BOSTON BEER CO INC

The Company calculates net income per share using the two-class method, which requires the Company to allocate net income to its Class A Common Shares, Class B Common Shares and unvested share-based payment awards that participate in dividends with common stock, in the calculation of net income per share.

The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the Class A Common Stock is required for (a) certain future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) certain alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles of Organization of the Company, (c) other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and (e) sales or dispositions of any significant portion of the Company’s assets.

The Class B Common Stock has full voting rights, including the right to (1) elect a majority of the members of the Company’s Board of Directors and (2) approve all (a) amendments to the Company’s Articles of Organization, (b) mergers or consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Company’s assets, and (d) equity-based and other executive compensation and other significant corporate matters. The Company’s Class B Common Stock is not listed for trading. Each share of the Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of the respective Class B holder, and participates equally in dividends.

The Company’s unvested share-based payment awards include unvested shares (1) issued under the Company’s investment share program, which permits employees who have been with the Company for at leastone year to purchase shares of Class A Common Stock and to purchase those shares at a discount ranging from 20% to 40% below market value based on years of employment starting aftertwo years of employment, and (2) awarded as restricted stock units at the discretion of the Company’s Board of Directors. The investment shares vest over five years in equal number of shares and the restricted stock units generally vest over four years in equal number of shares. If a dividend is declared, the unvested shares would participate equally. See Note M for a discussion of the current year unvested stock awards and issuances.

Included in the computation of net income per diluted common share are dilutive outstanding stock options and restricted stock that are vested or expected to vest. At its discretion, the Board of Directors grants stock options and restricted stock units to senior management and certain key employees. The terms of the employee stock options are determined by the Board of Directors at the time of grant. To date, stock options granted to employees vest over various service periods and/or based on the attainment of certain performance criteria and generally expire after ten years. The restricted stock units generally vest over four years in equal number of shares. Each restricted stock unit represents an unfunded and unsecured right to receive one share of Class A Stock upon satisfaction of the vesting criteria. The unvested shares participate equally in dividends, if declared, and are forfeitable. The Company also grants stock options and restricted stock units to its non-employee directors upon election or re-election to the Board of Directors. The number of option shares granted to non-employee directors is calculated based on a defined formula and these stock options vest immediately upon grant and expire after ten years. The restricted stock units granted to non-employee directors vest immediately upon grant.

Net Income per Common Share - Basic

The following table sets forth the computation of basic net income per share using the two-class method:

Net Income per Common Share - Diluted

The Company calculates diluted net income per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the two-class method, which assumes the participating securities are not exercised.

The following table sets forth the computations of diluted net income per share, assuming the conversion of all Class B Common Stock into Class A Common Stock for the thirteen and thirty-nine weeks ended September 27, 2025 and for the thirteen and thirty-nine weeks ended September 28, 2024:

For the thirteen and thirty-nine weeks ended September 27, 2025, in accordance with the two-class method, weighted-average stock options to purchase 180,461 and 179,618 shares, respectively, were outstanding but not included in computing dilutive income per common share because their effects were anti-dilutive. Additionally, performance-based stock options to purchase 6,930 shares of Class A Common Stock were outstanding as of September 27, 2025 but not included in computing diluted income per common share because the performance criteria were not met as of the end of the reporting period.

For the thirteen and thirty-nine weeks ended September 28, 2024, in accordance with the two-class method, weighted-average stock options to purchase 135,343 and 129,101 shares, respectively, were outstanding but not included in computing dilutive income per common share because their effects were anti-dilutive. Additionally, performance-based stock options to purchase 10,843 shares of Class A Common Stock were outstanding as of September 28, 2024 but not included in computing diluted income per common share because the performance criteria were not met as of the end of the reporting period.

I. Commitments and Contingencies

Contractual Obligations

As of September 27, 2025, projected cash outflows under non-cancellable contractual obligations are as follows:

The Company expects to pay $105.6 million of these obligations in the remainder of fiscal 2025, $47.3 million in fiscal 2026, $18.5 million in fiscal 2027, and $44.9 million in fiscal 2028 and thereafter. The commitment amounts exclude any impact related to the tariff programs announcement by the U.S. government to date.

