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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A No. 1
(Mark One)
/X / Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1996
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission file number 0-25836
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PORTLAND BREWING COMPANY
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Oregon 93-0865997
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2730 N.W. 31st Avenue, Portland, Oregon 97210
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(Address of Principal Executive Offices)
(503)226-7623
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(Issuer's Telephone Number, Including Area Code)
Not Applicable
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,069,397 shares of common
stock as of April 30, 1996.
Transitional Small Business Disclosure Format (check one):
Yes X No
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PORTLAND BREWING COMPANY
Balance Sheet
ASSETS
March 31 December 31,
1996 1995
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(Unaudited)
Current assets
Cash $ 15,162 $ 156,466
Accounts receivable 1,045,264 710,145
Inventories 689,840 707,145
Prepaid assets 236,452 200,421
Deferred tax assets 185,563 184,563
Other current assets 42,447 51,298
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Total current assets 2,213,728 2,010,038
Plant and equipment, net 7,156,131 6,751,334
Other assets, net 185,193 144,699
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Total assets $9,555,052 $8,906,071
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2
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PORTLAND BREWING COMPANY
Balance Sheet
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31 December 31,
1996 1995
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(Unaudited)
Current liabilities:
Accounts payable $ 672,432 $ 582,750
Customer deposits held 186,911 165,926
Accrued payroll 146,011 105,709
Income taxes payable 15,800 0
Other accrued liabilities 190,787 78,362
Notes payable 141,579 61,733
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Total current liabilities 1,353,520 994,480
Deferred tax liabilities 189,452 189,452
Long-term debt, net of current portion 801,458 537,712
STOCKHOLDERS' EQUITY:
Common stock, no par value, 5,000,000 shares
authorized, 2,069,397 shares issued
and outstanding at March 31, 1996 and
December 31, 1995 6,695,729 6,696,196
Stock notes receivable (14,723) (18,260)
Retained earnings 529,616 506,491
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Total stockholders' equity 7,210,622 7,184,427
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Total liabilities stockholders' equity $9,555,052 $8,906,071
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3
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PORTLAND BREWING COMPANY
Statements of Income
(Unaudited)
Three months ended
March 31,
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1996 1995
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SALES $3,154,436 $1,962,712
EXCISE TAX 223,390 98,471
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Net Sales 2,931,046 1,864,241
COST OF SALES 1,953,665 1,193,900
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GROSS PROFIT 977,381 670,341
SELLING, GENERAL AND ADMINISTRATIVE 920,540 763,235
EXPENSES
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OPERATING INCOME (LOSS) 56,841 (92,894)
OTHER INCOME AND (EXPENSES), (17,916) (14,742)
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Net income before provision for (benefit
from) income taxes 38,925 (107,636)
PROVISION FOR (BENEFIT FROM) INCOME
TAXES 15,800 (40,902)
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Net income (loss) $23,125 $(66,734)
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NET INCOME (LOSS) PER SHARE $0.01 ($0.04)
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Weighted average shares outstanding 2,147,236 1,731,060
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4
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PORTLAND BREWING COMPANY
Statements of Cash Flows
(Unaudited)
Three months ended
March 31,
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1996 1995
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Cash flows from operating activities $160,565 $204,852
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Net cash used in investing activities (648,531) (1,528,918)
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Net cash provided by financing activities 346,662 871,700
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Increase (decrease) in cash (141,304) (452,366)
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Cash, beginning of period 156,466 566,464
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Cash, end of period $15,162 $114,098
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5
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PORTLAND BREWING COMPANY
Notes to Financial Statements
(Unaudited)
1. The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the interim periods. The financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures included herein are adequate to make
the information presented not misleading.
2. The organization and business of the Company, accounting policies followed
by the Company and other information are contained in the notes to the
Company's financial statements filed as part of the Company's Annual Report
to Shareholders incorporated by reference in the Company's Annual Report on
Form 10-KSB for the fiscal year December 31, 1995. This quarterly report
should be read in conjunction with such annual report.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 COMPARISON AND THE BALANCE SHEET OF
DECEMBER 31, 1995
Shipments for the three months ended March 31, 1996 were 17,200 barrels, up 59%
over the same period in 1995. Correspondingly, gross sales were up 61% and net
sales up 57%. The excise tax expense increased 127% over the previous year due
to the federal requirement of accruing excise taxes at the blended federal
excise tax rate for annual shipments above 60,000 barrels. Gross profits were
up 46%, reflecting the costs of continued expansion.
Selling, general and administrative expenses were 21% higher in 1996 than 1995.
Depreciation and amortization expenses for the quarter ended March 31, 1996
totaled $212,886, compared to last year's $153,366. Operating income before
depreciation and amortization totaled $269,727 for the quarter, a 346% increase
over the same quarter in the previous year.
As a result, operations for the quarter ended March 31, 1996 resulted in net
income of $23,125 as compared to a net loss of $66,734 for the same period in
1995. Sales of beer are generally seasonal and at their lowest level in the
first and fourth quarters of each year and at their highest in the second and
third quarters.
During the three months ended March 31, 1996 the Company invested over $580,000
in additional brewing equipment and tanks as well as improvements to the
warehouse and shipping dock. This expenditure was funded by bank borrowing of
$343,000, the utilization of $141,000 of cash available from existing balances
and the remainder through cash flow from operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital principally to expand its production capacity,
increase the productivity of its manufacturing operations and fund its working
capital needs. To date, the Company has met its capital requirements through
cash flow from operations, bank borrowings, advances from certain stockholders
and the private and public sale of its Common Stock.
The Company has budgeted a total of $2.7 million for capital expenditures in
1996 principally to improve product and process quality, implement production
efficiencies and increase capacity. Such expenditures will be funded through
bank debt, additional equity offerings or a combination thereof.
The Company's working capital requirements over the next year are expected to be
met from existing cash and marketable balances, cash flow from operations, funds
available under the Company's line of credit facilities and, if more desirable,
additional equity offerings.
