Boston Beer II ? Fall 2016

To answer the following questions, you must use the data in the spreadsheet that I have provided.

There are several approaches that can be used to estimate the cost of capital. These are the constant dividend growth model, the inverse of the P/E (that is, the E/P ratio), and the capital asset pricing model (CAPM). Please estimate the cost of common equity using all three approaches as of December 28, 2015. Explain your assumptions, the strengths and weaknesses of each approach and the favored model that you would apply to SAM and why. There is another approach to valuing equity. Recall that free cash flows are the cash flows available to investors after the company has made investments in fixed assets and working capital to sustain operations. The present value of these free cash flows at the WACC is the total firm value (enterprise value). Much like the approach taken to value non-constant growth stock, you can find the present value of the free cash flows during the non-constant growth period, and then add to it the present value of the terminal value. The terminal value is the present value of the free cash flow stream that occurs at the end of the non-constant growth period. To simplify please use operating cash flows that will increase 12% annually and capital expenditures at 3% annually for the next five years (both are found in the statement of cash flows for 2015:12). Thereafter, assume that free cash flow will grow constantly at a 2% rate. Estimate the value of the firm and the price per share of common stock for SAM.

Boston Beer II - Fall 2016 To answer the following questions, you must use the data in the spreadsheet that I have provided. 1. There are several approaches that can be used to estimate the cost of capital. These are the constant dividend growth model, the inverse of the P/E (that is, the E/P ratio), and the capital asset pricing model (CAPM). Please estimate the cost of common equity using all three approaches as of December 28, 2015. Explain your assumptions, the strengths and weaknesses of each approach and the favored model that you would apply to SAM and why. 2. There is another approach to valuing equity. Recall that free cash flows are the cash flows available to investors after the company has made investments in fixed assets and working capital to sustain operations. The present value of these free cash flows at the WACC is the total firm value (enterprise value). Much like the approach taken to value non-constant growth stock, you can find the present value of the free cash flows during the non-constant growth period, and then add to it the present value of the terminal value. The terminal value is the present value of the free cash flow stream that occurs at the end of the non-constant growth period. To simplify please use operating cash flows that will increase 12% annually and capital expenditures at 3% annually for the next five years (both are found in the statement of cash flows for 2015:12). Thereafter, assume that free cash flow will grow constantly at a 2% rate. Estimate the value of the firm and the price per share of common stock for SAM. Corporate Bonds (December 28, 2015) Maturity 2yr AA 2yr A 5yr AAA 5yr AA 5yr A 10yr AAA 10yr AA 10yr A 20yr AAA 20yr AA 20yr A Yield (%) 1.35 1.58 1.81 2.29 2.57 2.99 3.2 3.53 3.98 4.34 4.41 Yesterday 1.31 1.53 1.96 2.24 2.51 3.03 3.25 3.46 3.99 4.23 4.39 Last Week 1.23 1.42 1.82 2.18 2.41 2.98 3.13 3.37 3.91 4.28 4.46 Last Month 