Please explain this using a step-by-step process with formulas, concepts, theories, etc. Any detail or help would be much appreciated! Thanks!
I need help with question 9 and 10:
Question 9 has three parts (i.e., a, b, and c).
a) What was the company's annual net sales CAGR (in %) between 12-27-2014 and 12-29-2018
b) What was this company's ROE (return on stockholder's equity) as of 12-29-2018? (Hint: Calculate from Mergent Online; do not use pre-calculated ratios)
c) What was this company's EPS (earnings per share, fully diluted) as of 12-29-2018? (Hint: on Mergent, from the Income Statement, the line is Net Income per Share - diluted. Report as $x.xx per share).
Question 10:
What does the Chief Executive Officer for your company state is the company's strategic plan going into 2019 and beyond? Briefly summarize the company's goals in one or two full paragraphs. (Hint: Use Boston Beer Company 2018 Annual Report, pages 2-3).
Annual Report Pages 2-3:
?
Annual Report Page 1:
Boston Beer Co Inc (The) (NYS: SAM) Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date 12/29/2018 12/30/2017 12/31/2016 12/26/2015 12/27/2014 Currency USD USD USD USD USD Audit Status Not D Not D Not : Not D Not D Qualified Qualified Qualified Qualified Qualified Consolidated Yes Yes Yes Yes Yes Scal Thousands Thousands Thousands Thousands Thousands Cash & cash equivalents 108.399 65,637 91,035 94.193 76,402 Accounts receivable, gross 36,694 39,228 37,004 Less allowance for doubtful accounts 244 144 Accounts receivable 34.073 33,749 36,694 38,984 36,860 Raw materials 44.655 33,086 41,630 42.123 39,535 Work in process 8,252 6,826 8,131 8,876 7,391 Finished goods 17,342 10,739 9,054 8,261 10,793 Total inventories 58,815 59,260 57,719 Less portion included in other long term (6.316) (2.798) (6,412) assets Inventories 70,249 50,651 52,499 56,462 51,307 Prepaid equipment 3,789 Excise & other tax receivables 2,179 1,651 1,637 2,093 4,572 Prepaid malt & barley 1.629 1,819 1,644 3,184 4,368 Prepaid advertising, promotional & selling 1,518 3,328 Prepaid insurance 1,11 1,055 1,144 1,047 1,009 Prepaid compensation 1,000 Prepaid software expense 754 Insurance cash surrender value 1,254 Supplier & vendor rebates 265 1.464 1,158 1.929 1.641 Lease incentive receivable 113 1,584 Grant receivable - environmental remediation 507 Other prepaid expenses & other current 391 1.378 1,781 2.216 790 assets Prepaid expenses & other current assets 13,136 10,695 8,731 12,053 12,887 Income tax receivable 5,714 7,616 4,928 14,928 21,321 Deferred income taxes 7,351 6,983 8,685 Total current assets 231,571 168,348 201,238 223,603 207,462 Machinery & plant equipment 476,174 438,925 420,486 387.180 358,781 Kegs 67,940 69,049 70,024 71,391 72,124 Land 22.295 22,295 22,295 25,135 23,992Report Date 12/29/2018 12/30/2017 12/31/2016 12/26/2015 12/27/2014 Currency USD USD USD USD USO Audit Status Not D Net D Not D Net D qualified Qualified Qualified Qualified Qualified Consolidated Yes Yes You Yes Scale Thousands Thousands Thousands Thousands Thousands Building & building improvements 120,111 112,912 112,508 101,836 77.130 Office equipment & fumiture 26,703 24,307 22,412 19,635 14.063 Leasehold improvements 20.830 16,650 14.147 12,037 7.889 Property. plant & equipment, gross 734 053 884, 148 661,872 817,214 553,979 Less accumulated depreciation 344.264 299,868 253,461 207,208 172,410 Property. plant & equipment, net 308 789 384,280 408,411 409,826 381 569 Other assets 14.808 13,313 9,965 8. 108 12.447 Goodwil 3.683 3,683 3,683 3,683 3 683 Total assets 638 851 569,624 623,297 845,400 605, 161 Accounts payable 47,102 30,141 40,585 42,718 35.576 Current portion of debt & capital lease 58 obligations Employee wages, benefits & reimbursements 27.074 16,275 14.116 12,367 14.520 Accrued deposits 18,171 14,224 15,814 18,865 19.865 Advertising, promotional & selling expenses 9.079 13,605 8,562 11,249 8 353 Deferred revenue 4.587 5,472 5,381 3,949 6.034 Accrued stale beer 2,148 3,023 6,226 3,254 2.422 Accrued excise taxes 2.335 2,015 2.265 3,976 4 980 Accrued sales & use tax 1.914 1,873 2,437 2,656 4 187 Accrued freight 1.680 1,518 1,402 5,681 4 265 Accrued ingredients 4 047 Other