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`

1,990

Gross Sales
Less excise taxes

1,991

1,992

1,993

1,994

21,222
-2,300

32,302
-2,845

53,343
-5,165

85,758
-8,607

128,077
-13,244

Net Sales

18,922

29,457

48,178

77,151

114,833

-8,109

-13,039

-22,028

-35,481

-52,851

Gross profit

10,813

16,418

26,150

41,670

61,982

-8,981
-1,817
-10,798

-12,105
-2,247
-14,352

-21,075
-3,306
-24,381

-32,669
-4,105
-36,774

-46,303
-6,793
-53,096

15

2,066

1,769

4,896

8,886

Cost of good sold

Adv., promotional, selling expenses


General & administrative expenses
Total operating expenses
Operating income

Other income (expense) net


Net income (1)

Pro forma taxes (2)


Pro forma net income (3)

276

23

-124

-2

199

291

2,089

1,645

4,894

9,085

-130

-859

-691

-2,040

-3,765

161

1,230

954

2,854

5,320

Pro forma earnings per share (3) (4)


Weighted avg. Share outstanding (4)

0.29
18,268

(in thousands except employees, barrels)

Statistical Data

1,990

1,991

1,992

1,993

Barrels sold

121

174

294

Net sales per barrel

156

169

164

162

161

65

69

87

110

138

291

427
44%

554
69%

701
62%

832
50%

Employess
Net sales per employee
% Growth in barrel sales

475

1,994

714

Balance Sheet
1,993

1,994

ASSETS

Cash and cash equivalents


Accounts receivable
Inventory
Prepaid expenses
Other current assets
Total current investments
Restricted investments

Equipment, leasehold improvements


Other assets
Total assets

8,827
8,112
3,706
216
512

7,801
10,060
7,755
501
1,105

21,373

27,222

579
1,864
238

605
3,539
410

24,054

31,776

LIABILITIES AND PARTNERS EQUITY

Accounts payable
Accrued expenses
Current maturities of long-term debt
Total current liabilities

Long-term debt - current LTD mat.


Partners equity
Total liabilities and partners equity

2,917
10,233
50

9,270
13,906
50

13,200

23,226

2,000
8,854

1,950
6,600

24,054

31,776

BALANCE SHEET DATA AT PERIOD END


1,990

1,991

1,992

1,993

1,994

Working capital
Equipment, leasehold improvements

6,304

6,053

6,169

8,173
1,864

3,996
3,539

Working capital / Net Sales


Equipment,/ Net Sales

33.3%

20.5%

12.8%

10.6%
2.4%

3.5%
3.1%

Total assets
Total debt
Total partners / stockholders equity

11,270
2,200
5,907

11,981
2,150
5,954

15,780
2,100
6,434

24,054
2,050
8,854

31,776
2,000
6,600

1,994

1,995

1,996

1,997

1,998

3,996
3,539

10,909
4,262

14,727
5,753

19,881
7,767

25,845
10,097

7.0%
2.7%

7.0%
2.7%

7.0%
2.7%

7.0%
2.7%

7.0%
2.7%

Working capital
Equipment, leasehold improvements
Working capital / Net Sales
Equipment,/ Net Sales

3 Q data
9/30/94

Vertical Analysis

9/30/95

90,098
-9,478

121,895
-12,990

80,620

108,905

-37,546

-52,615

43,074

56,290

-31,734
-4,316
-36,050

-43,408
-5,455
-48,863

7,024

7,427

85

834

7,109

8,261

-3,360

-3,556

3,749

4,705

1,990

Gross Sales
Less excise taxes
Net Sales

100%

Cost of good sold

-43%
Gross profit

57%

Adv., promotional, selling expenses


General & administrative expenses

-47%
-10%
-57%

Total operating expenses


Operating income

0%

Other income (expense) net

1%

Net income (1)

2%

Pro forma taxes (2)

-1%

Pro forma net income (3)