1.18 1.39 1.9 2.19 2.43 3.08 3.11 3.47 4.01 4.26 4.39 Yield Change 0 0.01 -0.18 0.03 0.04 -0.06 -0.06 0.07 0 0.08 -0.03 US Treasury Bonds (December 28, 2015) Maturity Yield (%) 3 Month 6 Month 2 Year 5 Year 10 Year 30 Year 0.23 0.46 0.95 1.69 2.25 2.96 Market Risk Premium (CAPM) 5.50 Yesterday 0.23 0.5 0.95 1.67 2.25 2.97 Last Week 0.23 0.44 0.89 1.63 2.19 2.95 Last Month 0.08 0.23 0.81 1.63 2.26 3.05 Yield Change -0.01 -0.03 0 0 -0.02 -0.03 Spread 0.4 0.63 0.12 0.6 0.88 0.74 0.95 1.28 - Stock Price Data for SAM and the S&P 500 Boston Beer Inc. (SAM) Historical Weekly Stock Prices SAM Date Open High Low Close Volume Adj Close Return 12/28/2015 204.64 204.9 198.68 201.91 119800 201.91 12/21/2015 207.78 207.78 203 205.4 109400 205.4 12/14/2015 213.67 215.75 203.49 205.49 160600 205.49 12/7/2015 212.9 222.57 211.21 213.62 138100 213.62 11/30/2015 217.87 221.35 207.5 212.85 111500 212.85 11/23/2015 213 219.65 210.47 218.49 92200 218.49 11/16/2015 201.42 217.1 201.42 212.36 123200 212.36 11/9/2015 209.06 214.25 201.26 201.9 159700 201.9 11/2/2015 219.87 227.44 203.76 210 191200 210 10/26/2015 258.04 259.9 212 219.59 222700 219.59 10/19/2015 240.75 260.51 240.25 257.78 150200 257.78 10/12/2015 229.23 244.37 226.04 240.58 142900 240.58 10/5/2015 212.99 229.83 212.41 228.44 102700 228.44 9/28/2015 217.48 218.88 205.27 211.11 112400 211.11 9/21/2015 229.29 231.32 214 217.48 127000 217.48 9/14/2015 215.8 230.11 215.51 229.03 231800 229.03 9/8/2015 209.57 216.79 205.04 215.71 142900 215.71 8/31/2015 208.02 209.8 195.04 208.27 145400 208.27 8/24/2015 201.03 212 195.27 208.42 188000 208.42 8/17/2015 234.84 237.42 210.25 213.28 176800 213.28 8/10/2015 235.58 238.72 230.8 236.55 112100 236.55 8/3/2015 220.81 235.95 220.01 235.07 189300 235.07 7/27/2015 221.2 225.87 214.21 220.52 302500 220.52 7/20/2015 223.75 226.81 220.92 224.15 173500 224.15 7/13/2015 229.01 231.38 219.5 223.25 145800 223.25 7/6/2015 228.26 229.34 220.5 227.16 147300 227.16 6/29/2015 235.8 237.47 227.04 227.8 125700 227.8 6/22/2015 251.39 251.39 237 237.62 162000 237.62 6/15/2015 252.25 256.82 247 250.09 138500 250.09 6/8/2015 259.55 260.94 248.52 253.23 183000 253.23 6/1/2015 263.74 264.7 257.01 260.38 143000 260.38 5/26/2015 262.72 266.62 260 263.78 93400 263.78 5/18/2015 261.47 264.81 260.48 263.01 89900 263.01 5/11/2015 250.47 263.81 245.92 262.06 126000 262.06 5/4/2015 244 256.84 243.81 251.29 141300 251.29 4/27/2015 267.18 270 238.43 244.2 241300 244.2 4/20/2015 260.1 267.46 259.09 265.97 53100 265.97 4/13/2015 270 270.49 257.09 259.3 74900 259.3 4/6/2015 271.82 273.71 265.7 270.76 65500 270.76 3/30/2015 269.93 272.7 261.56 272.19 135900 272.19 3/23/2015 3/16/2015 3/9/2015 3/2/2015 2/23/2015 2/17/2015 2/9/2015 2/2/2015 1/26/2015 1/20/2015 1/12/2015 1/5/2015 12/29/2014 12/22/2014 12/15/2014 12/8/2014 12/1/2014 11/24/2014 11/17/2014 11/10/2014 11/3/2014 10/27/2014 10/20/2014 10/13/2014 10/6/2014 9/29/2014 9/22/2014 9/15/2014 9/8/2014 9/2/2014 8/25/2014 8/18/2014 8/11/2014 8/4/2014 7/28/2014 7/21/2014 7/14/2014 7/7/2014 6/30/2014 6/23/2014 6/16/2014 6/9/2014 6/2/2014 5/27/2014 5/19/2014 5/12/2014 5/5/2014 4/28/2014 276.31 271.33 256.97 266.99 314.54 304.36 311.47 313.55 320.61 302 285.62 278.98 296 288.48 282.36 269.21 263.1 254.69 262.75 258.94 250.04 224.02 220 213.46 218.43 219.22 220.83 218.96 216.26 220.79 227.55 230 233 218.01 220.14 222.26 227.01 229.96 221.49 226.52 219.48 214.66 214.34 222.12 223.18 224.01 239.42 235.77 276.96 277.88 277.45 268.77 314.64 314.45 313 319.94 