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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

x	  	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934	
For the fiscal year ended December 26, 2015
OR

¨	  	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934	
For the transition period from                 to                 
Commission file number: 1-14092

THE BOSTON BEER COMPANY, INC.
(Exact name of registrant as specified in its charter)

 
 	 	 	
Massachusetts	 	04-3284048	
(State or other jurisdiction of
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	
One Design Center Place, Suite 850, Boston, Massachusetts
(Address of principal executive offices)
02210
(Zip Code)
(617) 368-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	 	Name of each exchange on which registered	
Class A Common Stock	 	NYSE	
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes   ¨     No   x
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   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.    Yes   x     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act)

Large accelerated filer	 	x	  	Accelerated filer	 	¨	
 	 	 	 	
Non-accelerated filer	 	¨	  	 	 	 	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
The aggregate market value of the Class A Common Stock ($.01 par value) held by non-affiliates of the registrant totaled $2,284.1 million (based on the average price of the Company’s Class A Common Stock on the New York Stock Exchange on June 27, 2015). All of the registrant’s Class B Common Stock ($.01 par value) is held by an affiliate.
As of February 12, 2016, there were 9,465,306 shares outstanding of the Company’s Class A Common Stock ($.01 par value) and 3,367,355 shares outstanding of the Company’s Class B Common Stock ($.01 par value).

DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of the registrant’s definitive Proxy Statement for its 2016 Annual Meeting to be held on May 25, 2016 are incorporated by reference into Part III of this report.

 

Table of Contents
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE PERIOD ENDED DECEMBER 26, 2015

 	 	 	  	Page	 	
PART I.	 	 	  	 	 	 	
Item 1.	 	Business	  	 	1	  	
Item 1A.	 	Risk Factors	  	 	11	  	
Item 1B.	 	Unresolved Staff Comments	  	 	20	  	
Item 2.	 	Properties	  	 	20	  	
Item 3.	 	Legal Proceedings	  	 	21	  	
Item 4.	 	Mine Safety Disclosures	  	 	21	  	
 	 	 	
PART II.	 	 	  	 	 	 	
Item 5.	 	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	  	 	21	  	
Item 6.	 	Selected Consolidated Financial Data	  	 	24	  	
Item 7.	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	24	  	
Item 7A.	 	Quantitative and Qualitative Disclosures About Market Risk	  	 	36	  	
Item 8.	 	Financial Statements and Supplementary Data	  	 	37	  	
Item 9.	 	Changes in and Disagreements With Accountants on Accounting and Financial Disclosures	  	 	67	  	
Item 9A.	 	Controls and Procedures	  	 	68	  	
Item 9B.	 	Other Information	  	 	70	  	
 	 	 	
PART III.	 	 	  	 	 	 	
Item 10.	 	Directors, Executive Officers and Corporate Governance	  	 	70	  	
Item 11.	 	Executive Compensation	  	 	70	  	
Item 12.	 	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	  	 	70	  	
Item 13.	 	Certain Relationships and Related Transactions, and Director Independence	  	 	71	  	
Item 14.	 	Principal Accountant Fees and Services	  	 	71	  	
 	 	 	
PART IV.	 	 	  	 	 	 	
Item 15.	 	Exhibits and Financial Statement Schedules	  	 	71	  	
Signatures	 	 	  	 	74	  	

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PART I.
 
Item 1.	Business	
General
The Boston Beer Company, Inc. (“Boston Beer” or the “Company”) is one of the largest craft brewers in the United States. In fiscal 2015, Boston Beer sold approximately 4.2 million barrels of its proprietary products (“core brands”).
During 2015, the Company sold over sixty beers under the Samuel Adams® and the Sam Adams® brand names, twelve flavored malt beverages under the Twisted Tea ®  brand name, ten hard cider beverages under the Angry Orchard ®  brand name, and over forty beers under four of the brand names of its subsidiary, A&S Brewing Collaborative LLC, under its trade name Alchemy & Science.
Boston Beer produces malt beverages and hard cider at Company-owned breweries and under contract arrangements at other brewery locations. The Samuel Adams Company-owned breweries are located in Boston, Massachusetts (the “Boston Brewery”), Cincinnati, Ohio (the “Cincinnati Brewery”) and Breinigsville, Pennsylvania (the “Pennsylvania Brewery”). The Alchemy & Science Company-owned small breweries are located in Los Angeles, California (the “Angel City Brewery”), Miami, Florida (the “Concrete Beach Brewery”) and Brooklyn, New York (the “Coney Island Brewery”). The Company owns an apple orchard and cidery located in Walden, New York (the “Orchard”).
The Company’s principal executive offices are located at One Design Center Place, Suite 850, Boston, Massachusetts 02210, and its telephone number is (617) 368-5000.
Industry Background
Before Prohibition, the United States beer industry consisted of hundreds of small breweries that brewed full-flavored beers. After the end of Prohibition, most domestic brewers shifted production to less flavorful, lighter beers, which use lower-cost ingredients, and can be mass-produced to take advantage of economies of scale in production. This shift towards mass-produced beers coincided with consolidation in the beer industry. Today, two major brewers, Anheuser-Busch InBev (“AB InBev”) and MillerCoors LLC (“MillerCoors”), comprise over 85 %  of all United States domestic beer production, excluding imports.
The Company’s beers are primarily positioned in the Better Beer category of the beer industry, which includes craft (small, independent and traditional) brewers, domestic specialty beers and most imports. Better Beers are determined by higher price, quality, image and taste, as compared with regular domestic beers. Samuel Adams is one of the largest brands in the Better Beer category of the United States brewing industry. The Company’s Alchemy & Science brands, which include the Traveler Beer Company ® , the Angel City Brewery ® , the Concrete Beach Brewery™ and the Coney Island ® Brewery also compete in the Better Beer category. The Company estimates that in 2015 the craft beer category percentage volume growth was in the mid to high teens and the Better Beer category volume growth was approximately 9%, while the total beer category volume was essentially flat. The Company believes that the Better Beer category is approximately 27% of United States beer consumption by volume.
The domestic beer industry, excluding Better Beers, has experienced a decline in shipment volume over the last ten years. The Company believes that this decline is due to declining alcohol consumption per person in the population, drinkers trading up to drink high quality, more flavorful beers and increased competition from wine and spirits companies.
The Company’s Twisted Tea products compete within the flavored malt beverage (“FMB”) category of the beer industry (and the Company’s Twisted Tea products are included in generic references to the Company’s “beers”
 
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in this report). The Company believes that the FMB category comprises approximately 4% of United States beer consumption and that the volume comprising the FMB category was essentially flat in 2015. This category is highly competitive due to, among other factors, the presence of large brewers and spirits companies in the category, the advertising of malt-based spirits brands in channels not available to the parent brands and a fast pace of product innovation.
The Company’s Angry Orchard ciders compete within the hard cider category that has similar characteristics to the beer industry for reporting and regulatory purposes. The Company believes that the hard cider category comprises approximately 1% of United States beer consumption and that the volume comprising the hard cider category increased approximately 9% in 2015. This category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local hard cider companies, and has experienced very fast growth over the last five years, although this growth stopped during late 2015.
Narrative Description of Business
The Company’s business goal is to become the leading supplier in the Better Beer and hard cider categories by creating and offering high quality full-flavored beers and hard ciders. With the support of a large, well-trained sales organization and world-class brewers, the Company strives to achieve this goal by offering great beers and hard ciders, and increasing brand availability and awareness through advertising, point-of-sale, promotional programs and drinker education.
Beers and Hard Ciders Marketed
The Company’s strategy is to create and offer a world-class variety of traditional and innovative beers and hard ciders, with a focus on promoting the Samuel Adams brand, but supported by a portfolio of complementary brands. The Angry Orchard brand family was launched in the second half of 2011 in several markets and achieved national distribution in 2012. Since 2013, Angry Orchard has been the largest selling hard cider in the United States. The Twisted Tea brand family has grown each year since the product was first introduced in 2001 and has established a loyal drinker following. The Company’s subsidiary, Alchemy & Science currently has four brands, including Angel City Brewery, The Traveler Beer Co., Coney Island Brewery and the Concrete Beach Brewery. In 2015, the Company began national distribution of certain styles of the Traveler Beer brand and the Coney Island beer brand, including Coney Island Hard Root Beer.
The Company sells its beers and hard ciders in various packages. Kegs are sold primarily for on-premise retailers, which include bars, restaurants and other venues, and bottles and cans are sold primarily for off-premise retailers, which include grocery stores, club stores, convenience stores and liquor stores.
Samuel Adams Boston Lager® is the Company’s flagship beer that was first introduced in 1984. The Samuel Adams Seasonal beers are brewed specifically for limited periods of time and include Samuel Adams Cold Snap, Samuel Adams Summer Ale, Samuel Adams Octoberfest, and Samuel Adams Winter Lager.
Certain Samuel Adams beers may be produced at select times during the year solely for inclusion in the Company’s seasonal variety packs. During 2015, Samuel Adams Crystal Pale Ale was brewed and included in the Spring Seasonal Collection variety pack, Samuel Adams Harvest Pumpkin and Samuel Adams Hoppy Red were brewed and included in the Fall variety pack and Samuel Adams Old Fezziwig ®  Ale, Samuel Adams Chocolate Bock, Samuel Adams Holiday Porter and Samuel Adams Sparkling Ale were brewed and included in the Winter Classics variety pack. Additionally, beginning in 2011 the Company began limited releases of seasonal beers in various packages. These limited seasonal release beers currently include Samuel Adams Escape Route, Samuel Adams Porch Rocker, Samuel Adams Pumpkin Batch and Samuel Adams White Christmas.
After being in test markets during 2013, the Company began a national rollout of Samuel Adams Rebel IPA, a West Coast style IPA brewed with hops from the Pacific Northwest, in early 2014. During 2014 and 2015, the
 
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Company added additional styles to support Samuel Adams Rebel IPA, including Sam Adams Rebel Rouser IPA, Samuel Adams Rebel Rider IPA, Samuel Adams Grapefruit IPA and Samuel Adams Rebel Raw IPA.
The Samuel Adams Brewmaster’s Collection is an important part of the Company’s portfolio and heritage, but receives limited promotional support. The Small Batch Collection, Barrel Room Collection and Limited Edition Beers and certain specialty variety packs are produced in limited quantities and are sold at higher prices than the Company’s other products. The Company also releases a variety of specialty draft beers brewed in limited quantities for festivals and Beer Week celebrations.
Since 2012, the Twisted Tea and Angry Orchard brand families have been available nationally. In 2015 the Company began national distribution of certain styles of the Traveler Beer brand and the Coney Island beer brand, including Coney Island Hard Root Beer. All of these nationally available brands are available in various packages, including cans. The Company will continue to look for complementary opportunities to leverage its capabilities, provided that they do not distract from its primary focus on its Samuel Adams brand.
The Company continually evaluates the performance of its various beers and hard cider styles and the rationalization of its product line as a whole. Periodically, the Company discontinues certain styles and packages, such as Samuel Adams Double Agent IPL, Samuel Adams White Lantern, Samuel Adams Whitewater IPA, Samuel Adams Noble Pils, Angry Orchard Traditional Dry and Twisted Pink Lemonade that were discontinued during 2015. Certain styles or brands discontinued in previous years may be produced for the Company’s variety packs or reintroduced.
The Company’s beers and hard ciders are sold by the Company’s sales force to the same types of customers in similar size quantities, at similar price points and through substantially the same channels of distribution. These beverages are manufactured using similar production processes, have comparable alcohol content and generally fall within the same regulatory environment.
Product and Packaging Innovations
The Company is committed to maintaining its position as a leading innovator in the Better Beer and hard cider categories by developing new beers and hard ciders. To that end, the Company continually test brews different beers and hard ciders and occasionally sells them under various brand labels for evaluation of drinker interest .  The Company also promotes the annual LongShot American Homebrew Contest ®  in which homebrewers and employees of the Company submit their homebrews for inclusion in the LongShot ®  six-pack in the following year. In 2015, the Company sold over sixty Samuel Adams beers commercially and brewed many more test brews. The Company’s Boston Brewery spends most of its time ideating, testing and developing beers and hard ciders for the Company’s potential future commercial development.
In 2013, the Company completed a two-year research effort to develop a can to improve the beer drinker’s experience compared to the traditional can. The features of this can were designed to enhance the drinking experience and include a wider lid with an opening slightly further from the edge of the lid, an extended lip and an hourglass ridge. Currently, Samuel Adams Boston Lager, Samuel Adams Seasonal Beers, Samuel Adams Porch Rocker, Samuel Adams Rebel IPA and some of the Alchemy & Science beers are available in this uniquely-designed can.
In late 2011, the Company formed a subsidiary, A&S Brewing Collaborative LLC, d/b/a Alchemy & Science, headed by Alan Newman, founder of Magic Hat Brewing Company, as a craft brew incubator. Alchemy & Science is headquartered in Burlington, Vermont. The mission of Alchemy & Science is to find new opportunities in craft brewing, which may be geographical or stylistic and some may be with existing breweries or brewpubs. Alchemy & Science has access to the brewing talents and broad resources of the Company, as it looks for opportunities around the country. During 2012 and 2013, Alchemy & Science purchased the assets of Southern California Brewing Company, Inc., a Los Angeles based craft brewer doing business as Angel City
 
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Brewing Company, and the assets of the Coney Island beer brand and certain other assets from Shmaltz Brewing Company, a New York based craft brewer. Since 2013, Alchemy & Science has also developed and sold beers under The Traveler Beer Co. brand name, including Illusive Traveler ® , Curious Traveler ®  and other shandy-style and fruit flavored beers. During 2015, Alchemy & Science built and opened two small breweries and beer halls, one in Miami, Florida, named Concrete Beach Brewery, and one in Brooklyn, New York named the Coney Island Brewery. Also in 2015, the Company began national distribution of certain styles of the Alchemy & Science Traveler Beer brand and the Coney Island beer brand, including Coney Island Hard Root Beer. In 2015, Alchemy & Science annual net sales were approximately 7% of the Company’s total net sales.
Sales, Distribution and Marketing
Most all of the Company’s sales are made to a network of approximately 350 wholesalers in the United States and to a network of foreign wholesalers, importers or other agencies (collectively referred to as “Distributors”). These Distributors, in turn, sell the products to retailers, such as pubs, restaurants, grocery stores, convenience stores, package stores, stadiums and other retail outlets, where the products are sold to drinkers, and in some limited circumstances to parties who act as sub-distributors. The Company sells its products predominantly in the United States, but also has markets in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central and South America.
With few exceptions, the Company’s products are not the primary brands in Distributors’ portfolios. Thus, the Company, in addition to competing with other beers and hard ciders for a share of the drinker’s business, competes with other brewers for a share of the Distributor’s attention, time and selling efforts. During 2015, the Company’s largest customer accounted for approximately 7% of the Company’s net sales. The top three Distributors collectively accounted for approximately 12% of the Company’s net sales. In some states and countries, the terms of the Company’s contracts with its Distributors may be affected by laws that restrict the enforcement of some contract terms, especially those related to the Company’s right to terminate the relationship.
Most core brands are shipped within days of completion and there has not been any significant product order backlog. The Company has historically received most of its orders from domestic Distributors in the first week of a month for products to be shipped the following month and the Distributor would then carry three to five weeks of packaged inventory (usually at ambient temperatures) and three to four weeks of draft inventory.
In an effort to reduce both the time and temperature the Company’s beers experience at Distributor warehouses before reaching the retail market, in late 2010 the Company introduced its Freshest Beer Program with domestic Distributors in several markets . The goal of the Freshest Beer Program is to provide better on-time service, forecasting, production planning and cooperation with the Distributors, while substantially reducing inventory levels at the Distributor. At the close of its 2015 fiscal year, the Company had 139 Distributors participating in the program, which constitutes approximately 71% of its volume. The Company has successfully reduced the inventories of participating Distributors in the aggregate by approximately two weeks, resulting in fresher beer being delivered to retail. The Freshest Beer Program has resulted in lower shipments of approximately 87,000, 103,000 and 212,000 case equivalents in 2015, 2014 and 2013, respectively, as measured at the end of the year by evaluating the year-on-year inventory reduction from the inventory levels that might otherwise have been expected. In 2015, the Company began piloting a small group of distributors on a pure replenishment service model within our Freshest Beer Program, which if successful would further reduce Distributor inventories. The ordering process has changed significantly for Distributors that participate in the Freshest Beer Program and has resulted in a shorter period between order placement and shipment. There are various risks associated with the Freshest Beer Program that are discussed in  Risk Factors  below.
Boston Beer has a sales force of approximately 420 people, which the Company believes is one of the largest in the domestic beer industry. The Company’s sales organization is designed to develop and strengthen relations at the Distributor, retailer and drinker levels by providing educational and promotional programs. The Company’s sales force has a high level of product knowledge and is trained in the details of the brewing and selling
 
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processes. Sales representatives typically carry samples of the Company’s beers and hard ciders, certain ingredients, such as hops and barley, and other promotional materials to educate wholesale and retail buyers about the quality and taste of the Company’s products. The Company has developed strong relationships with its Distributors and retailers, many of which have benefited from the Company’s premium pricing strategy and growth.
The Company also engages in media campaigns — including television, radio, digital and social media, billboards and print. These media efforts are complemented by participation in sponsorships of cultural and community events, local beer festivals, industry-related trade shows and promotional events at local establishments, to the extent permitted under local laws and regulations. The Company uses a wide array of point-of-sale items (banners, neons, umbrellas, glassware, display pieces, signs and menu stands) designed to stimulate impulse sales and continued awareness.
In 2008, the Company launched its core philanthropic initiative, Samuel Adams Brewing the American Dream®. In partnership with ACCION, the nation’s largest non-profit micro-lender, the program supports small business owners in the food, beverage, brewing and hospitality industries through access to business capital, coaching, and new market opportunities. The goal is to help strengthen small businesses, create local jobs and build vibrant communities. Since the inception of the Samuel Adams Brewing the American Dream program, Samuel Adams and ACCION have worked together to loan more than $8.2 million to nearly 800 small business owners who have subsequently repaid these loans at a rate of more than 98%. Samuel Adams employees, together with local business partners and community organizations, have provided coaching and mentoring to more than 6,000 business owners across the country. These efforts have helped to create or maintain more than 3,000 local jobs.
Ingredients and Packaging
The Company has been successful to date in obtaining sufficient quantities of the ingredients used in the production of its beers and hard ciders. These ingredients include:
Malt. The two-row varieties of barley used in the Company’s malt are mainly grown in the United States and Canada. The 2014 North American barley crop, which supported most 2015 malt needs, was well below historical long term averages with regards to both quality and quantity, driven by acreage declines and adverse weather events in key barley growing areas. The 2015 North American barley crop, which will support 2016 malt needs, was generally consistent with historical long term averages with regards to both quality and quantity, though quality from key areas in Canada was highly variable and below long term averages. The 2014 barley crop prices booked early in the calendar year were at prices comparable to historical long term averages. The 2014 crop prices booked late in the calendar year, as the impact of the weather events became clear, were well above historical long-term averages. The 2015 barley crop prices are consistent with historic long-term averages. There has been a long-term trend of declining acres and production in North America against relatively stable malt demand. The Company purchased most of the malt used in the production of its beer from two suppliers during 2015. The Company currently has a multi-year contract with one of its suppliers and a 1 year agreement with the other supplier. The Company also believes that there are other malt suppliers available that are capable of supplying its needs.
Hops. The Company uses Noble hop varieties for many of its Samuel Adams beers and also uses hops grown in the United States, England and New Zealand. Noble hops are grown in several specific areas recognized for growing hops with superior taste and aroma properties. These include Hallertau-Hallertauer, Tettnang-Tettnanger, Hersbrucker and Spalt-Spalter from Germany and Saaz from the Czech Republic. The United States hops, grown primarily in the Pacific Northwest, namely Cascade, Simcoe, Centennial, Chinook, Citra, Amarillo and Mosaic are used in certain of the Company’s ales and lagers, as are the Southern Hemisphere hop varieties, Galaxy and Nelson Sauvin. Traditional English hops, namely, East Kent Goldings and Fuggles, are also used in certain of the Company’s ales. Other hop sources and varieties are also tested and used from time to time.
 
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The European hop crop harvested in 2015 was well below historical long term averages with regards to both quality and quantity due to warmer than normal temperatures and insufficient precipitation. The United States hop crop harvested in 2015 was consistent with historical long term averages with regards to quality, with an increase in overall quantity driven by expansion of planted acres in recent years. However, the demand for certain hops grown in the United States has risen dramatically due to the success and proliferation of craft brewers and the popularity of beer styles that include hop varieties grown in the United States, with the result that certain United States hops are now in tight supply and prices have risen for both spot purchases and forward contract pricing, accordingly.
The Company enters into purchase commitments with eight primary hop dealers, based on the Company’s projected future volumes and brewing needs. The dealers either have the hops that are committed or will contract with farmers to meet the Company’s needs. The contracts with the hop dealers are denominated in Euros for the German and Czech Republic hops, in Pounds Sterling for the English hops, US Dollars for United States hops and New Zealand Dollars for the New Zealand hops. The Company does not currently hedge its forward currency commitments.
The Company expects to realize full delivery on United States and New Zealand hop contracts on the hop crop harvested in 2015. The Company experienced significant under-delivery on European hop contracts on the hop crop harvested in 2015. However, because the Company attempts to maintain up to a two-year supply of essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply, the underdelivery from current crop is not expected to have a material impact on its operations.
The Company believes it has adequate inventory and commitments for all hop varieties. This belief is based on expected growth and beer style mix, all of which could ultimately be significantly different from what is currently planned. Variations to plan could result in hops shortages for specific beers or an excess of certain hops varieties.
The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site.
Yeast. The Company uses multiple yeast strains for production of its beers and hard ciders. While some strains are commercially available, other strains are proprietary. Since the proprietary strains cannot be replaced if destroyed, the Company protects these strains by storing multiple cultures of the same strain at different production locations and in several external laboratories.
Apples. The Company uses special varieties and origins of apples in its hard ciders that it believes are important for their flavor profile. In 2015, these apples were sourced primarily from European, United States and New Zealand suppliers and include bittersweet apples from France and New Zealand and culinary apples from Italy and Washington State. Purchases and commitments are denominated in Euros for European apples, US Dollars for United States apples and New Zealand Dollars for the New Zealand apples. There is limited availability of some of these apple varieties, and many outside factors, including weather conditions, growers rotating from apples to other crops, competitor demand, government regulation and legislation affecting agriculture, could affect both price and supply. The 2015 apple crops in Europe, the United States and New Zealand were consistent with historical long term averages. The Company has entered into contracts to cover its expected needs for 2016 and expects to realize full delivery against these contracts.
The Company purchased and opened its cidery at the Orchard in 2015. The Company expects to use the apple varieties harvested at the Orchard primarily to experiment and develop new hard ciders. The Company may also use the apples harvested at the Orchard in small quantities in the Company’s current hard ciders, but, given the current varieties of apples grown at the Orchard, such use is likely to be insignificant.
Other Ingredients. The Company maintains competitive sources for most of the other ingredients used in its beers and hard ciders.
 
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Packaging Materials. The Company maintains competitive sources for the supply of certain packaging materials, such as shipping cases and glass. The Company enters into limited-term supply agreements with certain vendors in order to receive preferential pricing. In 2015, cans, crowns, six pack carriers and labels were each supplied by a single source; however, the Company believes that alternative suppliers are available.
The Company initiates bottle deposits in some states and reuses glass bottles that are returned pursuant to certain state bottle recycling laws. The Company derives some economic benefit from its reuse of returned glass bottles. The cost associated with reusing the glass varies, based on the costs of collection, sorting and handling, including arrangements with retailers, Distributors and dealers in recycled products. There is no guarantee that the current economics relating to the use of returned glass will continue or that the Company will continue to reuse returnable bottles.
Quality Assurance
As of December 26, 2015, the Company employed over twenty brew masters to monitor the Company’s brewing operations and control the production of its beers and hard ciders. Extensive tests, tastings and evaluations are typically required to ensure that each batch of the Company’s beers and hard ciders conform to the Company’s standards. The Company has on-site quality control labs at each of its Samuel Adams company-owned breweries, and supports the smaller local breweries with additional centralized lab services.
With the exception of certain specialty products, the Company includes a clearly legible “freshness” code on every bottle, can and keg of its beers, in order to ensure that its customers enjoy only the freshest products. Boston Beer was the first American brewer to use this practice.
Beer and Hard Cider Production Strategy
During 2015, the Company brewed, fermented and packaged over 95% of its core brand volume at breweries owned by the Company. The Company made capital investments in 2015 of approximately $74.2 million. These investments were made to expand the quality, capacity, efficiency and capabilities of its breweries, both to meet the 2015 growth and the anticipated future growth. The Company expects to invest between $60 million and $80 million in 2016, which is highly dependent on estimates of future growth and the capital investments to meet those volume growth estimates. The actual amount spent may well be different from these estimates. The Company believes that by executing this capital plan and expanding its use of production arrangements with third parties, it should be able to support its projected growth in 2016. The Company continues to evaluate capacity optimization at its breweries and the potential significant capital required for expansion of existing capacity.
The Company also engages in various product development activities. Such activities include researching market needs and competitive products, and sample brewing and market taste testing.
The Pennsylvania Brewery and the Cincinnati Brewery produce most of the Company’s shipment volume. The Pennsylvania Brewery is the Company’s largest brewery and the Cincinnati Brewery is the primary brewery for the production of most of the Company’s specialty and lower volume products. The Boston Brewery’s production is mainly for developing new types of innovative and traditional beers and brewing and packaging beers for retail sales on site and in the local market area.
The Company’s Angry Orchard Innovation Cider House located in Walden, New York, opened in November 2015 and its production is mainly for developing new types of innovative hard ciders and fermenting and packaging ciders for retail sales on site and in the local market area.
The Alchemy & Science breweries include the Angel City Brewery, Concrete Beach Brewery and Coney Island Brewery. The production at the Alchemy & Science breweries is mainly for developing new types of innovative
 
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and traditional beers and supporting draft accounts in the respective local market areas and providing for on-premise consumption of its beers at its beer halls.
The Company currently has a brewing services agreement with a subsidiary of City Brewing Company, LLC, to produce its products at facilities in Latrobe, Pennsylvania and an agreement with Shmaltz Brewing Company, LLC to produce at facilities in Clifton Park, New York. The Company carefully selects breweries and packaging facilities owned by others with (i) the capability of utilizing traditional brewing, fermenting and finishing methods and (ii) first-rate quality control capabilities throughout the process. Under its brewing and packaging arrangements with third parties, the Company is charged a service fee based on units produced at each of the facilities and bears the costs of raw materials, risk, excise taxes and deposits for pallets and kegs and specialized equipment required to brew and package the Company’s malt beverages and hard ciders.
The Company believes that it has alternatives available to it, in the event that production at any of its brewing locations is interrupted, although severe interruptions at the Pennsylvania Brewery would be problematic, especially in seasonal peak periods. In addition, the Company may not be able to maintain its current economics if interruptions were to occur, and could face significant delays in starting up replacement brewing locations. Potential interruptions at breweries include labor issues, governmental actions, quality issues, contractual disputes, machinery failures, operational shut downs, or natural or unavoidable catastrophes. Also, as the brewing industry has consolidated and the Company has grown, the capacity and willingness of breweries owned by others where the Company could brew some of its beers and hard ciders, if necessary, has become a more significant concern. The Company continues to work with its contract brewers to attempt to minimize any potential disruptions.
Competition
The Better Beer category within the United States beer market is highly competitive due to the increasing number of craft brewers, imported beers with similar pricing and target drinkers, and efforts by large domestic brewers to enter this category. The Company anticipates competition and innovation among domestic craft brewers to remain strong, as craft brewers experienced their eleventh successive year of growth in 2015 and there were many new startups. The Company estimates there are over 5,000 craft breweries in operation or in the planning stages, up from approximately 1,409 operating craft breweries in 2006. Also, established craft breweries are building more capacity, expanding geographically, and adding more SKUs and styles, as Distributors and retailers are promoting and making more shelf space available for more craft beer brands.
Imported beers, such as Corona®, Heineken® and Modelo Especial®, continue to compete aggressively in the United States and have gained market share over the last ten years. Heineken and Constellation Brands (owner of the United States Distribution rights to Corona and Modelo Especial) may have substantially greater financial resources, marketing strength and distribution networks than the Company has. The two largest brewers in the United States, MillerCoors and AB InBev, have entered the Better Beer category with domestic specialty beers, either by developing their own beers, acquiring, in whole or part, existing craft breweries, importing and distributing foreign brewers’ brands or increasing their development and marketing efforts on their own domestic specialty beers that might compete in the Better Beer category. In addition, Miller Coors’ Tenth and Blake and AB InBev’s High End Division have been formed as business units headquartered in the United States that are focused exclusively on competing in the Better Beer market.
During 2015, there were numerous acquisitions announced in the beer industry including AB InBev’s $107 billion purchase of SAB Miller and the related sale by SAB Miller to MolsonCoors of its 58% share of the MillerCoors joint venture with MolsonCoors. Both of these transactions are scheduled to close during 2016 and are subject to various regulatory and financing requirements. There were also numerous announcements of acquisitions of or investments in craft brewers by larger breweries, private equity and other investors. The most significant include Heineken’s acquisition of a 50% interest of Lagunitas Brewing Company for approximately $500 million, Constellation Brands’ acquisition of Ballast Point Brewing & Spirits for approximately $1 billion
 
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and AB InBev’s purchase of multiple craft breweries, including Elysian Brewing Company, Golden Road Brewing, Four Peaks Brewing Company and Breckenridge Brewery. During 2015, Pabst Brewing Company acquired an ownership interest in and entered into an exclusive distribution agreement to distribute nationally Small Town Brewery’s brands, including Not Your Fathers Hard Root Beer ® . Also, during 2015, Pabst Brewing Company entered a distribution agreement to distribute various United States cider brands of C&C Group PLC, including ‘Woodchuck’, ‘Magners’ and ‘Hornsby’s.’
The Company’s products also compete with other alcoholic beverages for drinker attention and consumption and the pace of innovation in the categories the Company competes in is increasing. In recent years, wine and spirits have been competing more directly with beers. The Company monitors such activity and attempts to develop strategies which benefit from the drinker’s interest in trading up, in order to position its beers and hard ciders competitively with wine and spirits.
The Company competes with other beer and alcoholic beverage companies within a three-tier distribution system. The Company competes for a share of the Distributor’s attention, time and selling efforts. In retail establishments, the Company competes for shelf, cold box and tap space. From a drinker perspective, competition exists for brand acceptance and loyalty. The principal factors of competition in the Better Beer segment of the beer industry include product quality and taste, brand advertising and imagery, trade and drinker promotions, pricing, packaging and the development of new products.
The Company distributes its products through independent Distributors who also distribute competitors’ products. Certain brewers have contracts with their Distributors that impose requirements on the Distributors that are intended to maximize the Distributors’ attention, time and selling efforts on that brewer’s products. These contracts generally result in increased competition among brewers as the contracts may affect the manner in which a Distributor allocates selling effort and investment to the brands included in its portfolio. The Company closely monitors these and other trends in its Distributor network and works to develop programs and tactics intended to best position its products in the market.
The Company has certain competitive advantages over the regional craft brewers, including a long history of awards for product quality, greater available resources and the ability to distribute and promote its products on a more cost-effective basis. Additionally, the Company believes it has competitive advantages over imported beers, including lower transportation costs, higher product quality, a lack of import charges and superior product freshness.
The Company’s Twisted Tea product line competes primarily within the FMB category of the beer industry. FMB’s, such as Twisted Tea, Smirnoff Ice ® , Mike’s Hard Lemonade ® , Bud Light Lime ®  Ritas, and Redds Apple Ale ®  are flavored malt beverages that are typically priced competitively with Better Beers. This category is highly competitive due to, among other factors, the presence of large brewers and spirits companies in the category, the advertising of malt-based spirits brands in channels not available to the parent brands and a fast pace of product innovation.
The Company’s Angry Orchard product line competes within the hard cider category. This category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local hard cider companies. Hard ciders are typically priced competitively with Better Beers and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include C&C Group PLC under the brand names ‘Woodchuck’, ‘Magners’ and ‘Hornsby’s’; Heineken under the brand names ‘Strongbow’; AB InBev under ‘Michelob Ultra Cider’ and ‘Stella Cidre’ and MillerCoors under the brand names ‘Smith and Forge’ and ‘Crispin Cider’.
Regulation and Taxation
The alcoholic beverage industry is regulated by federal, state and local governments. These regulations govern the production, sale and distribution of alcoholic beverages, including permitting, licensing, marketing and advertising. To operate its breweries, the Company must obtain and maintain numerous permits, licenses and
 
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approvals from various governmental agencies, including the Alcohol and Tobacco Tax and Trade Bureau, the Food and Drug Administration, state alcohol regulatory agencies and state and federal environmental agencies.
Governmental entities may levy various taxes, license fees and other similar charges and may require bonds to ensure compliance with applicable laws and regulations. The federal excise tax on malt beverages is $18 per barrel, on hard cider (with alcohol by volume of 7% or less) is $0.226 per gallon, and on artificially carbonated wine (hard cider with alcohol by volume greater than 7%) is $3.30 per gallon. States levy excise taxes at varying rates based on the type of beverage and alcohol content. Failure by the Company to comply with applicable federal, state or local laws and regulations could result in higher taxes, penalties, fees and suspension or revocation of permits, licenses or approvals. While there can be no assurance that any such regulatory action would not have a material adverse effect upon the Company or its operating results, the Company is not aware of any infraction affecting any of its licenses or permits that would materially impact its ability to continue its current operations.
Trademarks
The Company has obtained United States trademark registrations for over 190 trademarks, including Samuel Adams®, the design logo of Samuel Adams ® , Sam Adams ® , Samuel Adams Boston Lager ® , Samuel Adams Utopias ® , Samuel Adams Rebel ® , Samuel Adams Brewing the American Dream ® , Angry Orchard ® , Twisted Tea ® , Lazy River ® , The Traveler Beer Co. ® , Coney Island ® , Angel City Brewery ® , Concrete Beach ® . It also has a number of common law marks, including Infinium™ and Know More Love More™. The Samuel Adams trademark, the Samuel Adams Boston Lager trademark, the design logo of Samuel Adams, the Twisted Tea trademark and other Company trademarks are also registered or have registrations pending in various foreign countries. The Company regards its Samuel Adams family of trademarks and other trademarks as having substantial value and as being an important factor in the marketing of its products. The Company is not aware of any trademark infringements that could materially affect its current business or any prior claim to the trademarks that would prevent the Company from using such trademarks in its business. The Company’s policy is to pursue registration of its marks whenever appropriate and to oppose infringements of its marks.
Environmental, Health and Safety Regulations and Operating Considerations
The Company’s operations are subject to a variety of extensive and changing federal, state and local environmental and occupational health and safety laws, regulations and ordinances that govern activities or operations that may have adverse effects on human health or the environment. Environmental laws, regulations or ordinances may impose liability for the cost of remediation of, and for certain damages resulting from, sites of past releases of hazardous materials. The Company believes that it currently conducts, and in the past has conducted, its activities and operations in substantial compliance with applicable environmental laws, and believes that any costs arising from existing environmental laws will not have a material adverse effect on the Company’s financial condition or results of operations.
As part of its efforts to be environmentally friendly, the Company has reused its glass bottles returned from certain states that have bottle deposit bills. The Company believes that it benefits economically from washing and reusing these bottles, which result in a lower cost than purchasing new glass, and that it benefits the environment by the reduction in landfill usage, the reduction of usage of raw materials and the lower utility costs for reusing bottles versus producing new bottles. The economics of using recycled glass varies based on the cost of collection, sorting and handling, and may be affected by local regulation, and retailer, Distributor and glass dealer behavior. There is no guarantee that the current economics of using returned glass will continue, or that the Company will continue its current used glass practices.
The Company has adopted various policies and procedures intended to ensure that its facilities meet occupational health and safety requirements. The Company believes that it currently is in compliance with applicable requirements and will continue to endeavor to remain in compliance. There can be no assurances, however, that
 
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new and more restrictive requirements might not be adopted, compliance with which might have a material, adverse financial effect on the Company and its operating results, or that such policies and procedures will be consistently followed and be sufficient to prevent serious accidents.
Employees
As of December 26, 2015, the Company employed 1,429 people, of which 104 were covered by collective bargaining agreements at the Cincinnati Brewery. The collective bargaining agreements involve three labor unions, with two contracts expiring in 2017 and one expiring in 2020. The Company believes it maintains a good working relationship with all three labor unions and has no reason to believe that the good working relationship will not continue. The Company has experienced no work stoppages, or threatened work stoppages, and believes that its employee relations are good.
Other
The Company submitted the Section 12(a) CEO Certification to the New York Stock Exchange in accordance with the requirements of Section 303A of the NYSE Listed Company Manual. This Annual Report on Form 10-K contains at Exhibits 31.1 and 31.2 the certifications of the Chief Executive Officer and Chief Financial Officer, respectively, in accordance with the requirements of Section 302 of the Sarbanes-Oxley Act of 2002. The Company makes available free of charge copies of its Annual Report on Form 10-K, as well as other reports required to be filed by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, on the Company’s website at  www.bostonbeer.com , or upon written request to Investor Relations, The Boston Beer Company, Inc., One Design Center Place, Suite 850, Boston, Massachusetts 02210.
 