1%

0.26
18,273
DCF Valuation
9/30/94

510

688

158

158

124

174

650

626
35%

9/30/94

1,994

9/30/95

9/30/95

1,552
15,073
8,485
907
1,703

15,073
8,485
907
1,703

27,720

26,168

Barrels Sold
Net Sales/Barell

714
161

% growth in barrel sales

50%

Net Sales
COGS
Gross Profit
Adv., promotional, selling expenses
General & administrative expenses
EBIT
Taxes 42%
NOPAT
D&A
CAPEX

602
3,963
1,113

602
3,963
1,113

33,398

31,846

Incremental Capex
Change in WC
FCFF
Discount Factor
PV

114,833
-52,851
61,982
-46,303
-6,793
8,886
-3732.12
5,154

6,539
11,680
50

6,539
11,680
50

18,269

18,269

1,900
13,229

12,848
729

33,398

31,846

9/30/94

9/30/95

9,451

7,899

11.7%

7.3%

33,398
2,000
11,351

31,846
1,950
13,229

1999

2000

2,001

32,306
12,621

37,152
14,514

39,010
15,240

7.0%
2.7%

7.0%
2.7%

7.0%
2.7%

Average

PV CF 1995 end
Terminal Value
Firm value
Long Term Debt
Equity Value
share value

24441.96339
122656.0273
147097.9907
-1950
145147.9907
7.566885135

Capital invested at beginning of yr


Reinvestment
Cost of Capital
Cost of capitalXcap invested
EVA

31776
10685.33333
0.125
3972
1,182

EVA PV

Terminal Value
NPV
7.0% Total Firm Value
2.7% Debt
Equity Value
Share Price

85749.08313
142,702
1950
140,752
7.101153332

1,991

1,992

1,993

1,994

9/30/94

9/30/95

100%

100%

100%

100%

100%

100%

-44%

-46%

-46%

-46%

-47%

-48%

56%

54%

54%

54%

53%

52%

-41%
-8%
-49%

-44%
-7%
-51%

-42%
-5%
-48%

-40%
-6%
-46%

-39%
-5%
-45%

-40%
-5%
-45%

7%

4%

6%

8%

9%

7%

0%

0%

0%

0%

0%

1%

7%

3%

6%

8%

9%

8%

-3%

-1%

-3%

-3%

-4%

-3%

4%

2%

4%

5%

5%

4%

1995
1996
1997
963.9 1301.265 1756.708
161
161
161

1998
2283.72
161

1999
2000
2854.65 3282.848
161
161

2001
3446.99
161

35%

35%

35%

30%

25%

15%

5%

155024.6 209283.1 282532.2 367291.9 459114.9 527982.1 554381.2


-71174.5 -96085.6 -129716 -168630 -210788 -242406 -254526
83,850 113,198 152,817 198,662 248,327 285,576 299,855
-65322.3 -88185.1 -119050 -154765 -193456 -222475 -233598
-9352.29 -12625.6 -17044.5 -22157.9 -27697.4
-31852 -33444.6
9,175
12,387
16,722
21,739
27,173
31,249
32,812
-3853.66 -5202.44
-7023.3 -9130.28 -11412.9 -13124.8
-13781
5,322
7,184
9,699
12,608
15,761
18,125
19,031
1,465
1,978
2,571
3,214
3,696
3,881
-4,500

-723
-6,913
-6,813

-13,000

-1,492
-2,014
-2,330
-2,524
-1,893
-726
-3,818
-5,154
-5,964
-6,461
-4,846
-1,858
-9,660
4,509
6,885
9,989
15,081
20,328
89%
79%
70%
62%
55%
49%
-8586.76 3562.318 4835.549 6235.727 8368.596 10026.54

Average

-46%

-42%
-6%
-48%

1%

122656

42461.33
56,953
58,966
61,296
63,821
65,714
66,439
14491.54 2013.584 2330.004 2524.171 1893.129 725.6993 -66439.5
0.125
0.125
0.125
0.125
0.125
0.125
0.125
5307.667 7119.11 7370.808 7662.058 7977.58 8214.221 8304.933
14
65
2,328
4,946
7,783
9,910
10,726
57.96743 1839.382 3473.897 4858.649 5499.247 5290.395
64729.54