323.69 325 302 298.38 297.6 296.9 299 284.45 269.99 267.78 263.55 277.76 260 252.99 224.85 226.5 218.43 224 222.45 227.36 218.83 223.51 228.6 233.5 233.45 232.83 225.88 223.47 231.29 233.5 233.93 226.67 227.09 220.1 218.43 223.98 228.79 234.22 240.81 246.04 264 260 254.5 256.01 253.01 297.69 302.03 308.42 310.03 302 283.08 278 279 287.54 274.4 266.69 258 254.41 251 258.29 241.63 222.52 218.43 212.2 210.03 213.48 216.17 217.12 213.37 215.5 220.44 225.8 225.2 215.6 216.1 216.96 219 224.02 220.62 218.04 215.88 211.8 208.82 213.59 219.11 215.7 222 220.55 268.14 277.36 268.84 257.93 267.6 313.39 303.26 313.29 314.52 320.83 301.54 284.04 280.27 295.74 289.33 279.4 269.88 262.97 254.36 262.8 258.9 249 224.39 220.54 213.7 217.72 220.19 221.17 217.76 217.05 220.98 227.25 228.83 232.33 217.75 219.24 223.65 226.69 232.3 222.33 226.17 219.11 215.24 214.41 221.96 225.11 223.25 240.31 130400 160500 184500 191200 401100 67300 78700 63700 277700 81300 45600 71600 53400 36200 87900 70100 41100 51100 47200 72900 111300 85100 35100 54300 34500 41300 35300 55000 30600 55000 35200 44300 43300 45800 54900 27800 39600 44200 57300 44000 59300 66000 66600 62200 77500 67100 82200 99100 268.14 277.36 268.84 257.93 267.6 313.39 303.26 313.29 314.52 320.83 301.54 284.04 280.27 295.74 289.33 279.4 269.88 262.97 254.36 262.8 258.9 249 224.39 220.54 213.7 217.72 220.19 221.17 217.76 217.05 220.98 227.25 228.83 232.33 217.75 219.24 223.65 226.69 232.3 222.33 226.17 219.11 215.24 214.41 221.96 225.11 223.25 240.31 4/21/2014 4/14/2014 4/7/2014 3/31/2014 3/24/2014 3/17/2014 3/10/2014 3/3/2014 2/24/2014 2/18/2014 2/10/2014 2/3/2014 1/27/2014 1/21/2014 1/13/2014 1/6/2014 12/30/2013 12/23/2013 12/16/2013 Beta = 234.15 236.2 235 243.17 249.61 244.08 239.74 233.2 230 225.44 207.31 208.54 212.62 220 223.78 222.42 241.84 238.4 224.36 247.54 238.22 243 248 249.8 249.81 246.3 247.13 242.45 229.57 226.86 209.99 215.83 222.55 228.08 232.4 244.25 246.53 238.21 231.52 227.96 230.74 232.84 241.11 235.39 235.57 228.14 225 222.61 206.23 202.78 207.07 213.55 218.05 220.31 215.73 236.56 224.11 234.34 233.88 234.4 235.62 242.4 249.81 242.63 240.87 236.75 229.07 225.19 208.23 208.31 214.26 218.76 225.08 218.68 242.1 237.97 57700 36000 60700 66900 57600 67800 52000 124000 113900 45500 79300 76600 88600 74400 93200 86100 87900 38900 43900 234.34 233.88 234.4 235.62 242.4 249.81 242.63 240.87 236.75 229.07 225.19 208.23 208.31 214.26 218.76 225.08 218.68 242.1 237.97 S&P 500 (^G SPC) Historical Weekly Stock Prices S&P Date Open High Low Close Volume Adj Close Return 12/28/2015 2057.77 2081.56 2043.62 2043.94 2.5E+009 2043.94 12/21/2015 2010.27 2067.36 2005.93 2060.99 3.0E+009 2060.99 12/14/2015 2013.37 2053.87 1993.26 2043.41 4.5E+009 2043.41 12/7/2015 2090.42 2090.42 2008.8 2012.37 4.1E+009 2012.37 11/30/2015 2090.95 2104.27 2042.35 2091.69 4.1E+009 2091.69 11/23/2015 2089.41 2095.61 2070.29 2090.11 2.9E+009 2090.11 11/16/2015 2022.08 2097.06 2019.39 2089.17 3.9E+009 2089.17 11/9/2015 2096.56 2096.56 2022.02 2023.04 3.9E+009 2023.04 11/2/2015 2080.76 2116.48 2080.76 2099.2 4.1E+009 2099.2 10/26/2015 2075.08 2094.32 2058.84 2079.36 4.1E+009 2079.36 10/19/2015 2031.73 2079.74 2017.22 2075.15 3.8E+009 2075.15 10/12/2015 2015.65 2033.54 1990.73 2033.11 3.5E+009 2033.11 10/5/2015 1954.33 2020.13 1954.33 2014.89 4.2E+009 2014.89 9/28/2015 1929.18 1951.36 1871.91 1951.36 4.3E+009 1951.36 9/21/2015 1960.84 1979.64 1908.92 1931.34 3.6E+009 1931.34 9/14/2015 1963.06 2020.86 1948.27 1958.03 4.0E+009 