Item 1A.	Risk Factors	
In addition to the other information in this Annual Report on Form 10-K, the risks described below should be carefully considered before deciding to invest in shares of the Company’s Class A Common Stock. These are risks and uncertainties that management believes are most likely to be material and therefore are most important for an investor to consider. The Company’s business operations and results may also be adversely affected by additional risks and uncertainties not presently known to it, or which it currently deems immaterial, or which are similar to those faced by other companies in its industry or business in general. If any of the following risks or uncertainties actually occurs, the Company’s business, financial condition, results of operations or cash flows would likely suffer. In that event, the market price of the Company’s Class A Common Stock could decline.
The Company Faces Substantial Competition.
The Better Beer category within the United States beer market is highly competitive, due to the increasing number of craft brewers with similar pricing and target drinkers and gains in market share achieved by domestic specialty beers and imported beers, and more recently the acquisition of craft brewers by the four largest market competitors, AB InBev, MillerCoors, Constellation and Heineken. The Company faces strong competition from these brewers as they acquire craft brewers, or introduce new domestic specialty brands to many markets and expand their efforts behind existing brands. Imported beers, such as Corona ® , Heineken ®  and Modelo Especial ® , also continue to compete aggressively in the United States beer market. The Company anticipates competition among domestic craft brewers will remain strong, as craft brewers experienced their eleventh successive year of growth in 2015 and there were many new startups. The Company estimates there are now over 5,000 craft breweries in operation or in the planning stages up from 1,409 operating craft breweries in 2006. Also, existing craft breweries are building more capacity, expanding geographically, adding more SKUs and styles as Distributors and retailers are promoting and making more shelf space available for more craft beer brands. The continued growth in the sales of craft-brewed domestic beers and in imported beers is expected to increase the competition in the Better Beer category within the United States beer market and, as a result, prices and market share of the Company’s products may fluctuate and possibly decline.
 
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The Company’s products compete generally with other alcoholic beverages. The Company competes with other beer and beverage companies not only for drinker acceptance and loyalty, but also for shelf, cold box and tap space in retail establishments and for marketing focus by the Company’s Distributors and their customers, all of which also distribute and sell other beers and alcoholic beverage products. Many of the Company’s competitors, including AB InBev, MillerCoors, Heineken and Constellation Brands, have substantially greater financial resources, marketing strength and distribution networks than the Company. Moreover, the introduction of new products by competitors that compete directly with the Company’s products or that diminish the importance of the Company’s products to retailers or Distributors may have a material adverse effect on the Company’s business and financial results.
Further, the beer industry has seen continued consolidation among brewers in order to take advantage of cost savings opportunities for supplies, distribution and operations. Illustrative of this consolidation in 2015 is AB InBev’s $107 billion purchase of SAB Miller and the related sale by SAB Miller to MolsonCoors of its 58% share of the MillerCoors joint venture with MolsonCoors, as well as Heineken’s acquisition of a 50% interest of Lagunitas Brewing Company for approximately $500 million and Constellation Brand’s acquisition of Ballast Point Brewing & Spirits for approximately $1 billion. Due to the increased leverage that these combined operations will have in distribution and sales and marketing expenses, the costs to the Company of competing could increase and the availability of contract brewing capacity could be reduced. The potential also exists for these large competitors to increase their influence with their Distributors, making it difficult for smaller brewers to maintain their market presence or enter new markets. These potential increases in the number and availability of competing brands, the costs to compete, reductions in contract brewing capacity and decreases in distribution support and opportunities may have a material adverse effect on the Company’s business and financial results.
There Is No Assurance of Continued Growth. Conversely, the Company May Not Be Able to Manage Demand for Its Products.
The Company’s future growth may be limited, both by its ability to continue to increase its market share in domestic and international markets, including those markets that may be dominated by one or more regional or local craft breweries, and by the increasing number of competitors in the craft beer and the Better Beer markets. The development of new products by the Company may lead to reduced sales of the Company’s other products, including its flagship Samuel Adams Boston Lager.
The Company’s future growth may also be limited by its ability to meet production goals and/or targets at the Company’s owned breweries, its ability to enter into new brewing contracts with third party-owned breweries on commercially acceptable terms, disruption or operating performance issues at the Company’s owned breweries or limits on the availability of suitable production capacity at third party-owned breweries, and its ability to obtain sufficient quantities of certain ingredients and packaging materials, such as hops, malt, cider ingredients, bottles and cans, from suppliers.
The Company has Significantly Increased its Product Offerings and Distribution Footprint, which Increases Complexity and Could Adversely Affect the Company’s Results.
The Company has significantly increased the number of its commercially available beers, FMBs and hard ciders that it produces. Since 2010, the Company has introduced many new beers under the Samuel Adams brand name. During 2014 and 2015, the Company significantly increased distribution for both the Twisted Tea and Angry Orchard brand families, as well as adding more styles and packages. Alchemy & Science currently has four brands, including three small breweries and retail beer halls where beer is sold and consumed on-premise. In 2015, the Company began national distribution of certain styles of the Traveler Beer brand and the Coney Island beer brand, including Coney Island Hard Root Beer. Also in November 2015, the Company opened the Angry Orchard Innovation Cider House at its apple orchard located in Walden, New York, where hard cider is fermented, sold and consumed on-premise. These additional brands and locations, along with the increases in demand for existing brands, have added to the complexity of the Company’s beer and hard cider development
 
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process, as well as its brewing, packaging, marketing and selling processes. The Company does not have significant experience with managing this number of brands and products and has limited experience with integrating acquired brands or operating small production facilities and retail operations. There can be no assurance that the Company will effectively manage such increased complexity, without experiencing operating inefficiencies or control deficiencies. Such inefficiencies or deficiencies could have a material adverse effect on the Company’s business and financial results.
Unexpected Events at Company-Owned Production Facilities, Reduced Availability of Breweries Owned by Others, Increased Complexity of the Company’s Business, or the Expansion Costs of the Company-Owned Breweries Could Have A Material Adverse Effect on the Company’s Operations or Financial Results.
Prior to 2008, the Company pursued a production strategy that combined the capacity at its Cincinnati Brewery, which was acquired in 1997, with significant production arrangements at breweries owned by third parties. The brewing services arrangements with breweries owned by others allowed the Company to utilize their excess capacity, providing the Company with production flexibility, as well as cost advantages over its competitors, while maintaining full control over the brewing process for its beers. The Company purchased the Pennsylvania Brewery in June 2008. As a result of that acquisition and the subsequent expansion of the Pennsylvania Brewery’s capacity, the volume of core brands brewed at Company-owned breweries increased and currently over 95% of the Company’s volume is brewed and packaged at breweries that it owns.
In 2015, the Company brewed its flagship beer, Samuel Adams Boston Lager, at each of its three Samuel Adams breweries, but at any particular time it may rely on only one brewery for its products other than Samuel Adams Boston Lager. The Company expects to continue to brew most all of its core brands volume in 2016 at its Company-owned breweries. This reliance on its own breweries exposes the Company to capacity constraints and risk of disruption of supply, as these breweries are operating at or close to current capacity in peak months. Management believes that it has alternatives available to it, in the event that production at any of its brewing locations is temporarily interrupted, although as volumes at the Pennsylvania Brewery increase, severe interruptions there would be problematic, particularly during peak season. In addition, the Company may not be able to maintain its current economics, if interruptions were to occur, and could face significant delays in starting replacement brewing locations. Potential interruptions at breweries include labor issues, governmental action, quality issues, contractual disputes, machinery failures, operational shut downs or natural or unavoidable catastrophe.
The combination of the recent growth in the Company’s business and product complexity, its addition of new employees, and greater reliance on its own breweries, continues to heighten the challenges presented by the Company’s operations. In recent years, the Company has had product shortages and service issues and the Company’s supply chain struggled under the increased volume and experienced increased operational and freight costs as it reacted. In response to these issues, the Company has significantly increased its packaging capabilities and tank capacity to address these challenges. There can be no assurance that the Company will effectively manage such increasing complexity without experiencing future planning failures, operating inefficiencies, insufficient employee training, control deficiencies or other issues that could have a material adverse effect on the Company’s business and financial results. The growth of the Company, changes in operating procedures and increased complexity have required significant capital investment. The Company to date has not seen operating cost leverage from these increased volumes and there is no guarantee that it will.
The Company continues to avail itself of capacity at third-party breweries. During 2015, the Company brewed and/or packaged certain products under service contracts at facilities located in Latrobe, Pennsylvania, LaCrosse, Wisconsin, and Clifton Park, New York. In selecting third party breweries for brewing services arrangements, the Company carefully weighs brewery’s (i) capability of utilizing traditional brewing, fermenting and finishing methods, (ii) first rate quality control capabilities throughout the production process. To the extent that the Company needs to avail itself of third-party brewing services arrangement, it exposes itself to higher than planned costs of operating under such contract arrangements than would apply at the Company-owned breweries
 
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or an unexpected decline in the brewing capacity available to it, either of which could have a material adverse effect on the Company’s business and financial results. The use of such third party facilities also creates higher logistical costs and uncertainty in the ability to deliver product to the Company’s customers efficiently and on time.
As the brewing industry continues to consolidate and the Company has grown, the capacity and willingness of breweries owned by others where the Company could brew some of its beers, if necessary, has become a more significant concern and, thus, there is no guarantee that the Company’s brewing needs will be met. The Company continues to work at its own Breweries, and with its contract brewers to attempt to minimize any potential disruptions. Nevertheless, should an interruption occur, the Company could experience temporary shortfalls in production and/or increased production and/or distribution costs and be required to make significant capital investments to secure alternative capacity for certain brands and packages, the combination of which could have a material adverse effect on the Company’s business and financial results. A simultaneous interruption at several of the Company’s production locations or an unexpected interruption at one of the Company-owned breweries would likely cause significant disruption, increased costs and, potentially, lost sales.
The Company Is Dependent on Its Distributors.
In the United States, where approximately 96% of its beer is sold, the Company sells nearly all of its beer to independent beer Distributors for distribution to retailers and, ultimately, to drinkers. Although the Company currently has arrangements with approximately 350 wholesale Distributors, sustained growth will require it to maintain such relationships and possibly enter into agreements with additional Distributors. Changes in control or ownership within the current distribution network could lead to less support of the Company’s products. No assurance can be given that the Company will be able to maintain its current distribution network or secure additional Distributors on terms favorable to the Company.
Contributing to distribution risk is the fact that the Company’s distribution agreements are generally terminable by the Distributor on relatively short notice. While these distribution agreements contain provisions giving the Company enforcement and termination rights, some state laws prohibit the Company from exercising these contractual rights. The Company’s ability to maintain its existing distribution arrangements may be adversely affected by the fact that many of its Distributors are reliant on one of the major beer producers for a large percentage of their revenue and, therefore, they may be influenced by such producers. If the Company’s existing distribution agreements are terminated, it may not be able to enter into new distribution agreements on substantially similar terms, which may result in an increase in the costs of distribution.
The Company’s Freshest Beer Program Could Adversely Impact the Company’s Business and Operating Results
In late 2010, the Company started the implementation of its Freshest Beer Program with domestic Distributors to reduce both the time and temperature the Company’s beers experience at Distributor warehouses before reaching the market. Historically, Distributors carry three to five weeks of packaged inventory (usually at ambient temperatures) and three to four weeks of draft inventory. The Company’s goal is to reduce this warehouse time through better on-time service, forecasting, production planning and cooperation with the Distributors. At December 26, 2015, the Company had 139 Distributors, representing approximately 71% of its volume, participating in the program at various stages of inventory reduction. The Company has successfully reduced the inventories of participating Distributors by approximately two weeks, resulting in fresher beer being delivered to retail. The Freshest Beer Program has resulted in lower shipments of approximately 87,000, 103,000 and 212,000 case equivalents in 2015, 2014 and 2013 respectively as measured at the end of the year by evaluating the year on year inventory reduction from the inventory levels that might otherwise have been expected. In 2015, the Company began piloting a small group of distributors on a pure replenishment service model within our Freshest Beer Program, which if successful would further reduce Distributor inventories. The ordering process has changed significantly for Distributors that participate in the Freshest Beer Program and has resulted in a shorter
 
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period between order placement and shipment and posed much greater challenges for forecasting and production planning. Also, changes to the Distributor ordering process has increased the complexity of the Company’s revenue recognition for shipments to Distributors that participate in the Freshest Beer Program.
It is possible that the Freshest Beer Program may not ultimately be successful; that its costs of implementation may exceed the value realized; or that the outcome of such inventory reductions may prove detrimental to the Company’s business trends and ability to execute at retail. The Company may encounter unexpected problems with forecasting, accounting, production and Distributor cooperation. These issues may in the past have led and in the future could lead to shortages and out of stocks of the Company’s products at the Distributor and retailer levels, result in increased costs, negatively impact Distributor relations, and/or delay the Company’s implementation of this program.
Because the Company is still in the process of rolling out the Freshest Beer Program, there necessarily remain implementation and execution issues to be addressed. Additionally, the Company experienced growth rates significantly higher than planned during 2013 and 2014 and such growth placed much greater stress on the Company’s supply chain, given the lower inventories at Distributors. As a result, the Company currently cannot predict the long-term success of this program, the scope of its further implementation or the full extent of the costs or business impacts associated with the program that might be incurred. Although the Company currently believes the program will, in the long term, be beneficial to its business, there can be no assurances that this result will be achieved or, if achieved, to what extent.
The Company also fills orders from those of its Distributors who may independently choose to build their inventories or run their inventories down. Such a change in Distributor inventories is unpredictable and can lead to fluctuations in the Company’s quarterly or annual results.
The Company is Dependent on Key Suppliers, Including Foreign Sources; Its Dependence on Foreign Sources Creates Foreign Currency Exposure for the Company; The Company’s Use of Natural Ingredients Creates Weather and Crop Reliability and Excess Inventory Exposure for the Company.
The Company purchases a substantial portion of the raw materials used in the brewing of its products, including its malt, hops, barley and other ingredients, from a limited number of foreign and domestic suppliers. The Company purchased most of the malt used in the production of its beer from one major supplier during 2015. Nevertheless, the Company believes that there are other malt vendors available that are capable of supplying part of its needs. The Company is exposed to the quality of the barley crop each year, and significant failure of a crop would adversely affect the Company’s costs.
The Company predominantly uses Noble hops for its Samuel Adams lagers. Noble hops are varieties from several specific growing areas recognized for superior taste and aroma properties and include Hallertau-Hallertauer, Tettnang-Tettnanger, Hersbruck-Hersbrucker and Spalt-Spalter from Germany and Saaz-Saazer from the Czech Republic. Noble hops are rare and more expensive than most other varieties of hops. Traditional English hops, namely, East Kent Goldings and English Fuggles, and/or United States hops are used in most of the Company’s ales. The demand for hops grown in the United States has grown due to the success and growth of craft brewers and the popularity of beer styles that include hops grown in the United States. Certain United States hops are in tight supply and prices have risen for both spot purchases and forward contract pricing, accordingly. The Company enters into purchase commitments with several hops dealers, based on the Company’s projected future volumes and brewing needs. The dealers then contract with farmers to meet the Company’s needs. However, the performance and availability of the hops, as with any agricultural product, may be materially adversely affected by factors such as adverse weather or pests. Further, the use of fertilizers and pesticides that do not conform to United States regulations, the imposition of export/import restrictions (such as increased tariffs and duties) and changes in currency exchange rates could result in increased prices.
The Company attempts to maintain up to a two years supply of essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply. The Company stores its hops in multiple cold storage warehouses
 
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to minimize the impact of a catastrophe at a single site. Hops and malt are agricultural products and therefore many outside factors, including weather conditions, farmers rotating out of hops or barley to other crops, government regulations and legislation affecting agriculture, could affect both price and supply.
The Company uses special varieties of apples in its ciders that it believes are important for the ciders’ flavor profile. These apples are sourced primarily from European, United States and New Zealand suppliers and include bittersweet apples from France and New Zealand and culinary apples from Italy and Washington State. There is limited availability of these apples and many outside factors, including weather conditions, farmers rotating from apples to other crops, government regulations and legislation affecting agriculture, could affect both price and supply. In 2012, the Company experienced shortages of apples, primarily due to growth in excess of that planned, that impacted the timing of shipments of its hard ciders to Distributors. During 2013, 2014 and 2015, the Company did not experience any shortage of apples. The Company has entered into contracts to cover its expected needs for 2016 and expects to realize full delivery against these contracts.
Except for the shortage of apples in 2012, the Company has not experienced material difficulties in obtaining timely delivery from its suppliers, although the Company has had to pay significantly above historical prices to secure supplies when inventory and supply have been tight. The Company’s new product development can also be constrained by any limited availability of certain ingredients. Growth rates higher than planned or the introduction of new products requiring special ingredients could create demand for ingredients greater than the Company can source. Although the Company believes that there are alternative sources available for some of the ingredients and packaging materials, there can be no assurance that the Company would be able to acquire such ingredients or packaging materials from substitute sources on a timely or cost effective basis, in the event that current suppliers could not adequately fulfill orders. The loss or significant reduction in the capability of a supplier to support the Company’s requirements could, in the short-term, adversely affect the Company’s business and financial results, until alternative supply arrangements were secured.
The Company’s contracts for certain hops and apples that are payable in Euros, Pounds Sterling and New Zealand dollars, and therefore, the Company is subject to the risk that the Euro, Pound or New Zealand dollar may fluctuate adversely against the U.S. dollar. The Company has, as a practice, not hedged this exposure, although this practice is regularly reviewed. Significant adverse fluctuations in foreign currency exchange rates may have a material adverse effect on the Company’s business and financial results. The cost of hops has increased in recent years due to the rising market price of hops and exchange rate changes. The continuation of these trends will impact the Company’s product cost and potentially the Company’s ability to meet the demand for its beers. The Company buys some other ingredients and capital equipment from foreign suppliers for which the Company also carries exposure to foreign exchange rate changes.
The Company’s accounting policy for hops inventory and purchase commitments is to recognize a loss by establishing a reserve to the extent inventory levels and commitments exceed management’s expected future usage. The computation of the excess inventory requires management to make certain assumptions regarding future sales growth, product mix, cancellation costs and supply, among others. Actual results may differ materially from management’s estimates. The Company continues to manage inventory levels and purchase commitments in an effort to maximize utilization of hops on hand and hops under commitment. However, changes in management’s assumptions regarding future sales growth, product mix and hops market conditions could result in future material losses.
An Increase in Packaging Costs Could Harm the Company’s Financial Results.
The Company maintains competitive sources for the supply of certain packaging materials, such as shipping cases and glass. The Company enters into limited-term supply agreements with certain vendors in order to receive preferential pricing. In 2015, cans, crowns, six pack carriers and labels were each supplied by single sources. Although the Company believes that alternative suppliers are available, the loss of any of the Company’s packaging materials suppliers could, in the short-term, adversely affect the Company’s results of
 
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operations, cash flows and financial position until alternative supply arrangements were secured. Additionally there has been acquisition and consolidation activity in several of the packaging supplier networks which could potentially lead to disruption in supply and changes in economics. If packaging costs continue to increase, there is no guarantee that such costs can be fully passed along to drinkers through increased prices. The Company has entered into long-term supply agreements for certain packaging materials that have shielded it from some cost increases. These contracts have varying lengths and terms and there is no guarantee that the economics of these contracts can be replicated when renewed. The Company’s inability to preserve the current economics on renewal could expose the Company to significant cost increases in future years.
The Company initiates bottle deposits in some states and reuses glass bottles that are returned pursuant to certain state bottle recycling laws. The cost associated with reusing the glass varies. The Company believes that it benefits economically from cleaning and reusing these bottles, which result in a lower cost than purchasing new glass, and that it benefits the environment by the reduction in landfill usage, the reduction of usage of raw materials and the lower utility costs for reusing bottles versus producing new bottles. The economics of using recycled glass varies based on the cost of collection, sorting and handling, retailer, distributor and glass dealer behavior, the availability of equipment and service providers that will clean bottles for reuse, and may be adversely affected by changes in state regulation. There is no guarantee that the current economics of using returned glass will continue, or that the Company will continue its current used glass practices.
An Increase in Energy Costs Could Harm the Company’s Financial Results.
In the last five years, the Company has experienced significant variation in direct and indirect energy costs, and energy costs could rise unpredictably. Increased energy costs would result in higher transportation, freight and other operating costs, including increases in the cost of ingredients and supplies. The Company’s future operating expenses and margins could be dependent on its ability to manage the impact of such cost increases. If energy costs increase, there is no guarantee that such costs can be fully passed along to drinkers through increased prices.
The Company’s Advertising and Promotional Investments May Affect the Company’s Financial Results but Not be Effective.
As a growth-oriented company, the Company has made, and expects to continue to make, significant advertising and promotional expenditures to enhance its brands, even though these expenditures may adversely affect the Company’s results of operations in a particular quarter or even for the full year, and may not result in increased sales. Variations in the levels of advertising and promotional expenditures have in the past caused, and are expected in the future to continue to cause, variability in the Company’s quarterly results of operations. While the Company attempts to invest only in effective advertising and promotional expenditures, it is difficult to correlate such investments with sales results, and there is no guarantee that the Company’s expenditures will be effective in building brand equity or growing long term sales.
The Company’s Operations are Subject to Certain Operating Hazards Which Could Result in Unexpected Costs or Product Recalls That Could Harm the Company’s Business.
The Company’s operations are subject to certain hazards and liability risks faced by all brewers, such as potential contamination of ingredients or products by bacteria or other external agents that may be wrongfully or accidentally introduced into products or packaging, or defective packaging and handling. Such occurrences may create bad tasting beer or cider, or pose risk to the integrity and safety of the packaging. These could result in unexpected costs to the Company and, in the case of a costly product recall, potentially serious damage to the Company’s reputation for product quality, as well as claims for product liability.
 
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Changes in Tax, Environmental and Other Regulations or Failure to Comply with Existing Licensing, Trade or Other Regulations Could Have a Material Adverse Effect on the Company’s Financial Condition.
The Company’s business is highly regulated by federal, state and local laws and regulations regarding such matters as licensing requirements, trade and pricing practices, labeling, advertising, promotion and marketing practices, relationships with Distributors, environmental impact of operations and other matters. These laws and regulations are subject to frequent reevaluation, varying interpretations and political debate, and inquiries from governmental regulators charged with their enforcement. Failure to comply with existing laws and regulations relating to the Company’s operations or any revisions to such laws and regulations or the failure to pay taxes or other fees imposed on the Company’s operations and results could result in the loss, revocation or suspension of the Company’s licenses, permits or approvals, and could have a material adverse effect on the Company’s business, financial condition and results of operations.
Changes in Public Attitudes and Drinker Tastes Could Harm the Company’s Business. Regulatory Changes in Response to Public Attitudes Could Adversely Affect the Company’s Business.
The alcoholic beverage industry has become the subject of considerable societal and political attention in recent years, due to increasing public concern over alcohol-related social problems, including driving under the influence, underage drinking and health consequences from the misuse of alcohol, including alcoholism. As an outgrowth of these concerns, the possibility exists that advertising by beer producers could be restricted, that additional cautionary labeling or packaging requirements might be imposed, that further restrictions on the sale of alcohol might be imposed or that there may be renewed efforts to impose increased excise or other taxes on beer sold in the United States.
The domestic beer industry, other than Better Beers, has experienced a slight decline in shipments over the last ten years. The Company believes that this slower growth is due to both declining alcohol consumption per person in the population and increased competition from wine and spirits companies. If beer consumption in general were to come into disfavor among domestic drinkers, or if the domestic beer industry were subjected to significant additional governmental regulations, the Company’s business could be materially adversely affected.
Certain states are considering or have passed laws and regulations that allow the sale and distribution of marijuana. It is possible that legal marijuana usage could adversely impact the demand for the Company’s products.
Impact of Changes in Drinker Attitudes on Brand Equity and Inherent Risk of Reliance on the Company’s Founder in the Samuel Adams ®  Brand Communications.
There is no guarantee that the brand equities that the Company has built in its brands will continue to appeal to drinkers. Changes in drinker attitudes or demands could adversely affect the strength of the brands and the revenue that is generated from that strength. It is possible that the Company could react to such changes and reposition its brands, but there is no certainty that the Company would be able to maintain volumes, pricing power and profitability. It is also possible that marketing messages or other actions taken by the Company could damage the brand equities as opposed to building them. If such damage should occur, it could have a negative effect on the financial condition of the Company.
In addition to these inherent brand risks, the founder and Chairman of the Company, C. James Koch, is an integral part of the Company’s Samuel Adams brand history, equity and current and potential future brand messaging and the Company relies on the positive public perception of its founder. The role of Mr. Koch as founder, brewer and leader of the Company is emphasized as part of the Company’s brand communication and has appeal to some drinkers. If Mr. Koch were not available to the Company to continue his active role, his absence could negatively affect the strength of the Company’s messaging and, accordingly, the Company’s growth prospects. The Company and its brands may also be impacted if Drinkers views of Mr. Koch were to
 
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negatively change. If either of these were to occur, the Company might need to adapt its strategy for communicating its key messages regarding its traditional brewing processes, brewing heritage and quality. Any such change in the Company’s messaging strategy might have a detrimental impact on the future growth of the Company.
There Is No Guarantee that the Company Will not Face Litigation that Could Harm the Company’s Business.
While the Company has from time to time in the past been involved in material litigation, it is not currently a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations. In general, while the Company believes it conducts its business appropriately in accordance with laws, regulations and industry guidelines, claims, whether or not meritorious, could be asserted against the Company that might adversely impact the Company’s results. See  Item 3 — Legal Proceedings  below.
The Class B Shareholder Has Significant Influence over the Company
The Company’s Class A Common Stock is not entitled to any voting rights except for the right as a class to (1) approve certain mergers, charter amendments and by-law amendments and (2) elect a minority of the directors of the Company. Although not as a matter of right, the Class A stockholders have also been afforded the opportunity to vote on an advisory basis on executive compensation. Consequently, the election of a majority of the Company’s directors and all other matters requiring stockholder approval are currently decided by C. James Koch, who is the founder and Chairman of the Company, as the holder of 100% of the outstanding shares of the Company’s Class B Common Stock. As a result, Mr. Koch is able to exercise substantial influence over all matters requiring stockholder approval, including the composition of the board of directors, approval of equity-based and other executive compensation and other significant corporate and governance matters, such as approval of the Company’s independent registered public accounting firm. This could have the effect of delaying or preventing a change in control of the Company and makes most material transactions difficult or impossible to accomplish without the support of Mr. Koch. In addition, Mr. Koch could transfer some shares of the Class B Common Stock to others, which could impact the nature of the control currently held by him as the sole holder of the Class B Common Stock.
The Company’s Operating Results and Cash Flow May Be Adversely Affected by Unfavorable Economic and Financial Market Conditions.
Volatility and uncertainty in the financial markets and economic conditions may directly or indirectly affect the Company’s performance and operating results in a variety of ways, including: (a) prices for energy and agricultural products may rise faster than current estimates, including increases resulting from currency fluctuations; (b) the Company’s key suppliers may not be able to fund their capital requirements, resulting in disruption in the supplies of the Company’s raw and packaging materials; (c) the credit risks of the Company’s Distributors may increase; (d) the impact of currency fluctuations on amounts owed to the Company by distributors that pay in foreign currencies; (e) the Company’s credit facility, or portion thereof, may become unavailable at a time when needed by the Company to meet critical needs; (f) overall beer consumption may decline; or (g) drinkers of the Company’s beers may change their purchase preferences and frequency, which might result in sales declines.
The Company Relies Upon Complex Information Systems
The Company depends on information technology to be able to operate efficiently and interface with customers and suppliers, as well as maintain financial and accounting reporting accuracy to ensure compliance with all applicable laws. If the Company does not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, the Company could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property
 
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through security breach. The Company recognizes that many groups on a world-wide basis have experienced increases in cyber attacks and other hacking activity. The Company has dedicated internal and external resources to review and address such threats. However, as with all large information technology systems, the Company’s systems could be penetrated by outside parties intent on extracting confidential or proprietary information, corrupting information, disrupting business processes, or engaging in the unauthorized use of strategic information. Such unauthorized access could disrupt business operations and could result in the loss of assets or revenues, remediation costs or damage to the Company’s reputation, as well as litigation against the Company by third parties adversely affected by the unauthorized access. Such events could have a material adverse effect on the Company’s business and financial results. The Company also relies on third parties for supply of software, software and data hosting and telecommunications and networking, and is reliant on those third parties for the quality and integrity of these complex services. Failure by a third party supplier could have material adverse effect on the Company’s ability to operate.
 
Item 1B.	Unresolved Staff Comments	
The Company has not received any written comments from the staff of the Securities and Exchange Commission (the “SEC”) regarding the Company’s periodic or current reports that (1) the Company believes are material, (2) were issued not less than 180 days before the end of the Company’s 2015 fiscal year, and (3) remain unresolved.
 
Item 2.	Properties	
The Company maintains its principal corporate offices in approximately 54,200 square feet of leased space located in Boston, Massachusetts, the term of which is set to expire in 2026. The Company also leases small offices in California and Vermont.
The Company maintains a brewery and tour center in Boston, Massachusetts in approximately 37,000 square feet of leased space. The current term of the lease for this facility will expire in 2019, although it has an option to extend the term for an additional five years.
The Company owns approximately 76 acres of land in Breinigsville, Pennsylvania, consisting of the two parcels on which the Company’s Pennsylvania Brewery is located. The buildings on this property consist of approximately 1 million square feet of brewery and warehouse space.
The Company owns approximately 10 acres of land in Cincinnati, Ohio, on which the Company’s Cincinnati Brewery is located, and leases, with an option to purchase, approximately 1 acre of land from the City of Cincinnati which abuts its property. The buildings on this property consist of approximately 128,500 square feet of brewery and warehouse space.
The Company owns approximately 62 acres of land in Walden, New York, consisting of an apple orchard and certain buildings, including a small cidery and tour center. The small cidery and tour center on this property consist of approximately 15,000 square feet of space.
The Company leases approximately 48,650 square feet of space in Los Angeles, California, which houses a small brewery, beer hall and tour center. The current term of the lease for this facility will expire in 2021.
The Company leases approximately 11,365 square feet of space in Miami, Florida, which houses a small brewery, beer hall and tour center. The current term of the lease for this facility will expire in 2023.
The Company leases approximately 1,500 square feet of space within the retail section of MCU Park in Brooklyn, New York, which houses a small brewery and tasting room. The current term of the lease for this facility will expire in 2019.
 
