Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☐☒ ~~No ☒~~

Number of shares outstanding of each of the issuer’s classes of common stock, as of October 15, ~~2021:~~2022:

The accompanying notes are an integral part of these condensed consolidated financial statements.

For the thirteen and thirty-nine weeks ended September ~~25, 2021~~24, 2022 and September ~~26, 2020~~25, 2021


																									Class A								Accumulated
																							Class A		Common		Class B		Class B		Additional		Other						Total
																							Common		Stock,		Common		Common		Paid-in		Comprehensive			Retained			Stockholders’
																							Shares		Par		Shares		Stock, Par		Capital		Loss			Earnings			Equity
Balance at December 25, 2021																								10,184	$	102		2,068	$	21	$	611,622	$	(194	)	$	371,858		$	983,409
Net loss																																					(1,955	)		(1,955	)
Stock options exercised and restricted shares activities																								31		—						498								498
Stock-based compensation expense																																2,922								2,922
Foreign currency translation adjustment																																		50						50
Balance at March 26, 2022																								10,215	$	102		2,068	$	21	$	615,042	$	(144	)	$	369,903		$	984,924

Net income																																					53,349			53,349
Stock options exercised and restricted shares activities																								10		—						1,027								1,027
Stock-based compensation expense																																4,808								4,808
Foreign currency translation adjustment																																		(71	)					(71	)
Balance at June 25, 2022																								10,225	$	102		2,068	$	21	$	620,877	$	(215	)	$	423,252		$	1,044,037

Net income																																					27,286			27,286
Stock options exercised and restricted shares activities																								2		—						307								307
Stock-based compensation expense																																2,598								2,598
Foreign currency translation adjustment																																		(242	)					(242	)
Balance at September 24, 2022																								10,227	$	102		2,068	$	21	$	623,782	$	(457	)	$	450,538		$	1,073,986

			Class A											Accumulated											Class A								Accumulated
	Class A		Common		Class B			Class B			Additional			Other						Total			Class A		Common		Class B		Class B		Additional		Other						Total
	Common		Stock,		Common			Common			Paid-in			Comprehensive			Retained			Stockholders’			Common		Stock,		Common		Common		Paid-in		Comprehensive			Retained			Stockholders’
	Shares		Par		Shares			Stock, Par			Capital			Loss			Earnings			Equity			Shares		Par		Shares		Stock, Par		Capital		Loss			Earnings			Equity
Balance at December 26, 2020		10,005	$	100		2,178		$	22		$	599,737		$	(252	)	$	357,360		$	956,967			10,005	$	100		2,178	$	22	$	599,737	$	(252	)	$	357,360		$	956,967
Net income																		65,565			65,565																65,565			65,565
Stock options exercised and restricted shares activities		48		1								1,268									1,269			48		1						1,268								1,269
Stock-based compensation expense												4,957									4,957											4,957								4,957
Adoption of ASU 2019-12, Simplifying the accounting for income taxes																		(54	)		(54	)
Foreign currency translation adjustment															20						20
Balance at March 27, 2021		10,053	$	101		2,178		$	22		$	605,962		$	(232	)	$	422,871		$	1,028,724

Net income																		59,195			59,195
Stock options exercised and restricted shares activities		13		—								(9,133	)								(9,133	)
Stock-based compensation expense												5,334									5,334
Conversion from Class B to Class A		100		1		(100	)		(1	)											—
Foreign currency translation adjustment															15						15
Balance at June 26, 2021		10,166	$	102		2,078		$	21		$	602,163		$	(217	)	$	482,066		$	1,084,135

Net loss																		(58,421	)		(58,421	)
Stock options exercised and restricted shares activities												(21	)								(21	)
Stock-based compensation expense												3,711									3,711
Foreign currency translation adjustment															(26	)					(26	)
Balance at September 25, 2021		10,166	$	102		2,078		$	21		$	605,853		$	(243	)	$	423,645		$	1,029,378


Adoption of ASU 2019-12, Simplifying the accounting for income taxes																																				(54	)		(54	)
Foreign currency translation adjustment																																	20						20
Balance at March 27, 2021																					10,053	$	101	2,178		$	22		$	605,962		$	(232	)	$	422,871		$	1,028,724
			Class A										Accumulated
	Class A		Common		Class B			Class B			Additional		Other					Total
	Common		Stock,		Common			Common			Paid-in		Comprehensive			Retained		Stockholders’
	Shares		Par		Shares			Stock, Par			Capital		Loss			Earnings		Equity
Balance at December 28, 2019		9,371	$	94		2,673		$	27		$	571,784	$	(1,669	)	$	165,400	$	735,636
Net income																	18,234		18,234																	59,195			59,195
Stock options exercised and restricted shares activities		38		—								1,858							1,858		13		—							(9,133	)								(9,133	)
Stock-based compensation expense												2,566							2,566											5,334									5,334
Conversion from Class B to Class A		150		2		(150	)		(2	)									—		100		1	(100	)		(1	)											—
Foreign currency translation adjustment														(58	)				(58	)													15						15
Balance at March 28, 2020		9,559	$	96		2,523		$	25		$	576,208	$	(1,727	)	$	183,634	$	758,236
Net income																	60,141		60,141
Balance at June 26, 2021																					10,166	$	102	2,078		$	21		$	602,163		$	(217	)	$	482,066		$	1,084,135

Net loss																																				(58,421	)		(58,421	)
Stock options exercised and restricted shares activities		61		—								4,582							4,582		—		—	—			—			(21	)								(21	)
Stock-based compensation expense												4,537							4,537											3,711									3,711
Conversion from Class B to Class A		215		2		(215	)		(2	)									—
Foreign currency translation adjustment														(13	)				(13	)													(26	)					(26	)
Balance at June 27, 2020		9,835	$	98		2,308		$	23		$	585,327	$	(1,740	)	$	243,775	$	827,483
Net income																	80,768		80,768
Stock options exercised and restricted shares activities		34		1								5,468							5,469
Stock-based compensation expense												3,632							3,632
Defined benefit plans liability adjustment net of tax of $378														1,117					1,117
Foreign currency translation adjustment														61					61
Balance at September 26, 2020		9,869	$	99		2,308		$	23		$	594,427	$	(562	)	$	324,543	$	918,530
Balance at September 25, 2021																					10,166	$	102	2,078		$	21		$	605,853		$	(243	)	$	423,645		$	1,029,378

The accompanying notes are an integral part of these condensed consolidated financial statements.

A. Organization and Basis of Presentation

The Boston Beer Company, Inc. and certain subsidiaries (the “Company”) are engaged in the business of selling alcohol beverages throughout the United States and in selected international markets, under the trade names “The Boston Beer Company®”, “Twisted Tea Brewing Company®”, “Hard Seltzer Beverage Company”, “Angry Orchard® Cider Company”, “Dogfish Head® Craft Brewery”, “Dogfish ~~Head® Craft Distillery”~~Head Distilling Co.”, “Angel City® Brewing Company”, “Coney Island® Brewing Company”, "Green Rebel Brewing Co." and ~~“American Fermentation Company”.~~“Bevy Long Drink Co.”

The accompanying unaudited condensed consolidated balance sheet as of September ~~25, 2021,~~24, 2022, and the unaudited condensed consolidated ~~comprehensive~~ statements of comprehensive operations, stockholders’ equity, and cash flows for the interim periods ended September ~~25, 2021~~24, 2022 and September ~~26, 2020~~25, 2021 have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. All intercompany accounts and transactions have been eliminated. These condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December ~~26, 2020.~~25, 2021.

In the opinion of the Company’s management, the Company’s unaudited condensed consolidated balance sheet as of September ~~25, 2021~~24, 2022 and the ~~results~~condensed consolidated statements of ~~its condensed consolidated~~comprehensive operations, stockholders’ equity, and cash flows for the interim periods ended September ~~25, 2021~~24, 2022 and September ~~26, 2020,~~25, 2021, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. A reclassification has been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation of third-party production prepayments. Refer to Note H of these condensed consolidated financial statements for further details.

B. ~~Slowdown of the Hard Seltzer Market Impact~~

During the thirteen weeks ended September 25, 2021, the market for hard seltzer products continued to experience decelerating growth trends. The slowdown in growth trends greatly impacted the Company's volume of production and shipments within the thirteen weeks ended September 25, 2021, as well as its projections for the future. The volume reduction resulted in several supply chain related costs recorded during the third quarter. These costs include provisions for excess and obsolete inventories, property, plant and equipment impairments, write-offs of third-party production prepayments and provisions for costs associated with the termination of various third-party production contracts.

~~During the thirteen weeks ended September 25, 2021, the Company recorded excess and obsolete inventory reserves and other inventory related costs totaling $54.3~~ ~~million related specifically to a decline in future volume projections, inclusive of estimated destruction costs of $7.5~~ million. The reserves were recorded for inventory that the Company believes will expire, not be used or otherwise offer no net realizable value to the Company based on its current volume and production forecasts. These reserves were recorded for Truly finished goods inventory that is not expected to be sold prior to expiration, Truly packaging, Truly flavorings and other raw materials that are not projected to be used or will expire prior to being used in production. The actual write-offs and costs to destroy the inventory identified as excess and obsolete may vary from this estimate. The inventory related reserves were recorded within cost of goods sold for the thirteen and thirty-nine weeks ended September 25, 2021.

The Company has several third-party production agreements in place to meet the expected increased demand for Truly. Due to the volume slowdown, the Company determined that not all of these agreements are needed to meet adjusted demand. Several of these agreements included guaranteed payments and payments for capital expenditures incurred by the third-parties that the Company is still obligated to pay. The Company recorded contract termination costs totaling $~~19.6~~ million in the thirteen weeks ended September 25, 2021 to terminate certain third-party production agreements which are recorded within contract termination costs and other for the thirteen and thirty-nine weeks ended September 25, 2021. Additionally, the Company wrote off $~~9.5~~ ~~million relating to amounts prepaid pursuant to a third-party production agreement under which the Company has no future plans to utilize.~~

Due to the reduction in its production volume projections, the Company evaluated its construction in progress capital projects to determine if the assets would generate future economic benefits and concluded that certain projects were impaired. The Company recognized impairment expense of $~~12.7~~ ~~million related to projects that will be cancelled due to the volume slowdown. Additionally, the Company recognized a provision of $6.3~~ ~~million for amounts owed to third-parties under non-cancellable purchase orders for~~

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~~components of the cancelled projects which was recorded within contract termination costs and other for the thirteen and thirty-nine weeks ended September 25, 2021.~~

~~The combined expense of $102.4~~ million recognized for the above items contributed to the Company's operating loss for the thirteen weeks ended September 25, 2021. The Company does expect to incur shortfall fees at certain of its ongoing third-party production facilities. These shortfall fees have been factored into the Company's estimates of future performance and financial outlook and are explained in greater detail within Note H of these financial statements.

F.C. Revenue Recognition

During the ~~thirty-nine~~thirty-nine weeks ended September ~~25, 2021~~24, 2022 and September ~~26, 2020,~~25, 2021, approximately 95% of the Company’s revenue was from shipments of its products to domestic distributors, 4% from shipments to international distributors, primarily located in Canada, and less than 1% was from retail beer, cider, and merchandise sales at the Company’s retail locations.

The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of consideration expected to be received in exchange for transferring products. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met. As of September ~~25, 2021~~24, 2022 and December ~~26, 2020,~~25, 2021, the Company has deferred $~~10.4~~9.7 million and $~~13.9~~8.0 million, respectively, in revenue related to product shipped on or prior to these dates. These amounts are included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

Customer promotional discount programs are entered into by the Company with distributors for certain periods of time. The reimbursements for discounts to distributors are recorded as reductions to net revenue and were $17.7 million and $44.3 million for the thirteen and thirty-nine weeks ended September 24, 2022, respectively, and $17.5 million and $59.3 million for the thirteen and thirty-nine weeks ended September 25, 2021, ~~respectively, and were $19.0~~ ~~million and $47.6~~ ~~million for the thirteen and thirty-nine weeks ended September 26, 2020,~~ respectively. The agreed-upon discount rates are applied to certain distributors' sales to retailers, based on volume metrics, in order to determine the total discounted amount. The computation of the discount allowance requires that management make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities

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recorded. Actual promotional discounts owed and paid have historically been in line with allowances recorded by the Company; however, the amounts could differ from the estimated allowance.