accrued liabilities 6.438 5,612 5,681 6,387 6 058 Accrued expenses & other current liabilities 73.412 63,617 60,874 60,304 74 539 Total current liabilities 120.514 101,758 101,519 111, 160 110 170 Deferred income taxes 48 169 34,818 64,612 56,001 50 717 Debi & capital lease obligations, less current 411 471 528 portion Other liabilities 2 851 9,524 10,173 16,547 7 806 Total liabilities 178.534 146, 101 176,715 184,179 169.021 Class A common stock 95 Class B common stock 29 30 32 34 Additional paid-in capital 405,711 372,590 349,913 290,096 224 909 Accumulated other comprehensive income (1,197] (1.280) (1,103) 1951) (1,133) (loss), net of tax Retained earnings (accumulated deficit) 56 680 52,105 97,640 171,948 212,233 Total stockholders' equity (deficit) 460 317 423,523 446,582 461,221 436 140THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share datal December 29, 2018 December 30, 2017 Assets Current Assets: Cash and cash equivalents $ 108,399 $ 65,637 Accounts receivable 34,073 33,749 Inventories 70,249 50,651 Prepaid expenses and other current assets 13,136 10,695 Income tax receivable 5,714 7,616 Total current assets 231,571 168,348 Property, plant and equipment, net 389,789 384.280 Other assets 14,808 13,313 Goodwill 3.683 3,683 TOTAL ASSETS $ 639,851 $ 569,624 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 47.102 $ 38,141 Accrued expenses and other current liabilities 73,412 63,617 Total current liabilities 120,514 101,758 Deferred income taxes 49,169 34,819 Other liabilities 9,851 9,524 TOTAL LIABILITIES 179,534 146,101 Commitments and Contingencies (See Note J) Stockholders' Equity: Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 8,580,593 and 8,603, 152 shares issued and outstanding as of December 29, 2018 and December 30, 2017, respectively 86 86 Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,917,983 and 3,017,983 shares issued and outstanding as of December 29, 2018 and December 30, 2017, respectively 29 30 Additional paid-in capital 405,711 372,590 Accumulated other comprehensive loss, net of tax (1,197) (1,288) Retained earnings 55,688 52,105 Total stockholders' equity 460,317 123,523 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 639,851 $ 569,624THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, December 20, 2018 December 30, 2017 2016 (53 weeks] Cash flows provided by operating activities: Net income 82,863 98,049 87.348 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 51,968 51,256 49.557 Impairment of assets 852 2,451 716 Loss on disposal of property, plant and equipment 64 764 Gain on sale of property, plant and equipment (951] Bad debt (recovery) expense (244) Stock-based compensation expense 10,035 6,316 6,148 Excess tax benefit from stock-based compensation arrangements (12,524) Deferred income taxes 14,350 (22,442) B.243 Changes in operating assets and liabilities: Accounts receivable [1,836) 2,945 2,534 Inventories (21,312) [1,741) 445 Prepaid expenses, income tax receivable and other assets (552) [4,511) 14,936 Accounts payable 8,352 245 (1,81 1) Accrued expenses and other current liabilities 10,130 2,671 5,478 Other Iabilities 731 (1,021) (6,304) Net cash provided by operating activities 163,447 135,862 154,189 Cash flows used in investing activities: Purchases of property, plant and equipment (55,460) (32,857) (49.913) Proceeds from sale of property, plant and equipment 27 25 3.655 Cash paid for intangible assets 150) Change in restricted cash 139 33 40 Net cash used in investing activities (55,344) (32,829 (46,018) Cash flows used in financing activities: Repurchase of Class A Common Stock (88,312) (144,602) (164,658) Proceeds from exercise of stock options 22,143 15,415 40.127 Cash paid on note payable and capital lease (58) Excess tax benefit from stock-based compensation arrangements 12,524 Net proceeds from sale of investment shares 906 798 738 Net cash used in financing activities (65,341) (128,451) (111,329) Change in cash and cash equivalents 42,762 (25,398) (3.158) Cash and cash equivalents at beginning of year 65,837 91,035 94,193 Cash and cash equivalents at end of period 106,399 65.837 91,035 Supplemental disclosure of cash flow