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The Company owns 52.7 acres of vacant land in Freetown, Massachusetts. In January 2015, the Company entered into an agreement for the sale of this land. The closing of the sale is now expected to occur in the first quarter of 2016, subject to buyer due diligence and certain other conditions.
The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available on commercially acceptable terms as required.
 
Item 3.	Legal Proceedings	
The Company is currently not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations.
 
Item 4.	Mine Safety Disclosures	
Not Applicable
PART II.
 
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	
The graph set forth below shows the value of an investment of $100 on January 1, 2011 in each of the Company’s stock (“The Boston Beer Company, Inc.”), the Standard & Poor’s 500 Index (“S&P 500 Index”), the Standard & Poor’s 500 Beverage Index, which consists of producers of alcoholic and non-alcoholic beverages (“S&P 500 Beverages Index”) and a custom peer group which consists of Molson Coors Brewing Company and Craft Brewers Alliance, Inc. (formerly Redhook Ale Brewery, Inc.), the two remaining U.S. publicly-traded brewing companies (“Peer Group”), for the five years ending December 26, 2015.
Total Return To Shareholders
(Includes reinvestment of dividends)

 	  	ANNUAL RETURN PERCENTAGE
Years Ending	 	
Company Name / Index	  	12/31/11	 	  	12/29/12	 	  	12/28/13	 	  	12/27/14	 	  	12/26/15	 	
The Boston Beer Company, Inc.	  	 	10.88	  	  	 	22.49	  	  	 	82.06	  	  	 	22.16	  	  	 	-30.55	  	
S&P 500 Index	  	 	2.18	  	  	 	14.07	  	  	 	34.12	  	  	 	15.76	  	  	 	0.77	  	
S&P 500 Beverages Index	  	 	7.30	  	  	 	7.16	  	  	 	22.48	  	  	 	19.04	  	  	 	10.52	  	
Peer Group	  	 	-12.09	  	  	 	1.17	  	  	 	36.24	  	  	 	37.43	  	  	 	25.24	  	

 	  	Base	 	  	INDEXED RETURNS
Years Ending	 	
Company Name / Index	  	Period
12/25/10	 	  	12/31/11	 	  	12/29/12	 	  	12/28/13	 	  	12/27/14	 	  	12/26/15	 	
The Boston Beer Company, Inc.	  	 	100	  	  	 	110.88	  	  	 	135.82	  	  	 	247.27	  	  	 	302.05	  	  	 	209.78	  	
S&P 500 Index	  	 	100	  	  	 	102.18	  	  	 	116.56	  	  	 	156.34	  	  	 	180.97	  	  	 	182.36	  	
S&P 500 Beverages Index	  	 	100	  	  	 	107.30	  	  	 	114.99	  	  	 	140.84	  	  	 	167.65	  	  	 	185.29	  	
Peer Group	  	 	100	  	  	 	87.91	  	  	 	88.93	  	  	 	121.16	  	  	 	166.51	  	  	 	208.53	  	

Peer Group Companies	  	 	  	 	  	 	  	 	  	 	  	 	
Craft Brew Alliance Inc	  	 	  	 	  	 	  	 	  	 	  	 	
Molson Coors Brewing Co	  	 	  	 	  	 	  	 	  	 	  	 	

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The Company’s Class A Common Stock is listed for trading on the New York Stock Exchange. The Company’s NYSE symbol is SAM. For the fiscal periods indicated, the high and low per share sales prices for the Class A Common Stock of The Boston Beer Company, Inc. as reported on the New York Stock Exchange-Composite Transaction Reporting System were as follows:

Fiscal 2015	  	High	 	  	Low	 	
First Quarter	  	$	323.99	  	  	$	257.24	  	
Second Quarter	  	$	272.83	  	  	$	237.62	  	
Third Quarter	  	$	236.55	  	  	$	197.05	  	
Fourth Quarter	  	$	258.43	  	  	$	201.90	  	
 	 	 	
Fiscal 2014	  	High	 	  	Low	 	
First Quarter	  	$	249.81	  	  	$	203.81	  	
Second Quarter	  	$	246.04	  	  	$	212.07	  	
Third Quarter	  	$	232.61	  	  	$	215.69	  	
Fourth Quarter	  	$	297.78	  	  	$	210.44	  	
There were 10,248 holders of record of the Company’s Class A Common Stock as of February 12, 2016. Excluded from the number of stockholders of record are stockholders who hold shares in “nominee” or “street” name. The closing price per share of the Company’s Class A Common Stock as of February 12, 2016, as reported under the New York Stock Exchange-Composite Transaction Reporting System, was $185.04.
Class A Common Stock
At December 26, 2015, the Company had 22,700,000 authorized shares of Class A Common Stock with a par value of $.01, of which 9,449,927 were issued and outstanding, which includes 60,922 shares that have trading restrictions. 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) future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles of
 
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Organization of the Company, (c) certain 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.
Class B Common Stock
At December 26, 2015, the Company had 4,200,000 authorized shares of Class B Common Stock with a par value of $.01, of which 3,367,355 shares were issued and outstanding. 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, such as approval of the Company’s independent registered public accounting firm. The Company’s Class B Common Stock is not listed for trading. Each share of Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of any Class B holder.
As of February 12, 2016, C. James Koch, the Company’s Chairman, was the sole holder of record of all of the Company’s issued and outstanding Class B Common Stock.
The holders of the Class A and Class B Common Stock are entitled to dividends, on a share-for-share basis, only if and when declared by the Board of Directors of the Company out of funds legally available for payment thereof. Since its inception, the Company has not paid dividends and does not currently anticipate paying dividends on its Class A or Class B Common Stock in the foreseeable future.
Repurchases of the Registrants Class A Common Stock
On February 10, 2016, the Board of Directors of the Company increased the aggregate expenditure limit for the Company’s Stock Repurchase Program by $50.0 million, thereby increasing the limit from $525.0 million to $575.0 million. As of December 26, 2015, the Company has repurchased a cumulative total of approximately 11.5 million shares of its Class A Common Stock for an aggregate purchase price of approximately $446.1 million.
During the twelve months ended December 26, 2015, the Company repurchased 617,274 shares of its Class A Common Stock 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 28, 2014 to January 31, 2015	  	 	2,460	  	  	$	280.98	  	  	 	2,460	  	  	$	41,920,501	  	
February 1, 2015 to February 28, 2015	  	 	24	  	  	 	119.14	  	  	 	—  	  	  	 	41,920,501	  	
March 1, 2015 to March 28, 2015	  	 	32,871	  	  	 	268.15	  	  	 	32,693	  	  	 	33,122,126	  	
March 29, 2015 to May 2, 2015	  	 	17,934	  	  	 	267.92	  	  	 	17,879	  	  	 	28,328,911	  	
May 3, 2015 to May 30, 2015	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	78,328,911	  	
May 31, 2015 to June 27, 2015	  	 	34,367	  	  	 	247.26	  	  	 	34,363	  	  	 	69,830,129	  	
June 28, 2015 to August 1, 2015	  	 	105,248	  	  	 	224.93	  	  	 	105,134	  	  	 	122,163,970	  	
August 2, 2015 to August 29, 2015	  	 	82,285	  	  	 	223.18	  	  	 	82,153	  	  	 	103,816,477	  	
August 30, 2015 to September 26, 2015	  	 	88,262	  	  	 	215.19	  	  	 	88,262	  	  	 	83,819,092	  	
September 27, 2015 to October 31, 2015	  	 	76,697	  	  	 	226.93	  	  	 	76,697	  	  	 	116,410,572	  	
November 1, 2015 to November 28, 2015	  	 	86,938	  	  	 	212.77	  	  	 	86,938	  	  	 	97,908,260	  	
November 29, 2015 to December 26, 2015	  	 	90,188	  	  	 	210.69	  	  	 	90,168	  	  	 	78,906,271	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	 	617,274	  	  	$	224.77	  	  	 	616,747	  	  	$	78,906,271	  	

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Of the shares that were purchased during the period, 527 shares represent repurchases of unvested investment shares issued under the Investment Share Program of the Company’s Employee Equity Incentive Plan.
 
Item 6.	Selected Consolidated Financial Data	

 	  	Year Ended	 	
 	  	Dec. 26 2015	 	 	Dec. 27
2014	 	 	Dec. 28
2013	 	 	Dec. 29
2012 (53
weeks)	 	 	Dec. 31
2011	 	
 	  	(in thousands, except per share and net revenue per barrel data)	 	
Income Statement Data:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	  	$	1,024,040	  	 	$	966,478	  	 	$	793,705	  	 	$	628,580	  	 	$	558,282	  	
Less excise taxes	  	 	64,106	  	 	 	63,471	  	 	 	54,652	  	 	 	48,358	  	 	 	45,282	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenue	  	 	959,934	  	 	 	903,007	  	 	 	739,053	  	 	 	580,222	  	 	 	513,000	  	
Cost of goods sold	  	 	458,317	  	 	 	437,996	  	 	 	354,131	  	 	 	265,012	  	 	 	228,433	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	501,617	  	 	 	465,011	  	 	 	384,922	  	 	 	315,210	  	 	 	284,567	  	
Operating expenses:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advertising, promotional and selling expenses	  	 	273,629	  	 	 	250,696	  	 	 	207,930	  	 	 	169,306	  	 	 	157,261	  	
General and administrative expenses	  	 	71,556	  	 	 	65,971	  	 	 	62,332	  	 	 	50,171	  	 	 	43,485	  	
Impairment of assets	  	 	258	  	 	 	1,777	  	 	 	1,567	  	 	 	149	  	 	 	666	  	
Settlement proceeds	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(20,500	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	345,443	  	 	 	318,444	  	 	 	271,829	  	 	 	219,626	  	 	 	180,912	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	156,174	  	 	 	146,567	  	 	 	113,093	  	 	 	95,584	  	 	 	103,655	  	
Other expense, net	  	 	(1,164	) 	 	 	(973	) 	 	 	(552	) 	 	 	(67	) 	 	 	(155	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	  	 	155,010	  	 	 	145,594	  	 	 	112,541	  	 	 	95,517	  	 	 	103,500	  	
Provision for income taxes	  	 	56,596	  	 	 	54,851	  	 	 	42,149	  	 	 	36,050	  	 	 	37,441	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	98,414	  	 	$	90,743	  	 	$	70,392	  	 	$	59,467	  	 	$	66,059	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share — basic	  	$	7.46	  	 	$	6.96	  	 	$	5.47	  	 	$	4.60	  	 	$	5.08	  	
Net income per share — diluted	  	$	7.25	  	 	$	6.69	  	 	$	5.18	  	 	$	4.39	  	 	$	4.81	  	
Weighted average shares outstanding — basic	  	 	13,123	  	 	 	12,968	  	 	 	12,766	  	 	 	12,796	  	 	 	13,012	  	
Weighted average shares outstanding — diluted	  	 	13,520	  	 	 	13,484	  	 	 	13,504	  	 	 	13,435	  	 	 	13,741	  	
 	 	 	 	 	 	
Balance Sheet Data:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Working capital	  	$	112,443	  	 	$	97,292	  	 	$	59,901	  	 	$	73,448	  	 	$	58,674	  	
Total assets	  	$	645,400	  	 	$	605,161	  	 	$	444,075	  	 	$	359,484	  	 	$	272,488	  	
Total long-term obligations	  	$	73,019	  	 	$	58,851	  	 	$	37,613	  	 	$	25,499	  	 	$	20,694	  	
Total stockholders’ equity	  	$	461,221	  	 	$	436,140	  	 	$	302,085	  	 	$	245,091	  	 	$	184,745	  	
 	 	 	 	 	 	
Statistical Data:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Barrels sold	  	 	4,256	  	 	 	4,103	  	 	 	3,416	  	 	 	2,746	  	 	 	2,484	  	
Net revenue per barrel	  	$	226	  	 	$	220	  	 	$	216	  	 	$	211	  	 	$	207	  	
 
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	
Forward-Looking Statements
In this Form 10-K 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
 
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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 future 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 above and the other information set forth in this Form 10-K.
Introduction
The Boston Beer Company is engaged in the business of producing and selling alcohol beverages primarily in the domestic market and, to a lesser extent, in selected international markets. The Company’s revenues are derived by selling its beers and hard ciders to Distributors, who in turn sell the products to retailers and drinkers.
The Company’s beers compete primarily in the Better Beer category, which includes imported beers and craft beers. This category has seen high single-digit compounded annual growth over the past ten years. Defining factors for Better Beer include superior quality, image and taste, supported by appropriate pricing. The Company believes that the Better Beer category is positioned to increase market share, as drinkers continue to trade up in taste and quality. The Company estimates that in 2015 the craft beer category percentage volume growth was in the mid to high teens, the Better Beer category volume was up approximately 9%, and the total beer category was essentially flat. The Company believes that the Better Beer category is approximately 27% of United States beer consumption by volume. The Company estimates the Hard Cider category to be approximately 1% of the total beer category and believes it has many characteristics similar to the Better Beer category. The Company believes that significant opportunity continues to exist for the Better Beer and Hard Cider categories to gain market share in the total beer category. Depletions or Distributor sales to retailers of the Company’s beers and hard ciders, increased approximately 4% in 2015 from the comparable 52 week period in the prior year.
Outlook
Year-to-date depletions reported to the Company for the 6 weeks ended February 6, 2016 are estimated by the Company to have decreased approximately 3% from the comparable period in 2015.
The Company is targeting earnings per diluted share for 2016 of between $7.60 and $8.00, but actual results could vary significantly from this target. The 2016 fiscal year includes 53 weeks compared to the 2015 fiscal year which included only 52 weeks. The Company is currently planning that 2016 depletions and shipments percentage growth will be in the mid-single digits. The Company is targeting national price increases of between 1% and 2%. Full-year 2016 gross margins are currently expected to be between 52% and 54%. The Company intends to increase advertising, promotional and selling expenses by between $10 million and $20 million for the full year 2016, which does not include any increases in freight costs for the shipment of products to its Distributors. The Company intends to increase its investment in its brands in 2016 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 2016 effective tax rate of approximately 37%.
The Company is continuing to evaluate 2016 capital expenditures. Its current estimates are between $60 million and $80 million, consisting mostly of continued investments in the Company’s breweries. The actual total amount spent on 2016 capital expenditures may well be different from these estimates. Based on information currently available, the Company believes that its capacity requirements for 2016 can be covered by its Company-owned breweries and existing contracted capacity at third-party brewers.
 
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Results of Operations
Boston Beer’s flagship product is Samuel Adams Boston Lager. For purposes of this discussion, Boston Beer’s “core brands” or “core products” include all products sold under the Samuel Adams, Twisted Tea, Angry Orchard and various Alchemy & Science trade names. “Core products” do not include the products brewed or packaged at the Company’s brewery in Cincinnati, Ohio (the “Cincinnati Brewery”) under a contract arrangement for a third party. Sales of such products are not significant to the Company’s net revenues.
The following table sets forth certain items included in the Company’s consolidated statements of comprehensive income:

 	  	Year Ended	 	
 	  	Dec. 26
2015	 	 	Dec. 27
2014	 	 	Dec. 28
2013	 	
 	  	Barrels Sold (in thousands)	 	
Core brands	  	 	4,241	  	 	 	4,093	  	 	 	3,403	  	
Non-core products	  	 	15	  	 	 	10	  	 	 	13	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total barrels	  	 	4,256	  	 	 	4,103	  	 	 	3,416	  	
 	 	
 	  	Percentage of Net Revenue	 	
Net revenue	  	 	100	% 	 	 	100	% 	 	 	100	% 	
Cost of goods	  	 	47.7	  	 	 	48.5	  	 	 	47.9	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	52.3	  	 	 	51.5	  	 	 	52.1	  	
Advertising, promotional and selling expenses	  	 	28.5	  	 	 	27.8	  	 	 	28.2	  	
General and administrative expenses	  	 	7.5	  	 	 	7.3	  	 	 	8.4	  	
Impairment of assets	  	 	0.0	  	 	 	0.2	  	 	 	0.2	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	36.0	  	 	 	35.3	  	 	 	36.8	  	
Operating income	  	 	16.3	  	 	 	16.2	  	 	 	15.3	  	
Interest income	  	 	0.0	  	 	 	0.0	  	 	 	0.0	  	
Other expense, net	  	 	(0.1	) 	 	 	(0.1	) 	 	 	(0.1	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	  	 	16.1	  	 	 	16.1	  	 	 	15.2	  	
Provision for income taxes	  	 	5.9	  	 	 	6.1	  	 	 	5.7	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	10.3	% 	 	 	10.0	% 	 	 	9.5	% 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Year Ended December 26, 2015 (52 weeks) Compared to Year Ended December 27, 2014 (52 weeks)
Net revenue. Net revenue increased by $56.9 million, or 6.3%, to $959.9 million for the year ended December 26, 2015, as compared to $903.0 million for the year ended December 27, 2014, due primarily to increased shipments and increased revenue per barrel.
Volume. Total shipment volume of 4,256,000 barrels for the year ended December 26 2015 includes shipments of core brands of 4,241,000 barrels and other shipments of 15,000 barrels. Shipment volume for core brands increased by 3.6% over comparable 2014 levels of 4,093,000 barrels, due primarily to increases in shipments of Coney Island, Twisted Tea, Angry Orchard and Traveler brand products that were only partially offset by shipment declines in Samuel Adams brand products.
Depletions, or sales by Distributors to retailers, of the Company’s core products for the year ended December 26, 2015 increased by approximately 4% compared to the prior year, primarily due to increases in depletions of Twisted Tea, Coney Island, Angry Orchard and Traveler brand products that were only partially offset by declines in depletions of Samuel Adams brand products.
 
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Net Revenue per barrel. The net revenue per barrel for core brands increased by 2.6% to $226.18 per barrel for the year ended December 26, 2015, as compared to $220.46 per barrel for the year ended December 27, 2014, due primarily to price increases and changes in product and package mix.
Significant changes in the package mix could have a material effect on net revenue. The Company primarily packages its core brands in kegs, bottles and cans. Assuming the same level of production, a shift in the mix from bottles and cans to kegs would effectively decrease revenue per barrel, as the price per equivalent barrel is lower for kegs than for bottles and cans. The percentage of bottles and cans to total shipments increased by 1.7% to 78.7% of total shipments for the year ended December 26, 2015 as compared to the year ended December 27, 2014.
Gross profit. Gross profit for core products was $118.29 per barrel for the year ended December 26, 2015, as compared to $113.55 per barrel for the year ended December 27, 2014. Gross margin for core products was 52.3% for the year ended December 26, 2015, as compared to 51.5% for the year ended December 27, 2014. The increase in gross profit per barrel of $4.74 is primarily due to an increase in net revenue per barrel, partially offset by an increase in cost of goods sold per barrel.
Cost of goods sold for core brands was $107.89 per barrel for the year ended December 26, 2015, as compared to $106.91 per barrel for the year ended December 27, 2014. The 2015 increase in cost of goods sold of $0.98 per barrel of core product is primarily due to product and package mix and higher brewery operating costs, partially offset by lower ingredient costs.
The Company includes freight charges related to the movement of finished goods from 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 other entities that classify costs related to distribution differently.
Advertising, promotional and selling. Advertising, promotional and selling expenses, increased $22.9 million, or 9.2%, to $273.6 million for the year ended December 26, 2015, as compared to $250.7 million for the year ended December 27, 2014. The increase was primarily a result of increased media advertising of $14.6 million, increased costs for additional sales personnel and commissions of $5.5 million and increased point of sale and local marketing of $4.1 million.
Advertising, promotional and selling for core brands were 28.5% of net revenue, or $64.53 per barrel, for the year ended December 26, 2015, as compared to 27.8% of net revenue, or $61.25 per barrel, for the year ended December 27, 2014. The Company will invest in advertising and promotional campaigns that it believes are effective, but there is no guarantee that such investment will generate sales growth.
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 statement of operations as reductions to advertising, promotional and selling expenses. Historically, contributions from Distributors for advertising and promotional activities have amounted to between 2% and 4% of net sales. The Company may adjust its promotional efforts in the Distributors’ markets, if changes occur in these promotional contribution arrangements, depending on the industry and market conditions.
General and administrative. General and administrative expenses increased by $5.6 million, or 8.5%, to $71.6 million for the year ended December 26, 2015, as compared to $66.0 million for the comparable period in 2014. The increase was primarily due to increases in salary and benefit expenses, consulting and facilities costs.
Impairment of assets. For the year ended December 26, 2015,the Company incurred impairment charges of $0.3 million, based upon its review of the carrying values of its property, plant and equipment.
Stock-based compensation expense. For the year ended December 26, 2015, an aggregate of $6.7 million in stock-based compensation expense is included in advertising, promotional and selling expenses and general and
 
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administrative expenses. Stock compensation decreased by $0.2 million in 2015 compared to 2014, primarily due to performance not being achieved on certain awards granted during 2015.
Provision for income taxes. The Company’s effective tax rate for the year ended December 26, 2015 of 36.5% decreased from the year ended December 27, 2014 rate of approximately 37.7%. This decrease was primarily the result of an increased federal manufacturing deduction and lower state tax rates.
Year Ended December 27, 2014 (52 weeks) Compared to Year Ended December 28, 2013 (52 weeks)
Net revenue. Net revenue increased by $164.0 million, or 22.2%, to $903.0 million for the year ended December 27, 2014, as compared to $739.1 million for the year ended December 28, 2013, due primarily to increased shipments.
Volume. Total shipment volume of 4,103,000 barrels for the year ended December 27, 2014 includes shipments of core brands of 4,093,000 barrels and other shipments of 10,000 barrels. Shipment volume for core brands increased by 20.3% over comparable 2013 levels of 3,403,000 barrels, due primarily to increases in shipments of Angry Orchard, Samuel Adams,Twisted Tea and Traveler brand products.
Depletions, or sales by Distributors to retailers, of the Company’s core products for the year ended December 27, 2014 increased by approximately 22% compared to the prior year, primarily due to increases in depletions of Angry Orchard, Samuel Adams, Twisted Tea and Traveler brand products.
Net Revenue per barrel. The net revenue per barrel for core brands increased by 1.6% to $220.46 per barrel for the year ended December 27, 2014, as compared to $216.94 per barrel for the year ended December 28, 2013, due primarily to price increases and changes in product and package mix.
Significant changes in the package mix could have a material effect on net revenue. The Company primarily packages its core brands in kegs, bottles and cans. Assuming the same level of production, a shift in the mix from bottles and cans to kegs would effectively decrease revenue per barrel, as the price per equivalent barrel is lower for kegs than for bottles and cans. The percentage of bottles and cans to total shipments increased by 1.1% to 77.0% of total shipments for the year ended December 27, 2014 as compared to the year ended December 28, 2013.
Gross profit. Gross profit for core products was $113.55 per barrel for the year ended December 27, 2014, as compared to $113.03 per barrel for the year ended December 28, 2013. Gross margin for core products was 51.5% for the year ended December 27, 2014, as compared to 52.1% for the year ended December 28, 2013. The increase in gross profit per barrel of $0.52 is primarily due to an increase in net revenue per barrel, partially offset by an increase in cost of goods sold per barrel.
Cost of goods sold for core brands was $106.91 per barrel for the year ended December 27, 2014, as compared to $103.91 per barrel for the year ended December 28, 2013. The 2014 increase in cost of goods sold of $3.00 per barrel of core product is due to increased ingredients costs, product mix effects and increases in brewery processing costs.
The Company includes freight charges related to the movement of finished goods from 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 other entities that classify costs related to distribution differently.
Advertising, promotional and selling. Advertising, promotional and selling expenses, increased $42.8 million, or 20.6%, to $250.7 million for the year ended December 27, 2014, as compared to $207.9 million for the year ended December 28, 2013. The increase was primarily a result of increased media advertising of $14.0 million, increased freight to Distributors of $12.3 million due to higher volumes, increased local marketing of
 
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$10.4 million, increased costs for additional sales personnel and commissions of $8.9 million and increased point of sale of $3.7 million.
Advertising, promotional and selling for core brands were 27.8% of net revenue, or $61.25 per barrel, for the year ended December 27, 2014, as compared to 28.2% of net revenue, or $61.10 per barrel, for the year ended December 28, 2013. The Company will invest in advertising and promotional campaigns that it believes are effective, but there is no guarantee that such investment will generate sales growth.
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 statement of operations as reductions to advertising, promotional and selling expenses. Historically, contributions from Distributors for advertising and promotional activities have amounted to between 2% and 4% of net sales. The Company may adjust its promotional efforts in the Distributors’ markets, if changes occur in these promotional contribution arrangements, depending on the industry and market conditions.
General and administrative. General and administrative expenses increased by $3.7 million, or 5.8%, to $66.0 million for the year ended December 27, 2014, as compared to $62.3 million for the comparable period in 2013. The increase was primarily due to increases in salary costs.
Impairment of assets. For the year ended December 27, 2014, the Company incurred impairment charges of $1.8 million based upon its review of the carrying values of its property, plant and equipment, primarily due to a $1.6 million change in the estimated fair value of machinery that is intended to be replaced in early 2015.
Stock-based compensation expense. For the year ended December 27, 2014, an aggregate of $6.9 million in stock-based compensation expense is included in advertising, promotional and selling expenses and general and administrative expenses. Stock compensation decreased by $0.5 million in 2014 compared to 2013, primarily due to decreased awards granted during 2014.
Provision for income taxes. The Company’s effective tax rate for the year ended December 27, 2014 of 37.7% increased from the year ended December 28, 2013 rate of approximately 37.5%. This increase was primarily a result of a federal income tax audit settlement during 2013.
Liquidity and Capital Resources
Cash increased to $94.2 million as of December 26, 2015 from $76.4 million as of December 27, 2014, reflecting cash provided by operating activities that was partially offset by purchases of property, plant and equipment and repurchase of Class A Common Stock.
Cash provided by or used in operating activities consists of net income, adjusted for certain non-cash items, such as depreciation and amortization, stock-based compensation expense and related excess tax benefit, other non-cash items included in operating results, and changes in operating assets and liabilities, such as accounts receivable, inventory, accounts payable and accrued expenses.
Cash provided by operating activities in 2015 was $168.7 million and primarily consisted of net income of $98.4 million, non-cash items of $42.1 million and a net decrease in operating assets and liabilities of $28.2 million. Cash provided by operating activities in 2014 totaled $141.2 million and primarily consisted of net income of $90.7 million, non-cash items of $42.2 million and a net decrease in operating assets and liabilities of $8.3 million.
The Company used $74.2 million in investing activities during 2015, as compared to $151.8 million during 2014. Investing activities primarily consisted of discretionary equipment purchases to increase capacity of the Company-owned breweries.
 
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Cash used in financing activities was $76.7 million during 2015, as compared to $37.5 million provided by financing activities during 2014. The $114.2 million difference in financing cash flow in 2015 from 2014 is primarily due to an increase in stock repurchases under the Company’s Stock Repurchase Program partially offset by an increase in proceeds from the exercise of stock options and the related tax benefits.
During the year ended December 26, 2015, the Company repurchased approximately 616,700 shares of its Class A Common Stock for an aggregate purchase price of $138.7 million. On February 10, 2016, the Board of Directors approved an increase of $50.0 million to the previously approved $525.0 million share buyback expenditure limit, for a new limit of $575.0 million. As of December 26, 2015, the Company had repurchased a cumulative total of approximately 11.5 million shares of its Class A Common Stock for an aggregate purchase price of $446.1 million.
From December 27, 2015 through February 12, 2016, the Company repurchased 184,000 additional shares of its Class A Common Stock for a total cost of $33.0 million. As of February 12, 2016, the Company has repurchased a cumulative total of approximately 11.7 million shares of its Class A Common Stock for an aggregate purchase price of $479.1 million. The Company has approximately $95.9 million remaining on the $575.0 million stock repurchase expenditure limit set by the Board of Directors.
The Company expects that its cash balance as of December 26, 2015 of $94.2 million, along with future operating cash flow and the Company’s unused line of credit of $150.0 million, will be sufficient to fund future cash requirements. The Company’s $150.0 million credit facility has a term not scheduled to expire until March 31, 2019. 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 and there were no amounts outstanding under the credit facility.
Critical Accounting Policies
The discussion and analysis of the Company’s financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the Company to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. The more judgmental estimates are summarized below. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates if past experience or other assumptions do not turn out to be substantially accurate.
Provision for Excess or Expired Inventory
Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market value. The Company enters into multi-year purchase commitments in order to secure adequate supply of ingredients and packaging, to brew and package its products. Inventory on hand and under purchase commitments totaled approximately $193.8 million at December 26, 2015. The Company’s 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. 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 or expired inventory are recorded as a cost of goods sold and have historically been adequate to provide for losses on its raw materials. Provision for excess or expired inventory included in cost of goods sold was $4.0 million, $6.1 million, and $4.9 million in fiscal years 2015, 2014, and 2013.
 
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Valuation of Long-Lived Assets
The Company’s long-lived assets include property, plant and equipment which are depreciated over their estimated useful lives. The carrying value of property, plant and equipment, net of accumulated depreciation, at December 26, 2015 was $409.9 million. For purposes of determining whether there are any impairment losses, management has historically examined the carrying value of the Company’s identifiable long-lived assets, including their useful lives, when indicators of impairment are present. Evaluations of whether indicators of impairment exist involve judgments regarding the current and future business environment and the length of time the Company intends to use the asset. For all long-lived assets, if an impairment loss is identified based on the fair value of the asset, as compared to the carrying value of the asset, such loss would be charged to expense in the period the impairment is identified. Estimating the amount of impairment, if any, requires significant judgments including identification of potential impairments, market comparison to similar assets, estimated cash flows to be generated by the asset, discount rates, and the remaining useful life of the asset. Impairment of assets was $0.3 million, $1.8 million, and $1.6 million in fiscal years 2015, 2014 and 2013.
Revenue Recognition
Net revenue includes product sales, less customer programs and incentives, reserves for stale beer returns and excise taxes. The Company recognizes revenue on product sales at the time when the product is shipped and the following conditions are met: persuasive evidence of an arrangement exists, title has passed to the customer according to the shipping terms, the price is fixed and determinable, and collection of the sales proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met.
The Company is committed to maintaining the freshness of the product in the market. In certain circumstances and with the Company’s approval, the Company accepts and destroys stale beer that is returned by Distributors. The Company credits approximately fifty percent of the Distributor’s cost of the beer that has passed its expiration date for freshness when it is returned to the Company or destroyed. The Company reduces revenue and establishes an accrual based upon both historical returns and knowledge of specific return transactions. Estimating this reserve involves significant judgments and estimates, including comparability of historical return trends to future trends, lag time from date of sale to date of return, and product mix of returns. Historically, the cost of actual stale beer returns has been in line with established reserves, however, the cost could differ materially from the estimated accrual which would impact revenue. As of December 26, 2015 and December 27, 2014, the stale beer reserve was $3.3 million and $2.4 million, respectively.
Customer Programs and Incentives
Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50,  Revenue Recognition- Customer Payments and Incentives,  based on the nature of the expenditure. Amounts paid to customers totaled $55.3 million, $52.4 million and $40.4 million in fiscal year 2015, 2014 and 2013, respectively.
Customer promotional discount programs are entered into with Distributors for certain periods of time. Amounts paid to Distributors in connection with these programs in fiscal years 2015, 2014 and 2013 were $33.2 million, $28.5 million and $23.1 million, respectively. The reimbursements for discounts to Distributors are recorded as reductions to net revenue. 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 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.
 
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Customer incentives and other payments are made primarily to Distributors 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 in fiscal years 2015, 2014 and 2013 were $22.1 million, $23.9 million and $17.3 million, respectively. In fiscal 2015, 2014 and 2013, the Company recorded certain of these costs in the total amount of $16.6 million, $18.7 million and $13.4 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 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.
In connection with its preparation of financial statements and other financial reporting, management is required to make certain estimates and assumptions regarding the amount and timing of expenditures resulting from these activities. Actual expenditures incurred could differ from management’s estimates and assumptions.
Kegs and Pallets Inventory and Refundable Deposits
The Company distributes its draft beer in kegs and packaged beer primarily in glass bottles and cans and such kegs, bottles and cans are shipped on pallets to Distributors. Deposits held by the Company at December 26, 2015 totaled approximately $18.9 million. Most all kegs and pallets are owned by the Company. Upon shipment of beer to Distributors, the Company collects a refundable deposit on the kegs and pallets. The Company has experienced some loss of kegs and pallets and anticipates that some loss will occur in future periods. The Company believes that the loss of kegs and pallets, after considering the forfeiture of related deposits, has not been material to the financial statements. The Company uses internal records, records maintained by Distributors, records maintained by other third party vendors and historical information to estimate the physical count of kegs and pallets held by Distributors. These estimates affect the amount recorded as property, plant and equipment and current liabilities as of the date of the financial statements. The actual liability for refundable deposits could differ from these estimates.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of Accounting Standards Codification Topic 718,  Compensation – Stock Compensation . Stock-based compensation was $6.7 million, $6.9 million, and $7.3 million in fiscal years 2015, 2014, and 2013, respectively. Various option-pricing models are used to calculate the fair value of options. All option-pricing models require the input of subjective assumptions. These assumptions include the estimated volatility of the Company’s common stock price over the expected term, the expected dividend rate, the estimated post-vesting forfeiture rate, the risk-free interest rate and expected exercise behavior.
In addition, an estimated pre-vesting forfeiture rate is applied in the recognition of the compensation charge. Periodically, the Company grants performance-based stock options, related to which it only recognizes compensation expense if it is probable that performance targets will be met. Consequently, at the end of each reporting period, the Company estimates whether it is probable that performance targets will be met. Changes in the subjective assumptions and estimates can materially affect the amount of stock-based compensation expense recognized in the consolidated statements of comprehensive income.
Income Taxes
Income tax expense was $56.6 million, $54.9 million and $42.1 million in fiscal years 2015, 2014, and 2013, respectively. The Company provides for deferred taxes using an asset and liability approach that requires the
 
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recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. This results in differences between the book and tax basis of the Company’s assets, liabilities and carry-forwards such as tax credits. In estimating future tax consequences, all expected future events, other than enactment of changes in the tax laws or rates, are generally considered. Valuation allowances are provided to the extent deemed necessary when realization of deferred tax assets appears unlikely.
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns. Historically, the valuation allowances and reserves for uncertain tax positions have been adequate to cover the related tax exposures.
Business Environment
The alcoholic beverage industry is highly regulated at the federal, state and local levels. The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) and the Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives enforce laws under the Federal Alcohol Administration Act. The TTB is responsible for administering and enforcing excise tax laws that directly affect the Company’s results of operations. State and regulatory authorities have the ability to suspend or revoke the Company’s licenses and permits or impose substantial fines for violations. The Company has established strict policies, procedures and guidelines in efforts to ensure compliance with all applicable state and federal laws. However, the loss or revocation of any existing license or permit could have a material adverse effect on the Company’s business, results of operations, cash flows and financial position.
The Better Beer category is highly competitive due to the large number of regional craft and specialty brewers and the brewers of imported beers who distribute similar products that have similar pricing and target drinkers. The Company believes that its pricing is appropriate given the quality and reputation of its core brands, while realizing that economic pricing pressures may affect future pricing levels. Certain major domestic brewers have also developed brands to compete within the Better Beer, FMB and hard cider categories and have acquired interests in craft beers and hard cider makers, or importation rights to foreign brands. Import brewers and major domestic brewers are able to compete more aggressively than the Company, as they have substantially greater resources, marketing strength and distribution networks than the Company. The Company anticipates craft beer competition increasing as craft brewers have benefited from eleven years of healthy growth and are looking to maintain these trends. The Company also increasingly competes with wine and spirits companies, some of which have significantly greater resources than the Company. This competitive environment may affect the Company’s overall performance within the Better Beer category. As the market matures and the Better Beer category continues to consolidate, the Company believes that companies that are well-positioned in terms of brand equity, marketing and distribution will have greater success than those who do not. With approximately 350 Distributors nationwide and the Company’s sales force of approximately 420 people, a commitment to maintaining brand equity and the quality of its beer, the Company believes it is well positioned to compete in the Better Beer market.
The demand for the Company’s products is also subject to changes in drinkers’ tastes.
The Potential Impact of Known Facts, Commitments, Events and Uncertainties
Hops Purchase Commitments
The Company utilizes several varieties of hops in the production of its products. To ensure adequate supplies of these varieties, the Company enters into advance multi-year purchase commitments based on forecasted future hop requirements, among other factors.
 