Customer programs and incentives are a common practice in the alcohol beverage industry. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses, based on the nature of the expenditure. Customer incentives and other payments made to distributors are primarily based upon performance of certain marketing and advertising activities. Depending on applicable state laws and regulations, these activities promoting the Company's products may include, but are not limited to point-of-sale and merchandise placement, samples, product displays, promotional programs at retail locations and meals, travel and entertainment. Amounts paid to customers in connection with these programs that were recorded as reductions to revenue or as advertising, promotional and selling expenses for the thirteen and thirty-nine weeks ended September 24, 2022 were $11.7 million and $28.9 million, respectively. For the thirteen and thirty-nine weeks ended September 24, 2022 the Company recorded certain of these costs in the total amounts of $8.4 million and $21.6 million, respectively, as reductions to net revenue. Amounts paid to customers in connection with these programs for the thirteen and thirty-nine weeks ended September 25, 2021 were $12.2 million and $35.5 million, respectively. For the thirteen and thirty-nine weeks ended September 25, 2021, the Company recorded certain of these costs in the total ~~amounts~~amount of $9.8 million and $29.9 ~~million, respectively, as reductions to net revenue. Amounts paid to customers in connection with these programs for the thirteen and thirty-nine weeks ended September 26, 2020 were $7.5~~ ~~million and $16.9~~ ~~million, respectively. For the thirteen and thirty-nine weeks ended September 26, 2020, the Company recorded certain of these costs in the total amount of $6.9~~ ~~million and $15.9~~ million, respectively, as reductions to net revenue. Costs recognized in net revenues include, but are not limited to, promotional discounts, sales incentives and certain other promotional activities. Costs recognized in advertising, promotional and selling expenses include point of sale materials, samples, and ~~media~~ advertising expenditures in local markets. These costs are recorded as incurred, generally when invoices are received; however certain estimates are required at the period end. Estimates are based on historical and projected experience for each type of program or customer and have historically been in line with actual costs incurred.

G. Net Income (Loss) per Share

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~~I. Net (Loss) Income per Share~~

The Company calculates net income (loss) ~~income~~ per share using the two-class method, which requires the Company to allocate net ~~(loss)~~ income to its Class A Common Shares, Class B Common Shares and unvested share-based payment awards that participate in dividends with common stock, in the calculation of net ~~(loss)~~ income per share.

The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the Class A Common Stock is required for (a) certain future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) certain alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles of Organization of the Company, (c) other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and (e) sales or dispositions of any significant portion of the Company’s assets.

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The Class B Common Stock has full voting rights, including the right to (1) elect a majority of the members of the Company’s Board of Directors and (2) approve all (a) amendments to the Company’s Articles of Organization, (b) mergers or consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Company’s assets, and (d) equity-based and other executive compensation and other significant corporate matters. The Company’s Class B Common Stock is not listed for trading. Each share of the Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of the respective Class B holder, and participates equally in dividends.

The Company’s unvested share-based payment awards include unvested shares (1) issued under the Company’s investment share program, which permits employees who have been with the Company for at least one year to purchase shares of Class A Common Stock and to purchase those shares at a discount ranging from 20% to 40% below market value based on years of employment starting after two years of employment, and (2) awarded as restricted stock awards at the discretion of the Company’s Board of Directors. The investment shares and restricted stock awards generally vest over five years in equal number of shares. The unvested shares participate equally in dividends. See Note NM for a discussion of the current year unvested stock awards and issuances.

Included in the computation of net ~~(loss)~~ income per diluted common share are dilutive outstanding stock options and restricted stock that are vested or expected to vest. At its discretion, the Board of Directors grants stock options and restricted stock to senior management and certain key employees. The terms of the employee stock options are determined by the Board of Directors at the time of grant. To date, stock options granted to employees vest over various service periods and/or based on the attainment of certain performance criteria and generally expire after ten years. In December 2018, the Employee Equity Incentive Plan was amended to permit the grant of restricted stock units. The restricted stock units generally vest over four years in equal number of shares. Each restricted stock unit represents an unfunded and unsecured right to receive one share of Class A Stock upon satisfaction of the vesting criteria. The unvested shares participate equally in dividends and are forfeitable. Prior to March 1, 2019, the Company granted restricted stock awards, generally vesting over five years in equal number of shares. The Company also grants stock options to its non-employee directors upon election or re-election to the Board of Directors. The number of option shares granted to non-employee directors is calculated based on a defined formula and these stock options vest immediately upon grant and expire after ten years.

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Net Income (Loss) ~~Income~~ per Common Share - Basic

The following table sets forth the computation of basic net income (loss) ~~income~~ per share using the two-class method:


	Thirteen weeks ended					Thirty-nine weeks ended				Thirteen weeks ended					Thirty-nine weeks ended
	September 25, 2021			September 26, 2020		September 25, 2021		September 26, 2020		September 24, 2022		September 25, 2021			September 24, 2022		September 25, 2021
	(in thousands, except per share data)					(in thousands, except per share data)				(in thousands, except per share data)					(in thousands, except per share data)
Net (loss) income	$	(58,421	)	$	80,768	$	66,338	$	159,143
Allocation of net (loss) income for basic:
Net income (loss)										$	27,286	$	(58,421	)	$	78,680	$	66,338
Allocation of net income (loss) for basic:
Class A Common Stock	$	(48,356	)	$	65,074	$	54,586	$	126,146	$	22,647	$	(48,356	)	$	65,276	$	54,586
Class B Common Stock		(9,885	)		15,254		11,502		31,996		4,580		(9,885	)		13,214		11,502
Unvested participating shares		(180	)		440		250		1,001		59		(180	)		190		250
	$	(58,421	)	$	80,768	$	66,338	$	159,143	$	27,286	$	(58,421	)	$	78,680	$	66,338
Weighted average number of shares for basic:
Class A Common Stock		10,166			9,846		10,103		9,663		10,226		10,166			10,216		10,103
Class B Common Stock*		2,078			2,308		2,129		2,451		2,068		2,078			2,068		2,129
Unvested participating shares		38			67		47		77		27		38			29		47
		12,282			12,221		12,279		12,191		12,321		12,282			12,313		12,279
Net (loss) income per share for basic:
Net income (loss) per share for basic:
Class A Common Stock	$	(4.76	)	$	6.61	$	5.40	$	13.05	$	2.21	$	(4.76	)	$	6.39	$	5.40
Class B Common Stock	$	(4.76	)	$	6.61	$	5.40	$	13.05	$	2.21	$	(4.76	)	$	6.39	$	5.40

*~~Change~~The reduction in Class B Common Stock resulted from the conversion of ~~130,000~~ ~~shares~~ to Class A Common ~~Stock on November 3, 2020 and~~ ~~99,983~~ ~~shares to Class A Common Stock on May 14, 2021 with the ending number of shares reflecting the weighted average for the period.~~stock during fiscal 2021.

Net Income (Loss) ~~Income~~ per Common Share - Diluted

The Company calculates diluted net income (loss) ~~income~~ per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the two-class method, which assumes the participating securities are not exercised.

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The following table sets forth the computation of diluted net income (loss) ~~income~~ per share, assuming the conversion of all Class B Common Stock into Class A Common Stock for the thirteen and thirty-nine weeks ended September ~~25, 2021~~24, 2022 and for the thirteen and thirty-nine weeks ended September ~~26, 2020:~~25, 2021:


	Thirteen weeks ended														Thirteen weeks ended
	September 25, 2021								September 26, 2020						September 24, 2022						September 25, 2021
	Loss to Common Shareholders			Common Shares		EPS			Earnings to Common Shareholders		Common Shares		EPS		Earnings to Common Shareholders		Common Shares		EPS		Loss to Common Shareholders			Common Shares		EPS
	(in thousands, except per share data)														(in thousands, except per share data)
As reported - basic	$	(48,356	)		10,166	$	(4.76	)	$	65,074		9,846	$	6.61	$	22,647		10,226	$	2.21	$	(48,356	)		10,166	$	(4.76	)
Add: effect of dilutive potential common shares
Add: effect of dilutive common shares
Share-based awards		—			—					—		179				—		50				—			—
Class B Common Stock		(9,885	)		2,078					15,254		2,308				4,580		2,068				(9,885	)		2,078
Net effect of unvested participating shares		(180	)		38					6		—				—		—				(180	)		38
Net (loss) income per common share - diluted	$	(58,421	)		12,282	$	(4.76	)	$	80,334		12,333	$	6.51

Net income (loss) per common share - diluted															$	27,227		12,344	$	2.21	$	(58,421	)		12,282	$	(4.76	)

	Thirty-nine weeks ended														Thirty-nine weeks ended
	September 25, 2021								September 26, 2020						September 24, 2022						September 25, 2021
	Earnings to Common Shareholders			Common Shares		EPS			Earnings to Common Shareholders		Common Shares		EPS		Earnings to Common Shareholders		Common Shares		EPS		Earnings to Common Shareholders			Common Shares		EPS
	(in thousands, except per share data)														(in thousands, except per share data)
As reported - basic	$	54,586			10,103	$	5.40		$	126,146		9,663	$	13.05	$	65,276		10,216	$	6.39	$	54,586			10,103	$	5.40
Add: effect of dilutive potential common shares
Add: effect of dilutive common shares
Share-based awards		—			151					—		145				—		58				—			151
Class B Common Stock		11,502			2,129					31,996		2,451				13,214		2,068				11,502			2,129
Net effect of unvested participating shares	250				67					12		—				2		—				250			67
Net income per common share - diluted	$	66,338			12,450	$	5.33		$	158,154		12,259	$	12.90	$	78,492		12,342	$	6.36	$	66,338			12,450	$	5.33

For the thirteen and thirty-nine weeks ended September 24, 2022, in accordance with the two-class method, weighted-average stock options to purchase approximately 12,318 and 25,309 shares of Class A Common Stock were outstanding but not included in computing diluted income per common share because their effects were anti-dilutive. Additionally, performance-based stock options to purchase 17,114 shares of Class A Common Stock and 1,348 performance-based stock awards were outstanding as of September 24, 2022 but not included in computing diluted income per common share because the performance criteria were not met as of the end of the reporting period.

For the thirteen weeks ended September 25, 2021, approximately 182,000 unvested or unexercised securities were excluded from the computation of diluted shares because the net loss position of the Company made them ~~antidilutive.~~anti-dilutive. During the thirty-nine weeks ended September 25, 2021, in accordance with the treasury stock method, weighted-average stock options to purchase approximately 16,000 shares of Class A Common stock were outstanding but not included in computing ~~dilutive~~diluted income per common share because their effects were anti-dilutive. ~~In accordance with the two-class method, weighted average stock options to purchase approximately~~ 0 ~~and~~ ~~1,000~~ shares of Class A Common Stock were outstanding during the thirteen and thirty-nine weeks ended September 26, 2020 but not included in computing dilutive income per common share because their effects were anti-dilutive.

J.H. Comprehensive Income or Loss

Comprehensive income or loss represents net income or loss plus ~~a defined benefit plans liability adjustment, net of tax effect, and~~or minus foreign currency translation adjustment. The foreign currency translation adjustments for the interim periods ended September ~~25, 2021~~24, 2022 and September ~~26, 2020~~25, 2021 were not material. ~~During the thirteen weeks ended September 26, 2020, the Company incurred a $1.1~~ ~~million settlement loss, net of tax, as a result of terminating a defined benefit plan.~~

K.I. Commitments and Contingencies

~~Contract~~

Contractual Obligations

As of September ~~25, 2021,~~24, 2022, projected cash outflows under non-cancelable contractual obligations are as follows:


	Commitments		Commitments
	(in thousands)		(in thousands)
Ingredients (excluding hops and malt)	$	138,401
Ingredients and packaging (excluding hops and malt)			$	97,183
Equipment and machinery				52,156
Hops and malt				51,859
Brand support		67,847		48,076
Hops and malt		47,159
Equipment and machinery		34,368
Packaging		25,489
Other		10,082		23,712
Total commitments	$	323,346	$	272,986

The majority of these contract obligations are for the ~~2021~~remaining thirteen weeks of fiscal ~~year~~2022 and fiscal 2023, with the remainder extending no later than the ~~2025~~2026 fiscal year.

