QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
|
| |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
|
|
|
|
☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
| |||
|
|
Emerging growth company |
|
Class A Common Stock, $.01 par value |
|
|||
Class B Common Stock, $.01 par value |
|
|||
(Title of each class) |
(Number of shares) |
PART I. |
FINANCIAL INFORMATION |
PAGE |
||||
3 |
||||||
3 |
||||||
4 |
||||||
5 |
||||||
6 |
||||||
7 |
||||||
19 |
||||||
22 |
||||||
22 |
||||||
PART II. |
OTHER INFORMATION |
|||||
23 |
||||||
23 |
||||||
24 |
||||||
24 |
||||||
24 |
||||||
24 |
||||||
25 |
||||||
26 |
March 28, |
December 28, |
|||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | |
$ | |
||||
Accounts receivable |
|
|
||||||
Inventories |
|
|
||||||
Prepaid expenses and other current assets |
|
|
||||||
Income tax receivable |
|
|
||||||
Total current assets |
|
|
||||||
Property, plant and equipment, net |
|
|
||||||
Operating right-of-use assets |
|
|
||||||
Goodwill |
|
|
||||||
Intangible assets |
|
|
||||||
Other assets |
|
|
||||||
Total assets |
$ | |
$ | |
||||
Liabilities and Stockholders’ Equity |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | |
$ | |
||||
Accrued expenses and other current liabilities |
|
|
||||||
Current operating lease liabilities |
|
|
||||||
Total current liabilities |
|
|
||||||
Deferred income taxes, net |
|
|
||||||
Line of credit |
|
|
|
|
|
|
— |
|
Non-current operating lease liabilities |
|
|
||||||
Other liabilities |
|
|
||||||
Total liabilities |
|
|
||||||
Commitments and Contingencies (See Note K) |
||||||||
Stockholders’ Equity: |
||||||||
Class A Common Stock, $ par value; |
|
|
||||||
Class B Common Stock, $ par value; |
|
|
||||||
Additional paid-in capital |
|
|
||||||
Accumulated other comprehensive loss, net of tax |
( |
) | ( |
) | ||||
Retained earnings |
|
|
||||||
Total stockholders’ equity |
|
|
||||||
Total liabilities and stockholders’ equity |
$ |
|
$ |
|
||||
Thirteen weeks ended |
||||||||
|
March 28, 2020 |
March 30, 2019 |
||||||
Revenue |
$ | |
$ | |
||||
Less excise taxes |
|
|
||||||
Net revenue |
|
|
||||||
Cost of goods sold |
|
|
||||||
Gross profit |
|
|
||||||
Operating expenses: |
||||||||
Advertising, promotional and selling expenses |
|
|
||||||
General and administrative expenses |
|
|
||||||
Impairment of assets |
|
— |
||||||
Total operating expenses |
|
|
||||||
Operating income |
|
|
||||||
Other (expense) income, net: |
||||||||
Interest income, net |
|
|
||||||
Other (expense) income, net |
( |
) | ( |
) | ||||
Total other (expense) income, net |
( |
) | |
|||||
Income before income tax provision |
|
|
||||||
Income tax provision |
|
|
||||||
Net income |
$ | |
$ | |
||||
Net income per common share - basic |
$ | |
$ | |
||||
Net income per common share - diluted |
$ | |
$ | |
||||
Weighted-average number of common shares - Class A basic |
|
|
||||||
Weighted-average number of common shares - Class B basic |
|
|
||||||
Weighted-average number of common shares - |
|
|
||||||
Net income |
$ | |
$ | |
||||
Other comprehensive income: |
||||||||
Foreign currency translation adjustment |
( |
) | |
|||||
Comprehensive income |
$ | |
$ | |
||||
Class A Common Shares |
Class A Common Stock, Par |
Class B Common Shares |
Class B Common Stock, Par |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss, net of tax |
Retained Earnings |
Total Stockholders’ Equity |
|||||||||||||||||||||||||
Balance at December 28, 2019 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||||||||||
Net income |
|
|
||||||||||||||||||||||||||||||
Stock options exercised and restricted shares activities |
|
— |
|
|
||||||||||||||||||||||||||||
Stock-based compensation expense |
|
|
||||||||||||||||||||||||||||||
Conversion from Class B to Class A |
|
|
( |
) | ( |
) | — |
|||||||||||||||||||||||||
Currency translation adjustment |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Balance at March 28 , 2020 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||||||||||
Class A Common Shares |
Class A Common Stock, Par |
Class B Common Shares |
Class B Common Stock, Par |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss, net of tax |
Retained Earnings |
Total Stockholders’ Equity |
|||||||||||||||||||||||||
Balance at December 29, 2018 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||||||||||
Net income |
|
|
||||||||||||||||||||||||||||||
