Related-Party Transactions

12 Months Ended

Dec. 31, 2014

Related-Party Transactions [Abstract]

Related-Party Transactions

Note 17. Related-Party Transactions

For additional related party transactions, see Notes 8 and 16.

As of December 31, 2014 and 2013, A-B owned approximately 31.7% and 32.0%, respectively, of our outstanding common stock.

Modifications to A-B Agreements

In connection with the sale of our interest in FSB, we modified two agreements with A-B originally executed in 2004: the Master Distributor Agreement (as amended and restated, the “A-B Distributor Agreement”), which was amended primarily to lower our margin fees (“Margin Fees”) to be paid to A‑B; and the Exchange and Recapitalization Agreement (as amended and restated, the “Exchange Agreement”).

The modifications to the A-B Distributor Agreement reduced the Margin Fees to be paid to A‑B for beer sold through A-B or the associated A‑B distribution network, except for beer sold in qualifying territories, as defined, from May 1, 2011 (the “Commencement Date”) until December 31, 2018, to $0.25 per case equivalent from $0.74 per case equivalent. Beer sold through A-B or the associated A-B distribution network in qualifying territories, as defined, was exempt from Margin Fees until September 30, 2013, and thereafter are assessed Margin Fees at the $0.25 per case equivalent through December 31, 2018. The exemption from Margin Fees for beer sold in the qualifying territories was subject to certain conditions, including incurring sales and marketing expenses in the qualifying territories at or above specified amounts. In the event the A-B Distributor Agreement is renewed beyond December 31, 2018, the A-B Distributor Agreement sets Margin Fees to be paid to A‑B for the period beginning January 1, 2019 and ending December 31, 2028, at $0.75 per case equivalent. The A-B Distributor Agreement no longer provides for the incremental fees that were previously paid to A-B for shipments above the volume of shipments during 2003.

If we purchase additional beer brands, we may distribute those brands outside of the A-B Distributor Agreement while still selling existing brands to A-B affiliated wholesalers. We would not be obligated to pay margin fees on sales of the new brand.

Transactions with A-B

Transactions with A-B consisted of the following (in thousands):

	Year Ended December 31,
	2014		2013		2012
Gross sales to A-B	$	178,805	$	161,010	$	149,492
Margin fee paid to A-B, classified as a reduction of Sales		2,644		2,009		1,864
Sales to FSB through a contract brewing arrangement, classified in Sales(1)		-		-		3,083
Sales to FSB pursuant to termination agreement discussed below		-		-		838
Handling, inventory management, royalty and other fees paid to A-B, classified in Cost of sales		393		402		449
Amounts received from A-B for lost keg fees and forfeited deposits, included as a reduction of Property, equipment and leasehold improvements, net		-		-		122

(1) We owned 42% of FSB prior to its becoming a wholly owned subsidiary of A-B in May 2011 and, accordingly, transactions with FSB are considered to be related-party transactions in all periods.

Effective September 1, 2012, in the best interest of both parties, we mutually agreed with FSB to end our contract brewing arrangement. Under the termination agreement, we phased out production of FSB branded beers through November 2012 utilizing remaining inventory on-hand. In consideration, FSB paid us $70,000 per month through September 2013, all of which was recognized as Sales on September 1, 2012, the effective date of agreement.

Amounts due to or from A-B were as follows (in thousands):

	December 31,
	2014			2013
Amounts due from A-B related to beer sales pursuant to the A-B Distributor Agreement	$	7,846		$	8,457
Refundable deposits due to A-B		(2,629	)		(2,728	)
Amounts due to A-B for services rendered		(1,821	)		(1,852	)
Net amount due from A-B	$	3,396		$	3,877