7
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MANUFACTURING SERVICES AGREEMENT WITH STROH BREWERY COMPANY
In January, 1996, the Company entered into a Manufacturing Services Agreement
(the "Agreement") with the Stroh Brewery Company ("Stroh"), establishing
contract brewing arrangement between the parties. This arrangement is intended
to enable the Company to market its products in the midwestern and eastern
regions of the country. Such an arrangement is useful to the Company because it
(i) enables the Company to produce sufficient quantities of its product to
facilitate expansion of its sales to a national or near-national level without
requiring additional capital investment in plant facilities and equipment, and
(ii) it enables the Company's products to be distributed from a source (in St.
Paul, Minnesota) nearer its new markets than its own brewery in Portland,
Oregon, thereby lowering costs and ensuring product quality.
The material terms of the Agreement may be summarized as follows. The Company
will be allocated certain times each month during which it may use the Stroh
facility in St. Paul to manufacture its products. The Company is not required
to use the manufacturing services set forth in the contract, and Stroh is not
required to produce more than 20,500 barrels during any Order Cycle (as defined
in the Agreement, approximately one month). Stroh will purchase raw materials
and brew the products subject to the Company's right to monitor production and
reject nonconforming products. The Agreement provides that the Company shall
pay Stroh for its brewing services, which payments shall include (i) charges for
brewing the product, (ii) storage and handling fees, (iii) shipment cost
deposits and (iv) incidental packaging costs and other miscellaneous charges.
The Company has filed a request with the Securities and Exchange Commission for
confidential treatment of certain cost component amounts set forth in the
Agreement. The Company is responsible for compliance with Federal and state
regulations, submission of all Federal brewer's reports, excise returns and
payment of all applicable taxes. The contract also contains certain indemnity
and liability insurance related provisions. The Agreement will terminate on
March 31, 1997, with a renewal option exercisable by the Company for successive
one-year terms, and is terminable by either party (on five days notice) upon the
occurrence of certain specified defaults.
A copy of the Agreement is attached hereto as Exhibit 10.16.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
INCORPORATION BY REFERENCE.
The following Exhibits are incorporated herein by this reference. The order of
incorporation and the numbering used is intended to match the order and
numbering of the Exhibit Table of Regulation S-B Item 601.
Pagination
Sequential
Exhibit Numbering
Number Description of Document System
- ------------- ----------------------- ----------
Exhibit 3.1 Articles of Incorporation (1) --
Exhibit 3.2 Bylaws (1) --
Exhibit 3.2A Amendment to the Bylaws (2) --
Exhibit 4.1 Specimen Common Stock Certificate (1) --
Exhibit 10.1 Indenture of Lease between the Company
Portland Brewing Building Partners dated
November 4, 1992, as amended (1) --
Exhibit 10.2 Sublease between the Company, Power
Transmission Products, Inc., and
Pacific Realty Associates, L.P.,
dated January 26, 1995 (1) --
Exhibit 10.3 Lease Agreement between the Company and
Johnnie Johnson dated April 27, 1994 (1) --
Exhibit 10.4 Warrant issued to Electra Partners, Inc.
dated March 25, 1996 (2) --
Exhibit 10.5 Warrant issued to MacTarnahan Limited
Partnership dated March 25, 1996 (2) --
Exhibit 10.6 License Agreement between the Company, R.M.
MacTarnahan, and Harmer Company dated
July 1, 1994 (1) --
Exhibit 10.7 The Company 1992 Incentive Stock Option
Plan and Specimen Form Plan Documents (1) --
Exhibit 10.8 The Company's 1994 Nonqualified Stock
Option Plan and Specimen Form
Plan Documents (1) --
9
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Exhibit 10.9 Resolutions of the Board of Directors
reserving 30,000 shares (now 45,000
shares as adjusted for the three-for-two
stock split effected on November 18, 1994)
under the Company's 1994 Nonqualified
Stock Option Plan (1) --
Exhibit 10.10 Business Loan Agreement between the
Company and Bank of America-Oregon,
dated December 15, 1995 (2) --
Exhibit 10.11 Distribution Agreement between the
Company and Portland Distributing Co.
dated August 14, 1984, as amended by
assignment to Columbia Distributing,
d.b.a. Maletis Beverage, dated
April 1, 1990, and assigned to Columbia
Distributing Company on July 12, 1993,
with letter evidencing Columbia Distributing
Company's Distribution rights dated
April 5, 1995 (1) --
Exhibit 10.12 Restated Cash Incentive Plan, as amended (1) --
Exhibit 10.13 The Company's Stock Offering Purchase
Plan for Employees and Specimen Form
Plan Documents (1) --
Exhibit 10.14 Option to Purchase and Agreement and
Option to Lease between the Company and
L & L Land Co., dated December 1995 (2) --
Exhibit 10.15 Indenture of Lease between the Company and
Western Stations Co. dated May 1, 1995 (3) --
Exhibit 10.16 Manufacturing Services Agreement between
the Company and the Stroh Brewery Company
dated January 31, 1996. A request for
confidential treatment for a portion of
Exhibit 10.16 has been submitted to the
Securities and Exchange Commission. --
Exhibit 27 Financial Data Schedule --
(1) Incorporated by reference to the Company's Form SB-1 (Commission File No.
33-90914-LA as filed with the Securities Exchange Commission on April 4, 1995.
(2) Incorporated by reference to the Company's Form 10-KSB for the year ended
December 31, 1995 as filed with the Securities Exchange Commission on March 28,
1996.
(3) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended March 31, 1995 as filed with the Securities Exchange Commission on May 2,
1996.
(B) REPORTS ON FORM 8-K.
None.
10
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
/s/ Portland Brewing Company
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(Registrant)
Date 5/2/96 /s/ CHARLES A. ADAMS
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(Signature)
Charles A. Adams, President and
Chief
Executive Officer
Date 5/2/96 /s/GLENMORE JAMES
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(Signature)
Glenmore James, Chief Financial
Officer
(Principal Financial and Accounting
Officer)
11
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MANUFACTURING SERVICES AGREEMENT
MANUFACTURING SERVICES AGREEMENT, dated as of January 31, 1996, entered
into between The Stroh Brewery Company, an Arizona corporation ("Stroh") and
Portland Brewing Company, an Oregon corporation ("PBC").