1958.03 9/8/2015 1927.3 1988.63 1927.3 1961.05 3.5E+009 1961.05 8/31/2015 1986.73 1986.73 1903.07 1921.22 3.7E+009 1921.22 8/24/2015 1965.15 1993.48 1867.01 1988.87 5.2E+009 1988.87 8/17/2015 2089.7 2103.47 1970.89 1970.89 3.7E+009 1970.89 8/10/2015 2080.98 2105.35 2052.09 2091.54 3.5E+009 2091.54 8/3/2015 2104.49 2112.66 2067.91 2077.57 3.8E+009 2077.57 7/27/2015 2078.19 2114.24 2063.52 2103.84 3.9E+009 2103.84 7/20/2015 2126.85 2132.82 2077.09 2079.65 3.6E+009 2079.65 7/13/2015 2080.03 2128.91 2080.03 2126.64 3.2E+009 2126.64 7/6/2015 2073.95 2083.74 2044.02 2076.62 3.6E+009 2076.62 6/29/2015 2098.63 2098.63 2056.32 2076.78 3.6E+009 2076.78 6/22/2015 2112.5 2129.87 2095.38 2101.49 3.5E+009 2101.49 6/15/2015 2091.34 2126.65 2072.49 2109.99 3.4E+009 2109.99 6/8/2015 2092.34 2115.02 2072.14 2094.11 3.0E+009 2094.11 6/1/2015 2108.64 2121.92 2085.67 2092.83 3.1E+009 2092.83 5/26/2015 2125.34 2126.22 2099.18 2107.39 3.3E+009 2107.39 5/18/2015 2121.3 2134.72 2120.01 2126.06 3.0E+009 2126.06 5/11/2015 2115.56 2123.89 2085.57 2122.73 3.2E+009 2122.73 5/4/2015 2110.23 2120.95 2067.93 2116.1 3.6E+009 2116.1 4/27/2015 2119.29 2125.92 2077.59 2108.29 3.8E+009 2108.29 4/20/2015 2084.11 2120.92 2084.11 2117.69 3.3E+009 2117.69 4/13/2015 2102.03 2111.91 2072.37 2081.18 3.5E+009 2081.18 4/6/2015 2064.87 2102.61 2056.52 2102.06 2.7E+009 2102.06 3/30/2015 2064.11 2088.97 2048.38 2066.96 3.2E+009 2066.96 3/23/2015 3/16/2015 3/9/2015 3/2/2015 2/23/2015 2/17/2015 2/9/2015 2/2/2015 1/26/2015 1/20/2015 1/12/2015 1/5/2015 12/29/2014 12/22/2014 12/15/2014 12/8/2014 12/1/2014 11/24/2014 11/17/2014 11/10/2014 11/3/2014 10/27/2014 10/20/2014 10/13/2014 10/6/2014 9/29/2014 9/22/2014 9/15/2014 9/8/2014 9/2/2014 8/25/2014 8/18/2014 8/11/2014 8/4/2014 7/28/2014 7/21/2014 7/14/2014 7/7/2014 6/30/2014 6/23/2014 6/16/2014 6/9/2014 6/2/2014 5/27/2014 5/19/2014 5/12/2014 5/5/2014 4/28/2014 2107.99 2055.35 2072.25 2105.23 2109.83 2096.47 2053.47 1996.67 2050.42 2020.76 2046.13 2054.44 2087.63 2069.28 2005.03 2074.84 2065.78 2065.07 2038.29 2032.01 2018.21 1962.97 1885.62 1905.65 1970.01 1978.96 2009.08 1986.04 2007.17 2004.07 1991.74 1958.36 1933.43 1926.62 1978.25 1976.93 1969.86 1984.22 1960.79 1962.92 1934.84 1948.97 1923.87 1902.01 1876.66 1880.03 1879.45 1865 2114.86 2113.92 2083.49 2117.52 2119.59 2110.61 2097.03 2072.4 2057.62 2064.62 2056.93 2064.43 2093.55 2092.7 2077.85 2075.78 2079.47 2075.76 2071.46 2046.18 2034.26 2018.19 1965.27 1912.09 1977.84 1985.17 2009.08 2019.26 2007.17 2011.17 2005.04 1994.76 1964.04 1942.92 1984.85 1991.39 1983.94 1984.22 1985.59 1968.17 1963.91 1955.55 1949.44 1924.03 1901.26 1902.17 1889.07 1891.33 2045.5 2055.35 2039.69 2067.27 2103 2085.44 2041.88 1980.9 1989.18 2004.49 1988.12 1992.44 2046.04 2069.28 1972.56 2002.33 2049.57 2064.75 2034.46 2030.17 2001.01 1951.37 1882.3 1820.66 1906.05 1926.03 1965.99 1978.48 1980.26 1990.1 1990.52 1958.36 1928.29 1904.78 1916.37 1965.77 1955.59 1952.86 1958.22 1944.69 1930.91 1925.78 1915.98 1902.01 1868.14 1862.36 1859.79 1850.61 2061.02 2108.1 2053.4 2071.26 2104.5 2110.3 2096.99 2055.47 1994.99 2051.82 2019.42 2044.81 2058.2 2088.77 2070.65 2002.33 2075.37 2067.56 2063.5 2039.82 2031.92 2018.05 1964.58 1886.76 1906.13 1967.9 1982.85 2010.4 1985.54 2007.71 2003.37 1988.4 1955.06 1931.59 1925.15 1978.34 1978.22 1967.57 1985.44 1960.96 1962.87 1936.16 1949.44 1923.57 1900.53 1877.86 1878.48 1881.14 3.3E+009 3.9E+009 3.5E+009 3.4E+009 3.3E+009 3.3E+009 3.6E+009 4.2E+009 3.9E+009 3.9E+009 4.1E+009 