Stock options exercised and restricted shares activities |
|
— |
|
|
||||||||||||||||||||||||||||
Stock-based compensation expense |
|
|
||||||||||||||||||||||||||||||
Currency translation adjustment |
|
|
||||||||||||||||||||||||||||||
Balance at March 30, 2019 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||||||||||
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASHFLOWS (in thousands) (unaudited) |
Thirteen weeks ended |
||||||||
March 28, |
March 30, |
|||||||
2020 |
2019 |
|||||||
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 assets |
|
— |
||||||
Loss on disposal of property, plant and equipment |
— |
|
||||||
Change in ROU assets |
|
|
||||||
Credit loss expense |
|
— |
||||||
Stock-based compensation expense |
|
|
||||||
Deferred income taxes |
|
|
||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses, income tax receivable and other assets |
( |
) | |
|||||
Accounts payable |
|
|
||||||
Accrued expenses and other current liabilities |
( |
) | ( |
) | ||||
Change in operating lease liability |
( |
) | ( |
) | ||||
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 |
|
|
||||||
Other investing activities |
|
|
||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows provided by financing activities: |
||||||||
Proceeds from exercise of stock options and sale of investment shares |
|
|
||||||
Net cash paid on note payable and finance leases |
( |
) | ( |
) | ||||
Payment of tax withholdings on stock-based payment awards and investment shares |
|
|
( |
) |
|
|
— |
|
Cash borrowed on line of credit |
|
— |
||||||
Net cash provided by financing activities |
|
|
||||||
Change in cash and cash equivalents |
|
( |
) | |||||
Cash and cash equivalents at beginning of year |
|
|
||||||
Cash and cash equivalents at end of period |
$ | |
$ | |
||||
Supplemental disclosure of cash flow information: |
||||||||
Income taxes paid |
$ | |
$ | |
||||
Cash paid for amounts included in measurement of lease liabilities |
|
|
||||||
Operating cash flows from operating leases |
$ | |
$ | |
||||
Operating cash flows from finance leases |
$ | |
$ | |
||||
Financing cash flows from finance leases |
$ | |
$ | |
||||
Right-of-use assets obtained in exchange for operating lease obligations |
$ | |
$ | |
||||
Right-of-use assets obtained in exchange for finance lease obligations |
|
$ |
— |
|
|
$ |
|
|
Change in purchase of property, plant and equipment in accounts payable and accrued expenses |
$ |
( |
) | $ | |
|||
A. |
Organization and Basis of Presentation |
B. |
COVID-19 Pandemic |
C. |
Dogfish Head Brewery Transaction |
Total (In |
||||
Cash and cash equivalents |
$ | |
||
Accounts receivable |
|
|||
Inventories |
|
|||
Prepaid expenses and other current assets |
|
|||
Property, plant and equipment |
|
|||
Goodwill |
|
|||
Brand |
|
|||
Other intangible assets |
|
|||
Other assets |
|
|||
Total assets acquired |
|
|||
Accounts payable |
|
|||
Accrued expenses and other current liabilities |
|
|||
Deferred income taxes |
|
|||
Other liabilities |
|
|||
Total liabilities assumed |
|
|||
Net assets acquired |
$ | |
||
Cash consideration |
$ | |
||
Nominal value of equity issued |
|
|||
Fair Value reduction due to liquidity |
( |
) | ||
Estimated total purchase price |
$ | |
||
(i) | Depreciation and amortization expenses were updated to reflect the fair value adjustments to Dogfish Head property, plant and equipment and intangible assets beginning December 30, 2018. |
(ii) | Transaction costs incurred to date have been re-assigned to the first period of the comparative fiscal year. |
(iii) | Interest expense has been included at a rate of approximately |
(iv) | The tax effects of the pro forma adjustments at an estimated statutory rate of |
(v) | Earnings per share amounts are calculated using the Company’s historical weighted average shares outstanding plus the |
Thirteen weeks ended |
||||||||
March 28, |
March 30, |
|||||||
2020 |
2019 |
|||||||
|
(in thousands) |
| ||||||
Net revenue |
$ | |
$ | |
||||
Net income |
$ | |
$ | |
||||
Basic earnings per share |
$ | |
$ | |
||||
Diluted earnings per share |
$ | |
$ | |
D. |
Goodwill and Intangible Assets |
As of March 28, 2020 |
As of December 28, 2019 |
|||||||||||||||||||||||||||
Estimated Useful |
Gross Carrying |
Accumulated |
Net Book |
Gross Carrying |
Accumulated |
Net Book |
||||||||||||||||||||||
Life (Years) |
Value |
Amortization |
Value |
