Financial Data and Key Metrics Changes - The company reported a third quarter depletion decrease of 6% on a fiscal calendar basis and 3% on a comparable week's basis, which improved from a decrease of 7% in the second quarter [14][60] - Gross margin for the third quarter was over 45%, consistent for two consecutive quarters, with a reported net income of $45.3 million or $3.70 per diluted share [16][62] - General and administrative expenses increased by $4.9 million or 13.2% from the third quarter of 2022, primarily due to higher salaries and consulting costs [32] Business Line Data and Key Metrics Changes - Twisted Tea experienced 34% dollar sales growth, adding $3.2 share points and expanding its overall share to 29% of total FMB dollar sales in measured on-premise channels [17][43] - Truly's dollar sales declined 26% in the third quarter, with a loss of $3 share points, although the decline was less severe than in the previous quarter [50][87] - Sam Adams' total share across all channels was slightly up in the third quarter, supported by new campaigns and seasonal products [25] Market Data and Key Metrics Changes - The Beyond Beer category is expected to grow faster than the traditional beer market over the next several years, with the company planning to invest in Twisted Tea and Truly brands [9] - Hard seltzers have seen a decrease in shelf space from 11% to about 8%, while RTDs have increased by 1 to 2.5 points [3] Company Strategy and Development Direction - The company aims to sustain Twisted Tea's growth while improving Truly's volume trends and enhancing supply chain performance to improve gross margins [45] - There is a focus on innovation within the Beyond Beer categories, with new products like Twisted Tea Extreme being tested in select markets [20][54] - The company is modernizing its supply chain and targeting procurement savings to improve margins [26][56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the operating environment, noting that the current demand for beer may be weaker than in previous years [75] - The company expects to see continued improvements in depletion trends, with a narrowing of full-year guidance reflecting a more conservative outlook [33][87] - There is confidence in the long-term growth potential of the diversified beverage portfolio, with expectations for improved performance in 2024 [57][135] Other Important Information - The company repurchased 280,000 shares at a cost of $69 million, with approximately $290 million remaining on the share repurchase authorization [36][89] - The full-year effective tax rate is estimated to be approximately 28%, with updated non-GAAP earnings per share guidance of $7 to $9 [34] Q&A Session Summary Question: What is the company's approach to SKU replacement? - The company is replacing less productive SKUs with new ones that are expected to perform better, maintaining shelf space while focusing on productivity [67] Question: How are margins performing in the third quarter? - Margins were in line with expectations, driven by waste reduction and procurement savings [71] Question: What is the outlook for demand and pricing in the current environment? - The company is being prudent with pricing strategies, expecting a lighter pricing environment in the fourth quarter [76] Question: What is the split between third-party manufacturing and internal production? - The company aims to keep internal production around 90% to 100%, increasing from 65% to 70% internal production this year [78] Question: How does the company view the performance of Truly? - Management is optimistic about the changes made to Truly, with gradual improvements expected in the coming quarters [49][135]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-14092 THE BOSTON BEER COMPANY, INC. (Exact name of registrant as specified in its charter) MASSACHUSETTS 04- ...

Thank you. Good afternoon, and welcome. This is Mike Andrews, Associate General Counsel and Corporate Secretary of The Boston Beer Company. I'm pleased to kick off our 2023 second quarter earnings call. Joining the call from Boston Beer are Jim Koch, Founder and Chairman; Dave Burwick, our CEO and Matt Murphy, our Chief Accounting Officer and Interim CFO. Greetings, and welcome to The Boston Beer Company Second Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A brief que ...

