an integral part of these consolidated financial statements. 38 4,252 507 4,759 41,644 19,153 22,491 $ 1.58 $ 1.53 $ 14,193 14,699 3,143 673 3,816 31,766 13,574 18,192 1.31 1.27 13,900 14,375 Table of Contents THE BOSTON BEER COMPANY, INC. AND SUSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 27, 2008, December 29, 2007 and December 30, 2006 (In thousands, continued on next page) Class A Class A Class B Class B Additional Common Common Common Common Paid-in Shares Stock Shares Stock Capital Balance at December 31, 2005 Net income Stock options exercised, including tax benefit of $2,240 Net issuance of investment shares and restricted stock awards Elimination of unearned compensation upon adoption of SFAS No. 123R Stock-based compensation expense Repurchase of Class A Common Stock Defined benefit plans liability adjustment, net of tax of $3 Total fiscal 2006 comprehensive income Balance at December 30, 2006 Net income Stock options exercised, including tax benefit of $1,792 Net issuance of investment shares and restricted stock awards Stock-based compensation expense Repurchase of Class A Common Stock Defined benefit plans liability adjustment, net of tax of $6 Total fiscal 2007 comprehensive income Balance at December 29, 2007 Net income Stock options exercised, including tax benefit of $3,926 Net issuance of investment shares and restricted stock awards, including tax benefit of $139 Stock-based compensation expense Repurchase of Class A Common Stock Defined benefit plans liability adjustment, net of tax of $155 Total fiscal 2008 comprehensive income Balance at December 27, 2008 9,814 $ 98 334 43 3 1 (199) (2) 9,992 100 236 51 6,737 215 (353) 2,751 4,107 41 80,158 (2) 5,238 300 3,058 10,096 101 349 4 9,196 52 555 4,148 (429) (4) 10,068 $ 101 4,107 4,107 $ The accompanying notes are an integral part of these consolidated financial statements. 39 41 $ 70,808 2 1 (183) 4,107 $ 41 88,754 41 $102,653 Table of Contents THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 27, 2008, December 29, 2007 and December 30, 2006 (In thousands, continued from last page) Accumulated Other Total Unearned Comprehensive Retained Stockholders' Comprehensive Compensation Loss, net of tax Earnings Equity Income Balance at December 31, 2005 Net income Stock options exercised, including tax benefit of $2,240 Net issuance of investment shares and restricted stock awards Elimination of unearned compensation upon adoption of SFAS No. 123R Stock-based compensation expense Repurchase of Class A Common Stock Defined benefit plans liability adjustment, net of tax of $3 Total fiscal 2006 comprehensive income Balance at December 30, 2006 Net income Stock options exercised, including tax benefit of $1,792 Net issuance of investment shares and restricted stock awards Stock-based compensation expense Repurchase of Class A Common Stock Defined benefit plans liability adjustment, net of tax of $6 Total fiscal 2006 comprehensive income Balance at December 29, 2007 Net income Stock options exercised, including tax benefit of $3,926 Net issuance of investment shares and restricted stock awards, including tax benefit of $139 Stock-based compensation expense Repurchase of Class A Common Stock Defined benefit plans liability adjustment, net of tax of $155 Total fiscal 2008 comprehensive income Balance at December 27, 2008 $ (353) $ (196) $ 15,581 $ 18,192 353 (5,286) (1) 85,979 18,192 $ 6,740 216 2,751 (5,288) (1) $ (197) 28,487 22,491 (6,082) (7) (204) 44,896 8,088 (15,320) (227) 108,589 22,491 $ 5,240 301 3,058 (6,084) (7) $ 133,588 8,088 $ 9,200 555 4,148 (15,324) (227) $ $ (431) $ 37,664 $ The accompanying notes are an integral part of these consolidated financial statements. 40 140,028 18,192 (1) 18,191 22,491 (7) 22,484 8,088 (227) 7,861 Table of Contents THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 27, December 29, December 30, 2008 2007 2006 Cash flows provided by operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Impairment of long-lived assets Loss (gain) on disposal of property, plant and equipment Bad debt expense Stock-based compensation expense Excess tax benefit from stock-based compensation arrangements Deferred income taxes Purchases of trading securities Proceeds from sale of trading securities Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other assets Accounts payable Accrued expenses Other liabilities Net cash provided by operating activities Cash flows used in investing activities: Purchases of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of brewery assets Net cash used in investing activities Cash flows provided by (used in) financing activities: Repurchase of Class A Common Stock Proceeds from exercise of stock options Excess tax benefit from stock-based compensation arrangements Net proceeds from sale of investment shares Net cash provided by (used in) financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosure of cash flow information: Income taxes paid Reclassification of deposits and costs related to brewery acquisition to property, plant and equipment $ 8,088 $ 18,192 12,503 1,936 119 57 4,148 (4,065) 7,758 16,200 6,654 3,443 161 34 3,058 (1,792) (1,702) (47,520) 50,543 4,991 (8) 107 2,751 (2,240) (731) (36,577) 39,779 (142) (4,618) (8,875) 2,495 4,405 (167) 39,842 (236) (1,056) 963 (234) 19,521 (534) 53,794 (8,343) (3,385) (1,506) 6,564 7,807 1,576 28,977 (59,539) 11 (44,960) (104,488) (25,607) 5 (11,507) (37,109) (9,056) 42 (9,014) $ (15,324) 5,274 4,065 416 (5,569) (70,215) 79,289 9,074 $ (6,084) 3,448 1,792 301 (543) 16,142 63,147 79,289 $ (5,288) 4,500 2,240 216 1,668 21,631 41,516 63,147 $ 8,837 $ 14,721 $ 10,632 $ 11,507 $ $ The accompanying notes are an integral part of these consolidated financial statements. 41 22,491 $