The Company is and in the future may be party to legal proceedings and claims, including class action claims, where significant damages are asserted against it. Given the inherent uncertainty of litigation, it is possible that the Company could incur liabilities as a consequence of these claims, which may or may not have a material adverse effect on the Company’s financial condition or the results of its operations. The Company ~~has~~accrues loss contingencies ~~and may record provisions for which, even~~ if, in the opinion of management and its legal counsel, the risk of loss is probable and ~~estimable. The most significant contingencies~~the loss can be estimated. Material pending legal proceedings are discussed below.

Securities Litigation. On September 14, 2021, a purported class action lawsuit was filed by an individual shareholder in the United States District Court for the Southern District of New York against the Company and three of its officers. The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 between April 22, 2021 and September 8, 2021. The plaintiff claims that defendants made materially false and/or misleading statements or failed to disclose material adverse facts about the Company’s business, operations, and prospects. On October 8, 2021, a nearly identical complaint was filed against the Company by an individual shareholder in the United States District Court for the Southern District of New York. The Court consolidated the two actions and on December 14, 2021 appointed a lead plaintiff, who filed an amended complaint on January 13, 2022. The Company filed a motion to dismiss the amended complaint on March 16, 2022 and is now awaiting the Court's decision.The Company intends to vigorously defend against these ~~lawsuits.~~claims. A range of potential loss ~~is not estimable~~cannot be estimated at this time.

J. Income Taxes


	Thirteen weeks ended		Thirty-nine weeks ended
	September 24, 2022	September 25, 2021	September 24, 2022	September 25, 2021
Effective tax rate	28.6%	23.6%	26.3%	17.3%

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Changes in the tax rate for the thirteen-week period ended September 24, 2022, as compared to the same period in 2021, are primarily due to income before income taxes in the thirteen-week period ended September 24, 2022 compared to a loss before income taxes in the same period in 2021 with no corresponding changes in non-deductible expenses.

~~False Advertising. On August 26, 2021, a proposed class action lawsuit was filed by two individuals~~

Changes in the ~~United States District Court~~tax rate for the Southern District of California against the Company. The complaint alleges claims for false advertising, breach of warranty, unlawful business practices, unfair competition, and violations of certain California and New York consumer protection acts. The plaintiff claims that the Company falsely or misleadingly labelled its Truly products with respectthirty-nine-week period ended September 24, 2022, as compared to the ~~ingredients contained therein. The Company intends~~same period in 2021, are primarily due to ~~vigorously assert and defend its rights~~a decrease in ~~this lawsuit. A range of potential loss is not estimable at this time.~~
excess tax benefits related to the Company’s stock-based compensation award activity.

~~The following table provides a summary of the income tax (benefit) provision for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020:~~

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Thirteen weeks ended

September 25,
2021

September 26,
2020

(in thousands)

Summary of income tax (benefit) provision

Tax (benefit) provision based on net (loss) income

$
(17,772
)

$
26,325

Benefit of ASU 2016-09

(263
)

(5,142
)
Total income tax (benefit) provision

$
(18,035
)

$
21,183

Thirty-nine weeks ended

September 25,
2021

September 26,
2020

(in thousands)

Summary of income tax provision

Tax provision based on net income

$
23,156

$
52,029

Benefit of ASU 2016-09

(9,304
)

(9,481
)
Total income tax provision

$
13,852

$
42,548

~~The benefit of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, decreased by $4.8~~ ~~million to $0.3~~ ~~million for the thirteen weeks ended September 25, 2021 as compared to $5.1~~ ~~million for the thirteen weeks ended September 26, 2020, primarily due to decreases in number of shares exercised. The benefit of ASU 2016-09, decreased by $0.2~~ ~~million to $9.3~~ ~~million for the thirty-nine weeks ended September 25, 2021 as compared to $9.5~~ ~~million for the thirty-nine weeks ended September 26, 2020, primarily due to decreases in number of shares exercised.~~

~~The Company’s effective tax rate for the thirty-nine weeks ended September 25, 2021, excluding the impact of ASU 2016-09, increased to~~ ~~28.9% from~~ ~~25.8% for the thirty-nine weeks ended September 26, 2020, primarily due to a decrease in pre-tax income.~~

In March 2018, the Company amended its ~~existing~~ credit facility in place that provides for a $150.0 million revolving line of credit to extend the scheduled expiration date to March 31, 2023. As of September ~~25, 2021,~~24, 2022, no borrowings were outstanding. For the thirty-nine weeks ended September 24, 2022, the interest rate on the Company's borrowings under the credit facility was less than 1%. As of September 24, 2022, the Company was not in ~~compliance with all~~violation of any of its financial covenants to the lender under the credit facility and t~~he full~~the unused balance of $150.0 million ~~under~~on the line of credit was available to the Company for future borrowing.

N.L. Fair Value Measures

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

•

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.

The Company’s investments in money market funds are measured at fair value on a recurring basis (at least annually) and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The money market funds are invested substantially in United States Treasury and government securities. The Company does not adjust the quoted market price for such financial instruments. Cash, receivables and payables are carried at their cost, which approximates fair value, because of their short-term nature.

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At September ~~25, 2021~~24, 2022 and December ~~26, 2020,~~25, 2021, the Company had ~~money market~~ funds ~~with~~invested in a “Triple A” rated money market fund. The Company considers the “Triple A” rated money market fund to be a large, highly-rated investment-grade institution. As of September ~~25, 2021~~24, 2022 and December ~~26, 2020,~~25, 2021, the Company’s cash and cash equivalents balance was $~~86.5~~222.1 million and $~~163.3~~26.9 million, respectively, including money market funds amounting to $~~83.0~~216.4 million and $~~157.6~~5.8 million, respectively.

~~During~~

Non-Recurring Fair Value Measurement

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The fair value of the ~~thirteen weeks ended September 25, 2021,~~Company's Dogfish Head trademark intangible assets is classified within Level 3 of the fair value hierarchy because there are no observable inputs of market activity. When performing a quantitative assessment for impairment of the trademark asset, the Company ~~determined that it would be unable to use or repurpose certain~~measures the amount of ~~its in-service and under construction capital projects to generate future economic benefits. Accordingly, property, plant and equipment with a~~impairment by calculating the amount by which the carrying value of $~~17.8~~ ~~million was written down~~the trademark asset exceeds its estimated fair value. The estimated fair value is determined based on an income approach using the relief from royalty method, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of the trademark asset. The cash flow projections the Company uses to estimate the fair value of its Dogfish Head trademark intangible asset involves several assumptions, including (i) projected revenue growth, (ii) an estimated royalty rate, (iii) after-tax royalty savings expected from ownership of the trademark and (iv) a discount rate used to derive the estimated fair value of $~~5.1~~ ~~million. This $12.7~~ ~~million charge was included within asset impairments for~~ the thirteen and thirty-nine weeks ended September 25, 2021. The estimate of fair value was determined based on the expected salvage value of the assets. Also relating to discontinued capital projects, the Company recognized a provision of $~~6.3~~ million for amounts owed to third-parties under non-cancellable purchase orders for components of the capital projects which were determined to have no future economic benefit. Refer to Note B of these financial statements for further details.trademark asset.

O.M. Common Stock and Stock-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:

Shares

Weighted-
Average
Exercise Price

Weighted-
Average
Remaining
Contractual
Term in Years

Aggregate
Intrinsic
Value
(in thousands)

Outstanding at December 26, 2020

241,847

$
228.58

Granted

20,420

1,031.01

Forfeited

-

-

Expired

-

-

Exercised

(32,835
)

197.25

Outstanding at September 25, 2021

229,432

$
304.49

5.68

$
59,372

Exercisable at September 25, 2021

81,317

$
228.58

4.82

$
24,398

Vested and expected to vest at September 25, 2021

210,177

$
300.67

5.64

$
54,825


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value (in thousands)
Outstanding at December 25, 2021		221,354		$	310.38
Granted		20,924			378.55
Exercised		(18,867	)		192.41
Forfeited		(7,869	)		339.25
Outstanding at September 24, 2022		215,542		$	326.27		5.35	$	15,306
Exercisable at September 24, 2022		114,559		$	250.93		4.69	$	10,130
Vested and expected to vest at September 24, 2022		189,424		$	315.52		5.12	$	14,323

Of the total options outstanding at September ~~25, 2021,~~24, 2022, ~~30,049~~24,261 underlying shares ~~were~~related to performance-based options for which the performance criteria had yet to be achieved.

On March 1, ~~2021,~~2022, the Company granted options to purchase an aggregate of ~~8,063~~17,114 shares of the Company’s Class A Common Stock to senior management with a weighted average fair value of $~~449.93~~178.10 per share and a weighted average exercise price of $383.46 per share, of which all shares relate to performance-based stock options.

On ~~March 1, 2021~~May 18, 2022, the Company granted options to purchase an aggregate of ~~10,935~~ ~~shares of the Company’s Class A Common Stock to the Chief Executive Officer with a weighted average fair value of $457.25~~ ~~per share, of which all shares relate to service-based stock options.~~

~~On May 19, 2021, the Company granted options to purchase an aggregate of~~ ~~1,422~~3,810 shares of the Company’s Class A Common Stock to the Company’s non-employee Directors. ~~These options have a weighted average fair value of $484.33~~ ~~per share.~~ All of the options vested immediately on the date of the grant. These options have a fair value of $181.14 per share and an exercise price of $356.52 per share.

Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:


	2022			~~2021~~
Expected Volatility		~~36.1~~38.0	%
Risk-free interest rate		~~1.5~~2.1	%
Expected Dividends		0.0	%
Exercise factor		3.0	~~2.6~~ ~~times~~
Discount for post-vesting restrictions		~~0.0~~0.8	%

Non-Vested Shares Activity

~~Table of Contents~~

The following table summarizes vesting activities of shares issued under the investment share program and restricted stock awards:

Number of Shares

Weighted Average Fair Value

Non-vested at December 26, 2020

114,316

$
263.47

Granted

17,821

877.10

Vested

(42,019
)

227.46

Forfeited

(1,000
)

370.68

Non-vested at September 25, 2021

89,118

$
402.77

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	Number of Shares			Weighted Average Fair Value
Non-vested at December 25, 2021		88,848		$	401.70
Granted		42,560			344.62
Vested		(32,476	)		292.27
Forfeited		(8,150	)		512.28
Non-vested at September 24, 2022		90,782		$	410.25

Of the total shares outstanding at September ~~25, 2021,~~24, 2022, ~~2,696~~1,348 shares were performance-based shares for which the performance criteria had yet to be achieved.

On March 1, ~~2021,~~2022, the Company granted a combined ~~7,817~~31,101 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~~ ~~4,861~~ ~~shares of restricted stock units to the Chief Executive Officer, of which all shares vest over~~ ~~five years. On March 1, 2021,~~2022, employees elected to purchase a combined ~~4,954~~10,845 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~~the Company's investment share program, was $~~1,028.71~~383.46 and $~~502.32~~232.41 per share, respectively.

