|
☒
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QUARTERLY REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Washington
|
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91-1141254
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(State or other jurisdiction of incorporation or organization)
|
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(I.R.S. Employer Identification No.)
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929 North Russell Street
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|
|
Portland, Oregon
|
|
97227-1733
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(Address of principal executive offices)
|
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(Zip Code)
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Securities Registered pursuant to Section 12(b) of the Act:
|
|
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Title of each class
|
Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.005 par value
|
BREW
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The NASDAQ Stock Market LLC
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Large accelerated filer ☐
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Accelerated filer ☒
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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PART I - FINANCIAL INFORMATION
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Page
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Item 1.
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Financial Statements
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Item 2.
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Item 3.
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Item 4.
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PART II ‑ OTHER INFORMATION
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Item 1.
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||
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Item 1A.
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Item 6.
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June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
970
|
|
|
$
|
1,200
|
|
Accounts receivable, net
|
30,223
|
|
|
29,998
|
|
||
Inventory, net
|
20,579
|
|
|
17,216
|
|
||
Other current assets
|
3,591
|
|
|
3,121
|
|
||
Total current assets
|
55,363
|
|
|
51,535
|
|
||
Property, equipment and leasehold improvements, net
|
111,634
|
|
|
113,189
|
|
||
Operating lease right-of-use assets
|
19,002
|
|
|
—
|
|
||
Goodwill
|
21,935
|
|
|
21,986
|
|
||
Trademarks
|
44,245
|
|
|
44,289
|
|
||
Intangible and other assets, net
|
5,710
|
|
|
5,048
|
|
||
Total assets
|
$
|
257,889
|
|
|
$
|
236,047
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
19,489
|
|
|
$
|
17,552
|
|
Accrued salaries, wages and payroll taxes
|
4,920
|
|
|
5,635
|
|
||
Refundable deposits
|
3,685
|
|
|
4,123
|
|
||
Deferred revenue
|
4,364
|
|
|
6,015
|
|
||
Other accrued expenses
|
8,101
|
|
|
3,618
|
|
||
Current portion of long-term debt and finance lease obligations
|
1,483
|
|
|
919
|
|
||
Total current liabilities
|
42,042
|
|
|
37,862
|
|
||
Long-term debt and finance lease obligations, net of current portion
|
51,675
|
|
|
46,573
|
|
||
Fair value of derivative financial instruments
|
298
|
|
|
116
|
|
||
Deferred income tax liability, net
|
10,799
|
|
|
12,381
|
|
||
Long-term operating lease liabilities
|
19,382
|
|
|
—
|
|
||
Other liabilities
|
1,220
|
|
|
2,680
|
|
||
Total liabilities
|
125,416
|
|
|
99,612
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
||
Common shareholders' equity:
|
|
|
|
|
|
||
Common stock, $0.005 par value. Authorized 50,000,000 shares; issued and outstanding 19,465,244 and 19,382,641
|
97
|
|
|
97
|
|
||
Additional paid-in capital
|
144,941
|
|
|
144,013
|
|
||
Accumulated other comprehensive loss
|
(222
|
)
|
|
(86
|
)
|
||
Accumulated deficit
|
(12,343
|
)
|
|
(7,589
|
)
|
||
Total common shareholders' equity
|
132,473
|
|
|
136,435
|
|
||
Total liabilities and common shareholders' equity
|
$
|
257,889
|
|
|
$
|
236,047
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Sales
|
$
|
63,815
|
|
|
$
|
65,253
|
|
|
$
|
113,583
|
|
|
$
|
115,338
|
|
Less excise taxes
|
3,256
|
|
|
3,430
|
|
|
6,032
|
|
|
6,028
|
|
||||
Net sales
|
60,559
|
|
|
61,823
|
|
|
107,551
|
|
|
109,310
|
|
||||
Cost of sales
|
37,272
|
|
|
39,696
|
|
|
68,081
|
|
|
72,112
|
|
||||
Gross profit
|
23,287
|
|
|
22,127
|
|
|
39,470
|
|
|
37,198
|
|
||||
Selling, general and administrative expenses
|
19,381
|
|
|
15,857
|
|
|
44,946
|
|
|
30,605
|
|
||||
Operating income (loss)
|
3,906
|
|
|
6,270
|
|
|
(5,476
|
)
|
|
6,593
|
|
||||
Interest expense
|
(504
|
)
|
|
(107
|
)
|
|
(812
|
)
|
|
(241
|
)
|
||||
Other income, net
|
33
|
|
|
21
|
|
|
33
|
|
|
55
|
|
||||
Income (loss) before income taxes
|
3,435
|
|
|
6,184
|
|
|
(6,255
|
)
|
|
6,407
|
|
||||
Income tax provision (benefit)
|
825
|
|
|
1,732
|
|
|
(1,501
|
)
|
|
1,794
|
|
||||
Net income (loss)
|
$
|
2,610
|
|
|
$
|
4,452
|
|
|
$
|
(4,754
|
)
|
|
$
|
4,613
|
|
Basic and diluted net income (loss) per share
|
$
|
0.13
|
|
|
$
|
0.23
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.24
|
|
Shares used in basic per share calculations
|
19,443
|
|
|
19,334
|
|
|
19,416
|
|
|
19,322
|
|
||||
Shares used in diluted per share calculations
|
19,593
|
|
|
19,517
|
|
|
19,416
|
|
|
19,502
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
2,610
|
|
|
$
|
4,452
|
|
|
$
|
(4,754
|
)
|
|
$
|
4,613
|
|
Unrealized gain (loss) on derivative hedge transactions, net of tax
|
(89
|
)
|
|
46
|
|
|
(136
|
)
|
|
129
|
|
||||
Comprehensive income (loss)
|
$
|
2,521
|
|
|
$
|
4,498
|
|
|
$
|
(4,890
|
)
|
|
$
|
4,742
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Loss |
|
|
|
Total
Common Shareholders' Equity |
|||||||||||||
|
|
Shares
|
|
Par Value
|
|
|
|
Accumulated Deficit
|
|
||||||||||||||
Balance at December 31, 2017
|
|
19,310
|
|
|
$
|
96
|
|
|
$
|
142,196
|
|
|
$
|
(164
|
)
|
|
$
|
(11,337
|
)
|
|
$
|
130,791
|
|
Adoption of accounting standard ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(394
|
)
|
|
(394
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
485
|
|
|
—
|
|
|
—
|
|
|
485
|
|
|||||
Unrealized gain on derivative financial instruments, net of tax of $29
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
161
|
|
|
161
|
|
|||||
Balance at March 31, 2018
|
|
19,310
|
|
|
96
|
|
|
142,681
|
|
|
(81
|
)
|
|
(11,570
|
)
|
|
131,126
|
|
|||||
Issuance of shares under stock plans, net of shares withheld for tax payments
|
|
23
|
|
|
—
|
|
|
206
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|||||
Stock-based compensation
|
|
29
|
|
|
1
|
|
|
201
|
|
|
|
|
|
|
202
|
|
|||||||
Unrealized gain on derivative financial instruments, net of tax of $15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
|||||
Tax payments related to stock-based awards
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,452
|
|
|
4,452
|
|
|||||
Balance at June 30, 2018
|
|
19,362
|
|
|
$
|
97
|
|
|
$
|
143,004
|
|
|
$
|
(35
|
)
|
|
$
|
(7,118
|
)
|
|
$
|
135,948
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Loss |
|
|
|
Total
Common Shareholders' Equity |
|||||||||||||
|
|
Shares
|
|
Par Value
|
|
|
|
Accumulated Deficit
|
|
||||||||||||||
Balance at December 31, 2018
|
|
19,383
|
|
|
$
|
97
|
|
|
$
|
144,013
|
|
|
$
|
(86
|
)
|
|
$
|
(7,589
|
)
|
|
$
|
136,435
|
|
Stock-based compensation, net of shares withheld for tax payments
|
|
29
|
|
|
—
|
|
|
418
|
|
|
—
|
|
|
—
|
|
|
418
|
|
|||||
Unrealized loss on derivative financial instruments, net of tax of $16
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
|||||
Tax payments related to stock-based awards
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,364
|
)
|
|
(7,364
|
)
|
|||||
Balance at March 31, 2019
|
|
19,412
|
|
|
97
|
|
|
144,274
|
|
|
(133
|
)
|
|
(14,953
|
)
|
|
129,285
|
|
|||||
Stock-based compensation, net of shares withheld for tax payments
|
|
53
|
|
|
—
|
|
|
835
|
|
|
—
|
|
|
—
|
|
|
835
|
|
|||||
Unrealized loss on derivative financial instruments, net of tax of $31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(89
|
)
|
|||||
Tax payments related to stock-based awards
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,610
|
|
|
2,610
|
|
|||||
Balance at June 30, 2019
|
|
19,465
|
|
|
$
|
97
|
|
|
$
|
144,941
|
|
|
$
|
(222
|
)
|
|
$
|
(12,343
|
)
|
|
$
|
132,473
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(4,754
|
)
|
|
$
|
4,613
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
5,386
|
|
|
5,387
|
|
||
(Gain) loss on sale or disposal of Property, equipment and leasehold improvements
|
22
|
|
|
(494
|
)
|
||
Deferred income taxes
|
(1,536
|
)
|
|
(629
|
)
|
||
Stock-based compensation
|
1,253
|
|
|
687
|
|
||
Lease expense
|
101
|
|
|
—
|
|
||
Other
|
152
|
|
|
188
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
75
|
|
|
(9,215
|
)
|
||
Inventories
|
(3,349
|
)
|
|
(285
|
)
|
||
Other current assets
|
(687
|
)
|
|
1,761
|
|
||
Accounts payable, deferred revenue and other accrued expenses
|
8,068
|
|
|
7,889
|
|
||
Accrued salaries, wages and payroll taxes
|
(715
|
)
|
|
(1,204
|
)
|
||
Refundable deposits
|
104
|
|
|
(241
|
)
|
||
Net cash provided by operating activities
|
4,120
|
|
|
8,457
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Expenditures for Property, equipment and leasehold improvements
|
(9,440
|
)
|
|
(4,284
|
)
|
||
Proceeds from sale of Property, equipment and leasehold improvements
|
22
|
|
|
22,936
|
|
||
Restricted cash from sale of Property, equipment and leasehold improvements
|
—
|
|
|
515
|
|
||
Business combinations and asset acquisitions
|
(274
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(9,692
|
)
|
|
19,167
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
5,192
|
|
|
—
|
|
||
Principal payments on debt and finance lease obligations
|
(455
|
)
|
|
(348
|
)
|
||
Net borrowings (repayments) under revolving line of credit
|
930
|
|
|
(22,199
|
)
|
||
Proceeds from issuances of common stock
|
—
|
|
|
206
|
|
||
Tax payments related to stock-based awards
|
(325
|
)
|
|
(84
|
)
|
||
Net cash provided by (used in) financing activities
|
5,342
|
|
|
(22,425
|
)
|
||
Increase (decrease) in Cash, cash equivalents and restricted cash
|
(230
|
)
|
|
5,199
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash:
|
|
|
|
|
|
||
Beginning of period
|
1,200
|
|
|
579
|
|
||
End of period
|
$
|
970
|
|
|
$
|
5,778
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
761
|
|
|
$
|
285
|
|
Cash paid for income taxes, net
|
569
|
|
|
126
|
|
||
Cash paid for amounts included in measurement of lease liabilities
|
$
|
1,513
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash information:
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for operating lease obligations
|
$
|
19,726
|
|
|
$
|
—
|
|
Right-of-use assets obtained in exchange for finance lease obligations
|
2,538
|
|
|
—
|
|
||
Purchases of Property, equipment and leasehold improvements included in Accounts payable at end of period
|
199
|
|
|
429
|
|
•
|
elected the package of three practical expedients available under the transition provisions which allowed us to: (i) not reassess whether expired or existing contracts were or contained leases, (ii) not reassess the lease classification for expired or existing leases, and (iii) not reassess initial direct costs for existing leases.