WHEREAS, PBC, as an alternating proprietor at the Source Plant, desires to
enter into this agreement with Stroh for the Manufacturing Services, and Stroh
is willing to do so on the terms hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties agree as follows:
SECTION 1. DEFINITIONS.
As used herein, the following capitalized terms shall have the following
meanings:
"BARREL": A quantity equal to 31 U.S. gallons.
"BRANDS": Collectively, Oregon Honey brand beer and Wheatberry Brew brand
beer. Individually, Oregon Honey beer and Wheatberry Brew beer are referred to
herein as "Brand."
"BRAND ATTRIBUTES": As defined in Section 2.4.
"CONSEQUENTIAL DAMAGES": Damages suffered by PBC or Stroh and
consisting of those elements generally treated by law as consequential,
including, without limitation, secondary effects such as negative public opinion
or a decrease in sales or profits suffered by PBC or Stroh, resulting in whole
or in part from the performance or non-performance by PBC or Stroh of this
Agreement.
"INITIAL BRAND ATTRIBUTES": As defined in Section 2.4.
"MANUFACTURING SERVICES": The services provided to PBC by Stroh in the
manufacture and packaging of the Brands at the Source Plant, including, but not
limited to, the provision of the brewing services, facilities, employees,
storage, order taking, and logistic services.
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"MANUFACTURING SERVICES PRICE": As defined in Section 4.
"MINIMUM QUANTITY": As defined in Section 3.
"ORDER CYCLE": The four or five week shipping period that starts with
the first Monday of each month and ends with the last week of such month which
includes a Monday.
"PBC PROVIDED MATERIALS: Collectively, hops used for the manufacturing of
the Brands, blackberry flavor and essence used for the manufacturing of
Wheatberry Brew brand, and half-barrel packaging units used for the packaging of
the Brands.
"SHIPMENT CHARGES": As defined in Section 7.
"SHIPPING UNIT": A particular type, style, size, and configuration of
packaging for a Brand.
"SOURCE PANT": The brewery located in St. Paul, Minnesota, which is owned
by Stroh and which, during the term hereof, will be operated from time to time
by PBC under a federally approved alternating proprietorship.
"STORAGE CHARGES": As defined in Section 6.
"UNIQUE MATERIALS": Raw materials and packaging materials used in the
manufacturing and packaging of the Brands which are not used by Stroh in the
manufacturing and packaging of Stroh's malt beverage products.
SECTION 2. ALTERNATING PROCEDURES.
2.1. BASIC OBLIGATIONS. Commencing on or about March 31, 1996, and
continuing through the term hereof, PBC and Stroh agree to enter into an
alternating proprietor relationship, whereby Stroh agrees to allow PBC to
manufacture the Brands at the Source Plant and in connection therewith to
provide Manufacturing Services to PBC. PBC agrees to pay Stroh for the
Manufacturing Services in accordance with the terms and conditions set forth in
this Agreement.
2.2. STATEMENT OF ALTERNATION. In connection with the alternation, PBC and
Stroh agree to establish a monthly schedule based on PBC's quantity
requirements, which sets forth the days the Brands will be manufactured by PBC.
At any time during the schedule that a piece of equipment, pipeline, filter,
kettle, tank, bottling line, racking line, etc. (collectively, the "Equipment")
at the Source Plant is being used for the production of the Brands, such
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Equipment shall be alternated to PBC. PBC shall be responsible for maintaining
records indicating the time that a piece of Equipment is used by PBC. Upon a
piece of Equipment first being used by PBC, a record of that use shall be made
and PBC shall thereupon become and remain as the proprietor of such Equipment
until PBC ceases to use such Equipment and tenders it back to Stroh. PBC and
Stroh shall take whatever steps are necessary to ensure that the Brand(s) and
the Stroh products are at no time commingled during the production process;
provided, however, raw materials utilized by PBC may at times be commingled with
those of Stroh. In addition, the finished Brand(s) shall at all times be
segregated from finished products which are produced and owned by Stroh or other
alternating proprietors.
2.3. FEDERAL MONTHLY REPORTS AND EXCISE TAX RETURNS. As the manufacturer
of the Brands, PBC shall be responsible for all Federal monthly brewer's reports
and excise tax returns to be filed on behalf of the Brands. In addition, PBC
shall be responsible for obtaining Federal label approvals, filing Federal
statements of process and providing for state brand registrations for the
Brands. Stroh agrees to provide to PBC the services necessary to enable PBC to
meet its monthly federal filing requirements, including but not limited to the
preparation of ATF Forms 5130.9 and 5000.24.
2.4. BRAND ATTRIBUTES. The brewing formulas, quality specifications and
manufacturing processes for each Brand (collectively, the "Brand Attributes")
will be separately agreed upon and documented by the parties. The Brand
Attributes first agreed upon and so documented shall be designated as, and
referred to herein as, the "Initial Brand Attributes."
2.5. PRODUCT QUALITY.
A. Stroh will provide Manufacturing Services in compliance with the
Brand Attributes, using the same standards of compliance Stroh utilizes for its
similar brands of malt beverages.
B. PBC has the right, at PBC's expense, to have employees or other
agents on site at the Source Plant to monitor the performance of the
Manufacturing Services, and perform any additional testing upon the Brands in
order to verify compliance with the quality specifications.
C. Shipping Units that do not meet the quality specifications will not be
shipped. The Manufacturing Services Price shall not be due with respect to any
such Shipping Units except to the extent that such failure to meet the quality
specifications is the result of the directives of PBC's employees or agents.