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During 2015, the Company entered into several hops future contracts in the normal course of business. The total value of the contracts entered into as of December 26, 2015, which are denominated in Euros and U.S. Dollars, was $50.0 million. The Company has no forward exchange contracts in place as of December 26, 2015 and currently intends to purchase future hops using the exchange rate at the time of purchase. These contracts were deemed necessary in order to bring hop inventory levels and purchase commitments into balance with the Company’s current brewing volume and hop usage forecasts. In addition, these contracts enable the Company to secure its position for future supply with hop vendors in the face of some competitive buying activity.
The Company’s accounting policy for hop inventory and purchase commitments is to recognize a loss by establishing a reserve for aged hops and to the extent inventory levels and commitments exceed forecasted needs. The computation of the excess inventory requires management to make certain assumptions regarding future sales growth, product mix, cancellation costs and supply, among others. Actual results may differ materially from management’s estimates. The Company continues to manage inventory levels and purchase commitments in an effort to maximize utilization of hops on hand and hops under commitment. However, changes in management’s assumptions regarding future sales growth, product mix and hops market conditions could result in future material losses.
Contractual Obligations
The following table presents contractual obligations as of December 26, 2015:

 	  	 	 	  	Payments Due by Period	 	
 	  	Total	 	  	2016	 	  	2017-2018	 	  	2019-2020	 	  	Thereafter	 	
 	  	(in thousands)	 	
Hops, barley and wheat	  	$	63,685	  	  	$	26,763	  	  	$	23,195	  	  	$	13,727	  	  	$	—  	  	
Apples and other ingredients	  	 	48,719	  	  	 	48,719	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Advertising	  	 	29,113	  	  	 	28,826	  	  	 	287	  	  	 	—  	  	  	 	—  	  	
Equipment and machinery	  	 	22,704	  	  	 	22,704	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Glass bottles	  	 	21,412	  	  	 	21,412	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Operating leases	  	 	17,523	  	  	 	2,664	  	  	 	5,618	  	  	 	4,955	  	  	 	4,286	  	
Other	  	 	4,302	  	  	 	3,940	  	  	 	362	  	  	 	—  	  	  	 	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total contractual obligations	  	$	207,458	  	  	$	155,028	  	  	$	29,462	  	  	$	18,682	  	  	$	4,286	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The Company had outstanding total non-cancelable contractual obligations of $207.5 million at December 26, 2015. These obligations are made up of hops, barley and wheat of $63.7 million, apples and other ingredients of $48.7 million, advertising contracts of $29.1 million, equipment and machinery of $22.7 million, glass bottles of $21.4 million, operating leases of $17.5 million, and other commitments of $4.3 million.
The Company has entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2020 and specify both the quantities and prices, denominated in Euros and U.S. Dollars, to which the Company is committed. Hops purchase commitments outstanding at December 26, 2015 totaled $50.0 million, based on the exchange rates on that date.
Currently, the Company has entered into contracts for barley and wheat with two major suppliers. The contracts include crop years 2014 and 2015 and cover the Company’s barley, wheat, and malt requirements for part of 2016. These purchase commitments outstanding at December 26, 2015 totaled $13.7 million. On January 6, 2016 the Company entered into additional malt commitments for an incremental $4.1 million.
The Company sources glass bottles pursuant to a Glass Bottle Supply Agreement with Anchor Glass Container Corporation (“Anchor”), under which Anchor is the supplier of certain glass bottles for the Company’s Cincinnati Brewery and its Pennsylvania Brewery. This agreement also establishes the terms on which Anchor may supply glass bottles to other breweries where the Company brews its beers. Under the agreement with
 
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Anchor, the Company has minimum and maximum purchase commitments that are based on Company-provided production estimates which, under normal business conditions, are expected to be fulfilled. Minimum purchase commitments under this agreement, assuming the supplier is unable to replace lost production capacity cancelled by the Company, as of December 26, 2015 totaled $21.4 million.
The Company has various operating lease agreements in place for facilities and equipment as of December 26, 2015. Terms of these leases include, in some instances, scheduled rent increases, renewals, purchase options and maintenance costs, and vary by lease. These lease obligations expire at various dates through 2021.
For the fiscal year ended December 26, 2015, the Company brewed most all of its volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. Pursuant to these arrangements, the Company purchases the liquid produced by those brewing companies, including the raw materials that are used in the liquid, at the time such liquid goes into fermentation. The Company is required to repurchase all unused raw materials purchased by the brewing company specifically for the Company’s beers at the brewing company’s cost upon termination of the production arrangement. The Company is also obligated to meet annual volume requirements in conjunction with certain production arrangements, which are not material to the Company’s operations.
The Company’s arrangements with other brewing companies require it to periodically purchase equipment in support of brewery operations. As of December 26, 2015, there were no significant equipment purchase requirements outstanding under existing contracts. Changes to the Company’s brewing strategy or existing production arrangements, new production relationships or the introduction of new products in the future may require the Company to purchase equipment to support the contract breweries’ operations.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,  Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. The Company will elect to apply the impact (if any) of applying ASU 2014-09 to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date  (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 for one year, making it effective for the year beginning January 1, 2018, with early adoption permitted as of January 1, 2017. The Company is currently evaluating the impact ASU 2014-09 and has preliminarily concluded that it will not significantly affect how revenue for contracts with customers is recognized.
In April 2015, the FASB issued ASU No. 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets . ASU 2015-04 gives an employer whose fiscal year-end does not coincide with a calendar month-end (e.g., an entity that has a 52- or 53-week fiscal year) the ability, as a practical expedient, to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end. ASU 2015-04 will be effective prospectively for the year beginning December 27, 2015. The Company is currently evaluating the impact of ASU 2015-04 and has preliminarily concluded that it will not significantly affect the measurement of defined benefit retirement obligations and related plan assets.
 
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In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory. ASU 2015-11 is part of the FASB’s initiative to simplify accounting standards. The guidance requires an entity to recognize inventory within scope of the standard at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. ASU 2015-11 will be effective prospectively for the year beginning January 1, 2017. The Company is currently evaluating the impact ASU 2015-11 will have on its consolidated financial statements.
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 is part of the FASB’s initiative to simplify accounting standards. The guidance requires an entity to present deferred tax assets and deferred tax liabilities as noncurrent in the consolidated balance sheet. ASU 2015-17 permits entities to apply the amendments either prospectively or retrospectively. ASU 2015-17 will be effective for the year beginning January 1, 2017. The Company is currently evaluating the impact ASU 2015-17. As of December 26, 2015 and December 27, 2014, the Company had $7.0 million and $8.7 million, respectively, of current deferred tax assets on the consolidated balance sheet that would be classified as noncurrent under the new guidance.
See Note B of the Notes to Consolidated Financial Statements.
Off-Balance Sheet Arrangements
The Company has not entered into any material off-balance sheet arrangements as of December 26, 2015.
 
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	
In the ordinary course of business, the Company is exposed to the impact of fluctuations in foreign exchange rates. The Company does not enter into derivatives or other market risk sensitive instruments for the purpose of speculation or for trading purposes. Market risk sensitive instruments include derivative financial instruments, other financial instruments and derivative commodity instruments, such as futures, forwards, swaps and options, that are exposed to rate or price changes.
The Company enters into hops purchase contracts, as described above under “Hops Purchase Commitments”, and makes purchases of other ingredients, equipment and machinery denominated in foreign currencies. The cost of these commitments change as foreign exchange rates fluctuate. Currently, it is not the Company’s policy to hedge against foreign currency fluctuations.
The interest rate for borrowings under the Company’s credit facility is based on either (i) the Alternative Prime Rate (3.50% at December 26, 2015) or (ii) the applicable LIBOR rate (0.36% at December 26, 2015) plus 0.45%, and therefore, subjects the Company to fluctuations in such rates. As of December 26, 2015, the Company had no amounts outstanding under its current line of credit.
Sensitivity Analysis
The Company applies a sensitivity analysis to reflect the impact of a 10% hypothetical adverse change in the foreign currency rates. A potential adverse fluctuation in foreign currency exchange rates could negatively impact future cash flows by approximately $5.3 million as of December 26, 2015.
There are many economic factors that can affect volatility in foreign exchange rates. As such factors cannot be predicted, the actual impact on earnings due to an adverse change in the respective rates could vary substantially from the amounts calculated above.
 
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Item 8.	Financial Statements and Supplementary Data	
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
The Boston Beer Company, Inc.
Boston, Massachusetts
We have audited the accompanying consolidated balance sheet of The Boston Beer Company, Inc. and subsidiaries (the “Company”) as of December 26, 2015, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The Boston Beer Company, Inc. and subsidiaries as of December 26, 2015, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 26, 2015, based on the criteria established in  Internal Control—Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2016 expressed an unqualified opinion on the Company’s internal control over financial reporting.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 18, 2016
 
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of The Boston Beer Company, Inc.
We have audited the accompanying consolidated balance sheet of The Boston Beer Company, Inc. and subsidiaries as of December 27, 2014 and the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 27, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Boston Beer Company, Inc. and subsidiaries at December 27, 2014, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 27, 2014, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 24, 2015
 
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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 	  	December 26,
2015	 	 	December 27,
2014	 	
Assets	  	 	 	 	 	 	 	 	
Current Assets:	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	94,193	  	 	$	76,402	  	
Accounts receivable, net of allowance for doubtful accounts of $244 and $144 as of December 26, 2015 and December 27, 2014, respectively	  	 	38,984	  	 	 	36,860	  	
Inventories	  	 	56,462	  	 	 	51,307	  	
Prepaid expenses and other current assets	  	 	12,053	  	 	 	12,887	  	
Income tax receivable	  	 	14,928	  	 	 	21,321	  	
Deferred income taxes	  	 	6,983	  	 	 	8,685	  	
 	  	 	 	 	 	 	 	 	
Total current assets	  	 	223,603	  	 	 	207,462	  	
Property, plant and equipment, net	  	 	409,926	  	 	 	381,569	  	
Other assets	  	 	8,188	  	 	 	12,447	  	
Goodwill	  	 	3,683	  	 	 	3,683	  	
 	  	 	 	 	 	 	 	 	
Total assets	  	$	645,400	  	 	$	605,161	  	
 	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  	 	 	 	 	 	 	 	
Current Liabilities:	  	 	 	 	 	 	 	 	
Accounts payable	  	$	42,718	  	 	$	35,576	  	
Current portion of debt and capital lease obligations	  	 	58	  	 	 	55	  	
Accrued expenses and other current liabilities	  	 	68,384	  	 	 	74,539	  	
 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	111,160	  	 	 	110,170	  	
Deferred income taxes	  	 	56,001	  	 	 	50,717	  	
Debt and capital lease obligations, less current portion	  	 	471	  	 	 	528	  	
Other liabilities	  	 	16,547	  	 	 	7,606	  	
 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	184,179	  	 	 	169,021	  	
 	 	 	
Commitments and Contingencies (See Note J)	  	 	 	 	 	 	 	 	
 	 	 	
Stockholders’ Equity:	  	 	 	 	 	 	 	 	
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 9,389,005 and 9,452,375 issued and outstanding as of December 26, 2015 and December 27, 2014, respectively	  	 	94	  	 	 	95	  	
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 3,367,355 and 3,617,355 issued and outstanding as of December 26, 2015 and December 27, 2014, respectively	  	 	34	  	 	 	36	  	
Additional paid-in capital	  	 	290,096	  	 	 	224,909	  	
Accumulated other comprehensive loss, net of tax	  	 	(951	) 	 	 	(1,133	) 	
Retained earnings	  	 	171,948	  	 	 	212,233	  	
 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	461,221	  	 	 	436,140	  	
 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	645,400	  	 	$	605,161	  	
 	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

 	  	Year Ended	 	
 	  	December 26,	 	 	December 27,	 	 	December 28,	 	
 	  	2015	 	 	2014	 	 	2013	 	
Revenue	  	$	1,024,040	  	 	$	966,478	  	 	$	793,705	  	
Less excise taxes	  	 	64,106	  	 	 	63,471	  	 	 	54,652	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net revenue	  	 	959,934	  	 	 	903,007	  	 	 	739,053	  	
Cost of goods sold	  	 	458,317	  	 	 	437,996	  	 	 	354,131	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	501,617	  	 	 	465,011	  	 	 	384,922	  	
Operating expenses:	  	 	 	 	 	 	 	 	 	 	 	 	
Advertising, promotional and selling expenses	  	 	273,629	  	 	 	250,696	  	 	 	207,930	  	
General and administrative expenses	  	 	71,556	  	 	 	65,971	  	 	 	62,332	  	
Impairment of assets	  	 	258	  	 	 	1,777	  	 	 	1,567	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	345,443	  	 	 	318,444	  	 	 	271,829	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	156,174	  	 	 	146,567	  	 	 	113,093	  	
Other income (expense), net:	  	 	 	 	 	 	 	 	 	 	 	 	
Interest income	  	 	56	  	 	 	21	  	 	 	31	  	
Other expense, net	  	 	(1,220	) 	 	 	(994	) 	 	 	(583	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total other income (expense), net	  	 	(1,164	) 	 	 	(973	) 	 	 	(552	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income tax	  	 	155,010	  	 	 	145,594	  	 	 	112,541	  	
Provision for income taxes	  	 	56,596	  	 	 	54,851	  	 	 	42,149	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	98,414	  	 	$	90,743	  	 	$	70,392	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income per common share — basic	  	$	7.46	  	 	$	6.96	  	 	$	5.47	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income per common share — diluted	  	$	7.25	  	 	$	6.69	  	 	$	5.18	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of common shares — Class A basic	  	 	9,619	  	 	 	9,202	  	 	 	8,741	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of common shares — Class B basic	  	 	3,504	  	 	 	3,766	  	 	 	4,025	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of common shares — diluted	  	 	13,520	  	 	 	13,484	  	 	 	13,504	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	98,414	  	 	$	90,743	  	 	$	70,392	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss), net of tax:	  	 	 	 	 	 	 	 	 	 	 	 	
Currency translation adjustment	  	 	(22	) 	 	 	—  	  	 	 	—  	  	
Defined benefit plans liability adjustment	  	 	204	  	 	 	(716	) 	 	 	466	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total other comprehensive income (loss), net of tax:	  	 	182	  	 	 	(716	) 	 	 	466	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  	$	98,596	  	 	$	90,027	  	 	$	70,858	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 26, 2015, December 27, 2014 and December 28, 2013
(in thousands)

 	 	Class A
Common
Shares	 	 	Class A
Common
Stock,
Par	 	 	Class B
Common
Shares	 	 	Class B
Common
Stock,
Par	 	 	Additional
Paid-in
Capital	 	 	Accumulated
Other
Comprehensive
(Loss) Income,
net of tax	 	 	Retained
Earnings	 	 	Total
Stockholders’
Equity	 	
Balance at December 29, 2012	 	 	8,704	  	 	$	87	  	 	 	4,107	  	 	$	41	  	 	$	157,305	  	 	$	(883	) 	 	$	88,541	  	 	$	245,091	  	
Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	70,392	  	 	 	70,392	  	
Stock options exercised and restricted shares activities, including tax benefit of $5,282	 	 	132	  	 	 	1	  	 	 	 	 	 	 	 	 	 	 	8,402	  	 	 	 	 	 	 	 	 	 	 	8,403	  	
Stock-based compensation expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7,318	  	 	 	 	 	 	 	 	 	 	 	7,318	  	
Repurchase of Class A Common Stock	 	 	(196	) 	 	 	(1	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(29,584	) 	 	 	(29,585	) 	
Conversion from Class B to Class A	 	 	145	  	 	 	1	  	 	 	(145	) 	 	 	(1	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—  	  	
Defined benefit plans liability adjustment, net of tax of ($296)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	466	  	 	 	 	 	 	 	466	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 28, 2013	 	 	8,785	  	 	 	88	  	 	 	3,962	  	 	 	40	  	 	 	173,025	  	 	 	(417	) 	 	 	129,349	  	 	 	302,085	  	
Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	90,743	  	 	 	90,743	  	
Stock options exercised and restricted shares activities, including tax benefit of $17,353	 	 	351	  	 	 	3	  	 	 	 	 	 	 	 	 	 	 	45,027	  	 	 	 	 	 	 	 	 	 	 	45,030	  	
Stock-based compensation expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6,857	  	 	 	 	 	 	 	 	 	 	 	6,857	  	
Repurchase of Class A Common Stock	 	 	(29	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(7,859	) 	 	 	(7,859	) 	
Conversion from Class B to Class A	 	 	345	  	 	 	4	  	 	 	(345	) 	 	 	(4	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—  	  	
Defined benefit plans liability adjustment, net of tax of $455	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(716	) 	 	 	 	 	 	 	(716	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 27, 2014	 	 	9,452	  	 	 	95	  	 	 	3,617	  	 	 	36	  	 	 	224,909	  	 	 	(1,133	) 	 	 	212,233	  	 	 	436,140	  	
Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	98,414	  	 	 	98,414	  	
Stock options exercised and restricted shares activities, including tax benefit of $15,350	 	 	303	  	 	 	3	  	 	 	 	 	 	 	 	 	 	 	58,522	  	 	 	 	 	 	 	 	 	 	 	58,525	  	
Stock-based compensation expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6,665	  	 	 	 	 	 	 	 	 	 	 	6,665	  	
Repurchase of Class A Common Stock	 	 	(616	) 	 	 	(6	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(138,699	) 	 	 	(138,705	) 	
Conversion from Class B to Class A	 	 	250	  	 	 	2	  	 	 	(250	) 	 	 	(2	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—  	  	
Defined benefit plans liability adjustment, net of tax of ($142)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	204	  	 	 	 	 	 	 	204	  	
Currency translation adjustment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(22	) 	 	 	 	 	 	 	(22	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 26, 2015	 	 	9,389	  	 	$	94	  	 	 	3,367	  	 	$	34	  	 	$	290,096	  	 	$	(951	) 	 	$	171,948	  	 	$	461,221	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 	  	Year Ended	 	
 	  	December 26,	 	 	December 27,	 	 	December 28,	 	
 	  	2015	 	 	2014	 	 	2013	 	
Cash flows provided by operating activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	98,414	  	 	$	90,743	  	 	$	70,392	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	42,885	  	 	 	35,138	  	 	 	25,903	  	
Impairment of assets	  	 	258	  	 	 	1,777	  	 	 	1,567	  	
Loss on disposal of property, plant and equipment	  	 	515	  	 	 	434	  	 	 	462	  	
Bad debt expense (recovery)	  	 	165	  	 	 	(16	) 	 	 	19	  	
Stock-based compensation expense	  	 	6,665	  	 	 	6,857	  	 	 	7,318	  	
Excess tax benefit from stock-based compensation arrangements	  	 	(15,350	) 	 	 	(17,353	) 	 	 	(5,282	) 	
Deferred income taxes	  	 	6,986	  	 	 	15,350	  	 	 	11,630	  	
Changes in operating assets and liabilities:	  	 	 	 	 	 	 	 	 	 	 	 	
Accounts receivable	  	 	(2,289	) 	 	 	5,157	  	 	 	(10,542	) 	
Inventories	  	 	(5,155	) 	 	 	5,090	  	 	 	(12,036	) 	
Prepaid expenses, income tax receivable and other assets	  	 	11,858	  	 	 	(9,447	) 	 	 	(7,616	) 	
Accounts payable	  	 	5,985	  	 	 	884	  	 	 	3,173	  	
Accrued expenses and taxes and other current liabilities	  	 	9,014	  	 	 	4,578	  	 	 	14,633	  	
Other liabilities	  	 	8,732	  	 	 	2,019	  	 	 	361	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	168,683	  	 	 	141,211	  	 	 	99,982	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows used in investing activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	  	 	(74,187	) 	 	 	(151,784	) 	 	 	(100,655	) 	
Cash paid for intangible assets and acquisition of brewery assets	  	 	(100	) 	 	 	(100	) 	 	 	(2,753	) 	
Change in restricted cash	  	 	57	  	 	 	53	  	 	 	62	  	
Proceeds from disposal of property, plant and equipment	  	 	—  	  	 	 	—  	  	 	 	18	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(74,230	) 	 	 	(151,831	) 	 	 	(103,328	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows (used in) provided by financing activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Repurchase of Class A Common Stock	  	 	(135,705	) 	 	 	(7,859	) 	 	 	(29,585	) 	
Proceeds from exercise of stock options	  	 	42,339	  	 	 	27,272	  	 	 	2,541	  	
Cash paid on note payable and capital lease	  	 	(54	) 	 	 	(53	) 	 	 	(787	) 	
Excess tax benefit from stock-based compensation arrangements	  	 	15,350	  	 	 	17,353	  	 	 	5,282	  	
Net proceeds from sale of investment shares	  	 	1,408	  	 	 	785	  	 	 	956	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities	  	 	(76,662	) 	 	 	37,498	  	 	 	(21,593	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Change in cash and cash equivalents	  	 	17,791	  	 	 	26,878	  	 	 	(24,939	) 	
Cash and cash equivalents at beginning of year	  	 	76,402	  	 	 	49,524	  	 	 	74,463	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	94,193	  	 	$	76,402	  	 	$	49,524	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  	 	 	 	 	 	 	 	 	 	 	 	
Income taxes paid	  	$	45,078	  	 	$	42,324	  	 	$	29,442	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income taxes refunded	  	$	17,252	  	 	$	—  	  	 	$	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Acquisition of property and equipment under capital lease	  	$	—  	  	 	$	—  	  	 	$	252	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Increase in accounts payable for repurchase of Class A Common Stock	  	$	3,000	  	 	$	—  	  	 	$	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
(Decrease) Increase in accounts payable for purchase of property, plant and equipment	  	$	(1,843	) 	 	$	268	  	 	$	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Allocation of purchase consideration to brewery acquisition to the following assets:	  	 	 	 	 	 	 	 	 	 	 	 	
Property, plant and equipment	  	$	—  	  	 	$	—  	  	 	$	110	  	
Tradename	  	$	—  	  	 	$	—  	  	 	$	1,608	  	
Goodwill	  	$	—  	  	 	$	—  	  	 	$	1,145	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 26, 2015
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,” and “Angry Orchard Cider Company.” The Company’s Samuel Adams ®  beers are produced and sold under the trade name “The Boston Beer Company.” A&S Brewing Collaborative LLC, d/b/a Alchemy & Science (“A&S”), a wholly-owned subsidiary of the Company, sells beer under various trade names that is produced under its own license and the Company’s licenses. In 2015, sales from A&S brands are less than 7% of net revenues.
B. Summary of Significant Accounting Policies
Fiscal Year
The Company’s fiscal year is a fifty-two or fifty-three week period ending on the last Saturday in December. The fiscal periods of 2015, 2014 and 2013 consist of fifty-two weeks.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany transactions and balances have been eliminated in consolidation.
Segment Reporting
The Company consists of two operating segments that each produce and sell alcohol beverages. The first is the Boston Beer Company operating segment comprised of the Company’s Samuel Adams ® , Twisted Tea ®  and Angry Orchard ®  brands. The second is the A&S Brewing Collaborative operating segment which is comprised of The Traveler Beer Company, Coney Island Brewing Company, Angel City Brewing Company and Concrete Beach Brewing Company. Both segments have similar economic characteristics. They also sell predominantly low alcohol beverages, which are sold to the same types of customers in similar size quantities, at similar price points and through substantially the same channels of distribution. These beverages are manufactured using similar production processes, have comparable alcohol content and generally fall under the same regulatory environment. Since the operating segments are similar in the areas outlined above, they are aggregated for financial statements purposes.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at December 26, 2015 and December 27, 2014 included cash on-hand and money market instruments that are highly liquid investments. Cash and cash equivalents are carried at cost, which approximates fair value.
 
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The Company has restricted cash associated with a term note agreement with Bank of America that was required by the Commonwealth of Pennsylvania to fund economic development at the Company’s Pennsylvania Brewery. The restricted cash subject to this agreement amounted to $456,000 and $513,000 at December 26, 2015 and December 27, 2014, respectively and is included in other assets on the Company’s Consolidated Balance Sheets.
Accounts Receivable and Allowance for Doubtful Accounts
The Company’s accounts receivable primarily consist of trade receivables. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts as of December 26, 2015 and December 27, 2014 are adequate, but actual write-offs could exceed the recorded allowance.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and trade receivables. The Company places its cash equivalents with high credit quality financial institutions. As of December 26, 2015, the Company’s cash and cash equivalents were invested in investment-grade, highly-liquid U.S. government agency corporate money market accounts.
The Company sells primarily to a network of independent wholesalers in the United States and to a network of wholesalers, importers or other agencies (collectively referred to as “Distributors”). In 2015, sales to foreign Distributors were approximately 4% of total sales. Receivables arising from these sales are not collateralized; however, credit risk is minimized as a result of the large and diverse nature of the Company’s customer base. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. There were no individual customer accounts receivable balances outstanding at December 26, 2015 and December 27, 2014 that were in excess of 10% of the gross accounts receivable balance on those dates. No individual customers represented more than 10% of the Company’s revenues during fiscal years 2015, 2014 and 2013.
Financial Instruments and Fair Value of Financial Instruments
The Company’s primary financial instruments consisted of cash equivalents, accounts receivable, accounts payable and accrued expenses at December 26, 2015 and December 27, 2014. The Company determines the fair value of its financial assets and liabilities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820,  Fair Value Measurements and Disclosures  (“ASC 820”). The Company believes that the carrying amount of its cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value due to the short-term nature of these assets and liabilities. The Company is not exposed to significant interest, currency or credit risks arising from these financial assets and liabilities.
Inventories and Provision for Excess or Expired Inventory
Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops, malt, apple juice, other brewing materials and packaging, are stated at the lower of cost (first-in, first-out basis) or market value. The cost elements of work in process and finished goods inventory consist of raw materials, direct labor and manufacturing overhead. Packaging design costs are expensed as incurred.
The provisions for excess or expired inventory are based on management’s estimates of forecasted usage of inventories on hand and under contract. 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.
 
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The computation of the excess inventory requires management to make certain assumptions regarding future sales growth, product mix, new products, cancellation costs, and supply, among others. The Company manages inventory levels and purchase commitments in an effort to maximize utilization of inventory on hand and under commitments. The Company’s accounting policy for inventory and purchase commitments is to recognize a loss by establishing a reserve to the extent inventory levels and commitments exceed management’s expected future usage. Provision for excess or expired inventory included in cost of goods sold was $4.0 million, $6.1 million, and $4.9 million in fiscal years 2015, 2014, and 2013.
Property, Plant and Equipment
Property, plant, and equipment are stated at cost. Expenditures for repairs and maintenance are expensed as incurred. Major renewals and betterments that extend the life of the property are capitalized. Some of the Company’s equipment is used by other brewing companies to produce the Company’s products under brewing service arrangements (Note J). Depreciation is computed using the straight-line method based upon the estimated useful lives of the underlying assets as follows:

Kegs	  	5 years	
Office equipment and furniture	  	3 to 5 years	
Machinery and plant equipment	  	3 to 20 years, or the term of the production agreement, whichever is shorter	
Leasehold improvements	  	Lesser of the remaining term of the lease or estimated useful life of the asset	
Building and building improvements	  	12 to 20 years, or the remaining useful life of the building, whichever is shorter	
Refundable Deposits on Kegs and Pallets
The Company distributes its draft beer in kegs and packaged beer primarily in glass bottles and cans and such kegs, bottles and cans are shipped on pallets to Distributors. Most all kegs and pallets are owned by the Company. Kegs are reflected in the Company’s balance sheets at cost and are depreciated over the estimated useful life of the keg, while pallets are expensed upon purchase. Upon shipment of beer to Distributors, the Company collects a refundable deposit on the kegs and pallets, which is included in current liabilities in the Company’s balance sheets. Upon return of the kegs and pallets to the Company, the deposit is refunded to the Distributor.
The Company has experienced some loss of kegs and pallets and anticipates that some loss will occur in future periods due to the significant volume of kegs and pallets handled by each Distributor and retailer, the homogeneous nature of kegs and pallets owned by most brewers and the relatively small deposit collected for each keg when compared with its market value. The Company believes that this is an industry-wide issue and that the Company’s loss experience is not atypical. The Company believes that the loss of kegs and pallets, after considering the forfeiture of related deposits, has not been material to the financial statements. The Company uses internal records, records maintained by Distributors, records maintained by other third party vendors and historical information to estimate the physical count of kegs and pallets held by Distributors. These estimates affect the amount recorded as property, plant and equipment and current liabilities as of the date of the financial statements. The actual liability for refundable deposits could differ from these estimates. For the year ended December 26, 2015, the Company decreased its liability for refundable deposits, gross property, plant and equipment and related accumulated depreciation by $0.9 million, $1.2 million and $1.2 million, respectively. For the year ended December 27, 2014, the Company decreased its liability for refundable deposits, gross property, plant and equipment and related accumulated depreciation by $1.0 million, $1.8 million and $1.8 million,
 
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respectively. As of December 26, 2015 and December 27, 2014, the Company’s balance sheet includes $17.1 million and $18.2 million, respectively, in refundable deposits on kegs and pallets and $18.9 million and $25.9 million, respectively, in kegs, net of accumulated depreciation.
Goodwill
The Company does not amortize goodwill, but evaluates the recoverability of goodwill by comparing the carrying value and the fair value of its reporting units at the end of the third quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The Company has concluded that its goodwill was not impaired as of December 26, 2015 and December 27, 2014. As of December 26, 2015 and December 27, 2014, the goodwill of the Boston Beer Company reporting unit amounted to $1.4 million. As of December 26, 2015 and December 27, 2014 the goodwill of the A&S Brewing Collaborative reporting unit amounted to $2.3 million.
Long-lived Assets
Long-lived assets are recorded at cost and depreciated over their estimated useful lives. For purposes of determining whether there are any impairment losses, as further discussed below, management has historically examined the carrying value of the Company’s identifiable long-lived assets, including their useful lives, when indicators of impairment are present. For all long-lived assets, if an impairment loss is identified based on the fair value of the asset, as compared to the carrying value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated useful lives are more appropriate. In that event, the Company will be required to record additional depreciation in future periods, which will reduce earnings.
Factors generally considered important which could trigger an impairment review on the carrying value of long-lived assets include the following: (1) significant underperformance relative to historical or projected future operating results; (2) significant changes in the manner of use of acquired assets or the strategy for the Company’s overall business; (3) underutilization of assets; and (4) discontinuance of products by the Company or its customers. The Company believes that the carrying value of its long-lived assets was realizable as of December 26, 2015 and December 27, 2014.
Income Taxes
The Company provides for deferred taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. This results in differences between the book and tax bases of the Company’s assets and liabilities and carryforwards, such as tax credits. In estimating future tax consequences, all expected future events, other than enactment of changes in the tax laws or rates, are generally considered. Valuation allowances are provided when recovery of deferred tax assets does not meet the more likely than not standards as defined in ASC Topic 740,  Income Taxes .
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. The Company records estimated reserves for exposures associated with positions that it takes on its income tax returns that do not meet the more likely than not standards as defined in ACS Topic 740,  Income Taxes .
Excise Taxes
The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department (the “TTB”) regulations which includes making timely and accurate excise tax payments.
 