Value |
Amortization |
Value |
||||||||||||||||||||||
|
|
|
|
(in thousands) |
| |||||||||||||||||||||||
Custmer Relationships |
|
$ | |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | $ | |
|||||||||||||
Trade Names |
Indefinite |
|
— |
|
|
— |
|
|||||||||||||||||||||
Total intangible assets |
$ | |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | $ | |
||||||||||||||
Fiscal Year |
Amount (in thou sands) |
|||
Remainder of 2020 |
$ | |
||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
2025 |
|
E. |
Recent Accounting Pronouncements |
F. |
Revenue Recognition |
G. |
Inventories |
March 28, |
December 28, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Current inventory: |
||||||||
Raw materials |
$ |
|
$ | |
||||
Work in process |
|
|
||||||
Finished goods |
|
|
||||||
Total current inventory |
|
|
||||||
Long term inventory |
|
|
||||||
Total inventory |
$ | |
$ | |
||||
H. |
Leases |
|
Classification |
Leases |
||||||||
|
|
March 28, |
December 28, |
|||||||
2020 |
2019 |
|||||||||
(in thousands) |
||||||||||
Right-of-use assets |
||||||||||
Operating lease assets |
Operating right-of-use assets |
$ |
|
$ | |
|||||
Finance lease assets |
Property, plant and equipment, net |
|
|
|||||||
Lease Liabilities |
||||||||||
Current |
||||||||||
Operating lease liabilities |
Current operating lease liabilities |
|
|
|||||||
Finance lease liabilities |
Accrued expenses and other current liabilities |
|
|
|||||||
Non-current |
||||||||||
Operating lease liabilities |
Non-current operating lease liabilities |
|
|
|||||||
Finance lease liabilities |
Other liabilities |
|
|
Finance Leases |
||||||||
March 28, |
December 28, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Gross value |
$ | |
$ | |
||||
Accumulated amortization |
( |
) | ( |
) | ||||
Carrying value |
$ | |
$ | |
||||
Lease Cost |
||||||||
March 28, |
March 30, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Operating lease cost |
$ | |
$ |
|
||||
Variable lease costs not included in liability |
||||||||
Finance lease cost: |
||||||||
Amortization of right-of-use asset |
|
|
||||||
Interest on lease liabilities |
|
— |
||||||
Total finance lease cost |
$ | |
$ | |
||||
Operating Leases |
Capital Leases |
Weighted-Average |
||||||||||||||
Operating |
Capital |
|||||||||||||||
(in thousands) |
||||||||||||||||
2020 |
$ | |
$ | |
||||||||||||
2021 |
|
|
||||||||||||||
2022 |
|
|
||||||||||||||
2023 |
|
|
||||||||||||||
2024 |
|
|
||||||||||||||
Thereafter |
|
|
||||||||||||||
Total lease payments |
|
|
||||||||||||||
Less imputed interest (based on |
( |
) | ( |
) | ||||||||||||
Present value of lease liability |
$ | |
$ | |
|
|
||||||||||
I. |
Net Income per Share |
Thirteen weeks ended |
||||||||
March 28, |
March 30, |
|||||||
2020 |
2019 |
|||||||
(in thousands, except per share data) |
||||||||
Net income |
$ | |
$ | |
||||
Allocation of net income for basic: |
||||||||
Class A Common Stock |
$ | |
$ | |
||||
Class B Common Stock |
|
|
||||||
Unvested participating shares |
|
|
||||||
|
$ | |
$ | |
||||
Weighted average number of shares for basic: |
||||||||
Class A Common Stock |
|
|
||||||
Class B Common Stock* |
|
|
||||||
Unvested participating shares |
|
|
||||||
|
|
|||||||
Net income per share for basic: |
||||||||
Class A Common Stock |
$ | |
$ | |
||||
Class B Common Stock |
$ | |
$ | |
||||
* |
Change in Class B Common Stock resulted from the conversion of |
Thirteen weeks ended |
||||||||||||||||||||||||
March 28, 2020 |
March 30, 2019 |
|||||||||||||||||||||||
Earnings to Common Shareholders |
Common Shares |
EPS |
Earnings to Common Shareholders |
Common Shares |
EPS |
|||||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||||||||
As reported - basic |
$ | |
|
$ | |
$ | |
|
$ | |
||||||||||||||
Add: effect of dilutive potential common shares |
||||||||||||||||||||||||
Share-based awards |
— |
|
— |
|
||||||||||||||||||||
Class B Common Stock |
|
|
|
|
||||||||||||||||||||
Net effect of unvested participating shares |
|
— |
|
— |
||||||||||||||||||||
Net income per common share - diluted |
$ | |
|
$ | |
$ | |
|
$ | |
||||||||||||||
J. |
Comprehensive Income or Loss |
K. |
Commitments and Contingencies |
L. |
Income Taxes |
Thirteen weeks ended |
||||||||
March 28, |
March 30, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Summary of income tax provision |
||||||||
Tax provision based on net income |
$ | |
$ | |