Debt

Equity
D/V
E/V
Kd (semi-annual)
Kd (annual)
Tax Rate
Beta Levered
30 year govt treasury bond rate
Market Risk Premium
Ke
Levered Beta Annheuser
Beta Unlevered

1950
29517
0.06
0.94
11.50%
11.83%
42%
0.94
6.26%
7.00%
12.87%
1
0.910

Assumption
Book value of debt=market value of debt
WACC

(damodaran)

12.50%

Relative Valuation - Trading


P/E ratio on 11/20/95
CAGR 1990-94
PEG Ratio
12 month earnings 1995
Boston Beer Equity Value
Share Price

Pete's

Redhook Boston Beer


100
36
49.77
111%
41%
55.86%
89.71024 88.49558
89.10
6269.333
312042.8
16.26748

Transaction Comps
Using Pete's P/E
EPS 1994
EPS 1995 Annualized
Share Price 1994
Share Price 1995
Average Share Price
IPO Price
Pete's 1st day close
Issue Price Pete's
1st day growth

100
0.29
0.34
29.12
34.33
31.73
22.62
25.25
18
40.28%

Exhibit 1 Brewing Capacity and Utilization of Major U.S. Brewers

Anheuser-Busch
Miller Brewing
Coors
Strohs
G. Heileman
Pabst

Total Capacity
(Million Barrels)

1994 Volume
(Million Barrels)

Free Capacity
(Million Barrels)

Capacity Utilization
(%)

94.9
46.4
25.0
17.9
13.2
10.5

88.2
45.2
20.2
11.9
8.3
6.6

6.7
1.2
4.8
6.0
4.9
3.9

93%
97%
81%
66%
63%
63%

Exhibit 2 Shipments of U.S. Beer Companies, 1990-1994


1990
(000's Barrels)
Top Tier

Annheuser-Busch
Miller Brewing
Coors
Subtotal

2nd Tier

Imports

1991
(000's Barrels)

1992
(000's Barrels)

1993
(000's Barrels)

1994
(000's Barrels)

86,499
43,500
19,300

86,037
43,556
19,550

86,846
42,145
20,000

87,306
44,024
20,000

88,159
45,200
20,200

149,299

149,143

148,991

151,330

153,559

Strohs
G. Heileman
Pabst
Genesee
Latrobe
Falstaff/Pearl/Genesee
Pittsburg
All Others

16,200
10,914
6,700
2,200
713
850
700
1,871

14,800
9,377
6,600
2,220
803
800
700
2,554

14,000
9,133
6,900
2,150
882
900
670
3,907

12,610
8,940
7,000
2,000
1,035
800
575
2,582

11,850
8,315
6,630
1,800
1,060
700
470
1,473

Subtotal
All Imports

40,148
8,922

37,854
8,031

38,542
8,409

35,542
9,348

32,298
10,602

121
9
24
566

174
15
34
737

294
29
50
817

475
69
74
1,092

714
180
94
1,642

720
199,089

960
195,988

1,190
197,132

1,710
197,930

2,630
199,089

Craft Brewers
Boston Beer
Pete's Brewing
Redhook
All Others
Subtotal
Total

Exhibit 3 Stock Price Data For Pete's Brewing Company and Redhook Ale Brewery
Pete's Brewing Company
Offering Price
Date of Offering
Number of Shares Offered
Fully Diluted Average Shares
1 st Day Close
Low Trade as of 11/20/95
High Trade as of 11/20/95
Stock Price Close on 11/20/95
PIE Ratio on 11/20/95
PIB Ratio on 11/20/95

$18
7-Nov-95
3,000,000
8,460,000
$25.25
$23,314
$26.25
$24.75
100
129

Additional Market Information


AAA Corporate Debt in November, 1995
Treasury Bill Rate in November, 1995
Government 30- Year Treasury Notes