Financial Data and Key Metrics Changes - The company's first quarter 2023 gross margin decreased to 38.0% from 40.2% in the first quarter of 2022, primarily due to higher inventory obsolescence costs and higher brewery processing costs, partially offset by price increases [56][81] - A net loss of $9 million or $0.73 per diluted share was reported for the first quarter, compared to a net loss of $2 million or $0.16 per diluted share in the same period last year, driven by lower net revenue and gross margins [81] - Depletions for the quarter decreased by 6% from the prior year, reflecting declines in several brands, partially offset by increases in Twisted Tea and Hard Mountain Dew [79] Business Line Data and Key Metrics Changes - Twisted Tea experienced a 34% dollar sales growth in the first quarter, adding 3 share points and expanding its overall share leadership, now accounting for 27% of total FMB dollar sales in measured off-premise channels [40] - Truly's performance was negatively impacted by the overlap with the previous year's Margarita launch, which constituted over 25% of the total Truly business in the first quarter last year [18][46] - The core Truly business is showing signs of stabilization, with an increase in sales per point and share growth in almost half of the 63 markets tracked by Circana [20][73] Market Data and Key Metrics Changes - The hard seltzer category is expected to decline from about 10% of beer to closer to 8%, while Truly is projected to increase its share from 25% to 27% within that category [104] - The company anticipates that the Truly refresh program will help mitigate headwinds as the year progresses [50] Company Strategy and Development Direction - The company is focused on sustaining Twisted Tea's growth and improving Truly's volume trends while simplifying its business to enhance gross margins [48] - A major advancement of the Truly brand is set for launch, including a simplified product lineup and increased marketing efforts [41] - The company aims to return to long-term sustainable growth through operational changes and continued investment in innovation [70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the macroeconomic environment and indicated that the company is prepared to adapt its strategies accordingly [9][10] - The company expects to see improvements in margins in the second half of the year as operational plans take effect [38][76] - Management expressed optimism about the potential for recovery in Truly's performance as the brand refresh takes hold [20][50] Other Important Information - The company repurchased 82,000 shares at a cost of $27.5 million, with approximately $62.8 million remaining on the share repurchase authorization [60] - Full year 2023 gross margins are expected to be between 41% and 43%, with a focus on covering inflationary cost increases through pricing [82] Q&A Session All Questions and Answers Question: What are the expectations for Truly? - Management indicated that Truly is expected to continue losing market share, but they are hopeful for improvements in the second half of the year due to new initiatives [5][18] Question: Can you comment on supply chain utilization? - Management stated that internal capacity is planned to be fully utilized, while external capacity serves as an insurance policy for growth [15] Question: What is the impact of the Truly Vodka Seltzer rebranding? - The rebranding had a negative impact on margins, estimated at 100 to 150 basis points in Q1, but management believes it will benefit the brand in the long run [19][80] Question: How is the organization handling recent challenges? - Management expressed confidence in the resilience of the organization and the sales force, emphasizing their readiness for upcoming initiatives [103]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 THE BOSTON BEER COMPANY, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-3284048 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Id ...

Boston Beer Company, Inc. (NYSE:SAM) Q4 2022 Earnings Conference Call February 15, 2023 5:00 PM ET Company Participants Michael Andrews - Associate General Counsel & Corporate Secretary James Koch - Founder & Chairman David Burwick - President, CEO & Director Frank Smalla - CFO & Treasurer Conference Call Participants Sunil Modi - RBC Capital Markets Nadine Sarwat - Sanford C. Bernstein & Co. Vivien Azer - Cowen and Company Kevin Grundy - Jefferies Kaumil Gajrawala - Crédit Suisse Eric Serotta - Morgan Stan ...

The Boston Beer Company, Inc. (NYSE:SAM) Q3 2022 Earnings Conference Call October 20, 2022 5:00 PM ET Company Participants Mike Andrews - Associate General Counsel & Corporate Secretary Jim Koch - Founder & Chairman Dave Burwick - Chief Executive Officer Frank Smalla - Chief Financial Officer Conference Call Participants Nik Modi - RBC Kaumil Gajrawala - Credit Suisse Eric Serotta - Morgan Stanley Kevin Grundy - Jefferies Bonnie Herzog - Goldman Sachs Steve Powers - Deutsche Bank Rob Ottenstein - Evercore N ...

