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UNITED STATES FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 11, 2004 The Boston Beer Company, Inc. Massachusetts 001-14092 04-3284048
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Exact name of registrant as specified in its chapter)
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
75 Arlington Street, Boston, MA |
02116 |
Registrant's telephone number, including area code (617) 368-5000 |
<PAGE>
Item 12. Results of Operations and Financial Condition.
On February 11, 2004, The Boston Beer Company, Inc. disclosed unaudited financial information for the fourth quarter of 2003 in an earnings release, a copy of which is set forth in the attached Exhibit 99.
The information in this Form 8-K and the Exhibit 99 attached hereto is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
The Boston Beer Company Inc. |
|
Date February 11, 2004 |
/s/ William F. Urich |
|
|
William F. Urich |
*
Print name and title of the signing officer under his signature.Exhibit
99. Press release of The Boston Beer Company, Inc. dated February 11, 2004.
<PAGE> 2
EXHIBIT 99
BOSTON BEER REPORTS 2003 VOLUME,
REVENUE AND EARNINGS
BOSTON, MA (2/11/04) -- The Boston Beer Company, Inc. (NYSE: SAM) today announced fourth quarter 2003 volume, revenue and earnings.
4th Quarter Results
For the three month period ended December 27, 2003, Boston Beer shipment volumes were down 6.3%. The following chart compares reported shipment volume for the current period to the prior year.
Q4-2003 |
Q4-2002 |
%Chg |
||||
|
|
|
||||
(in barrels) |
||||||
Total Boston Beer Brands |
301,486 |
321,851 |
-6.3 |
|||
3rd Party Contract Brewing |
1,153 |
1,141 |
1.1 |
|||
|
|
|
||||
Total Company |
302,639 |
322,992 |
-6.3 |
The decrease in shipment volume is primarily related to Sam Adams Light® which was higher during the fourth quarter 2002 when Sam Adams Light was rolled out nationally. Distributor sales of Boston Beer brands to retail (depletions) during the 2003 fourth quarter totaled 336,000 barrels, approximately a 6% decrease from the same period in 2002.
Net revenue per barrel remained flat, with price increases taken in 2003 offset by a shift in the package mix towards kegs from bottles. This shift reflects the return to a more normal mix from the fourth quarter 2002 mix that was affected by the higher shipment volume of Sam Adams Light® bottles during the fourth quarter 2002 product launch.
The Company earned $3.6 million in net income and $.25 per diluted share for the quarter versus net income of $2.1 million and $.13 per diluted share for the same period last year. Gross margin as a percent of net revenue was 56.6% as compared to 57.8% in the prior year fourth quarter. The decline in gross margin was due to a $1.5 million charge expensed during the fourth quarter 2003 relating to securing long-term production alternatives in the event of an unfavorable outcome relating to the arbitration with Miller Brewing Company. On October 28, 2003, the arbitrators issued a decision that Miller Brewing Company was not entitled to early termination of its production agreement with the Company; and, thus, the Company, no longer needing the backup, expensed the costs incurred in establishing those alternatives. Advertising, selling and promotion expenses decreased by $4.8 million or 19.2% as compared to the prior year quarter, due primarily to higher brand support in 2002 for the launch of Sam Adams Light®. General and administrative expenses for the quarter decreased $828,000 compared to the fourth quarter of 2002, as a result of the award against Miller Brewing Company by the
<PAGE> 3
arbitrators related to the Company's legal costs incurred in connection with the proceedings.
Full Year Results
For the twelve month period ended December 27, 2003, Boston Beer recorded net revenue of $207.9 million, a 3.4% decrease from the same period in 2002. The decline in net revenue is primarily due to a 3.9% decline in shipment volume, partially offset by a price increase. The following chart compares reported sales volume for the current twelve months to the same period last year.
YTD-2003 |
YTD-2002 |
%Chg |
||||
|
|
|
||||
(in barrels) |
||||||
Total Boston Beer Brands |
1,229,217 |
1,280,589 |
-4.0 |
|||
3rd Party Contract Brewing |
6,734 |
5,786 |
16.4 |
|||
|
|
|
||||
Total Company |
1,235,951 |
1,286,375 |
-3.9 |
For the full year 2003 Boston Beer Brand distributor sales to retail (depletions) totaled 1,237,000 barrels, approximately even with 2002.