7.02%
5.35%
6.26%

Redhook Ale Brewery


$17
17-Aug-95
2,575,497
9,300,000
$27
$24.75
$34.75
$27
36
3

Exhibit 4 Financial Summary of Pete' Brewing Company and Redhook Ale Brewery
Pete's Brewing Company
Year Ended
31-Dec-93
31-Dec-94

Redhook Ale Brewery

9 Months Ending
30-Sep-95

Year Ended
31-Dec-93
31-Dec-94

Return on Equity
Profit Before Taxes/Net Sales (a)
x Net Sales/Average Assets
x Average Assets/Average Equity (b)
= Return on Equity (pre-tax)

1.07%
5.70
6.74
41.11%

1.67%
6.83
6.21
70.83%

3.50%
4.44
6.24
96.97%

`
0.77
1.50
31.97%

22.20%
0.55
1.29
15.62%

Margins
Gross ProfiVNet Sales
SGA/Net Sales
Operating ProfiVNet Sales
Interest Expense/Net Sales
Inventory Turnover
Avg Collection Period (c)
Avg Accts Pay Period (c) (d)

46.85%
45.50%
1.36%
0.30%
4.99
11.90
58.50

45.20%
43.20%
1.96%
0.30%
10.69
11.20
43.70

49.65%
42.80%
3.85%
0.40%
6.54
39.40
41.90

46.34%
17.42%
28.92%
1.38%
23.62
29.60
78.60

41.82%
18.76%
23.06%
0.87%
15.02
28.00
85.02

12,236
69
3,118
400
N/A
N/A

30,837
180
5,918
1,040
N/A
N/A

41,988
246
12,983
1,987
76
56

11 ,484
74
20,044
15,000
N/A
N/A

14,929
94
34,689
26,059
N/A
N/A

Aggregate Size Measures


Net Sales (000's)
Barrels Sold (000's)
Total Assets (000's)
Total Shareholders Equity
Total Employees
Total Salespersons

ok Ale Brewery

Boston Beer
9 Months Ending
30-Sep-95

Year Ended
31-Dec-93 31-Dec-94

18.00%
0.30
1.19
6.44%

3.70%
3.87
2.61
37.34%

4.63%
4.11
3.61
68.85%

34.35%
17.59%
16.76%
N/A
10.32
32.90
99.10

54.01%
-48%
6%

53.98%
-46%
8%

17,929
111
84,553
74,372
138
16

-9.5739342 -9.2227554
38.3777268 31.9759999

Exhibit 5 Excerpts from the Boston Beer Companys Offering Prospectus (cont.)
Summary Financial Data (in thousands, except per share, per barrel and employees data)

Year Ended December 31,


1990
1991
1992
Income Statement Data:
Net sales
Gross profit
Operating income
Net income (1)
Pro forma net income (2)
Pro forma earnings per
share (2) (3)
Shares outstanding, fully
diluted (3)
Statistical Data:
Barrels sold
Net sales per barrel
Employees
Net sales per employee

$18,922
10,813
15
291
161

$29,457
16,418
2,066
2,089
1,230

$48,178
26,150
1,769
1,645
954

Nine Months Ended


September 30,
1994
1994

1993
$77,151
41,670
4,896
4,894
2,854

$114,833
61,982
8,886
9,085
5,320
$0.29

$81,620
44,074
8,024
8,109
4,749

18,268

121
$156
65
$291

174
$169
69
$427

294
$164
87
$554

475
$162
110
$701

714
$161
138
$832

1995
$108,905
56,290
7,427
8,261
4,702
$0.26
18,273

510
$160
124
$658

688
$158
174
$626

September 30, 1995


Actual
Balance Sheet Data:
Working capital
Total assets
Total debt
Total partners'/Stockholders' equity