Litigation

The Company is party to legal proceedings and claims, where significant damages are asserted against it. Given the inherent uncertainty of litigation, it is possible that the Company could incur liabilities as a consequence of these claims, which may or may not have a material adverse effect on the Company’s financial condition or the results of its operations. The Company accrues loss contingencies if, in the opinion of management and its legal counsel, the risk of loss is probable and able to be estimated. Material pending legal proceedings are discussed below.

Supplier Dispute. On December 31, 2022, Ardagh Metal Packaging USA Corp. (“Ardagh”) filed an action against the Company alleging, among other things, that the Company had failed or would fail to purchase contractual minimum volumes of certain aluminum beverage can containers in 2021 to 2026. The Company filed an Amended Answer, Amended Affirmative Defenses and Amended Counterclaims on March 25, 2024. On November 9, 2023, Ardagh filed a Notice of Plaintiff’s Motion for Judgment on the Pleadings on Count II of the Complaint, to which the Company filed an Opposition on November 22, 2023. On February 26, 2024, the Court granted the Motion. On March 27, 2024, the Company filed a Motion to Clarify and to Reconsider the Court’s decision. Following briefing by the parties, on June 17, 2024, the Court granted the Company's Motion to Reconsider, denied Ardagh's Motion for Judgment on the Pleadings, and vacated its February 26, 2024 Order. The Court set a fact discovery deadline of November 25, 2024. The Court also set an expert discovery deadline of May 30, 2025. Ardagh has filed a Motion for Partial Summary Judgment on certain liability issues. The Company also has filed a Motion for Partial Summary judgment on certain liability and damage issues. The Court has not set a date for expert motion filings or trial. The Company denies that it breached the terms of the parties’ contract and intends to defend against the Ardagh claims vigorously. The possible outcome of this litigation could range from zero to the level of Ardagh's initial demand of over/approximately $300 million plus interest if applied.

J. Income Taxes

The following table provides a summary of the income tax provision for the thirteen weeks and thirty-nine weeks ended September 27, 2025 and September 28, 2024:

The decrease in the tax rate for the thirteen and thirty-nine weeks ended September 27, 2025 as compared to the thirteen and thirty-nine weeks ended September 28, 2024 is primarily due to a change in the impact of non-deductible stock compensation expense.

As of both September 27, 2025 and December 28, 2024, the Company had approximately$0.5 million of unrecognized income tax benefits.

The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. As of September 27, 2025 and December 28, 2024, the Company had approximately $0.1 million accrued for interest and penalties recorded in other liabilities.

The Company's federal income tax returns remain subject to examination forthree years. The Company’s state income tax returns remain subject to examination forthree orfour years depending on the state’s statute of limitations. The Company is not currently under any income tax audits as of September 27, 2025.

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (the “Act”). Key provisions of the Act relevant to the Company include, but are not limited to, the permanent extension of 100% bonus depreciation for qualifying assets and the elimination of the requirement to capitalize and amortize U.S.-based research and experimental expenditures, allowing for immediate expensing.

The Company has completed an initial assessment of the Act’s impact on its condensed consolidated financial statements and has recorded the resulting effects in the period ended September 27, 2025. Specifically, the impact has been reflected in the Company’s deferred income tax balances, primarily through adjustments to deferred tax liabilities and income taxes payable. The Company does not expect a material change in its annual effective tax rate as a result of the Act.

The Company will continue to monitor developments related to the Act, including any future clarifications or guidance issued by the U.S. Department of the Treasury or the Internal Revenue Service.

K. Line of Credit

In December 2022, the Company amended its credit facility in place that provides for a $150.0 million revolving line of credit to extend the maturity date to December 16, 2027. Under the terms of the amended agreement, the Company may elect an interest rate for borrowings under the credit facility based on the applicable secured overnight financing rate ("SOFR") plus 1.1%. As of September 27, 2025, no borrowings were outstanding. As of September 27, 2025 and December 28, 2024, the Company was not in violation of any of its financial covenants to the lender under the credit facility and the unused balance of $150.0 million on the line of credit was available to the Company for future borrowings.