|
•
|
determined the land easement practical expedient was not applicable.
|
•
|
as applicable, used hindsight for specified determinations and assessments in applying the new leases guidance.
|
•
|
did not separate lease and associated non-lease components for transitioned leases, but instead are accounting for them together as a single lease component.
|
•
|
elected to utilize the recognition exemption for short-term leases of one year or less at inception
|
|
|
Balance at
December 31, 2018 |
|
Adjustments due to
ASC 842 |
|
Balance at
January 1, 2019 |
||||||
Assets
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
$
|
29,998
|
|
|
$
|
300
|
|
|
$
|
30,298
|
|
Other current assets
|
|
3,121
|
|
|
(216
|
)
|
|
2,905
|
|
|||
Property, equipment and leasehold improvements, net
|
|
113,189
|
|
|
(2,538
|
)
|
|
110,651
|
|
|||
Operating lease right-of-use assets
|
|
—
|
|
|
19,726
|
|
|
19,726
|
|
|||
Intangible and other assets, net
|
|
5,048
|
|
|
1,140
|
|
|
6,188
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
||||||
Other accrued expenses
|
|
3,618
|
|
|
269
|
|
|
3,887
|
|
|||
Long-term lease liabilities
|
|
—
|
|
|
18,143
|
|
|
18,143
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
$
|
6,716
|
|
|
$
|
7,146
|
|
Work in process
|
4,051
|
|
|
3,219
|
|
||
Finished goods
|
7,004
|
|
|
4,319
|
|
||
Packaging materials
|
1,741
|
|
|
891
|
|
||
Promotional merchandise
|
656
|
|
|
1,139
|
|
||
Brewpub food, beverages and supplies
|
411
|
|
|
502
|
|
||
|
$
|
20,579
|
|
|
$
|
17,216
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Operating lease liabilities:
|
|
|
|
||||
Current lease liabilities included in Other accrued expenses
|
$
|
841
|
|
|
$
|
—
|
|
Long-term lease liabilities
|
19,382
|
|
|
—
|
|
||
Total operating lease liabilities
|
20,223
|
|
|
—
|
|
||
Financing lease liabilities:
|
|
|
|
||||
Current portion included in Current portion of long-term debt and finance lease obligations
|
387
|
|
|
477
|
|
||
Long-term portion of lease liabilities in Long-term debt and finance lease obligations, net of current portion
|
954
|
|
|
1,101
|
|
||
Total financing lease liabilities
|
1,341
|
|
|
1,578
|
|
||
Total lease liabilities
|
$
|
21,564
|
|
|
$
|
1,578
|
|
Weighted-average remaining lease term:
|
|
|
|
||||
Operating leases
|
27 years
|
|
|
|
|||
Finance leases
|
4 years
|
|
|
|
|||
Weighted-average discount rate:
|
|
|
|
||||
Operating leases
|
4.91
|
%
|
|
|
|||
Finance leases
|
3.56
|
%
|
|
|
|
Operating Leases
|
||
Remainder of 2019
|
$
|
957
|
|
2020
|
1,702
|
|
|
2021
|
1,713
|
|
|
2022
|
1,697
|
|
|
2023
|
1,480
|
|
|
Thereafter
|
29,077
|
|
|
Total minimum lease payments
|
36,626
|
|
|
Less: present value adjustment
|
(16,403
|
)
|
|
Operating lease liabilities
|
$
|
20,223
|
|
|
Finance Leases
|
||
Remainder of 2019
|
$
|
264
|
|
2020
|
333
|
|
|
2021
|
266
|
|
|
2022
|
199
|
|
|
2023
|
199
|
|
|
Thereafter
|
199
|
|
|
Total minimum lease payments
|
1,460
|
|
|
Less: present value adjustment
|
(119
|
)
|
|
Finance lease liabilities
|
$
|
1,341
|
|
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Operating lease cost
(1)
|
$
|
864
|
|
|
$
|
1,738
|
|
Finance lease cost:
|
|
|
|
||||
Amortization of right-of-use asset
|
42
|
|
|
85
|
|
||
Interest on lease liabilities
|
12
|
|
|
25
|
|
||
Sublease income
|
(69
|
)
|
|
(69
|
)
|
||
Total lease cost
|
$
|
849
|
|
|
$
|
1,779
|
|
|
Operating Lease Obligations
|
|
Capital Lease Obligations
|
||||
2019
|
$
|
11,208
|
|
|
$
|
529
|
|
2020
|
1,937
|
|
|
333
|
|
||
2021
|
1,863
|
|
|
266
|
|
||
2022
|
1,793
|
|
|
199
|
|
||
2023
|
1,465
|
|
|
199
|
|
||
Thereafter
|
25,446
|
|
|
199
|
|
||
|
$
|
43,712
|
|
|
1,725
|
|
|
Amount representing interest
|
|
|
(148
|
)
|
|||
|
|
|
$
|
1,577
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gross sales to A-B and Ambev
|
$
|
51,430
|
|
|
$
|
50,283
|
|
|
$
|
91,039
|
|
|
$
|
87,851
|
|
International distribution fee earned from ABWI
|
812
|
|
|
850
|
|
|
1,624
|
|
|
1,700
|
|
||||
International distribution fee from ABWI, recorded in Deferred revenue
|
—
|
|
|
650
|
|
|
—
|
|
|
1,300
|
|
||||
Contract brewing fee earned from ABC
|
104
|
|
|
395
|
|
|
642
|
|
|
858
|
|
||||
Margin fee paid to A-B, classified as a reduction of Sales
|
724
|
|
|
687
|
|
|
1,265
|
|
|
1,205
|
|
||||
Inventory management and other fees paid to A-B, classified in Cost of sales
|
107
|
|
|
100
|
|
|
197
|
|
|
190
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Amounts due from A-B related to beer sales pursuant to the A-B distributor agreement
|
$
|
21,885
|
|
|
$
|
17,946
|
|
Amounts due from ABWI and A-B related to international distribution fee and media reimbursement
|
—
|
|
|
6,000
|
|
||
Refundable deposits due to A-B
|
(3,709
|
)
|
|
(2,840
|
)
|
||
Amounts due to A-B for services rendered
|
(9,532
|
)
|
|
(5,140
|
)
|
||
Net amount due from A-B and ABWI
|
$
|
8,644
|
|
|
$
|
15,966
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Master distributor fee earned
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Share of loss, classified as a component of Other income (expense), net
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
22
|
|
||||
Refund of investment, classified as a reduction in the carrying value of the equity method investment
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
$
|
41
|
|
|
$
|
41
|
|
|
$
|
82
|
|
|
$
|
82
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Term loan, due September 30, 2023
|
$
|
8,604
|
|
|
$
|
8,823
|
|
Line of credit, due September 30, 2023
|
38,021
|
|
|
37,092
|
|
||
Secured borrowing, due June 21, 2026
|
5,192
|
|
|
—
|
|
||
|
51,817
|
|
|
45,915
|
|
||
Less current portion, term loan and secured borrowing
|
(1,096
|
)
|
|
(442
|
)
|
||
|
$
|
50,721
|
|
|
$
|
45,473
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Fair value of interest rate swap liability
|
$
|
(297
|
)
|
|
$
|
(116
|
)
|
Derivatives in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss)
Recognized in Accumulated OCI (Effective Portion)
|
|
Location of Loss Reclassified
from Accumulated OCI into
Income (Effective Portion)
|
|
Amount of Loss Reclassified from Accumulated OCI into
Income (Effective Portion)
|
||||
Three Months Ended
June 30, |
|
|
|
|
|
|
||||
2019
|
|
$
|
(120
|
)
|
|
Interest expense
|
|
$
|
6
|
|
2018
|
|
$
|
61
|
|
|
Interest expense
|
|
$
|
17
|
|
|
|
|
|
|
|
|
||||
Six Months Ended
June 30, |
|
|
|
|
|
|
||||
2019
|
|
$
|
(182
|
)
|
|
Interest expense
|
|
$
|
12
|
|
2018
|
|
$
|
173
|
|
|
Interest expense
|
|
$
|
39
|
|
•
|
Level 1 – quoted prices in active markets for identical securities as of the reporting date;
|
•
|
Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; and
|
•
|
Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.