6,304
11,270
2,200
5,907

6,053
11,981
2,150
5,954

6,169
15,780
2,100
6,434

8,173
24,054
2,050
8,854

3,996
31,776
2,000
6,600

As Adjusted (4)
9,143
35,151
2,000
11,351

9,451
33,398
1,950
13,229

Exhibit 5 Excerpts from the Boston Beer Companys Offering Prospectus (cont.)
Balance Sheets December 31, 1993 and 1994 and September 30, 1995
(in thousands)
December 31,
1993
Assets
Cash and cash equivalents
Accounts receivable
Inventory
Prepaid expenses
Other current assets
Total current assets
Restricted investments
Equipment and leasehold improvements,
net
Other assets
Total assets

Liabilities and Partners' Equity


Accounts payable
Accrued expenses
Current maturities of long-term debt
Total current liabilities
Long-term debt, less current maturities
Commitments and contingencies (Note H)
Partners' equity
Total liabilities and partners' equity

1994

September 30,
1995

Pro forma
September 30,
1995
(Note C)

$8,827
8,112
3,706
216
512
21,373
579

$7,801
10,060
7,755
501
1,105
27,222
605

$1,552
15,073
8,485
907
1,703
27,270
602

(Unaudited)
---$15,073
8,485
907
1,703
26,168
602

1,864
238
$24,054

3,539
410
$31,776

3,963
1,113
$33,398

3,963
1,113
$31,846

2,917
10,233
50
13,200
2,000

9,270
13,906
50
23,226
1,950

6,539
11,680
50
18,269
1,900

6,539
11,680
50
18,269
12,848

8,854
$24,054

6,600
$31,776

13,229
$33,398

729
$31,846

Exhibit 5 Excerpts from the Boston Beer Companys Offering Prospectus (cont.)
Statements of Income
For the years ended December 31, 1992, 1993 and 1994 and the nine months ended September 30,
1994 (Unaudited) and 1995 (Unaudited)
(in thousands except for share data)
For the Years Ended
December 31,
1992
1993
Sales
Less excise taxes
Net sales
Cost of goods sold
Gross profit
Advertising, promotional and selling
expenses
General and administrative expenses
Total operating expenses
Operating income
Other income (expense):
Interest income
Interest expense
Other, net
Total other income
Net income
Pro forma data (Unaudited):
Income before pro forma income taxes
Pro forma net income tax expense
Pro forma net income

$
$

53,343
5,165
48,178
22,028
26,150

85,758
8,607
77,151
35,481
41,670

1994
$

128,077
13,244
114,833
52,851
61,982

91,098
9,478
81,620
37,546
44,074

(Unaudited)
121,895
12,990
108,905
51,615
56,290

21,075
3,306
24,381
1,769

32,669
4,105
36,774
4,896

46,303
6,793
53,096
8,886

31 ,734
4,316
36,050
8,024

43,408
5,455
48,863
7,427

221
(243)
(102)
(124)
1,645

230
(239)
7
(2)
4,896

429
(233)
3
199
9,085

269
(177)
(7)
85
8,109

203
(173)
804
834
8,261

1,645
691
954

$
$

Pro forma earnings per share

0.29

Pro forma weighted average


number of shares outstanding

$ 18,267,705

4,894
2,040
2,854

9,085
3,765
5,320

Nine Months Ended


September 30,
1994
1995

$
$
$

8,109
3,360
4,749

$
$
$

8,261
3,559
4,702

0.26

$ 18,272,741

Exhibit 5 Excerpts from the Boston Beer Companys Offering Prospectus (cont.)
Statements of Partners Equity for the years ended December 31, 1992, 1993 and 1994 and the
nine months ended September 30, 1995
(in thousands)
Unearned

Balance, December 31,1991


$
Add:
Net income for the year
Compensation associated with unit options
Deduct:
Withdrawals
Balance, December 31, 1992
Add:
Net income for the year
Deduct:
Withdrawals
Balance, December 31, 1993
Add:
Net income for the year
Compensation associated with unit options
Deduct:
Withdrawals
Balance, December 31, 1994
Add:
Net income for the nine months
Conversion of unit plans to unit options
Issuance of unit options
Amortization of unearned compensation expense
Deduct:
Withdrawals
Balance, September 30, 1995 (Unaudited)
$

