EXHIBIT 99.1
BOSTON BEER REPORTS SECOND QUARTER VOLUME,
REVENUE AND EARNINGS
BOSTON, MA (7/29/03) -- The Boston Beer Company, Inc. (NYSE: SAM) today
announced second quarter 2003 volume, revenue and earnings compared to the
second quarter 2002.
2ND QUARTER RESULTS
For the 13 week period ended June 28, 2003, The Boston Beer Company recorded net
sales of $56.3 million, a 4.3% decline from the second quarter in 2002. Net
revenue per barrel increased by 2.3% during the quarter due to normal price
increases and product mix changes. As reflected on the following chart, reported
sales volume for the period was 330,000 barrels, a 6.5% decline from prior year.
(in barrels) Q2-2003 Q2-2002 %Chg
------- ------- ----
Total Boston Beer Brands 328,000 351,000 -6.5%
3rd Party Contract Brewing 2,000 2,000 0%
------- ------- -----
Total Company 330,000 353,000 -6.5%
The Company recorded net income of $3.1 million or $.20 per diluted share for
the quarter versus net income of $4.8 million and $.29 per diluted share for the
same period last year. Gross margins as a percentage of net sales were 61.0% as
compared to 60.3% in the prior year second quarter. This approximately 1.2%
increase in gross profit percentage is due to an increase in pricing partially
offset by normal increases in brewing costs at the contract breweries. Operating
expenses for the quarter were up 3.2% in comparison to the same period last
year, driven by an increase in advertising and promotional expenses that were
partially offset by a reduction in administrative costs. Selling expenditures
were higher due to national television advertising to support the entire Samuel
Adams(R) brand product line and higher point of sale costs due to the purchase
of new tap handles.
During the second quarter 2002, the Company received shares of stock from the
demutualization of a third party insurance provider. The Company recorded the
value of this stock receipt in second quarter 2002 Other Income. The impact to
earnings, net of tax, was approximately $820,000, or $.05 per share.
Based on the information available to the Company, distributor sales of Boston
Beer brands to retail (depletions) during the 2003 second quarter totaled
319,000 barrels, approximately a 2% increase from the same period in 2002. The
disparity between shipments and depletions during the second quarter 2003 is due
to an inventory build that occurred at the wholesaler level during the second
quarter 2002. Shipments and orders in-hand suggest that core shipments for July
and August 2003 will be down approximately 5% as compared to the same period
2002. Actual shipments for the current quarter may differ, however, and no
inferences should be drawn with respect to shipments in future periods.
YEAR TO DATE RESULTS
For the 26 week period ended June 28, 2003, Boston Beer Company recorded net
sales of $101.6 million, a 2.8% decrease from the same period in 2002. Net
revenue per barrel increased by 1.8% during the six months due to normal price
increases and package mix changes. As reflected on the following chart, reported
sales volume for the period was 600,000 barrels, a 4.5% decrease from prior
year.
(in barrels) 6 MOS-2003 6 MOS-2002 %Chg
---------- ---------- ----
Total Boston Beer Brands 596,000 625,000 -4.6%
3rd Party Contract Brewing 4,000 3,000 33.3%
------- ------- -----
Total Company 600,000 628,000 -4.5%
Based on the information available to the Company, distributor sales of Boston
Beer brands to retail (depletions) totaled 572,000 barrels, a 2.0% increase from
2002.
The Company recorded $3.0 million in net income or $.19 per diluted share for
the six months versus net income of $6.1 million and $.37 per diluted share for
the same period last year. Gross margins as a percent of net sales were 59.9%
for the six months ended 2003 and 2002. Advertising, promotional and selling
expenditures increased by $3.0 million to $49.3 million for the period ended
June 28, 2003 due to continued support of the Samuel Adams brand. Other
operating expenses were consistent with normal cost inflation compared to the
first half of 2002.
The Company's effective tax rate was 38.0% for the six months ended June 28,
2003, down from 41.4% during the same period 2002. The decline is due to both
shifting a significant portion of the Company's investments from taxable to
tax-exempt instruments, as well as a restructuring of the Company's corporate
entities.
Jim Koch, Chairman of The Boston Beer Company, said, "The second quarter 2003
was another challenging quarter for the beer industry, driven primarily by soft
on-premise business. Also, we continue to strive to minimize any cannibalization
effects on Samuel Adams Boston Lager and Seasonals by Sam Adams Light that may
have affected our total growth rate. Although too soon to measure actual impact,
we are encouraged by the reaction to the Samuel Adams Boston Lager advertising
campaign that began airing at the end of March 2003. Our strategy continues to
focus on total family growth, through continued investment behind the entire
Samuel Adams Brand Family. Sam Adams Light continues to contribute approximately
20% of the Company's volume and is established as a leading brand in the Better
Light Beer segment."