|
Fair Value at June 30, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Interest rate swap
|
|
$
|
—
|
|
|
$
|
(297
|
)
|
|
$
|
—
|
|
|
$
|
(297
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Fair Value at December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
$
|
—
|
|
|
$
|
(116
|
)
|
|
$
|
—
|
|
|
$
|
(116
|
)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Fixed-rate debt on Consolidated Balance Sheets
|
$
|
6,533
|
|
|
$
|
1,577
|
|
Estimated fair value of fixed-rate debt
|
6,747
|
|
|
1,591
|
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||
|
|
Beer Related
1
|
|
Brewpubs
|
|
Total
|
|
Beer Related
1
|
|
Brewpubs
|
|
Total
|
||||||||||||
Product sold through distributor agreements
2
|
|
$
|
55,905
|
|
|
$
|
—
|
|
|
$
|
55,905
|
|
|
$
|
97,033
|
|
|
$
|
—
|
|
|
$
|
97,033
|
|
Alternating proprietorship and contract brewing fees
3
|
|
352
|
|
|
—
|
|
|
352
|
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
||||||
International distribution fees
|
|
812
|
|
|
—
|
|
|
812
|
|
|
1,624
|
|
|
—
|
|
|
1,624
|
|
||||||
Brewpubs
4
|
|
—
|
|
|
6,066
|
|
|
6,066
|
|
|
—
|
|
|
12,269
|
|
|
12,269
|
|
||||||
Other
5
|
|
680
|
|
|
—
|
|
|
680
|
|
|
1,457
|
|
|
—
|
|
|
1,457
|
|
||||||
|
|
$
|
57,749
|
|
|
$
|
6,066
|
|
|
$
|
63,815
|
|
|
$
|
101,314
|
|
|
$
|
12,269
|
|
|
$
|
113,583
|
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
|
Beer Related
1
|
|
Brewpubs
|
|
Total
|
|
Beer Related
1
|
|
Brewpubs
|
|
Total
|
||||||||||||
Product sold through distributor agreements
2
|
|
$
|
54,148
|
|
|
$
|
—
|
|
|
$
|
54,148
|
|
|
$
|
93,815
|
|
|
$
|
—
|
|
|
$
|
93,815
|
|
Alternating proprietorship and contract brewing fees
3
|
|
3,175
|
|
|
—
|
|
|
3,175
|
|
|
5,886
|
|
|
—
|
|
|
5,886
|
|
||||||
International distribution fees
|
|
850
|
|
|
—
|
|
|
850
|
|
|
1,700
|
|
|
—
|
|
|
1,700
|
|
||||||
Brewpubs
4
|
|
—
|
|
|
6,101
|
|
|
6,101
|
|
|
—
|
|
|
12,112
|
|
|
12,112
|
|
||||||
Other
5
|
|
979
|
|
|
—
|
|
|
979
|
|
|
1,825
|
|
|
—
|
|
|
1,825
|
|
||||||
|
|
$
|
59,152
|
|
|
$
|
6,101
|
|
|
$
|
65,253
|
|
|
$
|
103,226
|
|
|
$
|
12,112
|
|
|
$
|
115,338
|
|
(1)
|
Beer Related sales include sales to A-B subsidiaries including Ambev, ABWI and ABC. Sales to wholesalers through the A-B distributor agreement in the three-month period ended
June 30, 2019
and
2018
represented
80.9%
and
77.9%
of our Sales, respectively. Sales to wholesalers through the A-B distributor agreement in the six-month period ended
June 30, 2019
and
2018
represented
81.0%
and
77.3%
of our Sales, respectively.
|
(2)
|
Product sold through distributor agreements included domestic and international sales of owned and non-owned brands pursuant to terms in our distributor agreements.
|
(3)
|
Alternating proprietorship fees ceased in the fourth quarter of 2018.
|
(4)
|
Brewpub sales include sales of promotional merchandise and sales of beer directly to customers.
|
(5)
|
Other sales include sales of beer related merchandise, hops and spent grain.
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
80.9
|
%
|
|
77.9
|
%
|
|
81.0
|
%
|
|
77.3
|
%
|
June 30,
2019 |
|
December 31,
2018 |
||
72.4
|
%
|
|
79.8
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of sales
|
$
|
34
|
|
|
$
|
14
|
|
|
$
|
82
|
|
|
$
|
66
|
|
Selling, general and administrative expense
|
801
|
|
|
188
|
|
|
1,171
|
|
|
621
|
|
||||
Total stock-based compensation expense
|
$
|
835
|
|
|
$
|
202
|
|
|
$
|
1,253
|
|
|
$
|
687
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted average common shares used for basic EPS
|
19,443
|
|
|
19,334
|
|
|
19,416
|
|
|
19,322
|
|
Dilutive effect of stock-based awards
|
150
|
|
|
183
|
|
|
—
|
|
|
180
|
|
Shares used for diluted EPS
|
19,593
|
|
|
19,517
|
|
|
19,416
|
|
|
19,502
|
|
|
|
|
|
|
|
|
|
|
|
||
Stock-based awards not included in diluted per share calculations as they would be antidilutive
|
63
|
|
|
—
|
|
|
51
|
|
|
—
|
|
Six Months Ended June 30,
|
|
Net sales
|
|
Net income (loss)
|
|
Number of
barrels sold |
2019
|
|
$107.6 million
|
|
$(4.8) million
|
|
400,000
|
2018
|
|
$109.3 million
|
|
$4.6 million
|
|
391,600
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Sales
|
105.4
|
%
|
|
105.5
|
%
|
|
105.6
|
%
|
|
105.5
|
%
|
Less excise taxes
|
(5.4
|
)
|
|
(5.5
|
)
|
|
(5.6
|
)
|
|
(5.5
|
)
|
Net sales
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales
|
61.5
|
|
|
64.2
|
|
|
63.3
|
|
|
66.0
|
|
Gross profit
|
38.5
|
|
|
35.8
|
|
|
36.7
|
|
|
34.0
|
|
Selling, general and administrative expenses
|
32.0
|
|
|
25.6
|
|
|
41.8
|
|
|
28.0
|
|
Operating income (loss)
|
6.4
|
|
|
10.1
|
|
|
(5.1
|
)
|
|
6.0
|
|
Interest expense
|
(0.8
|
)
|
|
(0.2
|
)
|
|
(0.8
|
)
|
|
(0.2
|
)
|
Other income, net
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Income (loss) before income taxes
|
5.7
|
|
|
10.0
|
|
|
(5.8
|
)
|
|
5.9
|
|
Income tax provision (benefit)
|
1.4
|
|
|
2.8
|
|
|
(1.4
|
)
|
|
1.6
|
|
Net income (loss)
|
4.3
|
%
|
|
7.2
|
%
|
|
(4.4
|
)%
|
|
4.2
|
%
|
(1)
|
Percentages may not add due to rounding.