2.6. INGREDIENTS AND PACKAGING. As part of the Manufacturing Services,
Stroh will purchase on behalf of PBC all raw materials and packaging materials
for the Brands, including Unique Materials; provided that except as otherwise
agreed from time to time, Stroh shall not purchase or otherwise provide the PBC
Provided Materials, all of which will
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be provided to Stroh at the Source Plant by, and at the sole cost and expense
of, PBC. Stroh has no obligation to use in the performance of the Manufacturing
Services any raw materials or packaging materials which are not compatible with
Stroh's then existing brewing and packaging capabilities and equipment at the
Source Plant. Stroh will maintain commercially reasonable inventory levels of
raw materials and packaging materials for the Brands, and will, as requested by
PBC, confer with PBC from time to time to review such inventory levels. The
parties agree to confer regarding the direct purchase by Stroh of the blackberry
flavor and essence used for the production of Wheatberry Brew. To the extent
that Stroh directly purchases such flavor and essence ingredients, they shall no
not be deemed to be part of the PBC Provided Materials, and, PBC acknowledges
that such purchases by Stroh will result in an increase of the Manufacturing
Services Price for Wheatberry Brew.
2.7. INCIDENTAL PACKAGING COSTS: PACKAGING CHANGES.
A. Provided PBC has authorized in writing the specific expenditure
in advance, PBC will reimburse Stroh promptly upon invoicing by Stroh for the
actual out of pocket cost of all tooling, dies, cylinders and plates which must
be specially purchased or otherwise paid for by Stroh for packaging materials
used for the Brands.
B. In the event that Stroh makes packaging or processing chances
with its own products which make it desirable to implement such changes with the
Brand(s), the parties will confer with a view toward reaching a reasonable
accommodation of such change(s).
SECTION 3. OBLIGATIONS RELATING TO MANUFACTURING SERVICES.
3.1. MANUFACTURING SERVICES LIMITATIONS: TERM.
A. PBC shall have no obligation to require Manufacturing Services.
Stroh shall have no obligation to perform the manufacturing and packaging
components of the Manufacturing Services with respect to (i) volumes of the
Brands collectively exceeding 20,500 Barrels in any Order Cycle (the "Maximum
Volume"), and (ii) brew sizes and packaging runs which do not meet the
respective increment requirements set forth in Section
5.2. Shipments of the Brand are subject to Section 6.
B. Unless otherwise terminated by the parties hereto, this Agreement
shall terminate on March 31, 1997; provided that, subject to Sections 4. 1. and
10.2., PBC shall have the right to cause this Agreement to be successively
renewed from year to year commencing April 1, 1997, by giving-not less than 90
days prior written notice to Stroh. The parties agree that on or before
December 31, 1996, and, if applicable, on or before December 31 or each year
thereafter, they will confer to discuss their respective intent with respect to
renewal or termination of this Agreement as of the next April 1.
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C. In the event that during any Order Cycle PBC requests Manufacturing
Services for a number of Barrels of the Brand(s) in excess of the Maximum
Volume, Stroh;(i) shall be obligated to provide the Manufacturing Services up to
the Maximum Volume, and (ii) will advise PBC within 10 days of such request if
Stroh will provide the Manufacturing Services for such excess volume.
3.2. TERMINATION OF OPERATIONS AT SOURCE PLANT. Stroh reserves the right
to terminate operations at the Source Plant, in which event this Agreement will
automatically terminate without liability to PBC. Unless a termination of
operations results from force majeure, Stroh will provide PBC not less than
sixty (60) days prior written notice of such termination of operations.
SECTION 4. THE MANUFACTURING SERVICES PRICE.
4.1. General. PBC will pay Stroh the Manufacturing Services Price for
each Shipping Unit for which Stroh performs the Manufacturing Services pursuant
to this Agreement. The Manufacturing Services Price, F.O.B. the Source Plant,
is an amount equal to the applicable Cost Component plus the Applicable Taxes.
In the event this Agreement is renewed by PBC as provided in Section 3. 1. B.,
then, commencing on, and effective as of, April 1, 1997, and on and effective as
of April 1 of each successive year that this Agreement is so renewed, Stroh
shall have the right in its sole discretion to set a new Manufacturing Services
Price for each Brand. Stroh shall give PBC not less than 60 days prior written
notice of each such new Manufacturing Services Price. In addition to the
Manufacturing Services Price, PBC will pay applicable Shipment Charges and
Storage Charges.
4.2. COST COMPONENT.
A. Subject to the adjustments as provided in Section 4. 1. and
the reconciliation payments provided for in Section 4.2.B., the applicable Cost
Component for each Shipping Unit of each Brand manufactured at the Source Plant
is as follows:
SHIPPING UNIT OREGON HONEY WHEATBERRY BREW
Four six packs of 12 ounce The information set forth in this
non-returnable bottles: space is confidential and has
Two twelve packs of 12 ounce been omitted. Such information
non-returnable bottles: has been filed separately with
Twelve 22 ounce bottles: the Securities and Exchange
One half-barrel (containing Commission.
15.5 US gallons):
The 12 ounce non-returnable bottles identified above are style "BS." The 22
ounce bottle referred to above are Stroh's standard 22 ounce bottle.
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B. The applicable Cost Components set forth in Section 4.2.A.
include a cost for malt as of January 1, 1996 (such cost for malt, adjusted as
provided below, being herein referred to as the "Base Cost"). Subsequent to
each calendar quarter that this Agreement or any renewal hereof is in effect,
Stroh will perform a reconciliation comparing the Base Cost to the actual costs
paid by Stroh for malt used in the manufacturing of the Brands shipped during
such calendar quarter (the "Actual Cost"). If the Actual Cost is higher than
the Base Cost, PBC will pay Stroh, within 10 days of invoice from Stroh, the
difference between the Actual Cost and the Base Cost. If the Base Cost is
higher than the Actual Cost, Stroh will pay PBC within 30 days of the end of
such calendar quarter the difference between the Base Cost and the Actual Cost.
In the event this Agreement is renewed by PBC as provided in Section 3. l.B.,
then, effective April 1, 1997, and effective April 1 of each successive year
this Agreement is so renewed, the Base Cost shall be adjusted by Stroh to
reflect the then applicable cost for malt. Base Cost and Actual Cost shall be
calculated without regard to discounts obtained by Stroh as a result of credit
terms. With each quarterly reconciliation, Stroh will provide PBC with a
statement identifying the changes in cost, and, upon the request-of PBC, will
provide PBC with appropriate back-up documentation evidencing-such change in
cost.