The Company earned $10.6 million in net income or $.70 per diluted share for the twelve months ending December 27, 2003 versus net income of $8.6 million and $.52 per diluted share earned during 2002. Gross margin as a percent of net revenue declined slightly to 58.8% as compared to 59.0% in 2002. The decline in gross margin was due to a $1.5 million charge relating to certain precautions taken to secure long-term production supply prior to learning the favorable outcome of the arbitration proceedings with Miller Brewing Company. Advertising, promotional and selling expenses decreased by $8.9 million or 8.8% for the full year 2003 as compared to 2002, primarily due to higher expenditures in 2002 to support the introduction of Sam Adams Light®.
The Company's effective tax rate was 37.8% for the twelve months ended December 27, 2003, down from 39.3% during the same period 2002. The decline is due to shifting a significant portion of the Company's investments from taxable to tax-exempt instruments and a restructuring of the Company's corporate legal entities.
Shipments and orders in-hand suggest that shipments for the first quarter will be approximately even with first quarter 2003 depletions. Actual shipments for the first quarter may differ, however, and no inferences should be drawn with respect to shipments in future periods.
Jim Koch, Chairman of The Boston Beer Company said, "2003 ended with mixed results for the beer industry, and, in particular, a year of lower growth for Better Beer. Volumes in the fourth quarter as compared to 2002 were negatively impacted due to the introduction of Sam Adams Light, which was first introduced in that year. We remain encouraged by the positive trends in the second half of the year for Samuel Adams Boston Lager and Seasonal brands. We have started outdoor and print campaigns behind
<PAGE> 4
Sam Adams Light. It is too early to say whether they are impacting our Sam Adams Light volume, which is still suffering relative to very strong trial numbers during the early launch months."
Martin Roper, Boston Beer President and CEO stated, "We are pleased with the outcome of the arbitration proceedings and look forward to continuing our relationship with Miller Brewing Company. The $1.5 million charge incurred in fourth quarter 2003, relating to securing long-term production alternatives negatively impacted our gross margins. Going forward, we do not anticipate any material changes in our current production economics, and, given expected price increases and current cost pressures, expect to be able to maintain our gross margins in 2004."
Martin Roper also commented on 2003 volume trends. "While not satisfied with the full year volumes of Sam Adams Light, we are pleased that our other core brands have demonstrated volume strength in a difficult year for the beer industry. We are committed to growing Sam Adams Light long-term, and are working on developing advertising campaigns to take best advantage of the significant opportunity that we believe exists. The advertising campaign for Samuel Adams Boston Lager appears to be working and we plan to continue investing behind this campaign as the cornerstone of quality communication for the entire Samuel Adams Brand Family."
During the three and twelve months ended December 27, 2003, the Company repurchased 36,200 and 2.1 million shares, respectively, of its Class A Common Stock for an aggregate purchase price of $589,000 and $29.8 million, respectively. As of February 10, 2004, the Company had $5.2 million remaining on the authorized share buyback expenditure limit. Since the beginning of the share repurchase program, the Company has repurchased a total of approximately 7.1 million shares of its Class A Common Stock for an aggregate purchase price of $74.8 million through February 10, 2004. As of February 10, 2004, the Company has 9.9 million shares of Class A Common Stock outstanding and 4.1 million shares of Class B Common Stock outstanding.
The Boston Beer Company is America's leading brewer of world-class beer. Founded in 1984 by sixth-generation brewer Jim Koch, the Company has won more than 500 international awards for its better-tasting beers. Samuel Adams Boston Lager® is the Company's flagship brand, celebrated worldwide for its high-quality ingredients and traditional brewing techniques. The result is a beer renowned by drinkers for its full flavor, balance, complexity, and consistent quality. For more information, visit the website at www.samadams.com or visit www.bostonbeer.com for financial information.
Statements made in this press release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K for the year
<PAGE> 5
ended December 28, 2002 and for December 29, 2001. Copies of these documents may be found on the Company's website, www.bostonbeer.com, or be obtained by contacting the Company or the SEC.