|
|
|
Three Months Ended June 30,
|
||||||||||
2019
|
|
Beer
Related |
|
Brewpubs
|
|
Total
|
||||||
Net sales
|
|
$
|
54,493
|
|
|
$
|
6,066
|
|
|
$
|
60,559
|
|
Gross profit
|
|
$
|
22,676
|
|
|
$
|
611
|
|
|
$
|
23,287
|
|
Gross margin
|
|
41.6
|
%
|
|
10.1
|
%
|
|
38.5
|
%
|
|||
|
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|||
Net sales
|
|
$
|
55,722
|
|
|
$
|
6,101
|
|
|
$
|
61,823
|
|
Gross profit
|
|
$
|
21,942
|
|
|
$
|
185
|
|
|
$
|
22,127
|
|
Gross margin
|
|
39.4
|
%
|
|
3.0
|
%
|
|
35.8
|
%
|
|||
|
|
|
|
|
|
|
||||||
|
|
Six Months Ended June 30,
|
||||||||||
2019
|
|
Beer
Related |
|
Brewpubs
|
|
Total
|
||||||
Net sales
|
|
$
|
95,282
|
|
|
$
|
12,269
|
|
|
$
|
107,551
|
|
Gross profit
|
|
$
|
38,184
|
|
|
$
|
1,286
|
|
|
$
|
39,470
|
|
Gross margin
|
|
40.1
|
%
|
|
10.5
|
%
|
|
36.7
|
%
|
|||
|
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|||
Net sales
|
|
$
|
97,198
|
|
|
$
|
12,112
|
|
|
$
|
109,310
|
|
Gross profit
|
|
$
|
36,652
|
|
|
$
|
546
|
|
|
$
|
37,198
|
|
Gross margin
|
|
37.7
|
%
|
|
4.5
|
%
|
|
34.0
|
%
|
|
|
Three Months Ended June 30,
|
|
Dollar
|
|
|
|||||||||
Sales by Category
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
A-B and A-B related
(1)
|
|
$
|
51,622
|
|
|
$
|
50,841
|
|
|
$
|
781
|
|
|
1.5
|
%
|
Contract brewing and beer related
(2)
|
|
6,127
|
|
|
8,311
|
|
|
(2,184
|
)
|
|
(26.3
|
)%
|
|||
Excise taxes
|
|
(3,256
|
)
|
|
(3,430
|
)
|
|
174
|
|
|
(5.1
|
)%
|
|||
Net beer related sales
|
|
54,493
|
|
|
55,722
|
|
|
(1,229
|
)
|
|
(2.2
|
)%
|
|||
Brewpubs
(3)
|
|
6,066
|
|
|
6,101
|
|
|
(35
|
)
|
|
(0.6
|
)%
|
|||
Net sales
|
|
$
|
60,559
|
|
|
$
|
61,823
|
|
|
$
|
(1,264
|
)
|
|
(2.0
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Six Months Ended June 30,
|
|
Dollar
|
|
|
|||||||||
Sales by Category
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
A-B and A-B related
(1)
|
|
$
|
92,040
|
|
|
$
|
89,204
|
|
|
$
|
2,836
|
|
|
3.2
|
%
|
Contract brewing and beer related
(2)
|
|
9,274
|
|
|
14,022
|
|
|
(4,748
|
)
|
|
(33.9
|
)%
|
|||
Excise taxes
|
|
(6,032
|
)
|
|
(6,028
|
)
|
|
(4
|
)
|
|
0.1
|
%
|
|||
Net beer related sales
|
|
95,282
|
|
|
97,198
|
|
|
(1,916
|
)
|
|
(2.0
|
)%
|
|||
Brewpubs
(3)
|
|
12,269
|
|
|
12,112
|
|
|
157
|
|
|
1.3
|
%
|
|||
Net sales
|
|
$
|
107,551
|
|
|
$
|
109,310
|
|
|
$
|
(1,759
|
)
|
|
(1.6
|
)%
|
(1)
|
A-B and A-B related includes domestic and international sales of our owned brands sold through A-B and Ambev, as well as non-owned brands sold pursuant to master distribution agreements in 2018, fees earned pursuant to the Brewing Agreement with ABC, and the international distribution fees earned from ABWI.
|
(2)
|
Beer related includes international sales of our beers, and brands, not sold through A-B or Ambev, as well as fees earned through alternating proprietorship agreements during 2018.
|
(3)
|
Brewpubs sales include sales of promotional merchandise and sales of beer directly to customers.
|
Three Months Ended June 30,
|
|
2019 Shipments
|
|
2018 Shipments
|
|
Increase
(Decrease) |
|
%
Change |
|
Change in
Depletions (1) |
|||||
A-B and A-B related
(2)
|
|
201,500
|
|
|
198,300
|
|
|
3,200
|
|
|
1.6
|
%
|
|
1
|
%
|
Contract brewing and beer related
(3)
|
|
27,000
|
|
|
24,300
|
|
|
2,700
|
|
|
11.1
|
%
|
|
|
|
Brewpubs
|
|
2,000
|
|
|
2,000
|
|
|
—
|
|
|
—
|
%
|
|
|
|
Total
|
|
230,500
|
|
|
224,600
|
|
|
5,900
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six Months Ended June 30,
|
|
2019 Shipments
|
|
2018 Shipments
|
|
Increase
(Decrease) |
|
%
Change |
|
Change in
Depletions (1) |
|||||
A-B and A-B related
(2)
|
|
356,100
|
|
|
344,800
|
|
|
11,300
|
|
|
3.3
|
%
|
|
(1
|
)%
|
Contract brewing and beer related
(3)
|
|
40,100
|
|
|
43,000
|
|
|
(2,900
|
)
|
|
(6.7
|
)%
|
|
|
|
Brewpubs
|
|
3,800
|
|
|
3,800
|
|
|
—
|
|
|
—
|
%
|
|
|
|
Total
|
|
400,000
|
|
|
391,600
|
|
|
8,400
|
|
|
2.1
|
%
|
|
|
|
(1)
|
Change in depletions reflects the year-over-year change in barrel volume sales of beer by wholesalers to retailers.
|
(2)
|
A-B and A-B related includes domestic and international shipments of our owned brands distributed through A-B and Ambev, as well as non-owned brands distributed pursuant to master distribution agreements in 2018 and shipments pursuant to the Brewing Agreement with ABC.
|
(3)
|
Beer related includes international shipments of our beers, and sales of our newly acquired brands, in each case not distributed through A-B or Ambev.
|
Three Months Ended June 30,
|
|
2019 Shipments
|
|
2018 Shipments
|
|
Increase
(Decrease) |
|
%
Change |
|
Change in
Depletions |
|||||
Kona
|
|
156,700
|
|
|
141,000
|
|
|
15,700
|
|
|
11.1
|
%
|
|
8
|
%
|
Widmer Brothers
|
|
27,400
|
|
|
28,900
|
|
|
(1,500
|
)
|
|
(5.2
|
)%
|
|
(11
|
)%
|
Redhook
|
|
17,000
|
|
|
20,400
|
|
|
(3,400
|
)
|
|
(16.7
|
)%
|
|
(18
|
)%
|
Omission
|
|
11,100
|
|
|
12,800
|
|
|
(1,700
|
)
|
|
(13.3
|
)%
|
|
(10
|
)%
|
All other
(1)
|
|
16,100
|
|
|
15,600
|
|
|
500
|
|
|
3.2
|
%
|
|
(2
|
)%
|
Total
(2)
|
|
228,300
|
|
|
218,700
|
|
|
9,600
|
|
|
4.4
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six Months Ended June 30,
|
|
2019 Shipments
|
|
2018 Shipments
|
|
Increase
(Decrease) |
|
%
Change |
|
Change in
Depletions |
|||||
Kona
|
|
265,500
|
|
|
240,000
|
|
|
25,500
|
|
|
10.6
|
%
|
|
5
|
%
|
Widmer Brothers
|
|
49,000
|
|
|
52,200
|
|
|
(3,200
|
)
|
|
(6.1
|
)%
|
|
(14
|
)%
|
Redhook
|
|
31,800
|
|
|
39,000
|
|
|
(7,200
|
)
|
|
(18.5
|
)%
|
|
(20
|
)%
|
Omission
|
|
20,200
|
|
|
23,100
|
|
|
(2,900
|
)
|
|
(12.6
|
)%
|
|
(10
|
)%
|
All other
(1)
|
|
26,200
|
|
|
25,000
|
|
|
1,200
|
|
|
4.8
|
%
|
|
2
|
%
|
Total
(2)
|
|
392,700
|
|
|
379,300
|
|
|
13,400
|
|
|
3.5
|
%
|
|
(1
|
)%
|
(1)
|
All other includes the shipments and depletions from our Square Mile brand family, as well as the previously non-owned AMB, Cisco Brewers, and Wynwood brand families, shipped by us pursuant to distribution agreements.
|
(2)
|
Total shipments by brand include international shipments and exclude shipments produced under our contract brewing arrangements.