C. The Cost Component for all Shipping Units not identified in
Section 4.2.A., and for all formulations of the Brands having Brand Attributes
other than the Initial Brand Attributes, shall be as set by Stroh prior to the
commencement of the performance of the Manufacturing Services with respect to
such Shipping Units and formulations of the Brands. Once so set, such Cost
Component shall be subject to adjustments and reconciliation's as provided in
Sections 4. 1. and 4.2.B.
4.3. APPLICABLE TAXES.
PBC, as manufacturer under the alternating proprietorship, shall be
responsible for payment of all federal, state, and local excise taxes relating
to the Brands. However, for purposes of this Agreement, "Applicable Taxes"
shall be those federal, state and local excise taxes, if any, which Stroh is
required by law to pay and does pay as a result of providing the Manufacturing
Services.
4.4. DUE DATE.
A. The Manufacturing Services Price shall be due and payable
for each Shipping Unit manufactured hereunder not later than the earlier of the
tenth day following shipment of such Shipping Unit and the 30th day following
the packaging of such Shipping Unit. Stroh will provide PBC with invoices for
such amounts pursuant to such procedures as the parties may agree upon from time
to time. Notwithstanding the foregoing, the extension of credit is subject to
ongoing approval by Stroh. In the event Stroh reasonably concludes that such
extension of credit is not prudent from a commercial perspective, Stroh may
require full payment of the Manufacturing Services Price prior to performance of
the Manufacturing Services.
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B. In the event of a dispute as to an amount due, only the
disputed amount may be withheld.
C.Payments are to be made by PBC to Stroh via the Stroh ACH
debit system as shall be in effect from time to time.
SECTION 5. ORDER SATISFACTION.
5.1. ORDERS FOR THE BRAND. Stroh will commence the performance of the
Manufacturing Services for particular Shipping Units upon notice from PBC. Such
notice shall be in such form and upon such terms as the parties shall agree from
time to time. Upon receipt of such notice, Stroh will notify PBC of the
anticipated production date; it being understood that the production of
particular Shipping Units must be coordinated with Stroh's detailed production
schedule.
5.2. BREW SIZE AND SHIPPING UNIT INCREMENT REQUIREMENTS.
A. Stroh shall only be required to perform the manufacturing
component of the Manufacturing Services with respect to minimum brew size of 820
Barrels, and beyond that in increments of 410 Barrels. A Barrel is 31 US
gallons.
B. Stroh shall only be required to perform the packaging component
of the Manufacturing Services with respect to packaging runs for identical
Shipping Units which meet the respective Minimum Run Requirement and Additional
Increment Requirement set forth below:
Minimum Additional
Run Increment
Shipping Unith Requirement Requirement
- ------------- ----------- -----------
Four six packs of 12 ounce
non-returnable bottles: 5,500 2,750
Two twelve packs of 12 ounce
non-returnable bottles: 5,500 2,750
Twelve 22 ounce bottles: 6,250 3,125
One half-barrel (containing
15.5 US gallons): 820 410
SECTION 6. LOGISTIC SERVICES; STORAGE CHARGES.
6.1. Delivery of all Shipping Units to PBC or PBC's wholesalers will
be at the dock of the Source Plant. Stroh will load trucks in accordance with
Stroh's policies in effect for Stroh's own brands from time to time. At the
request of PBC, and to the extent permitted by applicable law and commercially
reasonable for Stroh, Stroh will load the Brand(s) with Stroh's products to be
shipped to a wholesaler common to Stroh and PBC.
<PAGE>
6.2. Responsibility for securing and paying for carrier service for the
Brand will be solely that of PBC or PBC's wholesalers, except that Stroh shall
have the right to secure carrier service at PBC's expense in the case of "No
Shows" (as that term is defined from time to time by Stroh with respect to
deliveries to Stroh's wholesalers). Timing and other details relating to the
shipment of the Brands are to be arranged directly between PBC or PBC's
wholesalers and the Source Plant personnel designated by Stroh.
6.3. PBC will pay Stroh storage and handling fees (collectively, "Storage
Charges") of ten cents ($0. 10) per Shipping Unit for each full thirty day
period such Shipping Unit is held by Stroh after packaging and before shipping.
Storage Charges shall be due and payable within ten (10) days of invoice.
SECTION 7. SHIPMENT CHARGES.
PBC will pay Stroh Shipment Charges of $12.00 per pallet, $5.00 per
standard filler, and $2.00 per hanging filler delivered with each shipped load
of the Brand(s). Shipment Charges shall be due and payable within ten (10) days
of invoice. These charges are deposit amounts and will be returned or
otherwise credited to PBC when the items are returned to the Source Plant.
SECTION 8. STATE AND FEDERAL REGULATIONS.
Stroh and PBC acknowledge that certain licenses and label and packaging
approvals must be obtained with respect to the Brands from appropriate federal
and state authorities from time to time during the term of the Agreement. PBC,
as the manufacturer under the alternating proprietorship, will be solely
responsible for regulatory compliance in this regard and will obtain all, such
licenses and approvals; provided that (i) Stroh will in all instances cooperate
with PBC in this regard and provide to PBC such information and documentation
regarding the Source Plant as shall be required for PBC to obtain such
regulatory approvals, (ii) in those instances that Stroh as the provider of the
Manufacturing Services is required by law to obtain such licenses and approvals,
Stroh will use its commercially reasonable efforts to do so, and (iii) PBC shall
reimburse Stroh all out of pocket costs incurred by Stroh in fulfillment of its
obligations under this Section 8. PBC and Stroh will make available to each
other information and assistance necessary to complete all applications and
requests for approval.
<PAGE>
SECTION 9. MARKETING AND SALES.
9.1. GENERAL.
A. The sale of the Brand(s) to PBC's wholesalers and all marketing
and promotional activities incident to sale and distribution of the Brand(s)
will be the sole obligation and responsibility of PBC.