Financial Data and Key Metrics Changes - The company reported a net income of $53.3 million or $4.31 per diluted share for Q2 2022, down from $59.2 million or $4.75 per diluted share in Q2 2021, primarily due to lower gross margins despite increased revenue and lower operating expenses [37] - Q2 2022 gross margin was 43.1%, a decrease from 45.7% in Q2 2021, attributed to higher material costs and increased returns on scrap [41] - Depletions and shipments for the first 29 weeks of 2022 declined by 7% and 11% respectively compared to the same period in 2021 [42] Business Line Data and Key Metrics Changes - Depletions for Truly Hard Seltzer declined by 17% in Q2 2022, while Twisted Tea and Hard Mountain Dew showed growth, with Twisted Tea expanding its position as the number one FMB [19][25] - Excluding Truly, depletion volumes for the rest of the business increased by 14% in Q2 2022 [15] - Samuel Adams brand depletions were down low single digits, while Angry Orchard maintained a 48% share in the hard cider segment [31][32] Market Data and Key Metrics Changes - The hard seltzer segment saw a 13% decline in dollar sales in Q2 2022, with a shift in consumer preference back to premium light beers, particularly among the 35 to 44 age group [19][20] - The hard seltzer category's growth forecast was adjusted down from flat to +10% to a decline of 15% to 20% for 2022 [22] - Hard seltzers accounted for 10% of total beer dollars in Q2 2022, down from 11.4% in Q2 2021 [21] Company Strategy and Development Direction - The company aims to become the number one player in the fast-growing Beyond Beer segment, focusing on Twisted Tea, Truly, and Hard Mountain Dew for growth [16][11] - A reformulation of Truly's core flavors is underway, with the addition of real fruit juice to enhance taste [24] - The company plans to maintain momentum for Twisted Tea and Hard Mountain Dew while improving Truly's performance through innovation and marketing [18][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by declining consumer demand and supply chain issues, leading to a reduction in volume and earnings guidance for the remainder of 2022 [10] - The company remains optimistic about the long-term outlook for its diversified beverage portfolio despite current challenges [34] - Management emphasized the need to reengage consumers with hard seltzer and simplify choices in a crowded market [66] Other Important Information - The company generated over $100 million in operating cash flow during Q2 2022 [10] - The 2022 fiscal year includes 53 weeks, which is expected to positively impact growth rates [45] - The company plans to invest between $110 million and $140 million in capital expenditures, primarily for brewery improvements [47][48] Q&A Session Summary Question: How has Truly been trending around the 4th of July? - Management noted that while there was good execution during the 4th of July weekend, it is too early to determine if this indicates a trend [51][53] Question: How to address margin issues related to Truly? - Management explained that margins have been impacted by lower volumes and higher product returns, but improvements are expected as internal production capacity increases [56][58] Question: What are the assumptions behind updated shipment guidance? - The updated guidance reflects a more conservative outlook based on current trends, with expectations of continued declines in Truly and stable performance from Twisted Tea [80][84] Question: What is the expected contribution of Hard Mountain Dew to shipments? - Hard Mountain Dew's contribution is anticipated to be more significant in the latter half of the year as the brand continues to roll out [86] Question: What is the outlook for Truly's shipment volume? - Management confirmed that Truly's shipment volume is expected to decline more than 20% for the full year, aligning with the overall category decline [88][89]

Financial Data and Key Metrics Changes - The company reported a net loss of $2 million or $0.16 per diluted share in Q1 2022, compared to a net income of $65.6 million or $5.26 per diluted share in Q1 2021, primarily driven by lower net revenue and gross margins [31] - Operating expenses increased by 1.2% to $175.1 million in Q1 2022 [32] - Gross margin decreased to 40.2% in Q1 2022 from 45.8% in Q1 2021, mainly due to higher supply chain and materials costs [35] Business Line Data and Key Metrics Changes - Depletions for the quarter decreased by 7% from the prior year, reflecting declines in Truly Hard Seltzer, Angry Orchard, and Dogfish Head brands, partially offset by increases in Twisted Tea [32] - Shipment volume was approximately 1.7 million barrels, a 25.1% decrease from the prior year [33] - Twisted Tea grew double digits in measured off-premise channels, with 15% volume growth and 20% dollar growth [21] Market Data and Key Metrics Changes - The company gained dollar share in measured off-premise channels from 4.9% to 5.1% in Q1 2022, marking the second largest share gain among larger brewers [9] - Hard seltzers maintained a 29% household penetration over the last 52 weeks, equating to 9.3% of total beer dollars in Q1 2022 [15] - The on-premise share of total beer is currently around 13%, down from the pre-COVID level of 16% [58] Company Strategy and Development Direction - The company aims to achieve mid-single digit to double-digit depletions growth driven by broad-based growth across its entire portfolio, especially in Beyond Beer products [13] - New product innovations include Truly Margarita, Truly Poolside variety pack, and