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The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws.
Revenue Recognition
Net revenue includes product sales, less the distributor promotional discount allowance, certain Distributor incentives, as discussed below in Customer Programs and Incentives, the stale beer accrual and excise taxes. The Company recognizes revenue on product sales at the time when the product is shipped and the following conditions are met: persuasive evidence of an arrangement exists, title has passed to the customer according to the shipping terms, the price is fixed and determinable, and collection of the sales proceeds is reasonably assured. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met. As of December 26, 2015 and December 27, 2014, the Company has deferred $3.9 million and $6.0 million, in revenue related to product shipped prior to these dates. These amounts are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
In certain circumstances and with the Company’s approval, the Company accepts and destroys stale beer that is returned by Distributors. The Company generally credits approximately fifty percent of the distributor’s cost of the beer that has passed its expiration date for freshness when it is returned to the Company or destroyed. The Company reduces revenue and establishes an accrual based upon both historical returns, which is applied to an estimated lag time for receipt of product, and knowledge of specific return transactions. Stale beer expense is reflected in the accompanying financial statements as a reduction of revenue; however, the actual stale beer expense incurred by the Company could differ from the estimated accrual.
Cost of Goods Sold
The following expenses are included in cost of goods sold: raw material costs, packaging costs, costs and income related to deposit activity, purchasing and receiving costs, manufacturing labor and overhead, brewing and processing costs, inspection costs relating to quality control, inbound freight charges, depreciation expense related to manufacturing equipment and warehousing costs, which include rent, labor and overhead costs.
Shipping Costs
Costs incurred for the shipping of products to customers are included in advertising, promotional and selling expenses in the accompanying consolidated statements of comprehensive income. The Company incurred shipping costs of $62.2 million, $62.6 million, and $50.3 million in fiscal years 2015, 2014, and 2013, respectively.
Advertising and Sales Promotions
The following expenses are included in advertising, promotional and selling expenses in the accompanying consolidated statements of comprehensive income: media advertising costs, sales and marketing expenses, salary and benefit expenses and meals, travel and entertainment expenses for the sales and sales support workforce, promotional activity expenses, freight charges related to shipments of finished goods from manufacturing locations to distributor locations and point-of-sale items. Total advertising and sales promotional expenditures of $120.1 million, $100.5 million, and $81.0 million were included in advertising, promotional and selling expenses in the accompanying consolidated statements of comprehensive income for fiscal years 2015, 2014, and 2013, respectively.
The Company conducts certain advertising and promotional activities in its Distributors’ markets and the Distributors make contributions to the Company for such efforts. Reimbursements from Distributors for advertising and promotional activities are recorded as reductions to advertising, promotional and selling expenses.
 
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Customer Programs and Incentives
Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50,  Revenue Recognition – Customer Payments and Incentives,  based on the nature of the expenditure. Amounts paid to customers totaled $55.3 million, $52.4 million, and $40.4 million in fiscal year 2015, 2014, and 2013, respectively.
Customer promotional discount programs are entered into with Distributors for certain periods of time. Amounts paid to Distributors in connection with these programs in fiscal years 2015, 2014, and 2013 were $33.2 million, $28.5 million, and $23.1 million, respectively. The reimbursements for discounts to Distributors are recorded as reductions to net revenue. 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 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 incentives and other payments are made primarily to Distributors 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 in fiscal years 2015, 2014, and 2013 were $22.1 million, $23.9 million, and $17.3 million, respectively. In 2015, 2014, and 2013, the Company recorded certain of these costs in the total amount of $16.6 million, $18.7 million, and $13.4 million respectively as reductions to net revenue. Costs recognized as reduction to 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.
General and Administrative Expenses
The following expenses are included in general and administrative expenses in the accompanying consolidated statements of comprehensive income: general and administrative salary and benefit expenses, insurance costs, professional service fees, rent and utility expenses, meals, travel and entertainment expenses for general and administrative employees, and other general and administrative overhead costs.
Stock-Based Compensation
The Company accounts for share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”), which generally requires recognition of share-based compensation costs in financial statements based on fair value. Compensation cost is recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period). The amount of compensation cost recognized in the consolidated statements of comprehensive income is based on the awards ultimately expected to vest, and therefore, reduced for estimated forfeitures.
As permitted by ASC 718, the Company elected to use a lattice model, such as the binomial option-pricing model, to estimate the fair values of stock options, with the exception of the 2008 and 2016 stock option grants to the Company’s Chief Executive Officer, which is considered to be a market-based award and was valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome. See Note M for further discussion of the application of the option-pricing models.
 
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Net Income Per Share
Basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share is calculated by dividing net income by the weighted-average common shares and potentially dilutive securities outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. The Company will elect to apply the impact (if any) of applying ASU 2014-09 to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. In August 2015, the FASB issued ASU No. 2015-14,  Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date  (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 for one year, making it effective for the year beginning December 31, 2017, with early adoption permitted as of January 1, 2017. The Company is currently evaluating the impact ASU 2014-09 and has preliminarily concluded that it will not significantly affect how revenue for contracts with customers is recognized.
In April 2015, the FASB issued ASU No. 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets . ASU 2015-04 gives an employer whose fiscal year-end does not coincide with a calendar month-end (e.g., an entity that has a 52- or 53-week fiscal year) the ability, as a practical expedient, to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end. ASU 2015-04 will be effective prospectively for the year beginning December 27, 2015. The Company is currently evaluating the impact of ASU 2015-04 and has preliminarily concluded that it will not significantly affect the measurement of defined benefit retirement obligations and related plan assets.
In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory. ASU 2015-11 is part of the FASB’s initiative to simplify accounting standards. The guidance requires an entity to recognize inventory within scope of the standard at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. ASU 2015-11 will be effective prospectively for the year beginning January 1, 2017. The Company is currently evaluating the impact ASU 2015-11 will have on its consolidated financial statements.
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 is part of the FASB’s initiative to simplify accounting standards. The guidance requires an entity to present deferred tax assets and deferred tax liabilities as noncurrent in the consolidated balance sheet. ASU 2015-17 permits entities to apply the amendments either prospectively or retrospectively. ASU 2015-17 will be effective for the year beginning January 1, 2017. The Company is currently evaluating the impact ASU 2015-17. As of December 26, 2015 and December 27, 2014, the Company had $7.0 million and $8.7 million, respectively, of current deferred tax assets on the consolidated balance sheet that would be classified as noncurrent under the new guidance.
C. Inventories
Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops, apple juice, other brewing materials and packaging, are stated at the lower of cost, determined on
 
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the first-in, first-out basis, or market. The Company’s goal is to maintain on-hand a supply of approximately two years for essential hop varieties, in order to limit the risk of an unexpected reduction in supply. Inventories are generally classified as current assets. The Company classifies hops inventory in excess of two years of forecasted usage in other long term assets. The cost elements of work in process and finished goods inventory consist of raw materials, direct labor and manufacturing overhead. Inventories consisted of the following:

 	  	December 26,	 	  	December 27,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Raw Materials	  	$	42,123	  	  	$	39,535	  	
Work in process	  	 	8,876	  	  	 	7,391	  	
Finished Goods	  	 	8,261	  	  	 	10,793	  	
 	  	 	 	 	  	 	 	 	
 	  	 	59,260	  	  	 	57,719	  	
Less portion in other long term assets	  	 	(2,798	) 	  	 	(6,412	) 	
 	  	 	 	 	  	 	 	 	
 	  	$	56,462	  	  	$	51,307	  	
 	  	 	 	 	  	 	 	 	
D. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:

 	  	December 26,	 	  	December 27,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Prepaid malt and barley	  	$	3,184	  	  	$	4,368	  	
Excise and other tax receivables	  	 	2,093	  	  	 	4,572	  	
Supplier rebates	  	 	1,929	  	  	 	1,641	  	
Lease incentive receivable	  	 	1,584	  	  	 	—  	  	
Prepaid insurance	  	 	1,047	  	  	 	1,009	  	
Other	  	 	2,216	  	  	 	1,297	  	
 	  	 	 	 	  	 	 	 	
 	  	$	12,053	  	  	$	12,887	  	
 	  	 	 	 	  	 	 	 	
E. Property, Plant and Equipment
Property, plant and equipment consisted of the following:

 	  	December 26,	 	  	December 27,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Machinery and plant equipment	  	$	387,180	  	  	$	358,781	  	
Kegs	  	 	71,391	  	  	 	72,124	  	
Land	  	 	25,135	  	  	 	23,992	  	
Building and building improvements	  	 	101,836	  	  	 	77,130	  	
Office equipment and furniture	  	 	19,635	  	  	 	14,063	  	
Leasehold improvements	  	 	12,037	  	  	 	7,889	  	
 	  	 	 	 	  	 	 	 	
 	  	 	617,214	  	  	 	553,979	  	
Less accumulated depreciation	  	 	207,288	  	  	 	172,410	  	
 	  	 	 	 	  	 	 	 	
 	  	$	409,926	  	  	$	381,569	  	
 	  	 	 	 	  	 	 	 	
The Company recorded depreciation and amortization expense related to these assets of $43.4 million, $34.8 million, and $25.7 million in fiscal years 2015, 2014, and 2013, respectively.
 
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Impairment of Assets
The Company evaluates its assets for impairment when events indicate that an asset or asset group may have suffered impairment. During 2015, 2014, and 2013, the Company recorded impairment charges of $0.3 million, $1.8 million, and $1.6 million, respectively.
F. Goodwill
Goodwill represents the excess of the purchase price of the Company-owned breweries over the fair value of the net assets acquired upon the completion of the acquisitions.
The following table summarizes the Company’s changes to the carrying amount of goodwill for the fifty-two weeks ended December 26, 2015 (in thousands):

 	  	Balance at	 	  	 	 	  	Balance at	 	
 	  	December 27,	 	  	 	 	  	December 26,	 	
 	  	2014	 	  	Additions	 	  	2015	 	
Goodwill	  	$	3,683	  	  	$	—  	  	  	$	3,683	  	
G. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:

 	  	December 26,	 	  	December 27,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Accrued deposits	  	$	18,865	  	  	$	19,665	  	
Employee wages, benefits and reimbursements	  	 	12,367	  	  	 	14,528	  	
Advertising, promotional and selling expenses	  	 	11,249	  	  	 	8,353	  	
Accrued freight	  	 	5,681	  	  	 	4,265	  	
Accrued excise taxes	  	 	3,976	  	  	 	4,980	  	
Deferred revenue	  	 	3,949	  	  	 	6,034	  	
Accrued stale beer	  	 	3,254	  	  	 	2,422	  	
Accrued sales and use tax	  	 	2,656	  	  	 	4,187	  	
Accrued ingredients	  	 	—  	  	  	 	4,047	  	
Other accrued liabilities	  	 	6,387	  	  	 	6,058	  	
 	  	 	 	 	  	 	 	 	
 	  	$	68,384	  	  	$	74,539	  	
 	  	 	 	 	  	 	 	 	
H. Debt and Capital Lease Obligations
Line of Credit
The Company has a credit facility in place that provides for a $150.0 million revolving line of credit which has a term not scheduled to expire until March 31, 2019. The Company may elect an interest rate for borrowings under the credit facility based on either (i) the Alternative Prime Rate (3.50% at December 26, 2015) or (ii) the applicable LIBOR rate (0.36% at December 26, 2015) plus 0.45%. The Company incurs an annual commitment fee of 0.15% on the unused portion of the facility and is obligated to meet certain financial covenants, which are measured using earnings before interest, tax, depreciation and amortization (“EBITDA”) based ratios. The Company’s EBITDA to interest expense ratio was 9,810 as of December 26, 2015, compared to a minimum allowable ratio of 2.00 and the Company’s total funded debt to EBITDA ratio was 0.00 as of December 26, 2015, compared to a maximum allowable ratio of 2.50. The Company was in compliance with all financial covenants as of December 26, 2015 and December 27, 2014. There were no borrowings outstanding under the credit facility as of December 26, 2015 and December 27, 2014.
 
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There are also certain restrictive covenants set forth in the credit agreement. Pursuant to the negative covenants, the Company has agreed that it will not: enter into any indebtedness or guarantees other than those specified by the lender, enter into any sale and leaseback transactions, merge, consolidate, or dispose of significant assets without the lender’s prior written consent, make or maintain any investments other than those permitted in the credit agreement, or enter into any transactions with affiliates outside of the ordinary course of business. In addition, the credit agreement requires the Company to obtain prior written consent from the lender on distributions on account of, or in repurchase, retirement or purchase of its capital stock or other equity interests with the exception of the following: (a) distributions of capital stock from subsidiaries to The Boston Beer Company, Inc. and Boston Beer Corporation (a subsidiary of The Boston Beer Company, Inc.), (b) repurchase from former employees of non-vested investment shares of Class A Common Stock, issued under the Employee Equity Incentive Plan, and (c) redemption of shares of Class A Common Stock as approved by the Board of Directors and payment of cash dividends to its holders of common stock. Borrowings under the credit facility may be used for working capital, capital expenditures and general corporate purposes of the Company and its subsidiaries. In the event of a default that has not been cured, the credit facility would terminate and any unpaid principal and accrued interest would become due and payable.
I. Income Taxes
Significant components of the provision for income taxes are as follows:

 	  	2015	 	  	2014	 	  	2013	 	
 	  	(in thousands)	 	
Current:	  	 	 	 	  	 	 	 	  	 	 	 	
Federal	  	$	42,391	  	  	$	30,595	  	  	$	24,090	  	
State	  	 	7,403	  	  	 	8,262	  	  	 	6,723	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Total current	  	 	49,794	  	  	 	38,857	  	  	 	30,813	  	
Deferred:	  	 	 	 	  	 	 	 	  	 	 	 	
Federal	  	 	6,279	  	  	 	15,407	  	  	 	11,116	  	
State	  	 	523	  	  	 	587	  	  	 	220	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Total deferred	  	 	6,802	  	  	 	15,994	  	  	 	11,336	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Total provision for income taxes	  	$	56,596	  	  	$	54,851	  	  	$	42,149	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
The Company’s reconciliations to statutory rates are as follows:

 	  	2015	 	 	2014	 	 	2013	 	
Statutory rate	  	 	35.0	% 	 	 	35.0	% 	 	 	35.0	% 	
State income taxes, net of federal benefit	  	 	3.4	  	 	 	4.0	  	 	 	4.1	  	
Deduction relating to U.S. production activities	  	 	(2.7	) 	 	 	(2.1	) 	 	 	(2.2	) 	
Change in uncertain tax positions	  	 	—  	  	 	 	—  	  	 	 	(0.9	) 	
Other	  	 	0.8	  	 	 	0.8	  	 	 	1.5	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	36.5	% 	 	 	37.7	% 	 	 	37.5	% 	

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Significant components of the Company’s deferred tax assets and liabilities are as follows at:

 	  	December 26,	 	  	December 27,	 	
 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Deferred tax assets:	  	 	 	 	  	 	 	 	
Accrued expenses	  	$	7,435	  	  	$	5,087	  	
Stock-based compensation expense	  	 	9,493	  	  	 	9,342	  	
Inventory	  	 	2,398	  	  	 	4,534	  	
Other	  	 	4,154	  	  	 	2,886	  	
 	  	 	 	 	  	 	 	 	
Total deferred tax assets	  	 	23,480	  	  	 	21,849	  	
Valuation allowance	  	 	(1,036	) 	  	 	(1,049	) 	
 	  	 	 	 	  	 	 	 	
Total deferred tax assets net of valuation allowance	  	 	22,444	  	  	 	20,800	  	
Deferred tax liabilities:	  	 	 	 	  	 	 	 	
Property, plant and equipment	  	 	(69,226	) 	  	 	(61,057	) 	
Prepaid expenses	  	 	(1,475	) 	  	 	(1,080	) 	
Goodwill	  	 	(761	) 	  	 	(695	) 	
 	  	 	 	 	  	 	 	 	
Total deferred tax liabilities	  	 	(71,462	) 	  	 	(62,832	) 	
 	  	 	 	 	  	 	 	 	
Net deferred tax liabilities	  	$	(49,018	) 	  	$	(42,032	) 	
 	  	 	 	 	  	 	 	 	
The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. Interest and penalties included in the provision for income taxes amounted to $0.1 million, $0.0 million, and $0.0 million for fiscal years 2015, 2014, and 2013, respectively. Accrued interest and penalties amounted to $0.4 million and $0.3 million at December 26, 2015 and December 27, 2014, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Balance at beginning of year	  	$	368	  	  	$	619	  	
Increases related to current year tax positions	  	 	44	  	  	 	40	  	
Increases related to prior year tax positions	  	 	117	  	  	 	—  	  	
Decreases related to settlements	  	 	—  	  	  	 	(270	) 	
Decreases related to lapse of statute of limitations	  	 	(43	) 	  	 	(21	) 	
 	  	 	 	 	  	 	 	 	
Balance at end of year	  	$	486	  	  	$	368	  	
 	  	 	 	 	  	 	 	 	
Included in the balance of unrecognized tax benefits at December 26, 2015 and December 27, 2014 are potential net benefits of $0.4 million and $0.3 million, respectively, that would favorably impact the effective tax rate if recognized. Unrecognized tax benefits are included in accrued expenses in the accompanying consolidated balance sheets and adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.
As of December 26, 2015, the Company’s 2013 and 2014 federal income tax returns remain subject to examination by the Internal Revenue Service (“IRS”). The Company’s state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. The Company is being audited by two states as of December 26, 2015. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits.
It is reasonably possible that the Company’s unrecognized tax benefits may increase or decrease in 2016 if there is a completion of certain income tax audits; however, the Company cannot estimate the range of such possible
 
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changes. The Company does not expect that any potential changes would have a material impact on the Company’s financial position, results of operations or cash flows.
The Company’s short term income tax receivable of $14.3 million in the accompanying consolidated balance sheets is primarily due to the  Protecting Americans from Tax Hikes Act of 2015 , being enacted after 2015 corporate estimated tax payments were due on December 15, 2015. These tax extenders allow the Company to claim accelerated tax depreciation on qualified property, plant, and equipment additions, and the research & development tax credit on the 2015 federal corporate income tax return. As of this filing date, the Company has applied with the IRS for a $12.0 million quick refund of overpayment of estimate tax, which the Company expects to receive during the first quarter 2016.
J. Commitments and Contingencies
Contractual Obligations
The Company had outstanding total non-cancelable contractual obligations of $207.5 million at December 26, 2015. These obligations are made up of hops, barley and wheat totaling $63.7 million, apples and other ingredients of $48.7 million, advertising contracts of $29.1 million, equipment and machinery of $22.7 million, glass bottles of $21.4 million, operating leases of $17.5 million, and other commitments of $4.3 million. As of December 26, 2015, projected cash outflows under contractual obligations for the remaining years under the contracts are as follows:

 	  	Payments Due by Period	 	
 	  	Total	 	  	2016	 	  	2017-2018	 	  	2019-2020	 	  	Thereafter	 	
 	  	(in thousands)	 	
Hops, barley and wheat	  	$	63,685	  	  	$	26,763	  	  	$	23,195	  	  	$	13,727	  	  	$	—  	  	
Apples and other ingredients	  	 	48,719	  	  	 	48,719	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Advertising	  	 	29,113	  	  	 	28,826	  	  	 	287	  	  	 	—  	  	  	 	—  	  	
Equipment and machinery	  	 	22,704	  	  	 	22,704	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Glass bottles	  	 	21,412	  	  	 	21,412	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Operating leases	  	 	17,523	  	  	 	2,664	  	  	 	5,618	  	  	 	4,955	  	  	 	4,286	  	
Other	  	 	4,302	  	  	 	3,940	  	  	 	362	  	  	 	—  	  	  	 	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total contractual obligations	  	$	207,458	  	  	$	155,028	  	  	$	29,462	  	  	$	18,682	  	  	$	4,286	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The Company has entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2020 and specify both the quantities and prices, denominated in Euros and U.S. Dollars, to which the Company is committed. Hops purchase commitments outstanding at December 26, 2015 totaled $50.0 million, based on the exchange rates on that date. The Company does not use forward currency exchange contracts and intends to purchase future hops using the exchange rate at the time of purchase.
Currently, the Company has entered into contracts for barley and wheat with two major suppliers. The contracts include crop years 2014 and 2015 and cover the Company’s barley, wheat, and malt requirements for part of 2016. These purchase commitments outstanding at December 26, 2015 totaled $13.7 million.
The Company sources some of its glass bottles needs pursuant to a Glass Bottle Supply Agreement with Anchor Glass Container Corporation (“Anchor”), under which Anchor is the supplier of certain glass bottles for the Company’s Cincinnati Brewery and its Pennsylvania Brewery. This agreement also establishes the terms on which Anchor may supply glass bottles to other breweries where the Company brews its beers. Under the agreement with Anchor, the Company has minimum and maximum purchase commitments that are based on Company-provided production estimates which, under normal business conditions, are expected to be fulfilled. Minimum purchase commitments under this agreement, assuming the supplier is unable to replace lost production capacity cancelled by the Company, as of December 26, 2015 totaled $21.4 million.
 
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The Company has various operating lease agreements in place for facilities and equipment as of December 26, 2015. Terms of these leases include, in some instances, scheduled rent increases, renewals, purchase options and maintenance costs, and vary by lease. These lease obligations expire at various dates through 2021. Aggregate rent expense was $3.4 million, $3.2 million, and $2.7 million in fiscal years 2015, 2014, and 2013, respectively.
For the fiscal year ended December 26, 2015, the Company brewed over 95% of its core brands volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. Pursuant to these arrangements, the Company purchases the liquid produced by those brewing companies, including the raw materials that are used in the liquid, at the time such liquid goes into fermentation. The Company is required to repurchase all unused raw materials purchased by the brewing company specifically for the Company’s beers at the brewing company’s cost upon termination of the production arrangement. The Company is also obligated to meet annual volume requirements in conjunction with certain production arrangements, which are not material to the Company’s operations.
The Company’s arrangements with other brewing companies require it to periodically purchase equipment in support of brewery operations. As of December 26, 2015, there were no significant equipment purchase requirements outstanding under existing contracts. Changes to the Company’s brewing strategy or existing production arrangements, new production relationships or the introduction of new products in the future may require the Company to purchase equipment to support the contract breweries’ operations.
Litigation
The Company is currently not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations.
K. 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.	
 
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All financial assets or liabilities that are measured at fair value on a recurring basis (at least annually) have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The assets or liabilities measured at fair value on a recurring basis are summarized in the table below (in thousands):

 	  	As of December 26, 2015	 	
 	  	Level 1	 	  	Level 2	 	  	Level 3	 	  	Total	 	
Assets:	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Cash equivalents	  	$	88,108	  	  	$	—  	  	  	$	—  	  	  	$	88,108	  	
 	 	
 	  	As of December 27, 2014	 	
 	  	Level 1	 	  	Level 2	 	  	Level 3	 	  	Total	 	
Assets:	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Cash equivalents	  	$	68,846	  	  	$	—  	  	  	$	—  	  	  	$	68,846	  	
The Company’s cash equivalents listed above represent money market mutual fund securities and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments.
Cash, certificates of deposit, receivables and payables are carried at their cost, which approximates fair value, because of their short-term nature. Financial instruments not recorded at fair value in the consolidated financial statements are summarized in the table below (in thousands):

 	  	As of December 26, 2015	 	
 	  	Level 1	 	  	Level 2	 	  	Level 3	 	  	Total	 	
Note payable	  	$	—  	  	  	$	458	  	  	$	—  	  	  	$	458	  	
 	 	
 	  	As of December 27, 2014	 	
 	  	Level 1	 	  	Level 2	 	  	Level 3	 	  	Total	 	
Note payable	  	$	—  	  	  	$	513	  	  	$	—  	  	  	$	513	  	
L. Brewery Acquisitions
On August 26, 2013, A&S acquired substantially all of the assets of the Coney Island business (“Coney Island”) and certain other assets from Shmaltz Brewing Company for an aggregate purchase price of $2.9 million. Costs related to the acquisition of Coney Island were not significant and were expensed as incurred.
The allocation of the purchase price is based on management’s judgment after evaluating several factors, including valuation assessments of tangible and intangible assets. The allocation of the purchase price is as follows (in thousands):

Property, plant and equipment	  	$	110	  	
Trade name	  	 	1,648	  	
Goodwill	  	 	1,145	  	
 	  	 	 	 	
Total assets acquired and cash paid	  	$	2,903	  	
The Company has assigned an indefinite life to the acquired trade name and the related value is included in other assets in the accompanying consolidated balance sheets. Goodwill resulting from this acquisition is expected to be amortizable for tax purposes. The operating results of Coney Island since the acquisition date are included in the Company’s consolidated financial statements.
 
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M. Common Stock and Share-Based Compensation
Class A Common Stock
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.
Class B Common Stock
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 Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of any Class B holder, and participates equally in earnings.
All distributions with respect to the Company’s capital stock are restricted by the Company’s credit agreement, with the exception of distributions of capital stock from subsidiaries to The Boston Beer Company, Inc. and Boston Beer Corporation, repurchase from former employees of non-vested investment shares of Class A Common Stock issued under the Company’s equity incentive plan, redemption of certain shares of Class A Common Stock as approved by the Board of Directors and payment of cash dividends to its holders of common stock.
Employee Stock Compensation Plan
The Company’s Employee Equity Incentive Plan (the “Equity Plan”) currently provides for the grant of discretionary options and restricted stock awards to employees, and provides for shares to be sold to employees of the Company at a discounted purchase price under its investment share program. The Equity Plan is administered by the Board of Directors of the Company, based on recommendations received from the Compensation Committee of the Board of Directors. The Compensation Committee consists of three independent directors. In determining the quantities and types of awards for grant, the Compensation Committee periodically reviews the objectives of the Company’s compensation system and takes into account the position and responsibilities of the employee being considered, the nature and value to the Company of his or her service and accomplishments, his or her present and potential contributions to the success of the Company, the value of the type of awards to the employee and such other factors as the Compensation Committee deems relevant.
Stock options and related vesting requirements and terms are granted at the Board of Directors’ discretion, but generally vest ratably over five-year periods and, with respect to certain options granted to members of senior management, based on the Company’s performance. Generally, the maximum contractual term of stock options is ten years, although the Board of Directors may grant options that exceed the ten-year term. During fiscal 2015, 2014, and 2013, the Company granted options to purchase 18,723, 7,090, and 40,925 shares, respectively, of its Class A Common Stock to employees at market price on the grant dates. Of the 2015 option grants, 14,742 shares relate to performance-based option grants and 3,981 relate to special long-term service-based retention stock options. Of the 2014 option grants, all shares relate to performance-based option grants. Of the 2013 option grants, 10,925 shares relate to performance-based option grants, 15,000 shares relate to a long-term performance-based option, and 15,000 shares relate to special long-term service-based retention stock options. The number of shares that will vest under the performance-based options depends on the level of performance targets attained on various dates.
 
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On January 1, 2016, the Company granted options to purchase an aggregate of 663,136 shares of the Company’s Class A Common Stock with a weighted average fair value of $46.80 per share, of which 574,507 shares relate to a special long-term service-based retention stock option issued to the Chief Executive Officer, 70,502 shares relate to other special long-term service-based retention stock options and 18,127 shares relate to performance-based stock options .
Restricted stock awards are also granted at the Board of Directors’ discretion. During fiscal 2015, 2014, and 2013, the Company granted 6,092, 16,432, and 11,987 shares, respectively, of restricted stock awards to certain senior managers and key employees, most of which are service-based and generally vest ratably over service periods of five years.
The Equity Plan also has an 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 at a discount from current market value of 0% to 40%, based on the employee’s tenure with the Company. Investment shares vest ratably over service periods of five years. Participants may pay for these shares either up front or through payroll deductions over an eleven-month period during the year of purchase. During fiscal 2015, 2014, and 2013, employees elected to purchase an aggregate of 8,301, 8,516, and 12,894 investment shares, respectively.
On January 1, 2016, the Company granted 8,921 shares of restricted stock awards to certain senior managers and key employees of which all shares vest ratably over service periods of five years. On January 1, 2016, employees elected to purchase 9,133 shares under the investment share program.
On December 9, 2015, the Equity Plan was amended whereby the number of shares of Class A Common Stock reserved for issuance under the plan was increased from 6.0 million to 6.7 million. As of December 26, 2015, 1.4 million shares remained available for grant. Shares reserved for issuance under cancelled employee stock options and forfeited restricted stock are returned to the reserve under the Equity Plan for future grants or purchases. The Company also purchases unvested investment shares from employees who have left the Company at the lesser of (i) the price paid for the shares when the employee acquired the shares or (ii) the fair market value of the shares as of the date next preceding the date on which the shares are called for redemption by the Company. These shares are also returned to the reserve under the Equity Plan for future grants or purchases.
Non-Employee Director Options
The Company has a stock option plan for non-employee directors of the Company (the “Non-Employee Director Plan”), pursuant to which each non-employee director of the Company is granted an option to purchase shares of the Company’s Class A Common Stock upon election or re-election to the Board of Directors. Stock options issued to non-employee directors vest upon grant and have a maximum contractual term of ten years. During fiscal 2015, 2014, and 2013 the Company granted options to purchase an aggregate of 5,640, 6,696, and 9,864 shares of the Company’s Class A Common Stock to non-employee directors, respectively.
The Company has reserved 550,000 shares of Class A Common Stock for issuance pursuant to the Non-Employee Director Plan, of which 102,933 shares were available for grant as of December 26, 2015. Cancelled non-employee directors’ stock options are returned to the reserve under the Non-Employee Director Plan for future grants.
 
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Option Activity
Information related to stock options under the Equity Plan and the Non-Employee Director Plan is summarized as follows:

 	  	Shares	 	  	Weighted-
Average
Exercise
Price	 	  	Weighted-Average
Remaining
Contractual Term
in Years	 	  	Aggregate
Intrinsic
Value
(in thousands)	 	
Outstanding at December 27, 2014	  	 	1,380,444	  	  	$	55.37	  	  	 	 	 	  	 	 	 	
Granted	  	 	24,363	  	  	 	283.22	  	  	 	 	 	  	 	 	 	
Forfeited	  	 	—  	  	  	 	—  	  	  	 	 	 	  	 	 	 	
Expired	  	 	—  	  	  	 	—  	  	  	 	 	 	  	 	 	 	
Exercised	  	 	(277,645	) 	  	 	151.28	  	  	 	 	 	  	 	 	 	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Outstanding at December 26, 2015	  	 	1,127,162	  	  	$	63.99	  	  	 	3.43	  	  	$	161,603	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Exercisable at December 26, 2015	  	 	380,543	  	  	$	62.29	  	  	 	3.17	  	  	$	54,885	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Vested and expected to vest at December 26, 2015	  	 	1,089,831	  	  	$	63.96	  	  	 	3.43	  	  	$	156,268	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Of the total options outstanding at December 26, 2015, 117,352 shares were performance-based options.
Stock Option Grants to Chief Executive Officer
On January 1, 2008, the Company granted the Chief Executive Officer an option to purchase 753,864 shares of its Class A Common Stock, which vests over a five-year period, commencing on January 1, 2014, at the rate of 20% per year. The exercise price is determined by multiplying $42.00 by the aggregate change in the DJ Wilshire 5000 Index from and after January 1, 2008 through the close of business on the trading date next preceding each date on which the option is exercised. The exercise price will not be less than $37.65 per share and the excess of the fair value of the Company’s Class A Common Stock cannot exceed $70 per share over the exercise price. At December 26, 2015 and December 27, 2014, 452,319 shares and 603,092 shares of the stock option remained outstanding, respectively. If the outstanding shares at December 26, 2015 were exercised on that date, the exercise price would have been $135.40 per share. If the outstanding shares at December 27, 2014 were exercised on that date, the exercise price would have been $225.74 per share. Reflected in the table above is the minimum exercise price of $37.65. The Company is accounting for this award as a market-based award which was valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome. Under the Monte Carlo Simulation pricing model, the Company calculated the weighted average fair value per share to be $8.41, and recorded stock-based compensation expense of $0.5, $0.7, and $1.0, million related to this option in the fiscal 2015, 2014, and 2013, respectively.
On January 1, 2016, the Company granted the Chief Executive Officer an option to purchase 574,507 shares of its Class A Common Stock, which vests over a five-year period, commencing on January 1, 2019, at the rate of 20% per year. The exercise price is determined by multiplying $201.91 by the aggregate percentage change in the DJ Wilshire 5000 Index from and after January 1, 2016 through the close of business on the trading date next preceding each date on which the option is exercised, plus an additional 1.5 percentage points per annum, prorated for partial years. The exercise price will not be less than $201.91 per share and the excess of the fair value of the Company’s Class A Common Stock cannot exceed $150 per share over the exercise price. The Company is accounting for this award as a market-based award which was valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome. Under the Monte Carlo Simulation pricing model, the Company calculated the weighted average fair value per share to be $39.16.
 
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Stock-Based Compensation
The following table provides information regarding stock-based compensation expense included in operating expenses in the accompanying consolidated statements of comprehensive income:

 	  	2015	 	  	2014	 	  	2013	 	
 	  	(in thousands)	 	
Amounts included in advertising, promotional and selling expenses	  	$	2,943	  	  	$	3,342	  	  	$	3,054	  	
Amounts included in general and administrative expenses	  	 	3,722	  	  	 	3,515	  	  	 	4,264	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Total stock-based compensation expense	  	$	6,665	  	  	$	6,857	  	  	$	7,318	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Amounts related to performance-based stock awards included in total stock-based compensation expense	  	$	831	  	  	$	1,378	  	  	$	1,401	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
As permitted by ASC 718, the Company uses a lattice model, such as the binomial option-pricing model, to estimate the fair values of stock options. The Company believes that the Black-Scholes option-pricing model is less effective than the binomial option-pricing model in valuing long-term options, as it assumes that volatility and interest rates are constant over the life of the option. In addition, the Company believes that the binomial option-pricing model more accurately reflects the fair value of its stock awards, as it takes into account historical employee exercise patterns based on changes in the Company’s stock price and other relevant variables. The weighted-average fair value of stock options granted during 2015, 2014, and 2013 was $128.54, $106.81 and $60.99 per share, respectively, as calculated using a binomial option-pricing model.
Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:

 	  	2015	 	  	2014	 	  	2013	 	
Expected volatility	  	 	34.2%	  	  	 	34.3%	  	  	 	33.9%	  	
Risk-free interest rate	  	 	2.16%	  	  	 	2.83%	  	  	 	1.85%	  	
Expected dividends	  	 	0%	  	  	 	0%	  	  	 	0%	  	
Exercise factor	  	 	3.0 times	  	  	 	3.4 times	  	  	 	2.8 times	  	
Discount for post-vesting restrictions	  	 	0.0%	  	  	 	0.0%	  	  	 	0.0%	  	
Expected volatility is based on the Company’s historical realized volatility. The risk-free interest rate represents the implied yields available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option when using the binomial option-pricing model. Expected dividend yield is 0% because the Company has not paid dividends in the past and currently has no known intention to do so in the future. Exercise factor and discount for post-vesting restrictions are based on the Company’s historical experience.
Fair value of restricted stock awards is based on the Company’s traded stock price on the date of the grants. Fair value of investment shares is calculated using the binomial option-pricing model.
The Company uses the straight-line attribution method in recognizing stock-based compensation expense for awards that vest based on service conditions. For awards that vest subject to performance conditions, compensation expense is recognized ratably for each tranche of the award over the performance period if it is probable that performance conditions will be met.
Under ASC 718, compensation expense is recognized less estimated forfeitures. Because most of the Company’s equity awards vest on January 1 st  each year, the Company recognized stock-based compensation expense related to those awards, net of actual forfeitures. For equity awards that do not vest on January 1 st , the estimated forfeiture rate used was 5.0%. The forfeiture rate was based upon historical experience and the Company periodically reviews this rate to ensure proper projection of future forfeitures.
 