B. PBC will be responsible for appointing PBC's wholesalers for the
Brands. As directed by PBC, Stroh will release shipments of the Brand(s) to PBC
or PBC's wholesalers.
9.2. SALE PRICING, INVOICING AND CREDIT RISK. PBC assumes all
responsibility and obligation for sale pricing and credit terms relating to the
Brands, and for invoicing PBC's wholesalers. All risk of payment and collection
arising out of the sale of the Brands is solely that of PBC. Stroh has no right
to any information regarding the pricing or credit terms set by PBC.
SECTION 10. TERMINATION RIGHTS; POST-TERMINATION OBLIGATIONS.
10.1. TERMINATION RIGHTS OF PBC. PBC has the right to terminate this
Agreement upon notice to Stroh:
A. Immediately, if for reasons other than force majeure, Stroh fails
during any Order Cycle to provide the Manufacturing Services with respect to
Shipping Units required hereunder to be produced by the performance of
Manufacturing Services; it being agreed that such required production shall
include volumes of the Brands in excess of the Maximum Volume to the extent
Stroh agreed to provide Manufacturing Services for such excess in accordance'
with Section 3. 1. C.; and
B. Upon five business days of such notice, if Stroh fails to cure
its failure to fulfill any other obligations of Stroh hereunder.
10.2. TERMINATION RIGHTS OF STROH. Stroh has the right to terminate this
Agreement upon notice to PBC:
A. Upon five business days of such notice, if PBC fails to pay the
Manufacturing Services Price previously due, provided that Stroh may terminate
this Agreement immediately upon such notice if three times within any rolling
eight month period PBC has failed to pay the Manufacturing Services Price when
due and Stroh has given PBC written notice of such three failures prior to
receipt by Stroh of payment in respect of such failure;
<PAGE>
B. Upon five business days of such notice, if PBC fails to pay any
other amount then due Stroh hereunder, including, without limitation, any
Shipment Charges or Storage Charges; and
C. Upon six months of such notice, at will and for any reason or no
reason, provided that Stroh may not so terminate this Agreement effective prior
to March 31, 1997.
10.3. MUTUAL TERMINATION RIGHTS. Either party may terminate this
Agreement immediately, upon notice to the other party, if the parties have
failed to reach an agreement upon the Initial Brand Attributes within 60 days of
the date hereof.
10.4. POST-TERMINATION OBLIGATIONS. At the expiration or other
termination of this Agreement PBC shall purchase for cash from Stroh, at
Stroh's cost, all undamaged packaging material and Unique Materials acquired by
Stroh on behalf of PBC for the purpose of performing the Manufacturing Services,
and shall purchase for the Manufacturing Services Price all finished Shipping
Units in inventory and produced pursuant to notification delivered under Section
5. All rights and obligations accrued under this Agreement prior to the
expiration or other termination hereof shall survive such expiration or
termination.
SECTION 11. TRADEMARKS, TRADE NAMES AND COPYRIGHTS.
All names, designations and designs by which PBC's products are known or
identified are set forth on Exhibit 11 and are herein referred to as
"Trademarks." Stroh is granted a limited license to use the Trademarks solely
for the purpose of assisting PBC in producing and delivering the Brands, subject
to the following limitations: (i) this license is non-transferable and
terminates automatically upon termination of this Agreement or any extension
hereof, (ii) Stroh may not sub-license others, (iii) the Trademarks shall be
used only as pre-approved by PBC, (iv) no Trademark shall be used in combination
with any name, mark, slogan or other designation of Stroh or any third party
controlled by Stroh, and (v) the Trademarks shall be used in the company of the
appropriate designation symbol and shall be attributed to PBC. Stroh
acknowledges that the public associates the Trademarks with PBC's goods. Stroh
shall have no rights regarding the Trademarks except the license, hereby
granted, and waives any claim against PBC's rights in the Trademarks.
SECTION 12. IDEMNIFICATION; PRODUCT RETURN.
12.1. INDEMNIFICATION OF STROH.
A. PBC will indemnify and hold Stroh harmless from and against
any loss, costs, expense or other damage, including without limitation,
reasonable attorneys'' fees and
<PAGE>
expenses resulting from, arising out of or incurred with respect to each claim
made against Stroh by any third party or parties for infringement, invasion or
other misappropriation of any patent, trademark or any other proprietary rights
used by Stroh at the direction of PBC in connection with Stroh's performance of
this Agreement.
B. PBC will indemnify and hold Stroh harmless from and against all
loss, costs, expense or other damage, including, without limitation, reasonable
attorneys' fees and expenses, resulting from, arising out of, or incurred in
connection with all claims (i) of noncompliance with federal, state, or local
statutory or common law requirements of packaging designs, including without
limitation the design and content of labels, and of packaging materials supplied
or designated by PBC for the Brands directly or through PBC's packaging
specifications, if any, constituting part of the Brand Attributes, (ii) with
respect to or based upon the distribution, sales, marketing, promotion, or
consumption of the Brand(s), except to the extent Stroh is responsible therefor
and provided that Stroh will not be deemed responsible merely by virtue of
having performed the Manufacturing Services pursuant to this Agreement; (iii)
with respect to or based upon the inherent properties and/or characteristics of
the Brand(s) as a malt beverage, including, by way of example and not of
limitation, health and intoxicating effects of the Brand(s), and (iv) for
personal injury or property damages caused by impurities, defects, or
adulterations of any kind in the PBC Provided Materials; provided that in no
event shall PBC be liable for Consequential Damages.
12.2. INDEMNIFICATION OF PBC. Stroh will indemnify and hold PBC
harmless from and against all loss, costs, expense or other damage, including,
without limitation, reasonable attorneys'' fees and expenses, resulting from,
arising out of or incurred in connection with all claims made against PBC by any
party or parties for personal injury or property damage caused by impurities,
defects, or adulterations of any kind (excepting alleged inherent properties
and/or characteristics contemplated by Section 12. I.B. (iii)and excepting such
impurities, defects, or adulterations in PBC Provided Materials as contemplated
by Section 12. l.B. (iv)) in (i) the Brand(s) produced by Stroh's performance of
the Manufacturing Services, or (ii) the packaging materials used in the
performance of the Manufacturing Services; provided that in no event shall Stroh
be liable for Consequential Damages.