Wednesday, February 11, 2004
<PAGE> 6
THE BOSTON BEER COMPANY, INC. |
|||||||||||||
Financial Results |
|||||||||||||
(In thousands, except per share data) |
|||||||||||||
Operating Results: |
|||||||||||||
(unaudited) |
(unaudited) |
||||||||||||
Quarter Ended |
12 Months Ended |
||||||||||||
December 27, |
December 28, |
December 27, |
December 28, |
||||||||||
2003 |
2002 |
2003 |
2002 |
||||||||||
|
|||||||||||||
Barrels sold |
303 |
323 |
1,236 |
1,286 |
|||||||||
Gross revenue |
$ |
56,235 |
$ |
60,038 |
$ |
230,103 |
$ |
238,335 |
|||||
Less excise taxes |
5,474 |
5,774 |
22,158 |
22,980 |
|||||||||
|
|
||||||||||||
Net revenue |
50,761 |
54,264 |
207,945 |
215,355 |
|||||||||
Cost of goods sold |
22,016 |
22,917 |
85,606 |
88,367 |
|||||||||
|
|
||||||||||||
Gross profit |
28,745 |
31,347 |
122,339 |
126,988 |
|||||||||
Advertising, promotional and selling expenses |
20,286 |
25,091 |
91,841 |
100,734 |
|||||||||
General and administrative expenses |
2,808 |
3,636 |
14,628 |
14,586 |
|||||||||
|
|
||||||||||||
Total operating expenses |
23,094 |
28,727 |
106,469 |
115,320 |
|||||||||
|
|
||||||||||||
Operating income |
5,651 |
2,620 |
15,870 |
11,668 |
|||||||||
Interest income, net |
144 |
388 |
1,085 |
1,119 |
|||||||||
Other income (expenses), net |
20 |
59 |
19 |
1,304 |
|||||||||
|
|
||||||||||||
Income before income taxes |
5,815 |
3,067 |
16,974 |
14,091 |
|||||||||
Provision for income taxes |
2,198 |
999 |
6,416 |
5,538 |
|||||||||
|
|
||||||||||||
Net income |
$ |
3,617 |
$ |
2,068 |
$ |
10,558 |
$ |
8,553 |
|||||
|
|
||||||||||||
Net income per share - basic |
$ |
0.26 |
$ |
0.13 |
$ |
0.72 |
$ |
0.53 |
|||||
|
|
||||||||||||
Net income per share - diluted |
$ |
0.25 |
$ |
0.13 |
$ |
0.70 |
$ |
0.52 |
|||||
|
|
||||||||||||
Weighted average number of common |
|||||||||||||
shares - basic |
13,890 |
15,749 |
14,723 |
16,083 |
|||||||||
|
|
||||||||||||
Weighted average number of common |
|||||||||||||
shares - diluted |
14,227 |
16,059 |
15,000 |
16,407 |
|||||||||
|
|
<PAGE>
Consolidated Balance Sheets: |
||||||
(unaudited) |
||||||
December 27, |
December 28, |
|||||
2003 |
2002 |
|||||
|
|
|||||
Assets |
||||||
Current Assets: |
||||||
Cash and cash equivalents |
$ |
27,792 |
$ |
20,608 |
||
Short-term investments |
15,098 |
32,001 |
||||
Accounts receivable, net of allowance for doubtful accounts of |
||||||
$450 and $689 as of December 27, 2003 and December 28, 2002, |
||||||
respectively |
10,432 |
17,830 |
||||
Inventories |
9,890 |
8,342 |
||||
Prepaid expenses |
1,126 |
1,284 |
||||
Deferred income taxes |
1,177 |
1,959 |
||||
Other current assets |
2,304 |
1,513 |
||||
|
|
|||||
Total current assets |
67,819 |
83,537 |
||||
Property, plant and equipment, net |
17,059 |
20,202 |
||||
Other assets |
1,099 |
1,690 |
||||
|
Goodwill |
1,377 |
1,377 |
|||
|
|
|||||
Total assets |
$ |
87,354 |
$ |
106,806 |
||
|
|
|||||
Liabilities and Stockholders' Equity |
||||||
Current Liabilities: |
||||||
Accounts payable |
$ |
6,395 |
$ |
8,997 |
||
Accrued expenses |
15,504 |
15,874 |
||||
|
|
|||||
Total current liabilities |
21,899 |
24,871 |
||||
Deferred income taxes |
2,191 |
2,406 |
||||
Other long-term liabilities |
740 |
697 |
||||
Commitments and Contingencies |