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The total fair value of options vested during 2015, 2014, and 2013 was $4.1 million, $3.8 million, and $4.7 million, respectively. The aggregate intrinsic value of stock options exercised during 2015, 2014, and 2013 was $37.7 million, $45.8 million, and $12.5 million, respectively.
Based on equity awards outstanding as of December 26, 2015, there is $10.0 million of unrecognized compensation costs, net of estimated forfeitures, related to unvested share-based compensation arrangements that are expected to vest. Such costs are expected to be recognized over a weighted-average period of 2.2 years. The following table summarizes the estimated future annual stock-based compensation expense related to share-based arrangements existing as of December 26, 2015 that are expected to vest (in thousands):

2016	  	$	3,695	  	
2017	  	 	2,780	  	
2018	  	 	2,030	  	
2019	  	 	1,237	  	
2020	  	 	130	  	
Thereafter	  	 	89	  	
 	  	 	 	 	
Total	  	$	9,961	  	
 	  	 	 	 	
Non-Vested Shares Activity
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 27, 2014	  	 	73,098	  	  	$	116.02	  	
Granted	  	 	14,393	  	  	 	195.16	  	
Vested	  	 	(25,732	) 	  	 	79.44	  	
Forfeited	  	 	(837	) 	  	 	121.04	  	
 	  	 	 	 	  	 	 	 	
Non-vested at December 26, 2015	  	 	60,922	  	  	$	150.03	  	
 	  	 	 	 	  	 	 	 	
Stock Repurchase Program
On February 10, 2016, the Board of Directors of the Company increased the aggregate expenditure limit for the Company’s Stock Repurchase Program by $50.0 million, thereby increasing the limit from $525.0 million to $575.0 million.
As of December 26, 2015, the Company has repurchased a cumulative total of approximately 11.5 million shares of its Class A Common Stock for an aggregate purchase price of approximately $446.1 million as follows:

 	  	Number of
Shares	 	  	Aggregate Purchase
Price	 	
 	  	 	 	  	(in thousands)	 	
Repurchased at December 29, 2012	  	 	10,696,731	  	  	 	269,943	  	
2013 repurchases	  	 	195,728	  	  	 	29,585	  	
 	  	 	 	 	  	 	 	 	
Repurchased at December 28, 2013	  	 	10,892,459	  	  	 	299,528	  	
2014 repurchases	  	 	29,474	  	  	 	7,859	  	
 	  	 	 	 	  	 	 	 	
Repurchased at December 27, 2014	  	 	10,921,933	  	  	 	307,387	  	
2015 repurchases	  	 	616,747	  	  	 	138,705	  	
 	  	 	 	 	  	 	 	 	
Repurchased at December 26, 2015	  	 	11,538,680	  	  	$	446,092	  	

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N. Employee Retirement Plans and Post-Retirement Benefit Plan
The Company has one retirement plan covering substantially all non-union employees; two retirement plans, one of which covers substantially all union employees, and the other of which covers employees of a specific union, and post-retirement medical benefits covering substantially all union employees.
Non-Union Plans
The Boston Beer Company 401(k) Plan (the “Boston Beer 401(k) Plan”), which was established by the Company in 1993, is a Company-sponsored defined contribution plan that covers a majority of the Company’s non-union employees who are employed by Boston Beer Corporation, Samuel Adams Brewery Company, Ltd., Samuel Adams Pennsylvania Brewery Company or A&S Brewing Collaborative LLC. All non-union employees of these entities are eligible to participate in the plan on the first day of the first month after commencing employment or, if later, reaching age 21. Participants may make voluntary contributions up to 60% of their annual compensation, subject to IRS limitations. After the sixth month of employment, the Company matches each participant’s contribution. A maximum of 6% of compensation is taken into account in determining the amount of the match. The Company matches 100% of the first $1,000 of the eligible compensation participants contribute. Thereafter, the Company matches 50% of the eligible contribution. The Company’s contributions to the Boston Beer 401(k) Plan amounted to $3.0 million and $2.8 million in fiscal years 2015 and 2014, respectively. The basic annual administrative fee for the Boston Beer 401(k) Plan is paid by the Plan’s investment fund revenue. In addition, per the Service Provider Payment Agreement, up to a maximum of two basis points multiplied by the total amount of assets under the Plan per year is available for paying eligible Plan expenses. The Company is responsible for the payment of any additional fees related to the management of the Boston Beer 401(k) Plan. Such fees are not material to the Company.
Union Plans
The defined contribution plan, the Samuel Adams Brewery Company, Ltd. 401(k) Plan for Represented Employees (the “SABC 401(k) Plan”), is a Company-sponsored plan. It was established in 1997 and is available to all union employees upon commencement of employment or, if later, attaining age 21. Participants may make voluntary contributions up to 60% of their annual compensation to the SABC 401(k) Plan, subject to IRS limitations. Effective July 1, 2007, the Company commenced making a non-elective contribution for eligible employees who are members of what is now the Service Employees’ International Union, Local 1, Firemen & Oilers Division (“Local #1”). Effective January 1, 2012, the Company commenced making a non-elective contribution for eligible employees who are members of The International Union of Operating Engineers, Local #20 (“Local #20”). Company contributions for fiscal 2015 and 2014 were insignificant. The basic annual administrative fee for the SABC 401(k) Plan is paid by the Plan’s investment fund revenue. In addition, per the Service Provider Payment Agreement up to a maximum of two basis points multiplied by the total amount of assets under the Plan per year is available for paying eligible Plan expenses. The Company is responsible for the payment of any additional fees related to the management of the SABC 401(k) Plan. Such fees are not material to the Company.
The defined benefit plan, the Samuel Adams Brewery Company, Ltd. Local Union No. 1199 Pension Plan (the “Local 1199 Pension Plan”), is a Company-sponsored pension plan. It was established in 1991 and is open to all union employees who are covered by the Company’s collective bargaining agreement with Teamsters Local Union No. 1199 (“Local Union #1199”) and who have completed 12 consecutive months of employment with at least 750 hours worked. The defined benefit is determined based on years of service since July 1991. The Company made contributions of $188,000 and $162,000 in 2015 and 2014 respectively. At December 26, 2015 and December 27, 2014, the unfunded projected pension benefits were $1.6 million and $1.7 million, respectively.
The Company provides a supplement to eligible retirees from Local #20, Local #1 and Local Union #1199 to assist them with the cost of Medicare gap coverage after their retirement on account of age or permanent
 
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disability. To qualify for this benefit (collectively, the “Retiree Medical Plan”), an employee must have worked for at least 20 years for the Company or its predecessor at the Company’s Cincinnati Brewery, must have been enrolled in the Company’s comprehensive medical plan for at least 5 years before retirement and, in the case of retirees from Local #20, for at least 7 of the last 10 years of their employment, and must be eligible for Medicare benefits under the Social Security Act. The accumulated post-retirement benefit obligation was determined using a discount rate of 4.5% at December 26, 2015 and 4.0% at December 27, 2014 respectively, and a 2.5% health care cost increase based on the Cincinnati Consumer Price Index for the years 2015, 2014, and 2013. The effect of a 1% point increase and the effect of a 1% point decrease in the assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic post-retirement health care benefit costs and the accumulated post-retirement benefit obligation for health care benefits would not be significant.
In addition, the comprehensive medical plans offered to currently employed members of Local #20 and Local Union #1199 remain available to them should they retire after reaching age 57 (and before reaching age 65 in the case of a member of Local #20) with at least 20 years of service (if a Local #20 member) or 10 years of employment (if a Local Union #1199 member) with the Company or its predecessor at the Company’s Cincinnati Brewery. These eligible retirees may choose to continue to be covered under the Company’s comprehensive medical plan, subject to certain modifications applicable to members of Local Union #1199, until they reach the age when they are eligible for Medicare under the Social Security Act or (in the case of a Local #20 member) coverage under a comparable State health benefit plan. Eligible retirees pay 100% of the cost of the coverage.
The funded status of the Local 1199 Pension Plan and the Retiree Medical Plan are as follows:

 	  	Local 1199 Pension Plan	 	  	Retiree Medical Plan	 	
 	  	December 26,	 	  	December 27,	 	  	December 26,	 	  	December 27,	 	
 	  	2015	 	  	2014	 	  	2015	 	  	2014	 	
 	  	(in thousands)	 	
Fair value of plan assets at end of fiscal year	  	$	2,471	  	  	$	2,402	  	  	$	—  	  	  	$	—  	  	
Benefit obligation at end of fiscal year	  	 	4,105	  	  	 	4,092	  	  	 	671	  	  	 	720	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Unfunded Status	  	$	(1,634	) 	  	$	(1,690	) 	  	$	(671	) 	  	$	(720	) 	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The Local 1199 Plan invests in a family of funds that are designed to minimize excessive short-term risk and focus on consistent, competitive long-term performance, consistent with the funds’ investment objectives. The fund-specific objectives vary and include maximizing long-term returns both before and after taxes, maximizing total return from capital appreciation plus income and funds that invest in common stock of companies that cover a broad range of industries. The plan’s investments are considered category1 assets in the fair value hierarchy and the fair values were determined by reference to period end quoted market prices.
The basis of the long-term rate of return assumption of 6.5% reflects the Local 1199 Plan’s current targeted asset mix of approximately 35% debt securities and 65% equity securities with assumed average annual returns of approximately 3% to 6% for debt securities and 8% to 12% for equity securities. It is assumed that the Local 1199 Plan’s investment portfolio will be adjusted periodically to maintain the targeted ratios of debt securities and equity securities. Additional consideration is given to the plan’s historical returns as well as future long-range projections of investment returns for each asset category. The assumed discount rate in estimating the pension obligation was 4.5% and 4.0% at December 26, 2015 and December 27, 2014, respectively.
The Local 1199 Plan’s weighted-average asset allocations at the measurement dates by asset category are as follows:

Asset Category	  	December 26,
2015	 	 	December 27,
2014	 	
Equity securities	  	 	67	% 	 	 	66	% 	
Debt securities	  	 	33	  	 	 	34	  	
 	  	 	 	 	 	 	 	 	
Total	  	 	100	% 	 	 	100	% 	

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O. Net Income per Share
Net Income per Common Share — Basic
The following table sets forth the computation of basic net income per share using the two-class method:

 	  	December 26,	 	  	December 27,	 	  	December 28,	 	
 	  	2015	 	  	2014	 	  	2013	 	
 	  	(in thousands, except per share data)	 	
Net Income	  	$	98,414	  	  	$	90,743	  	  	$	70,392	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Allocation of net income for basic:	  	 	 	 	  	 	 	 	  	 	 	 	
Class A Common Stock	  	$	71,798	  	  	$	64,027	  	  	$	47,847	  	
Class B Common Stock	  	 	26,154	  	  	 	26,207	  	  	 	22,035	  	
Unvested participating shares	  	 	462	  	  	 	509	  	  	 	510	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
 	  	$	98,414	  	  	$	90,743	  	  	$	70,392	  	
Weighted average number of shares for basic:	  	 	 	 	  	 	 	 	  	 	 	 	
Class A Common Stock	  	 	9,619	  	  	 	9,202	  	  	 	8,741	  	
Class B Common Stock*	  	 	3,504	  	  	 	3,766	  	  	 	4,025	  	
Unvested participating shares	  	 	62	  	  	 	73	  	  	 	93	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
 	  	 	13,185	  	  	 	13,041	  	  	 	12,859	  	
Net income per share for basic:	  	 	 	 	  	 	 	 	  	 	 	 	
Class A Common Stock	  	$	7.46	  	  	$	6.96	  	  	$	5.47	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Class B Common Stock	  	$	7.46	  	  	$	6.96	  	  	$	5.47	  	

*	Change in Class B Common Stock resulted from the conversion of 150,000 shares to Class A Common Stock on May 6, 2015 and 100,000 shares to Class A Common Stock on October 26, 2015, with the 52-week number of shares reflecting the weighted average for the period.	
Net Income per Common Share — Diluted
The Company calculates diluted net 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 or converted.
The following tables set forth the computation of diluted net income per share, assuming the conversion of all Class B Common Stock into Class A Common Stock and using the two-class method for unvested participating shares:

 	  	Fifty-two weeks ended December 26, 2015	 	
 	  	Earnings to	 	  	 	 	  	 	 	
 	  	Common	 	  	 	 	  	 	 	
 	  	Shareholders	 	  	Common Shares	 	  	EPS	 	
 	  	(in thousands, except per share
data)	 	  	 	 	
As reported — basic	  	$	71,798	  	  	 	9,619	  	  	$	7.46	  	
Add: effect of dilutive potential common shares Share-based awards	  	 	—  	  	  	 	397	  	  	 	 	 	
Class B Common Stock	  	 	26,154	  	  	 	3,504	  	  	 	 	 	
Net effect of unvested participating shares	  	 	14	  	  	 	 	 	  	 	 	 	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Net income per common share — diluted	  	$	97,966	  	  	 	13,520	  	  	$	7.25	  	

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 	  	Fifty-two weeks ended December 27, 2014	 	
 	  	Earnings to
Common
Shareholders	 	  	Common
Shares	 	  	EPS	 	
 	  	(in thousands, except per share data)	 	  	 	 	
As reported — basic	  	$	64,027	  	  	 	9,202	  	  	$	6.96	  	
Add: effect of dilutive potential common shares Share-based awards	  	 	—  	  	  	 	516	  	  	 	 	 	
Class B Common Stock	  	 	26,207	  	  	 	3,766	  	  	 	 	 	
Net effect of unvested participating shares	  	 	19	  	  	 	—  	  	  	 	 	 	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Net income per common share — diluted	  	$	90,253	  	  	 	13,484	  	  	$	6.69	  	

 	  	Fifty-two weeks ended December 28, 2013	 	
 	  	Earnings to
Common
Shareholders	 	  	Common
Shares	 	  	EPS	 	
 	  	(in thousands, except per share data)	 	  	 	 	
As reported — basic	  	$	47,847	  	  	 	8,741	  	  	$	5.47	  	
Add: effect of dilutive potential common shares Share-based awards	  	 	—  	  	  	 	738	  	  	 	 	 	
Class B Common Stock	  	 	22,035	  	  	 	4,025	  	  	 	 	 	
Net effect of unvested participating shares	  	 	28	  	  	 	—  	  	  	 	 	 	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Net income per common share — diluted	  	$	69,910	  	  	 	13,504	  	  	$	5.18	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Basic net income per common share for each share of Class A Common Stock and Class B Common Stock is $7.46, $6.96 and $5.47 for the fiscal years 2015, 2014, and 2013, respectively, as each share of Class A and Class B participates equally in earnings. Shares of Class B are convertible at any time into shares of Class A on a one-for-one basis at the option of the stockholder.
Weighted average stock options to purchase 16,000, 11,000, and 15,000 shares of Class A Common Stock were outstanding during fiscal 2015, 2014, and 2013, respectively, but not included in computing diluted income per share because their effects were anti-dilutive. Additionally, performance-based stock options to purchase 15,000, 30,000, and 40,000 shares of Class A Common Stock were outstanding during fiscal 2015, 2014, and 2013, respectively, but not included in computing dilutive income per share because the performance criteria of these stock options were not met as of December 26, 2015, December 27, 2014 and December 28, 2013, respectively.
 
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P. Accumulated Other Comprehensive (Loss) Income
Accumulated other comprehensive (loss) income represents amounts of unrecognized actuarial gains or losses related to the Company sponsored defined benefit pension plan and post-retirement medical plan, net of tax effect and currency translation adjustments. Changes in accumulated other comprehensive loss represent actuarial losses or gains, net of tax effect, recognized as components of net periodic benefit costs and currency translation adjustments. The following table details the changes in accumulated other comprehensive (loss) income for 2015, 2014, and 2013 (in thousands):

 	  	Accumulated Other
Comprehensive (Loss)
Income	 	
Balance at December 29, 2012	  	$	(883	) 	
Deferred pension and other post-retirement benefit costs, net of taxes of ($261)	  	 	407	  	
Amortization of Deferred benefit costs, net of tax ($35)	  	 	59	  	
 	  	 	 	 	
Balance at December 28, 2013	  	$	(417	) 	
Deferred pension and other post-retirement benefit costs, net of taxes of $466	  	 	(734	) 	
Amortization of Deferred benefit costs, net of tax ($11)	  	 	18	  	
 	  	 	 	 	
Balance at December 27, 2014	  	$	(1,133	) 	
Deferred pension and other post-retirement benefit costs, net of taxes of ($99)	  	 	130	  	
Amortization of Deferred benefit costs, net of tax ($43)	  	 	74	  	
Currency translation adjustment	  	 	(22	) 	
 	  	 	 	 	
Balance at December 26, 2015	  	$	(951	) 	
Q. Valuation and Qualifying Accounts
The Company maintains reserves against accounts receivable for doubtful accounts and inventory for obsolete and slow-moving inventory. The Company also maintains reserves against accounts receivable for distributor promotional allowances. In addition, the Company maintains a reserve for estimated returns of stale beer, which is included in accrued expenses.

Allowance for Doubtful Accounts	  	Balance at
Beginning of
Period	 	  	Net Provision
(Recovery)	 	  	Amounts
Charged Against
Reserves	 	  	Balance at
End of Period	 	
 	  	(In thousands)	 	
2015	  	$	144	  	  	$	165	  	  	$	(65	) 	  	$	244	  	
2014	  	$	160	  	  	$	(16	) 	  	$	—  	  	  	$	144	  	
2013	  	$	125	  	  	$	35	  	  	$	—  	  	  	$	160	  	
 	 	 	 	 	
Discount Accrual	  	Balance at
Beginning of
Period	 	  	Net Provision
(Recovery)	 	  	Amounts
Charged Against
Reserves	 	  	Balance at
End of Period	 	
 	  	(In thousands)	 	
2015	  	$	3,006	  	  	$	33,204	  	  	$	(33,397	) 	  	$	2,813	  	
2014	  	$	2,602	  	  	$	28,448	  	  	$	(28,044	) 	  	$	3,006	  	
2013	  	$	2,315	  	  	$	23,132	  	  	$	(22,845	) 	  	$	2,602	  	
 
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Inventory Obsolescence Reserve	  	Balance at
Beginning of
Period	 	  	Net Provision
(Recovery)	 	  	Amounts
Charged Against
Reserves	 	  	Balance at
End of Period	 	
 	  	(In thousands)	 	
2015	  	$	1,328	  	  	$	4,045	  	  	$	(3,848	) 	  	$	1,525	  	
2014	  	$	1,616	  	  	$	6,130	  	  	$	(6,418	) 	  	$	1,328	  	
2013	  	$	1,072	  	  	$	4,884	  	  	$	(4,340	) 	  	$	1,616	  	
 	 	 	 	 	
Stale Beer Reserve	  	Balance at
Beginning of
Period	 	  	Net Provision
(Recovery)	 	  	Amounts
Charged Against
Reserves	 	  	Balance at
End of Period	 	
 	  	(In thousands)	 	
2015	  	$	2,422	  	  	$	7,780	  	  	$	(6,948	) 	  	$	3,254	  	
2014	  	$	1,754	  	  	$	5,648	  	  	$	(4,980	) 	  	$	2,422	  	
2013	  	$	1,859	  	  	$	3,432	  	  	$	(3,537	) 	  	$	1,754	  	
R. Subsequent Events
The Company evaluated subsequent events occurring after the balance sheet date, December 26, 2015, and concluded that there was no event of which management was aware that occurred after the balance sheet date that would require any adjustment to or disclosure in the accompanying consolidated financial statements except for the stock options and awards granted on January 1, 2016 and the increased expenditure limit for the Company’s Stock Repurchase Program on February 10, 2016 as disclosed in Note M.
S. Quarterly Results (Unaudited)
The Company’s fiscal quarters are consistently determined year to year and generally consist of 13 weeks, except in those fiscal years in which there are fifty-three weeks where the last fiscal quarters then consist of 14 weeks. In management’s opinion, the following unaudited information includes all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future quarters.

 	 	For Quarters Ended	 	
 	 	December 26,
2015	 	 	September 26,
2015	 	 	June 27,
2015	 	 	March 28,
2015	 	 	December 27,
2014	 	 	September 27,
2014	 	 	June 28,
2014	 	 	March 29,
2014	 	
 	 	(13 weeks)	 	 	(13 weeks)	 	 	(13 weeks)	 	 	(13 weeks)	 	 	(13 weeks)	 	 	(13 weeks)	 	 	(13 weeks)	 	 	(13 weeks)	 	
 	 	(In thousands, except per share data)	 	
Barrels sold	 	 	958	  	 	 	1,284	  	 	 	1,125	  	 	 	889	  	 	 	983	  	 	 	1,229	  	 	 	1,054	  	 	 	838	  	
Net revenue	 	$	215,133	  	 	$	293,094	  	 	$	252,204	  	 	$	199,503	  	 	$	217,817	  	 	$	269,734	  	 	$	231,611	  	 	$	183,845	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	108,767	  	 	 	157,010	  	 	 	136,225	  	 	 	99,615	  	 	 	108,400	  	 	 	142,996	  	 	 	123,096	  	 	 	90,519	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	26,338	  	 	 	60,879	  	 	 	46,819	  	 	 	22,138	  	 	 	32,036	  	 	 	60,647	  	 	 	40,493	  	 	 	13,391	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	16,115	  	 	$	38,624	  	 	$	29,932	  	 	$	13,743	  	 	$	19,074	  	 	$	37,926	  	 	$	25,428	  	 	$	8,315	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share — basic	 	$	1.25	  	 	$	2.93	  	 	$	2.24	  	 	$	1.04	  	 	$	1.46	  	 	$	2.91	  	 	$	1.95	  	 	$	0.64	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share — diluted	 	$	1.21	  	 	$	2.85	  	 	$	2.18	  	 	$	1.00	  	 	$	1.40	  	 	$	2.79	  	 	$	1.88	  	 	$	0.62	  	

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	
None.
 
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Item 9A.	Controls and Procedures	
(a) Evaluation of disclosure controls and procedures
The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in alerting them in a timely manner to material information required to be disclosed in the Company’s reports filed with or submitted to the SEC.
(b) Management’s Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 26, 2015. In making this assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in  Internal Control—Integrated Framework (2013 framework) . Based on its assessment, the Company believes that, as of December 26, 2015, the Company’s internal control over financial reporting is effective based on those criteria.
The effectiveness of the Company’s internal control over financial reporting as of December 26, 2015 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of The Boston Beer Company, Inc.
Boston, Massachusetts
We have audited the internal control over financial reporting of The Boston Beer Company, Inc. and subsidiaries (the “Company”), as of December 26, 2015, based on criteria established in  Internal Control — Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 26, 2015, based on the criteria established in  Internal Control — Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 26, 2015 of the Company and our report dated February 18, 2016 expressed an unqualified opinion on those financial statements.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 18, 2016
 
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(c) Changes in internal control over financial reporting
No changes in the Company’s internal control over financial reporting occurred during the quarter ended December 26, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
Item 9B.	Other Information	
None.
PART III.
 
Item 10.	Directors, Executive Officers and Corporate Governance	
In December 2002, the Board of Directors of the Company adopted a (i) Code of Business Conduct and Ethics that applies to its Chief Executive Officer and its Chief Financial Officer, and (ii) Corporate Governance Guidelines. The Code of Business Conduct and Ethics was amended effective August 1, 2007 to provide for a third-party whistleblower hotline. These, as well as the charters of each of the Board Committees, are posted on the Company’s website,  www.bostonbeer.com , and are available in print to any shareholder who requests them. Such requests should be directed to the Investor Relations Department, The Boston Beer Company, Inc., One Design Center Place, Suite 850, Boston, MA 02210. The Company intends to disclose any amendment to, or waiver from, a provision of its code of ethics that applies to the Company’s Chief Executive Officer or Chief Financial Officer and that relates to any element of the Code of Ethics definition enumerated in Item 406 of Regulation S-K by posting such information on the Company’s website.
The information required by Item 10 is hereby incorporated by reference from the registrant’s definitive Proxy Statement for the 2016 Annual Meeting to be held on May 25, 2016.
 
Item 11.	Executive Compensation	
The Information required by Item 11 is hereby incorporated by reference from the registrant’s definitive Proxy Statement for the 2016 Annual Meeting to be held on May 25, 2016.
 
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	
Security Ownership
The information required by Item 12 with respect to security ownership of certain beneficial owners and management is hereby incorporated by reference from the registrant’s definitive Proxy Statement for the 2016 Annual Meeting to be held on May 25, 2016.
Related Stockholder Matters
EQUITY COMPENSATION PLAN INFORMATION

Plan Category	  	Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights	 	  	Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights	 	  	Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans	 	
Equity Compensation Plans	  	 	 	 	  	 	 	 	  	 	 	 	
Approved by Security Holders	  	 	1,127,162	  	  	$	63.99	  	  	 	1,536,583	  	
Equity Compensation Plans Not	  	 	N/A	  	  	 	N/A	  	  	 	N/A	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
Approved by Security Holders	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	 	1,127,162	  	  	$	63.99	  	  	 	1,536,583	  	

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Item 13.	Certain Relationships and Related Transactions, and Director Independence	
The information required by Item 13 is hereby incorporated by reference from the registrant’s definitive Proxy Statement for the 2016 Annual Meeting to be held on May 25, 2016.
 
Item 14.	Principal Accountant Fees and Services	
The information required by Item 14 is hereby incorporated by reference from the registrant’s definitive Proxy Statement for the 2016 Annual Meeting to be held on May  25, 2016.
PART IV.
 
Item 15.	Exhibits and Financial Statement Schedules	
(a)1. Financial Statements.
The following financial statements are filed as a part of this report:

 	  	Page	 	
Report of Independent Registered Public Accounting Firm	  	 	37	  	
Consolidated Financial Statements:	  	 	 	 	
Consolidated Balance Sheets as of December 26, 2015 and December 27, 2014	  	 	39	  	
Consolidated Statements of Comprehensive Income for the years ended December 26, 2015, December  27, 2014 and December 28, 2013	  	 	40	  	
Consolidated Statements of Stockholders’ Equity for the years ended December 26, 2015, December  27, 2014 and December 28, 2013	  	 	41	  	
Consolidated Statements of Cash Flows for the years ended December 26, 2015, December  27, 2014 and December 28, 2013	  	 	42	  	
Notes to the Consolidated Financial Statements	  	 	43	  	
(a)2. Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission have been omitted because they are inapplicable or the required information is shown in the consolidated financial statements, or notes thereto, included herein.
 
(b)	Exhibits	
The following is a list of exhibits filed as part of this Form 10-K:

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).	
 	 	
      4.1	  	Form of Class A Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement No. 33-96164).	
 	 	
    10.1	  	Deferred Compensation Agreement between the Partnership and Alfred W. Rossow, Jr., effective December 1, 1992 (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement No. 33-96162).	
 
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    10.2	 	Stockholder Rights Agreement, dated as of December, 1995, among The Boston Beer Company, Inc. and the initial Stockholders (incorporated by reference to the Company’s Form 10-K, filed on April 1, 1996).	
 	 	
    10.3	 	Second Amended and Restated Credit Agreement between The Boston Beer Company, Inc. and Boston Beer Corporation, as Borrowers, and Bank of America, N.A. (successor-in-merger to Fleet National Bank), effective as of July 1, 2002 (incorporated by reference to the Company’s 10-Q, filed on August 13, 2002).	
 	 	
    10.4	 	Letter Agreement dated August 4, 2004 amending the Second Amended and Restated Credit Agreement between Bank of America, N.A. (successor-in-merger to Fleet National Bank) and The Boston Beer Company, Inc. and Boston Beer Corporation (incorporated by reference to the Company’s 10-Q, filed on November 4, 2004).	
 	 	
    10.5	 	Amendment dated February 27, 2007 to the Second Amended and Restated Credit Agreement between Bank of America, N.A., successor-in-merger to Fleet National Bank, and The Boston Beer Company, Inc. and Boston Beer Corporation (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 15, 2007).	
 	 	
    10.6	 	Amendment to Credit Agreement by and among the Company and Boston Beer Corporation, as borrowers, and Bank of America, N.A., as the lender, effective as of March 10, 2008 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2008).	
 	 	
  +10.7	 	Production Agreement between Samuel Adams Brewery Company, Ltd. and Brown-Forman Distillery Company, a division of Brown-Forman Corporation, effective as of April 11, 2005 (incorporated by reference to the Company’s 10-Q filed on May 5, 2005).	
 	 	
  +10.8	 	Brewing Services Agreement between CBC Latrobe Acquisition, LLC and Boston Beer Corporation dated March 28, 2007 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2007).	
 	 	
  +10.9	 	Office Lease Agreement between Boston Design Center LLC and Boston Beer Corporation dated March 24, 2006 (“Office Lease Agreement”) (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2006).	
 	 	
*+10.10	 	Sixth Amendment to Lease Agreement dated June 3, 2015.	
 	 	
    10.11	 	Stock Option Agreement between the Company and Martin F. Roper entered into effective as of January 1, 2008 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2008).	
 	 	
    10.12	 	The 1996 Stock Option Plan for Non-Employee Directors, originally adopted in 1996 and amended and restated on October 19, 2004, as amended on October 30, 2009, effective as of January 1, 2010 (incorporated by reference to the Company’s Post-Effective Amendment to its Registration Statement on Form S-8 filed on November 28, 2009); amended and restated on December 12, 2012, effective as of January 1, 2012.	
 	 	
    10.13	 	Amendment dated January 24, 2014 to the Second Amended and Restated Credit Agreement between Bank of America, N.A., successor-in-merger to Fleet National Bank, and The Boston Beer Company, Inc. and Boston Beer Corporation (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 28, 2014).	
 	 	
  *10.14	 	The Boston Beer Company, Inc. Employee Equity Incentive Plan, as amended on February 23, 1996, December 20, 1997, December 19, 2005, December 19, 2006, December 21, 2007, October 30, 2009, October8, 2013, October 8, 2014, and December 9, 2015.	
 	 	
  *10.15	 	Stock Option Agreement between the Company and Martin F. Roper effective as of January 1, 2016.	
 
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  *10.16	 	Offer Letter to Frank H. Smalla, Senior Vice President, Finance dated December 15, 2015.	
 	 	
  *10.17	 	Offer Letter to Quincy B. Troupe, Senior Vice President, Supply Chain dated December 18, 2015.	
 	 	
  *11.1	 	The information required by exhibit 11 has been included in Note O of the notes to the consolidated financial statements.	
 	 	
  *21.5	 	List of subsidiaries of The Boston Beer Company, Inc. effective as of December 26, 2015.	
 	 	
  *23.1	 	Consent of Deloitte & Touche LLP, an Independent Registered Public Accounting Firm.	
 	 	
  *23.2	 	Consent of Ernst & Young LLP, an Independent Registered Public Accounting Firm.	
 	 	
  *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	 	XBRL Instance Document	
 	 	
  *101.SCH	 	XBRL Taxonomy Extension Schema Document	
 	 	
  *101.CAL	 	XBRL Taxonomy Calculation Linkbase Document	
 	 	
  *101.LAB	 	XBRL Label Linkbase Document	
 	 	
  *101.PRE	 	XBRL Taxonomy Presentation Linkbase Document	
 	 	
  *101.DEF	 	XBRL Definition Linkbase Document	
 
*	Filed with this report.	
+	Portions of this Exhibit were omitted pursuant to an application for an order declaring confidential treatment filed with and approved by the Securities and Exchange Commission.	
 
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 18 th  day of February 2016.

THE BOSTON BEER COMPANY, INC.	
 	
/s/ Martin F. Roper	
Martin F. Roper	
President and Chief Executive Officer (principal executive officer)	
Pursuant to the requirements of the Securities and Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and on the dates indicated have signed this report below.