information: Income taxes paid 11,353 43,008 30.978 Income taxes refunded 5,000 12,084 Decrease) Increase in accounts payable for repurchase of Class A Common Stock S (3,000) (Decrease) Increase in accounts payable for purchase of property, plant and equipment 2,809 (2,689) 2,678Item 6. Selected Consolidated Financial Data Year Ended in thousands, except per share and net revenue per Dec. 31 2016 barrel data) Dec. 29 2018 Dec. 30 2017 (53 weeks) Dec. 26 2015 Dec. 27 2014 Income Statement Data: Revenue $ 1,057,495 $ 921,736 $ 968,994 $ 1,024,040 $ 966,478 Less excise taxes 61,846 58,744 62.548 64,106 63.471 Net revenue 995,649 862,992 906,446 959,934 903,007 Cost of goods sold 483,406 413,091 446,776 458,317 437,996 Gross profit 512,243 449,901 459,670 501,617 465,011 Operating expenses: Advertising, promotional and selling expenses 304,853 258,649 244,213 273,629 250,696 General and administrative expenses 90,857 73,126 78,033 71,556 65,971 Impairment (gain on sale) of assets, net 652 2.451 235) 258 1,777 Total operating expenses 396,362 334,226 322,011 345,443 318,444 Operating income 115,881 115,675 137,659 156,174 146,567 Other income (expense), net 405 467 (538) (1,164) (973) Income before provision for income taxes 116,286 116,142 137,121 155,010 145,594 Provision for income taxes 23,623 17,093 49,772 56,596 54.851 NET INCOME 92,663 $ 99,049 $ 87,349 $ 98,414 $ 90,743 Net income per share - basic 7.90 $ 8.18 S 6.93 7.46 S 6.96 Net income per share - diluted 7.82 $ 8.09 S 6.79 $ 7.25 $ 3.69 Weighted average shares outstanding - basic 11,621 12,035 12,533 13,123 12,968 Weighted average shares outstanding - diluted 11,734 12,180 12,796 13,520 13,484 Balance Sheet Data: Working capital $ 111,057 $ 66,590 $ 99,719 $ 112,443 $ 97,292 Total assets CO CO 639,851 $ 569,624 S 623,297 $ 645,400 S 605,161 Total long-term obligations 59,020 $ 44,343 S 75,196 $ 73,019 S 58,851 Total stockholders' equity 460,317 $ 423,523 S 446,582 $ 461,221 436,140 Statistical Data: Barrels sold 4,286 3,768 4,019 4,256 4,103 Net revenue per barrel $ 232.30 $ 229.05 S 225.55 $ 225.55 $ 220.08THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, (in thousand's, except per share data) December 29, 2018 December 30, 2017 2016 (53 weeks) Revenue $ 1,057,495 $ 921,736 $ 968,994 Less excise taxes 61,846 58.744 62.548 Net revenue 995,649 862,992 906,446 Cost of goods sold 483,406 413,091 446,776 Gross profit 512,243 449,901 459,670 Operating expenses Advertising, promotional and selling expenses 304,853 258,649 244,213 General and administrative expenses 90,857 73,126 78,033 Impairment (gain on sale) of assets, net 652 2.451 (235) Total operating expenses 396,362 334,226 322,011 Operating income 115,881 115,675 137,659 Other income (expense), net: Interest income 1,292 549 168 Other expense, net 887) (82) (706) Total other income (expense), not 405 467 538) Income before provision for income tax 116,286 116,142 137,121 Provision for income taxes 23,623 17,093 49,772 NET INCOME 92,663 $ 99,049 S 87,349 NET INCOME PER COMMON SHARE - BASIC 7.90 8.18 6.93 NET INCOME PER COMMON SHARE - DILUTED 7.82 8.09 6.79 Weighted average number of common shares - Class A basic B,620 8,933 9,189 Weighted average number of common shares - Class B basic 3,002 3,102 3,344 Weighted-average number of common shares - diluted 11,734 12,180 12,796 Net income $ 92,663 99,049 $ 87,349 Other comprehensive income (loss), net of tax: Currency translation adjustment 25 17 (99) Defined benefit plans liability adjustment 277 (202) (63) Impact of ASU 2018-02 (211) Total other comprehensive income (loss), net of tax: 91 185) (152) COMPREHENSIVE INCOME 92,754 $ 98,864 87,197THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 29, 2018, December 30, 2017, and December 31, 2016 Accumulated Class A Class A Class B Class B Additional Other Total Common Common Common Common Paid-in Comprehensive Retained Stockholders' (in thousands) Shares Stock, Par Shares Stock, Par Capital Loss, net of tax Earnings Equity Balance at December 26, 20151 9,389 S 94 $ 3,367 $ 34 $ 290,096 $ (951) $ 171,948 $ 461,221 Net income 87.349 87.349 Stock options exercised and restricted shares activities, including