Brewing Adventure Discovering New Tastes with Craft Beer Subscription Boxes

In general Established in 1981 to produce and market handcrafted beer, Craft Brew Alliance, Inc. Our six company-owned breweries produce, market nationally creative packaged and draft products for the Kona, Widmer Brothers, Redhook, Omission and Square Mile brands. We run five bars that highlight our products, provide dining and entertainment options, and

retail merchandise sales. Under the trading symbol "BREW," our common stock exchanges on the Nasdaq Stock Market Our products are sold locally in every one of the 50 states. Mostly through a set of distribution agreements with Anheuser-Busch, LLC ("A-B"), a major shareholder, this national presence was developed. We and A-B signed three agreements in

an exchange and recapitalization agreement (as modified, the "Exchange Agreement"), a master distributor agreement (as modified, the "A-B Distributor Agreement"), and a registration rights agreement that together define our current relationship with A-B Under the current conditions of the A-B Distributor Agreement, we use A-B's seamless national

Wholesale distributor network to distribute

our products in practically all of our markets. This distribution arrangement leads us to assume that, under alcohol beverage regulations in most states, these wholesalers own the exclusive right to distribute our beers in their respective markets should the A-B Distributor Agreement expire or be canceled. A-B's domestic wholesaler network includes mostly of

independent wholesalers, coupled with branches controlled by A-B. The A-B Distributor Agreement expires December 31, 2018, but may be automatically renewed automatically for an additional ten-year period unless A-B gives written notice to the contrary on or before June Early termination of either party is subject to occurrence of certain events Foundation of

Presentation The consolidated financial statements comprise our wholly owned companies as well as the records of Craft Brew Alliance, Inc. Consolidation eliminates all intercompany balances and transactions. Note 2 Noteworthy Accounting Policie Cash and Cash Equivalent We kept maintaid investments having an original maturity of three months or less to be cash

Equivalents December saw no cash

equivalents. December 31, 2013, saw $2.7 million in cash equivalents Except for pub food, beverages, and supplies, under our cash mantories inventories show the lesser of standard cost or market. Public food, beverages, and supplies are reported at the lowest of cost or market We routinely check our stocks for obsolete items resulting from seasonality, quality, and aging. Applying the two-step goodwill impairment test will help us to lower the fair value of

the produ reporting unit if our evaluation shows a drop in utility below the carrying value. Should the result be that the fair value of a reporting unit is less than its carrying value, we then conduct a two-step goodwill impairment test. The fair value of the reporting unit is first compared to its carrying value; if an indication of goodwill impairment exists in the reporting

unit, the second phase of the impairment test is carried out to estimate the degree of any loss. Under step two, an impairment loss is noted for any excess of the carrying amount of the reporting unit's goodwill as decided by allocating the fair value of the reporting unit in a way comparable to a purchase price allocation. The implicit fair value of the reporting unit goodwill

Is the residual fair value following

this distribution. Should the reporting unit's fair value be higher than its carrying value, there is no need for second step. As of December 31 of every year, we run our yearly impairment test and have found no impairment for any of the given periods. Leasehold Improvements, Property, Tools and Equipmen Less accumulated depreciation and accumulated amortization;

stated at cost are property, tools, and leasehold improvements. Repair and maintenance expenses are expensed as incurred; capitalized are renewals and improvements. After equipment and leasehold improvements are disposed of, the accounts are free of relevant accrued depreciation or amortization and our Consolidated Statements of Income show

corresponding gains or losses For accounting needs, banks may produce overdraft balances. There were no bank overdrafts as of December 31, 2014. On our Consolidated Balance Sheets, bank overdrafts of $0.7 million were shown in Accounts payable as of December 31, 2013. The Consolidated Statement of Cash Flows shows changes in book overdrafts from period to period as part of operating operations inside Accounts payable and Other Accrued

Conclusion

Expenses Accounts of Revenue Mostly trade receivables from wholesalers and A-B for beer and promotional product sales make up accounts receivable. State liquor laws and each wholesaler's agreement with AB help to avoid collectability problems with the selling of our beer goods. For beer sales, we thus do not routinely allow an allowance for dubious accounts.

Reflecting our best assessment of likely losses inherent in the accounts, we have allowed an allowance for promotional merchandise receivables billed to the wholesaler. We establish the allowance using past client experience as well as other presently available data. A particular account is written off against the allowance when it is deemed uncollectible. At both December 31, 2014 and 2013, the allowance for doubtful accounts was $25,000.