Stock-Based Compensation

The following table provides information regarding stock-based compensation expense included in operating expenses in the accompanying condensed consolidated statements of comprehensive operations:


	Thirteen weeks ended				Thirty-nine weeks ended				Thirteen weeks ended				Thirty-nine weeks ended
	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020		September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021
	(in thousands)				(in thousands)				(in thousands)				(in thousands)
Amounts included in advertising, promotional and selling expenses	$	1,064	$	1,203	$	4,004	$	3,054	$	834	$	1,064	$	3,555	$	4,004
Amounts included in general and administrative expenses		2,647		2,429		9,998		7,681		1,764		2,647		6,773		9,998
Total stock-based compensation expense	$	3,711	$	3,632	$	14,002	$	10,735	$	2,598	$	3,711	$	10,328	$	14,002

P.N. Licensing Agreements

Beam Suntory Licensing Agreement

On July 14, 2021, the Company signed 2two collaboration agreements with Jim Beam Brands Co. (“Jim Beam”) to develop, market and sell alcohol beverages. These agreements are perpetual, with regular assessments of the partnership performance every 5 ~~years~~, years, beginning in Year 5, giving rise to the option to continue agreement terms or terminate the partnership. Under the first of these agreements, the Company is responsible for developing and bringing to market through its distribution network one or more flavored malt beverage products under brand name(s) from the Jim Beam portfolio, beginning with the Sauza brand. Under the second agreement, Jim Beam is responsible for developing and bringing to market through its distribution network one or more full bottled distilled spirits products under brand(s) from the Company’s portfolio, beginning with the Truly brand.

The parties ~~expect to begin~~began shipping beverages to customers under these agreements during the first quarter of 2022. Under the first agreement, the Company is required to make payments to Jim Beam for their share of the brand contribution of the flavored malt beverages sold by the Company. The brand contribution amounts due to Beam are recorded as a component of costs of goods sold. Under the second agreement, Jim Beam is required to make payments to the Company for the Company’s share of the brand contribution of the full bottled distilled spirits sold by Jim Beam. The Company and Jim Beam also reimburse each other for certain marketing costs as they are incurred. These marketing costs are recorded in ~~early~~advertising, promotional and selling expenses. The Company’s sales of Jim Beam branded flavored malt beverages to third parties and the brand contribution payments received or owed the Company by Jim Beam for the use of the Company’s brand names are recorded within net revenue. Total net revenue recognized under these agreements amounted to less than 1% of the Company's total net revenues during the thirteen and thirty-nine week periods ended September 24, 2022.

Pepsi Licensing Agreement

On August 9, 2021, the Company signed ~~an agreement~~a series of agreements with PepsiCo, Inc. (“Pepsi”) to develop, market and sell alcohol beverages. The term of this agreement is perpetual, with provisions to terminate within the initial~~2-years~~ 2 years for a limited number of

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reasons. Under this agreement the Company is responsible for developing, manufacturing, and marketing a flavored malt beverage product under Pepsi’s MTN DEW® brand. As part of the ~~agreement,~~agreements, Pepsi provides certain proprietary ingredients and also licenses the Company tothe use of its MTN DEW® and Hard MTN DEW® trademarks in connection with manufacturing, promoting, marketing, and distributing the developed product through the Pepsi distribution network. The Company retains the right to distribute the developed product through its own distribution network for customers in the on-premise channel.

The ~~parties expect to begin~~Company began shipping flavored malt beverages to ~~customers~~Pepsi during the first quarter of 2022. Pursuant to the terms of the agreements, the Company makes payments to Pepsi for proprietary ingredients, freight costs to ship the product to Pepsi, and certain marketing services. These costs of the proprietary ingredients above fair market value are recorded within net revenue at the time revenue is recognized for the flavored malt beverages sold to Pepsi, and were $0.6 million and $1.9 million, respectively, for the thirteen and thirty-nine weeks ended September 24, 2022. Freight costs and marketing costs are recorded in advertising, promotional and selling expenses. Proprietary ingredients on hand at the end of the period are classified within prepaid expenses and other current assets as of September 24, 2022. Total net revenue recognized under these agreements amounted to less than 2% of the Company's total net revenues during the thirteen and thirty-nine week periods ended September 24, 2022.

O. Restricted Cash

During the year ended December 25, 2021, in accordance with state regulations, the Company consolidated distributor rights within a geographical region by terminating the distribution rights of certain existing distributors (the "terminating distributors") and granting these distribution rights to one existing distributor in the region (the "continuing distributor"). As part of this consolidation process, the Company also entered into an indemnification agreement in ~~early 2022.~~March 2021 with the continuing distributor. As part of the agreement, the Company is indemnified by the continuing distributor for the fair market value of distribution rights paid to the terminating distributors and all related legal fees. In accordance with state regulations, the Company followed the notification process and the distribution rights transferred on December 22, 2021. The Company received the fair market value payments of $39.5 million from the continuing distributor on December 19, 2021 and this amount is recorded in restricted cash and accrued liabilities at December 25, 2021. The Company paid the terminating distributors the fair market value payments of $39.5 million on December 28, 2021.

Q.P. Related Party Transactions

In connection with the Dogfish Head Transaction, the Company entered into a lease with the Dogfish Head founders ~~and other owners of~~for buildings used in certain of the Company’s restaurant operations. The lease is for ten years with renewal options. The total payments due under the initial ten year term is $3.6 million. Total related party expense recognized for the thirteen and thirty-nine weeks ended September 24, 2022 and September 25, 2021 related to the lease was approximately $91,000 and $274,000, respectively. Additionally, during the thirteen and thirty-nine weeks ended each of September 24, 2022 and September 25, 2021, the Company incurred expenses of less than $~~22,000~~100,000 ~~and $72,000, respectively, to~~with various other suppliers affiliated with the Dogfish Head founders.

.Q. Subsequent Events

The Company evaluated subsequent events occurring after the balance sheet date and concluded that there were no events of which management was aware that occurred after the balance sheet date that would require any adjustment to or disclosure in the accompanying condensed consolidated financial statements.

~~Table of Contents~~

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the significant factors affecting the consolidated operating results, financial condition and liquidity and cash flows of the Company for the thirteen and thirty-nine week period ended September ~~25, 2021,~~24, 2022, as compared to the thirteen and thirty-nine week period ended September ~~26, 2020.~~25, 2021. This discussion should be read in conjunction with the Management’s

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Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements of the Company and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~26, 2020.~~25, 2021.

RESULTS OF OPERATIONS

Thirteen Weeks Ended September ~~25, 2021~~24, 2022 compared to Thirteen Weeks Ended September 25, ~~2020~~2021


	Thirteen Weeks Ended (in thousands, except per barrel)																									Thirteen Weeks Ended (in thousands, except per barrel)
	September 25, 2021									September 26, 2020							Amount change			% change			Per barrel change			September 24, 2022									September 25, 2021									Amount change			% change			Per barrel change
Barrels sold					2,312								2,080					232			11.2	%								2,345									2,312						33			1.4	%
				Per barrel			% of net revenue					Per barrel		% of net revenue															Per barrel			% of net revenue						Per barrel			% of net revenue
Net revenue	$	561,643		$	242.93			100.0	%	$	492,792	$	236.90		100.0	%	$	68,851			14.0	%	$	6.03		$	596,453		$	254.38			100.0	%	$	561,643		$	242.93			100.0	%	$	34,810			6.2	%	$	11.45
Cost of goods		388,947			168.23			69.3	%		252,207		121.24		51.2	%		136,740			54.2	%		46.99			338,707			144.45			56.8	%		388,947			168.23			69.3	%		(50,240	)		(12.9	)%		(23.78	)
Gross profit		172,696			74.70			30.7	%		240,585		115.65		48.8	%		(67,889	)		(28.2	)%		(40.96	)		257,746			109.93			43.2	%		172,696			74.70			30.7	%		85,050			49.2	%		35.23
Advertising, promotional and selling expenses		166,817			72.15			29.7	%		108,023		51.93		21.9	%		58,794			54.4	%		20.22			153,717			65.56			25.8	%		166,817			72.15			29.7	%		(13,100	)		(7.9	)%		(6.59	)
General and administrative expenses		32,066			13.87			5.7	%		30,340		14.59		6.2	%		1,726			5.7	%		(0.72	)		37,382			15.94			6.3	%		32,066			13.87			5.7	%		5,316			16.6	%		2.07
Contract termination costs and other		35,428			15.32			6.3	%		—		—		0.0	%		35,428			0.0	%		15.32			—			—			0.0	%		35,428			15.32			0.0	%		(35,428	)		100.0	%		(15.32	)
Impairment of assets		14,158			6.12			2.5	%		441		0.21		0.1	%		13,717			3110.4	%		5.91
Impairment of intangible assets																											27,100			11.56			4.5	%		—			—			0.0	%		27,100			100.0	%		11.56
Impairment of brewery assets																											1,181			0.50			0.2	%		14,158			6.12			2.5	%		(12,977	)		(91.7	)%		(5.62	)
Total operating expenses		248,469			107.46			44.2	%		138,804		66.73		28.2	%		109,665			79.0	%		40.73			219,380			93.56			36.8	%		248,469			107.47			44.2	%		(29,089	)		(11.7	)%		(13.90	)
Operating (loss) income		(75,773	)		(32.76	)		(13.5	)%		101,781		48.93		20.7	%		(177,554	)		(174.4	)%		(81.69	)
Other (expense) income, net		(683	)		(0.30	)		(0.1	)%		170		0.08		0.0	%		(853	)		(501.8	)%		(0.38	)
(Loss) income before income tax (benefit) expense		(76,456	)		(33.06	)		(13.6	)%		101,951		49.01		20.7	%		(178,407	)		(175.0	)%		(82.07	)
Income tax (benefit) expense		(18,035	)		(7.80	)		(3.2	)%		21,183		10.18		4.3	%		(39,218	)		(185.1	)%		(17.98	)
Net (loss) income		(58,421	)		(25.26	)		(10.4	)%		80,768		38.83		16.4	%		(139,189	)		(172.3	)%		(64.09	)
Operating income (loss)																											38,366			16.37			6.4	%		(75,773	)		(32.77	)		(13.5	)%		114,139			(150.6	)%		49.13
Other expense, net																											(132	)		(0.06	)		(0.0	)%		(683	)		(0.30	)		(0.1	)%		551			(80.7	)%		0.24
Income before income tax provision (benefit)																											38,234			16.31			6.4	%		(76,456	)		(33.07	)		(13.6	)%		114,690			(150.0	)%		49.37
Income tax provision (benefit)																											10,948			4.67			1.8	%		(18,035	)		(7.80	)		(3.2	)%		28,983			(160.7	)%		12.47
Net income (loss)																											27,286			11.64			4.6	%		(58,421	)		(25.27	)		(10.4	)%		85,707			(146.7	)%		36.90

~~Slowdown~~Introduction. The Company recognized $133.0 million in direct and indirect costs in the third quarter of ~~Hard Seltzer Category Impact.~~ ~~The thirteen weeks ended September 25,~~ 2021 ~~results include direct costs~~ resulting from the 2021 slowdown ~~of the~~in hard seltzer category growth which impacts comparisons between the third quarter of ~~$102.4 million, before~~2022 and the ~~related tax benefit.~~third quarter of 2021. These costs ~~include~~incurred in the third quarter of 2021 included inventory obsolescence, ~~estimated~~ destruction costs and other inventory related costs of $54.3 million, contract termination costs, primarily for excess third-party contract production, of $35.4 million, ~~and~~ equipment impairments of $12.7 million, increased materials sourcing and warehousing costs of $11.8 million, unfavorable absorption impacts at Company-owned breweries and downtime charges at third party breweries of $11.4 million, and customer return provisions for out of code or damaged products of $5.4 million and other costs of $2.0 million. The total direct and indirect costs of ~~$102.4~~$133.0 million ~~have been~~were recorded in the ~~thirteen weeks ended September 25,~~third quarter 2021 financial statements as a ~~$54.3~~$6.9 million reduction in net revenue, $78.0 million increase in cost of goods sold, $35.4 million in contract termination fees, and $12.7 million in impairments of ~~long-lived~~brewery assets.