Signature	  	Title	
 	 	
/s/ Martin F. Roper
Martin F. Roper	  	President, Chief Executive Officer (principal executive officer) and Director	
 	 	
/s/ William F. Urich
William F. Urich	  	Chief Financial Officer and Treasurer (principal financial officer)	
 	 	
/s/ Matthew D. Murphy
Matthew D. Murphy	  	Chief Accounting Officer (principal accounting officer)	
 	 	
/s/ David A. Burwick
David A. Burwick	  	Director	
 	 	
/s/ Cynthia A. Fisher
Cynthia A. Fisher	  	Director	
 	 	
/s/ C. James Koch
C. James Koch	  	Chairman and Director	
 	 	
/s/ Jay Margolis
Jay Margolis	  	Director	
 	 	
/s/ Gregg A. Tanner
Gregg A. Tanner	  	Director	
 	 	
/s/ Jean-Michel Valette
Jean-Michel Valette	  	Director	
 
74

[ *] DENOTES EXPURGATED INFORMATION	  	Exhibit 10.10	
SIXTH AMENDMENT TO LEASE AGREEMENT
This SIXTH AMENDMENT TO LEASE AGREEMENT (the “Amendment”) made as of the 3rd day of June, 2015 by and between JAMESTOWN 1 DESIGN PLACE, L.P., a Delaware limited partnership, with a business address c/o Jamestown, Ponce City Market, 675 Ponce de Leon Avenue, 7th Floor, Atlanta, Georgia 30308 (“ Landlord ”), and BOSTON BEER CORPORATION, a Massachusetts corporation, with a business address of One Design Place, Boston, Massachusetts 02210 (“ Tenant ”).
WHEREAS, Tenant and Landlord’s predecessor in interest entered into that certain Standard Office Lease Agreement dated as of March 24, 2006, which lease has been amended by that certain First Amendment to Lease dated as of September 29, 2006, Second Amendment to Lease dated October 31, 2007, Third Amendment to Lease dated March 25, 2008, Fourth Amendment to Lease dated August 16, 2012, and Fifth Amendment to Lease dated February 22, 2013 (as amended, the “ Lease ”) relating to certain premises in the building consisting of, as of the date hereof, 42,398 rentable square feet (the “ Existing Premises ”) located at One Design Place, Boston, Massachusetts (the “Building”), as more particularly described therein;
WHEREAS, Tenant desires to lease an additional 11,758 rentable square feet (“Expansion Premises”) on the eighth (8 th ) floor of the Building, as such Expansion Premises are shown on  Exhibit A-1 , attached hereto and incorporated herein;
WHEREAS, Landlord and Tenant desire to amend the Lease to reflect the expansion of the Leased Premises to include the Expansion Premises, to extend the Lease Term and to modify certain other provisions of the Lease and set forth herein; and
NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt, sufficiency and delivery of which are hereby acknowledged, the parties hereby agree that the Lease is hereby amended as follows:
1. Leased Premises. The definition of Leased Premises contained in Article 1 of the Lease is hereby deleted and the following is inserted in its place:
“Leased Premises shall mean approximately 54,156 rentable square feet located on the eighth (8th) floor of One Design Place, Boston, Massachusetts, as shown on the floor plan attached to this Lease as  Exhibit A-1 .”
Exhibit A to the Lease is hereby deleted and Exhibit A-1 attached hereto is hereby substituted in its place. In addition, the reference to “42,398” in the definition of Rentable Area (contained in the Fourth Amendment to Lease) is hereby deleted and replaced with “54,156” and the reference to “539,448” in the same definition is also deleted and replaced with “537,018”.
2. Lease Term. The definition of Lease Term contained in Article 1 of the Lease is hereby deleted. From and after the date hereof, the Lease Term shall be that period of time commencing on June 25, 2015 and continuing until the last day of the [*] calendar month following the Expansion Premises Commencement Date (as hereinafter defined). As used herein, the Expansion Premises Commencement Date is [*].
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

3. Delivery of Expansion Premises. Subject to the terms of Section 4 below, including, but not limited to, Tenant’s rights to inspect the Landlord Work, Tenant has inspected the Expansion Premises and agrees (a) to accept possession of the Expansion Premises in the condition existing on the date hereof in its “as is,” “where is” condition (provided, however, the Premises shall be free of all tenants on the Expansion Premises Commencement Date), and (b) that except for Landlord’s Contribution and except for Landlord’s Work, Landlord has no obligation to perform any work, supply any materials, incur any expense or make any alterations or improvements to prepare the Leased Premises (including the Expansion Premises) for Tenant’s occupancy. Any work to be performed by Tenant in connection with Tenant’s initial occupancy of the Expansion Premises shall be herein referred to as “Initial Installations” and considered to be “Alterations” and governed by Section 4.2 of the Lease. Any work to be performed by Tenant in the Existing Premises shall be considered to be “Alterations” and governed by Section 4.2 of the Lease. Notwithstanding anything to the contrary contained in the Lease, Tenant shall pay to Landlord the amount of [*] for Landlord’s costs associated with the review and approval of the Initial Installations and Alterations pursuant to the foregoing. Such amount shall be paid within thirty (30) days of the date hereof or, at Tenant’s election, can be deducted from the Landlord Contribution (as hereinafter defined).
4. [*]
5. [*]
6. Basic Rental Payments. Exhibit D to the Lease, as last amended in the Fifth Amendment to Lease, is hereby deleted and of no further force or effect. For the period commencing on the date hereof and continuing through the Expiration Date, Tenant shall pay Base Rental in respect of the Existing Premises and the Expansion Premises in accordance with the schedule set forth on  Exhibit D  attached hereto.
7. Definition of Tenant’s Proportionate Share. The definition of Tenant’s Proportionate Share set forth in Article I of the Lease, as amended, is hereby amended by deleting the figure [*] and inserting the figure [*].
8. Tenant’s Proportionate Share of Operating Costs. Section 2.4 of the Lease and Section J of Exhibit E to the Lease, as last amended by Section 8 to the Fourth Amendment to Lease, are deleted effective as of the Expansion Premises Commencement Date. From and after the Expansion Premises Commencement Date, Tenant shall pay to Landlord Tenant’s Proportionate Share of Operating Costs in excess of Operating Costs for calendar year 2015 (the “ Expense Base Year ”), in accordance with the following provisions:
(i) For each calendar year commencing subsequent to the last day of the Expense Base Year, Landlord shall furnish to Tenant a statement setting forth Landlord’s reasonable estimate of Tenant’s Proportionate Share of Operating Costs, if any (the “ Expense Estimate ”). Tenant shall pay to Landlord the amount of such Expense Estimate in monthly installments of 1/12th each on a monthly basis contemporaneously with the payment of Base Rent.
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
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(ii) If at any time Landlord shall have reasonable grounds to believe that the amount of actual Operating Costs incurred and to be incurred will vary from the Expense Estimate, then Landlord reserves the right to revise such estimates accordingly. Upon any such revision, the monthly payments due and payable to Landlord by Tenant under this Section shall be increased to an amount which will amortize such revised estimate over the remainder of the calendar year in which any such revision is made by Landlord.
(iii) Within one hundred and eighty (180) days after the end of any calendar year Landlord shall provide Tenant with a statement in reasonable detail showing actual Operating Costs for such calendar year (a “ Statement ”). If the Statement shows that Tenant’s payments for Tenant’s Proportionate Share of Operating Costs exceed the actual amount of Tenant’s Proportionate Share of Operating Costs for such calendar year, then Landlord shall credit the amount of such excess against subsequent payments of rent due hereunder. If the Statement shows that Tenant’s payments for Tenant’s Proportionate Share of Operating Costs are less than the actual amount of Tenant’s Proportionate Share of Operating Costs, then Tenant shall pay the amount of such deficiency within thirty (30) Business Days after delivery of the Statement to Tenant.
(iv) If the Expansion Premises Rent Commencement Date is a day other than the first day of a calendar month or if this Lease terminates on a day other than the last day of a calendar month, then the amounts due and owing by Tenant to Landlord under this Section shall be prorated accordingly.
(v) Landlord’s failure to render any Statement on a timely basis with respect to any calendar year shall not prejudice Landlord’s right to thereafter render a Statement with respect to such calendar year or any subsequent calendar year, nor shall the rendering of a Statement prejudice Landlord’s right to thereafter render a corrected Statement for that calendar year.
9. Definition of Operating Costs. The reference to “[*]” in the definition of Operating Costs contained in Article VIII of the Lease is hereby deleted and the following is inserted in its place: “[*]”.
10. Electricity Costs. Section 9 of the Fourth Amendment to Lease is hereby deleted and of no further force or effect. Landlord and Tenant hereby agree that Tenant shall pay the costs of electricity for the Project based on its Proportionate Share and that such costs shall be computed based on the actual amount of such costs without a base year. In addition, Section 2.5 of the Lease is hereby deleted and the following is inserted in its place:
Section 2.5. Separately Metered Utilities. Tenant shall pay upon demand or receipt of an invoice Tenant’s Proportionate Share (based on [*] occupancy of the Building) of all amounts due and owing with respect to utilities furnished to the Building. Notwithstanding the foregoing, the Leased Premises may, from time to time, be separately metered by Landlord, and charged to Tenant by Landlord, or by any public utility as may furnish such utilities to the Leased Premises.
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
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11. Surrender Condition. The following sentence is added at the end of Section 5.4 of the Lease: “Notwithstanding anything herein to the contrary, Tenant hereby acknowledges and agrees that it will remove all data cabling, other low voltage wiring and any specialty built out items that is installed by or for the exclusive benefit of Tenant and located in the Leased Premises or other portions of the Building.”
12. Renewal Term. Tenant shall have the right to renew the Lease Term for all of the Leased Premises for one renewal term of [*] years (the “ Renewal Term ”) commencing on the day after the expiration of the initial Term (the “ Renewal Term Commencement Date ”) and ending on the day preceding the [*] anniversary of the Renewal Term Commencement Date, unless the Renewal Term shall sooner terminate pursuant to any of the terms of this Lease or otherwise. The Renewal Term shall commence only if (a) Tenant notifies Landlord (the “ Exercise Notice ”) of Tenant’s exercise of such renewal right not later than [*] prior to the Expiration Date, (b) at the time of the exercise of such right and immediately prior to the Renewal Term Commencement Date, no default shall have occurred and be continuing following any applicable cure period hereunder; and (c) Tenant occupies no less than [*] of the Lease Premises for its own use at the time the Exercise Notice is given. Time is of the essence with respect to the giving of the Exercise Notice. The Renewal Term shall be upon all of the agreements, terms, covenants and conditions of this Lease, except that (w) the Base Rental shall be adjusted as set forth in (i) below, and (x) Tenant shall have no further right to renew the Term. Any termination, cancellation or surrender of the entire interest of Tenant under this Lease at any time during the Term shall terminate the foregoing right of renewal of Tenant hereunder.
(i) Renewal Term Rent . The annual Base Rental payable during the Renewal Term shall be equal to [*] of the annual Fair Market Value (as hereinafter defined) of the Leased Premises as of commencement of the Renewal Term (the “ Calculation Date ”). “ Fair Market Value ” shall mean the fair market annual rental value of the Leased Premises as of the Calculation Date for a term equal to the Renewal Term, based on comparable space in the Project, or on comparable space in comparable buildings located in the Seaport District of Boston, Massachusetts, including all of Landlord’s services provided for in this Lease, and with the Leased Premises considered as vacant, and in “as is” condition existing on the Renewal Term Commencement Date. The calculation of Fair Market Value shall also be adjusted to take into account all relevant factors. Landlord shall advise Tenant (the “ Rent Notice ”) of Landlord’s determination of Fair Market Value no later than nine (9) months prior to the Renewal Term Commencement Date. If Tenant disputes Landlord’s determination of Fair Market Value, then Tenant shall give notice (a “ Dispute Notice ”) to Landlord of such dispute within ten (10) Business Days after delivery of the Rent Notice, and such dispute shall be resolved by arbitration as provided below. Time is of the essence of the giving of said Dispute Notice. Failure on the part of Tenant to timely submit a Dispute Notice shall constitute a waiver of the right of Tenant to dispute the Fair Rental Value determined by Landlord, and in such event the Base Rental for the Renewal Term shall be as set forth in the Rent Notice. If the Base Rental payable during the Renewal Term is not determined prior to the Renewal Term Commencement Date, then Tenant shall pay Base Rental in an amount equal to the Fair Market Value for the Leased Premises as determined by Landlord (the “ Interim Rent ”). Upon final determination of the Base Rental for the Renewal Term, Tenant shall commence paying such Base Rental as so determined, and
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
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within ten (10) days after such determination Tenant shall pay any deficiency in prior payments of Base Rental or, if the Base Rental as so determined shall be less than the Interim Rent, Tenant shall be entitled to a credit against the next succeeding installments of Base Rental in an amount equal to the difference between each installment of Interim Rent and the Base Rental as so determined which should have been paid for such installment until the total amount of the over payment has been recouped.
(ii) Arbitration . If Tenant timely disputes Landlord’s determination of the Fair Market Value rate pursuant to provisions above, then Landlord and Tenant shall each simultaneously submit to the other, in a sealed envelope, its good faith determination of the applicable Prevailing Market rate (collectively referred to as the “ Determinations ”). If the higher of such Determinations is not more than [*] of the lower of such Determinations, then the Fair Market Value rate shall be the average of the two Determinations. If the Fair Market Value rate is not resolved by the exchange of Determinations, then, within twenty (20) days after the exchange of the Determinations, Landlord and Tenant shall each select a commercial real estate broker with at least 10 years’ experience in the Boston Seaport District with working knowledge of current rental rates and practices to determine which of the two Determinations most closely reflects the applicable Fair Market Value rate. Upon such selection, Landlord and Tenant shall each provide to their respective brokers the applicable provisions of this Lease necessary for such determination, including, without limitation, the applicable definitions and criteria (“Lease Provisions”). Landlord’s and Tenant’s brokers shall work together in good faith to agree upon which of the two Determinations most closely reflects the applicable Fair Market Value rate. The Determination chosen by such brokers shall be binding on both Landlord and Tenant as the applicable Base Rent. If either Landlord or Tenant fails to appoint a broker within the twenty (20) day period referred to above, the broker appointed by the other party shall be the sole broker for the purposes hereof. If the two (2) brokers cannot agree upon which of the two Determinations most closely reflects the applicable Fair Market Value rate within thirty (30) days after the expiration of such twenty (20) day period, then, within ten (10) days after the expiration of such thirty (30) day period, the two (2) brokers shall select a third (3 rd ) broker meeting the aforementioned criteria. Once the third broker has been selected as provided for above, then Landlord and Tenant shall provide the Lease Provisions to the third broker and, as soon thereafter as practicable but in any case within thirty (30) days after the selection of the third broker, the third broker shall make its determination of which of the two Determinations most closely reflects the applicable Fair Market Value rate and such Determination shall be binding on both Landlord and Tenant as the applicable Base Rent. If the third broker believes that expert advice would materially assist him, he may retain one or more qualified persons to provide such expert advice. The parties shall share equally in the costs of the 3 rd  broker and of any experts retained by such third broker. Any fees of any broker, counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such broker, counsel or expert.
13. [*]
(i) Termination. Provided that all of the Termination Conditions Precedent have been fully and completely satisfied, then effective as of the Termination Date, this Lease, and the rights of the Tenant with respect to the Leased Premises, shall terminate and expire with
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
-5-

the same force and effect as if such Termination Date had originally been specified as the Expiration Date of the Lease Term. Prior to the later of (such later date, the “ Surrender Date ”) (i) the Termination Date, and (ii) the date on which Tenant actually surrenders and yields-up the Premises, Tenant shall comply with all of the terms and provisions of the Lease and shall perform all of its obligations hereunder, including, without limitation, the obligation to pay when due all Base Rent and all Additional Rent. By not later than the Termination Date, Tenant shall remove all of Tenant’s Fixtures and surrender and yield-up the Leased Premises in good and broom-clean order, repair and condition, free of all tenants and occupants, and otherwise in the condition in which the Leased Premises are required to be surrendered pursuant to this Lease at the expiration of the Term. All Tenant’s Fixtures and alterations of any kind, nature or description remaining in the Leased Premises after the Surrender Date shall be and become the property of Landlord and may be disposed of by Landlord, at the cost and expense of Tenant, without payment from Landlord and without the necessity to account therefor to Tenant.
(ii) Release of Liabilities. Effective as of the Termination Date, Landlord shall be released from any and all obligations and liabilities thereafter accruing under this Lease. Nothing contained herein shall constitute a waiver, limitation, amendment, or modification of any of the liabilities and obligations of Landlord under this Lease which accrue or arise prior to the Termination Date. Effective as of the Surrender Date, Tenant shall be released from any and all liabilities and obligations thereafter accruing under this Lease. Nothing contained herein shall constitute a waiver, limitation, amendment, or modification of any of the liabilities and obligations of Tenant under this Lease which accrue or arise prior to the Termination Date.
(iii) Holdover. Without limiting the foregoing, if Tenant fails to yield up and surrender the Leased Premises by the Termination Date, then for and with respect each day between the Termination Date and the Surrender Date, Tenant shall pay a holdover charge at the rate set forth in Section 7.22 of the Lease. Nothing herein contained shall constitute a release, waiver, limitation, or restriction of any rights or remedies of Landlord on account of Tenant’s failure to surrender the Premises by the Termination Date, including any rights or remedies afforded to Landlord in Section 7.22 of this Lease.
(iv) Amendment. The foregoing provisions shall be self-operative; provided, however, on the request of either party Landlord and Tenant will acknowledge in writing such Termination of this Lease.
(v) Time of Essence. Time is of the essence of this Section 13.
14. Intentionally Omitted.
15. Broker. Tenant represents and warrants that it has not worked directly or indirectly with any broker with respect to the leasing of the Expansion Space or extension of the Term other than Catherine Thompson/DTZ. Landlord represents and warrants that it has not worked directly or indirectly with any broker with respect to the leasing of the Expansion Space or extension of the Term other than Ron Perry at Colliers. In connection with the foregoing, the Tenant and Landlord each agree to indemnify, defend and save harmless the other party against any and all claims for a commission by a broker, person or firm whom each party has dealt with in connection with the execution and delivery of this Amendment.
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
-6-

16. Reimbursement of Expenses. Landlord will reimburse Tenant for the third party costs incurred by Tenant in connection with an initial space plan for the Expansion Premises, up to the maximum amount of [*] (i.e. [*] per rentable square foot of the Expansion Premises. In addition, Landlord will reimburse Tenant for the third party costs of architects and engineers contracted with for the design of the Initial Installations to the Expansion Premises, up to the maximum amount of [*]. Such amounts will be reimbursed by Landlord to Tenant within thirty (30) days of receipt of receipt of invoice with reasonable evidence of the work reflected in such invoice.
17. Notices. Section 7.4 of the Lease is hereby amended by deleting “Kevin P. Joyce, Esq.” and replacing it with “Christopher R. Froeb, Esq.”.
18. [*]
19. Deleted Provisions. The following sections of the Lease are hereby deleted and of no further force or effect: (i) Section A of Exhibit E to the Lease; (ii) Section E of Exhibit E to the Lease; (iii) Section F of Exhibit E to the Lease; (iv) Section J of Exhibit E to the Lease; (v) Sections 5, 6 and 9 of the Second Amendment to Lease; and (vi) Sections 5, 6 and 7 of the Fourth Amendment. In addition, and for the avoidance of doubt, the provisions of Sections D of Exhibit E to the Lease is for the benefit of the Existing Premises and shall not be deemed to expand the rights set forth therein to the Expansion Premises.
20. Amended Provision. Section P of Exhibit E is hereby deleted and replaced with the following:
“Notwithstanding anything to the contrary elsewhere in the Lease, but subject to the following and other terms of this Lease, Landlord shall permit Tenant access to an existing waste stack and an existing source of water so as to allow disposal of sanitary waste from and the supply of water to fixtures commonly found in an office environment such as sinks, dishwashers, coffee makers, bubblers, and the like that Tenant may wish to construct as part of the Alterations. Tenant shall be wholly responsible for installing, maintaining and servicing the associated waste and supply lines not now existing that are located within or without the Leased Premises and for obtaining all necessary permits and approvals for such use, installation, maintenance and repair. All such work shall be done at such times as may be reasonably convenient for Landlord’s supervisor and so as to minimize interference with other tenants, and shall require prior written approval by the Landlord, which approval shall not be unreasonably withheld, conditioned or delayed Tenant shall indemnify Landlord for any and all losses damages and claims, including costs of defense and reasonable attorneys’ fees, arising from such water or waste lines, whether from water damage, odors, insects or otherwise, except if caused by Landlord or Landlord’s agent.”
21. Capitalized Terms. Capitalized terms that are not otherwise defined herein shall have the meaning set forth in the Lease.
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
-7-

22. Governing Law. This Amendment shall be governed by the laws of the Commonwealth of Massachusetts without regard to its conflict of law provisions.
23. Conflicts. Any inconsistencies or conflicts between the terms and provisions of the Lease and the terms and provisions of this Amendment shall be resolved in favor of the terms and provisions of this Amendment.
24. Counterparts. This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.
25. Ratification, Approval and Confirmation of Terms. In all respects, the Lease, as hereby amended and modified, is hereby ratified, approved and confirmed.
[Signatures on next page]
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
-8-

IN WITNESS WHEREOF, the parties hereto have executed this instrument in any number of counterpart copies, each of which shall be an original for all purposes, as of the day and year first above written.

 	 	 	 	JAMESTOWN 1 DESIGN PLACE, L.P.,	
 	 	 	 	a Delaware limited partnership	
 	 	 	 	 	
 	 	 	 	 	 	By:	 	JT 1 Design Place Corp.,	
 	 	 	 	 	 	 	 	a Delaware corporation,	
 	 	 	 	 	 	 	 	its general partner	
 	 	 	 	 	
 	 	 	 	 	 	By:	 	/s/ Olashegan Holder	
 	 	 	 	 	 	Name:	 	Olashegan Holder	
 	 	 	 	 	 	Title:	 	Vice President	
 	 	 	 	
 	 	 	 	 	 	[LANDLORD]	
 	 	 	
 	 	 	 	BOSTON BEER CORPORATION, a
Massachusetts corporation	
 	 	 	 	 	
 	 	 	 	 	 	By:	 	/s/ Martin F. Roper	
 	 	 	 	 	 	Name:	 	Martin F. Roper	
 	 	 	 	 	 	Title:	 	President and CEO	
 	 	 	 	
 	 	 	 	 	 	[TENANT]	
 
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
-9-

EXHIBIT A-1
Floor Plan

Exhibit A-1
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

Note: Common corridor shown on attached is not included within the Leased Premises as of the date hereof.
Exhibit A-1
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

EXHIBIT C
LANDLORD’S WORK
[*]
Demising Wall:

Exhibit C
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

EXHIBIT D
BASIC RENTAL PAYMENT SCHEDULE
Existing Premises:

Lease Period	  	Annual
Base Rental	  	Monthly
Base Rental	  	Rent per
Square Foot	
[*]	  	 	  	 	  	 	
Exhibit D-1
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

Expansion Premises:

Lease Period	  	Annual
Base Rental	  	Monthly
Base Rental	  	Rent per
Square Foot	
[*]	  	 	  	 	  	 	
Exhibit D-2
[ * ] Indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

Exhibit 10.14
THE BOSTON BEER COMPANY, INC. RESTATED
EMPLOYEE EQUITY INCENTIVE PLAN
As amended, effective for grants and issuances made effective on and after January 1, 2016
1. Purpose; History.
(a) The purpose of The Boston Beer Company, Inc. (the “Company”, which term for purposes of eligibility to participate shall include all of the affiliates of The Boston Beer Company, Inc., including Boston Beer Corporation, a Massachusetts corporation) Employee Equity Incentive Plan (the “Plan”) is to provide additional incentive for management and other employees of the Company, selected for participation in the Plan, to promote the growth and success of the Company’s business, and to reward them for such growth and success, by making available to them shares of the Company’s Class A [Limited Voting Rights] Common Stock ($0.01 par value) (“Class A Stock”).
(b) The Plan was originally adopted on November 20, 1995. As adopted, the Plan provided for Management Options, Discretionary Options and Investment Shares. The maximum number of shares of the Company’s Class A Common Stock, $0.01 par value per share (the “Class A Stock”), originally authorized for issuance under the Plan was 1,687,500 shares. On October 20, 1997, the Board of Directors of the Company (the “Board”) and the sole holder of the Company’s outstanding Class B Common Stock, $0.01 par value per share (the “Class B Stock”), amended the Plan to provide for an additional 1,000,000 authorized shares of Class A Stock and, on December 19, 1997, the Board further amended the Plan to delete the provisions that had permitted the grant of Management Options at a per share exercise price of $0.01 and to provide for a shift from the Board’s Compensation Committee (the “Compensation Committee”) to the full Board authority to act under the Plan, based on recommendations brought to it by the Compensation Committee. On December 14, 2001, the Plan was amended to provide for an additional 1,000,000 authorized shares of Class A Stock.
(c) On December 20, 2005, the Board further amended the Plan, formally striking the discontinued Management Options provisions and inserting the Board’s right to grant shares of restricted stock (“Restricted Stock Grants”). On December 19, 2006, the Board further amended the Plan to provide for an additional 500,000 authorized shares of Class A Stock, to change the method used in valuing shares of Class A stock for purposes of the Plan and to grant the Board discretion to waive eligibility requirements in granting Discretionary Options and Restricted Stock Grants. On December 21, 2007, the Plan was amended to provide for an additional 1,000,000 authorized shares of Class A Stock. October 30, 2009, the Plan was amended to provide for an additional 812,500 authorized shares of Class A Stock. On October 8, 2013, the vesting provisions with respect to Investment Shares were amended. On October 8, 2014, the Plan was restated to reflect formally certain procedures and practices followed with respect to Restricted Stock Grants and Discretionary Options. On December 9, 2015, the Plan was amended to provide for an additional 700,000 authorized shares of Class A Stock.
2. Shares Covered By the Plan. The maximum number of shares of Class A Stock that may be issued under the Plan is 6,700,000 shares, subject to adjustment in accordance with Section 11 of the Plan. Shares of Class A Stock which are the subject of Restricted Stock Grants (as defined in Section 5) or Discretionary Options (as defined in Section 6) or Management Options granted under the Plan prior to its amendment on December 19, 1997, which lapse unexercised or Investment Shares which do not become Vested Shares (as defined in Section 7) and are repurchased by the Company pursuant to Section 7(g), or which are redeemed by the Company pursuant to Section 7(f) shall again be available for issuance hereunder. The maximum number of such shares that may be granted hereunder to an individual recipient per calendar year shall not exceed 1,000,000.
3. Administration of the Plan. The Plan shall be administered by the Board. In its sole discretion, the Board shall have the power to:
 
 	(i)	select employees to be granted Restricted Stock Grants pursuant to Section 5 of the Plan and Discretionary Options pursuant to Section 6 of the Plan;	
 
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 	(ii)	authorize Restricted Stock Grants and the grant of Discretionary Options, pursuant to Sections 5 and 6 of the Plan;	
 
 	(iii)	construe the Plan;	
 
 	(iv)	determine all questions arising under the Plan;	
 
 	(v)	including as hereinafter provided, delegate to the Compensation Committee of the Board or one or more officers of the Company power to make and administer grants to different categories of employees of the Company (in which case such delegatee(s) shall be considered the “Board” hereunder for purposes of such grants); and	
 
 	(vi)	adopt and amend such rules and regulations for the administration of the Plan as it may deem desirable.	
The decision of the Board as to all questions of interpretation and application of the Plan shall be final and binding on all persons.
4. Eligibility. Employees eligible to participate in the Plan (“Eligible Employees”) are those employees of the Company who:
 
 	(i)	except as otherwise determined by the Board on the recommendation of the Board’s Compensation Committee, have been employed by the Company for at least one (1) year or whose earlier participation is approved by the Board in connection with his or her becoming an employee;	
 
 	(ii)	have entered into an Employment Agreement (the “Employment Agreement”) with the Company containing such terms and conditions as the Board in its discretion may from time to time require; and	
 
 	(iii)	In the case of Restricted Stock Grants and Discretionary Options, have been recommended to the Board by the Board’s Compensation Committee, taking into account each prospective grantee’s or optionee’s level of responsibility, performance, potential and such other considerations as the Board or such Committee deems appropriate.	
5. Restricted Stock Grants. The Compensation Committee, subject to ratification by the Board and the holders of a majority of the Class B Stock, may, from time to time, grant to Eligible Employees shares of Class A Stock, subject to such vesting criteria and other terms and conditions, as the Board shall determine. Except as otherwise determined from time to time by the Board in connection with specific Restricted Stock Grants, Restricted Stock Grants shall vest over the period of five (5) years after the grant date at the rate of twenty percent (20%) of the shares covered thereby per year, so long as the recipient continues to be employed by the Company as of each vesting date. All Restricted Stock Grants shall be reflected in a restricted stock agreement, setting forth the applicable vesting criteria, terms and conditions, and otherwise in a form approved from time to time by the Board.
 
 	6.	Discretionary Options.	
(a) The Compensation Committee, subject to ratification by the Board and the holders of a majority of the Class B Stock, may also, from time to time, grant to Eligible Employees (individually, an Optionee and collectively, “Optionees”) options (“Discretionary Options”) to acquire shares of Class A Stock (“Option Shares”), on such terms and conditions, including exercise price (which shall not be less than the fair market value of such shares as of the date of grant), as the Board shall determine.
 
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(b) Except as the Board may from time to time otherwise determine with respect to a particular Discretionary Option, each Discretionary Option shall be set forth in an Option Agreement, containing such terms and conditions as the Board in its discretion may from time to time require, which shall include in any event the following terms, conditions and restrictions:
(i) Except as otherwise determined from time to time by the Board in connection with specific options, the right to exercise each Discretionary Option shall vest over the period of five (5) years after the date on which the Option was granted (the “Option Date”), at the rate of twenty percent (20%) of the Option Shares covered thereby per year, so long as the Optionee continues to be employed by the Company as of each vesting date,  provided that  (1) the Board may in its discretion permit accelerated vesting, (2) the Board may tie exercisability to performance criteria determined by the Board in its discretion, and (3) the Board may tie exercisability to compliance by an Optionee with any applicable restrictive covenants.
(ii) Except as determined by the Board from time to time, each Discretionary Option shall terminate on the earlier to occur of the expiration of (1) ninety days after the Optionee ceases to be an employee of the Company and (2) ten (10) years after the Option Date.
7. Performance-Based Measures for Certain Grants. The performance measure(s) to be used for Restricted Stock Grants or Discretionary Options granted to senior executive employees that are designed to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code of 1986 as amended shall be chosen from among:
 
 	(a)	Earnings per share;	
 
 	(b)	Net income (before or after taxes);	
 
 	(c)	Cash flow (including, but not limited to, operating cash flow and free cash flow);	
 
 	(d)	Gross revenues or Gross Volume;	
 
 	(e)	Depletions;	
 
 	(f)	Gross Profit or Gross Margins;	
 
 	(g)	EBITDA;	
 
 	(h)	Percentage increases in any of the above measures; and	
 
 	(i)	Any of the above measures compared to peer or other companies. Performance measures may be set either at the corporate level, subsidiary level, division level, or business unit level.	
8. Purchase of Investment Shares. Eligible Employees may also become “Participants” in the Plan and invest up to ten percent (10%) of their most recent annual compensation (base salary and bonus, if any) in whole shares (“Investment Shares”) of Class A Stock. The number of Investment Shares which can be purchased by each Participant will be computed by dividing 10% of the Participant’s eligible compensation up to a maximum of $175,000 by the Investment Share Value (as defined in Section 7(c)). After a Participant has been employed by the Company for at least two (2) years, Investment Shares will be issued at a discount from Investment Share Value based on length of service. The cost to the Participant will be the Investment Share Value, discounted, if applicable, according to the schedule in Section 7(c). For each full year Investment Shares are held after issuance and the Participant remains employed with the Company, twenty percent (20%) will become fully vested, except for those Participants who are age 64 or older, for whom one hundred percent (100%) of the Investment Shares will become fully vested (“Vested Shares”). Investment Shares not yet vested shall cease to vest upon the termination of a Participant’s employment with the Company, except as otherwise then determined by the Board, unless such termination was because of death or disability, whereupon such death or disability termination the Participant’s unvested Investment Shares shall vest. Notwithstanding the foregoing, unvested Investment Shares outstanding at January 1, 2014 shall also vest upon the Participant’s attainment of age 65 while employed by the Company, and Investment Shares issued to a Participant on or after January 1, 2014 who is age 64 or older shall vest on the first anniversary of issuance if the Participant is still then employed by the Company.
(a) The maximum number of Investment Shares that may be issued to each Participant at any time will be equal to ten percent (10%) of his or her most recent annual compensation (base salary and bonus, if any) up to a maximum of $175,000, divided by the applicable Discounted Investment Share Value then in effect under Section 7(c), below.
 