Truly Vodka Seltzer, which are expected to enhance market presence [20][19][18] - The company is focused on improving supply chain performance and reducing costs to enhance gross margins [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from supply chain issues and inflation affecting consumer purchases, but expressed confidence in recovery and growth for the full year [10][12] - The company expects depletions and shipment volumes to improve against less difficult prior year comparisons, with a full-year guidance of 4% to 10% growth [41][38] - Management remains cautious about external economic factors, including geopolitical issues and inflation, which may impact performance [102] Other Important Information - The company plans to invest between $140 million and $190 million in capital expenditures, primarily for brewery investments [45] - The fiscal year 2022 includes 53 weeks compared to 52 weeks in 2021, which may affect year-over-year comparisons [41] Q&A Session Summary Question: Can you provide insights on the higher supply chain costs faced in Q1? - Management explained that higher supply chain costs were due to lower absorption from high inventory levels, increased scrap, and temporary higher freight costs, but they expect improvements in supply chain performance [48][49] Question: How is the on-premise channel recovering? - Management noted that the on-premise channel showed strong growth in Q1, with sales per point for Truly Draft up 35%, indicating a positive trend [57][59] Question: What gives confidence that the company can meet its guidance? - Management highlighted upcoming innovations and improved execution as key factors for confidence in meeting guidance, despite acknowledging the challenges from the previous year's strong performance [90][93]

Part I [Business](index=3&type=section&id=Item%201.%20Business) The Boston Beer Company sells alcoholic beverages, including hard seltzer, malt beverages, and hard cider, primarily in the U.S., operating through company-owned breweries and contract arrangements, focusing on 'High End' and 'Beyond Beer' categories with key brands like Truly Hard Seltzer and Samuel Adams - The company operates under multiple trade names, including The Boston Beer Company®, Twisted Tea Brewing Company®, and Truly Hard Seltzer Beverage Company, producing beverages at four primary company-owned breweries and under contract arrangements - The company's business goal is to lead the 'High End' and 'Beyond Beer' categories by offering high-quality, innovative alcohol beverages, supported by a large sales organization and world-class brewers - In 2021, the company entered into licensing agreements with PepsiCo, Jim Beam, and Patagonia to develop, market, and sell new alcoholic beverages, though these are expected to be less than **4%** of net revenue in 2022 - The slowdown in the hard seltzer category growth from **158% growth** in 2020 to **13%** in 2021 significantly impacted the company's business, leading to inventory write-offs and reduced distributor orders in the second half of 2021 [Industry Background](index=3&type=section&id=Industry%20Background) - The 'High End' beer category, which includes hard seltzer, craft beers, and imports, grew approximately **2%** in 2021, significantly outpacing the total beer category's **5% decline**. The company holds an **11% market share** in this category[18](index=18&type=chunk) - The 'Beyond Beer' category (hard seltzer, FMBs, cider, etc.) grew approximately **14%** in 2021 and now represents over **19%** of the combined U.S. beer and Beyond Beer market. The company has a **26% market share** in this category[21](index=21&type=chunk) - The spirits Ready-to-Drink (RTD) market is an emerging category that the company entered in 2021. It is estimated to have grown **118%** during 2021[22](index=22&type=chunk) [Product Portfolio](index=5&type=section&id=Product%20Portfolio) - Truly Hard Seltzer is a leading brand in the hard seltzer category, which grew **13%** in 2021 after a **158% growth** in 2020. The slowdown significantly impacted the company's 2021 business[32](index=32&type=chunk) - Twisted Tea became the largest selling flavored malt beverage (FMB) brand in 2021. The FMB category grew approximately **3%** in 2021[25](index=25&type=chunk)[34](index=34&type=chunk) - The craft beer category, where Samuel Adams and Dogfish Head compete, declined by approximately **6%** in 2021[36](index=36&type=chunk) - Angry Orchard is the largest selling hard cider in the U.S., but the hard cider category declined by **8%** in 2021[25](index=25&type=chunk)[42](index=42&type=chunk) [Production Strategy](index=9&type=section&id=Production%20Strategy) - The company's production at its own breweries decreased from **65%** of volume in 2020 to **56%** in 2021. Capital investments in 2021 were approximately **$147.9 million**, with **$140-$190 million** planned for 2022[71](index=71&type=chunk) - Due to lower than anticipated demand for Truly, the company terminated some third-party production contracts, incurring **$19.6 million** in termination costs and writing off **$9.5 million** in prepayments[75](index=75&type=chunk) Expected Shortfall Fees at Third-Party Facilities | Year | Expected Shortfall Fees (in millions) | | :--- | :--- | | 2022 | $6 | | 2023 | $15 | | 2024 | $11 | | 2025 | $6 | | 2026 | $0 | | Thereafter | $0 | | **Total** | **$38** | [Human Capital Resources](index=13&type=section&id=Human%20Capital%20Resources) - As of December 25, 2021, the company had **2,543** employees, with **132** represented by