tax benefit of $12,524 557 5 53,669 53,674 Stock-based compensation expense 6.148 6,148 Repurchase of Class A Common Stock (945) (161,649) (161,658) Conversion from Class B to Class A 170 2 (170) (2) Defined benefit plans liability adjustment, net of tax of $32 (53) (53) Currency translation adjustment (99) 99) Balance at December 31, 2016 9,171 92 3,197 32 349.913 (1,103) 97,648 446,582 Net income 99,049 99,049 Stock options exercised and restricted shares activities 217 2 16.361 16,363 Stock-based compensation expense 6,316 6,316 Repurchase of Class A Common Stock (964) (10) (144,592) (144,602) Conversion from Class B to Class A 179 2 (179) (2) Defined benefit plans liability adjustment, net of tax of $68 (202) (202) Currency translation adjustment 17 17PART II Item & Financial Statements and Supplementary Data Accumulated Class A Class A Class B Class B Additional Other Total Common Common Common Common Paid-in Comprehensive Retained Stockholders (in thousand's) Shares Stock, Par Shares Stock, Par Capital Loss, net of tax Earnings Equity Balance at December 30, 2017 8,603 $ 3,018 $ 30 $ 372,590 $ (1,288) $ 62,105 $ 423,523 Net income 92,663 92,663 Stock options exercised and restricted shares activities 227 2 23,086 23,088 Stock-based compensation expense 10.035 10,035 Repurchase of Class A Common Stock (350) (3) (88,309) (88,312) Conversion from Class B to Class A 100 1 (100) (1) Defined benefit plans liability adjustment, net of tax of $93 277 277 Currency translation adjustment 25 25 One time effect of adoption of ASU 2014-09, Revenue from Contracts with Customers, net of tax of $329 (982) (982) One time effect of adoption of ASU 2018-02, Reclassification of Certain (211) 211 Tax Effects from Accumulated Other Comprehensive Income Balance at December 29, 2018 8,580 $ 86 $ 2,918 $ 29 $ 405,711 $ (1,197) $ 55,688 $ 460,317Contents Contents PART I PART I Hem 1 Business Item 1 Business local hard cider companies. The hard cider category experienced reporting and regulatory purposes. This category is smal, growing The Company offers nine styles of flavored malt beverages in the Twisted Tea brand family most of which are available nationaly Currently, Samuel Adams Boston Lager, Samuel Adams Seasonal very fast growth until a slowing in 2015, a decline in 2016 and rapidly in its early stages of development over the last 3 years, beers, Samuel Adams Sam '76, Samuel Adams New England IPA 2017, and a return to growth in 2018. The Company estimates highly competitive and includes large international and domestic in both the United States and Canada. The majority of the Samuel Adams Rebel IPA beers and some of the A&S Brewing the category volume grew approximately 8% in 2018. competitors. The Company believes that the hard seltzer category comprises less than 1% of United States beer consumption, but promotional and distribution efforts for the Twisted Tea brand family are focused on Twisted Tea Original and Twisted Tea Half beers are available in this uniquely-designed can. The Truly Hard Seltzer brand competes within the hard seltzer category that has similar characteristics to the beer industry for estimates that category volume grew approximately 200% in 2018. and Half in various can packages. Sales, Distribution and Marketing The Company offers twelve styles of hard cider in the Angry Description of Business Orchard brand family most of which are available nationally in As dictated by the legal and regulatory environment, most all of the United States. The majority of the promotional and distribution the Company's sales are made to a network of approximately 375 wholesalers in the United States and to a network of foreign The Company's business goal is to become the leading supplier Samuel Adams Summer Ale, Samuel Adams OctoberFest, and efforts for the Angry Orchard brand family are focused on Angry in the High End category by creating and offering high quality Samuel Adams Winter Lager. The majority of the promotional and Orchard Crisp Apple and Angry Orchard Rose in various bottle, wholesalers, Importers or other agencies (collectively referred to as "Distributors"). These Distributors, in turn, sell the