3.9E+009 2.6E+009 2.4E+009 5.1E+009 4.0E+009 3.7E+009 2.9E+009 3.4E+009 3.2E+009 3.7E+009 3.8E+009 3.6E+009 5.0E+009 4.1E+009 3.8E+009 3.2E+009 3.5E+009 2.9E+009 2.9E+009 2.3E+009 2.6E+009 2.7E+009 3.2E+009 3.5E+009 2.8E+009 3.2E+009 2.9E+009 2.8E+009 3.2E+009 3.3E+009 2.8E+009 2.8E+009 3.0E+009 2.7E+009 3.1E+009 3.2E+009 3.6E+009 2061.02 2108.1 2053.4 2071.26 2104.5 2110.3 2096.99 2055.47 1994.99 2051.82 2019.42 2044.81 2058.2 2088.77 2070.65 2002.33 2075.37 2067.56 2063.5 2039.82 2031.92 2018.05 1964.58 1886.76 1906.13 1967.9 1982.85 2010.4 1985.54 2007.71 2003.37 1988.4 1955.06 1931.59 1925.15 1978.34 1978.22 1967.57 1985.44 1960.96 1962.87 1936.16 1949.44 1923.57 1900.53 1877.86 1878.48 1881.14 4/21/2014 4/14/2014 4/7/2014 3/31/2014 3/24/2014 3/17/2014 3/10/2014 3/3/2014 2/24/2014 2/18/2014 2/10/2014 2/3/2014 1/27/2014 1/21/2014 1/13/2014 1/6/2014 12/30/2013 12/23/2013 12/16/2013 1865.79 1818.18 1863.92 1859.16 1867.67 1842.81 1877.86 1857.68 1836.78 1839.03 1796.2 1782.68 1791.03 1841.05 1841.26 1832.31 1841.47 1822.92 1777.48 1884.89 1869.63 1872.53 1897.28 1875.92 1883.97 1882.35 1883.57 1867.92 1847.5 1841.65 1798.03 1798.77 1849.31 1850.84 1843.23 1849.44 1844.89 1823.75 1859.7 1815.8 1814.36 1859.16 1842.11 1842.81 1839.57 1834.44 1836.78 1824.58 1791.83 1737.92 1770.45 1790.29 1815.52 1823.73 1827.74 1822.92 1767.99 1863.4 1864.85 1815.69 1865.09 1857.62 1866.52 1841.13 1878.04 1859.45 1836.25 1838.63 1797.02 1782.59 1790.29 1838.7 1842.37 1831.37 1841.4 1818.32 3.1E+009 3.3E+009 3.7E+009 3.3E+009 3.4E+009 3.5E+009 3.3E+009 3.5E+009 3.7E+009 3.5E+009 3.3E+009 4.1E+009 3.8E+009 3.9E+009 3.6E+009 3.5E+009 2.6E+009 2.0E+009 3.9E+009 1863.4 1864.85 1815.69 1865.09 1857.62 1866.52 1841.13 1878.04 1859.45 1836.25 1838.63 1797.02 1782.59 1790.29 1838.7 1842.37 1831.37 1841.4 1818.32 BOSTON BEER CO INC CLASS A (SAM) CashFlowFlag BALANCE SHEET Fiscal year ends in December. USD in millions except per share data. Assets Current assets Cash Cash and cash equivalents Short-term investments Total cash Receivables Inventories Deferred income taxes Prepaid expenses Other current assets Total current assets Non-current assets Property, plant and equipment Gross property, plant and equipment Accumulated Depreciation Net property, plant and equipment Goodwill Intangible assets Other long-term assets Total non-current assets Total assets Liabilities and stockholders' equity Liabilities Current liabilities Short-term debt Capital leases Accounts payable Taxes payable Accrued liabilities Deferred revenues Other current liabilities Total current liabilities Non-current liabilities Long-term debt Deferred taxes liabilities Other long-term liabilities Total non-current liabilities Total liabilities Stockholders' equity Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity Total liabilities and stockholders' equity 2005-12 2006-12 42 22 64 10 14 1 1 63 19 82 18 17 1 3 89 121 70 -44 27 79 -48 31 1 1 2 30 119 2 34 154 11 18 17 23 29 41 2 2 4 33 1 4 5 46 0 71 16 -1 86 119 0 80 28 0 109 154 2007-12 79 16 95 18 18 2 2 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 2014-12 2015-12 9 55 49 49 74 50 76 94 55 18 26 4 10 49 20 27 4 13 113 112 49 23 34 4 4 11 126 74 31 44 5 7 136 9 18 23 3 2 15 69 162 50 42 56 6 8 2 164 76 37 51 9 5 29 207 94 41 56 7 4 21 224 101 -55 46 1 212 -64 148 1 228 -81 147 1 234 -91 143 1 245 -102 144 1 311 -121 190 3 410 -143 267 4 554 -172 382 4 617 -207 410 4 12 60 196 2 151 220 2 150 263 2 147 259 2 147 272 5 197 359 10 280 444 