||||
Benefit of ASU 2016-09 |
( |
) | ( |
) | ||||
Total income tax provision |
$ | |
$ | |
||||
M. |
Revolving Line of Credit |
N. |
Fair Value Measures |
• | Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
• | Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. |
• | Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. |
O. |
Common Stock and Stock-Based Compensation |
Shares |
Weighted- A verageExercise |
Weighted-Average Contractual |
Aggregate Value (in thousands) |
|||||||||||||
Outstanding at December 28, 2019 |
|
$ | |
|||||||||||||
Granted |
|
|
||||||||||||||
Forfeited |
( |
) | |
|||||||||||||
Expired |
— |
— |
||||||||||||||
Exercised |
( |
) | |
|||||||||||||
Outstanding at March 28, 2020 |
|
$ | |
|
$ | |
||||||||||
Exercisable at March 28, 2020 |
|
$ | |
|
$ | |
||||||||||
Vested and expected to vest at March 28, 2020 |
|
$ | |
|
$ | |
||||||||||
2020 |
||||
Expected Volatility |
|
|||
Risk-free interest rate |
|
|||
Expected Dividends |
|
|||
Exercise factor |
|
|||
Discount for post-vesting restrictions |
|
Number |
Weighted Fair |
|||||||
Non-vested at December 28, 2019 |
|
$ | |
|||||
Granted |
|
|
||||||
Vested |
( |
) | |
|||||
Forfeited |
( |
) | |
|||||
Non-vested at March 28, 2020 |
|
$ | |
|||||
P. |
Employee Retirement Plans |
Q. |
Related Party Transactions |
R. |
Subsequent Events |
RESULTS |
OF OPERATIONS |
Thirteen Weeks Ended (in thousands, except per barrel) |
||||||||||||||||||||||||||||||||||||
March 28, 2020 |
March 30, 2019 |
Amount change |
% change |
Per barrel change |
||||||||||||||||||||||||||||||||
Barrels sold |
1,423 |
1,076 |
347 |
32.2 |
% | |||||||||||||||||||||||||||||||
Per barrel |
% of net revenue |
Per barrel |
% of net revenue |
|||||||||||||||||||||||||||||||||
Net revenue |
$ | 330,565 |
$ | 232.24 |
100.0 |
% | $ | 251,651 |
$ | 233.77 |
100.0 |
% | $ | 78,914 |
31.4 |
% | $ | (1.53 |
) | |||||||||||||||||
Cost of goods |
182,592 |
128.28 |
55.2 |
% | 127,111 |
118.08 |
50.5 |
% | 55,481 |
43.6 |
% | 10.20 |
||||||||||||||||||||||||
Gross profit |
147,973 |
103.96 |
44.8 |
% | 124,540 |
115.69 |
49.5 |
% | 23,433 |
18.8 |
% | (11.73 |
) | |||||||||||||||||||||||
Advertising, promotional and selling expenses |
97,891 |
68.78 |
29.6 |
% | 71,723 |
66.63 |
28.5 |
% | 26,168 |
36.5 |
% | 2.15 |
||||||||||||||||||||||||
General and administrative expenses |
27,029 |
18.99 |
8.2 |
% | 23,374 |
21.71 |
9.3 |
% | 3,655 |
15.6 |
% | (2.72 |
) | |||||||||||||||||||||||
Impairment of assets |
1,521 |
1.07 |
0.5 |
% | — |
— |
0.0 |
% | 1,521 |
0.0 |
% | 1.07 |
||||||||||||||||||||||||
Total operating expenses |
126,441 |
88.83 |
38.2 |
% | 95,097 |
88.34 |
37.8 |
% | 31,344 |
33.0 |
% | 0.49 |
||||||||||||||||||||||||
Operating income |
21,532 |
15.13 |
6.5 |
% | 29,443 |
27.35 |
11.7 |
% | (7,911 |
) | -26.9 |
% | (12.22 |
) | ||||||||||||||||||||||
Other (expense) income, net |
(297 |
) | (0.21 |
) | -0.1 |
% | 385 |
0.36 |
0.2 |
% | (682 |
) | -177.1 |
% | (0.57 |
) | ||||||||||||||||||||
Income before income tax expense |
21,235 |
14.92 |
6.4 |
% | 29,828 |
27.71 |
11.9 |
% | (8,593 |
) | -28.8 |
% | (12.79 |
) | ||||||||||||||||||||||
Income tax expense |
3,001 |
2.11 |
0.9 |
% | 6,134 |
5.70 |
2.4 |
% | (3,133 |
) | -51.1 |
% | (3.59 |
) | ||||||||||||||||||||||
Net income |
$ | 18,234 |
$ | 12.81 |
5.5 |
% | $ | 23,694 |
$ | 22.01 |
9.4 |
% | $ | (5,460 |
) | -23.0 |
% | $ | (9.20 |
) | ||||||||||||||||
LIQUIDITY |
AND CAPITAL RESOURCES |
THE |
POTENTIAL IMPACT OF KNOWN FACTS, COMMITMENTS, EVENTS AND UNCERTAINTIES |
Off-balance |
Off-balance Sheet Arrangements |
Contractual |
Obligations |
Critical |
Accounting Policies |
FORWARD-LOOKING |
STATEMENTS |
• | reduced demand for the Company’s products, due to adverse and uncertain economic conditions, such as increased unemployment, a prolonged downturn in economic growth and other financial hardships, or a decline in consumer confidence, as a result of health concerns; |
• | unpredictable drinker behaviors and reduced demand for the Company’s products, due to on-premise closures, government quarantines and other restrictions on social gatherings; |
• | inability to manufacture and ship the Company’s products in quantities necessary to meet drinker demand and achieve planned shipment and depletion targets due to disruptions at the Company-owned breweries and third party breweries caused by: |