L. Fair Value Measures

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

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Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

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Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The Company’s cash and cash equivalents are held in money market funds. These money market funds are measured at fair value on a recurring basis (at least annually) and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The money market funds are invested substantially in United States Treasury and government securities. Cash, accounts receivable, and accounts payable are carried at their cost, which approximates fair value, because of their short-term nature.

As of September 27, 2025 and December 28, 2024, the Company had money market funds with a “Triple A” rated money market fund. The Company considers this fund to carry low credit risk and to be highly likely to meet its financial obligations. As of September 27, 2025 and December 28, 2024, the Company’s cash and cash equivalents balance was$250.5 million and $211.8 million, respectively, including money market funds amounting to$241.2 millionand $203.1 million, respectively.

Non-Recurring Fair Value Measurement

The fair value as of the issuance date of the Company's note receivable is classified within Level 2 of the fair value hierarchy as the fair value was partially derived from publicly quoted inputs of market interest rates for a loan of similar terms, provisions, and maturity. See Note G for further discussion on the note receivable.

M. Common Stock and Stock-Based Compensation

Option Activity

Information related to stock options under the Restated Employee Equity Incentive Plan and the Equity Plan for Non-Employee Directors is summarized as follows:

Of the total options outstanding as of September 27, 2025,6,930 shares were performance-based options for which the performance criteria had yet to be achieved.

On March 1, 2025, the Company granted options to purchase an aggregate of 76,919 shares of the Company’s Class A Common Stockto certain officers and other members of senior management. These options have a weighted average fair value and exercise price per share of $117.00 and $243.77, respectively.

On May 14, 2025, the Company granted options to purchase an aggregate of 3,276 shares of the Company’s Class A Common Stock to the Company’s non-employee Directors. All of the options vested immediately on the date of the grant. These options have a fair value and exercise price per share of $119.06 and $240.26, respectively.

On August 1, 2025, the Company announced that Michael Spillane had decided to step down from his role as President and Chief Executive Officer, effective August 15, 2025. As part of his Outgoing CEO Agreement, disclosed in the Company’s Form 8-K filed on August 1, 2025, Mr. Spillane forfeited an aggregate of 57,955 options. These forfeited options had a weighted average fair value and exercise price per share of $121.21 and $254.87, respectively.

On August 11, 2025, a member of senior leadership forfeited an aggregate of 19,624 options as part of a new restricted stock unit award granted on the same day. These forfeited options had a weighted average fair value and exercise price per share of $152.00 and $330.68, respectively. The new restricted stock unit award was granted with the same accounting value, vesting schedule, and performance criteria as the original award. In accordance with ASC 718, the Company will recognize an incremental compensation expense of $1.6 million, representing the excess fair value of the modified award over the original award on the modification date. This expense will be recognized over the remaining service period.

Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:

Non-Vested Shares Activity

Information related to vesting activities of restricted stock units and investment share program under the Restated Employee Equity Incentive Plan and restricted stock units under the Equity Plan for Non-Employee Directors is summarized as follows:

Of the total non-vested shares as of September 27, 2025,82,415 shares were performance-based shares for which the performance criteria had yet to be achieved.

On March 1, 2025, the Company granted a combined 111,580 shares of restricted stock units to certain officers, other members of senior management and key employees. Of the restricted stock units granted,61,182 had performance-based vesting criteria. The remainder of restricted stock units granted on March 1, 2025 vest ratably over service periods offour years. Additionally, on March 1, 2025, employees elected to purchase a combined 12,251 shares under the Company’s investment share program. The weighted average fair value of the restricted stock units and investment shares, which are sold to employees at discount under its investment share program, was $243.77 and $145.64 per share, respectively.

On May 14, 2025, the Company granted a combined 1,626 shares of restricted stock units to the Company’s non-employee Directors, of which all shares vest one year from the grant date. The fair value of the restricted stock units was $240.26 per share.

On August 1, 2025, the Company announced that Michael Spillane had decided to step down from his role as President and Chief Executive Officer, effective August 15, 2025. As part of his Outgoing CEO Agreement, disclosed in the Company’s Form 8-K filed on August 1, 2025, Mr. Spillane forfeited a combined 6,570 shares of restricted stock units. The weighted average fair value of the forfeited restricted stock units was $304.42 per share.