12 398 605 8 422 645 0 36 9 59 6 67 28 7 48 4 1 89 0 34 3 57 9 1 104 110 0 43 7 58 4 111 17 4 21 93 17 3 21 88 1 20 4 25 114 32 5 38 142 51 8 59 169 56 17 73 184 122 44 0 166 259 0 138 47 -1 185 272 0 157 89 -1 245 359 0 173 129 0 302 444 0 225 212 -1 436 605 0 290 172 -1 461 645 0 18 20 25 19 40 44 2 49 53 58 67 74 72 1 3 4 62 10 3 13 80 0 89 45 0 134 196 0 103 38 0 140 220 13 3 16 90 112 62 0 173 263 19 6 40 2 BOSTON BEER CO INC CLASS A (SAM) CashFlowFlag INCOME STATEMENT Fiscal year ends in December. USD in millions except per share data. Revenue Cost of revenue Gross profit Operating expenses Sales, General and administrative Other operating expenses Total operating expenses Operating income Other income (expense) Income before taxes Provision for income taxes Net income from continuing operations Net income Net income available to common shareholders Earnings per share Basic Diluted Weighted average shares outstanding Basic Diluted EBITDA 2005-12 2006-12 238 285 97 121 141 164 118 136 118 23 2 26 10 16 16 16 136 28 4 32 14 18 18 18 1.1 1.07 1.31 1.27 14 15 28 14 14 33 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 2014-12 2015-12 342 398 453 506 513 580 739 903 960 152 215 201 207 228 265 354 438 458 189 184 252 298 285 315 385 465 502 149 3 152 37 5 42 19 22 22 22 168 2 170 14 2 16 8 8 8 8 158 1 160 93 -38 54 23 31 31 31 175 0 175 123 -42 81 31 50 50 50 201 -20 181 104 0 104 37 66 66 66 219 0 220 96 0 96 36 59 59 59 270 2 272 113 -1 113 42 70 70 70 317 2 318 147 -1 146 55 91 91 91 345 0 345 156 -1 155 57 98 98 98 1.58 1.53 0.58 0.56 2.21 2.17 3.67 3.52 5.08 4.81 4.6 4.39 5.47 5.18 6.96 6.69 7.46 7.25 14 15 44 14 14 27 14 14 71 14 14 99 13 14 122 13 13 116 13 14 139 13 13 182 13 14 199 BOSTON BEER CO INC CLASS A (SAM) Statement of CASH FLOW Fiscal year ends in December. USD in millions except per share data. Cash Flows From Operating Activities Net income Depreciation & amortization Investment/asset impairment charges Deferred income taxes Stock based compensation Accounts receivable Inventory Prepaid expenses Accounts payable Accrued liabilities Other working capital Other non-cash items Net cash provided by operating activities Cash Flows From Investing Activities Investments in property, plant, and equipment Property, plant, and equipment reductions Acquisitions, net Other investing activities Net cash used for investing activities Cash Flows From Financing Activities Debt issued Debt repayment Common stock issued Common stock repurchased Excess tax benefit from stock based compensation Other financing activities Net cash provided by (used for) financing activities Net change in cash Cash at beginning of period Cash at end of period Free Cash Flow Operating cash flow Capital expenditure Free cash flow 2005-12 2006-12 2007-12 16 5 18 5 22 7 1 -1 -2 -1 -1 -3 -2 -1 1 7 3 29 7 4 29 18 8 54 -14 0 -9 0 -26 0 -14 -9 -12 -37 3 -13 4 -5 3 -6 0 -9 6 36 42 2 2 22 42 63 2 -1 16 63 79 29 -14 15 29 -9 20 54 -26 28 2008-12 2009-12 8 13 2010-12 2011-12 2012-12 2013-12 2014-12 2015-12 31 17 1 2 4 0 -3 6 5 3 0 -2 66 50 17 0 4 3 -2 -1 -4 -6 7 1 -3 68 66 19 1 0 6 -3 -7 -2 -1 1 -1 -5 73 59 20 0 2 7 -8 -10 6 8 19 0 -8 95 70 26 2 12 7 -11 -12 -8 3 15 0 -5 100 91 35 2 15 7 5 5 -9 1 5 2 -17 141 98 43 0 7 7 -2 -5 12 6 9 9 -15 169 -60 0 -45 -17 0 -14 0 -20 -74 -17 -101 0 -3 0 -103 -152 -104 -66 0 -2 0 -67 0 0 -152 0 0 -74 -1 0 8 -5 -9 7 18 40 -14 -20 1 5 -15 4 -6 -70 79 9 -7 2 3 -2 46 9 55 -68 3 4 -61 -7 55 49 -63 5 5 -53 0 49 49 -18 8 7 -3 25 49 