In addition, the thirteen weeks ended September 25, 2021 results include indirect costs resulting from the slowdown of the hard seltzer category of $30.6 million, before the related tax benefit. These costs include increased raw materials sourcing and warehousing costs of $11.8 million, unfavorable absorption impacts at Company owned breweries and downtime charges at third party breweries of $11.4 million, customer return provisions for out of code or damaged products of $5.4 million and other costs of $2.0 million. These total indirect costs of $30.6 million have been recorded in the thirteen weeks ended September 25, 2021 financial statements as a $23.7 million increase in cost of goods sold and $6.9 million reduction in net revenue.

Net revenue. Net revenue increased by ~~$68.9~~$34.8 million, or ~~14.0%~~6.2%, to $596.5 million for the thirteen weeks ended September 24, 2022, as compared to $561.6 million for the thirteen weeks ended September 25, 2021, ~~as compared to $492.8 million for the thirteen weeks ended September 26, 2020,~~ primarily as a result of ~~an increase in shipments.~~price increases of $25.7 million and higher shipment volume of $8.4 million, partially offset by higher returns of $4.0 million.

Volume. Total shipment volume increased by ~~11.2%~~1.4% to 2,345,000 barrels for the thirteen weeks ended September 24, 2022, as compared to 2,312,000 barrels for the thirteen weeks ended September 25, 2021, ~~as compared to 2,080,000 barrels for the thirteen weeks ended September 26, 2020,~~ reflecting increases in the Company’s Twisted Tea, Hard Mountain Dew and Samuel Adams ~~and Angry Orchard~~ brands, partially offset by decreases in its Truly Hard Seltzer, Angry Orchard and Dogfish Head brands.

Depletions, or sales by distributors to retailers, of the Company’s products for the thirteen weeks ended September ~~25, 2021 increased~~24, 2022 decreased by approximately ~~11%~~6% compared to the thirteen weeks ended September ~~26, 2020,~~25, 2021, reflecting ~~increases~~decreases in the Company’s ~~Twisted Tea,~~ Truly Hard Seltzer, Angry Orchard, Samuel Adams, and Dogfish Head brands, partially offset by ~~decreases~~increases in its ~~Angry Orchard brand.~~Twisted Tea and Hard Mountain Dew brands.

~~Table of Contents~~

The Company believes distributor inventory as of September ~~25, 2021~~24, 2022 averaged approximately 6five weeks on hand and was at an appropriate level for each of its brands, except for Truly, which has significantly higher than planned distributor inventory levels for certain styles and packages. As a result of slowing demand and continued uncertainty on future volume projections for Truly, the Company is working closely with its distributors to reduce Truly distributor inventory levels and have adjusted production and shipments during the third quarter and the remainder of the year.brands. The Company expects ~~total distributor~~distributors will keep inventory levels ~~for its total business in terms of weeks on hand to be between 4 and 8 weeks~~ for the remainder of the ~~year.~~year between four to five weeks on hand.

Net ~~revenue per barrel.~~Revenue Per Barrel. Net revenue per barrel increased by ~~2.6%~~4.71% to ~~$242.93~~$254.38 per barrel for the thirteen weeks ended September ~~25, 2021,~~24, 2022, as compared to ~~$236.90~~$242.93 per barrel for the comparable period in ~~2020,~~2021, primarily due to price increases.

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Cost of goods sold. Cost of goods sold was $144.45 per barrel for the thirteen weeks ended September 24, 2022, as compared to $168.23 per barrel for the thirteen weeks ended September 25, 2021. The 2022 decrease in cost of goods sold of $23.78 per barrel was primarily due to the unfavorable impact of costs recorded in the third quarter of 2021 resulting from the 2021 slowdown of hard seltzer of $78.0 million, or $33.74 per barrel, partially offset by current year inflationary impacts which resulted in increased packaging, ingredient, and energy costs of $12.6 million, or $5.37 per barrel, and higher inventory obsolescence costs of $8.2 million, or $3.50 per barrel.

Inflationary impacts of $12.6 million consist primarily of increased costs of cans of $4.6 million, paperboard of $4.0 million, sweetener ingredients of $1.1 million, and utilities of $1.1 million.

Supply chain constraints in package materials, primarily cans, have impacted production schedules and increased can costs, as ~~compared~~a result of using a more expensive supplier. During the third quarters of 2022 and 2021, the additional can costs related to ~~$121.24~~use of this more expensive supplier were $0.4 million and $1.3 million, respectively. These supply chain constraints in package materials did not otherwise have a material impact on the Company’s results of operations or capital resources.

Gross profit. Gross profit was $109.93 per barrel for the thirteen weeks ended September ~~26, 2020. The 2021 increase in cost of goods sold of $46.99 per barrel was primarily due~~24, 2022, as compared to ~~$84.3 million direct and indirect volume adjustment cost as a result of the hard seltzer slowdown described above and higher materials cost, partially offset by price increases.~~

~~Gross profit.~~ ~~Gross profit was~~ $74.70 per barrel for the thirteen weeks ended September 25, 2021. The increase was primarily due to prior year costs related to the 2021 ~~as compared~~hard seltzer slowdown, partially offset by higher inventory obsolescence costs and returns in the third quarter of 2022. The higher obsolescence costs in the third quarter of 2022 were primarily related to ~~$115.65 per barrel~~the recent Truly product reformulation and lower than expected shipments. Inflationary cost impacts, primarily due to the increased packaging, ingredient, and utilities costs discussed above, were offset by increased pricing with a neutral impact on gross margin.

The Company currently expects to continue to offset inflationary impacts through increased pricing for the ~~thirteen weeks ended September 26, 2020.~~remainder of the year. As the Company's estimates for inflation in 2023 continue to change in the current economic environment, it is not possible to predict or quantify potential longer term impacts at this time.

The Company includes freight charges related to the movement of finished goods from its manufacturing locations to distributor locations in its advertising, promotional and selling expense line item. As such, the Company’s gross margins may not be comparable to those of other entities that classify costs related to distribution differently.

Advertising, promotional and ~~selling.~~selling expenses. Advertising, promotional and selling expenses ~~increased~~decreased by ~~$58.8~~$13.1 million, or ~~54.4%~~7.9%, to $153.7 million for the thirteen weeks ended September 24, 2022, as compared to $166.8 million for the thirteen weeks ended September 25, ~~2021, as compared to $108.0 million for the thirteen weeks ended September 26, 2020.~~2021. The ~~increase~~decrease was primarily due to ~~increased~~a reduction in brand investments of ~~$37.6~~$9.5 million, mainly driven by ~~higher~~lower media ~~production and local marketing~~ costs, and ~~increased~~decreased freight to distributors of ~~$21.1~~$3.6 million, ~~mostly attributable to higher rates and volumes.~~largely as a result of lower freight rates.

Advertising, promotional and selling expenses were 25.8% of net revenue, or $65.56 per barrel, for the thirteen weeks ended September 24, 2022, as compared to 29.7% of net revenue, or $72.15 per barrel, for the thirteen weeks ended September 25, ~~2021, as compared to 21.9% of net revenue, or $51.93 per barrel, for the thirteen weeks ended September 25, 2020.~~ 2021. This ~~increase~~decrease per barrel is primarily due to advertising, promotional and selling expenses growing at a higher rate than shipments. The Company invests in advertising and promotional campaigns that it believes will be effective, but there is no guarantee that such investments will generate sales growth.decreasing.

The Company conducts certain advertising and promotional activities in its distributors’ markets, and the distributors make contributions to the Company for such efforts. These amounts are included in the Company’s condensed consolidated statements of comprehensive operations as reductions to advertising, promotional and selling expenses. Historically, contributions from distributors for advertising and promotional activities have amounted to between 2%1% and 3% of net sales. The Company may adjust its promotional efforts in the distributors’ markets, if changes occur in these promotional contribution arrangements, depending on industry and market conditions.

General and ~~administrative.~~administrative expenses. General and administrative expenses increased by ~~$1.7~~$5.3 million, or ~~5.7%~~16.6%, to ~~$32.0~~$37.4 million for the thirteen weeks ended September 24, 2022, as compared to $32.1 million for the thirteen weeks ended September 25, ~~2021, as compared to $30.3 million for the thirteen weeks ended September 26, 2020.~~2021. The increase was primarily due to ~~increases in external services partially offset by lower~~increased salaries and benefits costs.

Contract termination costs and other. Contract termination costs ~~increased by~~decreased $35.4 million from the ~~comparable period~~third quarter of ~~2020, primarily due to cancellations~~2021 as a result of ~~third-party production facilities agreements~~the significant contract termination costs incurred in the prior year quarter related to the 2021 slowdown of the hard seltzer category.

Impairment of intangible assets. Impairment of ~~long-lived~~intangible assets ~~increased by $13.7~~reflects a $27.1 million non-cash impairment charge recorded for the Dogfish Head brand, taken as a result of the Company’s annual impairment analysis as of September 1, 2022. The brand impairment determination was primarily based on the latest forecasts of brand performance. See further discussion in Note F to the Condensed Consolidated Financial Statements within Part I, Item 1 of this Form 10-Q and in Part I, Item 2. Management’s Discussion

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and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Policies and Estimates – Valuation of Goodwill and Indefinite Lived Intangible Assets”.

Impairment of brewery assets. Impairment of brewery assets decreased $13.0 million from the ~~comparable period~~third quarter of ~~2020,~~2021, primarily due to write-downs of equipment of $12.7 million recorded in the prior year quarter related to the 2021 slowdown of the hard seltzer category.

Income tax provision (benefit) ~~expense.~~. During the thirteen weeks ended September ~~25, 2021,~~24, 2022, the Company’s effective tax rate was 28.6%, or a tax provision of $10.1 million, compared to an effective tax rate of 23.6%, or a tax benefit of ~~23.6% compared~~$18.0 million, for the thirteen weeks ended September 25, 2021. The change in the effective tax rate is primarily due to ~~a tax provision of 20.8%~~pre-tax income in the thirteen weeks ended September ~~26, 2020. This change in rate was primarily due~~24, 2022 compared to a ~~higher tax benefit from stock option activity recorded in accordance with ASU 2016-09~~pre-tax loss in the ~~thirteen weeks ended September 26, 2020.~~prior year period with no corresponding changes in non-deductible expenses.

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~~Thirty-Nine~~Thirty-nine Weeks Ended September 24, 2022 compared to Thirty-nine Weeks Ended September 25, 2021 ~~compared to Thirty-Nine Weeks Ended September 26, 2020~~