|
|
|
Three Months Ended June 30,
|
||||||||||
|
|
2019
|
|
2018
|
||||||||
|
|
Shipments
|
|
% of Total
|
|
Shipments
|
|
% of Total
|
||||
Draft
|
|
51,100
|
|
|
22.4
|
%
|
|
49,800
|
|
|
22.8
|
%
|
Packaged
|
|
177,200
|
|
|
77.6
|
%
|
|
168,900
|
|
|
77.2
|
%
|
Total
|
|
228,300
|
|
|
100.0
|
%
|
|
218,700
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
|
Six Months Ended June 30,
|
||||||||||
|
|
2019
|
|
2018
|
||||||||
|
|
Shipments
|
|
% of Total
|
|
Shipments
|
|
% of Total
|
||||
Draft
|
|
88,600
|
|
|
22.6
|
%
|
|
89,000
|
|
|
23.5
|
%
|
Packaged
|
|
304,100
|
|
|
77.4
|
%
|
|
290,300
|
|
|
76.5
|
%
|
Total
|
|
392,700
|
|
|
100.0
|
%
|
|
379,300
|
|
|
100.0
|
%
|
|
Three Months Ended June 30,
|
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Beer Related
|
$
|
31,817
|
|
|
$
|
33,780
|
|
|
$
|
(1,963
|
)
|
|
(5.8
|
)%
|
Brewpubs
|
5,455
|
|
|
5,916
|
|
|
(461
|
)
|
|
(7.8
|
)%
|
|||
Total
|
$
|
37,272
|
|
|
$
|
39,696
|
|
|
$
|
(2,424
|
)
|
|
(6.1
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
Six Months Ended June 30,
|
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Beer Related
|
$
|
57,098
|
|
|
$
|
60,546
|
|
|
$
|
(3,448
|
)
|
|
(5.7
|
)%
|
Brewpubs
|
10,983
|
|
|
11,566
|
|
|
(583
|
)
|
|
(5.0
|
)%
|
|||
Total
|
$
|
68,081
|
|
|
$
|
72,112
|
|
|
$
|
(4,031
|
)
|
|
(5.6
|
)%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Capacity Utilization
|
65
|
%
|
|
67
|
%
|
|
56
|
%
|
|
59
|
%
|
|
Three Months Ended June 30,
|
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Beer Related
|
$
|
22,676
|
|
|
$
|
21,942
|
|
|
$
|
734
|
|
|
3.3
|
%
|
Brewpubs
|
611
|
|
|
185
|
|
|
426
|
|
|
230.3
|
%
|
|||
Total
|
$
|
23,287
|
|
|
$
|
22,127
|
|
|
$
|
1,160
|
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|||||||
|
Six Months Ended June 30,
|
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Beer Related
|
$
|
38,184
|
|
|
$
|
36,652
|
|
|
$
|
1,532
|
|
|
4.2
|
%
|
Brewpubs
|
1,286
|
|
|
546
|
|
|
740
|
|
|
135.5
|
%
|
|||
Total
|
$
|
39,470
|
|
|
$
|
37,198
|
|
|
$
|
2,272
|
|
|
6.1
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Beer Related
|
41.6
|
%
|
|
39.4
|
%
|
|
40.1
|
%
|
|
37.7
|
%
|
Brewpubs
|
10.1
|
%
|
|
3.0
|
%
|
|
10.5
|
%
|
|
4.5
|
%
|
Overall
|
38.5
|
%
|
|
35.8
|
%
|
|
36.7
|
%
|
|
34.0
|
%
|
|
Three Months Ended
June 30, |
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Selling, general and administrative expenses
|
$
|
19,381
|
|
|
$
|
15,857
|
|
|
$
|
3,524
|
|
|
22.2
|
%
|
As a % of Net sales
|
32.0
|
%
|
|
25.6
|
%
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||
|
Six Months Ended
June 30, |
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Selling, general and administrative expenses
|
$
|
44,946
|
|
|
$
|
30,605
|
|
|
$
|
14,341
|
|
|
46.9
|
%
|
As a % of Net sales
|
41.8
|
%
|
|
28.0
|
%
|
|
|
|
|
Three Months Ended
June 30, |
|
Dollar
|
|
|
|||||||||
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
$
|
504
|
|
|
$
|
107
|
|
|
$
|
397
|
|
|
371.0
|
%
|
|
|
|
|
|
|
|
|||||||
Six Months Ended
June 30, |
|
Dollar
|
|
|
|||||||||
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
$
|
812
|
|
|
$
|
241
|
|
|
$
|
571
|
|
|
236.9
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Average debt outstanding
|
$50,595
|
|
$10,839
|
|
$47,439
|
|
$14,092
|
||||
Average interest rate
|
3.94
|
%
|
|
3.37
|
%
|
|
3.37
|
%
|
|
2.86
|
%
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
4,120
|
|
|
$
|
8,457
|
|
Net cash provided by (used in) investing activities
|
(9,692
|
)
|
|
19,167
|
|
||
Net cash provided by (used in) financing activities
|
5,342
|
|
|
(22,425
|
)
|
||
Increase (decrease) in Cash, cash equivalents and restricted cash
|
$
|
(230
|
)
|
|
$
|
5,199
|
|
Employment Agreement between the Registrant and Edwin A. Smith, dated July 15, 2019.
|
|
Employment Agreement between the Registrant and Kenneth C. Kunze, dated July 16, 2019.
|
|
Employment Agreement between the Registrant and Derek Hahm, dated July 16, 2019.
|
|
Employee Noncompetition and Nonsolicitation Agreement between the Registrant and Derek Hahm, dated July 16, 2019.
|
|
Settlement Agreement dated May 23, 2019, between the Registrant and Theodore Broomfield and Simone Zimmer individually and on behalf of the Kona settlement class.
|
|
Form of Indemnification Agreement with each independent director of the Registrant.
|
|
Certification of Chief Executive Officer of Craft Brew Alliance, Inc. pursuant to Exchange Act Rule 13a-14(a)
|
|
Certification of Chief Financial Officer of Craft Brew Alliance, Inc. pursuant to Exchange Act Rule 13a-14(a)
|
|
32.1
*
|
Certification pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350
|
99.1
*
|
Press Release dated August 7, 2019
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
CRAFT BREW ALLIANCE, INC.
|
|
|
|
|
|
|
August 7, 2019
|
By:
|
/s/ Edwin A. Smith
|
|
|
|
Edwin A. Smith
|
|
|
|
Corporate Controller and
Principal Accounting Officer
|
|
1.
|
Covenant Not To Hire Or Solicit Other Employees
. Subject to applicable state law requirements, Employee will not during Employee's employment and for a period of two (2) years after termination of Employee's employment employ in any business competitive with or otherwise similar to that of Company's any current employee of Company or any employee of Company whose employment with Company terminated within the previous thirty (30) days, nor will Employee otherwise solicit or induce or attempt to solicit or induce any current employee of Company to terminate his or her employment with Company for any reason.
|
2.
|
Confidentiality
. Employee agrees, both during Employee's employment and after termination of Employee's employment, to protect and preserve as confidential and to not disclose to any person or entity or use any and all Confidential Information, as defined below, acquired during Employee's employment with Company. "Confidential Information" is defined as: financial information related to the operation of Company's business; all formulas, recipes, and procedures relating to the production of Company's products and all information related to such production; Company's unique marketing plans; and the preferences of Company's customers, but does not include information considered part of the public domain.
|
3.
|
No Violation of Other Obligations
. I certify that my working for Company does not violate any contractual obligations I owe to any third party. I will not disclose to Company or use during my employment any trade secrets or other confidential information of any third party without that party's consent. I acknowledge that Company wishes me to abide strictly by the terms of valid and enforceable obligations I have to prior employers. I will inform my manager/supervisor whenever I believe a task I am to perform for Company could jeopardize my ability to abide by those obligations.
|
4.
|
Company Materials
. All notes, files, data, disks, tapes, reference items, sketches, drawings, memoranda, records, and other materials in whatever form in any way relating to any of the information referred to in paragraph 2 above or otherwise to Company's business shall belong exclusively to Company. Employee agrees to immediately turn over to Company, without retaining any copies, all such materials in Employee's possession or under Employee's control at any time at the request of Company or, in any event, upon the termination of Employee's employment with Company for any reason.
|
5.
|
Work Made For Hire
. All creative work, including but not limited to computer programs or models, templates, marketing plans, designs, graphics, techniques, processes, documentation, formulae, products, and technical information prepared or originated by Employee for Company at any time during Employee's employment with Company, constitutes work made for hire. All rights to this work, as well as enhancements and modifications to it, are owned by Company; and, in any event, Employee hereby assigns to Company all rights, title, and interest whether by way of copyright, trade secret, or otherwise, in all such work, whether or not subject to protection by copyright laws or other intellectual property laws. Employee shall take all actions reasonably requested by Company to vest ownership of such creative work in Company and to permit Company to obtain copyright, trademark, patent, or similar protection in its name.
|
6.
|
Accounting for Profits
. If Employee violates any of the provisions of this Agreement, Company shall be entitled to an accounting and repayment of all profits, compensation, royalties, commissions, remunerations or benefits which Employee directly or indirectly shall have realized or may realize relating to, growing out of, or in connection with any such violation. Such remedy shall be in addition to and not in lieu of any injunctive relief or other rights or remedies to which Company is or may be entitled at law or in equity or otherwise under this Agreement.
|
7.
|
Injunctive Relief
. Employee understands and agrees that Company shall suffer irreparable harm in the event that Employee breaches any the provisions of this Agreement and that monetary damages shall be inadequate to fully compensate Company for such breach. Accordingly, Employee agrees that, in the event of a breach or threatened breach by Employee of any of the provisions of this Agreement, Company, in addition to and not in lieu of any other rights, remedies or damages available to Company at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or restrain any such breach or threatened breach by Employee, or by any or all of Employee's partners, co-venturers, employers, employees, servants, agents, representatives, and any and all persons directly or indirectly acting for, on behalf of or with Employee.
|
8.
|
Remedies in General
. If Employee fails to abide by this Agreement or any provision of it, Company will be entitled to specific performance, including immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement, and to judgment for damages caused by Employee's breach, and to any other remedies provided by applicable law. Subsequent employers shall have this covenant disclosed to them either by Employee or by Company at the discretion of Company. The provisions of this Agreement are in addition to and not in lieu of any rights or obligations of Company or Employee under any applicable statute, regulation, or common law.
|
9.
|
Attorney Fees
. In the event this Agreement is placed in the hands of any attorney or in any action at law or in equity, administrative proceeding, or arbitration instituted to enforce or interpret the terms of this Agreement, including proceedings before any bankruptcy court of the United States, the prevailing party shall be entitled to recover from the other party reasonable attorneys fees, costs, and necessary disbursements at trial and on any appeal therefrom, in addition to any other relief to which such party may be entitled.
|
10.
|
Severability
. If any provision, or portion thereof, in this Agreement is invalid or legally unenforceable, it shall be enforced to the extent possible, and all other provisions hereof shall remain in full force and effect.
|
11.
|
Waiver
. The waiver by either the Company or Employee of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party and shall in no way affect the enforcement of all the other provisions of this Agreement.
|
12.
|
Survival
. The terms of this Agreement survive the termination of Employee's employment.
|
1.
|
Covenant Not To Hire Or Solicit Other Employees
. Subject to applicable state law requirements, Employee will not during Employee's employment and for a period of two (2) years after termination of Employee's employment employ in any business competitive with or otherwise similar to that of Company's any current employee of Company or any employee of Company whose employment with Company terminated within the previous thirty (30) days, nor will Employee otherwise solicit or induce or attempt to solicit or induce any current employee of Company to terminate his or her employment with Company for any reason.
|
2.
|
Confidentiality
. Employee agrees, both during Employee's employment and after termination of Employee's employment, to protect and preserve as confidential and to not disclose to any person or entity or use any and all Confidential Information, as defined below, acquired during Employee's employment with Company. "Confidential Information" is defined as: financial information related to the operation of Company's business; all formulas, recipes, and procedures relating to the production of Company's products and all information related to such production; Company's unique marketing plans; and the preferences of Company's customers, but does not include information considered part of the public domain.