Martin Roper, Boston Beer President and CEO, reported on the Company's outlook,
"Negatively impacting our shipment volume for the first six months 2003 as
compared to the same period 2002 was an inventory build that began in January
2002 as we were rolling out Sam Adams Light. As a result we expect wholesalers
to continue reducing their inventory levels, which should result in lower
shipments than depletions during the remainder of 2003."
Looking forward, Jim said, "During the second half of 2003, the company expects
to spend approximately $10 million less in total brand support than in the same
period 2002, when the Company was investing heavily in the Sam Adams Light
national launch. This spending may vary based on the impact of our current
advertising campaign. Assuming
this investment level and pricing stability, we continue to anticipate slightly
higher margins than 2002 for the full year which should result in low double
digit percent earnings improvement for the full year of 2003 as compared to the
pre Sam Light launch base year of 2001, after adjusting for a charge related to
the disposal of excess hop inventories." The Company earned $.47 per share
during 2001, and $.62 per share after adjusting for the charge related to the
hop disposal.
During the three and six months ended June 28, 2003, the Company repurchased
908,000 and 1.3 million shares, respectively of its Class A Common Stock for an
aggregate purchase price of $12.4 and $17.4 million, respectively. In June 2003,
the Company's Board of Directors increased the aggregate expenditure limitation
on the Company's Class A Common Stock from $60.0 million to $70.0 million. As of
July 25, 2003, the Company had $774,000 remaining on the authorized share
buyback expenditure limit. Since the beginning of the share repurchase program,
the Company has repurchased a total of approximately 6.8 million shares of its
Class A Common Stock for an aggregate purchase price of $69.2 million through
July 25, 2003. As of July 25, 2003, the Company has 10.0 million shares of Class
A Common Stock outstanding and 4.1 million shares of Class B Common Stock
outstanding.
The Boston Beer Company is America's leading brewer of world-class beer. Founded
in 1984 by sixth-generation brewer Jim Koch, the Company has won more than 500
international awards for its better-tasting beers. Samuel Adams Boston Lager(R)
is the Company's flagship brand, celebrated worldwide for its high-quality
ingredients and traditional brewing techniques. The result is a beer renowned by
drinkers for its full flavor, balance, complexity, and consistent quality. For
more information, visit the web-site at www.samadams.com or visit
www.bostonbeer.com for financial information.
Statements made in this press release that state the Company's or management's
intentions, hopes, beliefs, expectations or predictions of the future are
forward-looking statements. It is important to note that the Company's actual
results could differ materially from those projected in such forward-looking
statements. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements is
contained from time to time in the Company's SEC filings, including but not
limited to the Company's report on Form 10-K for the year ended December 28,
2002 and for December 29, 2001. Copies of these documents may be obtained by
contacting the Company or the SEC.
Tuesday, July 29, 2003
THE BOSTON BEER COMPANY, INC.
