H. Product Recall

In April 2008, the Company announced a voluntary product recall of certain glass bottles of its Samuel Adams^® products. The recall was a precautionary step and resulted from routine quality control inspections at the Cincinnati Brewery, which detected glass inclusions in certain bottles of beer. The recall process was substantially completed during the fourth quarter of 2008.

The following table summarizes the Company’s reserves and reserve activities for the product recall for the twenty-six weeks ended June 30, 2012 (in thousands):


	Reserves at December 31, 2011			Changes in Estimates		Reserves Used			Reserves at June 30, 2012
Excise tax credit	$	(242	)		—		242		$	—
Recall-related costs		54			7		(61	)		—
Inventory reserves		67			—		(67	)		—

	$	(121	)	$	7	$	114		$	—

During the second quarter of 2011, the Company and its former glass bottle supplier entered into an agreement to settle all claims regarding the recall. The Company received a cash payment of $20.5 million, which was recorded as an offset to operating expenses, and all parties have released each other of any claims as they relate to this matter. In addition, the Company reversed approximately $0.6 million in reserves against invoices due to the supplier, which was recorded as an offset to cost of goods sold.

Although the Company is not aware of any additional quality or safety issues that are likely to result in material recalls or withdrawals, there can be no assurance that additional issues will not be identified in the future.