products alcohol beverages. With the support of a large, well-trained sales can and keg packages. to retailers, such as grocery stores, club stores, convenience organization and world-class brewers, the Company strives to distribution efforts for the Samuel Adams brand family are focused on Samuel Adams Boston Lager and the Samuel Adams Seasonal The Company offers nine styles of hard seltzer in the Truly brand stores, liquor stores, bars, restaurants, stadiums and other retail achieve this goal by offering great beers, hard ciders and hard program of beers in vario packages. family most of which are available nationaly in the United States. outlets, where the products are sold to drinkers, and in some seltzers, and increasing brand availability and awareness through The majority of the promotional and distribution efforts for the limited circumstances to parties who act as sub-distributors. The traditional media and digital advertising, point-of-sale, promotional After some test launches in late 2017, the Company began the Company sells its products predominantly in the United States, programs and drinker education. national launch in the first quarter of 2018 of Samuel Adams Sam Truly brand family are focused on Truly Citrus Mix Pack and Truly '76, a revolutionary beer that is a uniquely flavorful and refreshing Berry Mix Pack in sleek can packages. but also has markets in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central The Company's Beer, Hard Cider and Hard union of lager and ale. Later in 2018 and on a more limited basis, The Company continually evaluates the performance of its various and South America. Seltzer Business the Company launched Samuel Adams New England IPA, a hazy beer, hard cider and hard seltzer and the rationalization of its unfiltered IPA with citrusy hop flavor. In the first quarter of 2019. product line as a whole. Periodically, the Company discontinues With few exceptions, the Company's products are not the the Company launched nationally Samuel Adams New England certain styles and packages. Certain styles or brands discontinued primary brands in its Distributors' portfolios. Thus, the Company. The Company's beers, hard ciders and hard seltzers are sold by the Company's sales force to the same types of customers Pale Ale, a more sessionable hazy unfiltered pale ale. Sam '76 In previous years may be produced for the Company's variety in addition to competing with other beers, hard ciders and hard packs or reintroduced. seltzers for a share of the drinker's business, competes with other and drinkers in similar size quantities, at similar price points and and both the Samuel Adams New England beers will be promoted brewers for a share of the Distributor's attention, time and seling through substantially the same channels of distribution. These and distributed nationally in 2019 and are viewed as important beverages are manufactured using similar production processes, innovations and opportunities for sales volume growth within the Product and Packaging Innovations efforts. During 2018, the Company's largest Distributor accounted for approximately 3% of the Company's net sales. The top three have comparable alcohol content and generally fall within the Samuel Adams brand family. The Company has a proven track record of innovation and building Distributors collectively accounted for approximately 7% of the same regulatory environment. Certain Samuel Adams beers may be produced at select times Company's net sales. In some states and countries, the terms The Company's strategy is to create and offer a world-class during the year solely for inclusion in the Company's seasonal new brands and is committed to maintaining its position as a leading innovator. To that end, the Company continually tests new of the Company's contracts with its Distributors may be affected variety of traditional and innovative alcohol beverages, with a variety packs that are available nationally. During 2018, Samuel Adams Noble Pills, Samuel Adams Kellerbier, Samuel Adams beers, hard ciders, hard seltzers and other alcohol beverages and by laws that restrict the enforcement of some contract terms, focus on