unions[101](index=101&type=chunk) - The company has implemented numerous Diversity, Equity, and Inclusion (DEI) initiatives since 2019, including creating a full-time DEI Leader position, establishing Coworker Resource Groups, and undergoing a pay equity analysis[108](index=108&type=chunk)[114](index=114&type=chunk) - The 'Samuel Adams Brewing the American Dream' program, in partnership with Accion Opportunity Fund, has loaned over **$74 million** to nearly **3,500** small business owners since 2008, helping to create or maintain over **9,000** jobs[111](index=111&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company identifies several material risks, with the COVID-19 pandemic continuing to pose threats to operations, supply chains, and demand, alongside industry competition, shifts in consumer tastes, and business-specific challenges like managing product portfolio expansion and dependence on key suppliers - The 2021 slowdown in hard seltzer market growth from **158%** in 2020 to **13%** greatly impacted the company's production and shipments, leading to **$102.9 million** in direct supply chain costs, including inventory destruction and contract termination fees[135](index=135&type=chunk) - The company faces increasing competition from large non-alcoholic beverage companies like Pepsi, Coca-Cola, and Monster entering the alcohol market through licensing agreements or acquisitions[126](index=126&type=chunk) - The company is dependent on its network of over **400** independent distributors, and changes in control or ownership within this network could lead to less support for its products[131](index=131&type=chunk)[132](index=132&type=chunk) - The company's reliance on its own breweries (**56%** of 2021 volume) exposes it to capacity constraints, while its use of third-party brewers (like City Brewing, which produced **32%** of 2021 volume) creates logistical costs and potential service-level risks[146](index=146&type=chunk)[147](index=147&type=chunk) - The holder of **100%** of the Class B Common Stock, C. James Koch, is able to exercise substantial influence over all matters requiring stockholder approval, which could delay or prevent a change in control[172](index=172&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) The company owns several major properties, including approximately **76** acres for its Pennsylvania Brewery, **57** acres for its Milton Brewery, and **10** acres for its Cincinnati Brewery, also leasing its principal corporate offices in Boston and various tap room and brewery spaces - The company owns its three largest production breweries, located in Breinigsville, PA (approx. **1 million** sq. ft.), Milton, DE (approx. **240,000** sq. ft.), and Cincinnati, OH (approx. **128,500** sq. ft.)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - The company leases its principal corporate offices in Boston, MA, with a term expiring in 2031, as well as numerous tap rooms and smaller breweries in key urban markets[178](index=178&type=chunk)[182](index=182&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company is facing two notable legal proceedings: a consolidated securities class action lawsuit alleging misleading statements about business prospects, and a proposed class action lawsuit for false advertising regarding Truly product ingredients, both of which the company intends to vigorously defend against - A consolidated securities class action lawsuit was filed against the company and three officers, alleging misleading statements about business operations and prospects between April 22, 2021, and September 8, 2021[191](index=191&type=chunk) - A proposed class action lawsuit filed in August 2021 alleges false advertising and other claims, stating that Truly products were misleadingly labeled regarding their ingredients[192](index=192&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A Common Stock trades on the NYSE under SAM, experiencing significant volatility with a **168%** return in 2020 followed by a **48%** decline in 2021, while Class B shares, held by Chairman C. James Koch, retain full voting rights, and the company has a **$931.0 million** stock repurchase program with **$90.3 million** remaining Annual Stock Return Percentage | Company/Index | 2020 | 2021 | % Change | | :--- | :--- | :--- | :--- | | The Boston Beer Company, Inc. | 167.97% | (48.29)% | | S&P 500 Index | 16.40% | 29.44% | | S&P 500 Beverages Index | 6.56% | 14.51% | - The company has a dual-class stock structure. Class A shares have no voting rights, while Class B shares, held entirely by Chairman C. James Koch, have full voting rights[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - As of December 25, 2021, the company has approximately **$90.3 million** remaining under its **$931.0 million** stock repurchase authorization. No shares were repurchased under the program in 2021[202](index=202&type=chunk)[203](index=203&type=chunk)[235](index=235&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's 2021 financial performance was heavily impacted by the hard seltzer market slowdown, with net revenue growing **18.5%** to **$2.06 billion** but operating income plummeting **96.7%** to **$8.0 million** due to **$102.9 million** in direct costs and **$93.5 million** in indirect costs, resulting in a gross margin decline from **46.9%** to **38.8%**, though liquidity remains solid - The slowdown in the hard seltzer market resulted in **$102.9 million** of direct costs, including **$59.5 million** for inventory obsolescence, **$30.7 million** in contract termination fees, and **$12.7 