• | the Company’s inability to maintain a sufficient workforce at Company-owned breweries due to the health-related effects of COVID-19 and similar staffing issues at third party breweries; |
• | disruptions at the Company-owned breweries and third party breweries caused by an inability to maintain a sufficient quantity of essential supplies, such as ingredients and packaging materials, and maintain logistics and other manufacturing and supply chain capabilities necessary for the manufacture and distribution of the Company’s products; |
• | failure of third parties on which the Company relies, including the Company’s inventory suppliers, third party breweries, distributors, and logistics and transportation providers, to continue to meet on a timely basis their obligations to the Company, which may be caused by their own financial or operational difficulties; |
• | potential incremental costs associated with mitigating the effects of the pandemic on the Company’s operations, including increased labor, freight and logistics costs and other expenses; or |
• | significant changes in the conditions in markets in which the Company produces, sells or distributes Company products, including prolonged or additional quarantines, governmental and regulatory actions, closures or other restrictions that limit or close the Company’s operating and manufacturing facilities, restrict the ability of the Company’s employees to perform necessary business functions, restrict or prevent consumers access to the Company products, or otherwise prevent the Company’s third-parties from sufficiently staffing operations, including operations necessary for the production, distribution, sale and support of Company products. |
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs |
||||||||||||
December 29, 2020 to February 1, 2020 |
167 |
$ | 132.37 |
— |
$ | 90,335 |
||||||||||
February 2, 2020 to February 29, 2020 |
— |
— |
— |
90,335 |
||||||||||||
March 1, 2020 to March 28, 2020 |
58 |
105.56 |
— |
90,335 |
||||||||||||
Total |
225 |
$ | 125.46 |
— |
90,335 |
|||||||||||
Exhibit No. |
Title | |||
**10.1 |
||||
**10.2 |
||||
**10.3 |
||||
**10.4 |
||||
**10.5 |
||||
*31.1 |
||||
*31.2 |
||||
*32.1 |
||||
*32.2 |
||||
*101.INS |
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||
*101.SCH |
XBRL Taxonomy Extension Schema Document | |||
*101.CAL |
XBRL Taxonomy Calculation Linkbase Document | |||
*101.LAB |
XBRL Taxonomy Label Linkbase Document | |||
*101.PRE |
XBRL Taxonomy Presentation Linkbase Document | |||
*101.DEF |
XBRL Definition Linkbase Document | |||
*104 |
The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, formatted in Inline XBRL (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed with this report |
** | Designates management contract or compensatory plan or arrangement |
THE BOSTON BEER COMPANY, INC. | ||||||
(Registrant) | ||||||
Date: April 22, 2020 |
/s/ David A. Burwick | |||||
David A. Burwick | ||||||
President and Chief Executive Officer | ||||||
(principal executive officer) | ||||||
Date: April 22, 2020 |
/s/ Frank H. Smalla | |||||
Frank H. Smalla | ||||||
Chief Financial Officer | ||||||
(principal financial officer) |
Exhibit 31.1
I, David A. Burwick, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Boston Beer Company, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: April 22, 2020
/s/ David A. Burwick |
David A. Burwick |
President and Chief Executive Officer |
[Principal Executive Officer] |
Exhibit 31.2
I, Frank H. Smalla, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Boston Beer Company, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: April 22, 2020
/s/ Frank H. Smalla |
Frank H. Smalla |
Chief Financial Officer |
[Principal Financial Officer] |
Exhibit 32.1
The Boston Beer Company, Inc.
Certification Pursuant To
18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of The Boston Beer Company, Inc. (the Company) on Form 10-Q for the period ended March 28, 2020 as filed with the Securities and Exchange Commission (the Report), I, David A. Burwick, President and Chief Executive Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 22, 2020
/s/ David A. Burwick |
David A. Burwick |
President and Chief Executive Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Boston Beer Company, Inc. and will be retained by The Boston Beer Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
The Boston Beer Company, Inc.