promoting the Samuel Adams brand, but supported may sell them under various brand labels for evaluation of drinker especially those related to the Company's right to terminate the by complementary brands. The Samuel Adams, Twisted Tea, Smoked Lager and Samuel Adams Coffee Black Lager were interest. The Boston Brewery and the Orchard, along with its other relationship. Angry Orchard and Truly Hard Seltzer brands are all available brewed and included in the Spring bottle variety packs, Samuel Adams Hefeweizen, Samuel Adams Raspberry Lemon Gose, breweries and tap rooms spend significant time ideating, testing and developing alcohol beverages for the Company's potential Most products are shipped within days of packaging resulting nationally, while the majority of the A&S Brewing brands focus on local distribution and tap rooms. The Twisted Tea brand family Samuel Adams Golden Ale and Samuel Adams Pale Ale were brewed and included in Summer bottle variety packs, Samuel future commercial development and evaluating ingredients and in limited product order backlog. The Company has historically has grown each year since the product was first introduced in Adams Pumpkin Ale, Samuel Adams Black Lager, Samuel Adams process improvements for existing beverages. received most of its orders from domestic Distributors in the first week of a month for products to be shipped the following 2001 and has established a loyal drinker following. The Angry In 2018, the Company introduced Angry Orchard Rose, a Truly month and the Distributor would then carry three to five weeks of Orchard brand family was launched in the second half of 2011 in Spruce Tip Lager and Samuel Adams Coffee Pale Ale were brewed several markets and achieved national distribution in 2012. Since and included in Fall bottle variety packs, and Samuel Adams Berry Variety Pack, Truly Wild Berry, Sam'76 and Samuel Adams packaged inventory (usually at ambient temperatures) and three Chocolate Bock, Samuel Adams Holiday Porter and Samuel New England IPA. Overall in 2018, these five new product to four weeks of draft inventory. 2013, Angry Orchard has been the largest selling hard cider in the United States. In 2016, the Company began national distribution Adams Old Fezziwig* Ale were brewed and included in Winter innovations are within the top product introductions in their respective categories. In 2019, the Company plans to build upon In an effort to reduce both the time and temperature the Company's of the Truly Hard Seltzer brand and it maintained its place as one bottle variety packs. Additionally, beginning in 2011 the Company began limited releases of seasonal beers in various packages. these successful innovations with three additional brands that beers experience at Distributor warehouses before reaching the of the leading brands in the hard seltzer category in 2018. The In 2018, these limited seasonal release beers included Samuel It believes address important opportunities for High End beer retail market, in late 2010 the Company Introduced its Freshest Company's A&S Brewing subsidiary currently has three brands, including Angel City", Coney Island" and Concrete Beach". Adams Porch Rocker" and Samuel Adams White Christmas. occasions. These brands include 26.2 Brew from the Company's Beer Program with domestic Distributors in several markets. The wholly owned affiliate Marathon Brewing Company, Wild Leaf goal of the Freshest Beer Program is to work in cooperation with The Samuel Adams Brewmaster's Collection and Samuel Adams the Distributors to provide better on-time service, forecasting, The Company sells its beverages in various packages. Kegs are sold Rebel" IPA family include various styles of beer and are an important Hard Tea, a craft hard tea, and Tura Alcoholic Kombucha, an alcoholic kombucha tea. The Company is in the very early stages production planning, substantialy reducing Distributor inventory primarily for on-premise retailers, which include bars, restaurants, part of the Company's portfolio and heritage, but currently receive levels. At the close of its 2018 fiscal year, the Company had stadiums and other venues. Bottles, traditional cans and