	Thirty-nine Weeks Ended (in thousands, except per barrel)																											Thirty-nine Weeks Ended (in thousands, except per barrel)
	September 25, 2021									September 26, 2020									Amount change			% change			Per barrel change			September 24, 2022									September 25, 2021									Amount change			% change			Per barrel change
Barrels sold					7,037									5,425						1,612			29.7	%								6,472									7,037						(565	)		(8.0	)%
				Per barrel			% of net revenue						Per barrel			% of net revenue															Per barrel			% of net revenue						Per barrel			% of net revenue
Net revenue	$	1,709,528		$	242.93			100.0	%	$	1,275,495		$	235.12			100.0	%	$	434,033			34.0	%	$	7.81		$	1,642,809		$	253.84			100.0	%	$	1,709,528		$	242.93			100.0	%	$	(66,719	)		(3.9	)%	$	10.91
Cost of goods		1,011,513			143.74			59.2	%		677,313			124.86			53.1	%		334,200			49.3	%		18.88			946,336			146.22			57.6	%		1,011,513			143.74			59.2	%		(65,177	)		(6.4	)%		2.48
Gross profit		698,015			99.19			40.8	%		598,182			110.27			46.9	%		99,833			16.7	%		(11.07	)		696,473			107.62			42.4	%		698,015			99.19			40.8	%		(1,542	)		(0.2	)%		8.43
Advertising, promotional and selling expenses		469,296			66.69			27.5	%		306,250			56.45			24.0	%		163,046			53.2	%		10.24			439,215			67.87			26.7	%		469,296			66.69			27.5	%		(30,081	)		(6.4	)%		1.18
General and administrative expenses		96,973			13.78			5.7	%		87,054			16.05			6.8	%		9,919			11.4	%		(2.27	)		115,929			17.91			7.1	%		96,973			13.78			5.7	%		18,956			19.5	%		4.13
Contract termination costs and other		35,428			5.03			2.1	%		—			—			0.0	%		35,428			0.0	%		5.03			5,330			0.82			0.3	%		35,428			5.03			0.0	%		(30,098	)		100.0	%		(4.21	)
Impairment of assets		15,389			2.19			0.9	%		2,796			0.52			0.2	%		12,593			450.4	%		1.67
Impairment of intangible assets																													27,100			4.19			1.6	%		—			—			0.0	%		27,100			100.0	%		4.19
Impairment of brewery assets																													1,302			0.20			0.1	%		15,389			2.19			0.9	%		(14,087	)		(91.5	)%		(1.99	)
Total operating expenses		617,086			87.69			36.1	%		396,100			73.02			31.1	%		220,986			55.8	%		14.67			588,876			90.99			35.8	%		617,086			87.69			36.1	%		(28,210	)		(4.6	)%		3.30
Operating income		80,929			11.50			4.7	%		202,082			37.25			15.8	%		(121,153	)		(60.0	)%		(25.74	)		107,597			16.63			6.5	%		80,929			11.50			4.7	%		26,668			33.0	%		5.13
Other expense net		(739	)		(0.11	)		(0.0	)%		(391	)		(0.07	)		(0.0	)%		(348	)		89.0	%		(0.04	)
Income before income tax expense		80,190			11.39			4.7	%		201,691			37.18			15.8	%		(121,501	)		(60.2	)%		(25.78	)
Income tax expense		13,852			1.97			0.8	%		42,548			7.84			3.3	%		(28,696	)		(67.4	)%		(5.87	)
Other expense, net																													(783	)		(0.12	)		(0.0	)%		(739	)		(0.11	)		(0.0	)%		(44	)		6.0	%		(0.01	)
Income before income tax provision																													106,814			16.51			6.5	%		80,190			11.40			4.7	%		26,624			33.2	%		5.12
Income tax provision																													28,134			4.35			1.7	%		13,852			1.97			0.8	%		14,282			103.1	%		2.38
Net income		66,338			9.42			3.9	%		159,143			29.34			12.5	%		(92,805	)		(58.3	)%		(19.91	)		78,680			12.16			4.8	%		66,338			9.43			3.9	%		12,342			18.6	%		2.74

~~Slowdown of Hard Seltzer Category Impact.~~ Introduction.The Company recognized $143.9 million in direct and indirect costs in the thirty-nine ~~weeks~~week period ended September 25, 2021 ~~results include direct costs~~ resulting from the 2021 slowdown ~~of the~~in hard seltzer category ~~of $102.4 million, before~~growth which impacts comparisons between the ~~related tax benefit. These direct~~respective thirty-nine week periods in 2022 and 2021. Those costs ~~were all~~ incurred induring the ~~thirteen weeks~~thirty-nine week period ended September 25, 2021 included inventory obsolescence, destruction costs and ~~are described in more detail in the thirteen weeks ended September 25, 2021 Results~~other inventory related costs of ~~Operations section above.~~

~~In addition, the thirty-nine weeks ended September 25, 2021 results include indirect~~$54.3 million, contract termination costs, ~~resulting from the slowdown~~primarily for excess third-party contract production, of ~~the hard seltzer category of $41.5~~$35.4 million, ~~before the related tax benefit. These costs, include~~ increased ~~raw~~ materials sourcing and warehousing costs of $22.3 million, equipment impairments of $12.7 million, unfavorable absorption impacts at ~~Company owned~~Company-owned breweries and downtime charges at third party breweries of $11.8 million, and customer return provisions for out of code or damaged products of $5.4 million and other costs of $2.0 million. The total direct and indirect costs of ~~$41.5~~$143.9 million ~~have been~~were recorded in ~~the thirty-nine weeks ended September 25,~~year-to-date 2021 financial statements as a ~~$34.6~~$6.9 million reduction in net revenue, $88.9 million increase in cost of goods sold, $12.7 million in impairments of brewery assets and ~~$6.9~~$35.4 million ~~reduction~~ in ~~net revenue.~~contract termination fees.

Net revenue. Net revenue ~~increased~~decreased by ~~$434.0~~$66.7 million, or ~~34.0%~~3.9%, to $1,642.8 million for the thirty-nine weeks ended September 24, 2022, as compared to $1,709.5 million for the thirty-nine weeks ended September 25, 2021, primarily as ~~compared~~a result of lower shipment volume of $143.4 million and higher returns of $12.6 million, partially offset by price increases of $83.2 million.

Volume. Total shipment volume decreased by 8.0% to ~~$1,275 million~~6,472,000 barrels for the thirty-nine weeks ended September ~~26, 2020, primarily~~24, 2022, as ~~a result of an increase in shipments.~~

~~Volume.~~ ~~Total shipment volume increased by 29.7%~~compared to 7,037,000 barrels for the thirty-nine weeks ended September 25, 2021, ~~as compared to 5,425,000 barrels for the thirty-nine weeks ended September 26, 2020,~~ reflecting ~~increases~~decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Dogfish Head, and Samuel Adams brands, partially offset by increases in its Twisted Tea ~~Samuel Adams, Angry Orchard~~ and ~~Dogfish Head~~Hard Mountain Dew brands.

Depletions ~~or sales by distributors to retailers, of the Company’s products for the thirty-nine weeks ended September 25,~~year-to-date decreased 7% from year-to-date 2021, ~~increased by approximately 24% compared to the thirty-nine weeks ended September 26, 2020,~~ reflecting ~~increases~~decreases in the Company’s Truly Hard Seltzer, ~~Twisted Tea,~~Angry Orchard, Dogfish Head, and Samuel Adams ~~and Dogfish Head~~ brands, partially offset by ~~decreases~~increases in its ~~Angry Orchard brand.~~Twisted Tea and Hard Mountain Dew brands.

Net ~~revenue per barrel.~~Revenue Per Barrel. Net revenue per barrel increased by ~~3.32%~~4.5% to ~~$242.93~~$253.84 per barrel for the thirty-nine weeks ended September ~~25, 2021,~~24, 2022, as compared to ~~$235.12~~$242.93 per barrel for the comparable period in ~~2020,~~2021, primarily due to price increases.

2221

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Cost of goods sold. Cost of goods sold was $146.22 per barrel for the thirty-nine weeks ended September 24, 2022, as compared to $143.74 per barrel for the thirty-nine weeks ended September 25, 2021. The 2022 increase in cost of goods sold of $2.48 per barrel was primarily due to current year inflationary impacts on packaging, ingredient, and energy costs of $41.7 million, or $6.44 per barrel, unfavorable changes in product mix of $14.5 million, or $2.24 per barrel, higher inventory obsolescence costs of $13.4 million, or $2.07 per barrel, higher per barrel processing costs at Company-owned breweries due to lower volumes of $10.1 million, or $1.56 per barrel, increased warehousing and pallet costs of $9.1 million, or $1.40 per barrel, partially offset by costs recorded in the third quarter of 2021 resulting from the 2021 slowdown of hard seltzer of $88.9 million, or $12.63 per barrel.

Inflationary impacts of $41.7 million consist primarily of increased costs of cans of $26.8 million, paperboard of $6.3 million, utilities of $2.5 million and sweetener ingredients of $1.9 million.

Supply chain constraints in package materials, primarily cans, have impacted production schedules and increased can costs, as ~~compared~~a result of using a more expensive supplier. During the first nine months of 2022 and 2021, the additional can costs related to ~~$124.86~~use of this more expensive supplier were $3.6 million and $3.6 million, respectively. These supply chain constraints in package materials did not otherwise have a material impact on the Company’s results of operations or capital resources.

Gross profit. Gross profit was $107.62 per barrel for the thirty-nine weeks ended September ~~26, 2020. The 2021 increase in cost of goods sold of $18.88 per barrel was primarily due~~24, 2022, as compared to ~~$95.2 million direct and indirect volume adjustment cost as a result of the hard seltzer slowdown described above and higher materials cost, partially offset by price increases.~~

~~Gross profit.~~ ~~Gross profit was~~ $99.19 per barrel for the thirty-nine weeks ended September 25, 2021. The increase was primarily due to costs in the prior year resulting from the 2021 ~~as compared~~slowdown of hard seltzer and increased pricing in the current year, partially offset by current year inflationary impacts primarily due to ~~$110.27 per barrel~~increased packaging, ingredient, and energy costs, higher inventory obsolescence costs, higher returns and unfavorable changes in product mix.

Advertising, promotional and selling expenses. Advertising, promotional and selling expenses decreased by $30.1 million, or 6.4%, to $439.3 million for the thirty-nine weeks ended September ~~26, 2020.~~

~~Advertising, promotional and selling.~~ ~~Advertising, promotional and selling expenses increased by $163.1 million, or 53.2%,~~24, 2022, as compared to $469.3 million for the thirty-nine weeks ended September 25, ~~2021, as compared to $306.3 million for the thirty-nine weeks ended September 26, 2020.~~2021. The ~~increase~~decrease was primarily due to ~~increased~~a reduction in brand investments of ~~$99.7~~$30.1 million, mainly driven by ~~higher~~lower media ~~production and local marketing costs, and increased freight~~costs. Freight to distributors ~~of $63.2 million mostly attributable to~~was flat as higher rates ~~and~~were offset by lower volumes.

Advertising, promotional and selling expenses were 26.7% of net revenue, or $67.87 per barrel, for the thirty-nine weeks ended September 24, 2022, as compared to 27.5% of net revenue, or $66.69 per barrel, for the thirty-nine weeks ended September 25, ~~2021, as compared to 24.0% of net revenue, or $56.45 per barrel, for the thirty-nine weeks ended September 26, 2020.~~2021. This increase per barrel is primarily due to advertising, promotional and selling expenses ~~growing~~decreasing at a ~~higher~~lower rate than shipments.

General and ~~administrative.~~administrative expenses. General and administrative expenses increased by ~~$9.9~~$18.9 million, or ~~11.4%~~19.5%, to ~~$96.9~~$116 million for the thirty-nine weeks ended September 24, 2022, as compared to $97 million for the thirty-nine weeks ended September 25, ~~2021, as compared to $87.1 million for the thirty-nine weeks ended September 26, 2020.~~2021. The increase was primarily due to ~~increases in external services and~~increased salaries and benefits costs.

Contract termination costs and other. Contract termination costs ~~increased by $35.4~~decreased $30.1 million from ~~the comparable period of 2020,~~year-to-date 2021, primarily due to ~~cancellations of third-party production facilities agreements~~the higher contract termination costs incurred in the prior year related to the 2021 slowdown of the hard seltzer category.

Impairment of intangible assets. Impairment of ~~long-lived~~intangible assets ~~increased $12.6~~reflects a $27.1 million non-cash impairment charge recorded for the Dogfish Head brand, taken as a result of the Company’s annual impairment analysis as of September 1, 2022. See further discussion in Note F to the Condensed Consolidated Financial Statements within Part I, Item 1 of this Form 10-Q and in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Policies and Estimates – Valuation of Goodwill and Indefinite Lived Intangible Assets”.

Impairment of brewery assets. Impairment of brewery assets decreased $14.1 million from ~~the first half of 2020,~~year-to-date 2021, primarily due to write-downs of equipment of $12.7 million in the third quarter of 2021 related to the 2021 slowdown of the hard seltzer ~~category, partially offset by lower write-offs of equipment at Company owned breweries.~~category.

Income tax ~~expense.~~provision. During the thirty-nine weeks ended September ~~25, 2021,~~24, 2022, the Company’s effective tax rate was ~~17.3%~~26.3%, or a tax provision of $28.1 million, compared to an effective tax rate of ~~21.1% in~~17.3%, or a tax provision of $13.9 million, for the ~~thirty-nine~~thirteen weeks ended September ~~26, 2020. This lower~~25, 2021. The change in the effective tax rate ~~in year-to-date 2021 was~~is primarily due to ~~the higher impact of deductions for option activity on lower net income compared~~a decrease in excess tax benefits related to the ~~thirty-nine weeks ended September 26, 2020.~~Company’s stock-based compensation award activity.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s primary sources of liquidity are its existing cash balances, cash flows from operating activities and amounts available under its revolving credit facility. The Company’s material cash requirements include working capital needs, satisfaction of contractual commitments, and investment in the Company’s business through capital expenditures.