Certification Pursuant To
18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of The Boston Beer Company, Inc. (the Company) on Form 10-Q for the period ended March 28, 2020 as filed with the Securities and Exchange Commission (the Report), I, Frank H. Smalla, Chief Financial Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 22, 2020
/s/ Frank H. Smalla |
Frank H. Smalla |
Chief Financial Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Boston Beer Company, Inc. and will be retained by The Boston Beer Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Income Taxes - Summary of Income Tax Benefit (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 28, 2020 |
Mar. 30, 2019 |
|
Summary of income tax provision | ||
Tax provision based on net income | $ 5,005 | $ 7,909 |
Benefit of ASU 2016-09 | (2,004) | (1,775) |
Total income tax provision | $ 3,001 | $ 6,134 |
Employee Retirement Plans - Additional Information (Detail) - USD ($) $ in Millions |
Apr. 30, 2019 |
Dec. 28, 2019 |
---|---|---|
Pension Benefit Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Fair value of plan assets at end of fiscal year | $ 3.9 | |
Benefit obligation at end of fiscal year | $ 6.7 | |
Union Number 1199 Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Estimated cost of termination of retirement pension plan | $ 1.8 |
Commitments and Contingencies |
3 Months Ended | ||
---|---|---|---|
Mar. 28, 2020 | |||
Commitments and Contingencies |
Contract Obligations The Company had outstanding total non-cancelable contract obligations of $239.9 million a t March 28, 2020. These obligations are made up of advertising contracts of $71.2 million, ingredients of $51.1 million, equipment and machinery of $45.8 million, hops, barley and wheat totaling $44.3 million, and other commitments of $27.5 million.T he Company has entered into contracts for barley and wheat with three major suppliers. The contracts include crop year 2019 and cover the Company’s barley, wheat, and malt requirements for 2020 and part of 2021. These purchase commitments outstanding at March 28, 2020 totaled $13.2 million. The Company has entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2025 and specify both the quantities and prices, denominated in U.S. Dollars, Euros, New Zealand Dollars, and British Pounds, to which the Company is committed. Hops purchase commitments outstanding at March 28, 2020 totaled $31.1 million, based on the exchange rates on that date. The Company does not use forward currency exchange contracts and intends to purchase future hops using the exchange rate at the time of purchase. Currently, the Company brews and packages more than 60% of its volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. Pursuant to these arrangements, the Company supplies raw materials to those brewing companies, and incurs conversion fees for labor at the time the liquid is produced and packaged. The Company is in the process of assessing the impact the COVID-19 pande mic will have on its future commitments and contingencies but does not believe that the future commitments will be materially adversely impacted. Litigation The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or the results of its operations. In general, while the Company believes it conducts its business appropriately in accordance with laws, regulations and industry guidelines, claims, whether or not meritorious, could be asserted against the Company that might adversely impact the Company’s results. |
Inventories |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops
, flavorings, apple juice, other brewing materials and packaging, are stated at the lower of cost, determined on the first-in, first-out basis, or net realizable value. The Company’s goal is to maintain on hand a supply of at least one year for essential hop varieties, in order to limit the risk of an unexpected reduction in supply. Inventories are generally classified as current assets. The Company classifies hops inventory in excess of two years of forecasted usage in other long-term assets. The cost elements of work in process and finished goods inventory consist of raw materials, direct labor and manufacturing overhead. Inventories consist of the following:
|
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 28, 2020 |
Jul. 03, 2019 |
|
Customer Relationships | ||
Useful life Of Finite Lived Intangibles | 15 years | |
Dogfish Head Brewery [Member] | ||
Business Combination Indefinite Lived Intangible Assets Assumed | $ 98,500,000 | |
Dogfish Head Brewery [Member] | Customer Relationships | ||
Business Combination Finite Lived Intangible Assets Assumed | $ 3,800,000 | 3,800,000 |
Useful life Of Finite Lived Intangibles | 15 years | |
Intangible Assets Amortization | $ 63,000 | |
Dogfish Head Brewery [Member] | Trade Names | ||
Business Combination Indefinite Lived Intangible Assets Assumed | $ 98,500,000 | $ 98,500,000 |
Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Components of Provisions for Income Taxes | The following table provides a summary of the income tax provision for the thirteen weeks ended March 28, 2020 and March 30, 2019:
|
Dogfish Head Brewery Transaction - Fair value of assets acquired and liabilities assumed (Detail) - USD ($) $ in Thousands |
Jul. 03, 2019 |
Mar. 28, 2020 |
Dec. 28, 2019 |
---|---|---|---|
Goodwill | $ 112,529 | $ 112,529 | |
Dogfish Head Brewery [Member] | |||
Cash and cash equivalents | $ 7,476 | ||
Accounts receivable | 8,081 | ||
Inventories | 9,286 | ||
Prepaid expenses and other current assets | 847 | ||
Property, plant and equipment | 106,964 | ||
Goodwill | 108,846 | ||
Brand | 98,500 | ||
Other intangible assets | 3,800 | ||
Other assets | 378 | ||
Total assets acquired | 344,178 | ||
Accounts payable | 3,861 | ||
Accrued expenses and other current liabilities | 4,085 | ||
Deferred income taxes | 18,437 | ||
Other liabilities | 59 | ||