|
3.
|
No Violation of Other Obligations
. I certify that my working for Company does not violate any contractual obligations I owe to any third party. I will not disclose to Company or use during my employment any trade secrets or other confidential information of any third party without that party's consent. I acknowledge that Company wishes me to abide strictly by the terms of valid and enforceable obligations I have to prior employers. I will inform my manager/supervisor whenever I believe a task I am to perform for Company could jeopardize my ability to abide by those obligations.
|
4.
|
Company Materials
. All notes, files, data, disks, tapes, reference items, sketches, drawings, memoranda, records, and other materials in whatever form in any way relating to any of the information referred to in paragraph 2 above or otherwise to Company's business shall belong exclusively to Company. Employee agrees to immediately turn over to Company, without retaining any copies, all such materials in Employee's possession or under Employee's control at any time at the request of Company or, in any event, upon the termination of Employee's employment with Company for any reason.
|
5.
|
Work Made For Hire
. All creative work, including but not limited to computer programs or models, templates, marketing plans, designs, graphics, techniques, processes, documentation, formulae, products, and technical information prepared or originated by Employee for Company at any time during Employee's employment with Company, constitutes work made for hire. All rights to this work, as well as enhancements and modifications to it, are owned by Company; and, in any event, Employee hereby assigns to Company all rights, title, and interest whether by way of copyright, trade secret, or otherwise, in all such work, whether or not subject to protection by copyright laws or other intellectual property laws. Employee shall take all actions reasonably requested by Company to vest ownership of such creative work in Company and to permit Company to obtain copyright, trademark, patent, or similar protection in its name.
|
6.
|
Accounting for Profits
. If Employee violates any of the provisions of this Agreement, Company shall be entitled to an accounting and repayment of all profits, compensation, royalties, commissions, remunerations or benefits which Employee directly or indirectly shall have realized or may realize relating to, growing out of, or in connection with any such violation. Such remedy shall be in addition to and not in lieu of any injunctive relief or other rights or remedies to which Company is or may be entitled at law or in equity or otherwise under this Agreement.
|
7.
|
Injunctive Relief
. Employee understands and agrees that Company shall suffer irreparable harm in the event that Employee breaches any the provisions of this Agreement and that monetary damages shall be inadequate to fully compensate Company for such breach. Accordingly, Employee agrees that, in the event of a breach or threatened breach by Employee of any of the provisions of this Agreement, Company, in addition to and not in lieu of any other rights, remedies or damages available to Company at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or restrain any such breach or threatened breach by Employee, or by any or all of Employee's partners, co-venturers, employers, employees, servants, agents, representatives, and any and all persons directly or indirectly acting for, on behalf of or with Employee.
|
8.
|
Remedies in General
. If Employee fails to abide by this Agreement or any provision of it, Company will be entitled to specific performance, including immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement, and to judgment for damages caused by Employee's breach, and to any other remedies provided by applicable law. Subsequent employers shall have this covenant disclosed to them either by Employee or by Company at the discretion of Company. The provisions of this Agreement are in addition to and not in lieu of any rights or obligations of Company or Employee under any applicable statute, regulation, or common law.
|
9.
|
Attorney Fees
. In the event this Agreement is placed in the hands of any attorney or in any action at law or in equity, administrative proceeding, or arbitration instituted to enforce or interpret the terms of this Agreement, including proceedings before any bankruptcy court of the United States, the prevailing party shall be entitled to recover from the other party reasonable attorneys fees, costs, and necessary disbursements at trial and on any appeal therefrom, in addition to any other relief to which such party may be entitled.
|
10.
|
Severability
. If any provision, or portion thereof, in this Agreement is invalid or legally unenforceable, it shall be enforced to the extent possible, and all other provisions hereof shall remain in full force and effect.
|
11.
|
Waiver
. The waiver by either the Company or Employee of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party and shall in no way affect the enforcement of all the other provisions of this Agreement.
|
12.
|
Survival
. The terms of this Agreement survive the termination of Employee's employment.
|
13.
|
Acknowledgment
. Employee acknowledges that Employee entered into this Agreement upon Employee's initial employment or a subsequent bona fide advancement with Company.
|
1.
|
Covenant Not To Hire Or Solicit Other Employees
. Subject to applicable state law requirements, Employee will not during Employee's employment and for a period of two (2) years after termination of Employee's employment employ in any business competitive with or otherwise similar to that of Company's any current employee of Company or any employee of Company whose employment with Company terminated within the previous thirty (30) days, nor will Employee otherwise solicit or induce or attempt to solicit or induce any current employee of Company to terminate his or her employment with Company for any reason.
|
2.
|
Confidentiality
. Employee agrees, both during Employee's employment and after termination of Employee's employment, to protect and preserve as confidential and to not disclose to any person or entity or use any and all Confidential Information, as defined below, acquired during Employee's employment with Company. "Confidential Information" is defined as: financial information related to the operation of Company's business; all formulas, recipes, and procedures relating to the production of Company's products and all information related to such production; Company's unique marketing plans; and the preferences of Company's customers, but does not include information considered part of the public domain.
|
3.
|
No Violation of Other Obligations
. I certify that my working for Company does not violate any contractual obligations I owe to any third party. I will not disclose to Company or use during my employment any trade secrets or other confidential information of any third party without that party's consent. I acknowledge that Company wishes me to abide strictly by the terms of valid and enforceable obligations I have to prior employers. I will inform my manager/supervisor whenever I believe a task I am to perform for Company could jeopardize my ability to abide by those obligations.
|
4.
|
Company Materials
. All notes, files, data, disks, tapes, reference items, sketches, drawings, memoranda, records, and other materials in whatever form in any way relating to any of the information referred to in paragraph 2 above or otherwise to Company's business shall belong exclusively to Company. Employee agrees to immediately turn over to Company, without retaining any copies, all such materials in Employee's possession or under Employee's control at any time at the request of Company or, in any event, upon the termination of Employee's employment with Company for any reason.
|
5.
|
Work Made For Hire
. All creative work, including but not limited to computer programs or models, templates, marketing plans, designs, graphics, techniques, processes, documentation, formulae, products, and technical information prepared or originated by Employee for Company at any time during Employee's employment with Company, constitutes work made for hire. All rights to this work, as well as enhancements and modifications to it, are owned by Company; and, in any event, Employee hereby assigns to Company all rights, title, and interest whether by way of copyright, trade secret, or otherwise, in all such work, whether or not subject to protection by copyright laws or other intellectual property laws. Employee shall take all actions reasonably requested by Company to vest ownership of such creative work in Company and to permit Company to obtain copyright, trademark, patent, or similar protection in its name.
|
6.
|
Accounting for Profits
. If Employee violates any of the provisions of this Agreement, Company shall be entitled to an accounting and repayment of all profits, compensation, royalties, commissions, remunerations or benefits which Employee directly or indirectly shall have realized or may realize relating to, growing out of, or in connection with any such violation. Such remedy shall be in addition to and not in lieu of any injunctive relief or other rights or remedies to which Company is or may be entitled at law or in equity or otherwise under this Agreement.
|
7.
|
Injunctive Relief
. Employee understands and agrees that Company shall suffer irreparable harm in the event that Employee breaches any the provisions of this Agreement and that monetary damages shall be inadequate to fully compensate Company for such breach. Accordingly, Employee agrees that, in the event of a breach or threatened breach by Employee of any of the provisions of this Agreement, Company, in addition to and not in lieu of any other rights, remedies or damages available to Company at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or restrain any such breach or threatened breach by Employee, or by any or all of Employee's partners, co-venturers, employers, employees, servants, agents, representatives, and any and all persons directly or indirectly acting for, on behalf of or with Employee.
|
8.
|
Remedies in General
. If Employee fails to abide by this Agreement or any provision of it, Company will be entitled to specific performance, including immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement, and to judgment for damages caused by Employee's breach, and to any other remedies provided by applicable law. Subsequent employers shall have this covenant disclosed to them either by Employee or by Company at the discretion of Company. The provisions of this Agreement are in addition to and not in lieu of any rights or obligations of Company or Employee under any applicable statute, regulation, or common law.
|
9.
|
Attorney Fees
. In the event this Agreement is placed in the hands of any attorney or in any action at law or in equity, administrative proceeding, or arbitration instituted to enforce or interpret the terms of this Agreement, including proceedings before any bankruptcy court of the United States, the prevailing party shall be entitled to recover from the other party reasonable attorneys fees, costs, and necessary disbursements at trial and on any appeal therefrom, in addition to any other relief to which such party may be entitled.
|
10.
|
Severability
. If any provision, or portion thereof, in this Agreement is invalid or legally unenforceable, it shall be enforced to the extent possible, and all other provisions hereof shall remain in full force and effect.
|
11.
|
Waiver
. The waiver by either the Company or Employee of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party and shall in no way affect the enforcement of all the other provisions of this Agreement.
|
12.
|
Survival
. The terms of this Agreement survive the termination of Employee's employment.
|
1.
|
Covenant Not To Hire Or Solicit Other Employees
. Subject to applicable state law requirements, Employee will not during Employee's employment and for a period of two (2) years after termination of Employee's employment employ in any business competitive with or otherwise similar to that of Company's any current employee of Company or any employee of Company whose employment with Company terminated within the previous thirty (30) days, nor will Employee otherwise solicit or induce or attempt to solicit or induce any current employee of Company to terminate his or her employment with Company for any reason.
|
2.