74 -30 5 3 -22 -25 74 50 -8 17 28 37 27 50 76 0 -136 15 44 -77 18 76 94 40 -60 -20 66 -17 49 68 -14 54 73 -20 53 95 -66 29 100 -101 -1 141 -152 -11 169 -74 94 Growth Profitability and Financial Ratios for Boston Beer Co Inc Class A Financials TTM 2014-12 2013-12 2012-12 2011-12 2010-12 Revenue USD Mil 963 903 739 580 513 506 Gross Margin % 52.1 51.5 52.1 54.3 55.5 50.7 Operating Income USD Mil 162 147 113 96 104 81 Operating Margin % 16.8 16.2 15.3 16.5 20.2 16 Net Income USD Mil 101 91 70 59 66 50 Earnings Per Share USD 7.46 6.69 5.18 4.39 4.81 3.52 Dividends USD Payout Ratio % Shares Mil 14 13 14 13 14 14 Book Value Per Share USD 38.31 31.55 22.08 19.13 13.42 12.36 Operating Cash Flow USD Mil 181 141 100 95 73 68 Cap Spending USD Mil -79 -152 -101 -66 -20 -14 Free Cash Flow USD Mil 102 -11 -1 29 53 54 Free Cash Flow Per Share USD -1.5 0.58 2.18 4.06 3.81 Working Capital USD Mil 97 60 73 59 40 Key Ratios -> Profitability Margins % of Sales Revenue COGS Gross Margin SG&A R&D Other Operating Margin Net Int Inc & Other EBT Margin Profitability Tax Rate % Net Margin % Asset Turnover (Average) Return on Assets % Financial Leverage (Average) Return on Equity % Return on Invested Capital % Interest Coverage TTM 2014-12 2013-12 2012-12 2011-12 2010-12 100 100 100 100 100 100 47.93 48.5 47.92 45.67 44.53 41.01 52.07 51.5 52.08 54.33 55.47 50.67 35.21 35.07 36.57 37.83 39.13 34.56 0.04 16.82 -0.15 16.66 TTM 0.2 16.23 -0.11 16.12 0.21 15.3 -0.07 15.23 0.03 16.47 -0.01 16.46 -3.87 20.21 -0.03 20.18 0.06 16.05 -0.01 16.03 2014-12 2013-12 2012-12 2011-12 2010-12 36.8 37.67 37.45 37.74 36.17 38.18 10.53 10.05 9.52 10.25 12.88 9.91 1.52 1.72 1.84 1.84 1.93 1.94 16.05 17.3 17.52 18.82 24.88 19.23 1.4 1.39 1.47 1.47 1.47 1.56 22.35 24.58 25.73 27.67 37.71 29.6 22.32 24.54 25.66 27.59 37.69 29.58 Key Ratios -> Growth Latest Qtr 2014-12 Revenue % Year over Year 3-Year Average 5-Year Average 10-Year Average 8.66 22.18 20.74 14.77 15.31 2013-12 27.37 13.47 13.15 13.52 2012-12 13.1 8.56 11.17 10.42 2011-12 1.41 8.79 12.44 10.63 2010-12 11.56 13.98 16.25 10.26 Operating Income % Year over Year 3-Year Average 5-Year Average 10-Year Average Net Income % Year over Year 3-Year Average 5-Year Average 10-Year Average EPS % Year over Year 3-Year Average 5-Year Average 10-Year Average 0.38 2.15 29.6 12.24 21.98 22.36 18.32 11.69 51.73 21.7 -7.79 20.76 20.98 23.41 27.69 94.62 29.97 24.66 49.58 30.08 28.34 17.55 28.91 11.16 23.87 21.92 18.37 11.97 54.15 20.89 -9.98 24.1 21.47 21.4 31.74 101.39 29.42 23.77 61.14 30.64 26.37 16.13 29.15 11.62 25.25 22.77 18 13.74 56.04 22.16 -8.73 26.47 23.47 23.78 36.65 104.79 30.52 26.18 62.21 32.01 26.89 18.96 Key Ratios -> Cash Flow Cash Flow Ratios TTM 2014-12 2013-12 2012-12 2011-12 2010-12 Operating Cash Flow Growth % YOY 41.24 4.88 31.02 7.27 3.45 Free Cash Flow Growth % YOY -44.85 -1.96 11.64 Cap Ex as a % of Sales 8.22 16.81 13.62 11.38 3.82 2.69 Free Cash Flow/Sales % 10.6 -1.17 -0.09 5.05 10.36 10.72 Free Cash Flow/Net Income 1.01 -0.12 -0.01 0.49 0.8 1.08 Key Ratios -> Financial Health Balance Sheet Items (in %) Cash & Short-Term Investments Accounts Receivable Inventory Other Current Assets Total Current Assets Net PP&E Intangibles Other Long-Term Assets Total Assets Accounts Payable Short-Term Debt Taxes Payable Accrued Liabilities Other Short-Term Liabilities Total Current Liabilities Long-Term Debt Other Long-Term Liabilities Total Liabilities Total Stockholders' Equity Total Liabilities & Equity Latest Qtr 2014-12 2013-12 