On August 11, 2025, the Company granted a combined 19,314 shares of restricted stock units to certain members of senior leadership. Of the restricted stock units granted,4,599 had performance-based vesting criteria to be measured in March 2027,9,197 had service-based vesting through March 2027 and 5,518 has service-based vesting through August 2026. The fair value of the restricted stock units was $217.48 per share.

Stock-Based Compensation

The following table provides information regarding stock-based compensation expense included in operating expenses in the accompanying condensed consolidated statements of comprehensive operations:

Stock Repurchases

In 1998, the Company began a share repurchase program. Under this program, the Company's Board of Directors has authorized the repurchase of the Company's Class A Stock. On October 2, 2024, the Board of Directors authorized an increase in the aggregate expenditure limit for the Company’s stock repurchase program by $400.0 million, increasing the limit from $1.2 billion to $1.6 billion. The Board of Directors did not specify a date upon which the total authorization would expire and, in the future, can further increase the authorized amount. Share repurchases under this program for the periods included herein were effected through open market transactions.

During the thirteen and thirty-nine ended September 27, 2025, the Company repurchased and subseq uently retired 236,006 and 654,679 shares of its Class A Common Stock, respectively, for an aggregate purchase price of $50 million and $149.2 million, respectively. As of September 27, 2025, the Company had repurchased a cumulative total of approximately 15.5 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.32 billion and had approximately $278 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.

N. Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision making group, in deciding how to allocate resources in assessing performance. The Company hasone operating segment andone reportable segment that produces and sells alcohol beverages under various brands. All brands are predominantly beverages that are manufactured using similar production processes, have comparable alcohol content, generally fall under the same regulatory environment, and are sold to the same types of customers in similar size quantities at similar price points, with similar profit margins, and through the same channels of distribution. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the segment based on net income, which is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

The table below summarizes the Company’s measures of segment net income that the CODM considered in determining how to allocate resources and assess segment performance for the thirteen and thirty-nine weeks ended September 27, 2025, and September 28, 2024

O. Related Party Transactions

In 2019, as part of the merger with Dogfish Head, the Company entered into a lease with the Dogfish Head founders and other owners of buildings used in certain of the Company’s restaurant operations. The lease is forten years with renewal options. The total payments due under the initial ten-year term is $3.6 million. Total related parties expense recognized related to the lease was $91,000 for the thirteen weeks ended September 27, 2025 and September 28, 2024. Additionally, the Company incurred expenses of less than $25,000 to various other suppliers affiliated with the Dogfish Head founders during the thirteen weeks ended September 27, 2025 and September 28, 2024. Total related parties expense recognized related to the lease was $183,000 for the thirty-nine weeks ended September 27, 2025 and September 28, 2024. Additionally, the Company incurred expenses of less than $50,000 to various other suppliers affiliated with the Dogfish Head founders during the thirty-nine weeks ended September 27, 2025 and September 28, 2024.

Effective August 15, 2025, Jim Koch assumed the role of Chief Executive Officer, succeeding Michael Spillane. Prior to this appointment, Mr. Koch served as Brewer, Founder, and Chairman of the Board, during which time in 2025, he did not receive salary, bonus, or equity compensation. Upon assuming the CEO role, Mr. Koch has elected to continue forgoing salary and bonus, and no new equity awards have been granted. He also holds no unvested equity awards that would be subject to expense recognition.

The Company was party to an International Brand Rights License Agreement, dated May 8, 2019 (the “License Agreement”), with Calagione International, LLC (“CILLC”), an entity owned and controlled by Director Samuel A. Calagione, III. The License Agreement, which was entered into in connection with the Dogfish Head Merger, granted CILLC exclusive rights to the Dogfish Head trademarks outside of the United States and Canada for a ten-year period, automatically renewable on an indefinite basis. On October 22, 2025, the Company and CILLC entered into a letter agreement terminating the License Agreement, reverting the rights back to the Company in exchange for a one-time payment of $100,000.