FINANCIAL RESULTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATING RESULTS:
(unaudited) (unaudited)
QUARTER ENDED 6 MONTHS ENDED
------------- --------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
2003 2002 2003 2002
---- ---- ---- ----
Barrels sold 330 353 600 628
Gross sales $ 62,161 $ 65,217 $ 112,284 $ 115,696
Less excise taxes 5,842 6,345 10,645 11,164
--------- --------- --------- ---------
Net sales 56,319 58,872 101,639 104,532
Cost of goods sold 21,965 23,369 40,737 41,881
--------- --------- --------- ---------
Gross profit 34,354 35,503 60,902 62,651
Advertising, promotional and selling expenses 26,006 24,592 49,316 46,277
General and administrative expenses 3,669 4,153 7,472 7,573
--------- --------- --------- ---------
Total operating expenses 29,675 28,745 56,788 53,850
--------- --------- --------- ---------
Operating income 4,679 6,758 4,114 8,801
Interest income, net 260 198 654 397
Other income (expense), net 4 1,257 (4) 1,251
--------- --------- --------- ---------
Income before income taxes 4,943 8,213 4,764 10,449
Provision for income taxes 1,881 3,410 1,811 4,327
--------- --------- --------- ---------
Net income $ 3,062 $ 4,803 $ 2,953 $ 6,122
========= ========= ========= =========
Net income per share - basic $ 0.20 $ 0.29 $ 0.19 $ 0.37
========= ========= ========= =========
Net income per share - diluted $ 0.20 $ 0.29 $ 0.19 $ 0.37
========= ========= ========= =========
Weighted average number of common shares - basic 15,087 16,354 15,411 16,353
========= ========= ========= =========
Weighted average number of common shares - diluted 15,306 16,682 15,649 16,689
========= ========= ========= =========
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COPIES OF THE BOSTON BEER COMPANY'S PRESS RELEASES, INCLUDING QUARTERLY
FINANCIAL RESULTS, ARE AVAILABLE ON THE INTERNET AT WWW.SAMADAMS.COM
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CONFERENCE CALL BEGINS AT 4:00 P.M. (ET)
DIAL IN # (630) 395-0024 PASSWORD: SUMMER ALE
Contact: Kara Rappaport (617) 368-5108
CONSOLIDATED BALANCE SHEETS:
(unaudited)
JUNE 28, DECEMBER 28,
2003 2002
---- ----
Assets
Current Assets:
Cash and cash equivalents $ 1,050 $ 20,608
Short-term investments 30,940 32,001
Accounts receivable, net of allowance for doubtful accounts of
$524 and $689 as of June 28, 2003 and December 28, 2002,
respectively 22,957 17,830
Inventories 10,601 8,342
Prepaid expenses 1,183 1,284
Deferred income taxes 1,918 1,959
Other current assets 2,303 1,513
-------- ---------
Total current assets 70,952 83,537
Property, plant and equipment, net 19,047 20,202
Other assets 1,254 1,690
Goodwill 1,377 1,377
-------- ---------
Total assets $ 92,630 $ 106,806
======== =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 10,948 $ 8,997
Accrued expenses 14,270 15,874
-------- ---------
Total current liabilities 25,218 24,871
Deferred income taxes 1,568 2,406
Other long-term liabilities 650 697
Commitments and Contingencies
Stockholders' Equity
Class A Common Stock, $.01 par value;
22,700,000 shares authorized; 16,769,429 and 16,674,556 issued
as of June 28, 2003 and December 28, 2002, respectively 168 166
Class B Common Stock, $.01 par value;
4,200,000 shares authorized; 4,107,355 issued and outstanding 41 41
Additional paid-in capital 60,066 59,144
Unearned compensation (307) (189)
Other comprehensive income 381 419
Retained earnings 67,153 64,200
Treasury stock, at cost
6,285,167 and 5,011,947 shares as of June 28, 2003 and
December 28, 2002, respectively (62,308) (44,949)
-------- ---------
Total stockholders' equity 65,194 78,832
-------- ---------
Total liabilities and stockholders' equity $ 92,630 $ 106,806
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CONSOLIDATED STATEMENTS OF CASH FLOWS:
(unaudited)
6 MONTHS ENDED
----------------
JUNE 28, JUNE 29,
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,953 $ 6,122
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 2,788 2,879
Loss on disposal of fixed assets 47 206
Bad debt expense (39) 116
Realized gain on sale of marketable equity security (28) --
Stock option compensation expense 43 42
Changes in assets and liabilities:
Accounts receivable (5,086) (4,144)
Inventories (2,259) (519)
Prepaid expenses 101 (244)
Other current assets (943) (598)
Deferred taxes (796) 380
Other assets -- (899)
Accounts payable 1,951 (1,566)
Accrued expenses (1,339) 2,620
Other long-term liabilities (47) (206)
-------- --------
Net cash (used in) provided by operating activities (2,654) 4,189
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,225) (947)
Proceeds on disposal of fixed assets 14 202
Maturities of held-to-maturity investments -- 8,028
Purchases of available-for-sale securities (3,560) (33,832)
Purchases of held-to-maturity securities -- (9,026)
Proceeds from the sale of available-for-sale securities 4,610 --
-------- --------
Net cash used in investing activities (161) (35,575)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (17,359) (798)
Proceeds from exercise of stock options 510 228
Net proceeds from the sale of investment shares 106 41
-------- --------
Net cash used in financing activities (16,743) (529)
-------- --------
Change in cash and cash equivalents (19,558) (31,915)
Cash and cash equivalents at beginning of period 20,608 45,838
-------- --------
Cash and cash equivalents at end of period $ 1,050 $ 13,923
======== ========
Supplemental disclosure of cash flow information:
Interest paid $ -- $ --
======== ========
Taxes paid $ 4,356 $ 2,041
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