12.3. RETURN OF THE BRANDS. All demands by PBC or PBC's wholesalers
for return of Brand(s) manufactured hereunder will be the sole responsibility of
PBC; provided however, where any such demand results from Stroh's failure to
comply with its obligations under this Agreement, Stroh will be solely
responsible for all costs related to such return (including the Manufacturing
Services Price, sampling, transportation and destruction, if necessary).
<PAGE>
12.4. SURVIVAL. The indemnity provisions of this Section 12 and
elsewhere in this Agreement shall (i) survive expiration or other termination of
this Agreement, (ii) include defense and indemnity for the employees and agents
of the indemnified party, and (iii) include the right of the indemnifying party
to defend the claim through counsel selected by the indemnified party (subject
to the reasonable approval of the indemnified party).
SECTION 13. FORCE MAJEURE.
Notwithstanding anything in the Agreement to the contrary, Stroh will not
be liable to PBC for any failure to perform hereunder which results from:
13.1. Events beyond Stroh's reasonable control, including without
limitation, acts of God, fires, explosions, earthquakes, raw material shortages,
energy shortages and strikes or other labor problems; or
13.2. The temporary shutdown of a Source Plant for maintenance, holidays,
inventory adjustments and other routine short-term, temporary stoppages of
production.
This Agreement may not be terminated by PBC as a result of any such failure
to perform. This Section 13 shall not apply to obligations of Stroh under
Sections 12.2 and 12.3.
SECTION 14. PRODUCT AND PACKAGING WARRANTY AIND COVENANT.
PBC represents, warrants and covenants to Stroh that the formulas for the
Brands and all packaging material and designs, including label designs and
content, supplied or designated by it hereunder will comply with all applicable
federal, state, and local laws and regulations and will not infringe any
copyright, trademark, trade name or other proprietary right of any third party.
It is expressly acknowledged that Stroh has not approved, and has no obligation
to approve, from a governmental regulatory perspective, the Brands, their
respective name, formulas, labeling, and other Brand Attributes.
SECTION 15. PRODUCT LIABILITY INSURANCE
Stroh and PBC will each procure, prior to Stroh performing the
Manufacturing Services, and maintain in full force and effect during the term of
this Agreement and any extensions or renewals hereof, product liability
insurance coverage with a minimum annual aggregate limit of One Million Dollars
($1,000,000.00). Such respective policy or policies will be written by an
insurance company or companies reasonably satisfactory to the other party and in
a form reasonably satisfactory to the other party. Upon request of the other
party, Stroh and PBC will (i) have the other party named as an additional
insured under such
<PAGE>
party's insurance policy, and (ii) provide to the other party certificate(s) of
insurance which set forth the coverage and policy limits of such policy or
policies, and which certify blanket contractual coverage.
SECTION 16. LIMITATION PERIODS ON CLAIMS.
All claims hereunder must be brought no later than one (1) year after such
claim arose or the party having such claim shall be deemed to have waived and
forever released it; provided that for this purpose, an indemnity claim under
Section 12 will be deemed to have arisen at the time the party asserting the
claim first became aware of such claim.
SECTION 17. NOTICES.
Notices or other communications required or permitted hereunder will be
sufficiently given if personally delivered, or if sent by certified mail, return
receipt requested, postage prepaid, or if sent by commercial overnight delivery
service, or if sent via facsimile (with confirmation of receipt or good
transmission), addressed as follows:
If to Stroh:
The Stroh Brewery Company
100 River Place
Detroit, MI 48207
Attention: V. M. Abatemarco, Treasurer
Facsimile: 313-446-2816
with a copy to:
The Stroh Brewery Company
100 River Place
Detroit, MI 48207
Attention: G. E. Kuehn, Sr. Vice President, General Counsel and
Secretary
Facsimile: 313-446-2756
If to PBC:
Portland Brewing Company
2730 NW 31st Avenue
Portland, OR 97210
Attention: Tony Adams, President
Facsimile: 503-226-2702
<PAGE>
with a copy to:
John D. Guinasso, Esq.
Lane Powell Spears Lubersky
520 S. W. Yamhill Street
Portland, OR 97204
Facsimile: 503-224-0388
or to such other person(s) and address(es) as shall be furnished by like notice
by such party. Notice given in accordance with this provision shall be deemed
to have been given and effective when received, which in the case of certified
mail or overnight courier, shall be on the date return or other receipt
indicates delivery was made.
SECTION 18. ENTIRE AGREEMENT, AMENDMENT AND WAIVER.
This Agreement embodies the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements with respect
thereto. Except as otherwise specifically provided herein, this Agreement may
be terminated or amended and any provision may be waived, but only in writing
signed by an officer of the party against whom such termination, amendment or
waiver is sought to be enforced.
SECTION 19. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Michigan.
SECTION 20. COUNTERPARTS.
This Agreement may be executed one or, more of counterparts, all of which
together constitute one Agreement.
SECTION 21. CAPTIONS.
Captions to Sections and sub-Sections of this Agreement have been included
solely for the sake of convenient reference, and are entirely without
substantive effect.
<PAGE>
SECTION 22. SUCCESSORS.
This Agreement is binding upon, and the benefits hereof inure to, the
parties hereto and their respective successors and assigns; provided that
neither this Agreement nor any
right or obligation under this Agreement may be assigned by either party without
the written consent of the other party hereto, which party will not unreasonably
withhold such consent, and except that no consent is necessary for an assignment
(an "Affiliated Assignment") to a wholly-owned subsidiary or the parent of a
party, but an Affiliated Assignment will not relieve the assignor of its
obligations hereunder, and assignor will give prompt written notice of such
Affiliated Assignment to the other party.
SECTION 23. NO THIRD PARTY BENEFICIARIES.
Stroh and PBC agree that this Agreement is solely for their benefit and it
does not nor is it intended to create any rights in favor of, or obligations
owing to, any third parties.