- 3 -

(b) The issuance price for Investment Shares will be based on the then Investment Share Value. Investment Share Value shall be the closing price at which shares of Class A stock traded on the New York Stock Exchange or on any other exchange on which such shares may be traded, on the day next preceding the date of a Participant’s investment in Investment Shares, which ordinarily shall be effective as of January 1 in each applicable year. The issuance price for Investment Shares will be the “Discounted Investment Share Value”, determined based on discounts from Investment Share Value, keyed to each Eligible Employee’s tenure with the Company.
Prior to 2 full years of employment, there will be no discount
After 2 full years of employment, the discount will be 20%
After 3 full years of employment, the discount will be 30%
After 4 full years of employment, the discount will be 40%
(c) Each Participant will be responsible for the withholding taxes payable on his or her W-2 earnings, including on the amount of taxable income realized by him or her by reason of the purchase of Investment Shares at Discounted Investment Share Value, whether recognized at the time of purchase or upon vesting.
(d) All Investment Shares which have not yet vested shall be held in escrow by an escrow agent selected by the Board, pursuant to an Investment Share Escrow Agreement, in a form approved from time to time by the Board.
(e) Each Participant who purchases Investment Shares and who is not subject to the provisions of Section 16(b) of the 1934 Act shall have the right at any time to cause the Company to redeem all, but not less than all, of the Investment Shares previously purchased by him or her but which have not yet vested at a price equal to the lesser of (i) the Discounted Investment Share Value at which the Shares were issued and (ii) the Investment Share Value, as of the date next preceding the date on which the Investment Shares are tendered for redemption.
(f) In the event of the termination of the employment with the Company of any Participant who holds Investment Shares, the Company shall have the right, but not the obligation, to redeem within ninety (90) days after such termination any or all of such Investment Shares which are not Vested Shares at a price, payable in cash, equal to the lesser of (i) the Discounted Investment Share Value at which the Shares were issued and (ii) the Investment Share Value, as of the date next preceding the date on which the Investment Shares are called for redemption.
9. Provisions Relating to Securities Act. Notwithstanding any other provision of the Plan, the Company may delay the issuance of Option Shares covered by the exercise of a Discretionary Option or any Restricted Stock Grant shares that have vested or Investment Shares which have become Vested Shares (in any case, “Shares”) until one of the following conditions shall be satisfied:
 
 	(i)	Such Shares are at the time of issuance effectively registered under applicable federal and state securities acts, as now in force or hereafter amended; or	
 
 	(ii)	Counsel for the Company shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that the issuance of such Shares is exempt from registration under applicable federal and state securities acts, as now in force or hereafter amended.	
Moreover, unless the Shares to be issued have been effectively registered under the Securities Act of 1933, as amended (the “Act”), the Company shall be under no obligation to issue such Shares unless the person to whom the Shares are to be issued shall first give written representation to the Company, satisfactory in form and scope to the Company’s counsel and upon which in the opinion of such counsel the Company may
 
- 4 -

reasonably rely, that he or she is acquiring the Shares to be issued to him or her as an investment and not with a view to or for sale in connection with any distribution thereof in violation of the Act. The Company shall have no obligation, contractual or otherwise, to any person to register under any federal or state securities laws any Shares issued under the Plan to such person.
10. Expenses of the Plan. All costs and expenses of the adoption and administration of the Plan shall be borne by the Company, and none of such expenses shall be charged to any recipient of a Restricted Stock Grant, Optionee or Participant.
11. No Contractual Right to Participate and No Right to Continued Employment. Nothing in the Plan shall be deemed to give any employee of the Company, or his or her legal representatives or assigns, or any other person claiming under or through him or her, any contractual or other right to participate in the benefits of the Plan. Nothing in the Plan and no action or grant thereunder shall be construed to constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company to employ or retain in its employ for any specific period of time any recipient of a Restricted Stock Grant, Optionee or Participant. No Discretionary Option shall give to the recipient any rights as a stockholder in the Company or any rights in any Option Shares, except to the extent the Option has been exercised and Option Shares issued.
12. Dilution and Other Adjustments. In the event that the outstanding shares of Class A Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares which may be issued under the Plan and as to which outstanding Discretionary Options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the Optionee shall be maintained as before the occurrence of such event; such adjustment in outstanding Discretionary Options shall be made without change in the total price applicable to the unexercised portion of such Discretionary Options and with a corresponding adjustment in the exercise price per share.
13. Transferability. No right or interest under the Plan of any Eligible Employee shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including, but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, other than by will or the laws of descent and distribution; and no such right or interest of any Eligible Employee shall be subject to any obligation or liability of such Eligible Employee. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option.
14. Withholding of Income Taxes. The Company shall have the right to deduct from amounts otherwise payable by the Company to any recipient of a Restricted Stock Grant, Optionee or Participant by way of salary or wages or otherwise, any Federal, state or local taxes required by law to be withheld with respect to the exercise of a Discretionary Option granted under the Plan or the purchase or vesting under the Plan of Investment Shares or shares subject to a Restricted Stock Grant which results in taxable income to the recipient of the Restricted Stock Grant, Optionee or Participant.
15. Amendment and Termination of the Plan. The Board, subject to the approval of the holders of a majority in interest of the Company’s issued and outstanding Class B Stock, may at any time terminate, extend, or amend the Plan; provided, however, that termination or amendment of the Plan shall not, without the consent of any person affected thereby, modify or in any way affect any Restricted Stock Grant or Discretionary Option granted, or Investment Shares purchased, prior to such termination or amendment.
Approved by the Board of Directors on the recommendation of the Compensation Committee and by the sole holder of the Class B Common Stock of the Company on December 9, 2015.
 
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Exhibit 10.15

Option No. 1393	  	Roper	
THE BOSTON BEER COMPANY, INC.
STOCK OPTION AGREEMENT
AGREEMENT entered into effective as of January 1, 2016, by and between THE BOSTON BEER COMPANY, INC., a Massachusetts corporation (the “Company”), and Martin F. Roper, the Company’s President and Chief Executive Officer (“Mr. Roper”).
IN CONSIDERATION OF services rendered and to be rendered by Mr. Roper to the Company and of the mutual covenants and agreements contained herein, the Company and Mr. Roper hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Mr. Roper an option (the “Option”) to purchase all or any part of an aggregate of  Five Hundred Seventy-Four Thousand Five Hundred and Seven (574,507)  shares (the “Shares”) of the Company’s Class A Common Stock, on the terms and conditions hereinafter set forth.
2. Exercise Price and Vesting of Exercisability.
(a) Exercise Price. Subject to the provisions of Sections 2(b) and 2(c), the Exercise Price (“Exercise Price”) for the Shares shall be determined by multiplying (i)  $201.91  by (ii) the DJ Wilshire 5000 Index or in a successor broad market index selected by the Compensation Committee of the Company’s Board of Directors if the DJ Wilshire 5000 Index ceases to exist (in either case, the “Index”) on the close of business on the trading date next preceding each date on which Mr. Roper exercises the Option (the “Determination Date”) plus an escalation factor of 1.5% per annum (the “Escalation Factor”) divided by the Index on the close of business on December 31, 2015. The Escalation Factor is calculated for full years as 1.5% multiplied by the Index at the close of business on the last business day of the December. The Escalation Factor is calculated for partial years as 1.5% multiplied by the Determination Date day of the year divided by 365 and multiplied by the Index at the close of business on the Determination Date.
(b) Minimum Exercise Price. Notwithstanding the provisions of Section 2(a), the Exercise Price shall in all events be not less than  $201.91 .
(c) Cap on Option Value. Notwithstanding the provisions of Section 2(a), if the excess of (i) the closing price of the Company’s Class A Common Stock on the New York Stock Exchange or on any other exchange on which such shares may be traded, on the day next preceding a date on which Mr. Roper exercises the Option over (ii) the Exercise Price determined in accordance with Section 2(a) is greater than  $150.00 , the Exercise Price shall be increased to the extent necessary to reduce such excess (i.e., the excess as of the close of business on the trading date next preceding the date on which Mr. Roper exercises the Option) to  $150.00 .
(d) Vesting Schedule. So long as Mr. Roper continues to be employed by the Company or an affiliate of the Company, the Option shall become exercisable as follows:

 	  	Incremental
Shares Vested	 	  	Cumulative
Shares Vested	 	
January 1, 2019	  	 	114,901	  	  	 	114,901	  	
January 1, 2020	  	 	114,901	  	  	 	229,802	  	
January 1, 2021	  	 	114,901	  	  	 	344,703	  	
January 1, 2022	  	 	114,902	  	  	 	459,605	  	
January 1, 2023	  	 	114,902	  	  	 	574,507	  	

(e) Vesting on Change in Control. Notwithstanding the provisions of subsection 2(d), if, within twelve (12) months after C. James Koch and/or members of his family cease to control a majority of the Company’s issued and outstanding Class B Common Stock (a “Change in Control”), Mr. Roper’s employment with the Company or any successor employer following the Change in Control (in either case, his “Employer”) is terminated by the Employer without Cause or by Mr. Roper for Good Reason, the Option shall become immediately exercisable to the extent provided below.
If a Change in Control occurs while the Option remains in effect:

(i)	  	Prior to January 1, 2017	  	No accelerated vesting	
 	 	 	
(ii)	  	On or after January 1, 2017 but prior to January 1, 2018	  	Vesting as to 20% of the unvested Shares	
 	 	 	
(iii)	  	On or after January 1, 2018 but prior to January 1, 2019	  	Vesting as to 25% of the unvested Shares	
 	 	 	
(iv)	  	On or after January 1, 2019 but prior to January 1, 2020	  	Vesting as to 40% of the unvested Shares	
 	 	 	
(v)	  	On or after January 1, 2020 but prior to January 1, 2021	  	Vesting as to 60% of the unvested Shares	
 	 	 	
(vi)	  	On or after January 1, 2021 but prior to January 1, 2022	  	Vesting as to 80% of the unvested Shares	
 	 	 	
(vii)	  	On or after January 1, 2022	  	Vesting as to all Shares remaining unvested	
(f) Definitions. For purposes of paragraph 2(e), the terms “Cause” and “Good Reason” shall have the following meanings:
“Cause” shall mean: (i) engaging in knowing and intentional illegal conduct that was or is materially injurious to the Company or its affiliates; (ii) violating a federal or state law or regulation applicable to the Company’s business, which violation was or is reasonably likely to be injurious to the Company; (iii) being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty or fraud against, or (iv) the misappropriation of material property belonging to the Company or its affiliates.
“Good Reason” shall mean without Mr. Roper’s written consent, (i) a reduction in his base salary; or (ii) a relocation of his principal place of work to a location more than 50 miles away from his workplace prior to the relocation; or (iii) the significant reduction of his duties or responsibilities when compared to his duties or responsibilities in effect immediately prior to the Change in Control.
3. Manner of Exercise of Option. To the extent exercisable, the Option may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the Option, to the Company, stating the number of Shares with respect to which the Option is being exercised, accompanied by payment in full of the Exercise Price for such Shares in cash. There shall be no exercise at any one time as to fewer than two thousand (2,000) Shares or all of the remaining Shares then purchasable by the person or persons exercising the Option, if fewer than two thousand (2,000) Shares.
4. Term of Option. The Option shall terminate on the sooner to occur of (i) the expiration of twelve (12) months after Mr. Roper ceases to be an employee of the Company or a successor employer following a Change in Control, regardless of the reason therefore and (ii) the close of business on December 31, 2025.
 
- 2 -

5. Non-Transferability. The right of Mr. Roper to exercise the Option shall not be assignable or transferable by Mr. Roper otherwise than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of Mr. Roper only by him or her. The Option shall be null and void and without effect upon the bankruptcy of Mr. Roper or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option.
6. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of Shares covered by the exercise of the Option until one of the following conditions shall be satisfied:
(i) The Shares with respect to which the Option has been exercised are at the time of the issuance of such Shares effectively registered under applicable federal and state securities acts, as now in force or hereafter amended; or
(ii) Counsel for the Company shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that the issuance of such Shares is exempt from registration under applicable federal and state securities acts, as now in force or hereafter amended.
(b) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933 (the “1933 Act”), upon any date on which the Option is exercised in whole or in part, the Company shall be under no further obligation to issue Shares covered by the Option, unless the person exercising the Option shall give a written representation to the Company that such person is acquiring the Shares issued to him or her pursuant to such exercise of the Option for investment and not with a view to, or for sale in connection with, the distribution of any such Shares, and that he or she will make no transfer of the same except in compliance with the 1933 Act and the rules and regulations promulgated thereunder and then in force, and in such event, the Company may place an “investment legend”, so-called, upon any certificate for the Shares which may be issued by reason of such exercise.
7. Adjustments Upon Changes in Capitalization. In the event that shares of the Company’s Class A Common Stock are changed into or exchanged for a different number or kind of securities of the Company or of another entity by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares or dividend payable in capital stock or other securities, appropriate adjustment shall be made in the number and kind of securities as to which the Option, or any part thereof then unexercised, shall be exercisable, to the end that the proportionate interest of Mr. Roper shall remain as before the occurrence of such event; such adjustment in the Option shall be made without change in the total price applicable to the unexercised portion of the Option and with a corresponding adjustment in the Option price per share or other security unit.
8. Compliance with Post-Employment Obligations. Mr. Roper understands and agrees that his rights hereunder are conditioned on continued compliance with all of his obligations to the Company, including obligations to protect the confidentiality of the Company’s proprietary information and the proprietary information of any of the Company’s affiliates and not to compete with the Company or any of its affiliates after Mr. Roper’s employment with the Company or any of its affiliates has terminated. In furtherance of Mr. Roper’s understanding and agreement, Mr. Roper further agrees that, if Mr. Roper breaches any post-employment confidentiality covenants or covenants not to compete with the Company or any of its affiliates, the Company shall be entitled, in addition to any other remedies it may then have available to it, to recover all profit realized by Mr. Roper as a result of exercises of the Option during Mr. Roper ’s last twelve (12) months of employment with the Company or any of its affiliates or at any time following termination of such employment.
 
- 3 -

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its corporate seal to be hereto affixed by its officer thereunto duly authorized, and Mr. Roper has hereunto set his hand and seal, all as of the day and year first above written.

THE BOSTON BEER COMPANY, INC.	
 	 	
By:	 	/s/ William F. Urich	
 	 	William F. Urich, Chief Financial Officer	
 	 	
 	 	/s/ Martin F. Roper	
 	 	Mr. Roper’s Signature	
 	 	
 	 	Martin F. Roper	
 	 	109 Chestnut Street	
 	 	Weston, MA 02493	
 
- 4 -

Exhibit 10.16
Tuesday, December 15, 2015
PERSONAL AND CONFIDENTIAL
Frank H. Smalla
98 Locust Road
Winnetka, IL 60093
Dear Frank:
We are pleased to offer you the position of Senior Vice President, Finance of The Boston Beer Company, Inc., reporting directly to me. The following are the parameters of our offer:
 
 	•	 	Title: Senior Vice President, Finance. You will assume the role of Chief Financial Officer of the Company at the time that position is vacated by Bill Urich, anticipated end-February or early March, 2016.	
 
 	•	 	Anticipated Start Date: January 4, 2016	
 
 	•	 	Base Annualized Salary: $500,000, payable in bi-weekly installments, subject to applicable payroll and withholding taxes.	
 
 	•	 	Annual Bonus Potential: 60% of paid salary each calendar year. The bonus will be tied to Company Goals to be determined annually. Bonuses are paid on calendar year performance and you must be employed on December 31st of the applicable year to receive the bonus. Bonus multiplier of 1.5x is available for significant performance above Target.	
 
 	•	 	Options Grant: You will be granted options for Class A Common Stock of The Boston Beer Company, Inc. valued at approximately $4,000,000 (accounting value of the options). The Option will be granted on the third business day after the first release of quarterly financial results following the date on which you commenced full-time employment (on or about February 23, 2016). The number of shares will be determined based on the market price on the day prior to the date of grant and the per share exercise price will be that market price.	
 
 	•	 	The options will vest on the following schedule:	
 
 	•	 	20% vest on third anniversary of date of grant	
 
 	•	 	20% vest on fourth anniversary of date of grant	
 
 	•	 	20% vest on fifth anniversary of date of grant	
 
 	•	 	20% vest on sixth anniversary of date of grant	
 
 	•	 	20% vest on seventh anniversary of date of grant	

Frank H. Smalla
December 15, 2015
Page 2
Offer Letter
 
 	•	 	The options have a ten-year life but expire ninety days after the end of employment. Details are in the attached form of the Option Agreement.	
 
 	•	 	Compensation structure is determined and additional option grants are made at the discretion of the Company’s Board of Directors based on the recommendation of the Board’s Compensation Committee, as is the case with other Company senior officers. Discretionary option awards are generally granted effective January 1 each year and are based on Company and individual performance. Vesting of discretionary options is frequently both time- and performance-based. Due to the size of the initial grant in this offer, you should not expect any further awards to occur prior to January 1, 2018.	
 
 	•	 	Restricted Stock: At the same time that you will receive your Option grant, you will be granted restricted stock in The Boston Beer Company, Inc. valued at $1,000,000. The actual number of shares to be granted will be determined based on the market price on the day prior to the date of grant.	
 
 	•	 	The shares will vest one-third each year on the first, second and third anniversary of your date of grant.	
 
 	•	 	Performance and Compensation Review: Your performance will be formally reviewed on an annual basis and any adjustment to compensation may require approval of the Compensation Committee. Adjustments generally take effect as of January 1.	
 
 	•	 	Relocation: Provided you agree to the Company’s Relocation Payback guidelines included with this offer, the Company will provide you with the following relocation assistance:	
 
 	•	 	Sale of Current Home - Reimbursement of third party agent commission up to 6%. Legal fees will be reimbursed (maximum of $2,000).	
 
 	•	 	If you need to sell your home in order to relocate, the Company has a program which may, in some circumstances, provide you with some tax savings related to the transaction. When the time comes to place your house on the market,  please do not contact or sign with a selling agent  prior to discussing your home sale needs with the HR Department.	
 
 	•	 	Boston Beer will not assume any liability or risk with respect to the sale of your home, including but not limited to, covering a negative equity position, guaranteed buy-out of property, etc.	
 
 	•	 	Assistance in Purchasing New Residence - Purchase closing costs normally paid by the purchaser up to a maximum of 1% of the value of the loan. Mortgage loan points are not reimbursed.	
 
 	•	 	Boston Beer will not assume any liability or risk in reference to the purchase of a new home, including but not limited to equity loans, advanced pay, etc.	

Frank H. Smalla
December 15, 2015
Page 3
Offer Letter
 
 	•	 	Home Finding – reasonable number of trips for you and your spouse including food, lodging and transportation (utilizing the Company’s travel agency to the extent practicable).	
 
 	•	 	Transportation to New Location – actual expenses incurred by using the most direct route for one trip (utilizing the Company’s travel agency to the extent practicable).	
 
 	•	 	Temporary Housing – lodging (e.g., short term apartment in Boston) through August, 2016.	
 
 	•	 	Movement of Household Goods – moving company will pack and move ordinary household goods, and two (2) vehicles.	
 
 	•	 	Storage – storage of household goods up to 60 days.	
 
 	•	 	Settling-in Allowance – reimbursement of actual out of pocket expenses incurred during your move, including but not limited to application fees, driver’s license fee, car registration fees and utility hook-up fees.	
 
 	•	 	Miscellaneous Allowance –should you utilize temporary housing, Boston Beer will reimburse up to $2,000 (net of taxes) each month for miscellaneous commuting and travel expenses through August, 2016.	
 
 	•	 	Paid Time Off (PTO): During the first two (2) years of your employment, in addition to 10 company holidays, you will be eligible for seventeen (17) PTO days per year, accruing at 2.62 hours / week, which will be pro-rated during your first year of employment. On your second anniversary, you will be eligible for twenty-two (22) PTO days per year, accruing at 3.38 hours / week. You will begin accruing PTO immediately, and we encourage you to take all of this time within the calendar year in which accrued.	
 
 	•	 	Benefits: You will be eligible to participate in the Company’s medical and dental programs upon your first day of employment with us. You will be eligible to participate in our 401(k) plan at the beginning of the month following your start date. Enclosed you will find a more detailed description of our benefits package and payroll information. You should complete the enclosed forms and send them to Ai-Li Lim, VP of Human Resources, at the above address prior to your first day of employment with us. If you have specific questions regarding your benefits, you may contact Ai-Li directly at . Please note — it is imperative that you provide I-9 documentation to Ai-Li on or before your first day so we are able to add you to our payroll system. Failure to do so may delay your first paycheck.	
 
 	•	 	Employment Agreement: Enclosed are two (2) copies of an Employment Agreement, which includes, among other provisions, an agreement to protect the Company’s proprietary and confidential information and a covenant not to compete. This offer is contingent on your signing the Employment Agreement prior to your start date. Please sign both copies and send to Ai-Li Lim. You will receive a fully-executed copy of the agreement for your files after your start date.	

Frank H. Smalla
December 15, 2015
Page 4
Offer Letter
 
 	•	 	At-Will Employment: Your employment is, and will at all times remain, at will, meaning that you or the Company may terminate your employment at any time, with or without cause, for any reason or for no reason. It also means that, if your employment is terminated by the Company, you have no legal entitlement to severance pay. By accepting our offer of employment you confirm that you understand your at-will status.	
Please note that at this level, your compensation, equity grants, and biographical information may be disclosed publicly in our proxy statement and other public documents filed with the Securities and Exchange Commission. Also, all aspects of your compensation may be subject to Compensation Committee review and approval from time to time. The Company has also established claw-back provisions to recover executive compensation not earned.
All employees are expected to abide by our Code of Ethics and Business Conduct and Insider Trading Policy (copies of which are enclosed), and such other policies as may be adopted from time to time by the Company.
Please indicate your acceptance of this offer by signing one copy of this letter and returning it to Ai-Li Lim by fax at or by mail at the above address. This offer is valid until December 24, 2016 and is contingent upon our receipt of satisfactory background and reference checks, as well as your signing the Employment Agreement in the form enclosed with this letter.
Frank, we are delighted to extend this offer and hope you decide to join us. I look forward to working with you as together we grow this company.
Best regards,
/s/ Martin F. Roper
Martin Roper
President and CEO
 
Enc.	Form of Option Agreement	
Form of Restricted Stock Agreement
Employee Equity Incentive Plan (EEIP) Disclosure Statement
Employment Agreement (2 copies)
Code of Ethics and Business Conduct
Insider Trading Policy
Corporate Governance Guidelines
Benefits Guide
Relocation Approval Payback Form
Relocation Survey Form
 
cc:	Jim Koch	
Bill Urich
Ai-Li Lim

Frank H. Smalla
December 15, 2015
Page 5
Offer Letter
 
Accepted and agreed to:

/s/ Frank H. Smalla	 	 	 	December 16, 2015	
Frank H. Smalla	 	 	 	Date	
This document should not be misconstrued as a contract.
This is an offer for employment at will.

Exhibit 10.17
Friday, December 18, 2015
PERSONAL AND CONFIDENTIAL
Quincy B. Troupe
117 Willowdale Avenue
Montclair, NJ 07042
Dear Quincy:
We are pleased to offer you the position of Senior Vice President, Supply Chain of The Boston Beer Company, Inc., reporting directly to me initially, but if the Company decides to add a Chief Operating Officer at some point in the future, reporting relationships could change. The following are the parameters of our offer:
 
 	•	 	Title: Senior Vice President, Supply Chain	
 
 	•	 	Areas Of Responsibility: Initially breweries, engineering, safety, production quality, and scheduling. Potential additions of procurement and customer service/freight when initial areas are performing.	
 
 	•	 	Anticipated Start Date: February 15, 2016	
 
 	•	 	Base Annualized Salary: $350,000, payable in bi-weekly installments, subject to applicable payroll and withholding taxes.	
 
 	•	 	Annual Bonus Potential: 50% of paid salary each calendar year. The bonus will be tied to Company Goals to be determined annually. Bonuses are paid on calendar year performance and you must be employed on December 31st of the applicable year to receive the bonus. Bonus multiplier of 1.5x is available for significant performance above Target.	
 
 	•	 	Options Grant: You will be granted options for Class A Common Stock of The Boston Beer Company, Inc. valued at approximately $2,000,000 (estimated at the current stock price of ~$205 is approximately 21,000 shares). The Option will be granted on the third business day after the first release of quarterly financial results following the date on which you commenced full-time employment (next date would be on or about February 23, 2016). The number of shares will be determined based on the market price on the day prior to the date of grant and the per share exercise price will be that market price.	
 
 	•	 	The options will vest on the following schedule:	
 
 	•	 	20% vest on third anniversary of date of grant	
 
 	•	 	20% vest on fourth anniversary of date of grant	
 
 	•	 	20% vest on fifth anniversary of date of grant	

Quincy B. Troupe
December 15, 2015
Page 2
Offer Letter
 
 	•	 	20% vest on sixth anniversary of date of grant	
 
 	•	 	20% vest on seventh anniversary of date of grant	
 
 	•	 	The options have a ten-year life but expire ninety days after the end of employment. Details are in the attached form of the Option Agreement.	
 
 	•	 	Compensation structure is determined and additional option grants are made at the discretion of the Company’s Board of Directors based on the recommendation of the Board’s Compensation Committee, as is the case with other Company senior officers. Discretionary option awards are generally granted effective January 1 each year and are based on Company and individual performance. Vesting of discretionary options is frequently both time- and performance-based. Due to the size of the initial grant in this offer, you should not expect any further awards to occur prior to January 1, 2018.	
 
 	•	 	Restricted Stock: At the same time that you will receive your Option grant, you will be granted restricted stock in The Boston Beer Company, Inc. valued at $750,000. The actual number of shares to be granted will be determined based on the market price on the day prior to the date of grant.	
 
 	•	 	The shares will vest one-third each year on the first, second and third anniversary of your date of grant.	
 
 	•	 	Performance and Compensation Review: Your performance will be formally reviewed on an annual basis and any adjustment to compensation may require approval of the Compensation Committee. Adjustments generally take effect as of January 1.	
 
 	•	 	Relocation: We understand that you do not wish to relocate at this time and will establish a home office in NJ and travel to our company locations. Such travel will be subject to the Company’s Travel & Expense Policy.	
However, if and when you do decide to relocate, and provided you agree to the Company’s Relocation Payback guidelines included with this offer and the Company agrees to such relocation, the Company will provide you with the following relocation assistance to the Boston area or another mutually agreed-upon location:
 
 	•	 	Sale of Current Home - Reimbursement of third party agent commission up to 6%. Legal fees will be reimbursed (maximum of $2,000).	
 
 	•	 	If you need to sell your home in order to relocate, the Company has a program which may, in some circumstances, provide you with some tax savings related to the transaction. When the time comes to place your house on the market,  please do not contact or sign with a selling agent  prior to discussing your home sale needs with the HR Department.	
 
 	•	 	Boston Beer will not assume any liability or risk with respect to the sale of your home, including but not limited to, covering a negative equity position, guaranteed buy-out of property, etc.	

Quincy B. Troupe
December 15, 2015
Page 3
Offer Letter
 
 	•	 	Assistance in Purchasing New Residence—Purchase closing costs normally paid by the purchaser up to a maximum of 1% of the value of the loan. Mortgage loan points are not reimbursed.	
 
 	•	 	Boston Beer will not assume any liability or risk in reference to the purchase of a new home, including but not limited to equity loans, advanced pay, etc.	
 
 	•	 	Home Finding – reasonable number of trips for you and your spouse including food, lodging and transportation (utilizing the Company’s travel agency to the extent practicable).	
 
 	•	 	Transportation to New Location – actual expenses incurred by using the most direct route for one trip (utilizing the Company’s travel agency to the extent practicable).	
 
 	•	 	Temporary Housing – lodging up to 180 days.	
 
 	•	 	Movement of Household Goods – moving company will pack and move ordinary household goods, and two (2) vehicles.	
 
 	•	 	Storage – storage of household goods up to 60 days.	
 
 	•	 	Settling-in Allowance – reimbursement of actual out of pocket expenses incurred during your move, including but not limited to application fees, driver’s license fee, car registration fees and utility hook-up fees.	
 
 	•	 	Paid Time Off (PTO): During the first two (2) years of your employment, in addition to 10 company holidays, you will be eligible for seventeen (17) PTO days per year, accruing at 2.62 hours / week, which will be pro-rated during your first year of employment. On your second anniversary, you will be eligible for twenty-two (22) PTO days per year, accruing at 3.38 hours / week. You will begin accruing PTO immediately, and we encourage you to take all of this time within the calendar year in which accrued.	
 
 	•	 	Benefits: You will be eligible to participate in the Company’s medical and dental programs upon your first day of employment with us. You will be eligible to participate in our 401(k) plan at the beginning of the month following your start date. Enclosed you will find a more detailed description of our benefits package and payroll information. You should complete the enclosed forms and send them to Ai-Li Lim, VP of Human Resources, at the above address prior to your first day of employment with us. If you have specific questions regarding your benefits, you may contact Ai-Li directly at. Please note — it is imperative that you provide I-9 documentation to Ai-Li on or before your first day so we are able to add you to our payroll system. Failure to do so may delay your first paycheck.	
 
 	•	 	Employment Agreement: Enclosed are two (2) copies of an Employment Agreement, which includes, among other provisions, an agreement to protect the Company’s proprietary and confidential information and a covenant not to compete. This offer is contingent on your signing the Employment Agreement prior to your start date. Please sign both copies and send to Ai-Li Lim. You will receive a fully-executed copy of the agreement for your files after your start date.	

Quincy B. Troupe
December 15, 2015
Page 4
Offer Letter
 
 	•	 	At-Will Employment: Your employment is, and will at all times remain, at will, meaning that you or the Company may terminate your employment at any time, with or without cause, for any reason or for no reason. It also means that, if your employment is terminated by the Company, you have no legal entitlement to severance pay. By accepting our offer of employment you confirm that you understand your at-will status.	
Please note that at this level, your compensation, equity grants, and biographical information may be disclosed publicly in our proxy statement and other public documents filed with the Securities and Exchange Commission. Also, all aspects of your compensation may be subject to Compensation Committee review and approval from time to time. The Company has also established claw-back provisions to recover executive compensation not earned.
All employees are expected to abide by our Code of Ethics and Business Conduct and Insider Trading Policy (copies of which are enclosed), and such other policies as may be adopted from time to time by the Company.
Please indicate your acceptance of this offer by signing one copy of this letter and returning it to Ai-Li Lim by fax at or by mail at the above address. This offer is valid until January 4, 2016 and is contingent upon our receipt of satisfactory background and reference checks, as well as your signing the Employment Agreement in the form enclosed with this letter.
Quincy, we are delighted to extend this offer and hope you decide to join us. I look forward to working with you as together we grow this company.
Best regards,
/s/ Martin F. Roper
Martin Roper
President and CEO
 
Enc.	Form of Option Agreement	
Form of Restricted Stock Agreement
Employee Equity Incentive Plan (EEIP) Disclosure Statement
Employment Agreement (2 copies)
Code of Ethics and Business Conduct
Insider Trading Policy
Corporate Governance Guidelines
Benefits Guide
Relocation Approval Payback Form
Relocation Survey Form
 
cc:	Jim Koch	
Bill Urich
Ai-Li Lim

Quincy B. Troupe
December 15, 2015
Page 5
Offer Letter
 
Accepted and agreed to:

/s/ Quincy B. Troupe	 	 	 	December 24, 2015	
Quincy B. Troupe	 	 	 	Date	
This document should not be misconstrued as a contract.
This is an offer for employment at will.

Exhibit 21.5
List of Subsidiaries and Affiliates
of
The Boston Beer Company, Inc.
as of
December 26, 2015
A&S Brewing Collaborative LLC
(a Delaware limited liability company)
American Craft Brewery LLC
(a Massachusetts limited liability company)
Angry Orchard Cider Company, LLC
(a Delaware limited liability company)
Boston Beer Corporation
(a Massachusetts corporation)
Boston Beer Corporation Canada, Inc.
(a Canadian business corporation)
Boston Brewing Company, Inc.
(a Massachusetts corporation)
Freetown Acquisition Company, LLC
(a Massachusetts limited liability company)
Lazy River Cider Co., LLC
(a Delaware limited liability company)
Providence Street Associates, LLC
(an Ohio limited liability company)
SABC Realty, Ltd.
(an Ohio limited liability company)
TM on Hold LLC
(a Delaware limited liability company)

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-68531, 333-163314, 333-163315, 333-12221, 333-85110, 333-85112, 333-121057, 333-140250, and 333-148374 on Form S-8 of our reports dated February 18, 2016, relating to the 2015 consolidated financial statements of The Boston Beer Company, Inc., and the effectiveness of The Boston Beer Company, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of The Boston Beer Company, Inc. for the year ended December 26, 2015.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 18, 2016

Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
 
 	(1)	Registration Statement (Form S-8 No. 333-68531) pertaining to THE BOSTON BEER COMPANY, INC. EMPLOYEE EQUITY INCENTIVE PLAN,	
 
 	(2)	Registration Statement (Form S-8 No. 333-163314) pertaining to THE BOSTON BEER COMPANY, INC. 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS,	
 
 	(3)	Registration Statement (Form S-8 No. 333-163315) pertaining to THE BOSTON BEER COMPANY, INC. EMPLOYEE EQUITY INCENTIVE PLAN,	
 
 	(4)	Registration Statement (Form S-8 No. 333-12221) pertaining to THE BOSTON BEER COMPANY, INC. 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS,	
 
 	(5)	Registration Statement (Form S-8 No. 333-85110) pertaining to THE BOSTON BEER COMPANY, INC. 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS,	
 
 	(6)	Registration Statement (Form S-8 No. 333-85112) pertaining to THE BOSTON BEER COMPANY, INC. EMPLOYEE EQUITY INCENTIVE PLAN,	
 
 	(7)	Registration Statement (Form S-8 No. 333-121057) pertaining to THE BOSTON BEER COMPANY, INC. 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS,	
 
 	(8)	Registration Statement (Form S-8 No. 333-140250) pertaining to THE BOSTON BEER COMPANY, INC. EMPLOYEE EQUITY INCENTIVE PLAN, and	
 
 	(9)	Registration Statement (Form S-8 No. 333-148374) pertaining to THE BOSTON BEER COMPANY, INC. EMPLOYEE EQUITY INCENTIVE PLAN of The Boston Beer Company, Inc.	
of our report dated February 24, 2015, with respect to the consolidated financial statements of The Boston Beer Company, Inc. as of December 27, 2014 and for each of the two years in the period ended December 27, 2014 included in this Annual Report (Form 10-K) of the Boston Beer Company, Inc. for the year ended December 26, 2015.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2016

Exhibit 31.1
I, Martin F. Roper, certify that:
1. I have reviewed this annual report on Form 10-K of The Boston Beer Company, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	
Date: February 18, 2016

/s/ Martin F. Roper	
Martin F. Roper	
President and Chief Executive Officer	
[Principal Executive Officer]	

Exhibit 31.2
I, William F. Urich, certify that:
1. I have reviewed this annual report on Form 10-K of The Boston Beer Company, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
 	(d)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
 	(e)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	
Date: February 18, 2016

/s/ William F. Urich	
William F. Urich	
Chief Financial Officer	
[Principal Financial Officer]	

Exhibit 32.1
The Boston Beer Company, Inc.
Certification Pursuant To
18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The Boston Beer Company, Inc. (the “Company”) on Form 10-K for the period ended December 26, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Martin F. Roper, President and Chief Executive Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 18, 2016

/s/ Martin F. Roper	
Martin F. Roper	
President and Chief Executive Officer	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Boston Beer Company, Inc. and will be retained by The Boston Beer Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2
The Boston Beer Company, Inc.
Certification Pursuant To
18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The Boston Beer Company, Inc. (the “Company”) on Form 10-K for the period ended December 26, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, William F. Urich, Chief Financial Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 18, 2016

/s/ William F. Urich	
William F. Urich	
Chief Financial Officer	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Boston Beer Company, Inc. and will be retained by The Boston Beer Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.