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Cash ~~decreased~~increased to ~~$86.5~~$222.1 million as of September ~~25, 2021~~24, 2022 from ~~$163.3~~$26.8 million as of December ~~26, 2020,~~25, 2021, reflecting cash provided by operating activities and proceeds from the exercise of stock options and sale of investment shares, partially offset by purchases of property, plant and equipment and payments of tax withholdings on stock-based payment awards and investment ~~shares, partially offset by cash provided by operating activities.~~shares.

Cash provided by operating activities consists of net income, adjusted for certain non-cash items, such as depreciation and amortization, impairment of intangible assets, stock-based compensation expense, other non-cash items included in operating results, and changes in operating assets and liabilities, such as accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, and accrued expenses.

Cash provided by operating activities for the thirty-nine weeks ended September 24, 2022 was $225.0 million and primarily consisted of non-cash items of $108.0 million, net income of $78.7 million, and a net decrease in operating assets and liabilities of $38.3 million. The inventory increase of $45.2 million and corresponding increase in accounts payable of $67.6 million from December 25, 2021 levels are primarily seasonal in nature. The Company believes inventory levels are appropriate to support future demand projections. The accounts receivable increase of $37.7 million is due to increased shipments and higher product pricing during the thirteen weeks ended September 24, 2022 as compared to the thirteen weeks ended December 25, 2021. The prepaid expenses and other current assets decrease of $52.7 million is primarily driven by income tax refunds of $40.8 million received during the second quarter of 2022. Cash provided by operating activities for the thirty-nine weeks ended September 25, 2021 was $51.0 million and primarily consisted of non-cash items of $78.6 million and net income of $66.3 ~~million and non-cash items of $78.6~~ million, partially offset by a net increase in operating assets and liabilities of $94.0 million. Cash provided by operating activities for the thirty-nine weeks ended September 26, 2020 was $208.9 million and primarily consisted of net income of $159.1 million and non-cash items of $82.7 million, partially offset by a netThe increase ~~in operating assets and liabilities of $32.9 million. The decrease~~ in cash provided by operating activities for the thirty-nine weeks ended September ~~25, 2021~~24, 2022 compared to the prior period is primarily due to ~~lower~~income tax refunds received, higher net income, ~~compared to the prior year~~ and ~~increases~~decreases in ~~Truly brand finished goods~~ inventory ~~partially offset by a $42.6 million obsolescence reserve related to the hard seltzer slowdown. This inventory, net of obsolescence reserve, is expected to be sold through the first quarter of 2022.~~and third party production prepayments.

~~Table of Contents~~

The Company used ~~$119.6~~$69.8 million in investing activities during the thirty-nine weeks ended September ~~25, 2021,~~24, 2022, as compared to ~~$100.0~~$119.6 million during the thirty-nine weeks ended September ~~26, 2020.~~25, 2021. Investing activities primarily consisted of capital investments made mostly in the Company’s breweries to drive efficiencies and cost reductions and support product innovation and future growth.

Cash ~~used~~provided by financing activities was ~~$8.1~~$0.6 million during the thirty-nine weeks ended September ~~25, 2021,~~24, 2022, as compared to ~~$11.4~~$8.1 million ~~provided by financing activities~~used during the thirty-nine weeks ended September 25, ~~2020.~~2021. The ~~$19.6~~$8.7 million ~~decrease~~increase in cash provided by financing activities in ~~2021~~2022 from ~~2020~~2021 is primarily due to ~~$15.5 million in payments of~~lower tax ~~withholding~~withholdings on stock-based payment awards and investment shares, ~~in the thirty-nine weeks ended September 25, 2021, an increase~~partially offset by lower proceeds from exercises of ~~$13.8 million from such amounts in the thirty-nine weeks ended September 26, 2020.~~stock options and sales of investment shares.

During the thirty-nine weeks ended September ~~25, 2021~~24, 2022 and the period from September ~~26, 2021~~25, 2022 through October ~~21, 2021,~~15, 2022, the Company did not repurchase any shares of its Class A Common Stock. As of October ~~21, 2021,~~20, 2022, the Company had repurchased a cumulative total of approximately 13.8 million shares of its Class A Common Stock for an aggregate purchase price of $840.7 million and had approximately $90.3 million remaining on the $931.0 million stock repurchase expenditure limit set by the Board of Directors.

The Company expects that its cash balance as of September ~~25, 2021~~24, 2022 of ~~$86.5~~$222.1 million, along with future operating cash ~~flow and the unused balance of the Company’s line of credit of $150.0 million,~~flows, will be sufficient to fund future cash requirements. The Company’s $150.0 million credit facility has a term ~~not~~ scheduled to expire ~~until~~on March 31, 2023. The Company is currently in negotiations on an extension of the term on the credit facility and expects an agreement to be reached during the fourth quarter of 2022 or the first quarter of 2023. As of the date of this filing, the Company was not in violation of any of its covenants to the lender under the credit facility.

~~2021~~

Critical Accounting Policies and ~~2022 Outlook~~Estimates

~~Year-to-date depletions through the forty-one weeks ended October 16, 2021 are estimated to have increased approximately 23% from the comparable period in 2020.~~

Valuation of Goodwill and Indefinite Lived Intangible Assets

The Company ~~currently projects Non-GAAP earnings per diluted share,~~has recorded intangible assets with indefinite lives and goodwill for which ~~excludes~~impairment testing is required at least annually or more frequently if events or circumstances indicate that these assets might be impaired. The Company performs its annual impairment tests and re-evaluates the ~~impact~~useful lives of ~~ASU 2016-09, for 2021~~other intangible assets with indefinite lives at the annual impairment test measurement date in the third quarter of ~~between $2.00 and $6.00, primarily~~each fiscal year or when circumstances arise that indicate a possible impairment or change in useful life might exist.

Significant judgement is required to estimate the fair value the Dogfish Head trademark. Accordingly, the Company obtains the assistance of third-party valuation specialists as ~~a result~~part of the ~~slowdown~~impairment evaluation. In estimating the fair value of the ~~hard seltzer category~~trademark, management must make assumptions and projections regarding future cash flows based upon future revenues, the market-based royalty rate, the discount rate, and the ~~related inventory write-offs, contract termination fees, equipment impairments, absorption impacts, downtime charges,~~after-tax royalty savings expected from ownership of the trademark. The assumptions and ~~increased sourcing~~projections used in the estimate of fair value are consistent with recent trends and ~~warehousing costs. This estimate is highly sensitive to changes~~represent the projections used in ~~volume projections, particularly related to the hard seltzer category. The~~ Company’s ~~actual 2021 earnings per share could vary significantly~~current strategic operating plans which include reductions in revenues from the current projection. The Company is currently estimating 2021 depletions and shipments growth of between 18% and 22%. The Company is targeting national price increases of between 2% and 3%. Full-year 2021 gross margins are currently expected to be between 40% and 42%,Dogfish Head beer products which includes combined full year direct and indirect costs of the hard seltzer slowdown estimated at $132.0 million, of which $95.2 million has been incurred in the first nine months and the remainder of $36.8 million are estimated to be incurred in the fourth quarter. The Company intends to increase advertising, promotional and selling expenses by between $80million and $100 million for the full year 2021, not including any changes in freight costs for the shipment of products to Distributors. The Company intends to increase its investment in its brands in 2021, commensuratewere partially offset with the opportunities for growth that it sees, but there is no guarantee that such increased investments will result in increased volumes. The Company estimates a full-year 2021 Non-GAAP effective tax rate of approximately 28.0%, which excludes the impact of ASU 2016-09.

The Company is completing its 2022 planning process and will provide further detailed guidance when the Company presents its full-year 2021 results. Based on information of which it is currently aware, the Company is using the following preliminary assumptions and targets for its 2022 fiscal year, which are highly sensitive to changes in volume projections, particularly related to the hard seltzer category. The Company is forecasting depletion and shipment percentage growth of between mid-single digits and low-double digits. The Company is targeting national price increases of between 3% and 6%. Full-year 2022 gross margins are currently expected to be between 45% and 48%. The Company intends to increase advertising, promotional and selling expenses by between $10 million and $30 million for the full year 2022, not including any changes in freight costs for the shipment of products to distributors. The Company intends to increase its investment in its brands in 2022 commensurate with the opportunities for growth that it sees, but there is no guarantee that such increased investments will result in increased volumes. The Company estimates a full-year 2022 Non-GAAP effective tax rate of approximately 26%, excluding the impact of ASU 2016-09.

Non-GAAP earnings per diluted share and Non-GAAP effective tax rate are not defined terms under U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP measures should not be considered in isolation or as a substitute for diluted earnings per share and effective tax rate data prepared in accordance with GAAP, and may not be comparable to calculations of similarly titled measures by other companies. Management believes these Non-GAAP measures provide meaningful and useful information to investors and analysts regarding our outlook and facilitate period to period comparisons of our forecasted financial performance. Non-GAAP earnings per diluted share and Non-GAAP effective tax rate exclude the potential impact of ASU 2016-09, which could be significant and will depend largely upon unpredictable future events outside the Company’s control, including the

2423

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revenue growth from the new Dogfish Head canned cocktails products that were launched in 2021. These assumptions reflect management’s estimates of future economic and competitive conditions and consider many factors including macroeconomic conditions, industry growth rates, and competitive activities and are, therefore, subject to change as a result of changing market conditions. If these estimates or their related assumptions change in the future, we may be required to recognize an additional impairment loss for the asset. The recognition of any resulting impairment loss could have a material adverse impact on our financial statements.

~~timing~~

The Company performed a sensitivity analysis on its significant assumptions used in the Dogfish Head trademark fair value calculation and ~~value realized upon exercise~~determined the following:

•

A decrease in the annual forecasted revenue growth rate of ~~stock options versus~~1.0% would result in a 5.9% decrease to the current fair value of ~~those options when granted. Therefore, because~~$71.4 million.

•

A decrease in the discount rate of 1.5% would result in a 16.0% increase to the ~~uncertainty and variability~~current fair value of ~~the impact of ASU 2016-09, the Company is unable to provide, without unreasonable effort, a reconciliation of these Non-GAAP measures on a forward-looking basis.~~

~~The Company is continuing to evaluate 2021 capital expenditures. Its current estimates are between $160~~$71.4 million and ~~$200million, consisting mostly~~an increase in the discount rate of ~~investments~~1.5% would result in capacity and supply chain efficiency improvements. The Company estimates full-year 2022 capital spending of between $140 million and $190 million. The actual total amount spent on 2021 and 2022 capital expenditures may well be different from these estimates. Based on information currently available, the Company believes that its capacity requirements for 2021 and 2022 can be covered by its Company-owned breweries and existing contracted capacity at third-party brewers.

~~Off-balance Sheet Arrangements~~

~~At September 25, 2021, the Company did not have off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

~~Contractual Obligations~~

~~There were no material changes outside of the ordinary course of the Company’s business to contractual obligations during the three-month period ended September 25, 2021.~~

~~Critical Accounting Policies~~

The Company’s critical accounting policies are discussed in Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Form 10-K for the year ended December 26, 2020. The Company believes that the consistent application of these policies enables the Company to provide readers of the interim consolidated financial statements with useful and reliable information about the Company’s results of operations and financial condition. No material changesa 12.2% decrease to the ~~Company’s critical accounting policies, as previously disclosed, have occurred during the first nine months~~current fair value of 2021, except for the expansion of the Company’s Provision for Excess or Expired Inventory policy due to the large provision reported in the third quarter of 2021 as discussed in Note B of these condensed consolidated financial statements.

$71.4 million.