|
Confidentiality
. Employee agrees, both during Employee's employment and after termination of Employee's employment, to protect and preserve as confidential and to not disclose to any person or entity or use any and all Confidential Information, as defined below, acquired during Employee's employment with Company. "Confidential Information" is defined as: financial information related to the operation of Company's business; all formulas, recipes, and procedures relating to the production of Company's products and all information related to such production; Company's unique marketing plans; and the preferences of Company's customers but does not include information considered part of the public domain.
|
3.
|
No Violation of Other Obligations
. I certify that my working for Company does not violate any contractual obligations I owe to any third party. I will not disclose to Company or use during my employment any trade secrets or other confidential information of any third party without that party's consent. I acknowledge that Company wishes me to abide strictly by the terms of valid and enforceable obligations I have to prior employers. I will inform my manager/supervisor whenever I believe a task I am to perform for Company could jeopardize my ability to abide by those obligations.
|
4.
|
Company Materials
. All notes, files, data, disks, tapes, reference items, sketches, drawings, memoranda, records, and other materials in whatever form in any way relating to any of the information referred to in paragraph 2 above or otherwise to Company's business shall belong exclusively to Company. Employee agrees to immediately turn over to Company, without retaining any copies, all such materials in Employee's possession or under Employee's control at any time at the request of Company or, in any event, upon the termination of Employee's employment with Company for any reason.
|
5.
|
Work Made For Hire
. All creative work, including but not limited to computer programs or models, templates, marketing plans, designs, graphics, techniques, processes, documentation, formulae, products, and technical information prepared or originated by Employee for Company at any time during Employee's employment with Company, constitutes work made for hire. All rights to this work, as well as enhancements and modifications to it, are owned by Company; and, in any event, Employee hereby assigns to Company all rights, title, and interest whether by way of copyright, trade secret, or otherwise, in all such work, whether or not subject to protection by copyright laws or other intellectual property laws. Employee shall take all actions reasonably requested by Company to vest ownership of such creative work in Company and to permit Company to obtain copyright, trademark, patent, or similar protection in its name.
|
6.
|
Accounting for Profits
. If Employee violates any of the provisions of this Agreement, Company shall be entitled to an accounting and repayment of all profits, compensation, royalties, commissions, remunerations or benefits which Employee directly or indirectly shall have realized or may realize relating to, growing out of, or in connection with any such violation. Such remedy shall be in addition to and not in lieu of any injunctive relief or other rights or remedies to which Company is or may be entitled at law or in equity or otherwise under this Agreement.
|
7.
|
Injunctive Relief
. Employee understands and agrees that Company shall suffer irreparable harm in the event that Employee breaches any the provisions of this Agreement and that monetary damages shall be inadequate to fully compensate Company for such breach. Accordingly, Employee agrees that, in the event of a breach or threatened breach by Employee of any of the provisions of this Agreement, Company, in addition to and not in lieu of any other rights, remedies or damages available to Company at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or restrain any such breach or threatened breach by Employee, or by any or all of Employee's partners, co-venturers, employers, employees, servants, agents, representatives, and any and all persons directly or indirectly acting for, on behalf of or with Employee.
|
8.
|
Remedies in General
. If Employee fails to abide by this Agreement or any provision of it, Company will be entitled to specific performance, including immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement, and to judgment for damages caused by Employee's breach, and to any other remedies provided by applicable law. Subsequent employers shall have this covenant disclosed to them either by Employee or by Company at the discretion of Company. The provisions of this Agreement are in addition to and not in lieu of any rights or obligations of Company or Employee under any applicable statute, regulation, or common law.
|
9.
|
Attorney Fees
. In the event this Agreement is placed in the hands of any attorney or in any action at law or in equity, administrative proceeding, or arbitration instituted to enforce or interpret the terms of this Agreement, including proceedings before any bankruptcy court of the United States, the prevailing party shall be entitled to recover from the other party reasonable attorneys fees, costs, and necessary disbursements at trial and on any appeal therefrom, in addition to any other relief to which such party may be entitled.
|
10.
|
Severability
. If any provision, or portion thereof, in this Agreement is invalid or legally unenforceable, it shall be enforced to the extent possible, and all other provisions hereof shall remain in full force and effect.
|
11.
|
Waiver
. The waiver by either the Company or Employee of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party and shall in no way affect the enforcement of all the other provisions of this Agreement.
|
12.
|
Survival
. The terms of this Agreement survive the termination of Employee's employment.
|
13.
|
Acknowledgment
. Employee acknowledges that Employee entered into this Agreement upon Employee's initial employment or a subsequent bona fide advancement with Company.
|
COMPANY:
Craft Brew Alliance, Inc.
/s/ Andrew J. Thomas
Name: Andrew J. Thomas
Title: Chief Executive Officer |
EMPLOYEE:
/s/ Derek Hahm
Name: Derek Hahm
|
|
1.
|
I have reviewed this quarterly report on Form 10−Q of Craft Brew Alliance, Inc. (the “Registrant”);
|
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 we 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 the 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:
|
August 7, 2019
|
|
|
|
|
By:
|
/s/ Andrew J. Thomas
|
|
|
Andrew J. Thomas
|
|
|
Chief Executive Officer
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10−Q of Craft Brew Alliance, Inc. (the “Registrant”);
|
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 we 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 the 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:
|
August 7, 2019
|
|
|
|
|
By:
|
/s/ Christine N. Perich
|
|
|
Christine N. Perich
|
|
|
Chief Financial and Strategy Officer
|
|
|
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Date:
|
August 7, 2019
|
|
|
|
|
BY:
|
/s/ Andrew J. Thomas
|
|
|
Andrew J. Thomas
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
BY:
|
/s/ Christine N. Perich
|
|
|
Christine N. Perich
|
|
|
Chief Financial and Strategy Officer
|
|
|
•
|
Kona depletions grew 8%, driving a total CBA depletions increase of more than 1% over the second quarter in 2018.
|
•
|
An 11% increase in Kona shipments contributed to an overall 4.4% increase in owned beer shipments.
|
•
|
Core beer sales increased 2.7% over the second quarter in 2018.
|
•
|
Beer gross margin expanded 220 basis points to a record 41.6% in the second quarter.
|
•
|
Brewpub gross margin expanded 710 basis points over the second quarter last year.
|
•
|
Net income was $2.6 million, or $0.13 per share.
|
•
|
Core beer sales increased 2.7% in the second quarter and 2.9% year to date.
|
◦
|
Total net sales were $60.6 million for the quarter, a decrease of 2.0% from the second quarter in 2018, and $107.6 million year to date, a decrease of 1.6% from the same period a year ago. Our net sales decrease compared to 2018 is attributed to the change in ownership structure of Appalachian Mountain Brewery, Cisco, and Wynwood. Excluding the impact of the alternating proprietorship fees, our second quarter and year-to-date total net sales would have been up 1.7% and 2.2%, respectively.
|
•
|
Kona shipments increased 11% in the second quarter and 10% year to date, contributing to a 2.6% increase in total CBA shipments for the second quarter and a 2.1% increase in total CBA shipments year to date, compared to the same periods last year.
|
•
|
Kona depletions increased by 8% in the second quarter and 5% year-to-date, driven by strong consumer response to the national media campaign. Kona’s strong performance contributed to a 1.1% increase in total CBA depletions for the quarter, which improved CBA’s year-to-date depletion trend to a decrease of 1.4% from the same period a year ago.
|
◦
|
Post-campaign analysis indicates that demand actually outpaced in-store inventory leading to significant retail out-of-stock issues across key media markets. Estimates suggest that these issues may have suppressed Kona’s depletion growth by approximately 200 basis points in the second quarter.
|
•
|
Total company gross margin expanded by 270 basis points to 38.5%, compared to 35.8% in the second quarter of 2018, and year-to-date gross margin expanded 270 basis points to 36.7% compared to the same period last year.
|
◦
|
Beer gross margin expanded by 220 basis points to 41.6% in the second quarter, and year-to-date beer gross margin expanded 240 basis points to 40.1%. Our beer gross margin expansion reflects the impact of transitioning our partner brands to owned brands, as well as continued leverage of our evolving brewery footprint, strong revenue management, and a reduction in beer loss.
|
◦
|
Brewpub gross margin expanded 710 basis points to 10.1% in the second quarter, primarily reflecting improvements with our reshaped and expanded pub footprint. Our year-to-date brewpub gross margin expanded 600 basis points over the same period last year, to 10.5%.
|
•
|
Selling, general and administrative expense (“SG&A”) increased by $3.5 million to $19.4 million over the second quarter last year, which reflects additional investments to amplify our national Kona marketing campaign, as well as employee-related costs.
|
◦
|
Year-to-date SG&A increased by $14.3 million, to $44.9 million. The increases in year-to-date SG&A over the same period in 2018 primarily reflect our national marketing investment to fuel Kona’s growth and a $4.7 million pre-tax expense related to the Kona class action lawsuit settlement, which was accrued as a one-time expense in the first quarter. Based on initial claims being in line with our expectations, we anticipate our accrual will cover our total costs for the settlement.
|
•
|
Net income was $2.6 million in the second quarter.
|
◦
|
Year to date, we recorded a net loss of $4.8 million primarily due to the Kona class action accrual. On an adjusted non-GAAP basis excluding the $3.6 million after-tax impact of the accrual, our year-to-date net loss was $1.2 million.
|
•
|
Earnings per share were $0.13 in the second quarter, a decrease of $0.10 from the second quarter of 2018, which reflects the planned increase in SG&A to amplify the Kona marketing investment.