||||||
Stockholders' Equity |
||||||
Class A Common Stock, $.01 par value; |
||||||
22,700,000 shares authorized; 16,945,418 and 16,674,556 issued |
||||||
as of December 27, 2003 and December 28, 2002, respectively |
166 |
|||||
Class B Common Stock, $.01 par value; |
||||||
4,200,000 shares authorized; 4,107,355 issued and outstanding |
41 |
|||||
Additional paid-in capital |
62,517 |
59,144 |
||||
Unearned compensation |
(229) |
(189) |
||||
Other comprehensive income |
45 |
419 |
||||
Retained earnings |
74,758 |
64,200 |
||||
Treasury stock, at cost |
||||||
7,102,467 and 5,011,947 shares as of December 27, 2003 and |
||||||
|
|
|||||
December 28, 2002, respectively |
(74,777) |
(44,949) |
||||
|
|
|||||
Total stockholders' equity |
62,524 |
78,832 |
||||
Total liabilities and stockholders' equity |
$ |
87,354 |
$ |
106,806 |
||
|
|
<PAGE>
Consolidated Statements of Cash Flows: |
||||||
(unaudited) |
||||||
12 Months Ended |
||||||
December 27, |
December 28, |
|||||
2003 |
2002 |
|||||
|
|
|||||
Cash flows from operating activities: |
||||||
Net income |
$ |
10,558 |
$ |
8,553 |
||
Adjustments to reconcile net income to net cash from operating activities: |
||||||
Depreciation and amortization |
7,106 |
6,151 |
||||
Loss on disposal of fixed assets |
102 |
206 |
||||
Bad debt (recovery) expense |
(113) |
64 |
||||
Realized gain on sale of marketable equity security |
(128) |
(1,284) |
||||
Stock option compensation expense |
85 |
69 |
||||
Changes in assets and liabilities: |
||||||
Accounts receivable |
7,514 |
1,325 |
||||
Inventories |
(1,548) |
981 |
||||
Prepaid expenses |
158 |
(282) |
||||
Other current assets |
(1,432) |
(792) |
||||
Deferred taxes |
1,427 |
(763) |
||||
Other assets |
(1,653) |
(907) |
||||
|
Accounts payable |
(2,602) |
(2,204) |
|||
Accrued expenses |
159 |
3,026 |
||||
Other long-term liabilities |
8 |
(323) |
||||
|
|
|||||
Net cash from operating activities |
19,641 |
13,820 |
||||
|
|
|||||
Cash flows from investing activities: |
||||||
Purchases of property, plant and equipment |
(1,729) |
(2,336) |
||||
Proceeds on disposal of fixed assets |
32 |
212 |
||||
Purchases of available-for-sale securities |
(3,778) |
(36,459) |
||||
Purchases of held-to-maturity securities |
- |
(9,027) |
||||
Maturities of held-to-maturity investments |
- |
11,059 |
||||
Proceeds from the sale of available-for-sale securities |
20,470 |
5,021 |
||||
Proceeds from the sale of trading security |
- |
1,263 |
||||
|
|
|||||
Net cash from (used in) investing activities |
14,995 |
(30,267) |
||||
|
|
|||||
Cash flows from financing activities: |
||||||
Purchase of treasury stock |
(29,828) |
(9,877) |
||||
Proceeds from exercise of stock options |
2,143 |
1,014 |
||||
Net proceeds from the sale of Investment Shares |
233 |
80 |
||||
|
|
|||||
Net cash used in financing activities |
(27,452) |
(8,783) |
||||
|
|
|||||
Change in cash and cash equivalents |
7,184 |
(25,230) |
||||
Cash and cash equivalents at beginning of period |
$ 20,608 |
45,838 |
||||
|
|
|||||
Cash and cash equivalents at end of period |
$ |
27,792 |
$ |
20,608 |
||
|
|
|||||
Supplemental disclosure of cash flow information: |
||||||
Taxes paid |
$ |
5,571 |
$ |
3,864 |
||
|
|
<PAGE>