~~Provision for Excess or Expired Inventory~~

The provisions for excess or expired inventory are based on management’s estimates of forecasted usage of inventories on hand and under contract. Forecasting usage involves significant judgments regarding future demand for the Company’s various existing products and products under development as well as the potency and shelf-life of various ingredients. The Company experienced a significant decline in demand for its Truly branded products during the third quarter of 2021 and is forecasting lower demand for Truly branded products for the remainder of the 2021 fiscal year and for the 2022 fiscal year. The lower forecasted demand for the Truly branded products resulted in a $42.6 million provision for excess or expired inventory during the third quarter of 2021. A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in recording additional provisions for excess or expired inventory in the future. Provisions for excess inventory are included in cost of goods sold and have historically been adequate to provide for losses on its inventory. Provisions for excess or expired inventory included in cost of goods sold was $11.3 million, $8.1 million and $4.2 million in fiscal years 2020, 2019 and 2018, respectively.

FORWARD-LOOKING STATEMENTS

In this Quarterly Report on Form 10-Q and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “designed” and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, results of operations and financial position. These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no firm assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect subsequent events or circumstances. Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth below in addition to the other information set forth in this Quarterly Report on Form 10-Q and in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December ~~26, 2020.~~25, 2021.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since December ~~26, 2020,~~25, 2021, there have been no significant changes in the Company’s exposures to interest rate or foreign currency rate fluctuations. The Company currently does not enter into derivatives or other market risk sensitive instruments for the purpose of hedging or for trading purposes.

Item 4. CONTROLS AND PROCEDURES

As of September ~~25, 2021,~~24, 2022, the Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods and that such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

~~As a result of the COVID-19 pandemic, certain employees of the Company began working remotely in March 2020 but these~~

There were no changes ~~to the working environment did not have a material effect on the Company’s internal control over financial reporting. There was no other change~~ in the Company’s internal control over financial reporting that occurred during the thirty-nine weeks ended September ~~25, 2021~~24, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

For information regarding the Company's legal proceedings, refer to Note KI of the Condensed Consolidated Financial Statements.

Item 1A. RISK FACTORS

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, "Item 1A. Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December ~~26, 2020,~~25, 2021, which could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its business, financial condition and/or operating results.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As of October ~~16, 2021,~~15, 2022, the Company had repurchased a cumulative total of approximately 13.8 million shares of its Class A Common Stock for an aggregate purchase price of $840.7 million and had $90.3 million remaining on the $931.0 million share buyback expenditure limit set by the Board of Directors. During the thirty-nine weeks ended September ~~25, 2021,~~24, 2022, the Company did not repurchase any shares of its Class A Common Stock under the previously announced repurchase program.

During the thirty-nine weeks ended September ~~25, 2021,~~24, 2022, the Company repurchased ~~390~~1,265 shares of its Class A Common Stock, of which all represent repurchases of unvested investment shares issued under the Investment Share Program of the Company’s Employee Equity Incentive Plan, as illustrated in the table below:

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 27, 2020 to January 30, 2021

-

$
-

—

$
90,335

January 31, 2021 to February 27, 2021

20

218.79

—

90,335

February 27, 2021 to March 27, 2021

163

192.77

—

90,335

March 28, 2021 to May 1, 2021

-

-

—

90,335

May 2, 2021 to May 29,2021

94

314.86

—

90,335

May 30, 2021 to June 26, 2021

2

135.88

—

90,335

June 27, 2021 to July 31, 2021

40

209.37

—

90,335

August 1, 2021 to August 28, 2021

71

422.16

—

90,335

August 29, 2021 to September 25, 2021

-

-

—

90,335

Total

390

$
266.71

—

$
90,335


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 26, 2021 - January 29, 2022		26	$	248.61		—	$	90,335
January 30, 2022 - February 26, 2022		153		260.46		—		90,335
February 27, 2022 - March 26, 2022		131		289.29		—		90,335
March 27, 2022 - April 30, 2022		263		175.43		—		90,335
May 1, 2022 - May 28, 2022		372		134.05		—		90,335
May 29, 2022 - June 25, 2022		107		211.52		—		90,335
June 26,2022 - July 30,2022		120		210.67		—		90,335
July 31,2022 - August 27,2022		83		201.63		—		90,335
August 28, 2022 - September 24, 2022		17		290.75		—		90,335
Total		1,272	$	196.39		-	$	90,335

As of October ~~16, 2021,~~15, 2022, the Company had 10.2 million shares of Class A Common Stock outstanding and 2.1 million shares of Class B Common Stock outstanding.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

Item 4. MINE SAFETY DISCLOSURES

Not Applicable

Item 5. OTHER INFORMATION

Not Applicable

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Item 6. EXHIBITS


Exhibit No.		Title

3.1		Amended and Restated By-Laws of the Company, dated June 2, 1998 (incorporated by reference to Exhibit 3.5 to the Company’s Form 10-Q filed on August 10, 1998).

3.2		Restated Articles of Organization of the Company, dated November 17, 1995, as amended August 4, 1998 (incorporated by reference to Exhibit 3.6 to the Company’s Form 10-Q filed on August 10, 1998).

*31.1		Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1		Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
*101.SCH		Inline XBRL Taxonomy Extension Schema Document
*101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
*101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
*101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
*101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
*104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed with this report

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

THE BOSTON BEER COMPANY, INC

(Registrant)


Date: October ~~21, 2021~~20, 2022	/s/ David A. Burwick
	David A. Burwick
	President and Chief Executive Officer
	(Principal Executive Officer)


Date: October ~~21, 2021~~20, 2022	/s/ Frank H. Smalla
	Frank H. Smalla
	Chief Financial Officer
	(Principal Financial Officer)

3029


MASSACHUSETTS		04-3284048
(State or other jurisdiction of incorporation or organization)		(State or other jurisdiction of incorporation Identification No.)
One Design Center Place, Suite 850, Boston, Massachusetts		02210
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Class A Common Stock $0.01 per value	SAM	New York Stock Exchange


Class A Common Stock, $.01 par value		~~10,203,620~~10,227,137
Class B Common Stock, $.01 par value		~~2,078,000~~2,068,000
(Title of each class)		(Number of shares)


PART I.	FINANCIAL INFORMATION		PAGE

	Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
		Condensed Consolidated Balance Sheets as of September ~~25, 2021~~24, 2022 and December ~~26, 2020~~25, 2021	3
		Condensed Consolidated Statements of Comprehensive Operations for the thirteen and thirty-nine weeks ended September ~~25, 2021~~24, 2022 and September ~~26, 2020~~25, 2021	4
		Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September ~~25, 2021~~24, 2022 and September ~~26, 2020~~25, 2021	5
		Condensed Consolidated Statements of Stockholders’ Equity for the thirteen and thirty-nine weeks ended September ~~25, 2021~~24, 2022 and September ~~26, 2020~~25, 2021	6
		Notes to Condensed Consolidated Financial Statements	~~8-19~~8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~20-25~~18
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2625
	Item 4.	Controls and Procedures	2625

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	2726
	Item 1A.	Risk Factors	2726
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2827
	Item 3.	Defaults Upon Senior Securities	2827
	Item 4.	Mine Safety Disclosures	2827
	Item 5.	Other Information	2827
	Item 6.	Exhibits	2928

SIGNATURES			3029


	September 25, 2021			December 26, 2020
							September 24, 2022			December 25, 2021
Assets
Current Assets:
Cash and cash equivalents	$	86,504		$	163,282		$	222,050		$	26,853
Restricted cash								—			39,468
Accounts receivable		83,121			78,358			92,349			55,022
Inventories		196,455			130,910			192,172			149,118
Prepaid expenses and other current assets		24,127			30,230			17,948			21,462
Income tax receivable		40,919			10,393			4,252			53,418
Total current assets		431,126			413,173			528,771			345,341
Property, plant and equipment, net		665,374			623,083			670,689			664,815
Operating right-of-use assets		54,485			58,483			45,727			52,774
Goodwill		112,529			112,529			112,529			112,529
Intangible assets		103,740			103,930
Intangible assets, net								76,387			103,677
Third-party production prepayments		74,392			56,843			67,449			88,294
Other assets		21,880			10,784			29,146			19,354
Total assets	$	1,463,526		$	1,378,825		$	1,530,698		$	1,386,784
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	136,462		$	121,647		$	151,443		$	85,920
Accrued expenses and other current liabilities		140,712			129,544			153,543			161,552
Current operating lease liabilities		8,313			8,232			8,611			7,634
Total current liabilities		285,487			259,423			313,597			255,106
Deferred income taxes, net		83,350			92,665			89,694			87,495
Non-current operating lease liabilities		54,950			59,171			47,399			53,849
Other liabilities		10,361			10,599			6,022			6,925
Total liabilities		434,148			421,858			456,712			403,375
Commitments and Contingencies (See Note K)
Commitments and Contingencies (See Note I)
Stockholders' Equity:
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,165,710 and 10,004,681 issued and outstanding as of September 25, 2021 and December 26, 2020, respectively		102			100
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,078,000 and 2,177,983 issued and outstanding as of September 25, 2021 and December 26, 2020, respectively		21			22
Class A Common Stock, $0.01 par value; 22,700,000 shares authorized; 10,226,712 and 10,183,801 issued and outstanding as of September 24, 2022 and December 25, 2021, respectively								102			102
Class B Common Stock, $0.01 par value; 4,200,000 shares authorized; 2,068,000 issued and outstanding as of September 24, 2022 and December 25, 2021								21			21
Additional paid-in capital		605,853			599,737			623,782			611,622
Accumulated other comprehensive loss		(243	)		(252	)		(457	)		(194	)
Retained earnings		423,645			357,360			450,538			371,858
Total stockholders' equity		1,029,378			956,967			1,073,986			983,409
Total liabilities and stockholders' equity	$	1,463,526		$	1,378,825		$	1,530,698		$	1,386,784


☒	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


			As of September 25, 2021							As of December 26, 2020
	Estimated Useful		Gross Carrying		Accumulated			Net Book		Gross Carrying		Accumulated			Net Book
	Life (Years)		Value		Amortization			Value		Value		Amortization			Value
								(in thousands)
Customer Relationships		15	$	3,800	$	(570	)	$	3,230	$	3,800	$	(380	)	$	3,420
Trade Names	Indefinite			100,510		—			100,510		100,510		—			100,510
Total intangible assets			$	104,310	$	(570	)	$	103,740	$	104,310	$	(380	)	$	103,930


Fiscal Year	Amount (in thousands)
Remainder of 2021	$	63
2022		253
2023		253
2024		253
2025		253
2026		253


	Expected Shortfall Fees to be Incurred
	(in millions)
Remainder of 2022	$	5
2023		26
2024		25
2025		23
2026		6
2027		4
Thereafter		4
Total shortfall fees expected to be incurred	$	93


			As of September 24, 2022							As of December 25, 2021
	Estimated Useful		Gross Carrying		Accumulated			Net Book		Gross Carrying		Accumulated			Net Book
	Life (Years)		Value		Amortization			Value		Value		Amortization			Value
								(in thousands)
Customer relationships		15	$	3,800	$	(823	)	$	2,977	$	3,800	$	(633	)	$	3,167
Trade names	Indefinite			73,410		—			73,410		100,510		—			100,510
Total intangible assets, net			$	77,210	$	(823	)	$	76,387	$	104,310	$	(633	)	$	103,677


	Expected Shortfall Fees to be Incurred
	(in millions)
2021	$	1
2022		15
Fiscal Year			Amount (in thousands)
Remainder of 2022			$	63
2023		19		253
2024		13		253
2025		8		253
2026				253
2027				253
Thereafter		1		1,649
Total shortfall fees expected to be incurred	$	57
Total amortization expense			$	2,977


	Number of Shares			Weighted Average Fair Value
Non-vested at December 26, 2020		114,316		$	263.47
Granted		17,821			877.10
Vested		(42,019	)		227.46
Forfeited		(1,000	)		370.68
Non-vested at September 25, 2021		89,118		$	402.77

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company