sleek cans are sold primarily for off-premise retailers, which include grocery limited promotional support and distribution. The Barrel Room of national launch of both 26.2 Brew and Wild Leaf and will launch Tura later in the quarter on a more limited geographical basis. Distributors representing approximately 77% of the Company's Colection and Limited Edition Beers and certain specialty variety domestic volume participating in the Program. The Company has stores, club stores, convenience stores and liquor stores. packs are produced in limited quantities and are sold at higher prices In 2013, the Company completed a two-year research effort to successfully reduced the inventories of participating Distributors Samuel Adams Boston Lager" is the Company's flagship beer than the Company's other products. The Company also releases a develop a beer can to improve the experience of the beer drinker in the aggregate by approximately two weeks, resulting in fresher that was first introduced in 1984. The Samuel Adams Seasonal who chooses to drink from a can. The features of this custom beer being delivered to retail. The Freshest Beer Program has program of beers was originally introduced in the late 1980's variety of specialty draft beers brewed in limited quantities for festivals and Beer Week celebrations and at its brewery tap rooms in both Sam can include a wider lid with an opening slightly further from significantly changed the ordering process for participating and early 1990's. These beers are brewed specifically for limited Boston, Massachusetts and Cincinnati, Ohio. the edge of the lid, an extended ip and an hourglass ridge, all of Distributors and has resulted in a shorter period between order periods of time and in 2018 included Samuel Adams Cold Snap", which features are believed by the Company to enhance the craft placement and shipment and a resulting reduction in open orders. beer drinker's experience relative to a traditional beverage can. THE BOSTON BEER COMPANY, INC. _2018 Form 10-K www.bostonbeer.com THE BOSTON BEER COMPANY, INC. |2018 Form 10-K Cancel PrintContents Contents Table of Contents PART I PART I ITEM 1. Business ITEM 1A. Risk Factors Item 1. Business ITEM 1B. Unresolved Staff Comments ITEM 2. Properties ITEM 3 Legal Proceedings General ITEM 4. Mine Safety Disclosures The Boston Beer Company, Inc. ["Boston Beer" or the "Company"} at other brewery locations. The Company-owned breweries is a high-and alcoholic beverage company and one of the largest craft brewers in the United States. In fiscal 2018, Boston Beer include breweries located in Boston, Massachusetts (the sold approximately 4.3 million barrels of its proprietary products. "Boston Brewery"), Cincinnati, Ohio (the "Cincinnati Brewery") PART II 17 and Breinigsville, Pennsylvania (the "Pennsylvania Brewery"). The During 2018, the Company's brands include Samuel Adams", A&S Brewing breweries are located in Los Angeles, California ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters Twisted Tea", Angry Orchard" Hard Cider, and Truly Hard Seltzer, (the "Angel City Brewery"), Miami, Florida (the "Concrete Beach Brewery ) and Brooklyn, New York (the *Coney Island Brewery"). and Issuer Purchases of Equity Securities formerly marketed as Truly Spiked & Sparkling", as well as craft 17 beer brands brewed by its subsidiary A&S Brewing Collaborative The Company owns an apple orchard and cidery located in ITEM 6. Selected Consolidated Financial Data 20 LLC and its affiliates ("A&S Brewing"]. Walden, New York (the "Orchard" and "Cidery"). ITEM 7. Management's Discussion and Analysis of Financial Condition Boston Beer produces alcohol beverages including malt The Company's principal executive offices are located at One and Results of Operations 21 beverages ("beers"), hard cider and hard seltzer at Company- Design Center Place, Suite 850, Boston, Massachusetts 02210, ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 29 owned breweries and its cidery and under contract arrangements and its telephone number is (617) 368-5000 ITEM 8. Financial Statements and Supplementary Data 30 ITEM 9. Changes in and Disagreements with Accountants on Accounting