General
160

Limited
5,794

Total Partners

Compensation
$

Equity
5,954

407

1,238
330

1,645
330

(367)
200

(1,126)
6,236

(1,493)
6,436

1,208

3,686

4,894

(605)
803

(1,871)
8,051

(2,476)
8,854

2,242

6,843
280

9,085
280

(2,813)
232

(8,806)
6,368

(11,619)
6,600

2,039

6,222
4,352
141

(1,364)
907

(4,191)
12,892

8,261
3,734
---189

(618)
(141)
189

(570)

(5,555)
13,229

Exhibit 5 Excerpts from the Boston Beer Companys Offering Prospectus (cont.)
Statements of Cash Flow, for the years ended December 31, 1992, 1993 and 1994 and the nine
months ended September 30, 1994 (Unaudited) and 1995 (Unaudited)
(in thousands)

1992
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
(Gain) loss on disposal of fixed asset
Stock option compensation expense
Changes in assets and liabilities:
Accounts receivable
Inventory
Prepaid expenses
Other current assets
Other assets
Accounts payable
Accrued expenses
Total adjustments
Net cash provided by (used for) operating activities

1,645

NIne Months Ended


September 30,
1994
1995
(Unaudited)

Years Ended December 31,


1993
1994

4,894

9,085

8,109

8,261

341
69
330

476
(3)
---

925
21
280

525
21
---

1,086
(19)
188

(1,393)
(919)
(135)
(308)
28
908
2,361
1,282
2,927

(3,689)
(1,847)
2
3
(34)
728
5,079
715
5,609

(1,948)
(4,049)
(285)
(593)
(172)
6,353
3,673
4,205
13,290

(7,217)
(1,255)
(393)
(190)
(178)
5,129
3,520
(38)
8,071

(5,013)
(730)
(406)
(598)
(703)
(2,731)
1,508
(7,418)
843

Cash flows from investing activities:


Additions to fixed assets
Proceeds on disposal of fixed assets
Purchases of restricted investments
Maturities of restricted investments
Net cash used in investing activities

(749)
12
(18)
--(755)

(893)
--(209)
297
(865)

(2,621)
--(1,171)
1,145
(2,647)

(1,830)
--(815)
799
(1,846)

(1,535)
45
(612)
615
(1,487)

Cash flows from financing activities


Principal payments on long-term debt
Proceeds from revolving line of credit
Repayments of revolving line of credit
Partners' distributions
Net cash used in financing activities

(50)
----(1,493)
(1,543)

(50)
----(2,477)
(2,527)

(50)
----(11,669)
(11,669)

(50)
----(5,610)
(5,666)

(50)
700
(700)
(5,555)
(5,605)

Net (decrease) increase in cash and cash equivalents


Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

629
5,921
$6,556

2,277
6,550
8,827

(1,026)
8,827
7,801

565
8,827
9,392

(6,249)
7,801
$1,552

247

242

236

236

Supplemental disclosure of cash flow information:


Interest paid

230

Exhibit 9
Boston Beer Company, Proposed Share Offering

Authorized Shares Sold


Shares
in IPO
Class A Common Stock offered by the
Company in the Consumer Offering
Class A Common Stock offered by the
Company in the Underwritten Offering
Class A Common Stock offered by the
Selling Stockholders in the
Underwritten Offering
Class A Common Stock not offered by
the Selling Stockholders in the
Underwritten Offering
Class A Common Stock to be
outstanding after the offerings
Class B Common Stock

990,000

990,000

1,550,379

1,550,379

1,443,836

12,534,385
20,300,000
4,200,000

Class A and Class B Common Stock to


be outstanding after the offerings
24,500,000

Source: Company documents, 1995.

Outstanding
Shares after
IPO

4,107,355

15,074,764
4,107,355
19,182,119