Total liabilities assumed | 26,442 | ||
Net assets acquired | 317,736 | ||
Cash consideration | 172,993 | ||
Nominal value of equity issued | 162,999 | ||
Fair Value reduction due to liquidity | (18,256) | ||
Estimated total purchase price | $ 317,736 |
Dogfish Head Brewery Transaction (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of assets acquired and liabilities assumed | The following table summarizes the acquisition date fair value of the tangible assets, intangible assets, liabilities assumed, and related goodwill acquired from Dogfish Head, as well as the allocation of purchase price paid:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited proforma information |
|
Common Stock and Share-Based Compensation |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock and Share-Based Compensation |
Option Activity Information related to stock options under the Restated Employee Equity Incentive Plan and the Stock Option Plan for
Non-Employee Directors is summarized as follows:
Of the total options outstanding at March 28, 2020, 42,000 shares were performance-based options for which the performance criteria had yet to be achieved. On January 31, 2020, the Company granted options to purchase an aggregate of 978 shares of the Company’s Class A Common Stock to the Company’s newly appointed non-employee Director. These options have a weighted average fair value of $146.87 per share, of which all shares vested immediately.On March 1, 2020, the Company granted options to purchase an aggregate of 14,962 shares of the Company’s Class A Common Stock to senior management with a weighted average fair value of $142.25 per share, of which all shares relate to performance-based stock options. On March 2, 2020, the Company granted options to purchase an aggregate of 7,030 shares of the Company’s Class A Common Stock to the Company’s newly appointed Chief People Officer with a weighted average fair value of $142.23 per share, Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:
Non-Vested Shares Activity The following table summarizes vesting activities of shares issued under the investment share program and restricted stock awards:
On March 1, 2020, the Company granted 15,011 shares of restricted stock units to certain officers, senior managers and key employees, of which all shares vest ratably over service periods of four years. Additionally on March 1, 2020, the Company granted a combined 13,482 shares of restricted stock units to select senior management employees with various service and performance based vesting conditions. On March 1, 2020, employees elected to purchase 9,127 shares under the Company’s investment share program. The weighted average fair value of the restricted stock units and investment shares, which are sold to employees at discount under its investment share program, was $370.79 and $169.43 per share, respectively. On March 2, 2020, the Company granted its newly appointed Chief People Officer 2,696 shares of restricted stock units with a weighted-average fair value of $370.79 per share with service based vesting through 2024.Stock-Based Compensation Stock-based compensation expense related to share-based awards recognized in the thirteen weeks ended March 28, 2020 and March 30, 2019 was $2.6 million and $2.1 million, respectively, and was calculated based on awards expected to vest . |
Net Income per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Earnings Per Share, Basic | The following table sets forth the computation of basic net income per share using the two-class method:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Earnings Per Share, Diluted | The following table sets forth the computation of diluted net income per share, assuming the conversion of all Class B Common Stock into Class A Common Stock and using the
two-class method for unvested participating shares:
|
Dogfish Head Brewery Transaction |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dogfish Head Brewery Transaction |
On May 8, 2019, the Company entered into definitive agreements to acquire Dogfish Head Brewery (“Dogfish Head”) and various related operations (the “Transaction”) through the acquisition of all of the equity interests held by certain private entities in Off-Centered Way LLC, the parent holding company of the Dogfish Head operations. In accordance with these agreements, the Company made a payment of $158.4 million, which was placed in escrow pending the satisfaction of certain closing conditions. The Transaction closed on July 3, 2019, for total consideration of $336.0 million consisting of $173.0 million in cash and 429,291 shares of restricted Class A Common Stock that had an aggregate market value as of July 3, 2019 of $163.0 million, after taking into account a post-closing cash related adjustment. As required under the definitive agreements, 127,146 of the 429,291 shares of restricted Class A Stock have been placed in escrow and will be released no later than July 3, 2029. These shares had a market value on July 3, 2019 of $48.3 million. The timing of the release of these escrowed shares is primarily related to the continued employment with the Company of Samuel A. Calagione III, one of the two Dogfish Head founders.The fair value of the Transaction is estimated at approximately $317.7 million. The following table summarizes the acquisition date fair value of the tangible assets, intangible assets, liabilities assumed, and related goodwill acquired from Dogfish Head, as well as the allocation of purchase price paid:
The Company accounted for the acquisition in accordance with the accounting standards codification guidance for business combinations, whereby the total purchase price was allocated to the acquired net tangible and intangible assets of Dogfish Head based on their fair values as of the Transaction closing date. The Company believes that the information available as of the Transaction closing date provides a reasonable basis for estimating the fair values of the assets acquired and liabilities assumed; however, the Company is continuing to finalize these amounts, particularly with respect to income taxes and valuation of inventories, fixed assets, and intangible assets. Thus, the preliminary measurements of fair value reflected are subject to change as additional information becomes available and as additional analysis is performed. The Company expects to finalize the valuation and complete the allocation of the purchase price as soon as practicable, but no later than one year from the closing date of the acquisition, as required. The fair value of the Dogfish Head brand trade name is estimated at approximately $98.5 million and the fair value of customer relationships is estimated at $3.8 million. The Company estimated the Dogfish Head brand trade name will have an indefinite life and customer relationships will have an estimated useful life of 15 years. The customer relationship intangible asset will be amortized on a straight-line basis over the 15 year estimated useful life. The fair value of the deferred income tax liability assumed is $18.4 million, representing the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax basis. The Company used a preliminary consolidated tax rate to determine the net deferred tax liabilities. The Company will record measurement period adjustments as the Company applies the appropriate tax rate for each legal entity within Dogfish Head. The expectation is that the Dogfish Head deferred income taxes will be subject to the Company’s consolidated rate. The excess of the purchase price paid over the estimated fair values of the assets and liabilities assumed has been recorded as goodwill in the amount of $108.8 million. Goodwill associated with the acquisition is primarily attributable to the future growth opportunities associated with the Transaction, expected synergies and value of the workforce. The Company believes the majority of the goodwill is deductible for tax purposes. The fair value of the brand trade name was determined utilizing the relief from royalty method which is a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trade name and discounted to present value using an appropriate discount rate. The fair value of the property, plant and equipment was determined utilizing the cost and market valuation approaches. The results of operations from Dogfish Head have been included in the Company’s consolidated statements of comprehensive income since the July 3, 2019 Transaction closing date. Consistent with prior periods and considering post-merger reporting structures, the Company will continue to report as one operating segment. The combined Company’s brands are predominantly beverages that are manufactured using similar production processes, have comparable alcohol content, generally fall under the same regulatory environment, and are sold to the same types of customers in similar size quantities at similar price points and through the same channels of distribution. The following unaudited pro forma information has been prepared, as if the Transaction and the related debt financing had occurred as of December 30, 2018, the first day of the Company’s 2019 fiscal year. The pro forma amounts reflect the combined historical operational results for Boston Beer and Dogfish Head, after giving effect to adjustments related to the impact of purchase accounting, transaction costs and financing. The unaudited pro forma financial information is not indicative of the operational results that would have been obtained had the Transaction occurred as of that date, nor is it necessarily indicative of the Company’s future operational results. The following adjustments have been made:
|
Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands |
Mar. 28, 2020 |
Dec. 28, 2019 |
---|---|---|
Current inventory: | ||
Raw materials | $ 73,267 | $ 61,522 |
Work in process | 14,775 | 12,631 |
Finished goods | 36,487 | 31,885 |
Total current inventory | 124,529 | 106,038 |
Long term inventory | 15,413 | 10,048 |
Total inventory | $ 139,942 | $ 116,086 |
Leases - Maturities of lease liabilities (Detail) $ in Thousands |
Mar. 28, 2020
USD ($)
|
---|---|
Operating Leases | |
2020 | $ 3,962 |
2021 | 9,816 |
2022 | 9,695 |
2023 | 9,694 |
2024 | 9,470 |
Thereafter | 39,524 |
Total lease payments | 82,161 |
Less imputed interest | (13,454) |
Present value of lease liability | $ 68,707 |
Operating Lease, Weighted Average Discount Rate, Percent | 3.50% |
Operating Lease Weighted-Average Remaining Term | |
Lease Weighted Average Remaining Lease Term | 9 years 4 months 24 days |
Finance Lease Liabilities, Payments, Due | |
2020 | $ 464 |
2021 | 626 |
2022 | 626 |
2023 | 626 |
2024 | 265 |
Thereafter | 23 |
Total lease payments | 2,630 |
Less imputed interest | (183) |
Present value of lease liability | $ 2,447 |
Finance Lease, Weighted Average Remaining Lease Term | 4 years 6 months |
Finance Lease, Weighted Average Discount Rate, Percent | 3.50% |
9[H0L=]<)UG4Y@+RSVH7A^_!TV@
MI<'I^<6B3ULV/X I9UM_X<[1)^(#I@=*(- U7^#:,@.N^]J_U!VG\Q8^YE(+
MF(Y-@2FW_$P)_M>XAEDN;?VY6V'4A /[DU&W91MW0,,MOWAYJ7)XO/7GN@RL
M*!A?"\PBKF$3X5VMMHPMUGW^_L]N:^7;'Q9AILL&C-MMS/O\&X?G'SUA D/#
M1!C.'WV04= O)H@DQ^WBVM#EWP6= 8S3_]_4-6G?8J)@<8#V
MD&?>YIFM/[X\O_$-MMM0J9AL>QWMI@:VO8Z5!X*INY_P\:EJH_$0S.4R_'ID
MONF*M3PWH9RU70Z*!&T>==HI'M<[[+J^/N:N:ZZMZGO6IBMPH9BS/6YL(?N6
ME\H\SL[Q)5;#DB]9EWS)B*Y8O$62XBW9T!MKRZ5?6RX;2F*5.*P2ER:KX;&V
MB#/7^^#**;$:XLS3X &A9%(;%'_>"9^
MU^+&W:7W>" W(3=ATJ5DBY-\1V/,CG\?T] ZPWG6K=UW0/5L,B>3F1O/4:!YB1VXT,6N-)B4\SF.&
M[AF0R""2'U'1B#1MT'P6>JQIM)PH*,'Q"_ -35D51551U!I%,.LPAT-'4>$G.L/24E:W.'/IN6-DJ^=((J*' _I/YPC[JCV5\#0UB00[R>F3_:<8]K2
M2//'KA,\CN.A,4YC
"-6^,23-A
M0@/^#I/%$]-^E,Y39,(EDAQF\F@8+"'E!HDA0;T'/AVUIVPF*Q#I[EL6>?6R
M55Z_!*@P[T;?Z9GBVUWJ[6\-5*3W&