2012-12 2011-12 2010-12 19.48 12.63 11.15 20.71 18.15 18.94 8.58 10.45 9.91 8.76 12.32 7.74 8.3 8.48 12.7 12.34 12.5 10.29 3.05 2.73 3.23 3.35 3.16 6.35 39.41 34.28 36.99 45.16 46.14 43.32 58.68 63.05 60.03 52.84 52.69 55.27 0.53 0.61 0.83 0.71 0.51 0.53 1.38 2.06 2.15 1.3 0.66 0.87 100 100 100 100 100 100 7.02 5.88 7.75 7.87 6.9 7.51 0.02 1.51 0.65 2.03 2.03 12.2 9.81 12.95 13.26 14.82 20.41 1.01 2.15 1.55 0.85 19.22 18.21 23.5 24.73 24.61 27.93 0.16 9.17 9.72 8.47 6.94 7.59 8.02 28.39 27.93 31.97 31.82 32.2 35.95 71.61 72.07 68.03 68.18 67.8 64.05 100 100 100 100 100 100 Liquidity/Financial Health Latest Qtr 2014-12 2013-12 2012-12 2011-12 2010-12 Current Ratio Quick Ratio Financial Leverage Debt/Equity Key Ratios -> Efficiency Ratios Efficiency Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover Asset Turnover 2.05 1.46 1.4 TTM 1.88 1.27 1.39 1.57 0.9 1.47 1.83 1.19 1.47 1.88 1.24 1.47 1.55 0.96 1.56 2014-12 2013-12 2012-12 2011-12 2010-12 20.25 15.94 18.15 17.21 15.39 13.66 46.25 44.88 51.93 54.01 48.48 45.89 34.95 29.17 32.33 32.44 30.54 39.3 31.55 31.65 37.74 38.78 33.33 20.26 18.03 22.9 20.12 21.21 23.72 26.71 7.89 8.13 7.03 6.76 7.53 7.95 2.48 2.79 3.24 3.48 3.58 3.49 1.52 1.72 1.84 1.84 1.93 1.94 2009-12 2008-12 2007-12 2006-12 2005-12 453 398 342 285 238 47.2 46.2 55.4 57.6 59.4 54 14 37 28 23 12 3.5 10.8 9.8 9.8 31 8 22 18 16 2.17 0.56 1.53 1.27 1.07 14 12.15 66 -17 49 3.38 39 14 9.88 40 -60 -20 -1.37 2 15 9.41 54 -26 28 1.92 78 14 7.29 29 -9 20 1.41 80 15 6.03 29 -14 15 0.9 60 2009-12 2008-12 2007-12 2006-12 2005-12 100 100 100 100 100 44.38 53.84 44.57 42.45 40.63 47.15 46.16 55.43 57.55 59.37 34.95 42.14 43.62 47.76 49.58 0.23 11.97 0.02 11.99 0.49 3.53 0.45 3.98 1.01 10.8 1.39 12.19 9.79 1.34 11.13 9.78 0.92 10.71 2009-12 2008-12 2007-12 2006-12 2005-12 42.76 48.94 45.99 42.73 39.03 6.86 2.03 6.58 6.37 6.53 1.88 1.92 1.95 2.09 2.1 12.89 3.89 12.84 13.3 13.74 1.52 1.57 1.47 1.42 1.38 19.87 5.91 18.57 18.7 18.93 19.83 5.15 16.29 15.47 17.63 2009-12 13.82 16.68 15.86 9.88 2008-12 16.61 18.69 13.89 8.06 2007-12 19.7 16.3 9.67 6.4 2006-12 19.78 11.14 8.85 4.09 2005-12 9.71 3.43 4.57 4.65 285.94 24.76 22.74 12.37 -61.88 -15.51 -2.39 -0.37 31.97 23.7 25.88 11.34 19.87 20.76 19.57 7.79 19.66 25.96 7.66 9.39 284.74 19.59 20.01 10.86 -64.04 -19.59 -5.19 0.24 23.63 21.62 21.33 11.46 16.92 19.89 18.36 8.03 24.45 22.07 6.72 2.13 287.5 19.55 20.34 14.92 -63.4 -19.41 -4.36 3.68 20.47 21.17 24.09 15.25 18.69 21.97 21.99 11.97 24.42 27.19 11.53 12.48 2009-12 2008-12 2007-12 2006-12 2005-12 64.56 -25.94 85.64 0.47 49.64 41.49 33.99 1.05 3.75 14.94 7.5 3.17 5.86 10.71 -4.94 8.25 6.98 6.24 1.56 -2.44 1.25 1.1 0.96 2009-12 2008-12 2007-12 2006-12 2005-12 21.1 4.13 48.75 53.32 53.71 6.79 14.15 9.18 11.5 8.01 9.72 10.33 9.24 11.03 11.46 5.38 2.72 2.17 2.19 1.73 42.99 31.33 69.33 78.05 74.91 55.92 67.31 23.59 19.87 22.28 0.52 0.63 0.7 0.89 1.16 0.57 0.73 6.38 1.19 1.65 100 100 100 100 100 9.6 9.19 9.04 11.61 9.56 18.46 20.6 14.84 14.58 28.06 20.2 1.13 30.51 29.64 26.46 24.14 6.08 34.15 65.85 100 5.77 36.28 63.72 100 2.15 31.79 68.21 100 3.25 29.7 70.3 100 3.64 27.78 72.22 100 2009-12 2008-12 2007-12 2006-12 2005-12 1.53 0.99 1.52 1.03 0.6 1.57 2.34 1.95 1.47 2.95 2.45 1.42 3.1 2.56 1.38 2009-12 2008-12 2007-12 2006-12 2005-12 14.45 16.5 19.09 17.46 17.12 43.77 34.71 42.09 46.22 49.4 41.23 32.25 42.72 44.17 39.81 17 18.96 18.46 19.51 26.71 25.25 22.12 19.12 20.91 21.32 8.34 10.52 8.67 7.9 7.39 3.07 4.1 8.89 9.98 10.89 1.88 1.92 1.95 2.09 2.1