million** in asset impairments[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - Depletions (distributor sales to retailers) increased by approximately **22%** in 2021, driven by Truly Hard Seltzer, Twisted Tea, Samuel Adams, and Dogfish Head brands[217](index=217&type=chunk) Fiscal Year 2021 vs. 2020 Financial Results (in thousands) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $2,057,622 | $1,736,432 | 18.5% | | Gross Profit | $797,792 | $814,452 | (2.0)% | | Operating Income | $7,997 | $244,207 | (96.7)% | | Net Income | $14,553 | $191,960 | (92.4)% | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents decreased from **$163.3 million** at year-end 2020 to **$66.3 million** at year-end 2021[231](index=231&type=chunk) - Cash provided by operating activities fell sharply to **$56.3 million** in 2021 from **$253.4 million** in 2020, mainly due to lower net income and an increase in income tax receivables[233](index=233&type=chunk) - The company has a **$150.0 million** revolving credit facility expiring in March 2023. As of the filing date, **$20.0 million** had been drawn under the facility[236](index=236&type=chunk) [Critical Accounting Policies](index=34&type=section&id=Critical%20Accounting%20Policies) - Provision for excess or expired inventory was a significant estimate, increasing to **$62.6 million** in 2021 from **$11.3 million** in 2020, driven by the hard seltzer slowdown[240](index=240&type=chunk) - The company performs annual impairment testing for its goodwill and indefinite-lived intangible assets, such as the Dogfish Head trademark. The 2021 test indicated no impairment, but the fair value of the Dogfish Head trademark was only **120.7%** of its carrying value, indicating sensitivity to changes in revenue growth or discount rates[244](index=244&type=chunk)[246](index=246&type=chunk) - Revenue recognition involves key estimates for stale beer returns. The stale beer reserve increased to **$6.0 million** at year-end 2021 from **$3.1 million** in 2020[250](index=250&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes Deloitte & Touche LLP's unqualified opinion on the financial statements and internal controls, highlighting the valuation of the Dogfish Head brand name intangible asset and the reserve for excess or expired inventory as critical audit matters, and provides consolidated financial statements and detailed notes - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements and the company's internal control over financial reporting[268](index=268&type=chunk)[269](index=269&type=chunk) - Critical Audit Matters identified were the valuation of the Dogfish Head brand name intangible asset and the reserve for excess or expired inventory, due to the significant judgments and assumptions required by management[273](index=273&type=chunk)[275](index=275&type=chunk) [Notes to Consolidated Financial Statements](index=46&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - Note C details the financial impact of the hard seltzer market slowdown, including **$59.5 million** in inventory-related costs, **$14.8 million** in contract termination costs, a **$9.5 million** write-off of production prepayments, and a **$12.7 million** impairment of capital projects[340](index=340&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - Note E shows that inventory obsolescence reserves increased significantly to **$43.1 million** as of Dec 25, 2021, from **$6.3 million** as of Dec 26, 2020, primarily due to excess hard seltzer inventory[346](index=346&type=chunk) - Note J discloses that at current projections, the company anticipates incurring approximately **$38 million** in shortfall fees under its third-party production contracts between 2022 and 2025[360](index=360&type=chunk) - Note U outlines new perpetual licensing agreements with Jim Beam (for Sauza FMBs and Truly spirits) and PepsiCo (for Hard MTN DEW), both expected to launch in early 2022[427](index=427&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 25, 2021, an assessment affirmed by Deloitte & Touche LLP's unqualified opinion - Management concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year 2021[434](index=434&type=chunk) - Based on the COSO 2013 framework, management assessed the company's internal control over financial reporting as effective as of December 25, 2021[436](index=436&type=chunk) Part III [Directors, Executive Compensation, Security Ownership, and Accountant Fees](index=72&type=section&id=Items%2010-14) Information for Items 10 through 14, covering Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Related Transactions, and Principal Accounting Fees, is incorporated by reference from the company's definitive Proxy Statement for its 2022 Annual Meeting - Information regarding directors, executive compensation, security ownership, related party transactions, and principal accounting fees is incorporated by reference from the registrant's definitive Proxy Statement for the 2022 Annual Meeting[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk)[454](index=454&type=chunk)[455](index=455&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=73&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report, including consolidated financial statements, notes, various agreements, equity plans, executive contracts, and required CEO and CFO certifications - This section provides a comprehensive list of all financial statements, schedules, and exhibits filed with the Form 10-K, including key agreements and required certifications[456](index=456&type=chunk)[458](index=458&type=chunk)