|
◦
|
Year to date, we recorded a net loss per share of $0.24. On an adjusted non-GAAP basis excluding the $3.6 million after-tax expense accrual, our net loss per share was $0.06.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Sales
|
$
|
63,815
|
|
|
$
|
65,253
|
|
|
$
|
113,583
|
|
|
$
|
115,338
|
|
Less excise taxes
|
3,256
|
|
|
3,430
|
|
|
6,032
|
|
|
6,028
|
|
||||
Net sales
|
60,559
|
|
|
61,823
|
|
|
107,551
|
|
|
109,310
|
|
||||
Cost of sales
|
37,272
|
|
|
39,696
|
|
|
68,081
|
|
|
72,112
|
|
||||
Gross profit
|
23,287
|
|
|
22,127
|
|
|
39,470
|
|
|
37,198
|
|
||||
As percentage of net sales
|
38.5
|
%
|
|
35.8
|
%
|
|
36.7
|
%
|
|
34.0
|
%
|
||||
Selling, general and administrative expenses
|
19,381
|
|
|
15,857
|
|
|
44,946
|
|
|
30,605
|
|
||||
Operating income (loss)
|
3,906
|
|
|
6,270
|
|
|
(5,476
|
)
|
|
6,593
|
|
||||
Interest expense
|
(504
|
)
|
|
(107
|
)
|
|
(812
|
)
|
|
(241
|
)
|
||||
Other income, net
|
33
|
|
|
21
|
|
|
33
|
|
|
55
|
|
||||
Income (loss) before income taxes
|
3,435
|
|
|
6,184
|
|
|
(6,255
|
)
|
|
6,407
|
|
||||
Income tax provision (benefit)
|
825
|
|
|
1,732
|
|
|
(1,501
|
)
|
|
1,794
|
|
||||
Net income (loss)
|
$
|
2,610
|
|
|
$
|
4,452
|
|
|
$
|
(4,754
|
)
|
|
$
|
4,613
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic and diluted net income (loss) per share
|
$
|
0.13
|
|
|
$
|
0.23
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.24
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
19,443
|
|
|
19,334
|
|
|
19,416
|
|
|
19,322
|
|
||||
Diluted
|
19,593
|
|
|
19,517
|
|
|
19,416
|
|
|
19,502
|
|
||||
Total shipments (in barrels):
|
|
|
|
|
|
|
|
|
|
||||||
Core Brands
|
228,300
|
|
|
218,700
|
|
|
392,700
|
|
|
379,300
|
|
||||
Contract Brewing
|
2,200
|
|
|
5,900
|
|
|
7,300
|
|
|
12,300
|
|
||||
Total shipments
|
230,500
|
|
|
224,600
|
|
|
400,000
|
|
|
391,600
|
|
||||
Change in depletions
(1)
|
1
|
%
|
|
(2
|
)%
|
|
(1
|
)%
|
|
(3
|
)%
|
(1)
|
Change in depletions reflects the period-over-period change in barrel volume sales of beer by wholesalers to retailers.
|
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
Current assets:
|
|
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
970
|
|
|
$
|
5,778
|
|
Accounts receivable, net
|
30,223
|
|
|
36,999
|
|
||
Inventory, net
|
20,579
|
|
|
14,522
|
|
||
Other current assets
|
3,591
|
|
|
1,874
|
|
||
Total current assets
|
55,363
|
|
|
59,173
|
|
||
Property, equipment and leasehold improvements, net
|
111,634
|
|
|
104,982
|
|
||
Operating lease right-of-use assets
|
19,002
|
|
|
—
|
|
||
Goodwill
|
21,935
|
|
|
12,917
|
|
||
Trademarks
|
44,245
|
|
|
14,415
|
|
||
Intangible and other assets, net
|
5,710
|
|
|
6,054
|
|
||
Total assets
|
$
|
257,889
|
|
|
$
|
197,541
|
|
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
19,489
|
|
|
$
|
20,042
|
|
Accrued salaries, wages and payroll taxes
|
4,920
|
|
|
4,673
|
|
||
Refundable deposits
|
3,685
|
|
|
4,282
|
|
||
Deferred revenue
|
4,364
|
|
|
4,685
|
|
||
Other accrued expenses
|
8,101
|
|
|
3,163
|
|
||
Current portion of long-term debt and finance lease obligations
|
1,483
|
|
|
807
|
|
||
Total current liabilities
|
42,042
|
|
|
37,652
|
|
||
Long-term debt and finance lease obligations, net of current portion
|
51,675
|
|
|
9,946
|
|
||
Other long-term liabilities
|
31,699
|
|
|
13,995
|
|
||
Total common shareholders' equity
|
132,473
|
|
|
135,948
|
|
||
Total liabilities and common shareholders' equity
|
$
|
257,889
|
|
|
$
|
197,541
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(4,754
|
)
|
|
$
|
4,613
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
5,386
|
|
|
5,387
|
|
||
(Gain) loss on sale or disposal of Property, equipment and leasehold improvements
|
22
|
|
|
(494
|
)
|
||
Deferred income taxes
|
(1,536
|
)
|
|
(629
|
)
|
||
Other, including stock-based compensation
|
1,506
|
|
|
875
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
75
|
|
|
(9,215
|
)
|
||
Inventories
|
(3,349
|
)
|
|
(285
|
)
|
||
Other current assets
|
(687
|
)
|
|
1,761
|
|
||
Accounts payable, deferred revenue and other accrued expenses
|
8,068
|
|
|
7,889
|
|
||
Accrued salaries, wages and payroll taxes
|
(715
|
)
|
|
(1,204
|
)
|
||
Refundable deposits
|
104
|
|
|
(241
|
)
|
||
Net cash provided by operating activities
|
4,120
|
|
|
8,457
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Expenditures for Property, equipment and leasehold improvements
|
(9,440
|
)
|
|
(4,284
|
)
|
||
Proceeds from sale of Property, equipment and leasehold improvements
|
22
|
|
|
22,936
|
|
||
Restricted cash from sale of Property, equipment and leasehold improvements
|
—
|
|
|
515
|
|
||
Business combinations and asset acquisitions
|
(274
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(9,692
|
)
|
|
19,167
|
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
5,192
|
|
|
—
|
|
||
Principal payments on debt and finance lease obligations
|
(455
|
)
|
|
(348
|
)
|
||
Net borrowings (repayments) under revolving line of credit
|
930
|
|
|
(22,199
|
)
|
||
Proceeds from issuances of common stock
|
—
|
|
|
206
|
|
||
Tax payments related to stock-based awards
|
(325
|
)
|
|
(84
|
)
|
||
Net cash provided by (used in) financing activities
|
5,342
|
|
|
(22,425
|
)
|
||
Increase (decrease) in Cash, cash equivalents and restricted cash
|
(230
|
)
|
|
5,199
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
1,200
|
|
|
579
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
970
|
|
|
$
|
5,778
|
|
|
Twelve Months Ended
|
|
|
|
|
|||||||||
|
June 30,
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Net sales
|
$
|
204,427
|
|
|
$
|
211,914
|
|
|
$
|
(7,487
|
)
|
|
(3.5
|
)%
|
Gross profit
|
$
|
70,595
|
|
|
$
|
71,458
|
|
|
$
|
(863
|
)
|
|
(1.2
|
)%
|
As percentage of net sales
|
34.5
|
%
|
|
33.7
|
%
|
|
80
|
|
bps
|
|
|
|||
Selling, general and administrative expenses
|
76,913
|
|
|
60,039
|
|
|
16,874
|
|
|
28.1
|
%
|
|||
Operating income (loss)
|
$
|
(6,318
|
)
|
|
$
|
11,419
|
|
|
$
|
(17,737
|
)
|
|
(155.3
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net income (loss)
|
$
|
(5,225
|
)
|
|
$
|
14,199
|
|
|
$
|
(19,424
|
)
|
|
(136.8
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Income per share:
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
(0.27
|
)
|
|
$
|
0.74
|
|
|
$
|
(1.01
|
)
|
|
(136.5
|
)%
|
Diluted
|
$
|
(0.27
|
)
|
|
$
|
0.73
|
|
|
$
|
(1.00
|
)
|
|
(137.0
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Total shipments (in barrels):
|
|
|
|
|
|
|
|
|
|
|
|
|||
Core Brands
|
732,800
|
|
|
742,500
|
|
|
(9,700
|
)
|
|
(1.3
|
)%
|
|||
Contract Brewing
|
23,200
|
|
|
19,000
|
|
|
4,200
|
|
|
22.1
|
%
|
|||
Total shipments
|
756,000
|
|
|
761,500
|
|
|
(5,500
|
)
|
|
(0.7
|
)%
|
|||
Change in depletions
(1)
|
(1
|
)%
|
|
(2
|
)%
|
|
|
|
|
|
|
(1)
|
Change in depletions reflects the period-over-period change in barrel volume sales of beer by wholesalers to retailers.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
2,610
|
|
|
$
|
4,452
|
|
|
$
|
(4,754
|
)
|
|
$
|
4,613
|
|
Interest expense
|
504
|
|
|
107
|
|
|
812
|
|
|
241
|
|
||||
Income tax provision (benefit)
|
825
|
|
|
1,732
|
|
|
(1,501
|
)
|
|
1,794
|
|
||||
Depreciation expense
|
2,540
|
|
|
2,608
|
|
|
5,141
|
|
|
5,301
|
|
||||
Amortization expense
|
120
|
|
|
43
|
|
|
245
|
|
|
86
|
|
||||
Stock-based compensation
|
835
|
|
|
202
|
|
|
1,253
|
|
|
687
|
|
||||
(Gain) loss on disposal of assets
|
14
|
|
|
22
|
|
|
22
|
|
|
(494
|
)
|
||||
Kona class action expense
|
62
|
|
|
—
|
|
|
4,902
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
7,510
|
|
|
$
|
9,166
|
|
|
$
|
6,120
|
|
|
$
|
12,228
|
|