Industry Background and Financial Disclosures 56 TEM 9A. Controls and Procedures 56 Before Prohibition, the United States beer industry consisted of End category in the United States. The Company estimates that hundreds of small breweries that brewed full-flavored beers. After in 2018 the High End category percentage volume growth was ITEM 9B. Other Information 58 the end of Prohibition, most domestic brew approximately 8%, with the craft beer category volume growth to less flavorful, lighter beers, which use lower-cost ingredients, and can be mass-produced to take advantage of economies approximately 5%, and total beer category volume essentially flat to slightly down. The Company believes that the High End category of scale in production. This shift towards mass-produced beers is now over 30% of the United States beer market. PART III 59 coincided with ultimately resulted in the two largest breweries, Anheuser-Busch The domestic beer industry, excluding the High End category. ITEM 10. Directors, Executive Officers and Corporate Governance 59 InBev ("AB InBev") and MillerCoors LLC ["Mile 7, comprising has experienced a decline in shipment volume over the last twenty years. The Company believes that this decline is due TEM 11. Executive Compensation 59 over 90% of all United States domestic beer production, excluding imports. During the last twenty years the number of breweries in to declining alcohol consumption per person in the population, ITEM 12. Security Ownership of Certain Beneficial Owners and Management the United States has increased significantly from approximately drinkers trading up to drink high quality, more flavorful beers, and Related Stockholder Matters 1,500 in 2008 to over 7,000 in 2018. Most of these new breweries are craft (small and independent) brewers. The rise and spirits companies. ITEM 13. Certain Relationships and Related Transactions, and Director Independence 8 85 health and welness trends and increased competition from wine of craft breweries along with the growth of imported beers has resulted in a significant decline in the volume of the two largest The Company's Twisted Tea products compete within the ITEM 14. Principal Accountant Fees and Services breweries who now comprise approximately 70% of al United flavored malt beverage ("FMB") category of the beer industry States domestic beer production, excluding imports. (and the Company's Twisted Tea products are included in generic references to the Company's "beers" in this report). The Company PART IV 61 The Company's beers, hard ciders and hard seltzers are primarily believes that the FMB category comprises approximately 5% of positioned in the market for High End beer occasions. The Company United States beer consumption and that the volume comprising defines "High End" beers, including craft beers, domestic specialty the FMB category grew approximately 13% in 2018. This category ITEM 15. Exhibits and Financial Statement Schedules 61 is highly competitive due to, among other factors, the presence 63 bears, most imported beer, hard cider, flavored malt beverages and ITEM 16 Form 10-K Summary hard seltzer that are called for by a High End beer drinker occasic of large brewers and spirits companies in the category and a fast SIGNATURES High End beers and beer occasions (the "High End category") pace of product innovation. are determined by higher price, quality, image and taste, as compared with regular domestic beers. This category has s The Company's Angry Orchard ciders compete within the hard single-digit compounded annual growth over the past ten years. cider category that has similar characteristics to the beer industry. The Company believes that the High End category is positioned The Company believes that the hard cider category comprises to increase market share, as drinkers continue to trade up in taste less than 1% of United States beer consumption. This category is small and highly competitive and includes large international and quality. Boston Beer is one of the largest suppliers in the High and domestic competitors, as well as many small regional and THE BOSTON BEER COMPANY, INC. 2018 Form 10-K Cancel Print