SECTION 24. CONFIDENTIALITY.
24.1. Stroh and PBC agree not to publicly disclose the terms, conditions
and other details of this Agreement without the prior written consent of the
other party, except as required by law, and then, to the extent possible, only
upon prior notice to the other party.
24.2. In order to perform this Agreement, Stroh and PBC will be required
to share information about each company and its operations, respectively. All
information shared between Stroh and PBC (including, but not limited to, any
formula, recipe, or process used for the products of PBC) prior and subsequent
to the execution of this Agreement shall be deemed "Confidential Information"
unless, prior to the time of such disclosure, the same is known by the receiving
party or generally known in the public domain, or, subsequent to the time of its
disclosure hereunder, the same becomes generally known in the public domain
other than as a result of a breach of this Section 24.2. All Confidential
Information shall be deemed proprietary to the party giving such Confidential
Information and shall be held as confidential by the other party. Each party
hereby agrees (i) not to disclose any Confidential Information of the other
party to any third party whomsoever, except as required by law, and then, to the
extent possible, only upon prior notice to the other party, (ii) not to use any
Confidential Information of the other party for its own benefit or adversely to
the other party (Confidential Information shall be used for the purpose
performance hereunder and not otherwise), and (iii) to immediately return all
forms of Confidential Information, whether written or on computer disk or
otherwise upon termination of this Agreement. All work product prepared on the
basis of Confidential Information shall be treated as Confidential Information.
SECTION 25. DISPUTE RESOLUTION.
All controversies and claims between Stroh and PBC arising out of or
relating to this Agreement, or the breach thereof, which are not settled by the
parties through negotiation, shall be settled by arbitration administered by the
American Arbitration Association ("AAA")
<PAGE>
in accordance with its applicable rules, and judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. Either
party may initiate such arbitration proceeding which shall be filed in the
Michigan regional office of the AAA.
SECTION 26. NO PARTNERSHIP INTENDED OR CREATED.
The parties intend that the relationship between them shall be solely that
of alternating proprietors of the Source Plant. Nothing contained in this
Agreement shall be deemed to create a partnership, joint venture, joint tenancy,
agency, or co-ownership relationship between the parties. PBC shall not be
responsible or liable for the debts, losses, obligations, or duties of Stroh
with respect to the Source Plant or otherwise. All obligations to pay real
property or other taxes, assessments, insurance premiums, wages, and all other
fees and costs arising from the ownership, operation, or occupancy of the Source
Plant and to perform all agreements and contracts relating to the Source Plant
shall be the sole responsibility of Stroh, excepting obligations of PBC under
this Agreement. The parties understand and agree that all employees at the
Source Plant are employees of Stroh, and that Stroh shall be solely responsible
for paying all applicable employee benefits, insurance premiums, and tax or
other withholding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the day and year first above written
PORTLAND BREWING COMPANY, THE STROH BREWERY COMPANY,
an Oregon corporation an Arizona corporation
By: /S/ CHARLES A. ADAMS By: /S/ VINCENT M. ABATEMARCO
------------------------- ----------------------------
Charles A. Adams Vincent M. Abatemarco
President Treasurer
<PAGE>
EXHIBIT 11
TRADEMARK SCHEDULE
AS OF 01/22/96
WHEAT BERRY BREW AND OREGON HONEY BEER
I. COMMON LAW RIGHTS:
Distribution in various states under the following four marks.
- - WHEAT BERRY BREW (word)
- - WHEAT BERRY BREW (word & design) ( see III. A. California.)
- - OREGON HONEY BEER (word )
- - OREGON HONEY BEER (word & design) (see III. B. California.)
II. FEDERAL TRADEMARK APPLICATION FOR REGISTRATION:
One pending federal application for Oregon Honey Beer Label design (see
Ex. B).
- - Design and
PORTLAND BREWING 1339 OREGON HONEY BEER BREWED WITH REAL HONEY BLONDISH GOLD
AND LIGHT BODIED, OHB OFFERS A HINT OF HONEY FLAVOR WITH A CRISP, DRY FINISH
Goods: Malt beverages, namely beer and ale
<PAGE>
III. STATE TRADEMARK REGISTRATIONS:
Multiple state registrations for both marks as follows:
A. WHEAT BERRY BREW
- -------------------------------------------------------------------------------
STATE MARK GOODS
- -------------------------------------------------------------------------------
California WHEAT BERRY BREW Malt beverages, namely beer
and ale
A banner and shield design
with a decorative floral berry
and wheat design,on which the
following words appear:
PORTLAND BREWING PRODUCT
NO. 13 WHEAT BERRY BREW BEER
FLAVORED WITH MARIONBERRY
AND OTHER NATURAL FLAVORS
CRISP AND REFRESHING, WITH
THE SMOOTH CHARACTER OF
WHEAT AND THE PURE ESSENCE
OF OREGON MARIONBERRIES
- -------------------------------------------------------------------------------
Colorado WHEAT BERRY BREW Malt beverages, namely beer
and ale
- -------------------------------------------------------------------------------
Oregon WHEAT BERRY BREW Malt beverages, namely beer
and ale
- -------------------------------------------------------------------------------
Washington WHEAT BERRY BREW Malt beverages, namely beer
and ale
- -------------------------------------------------------------------------------
<PAGE>
B. OREGON HONEY BEER ( Pages 3-4)
- -------------------------------------------------------------------------------
STATE MARK GOODS
- -------------------------------------------------------------------------------
California OREGON HONEY BEER Malt beverages, namely beer
and ale
The mark consists of a banner
and shield design, along with a
decorative floral design, on
which the following words appear:
PORTLAND BREWING 1339 OREGON
HONEY BEER BREWED WITH REAL HONEY
BLONDISH GOLD AND LIGHT BODIED
- -------------------------------------------------------------------------------
Colorado OREGON HONEY BEER Malt beverages, namely beer
and ale
- -------------------------------------------------------------------------------
Oregon OREGON HONEY BEER Tap handles, point of sale
materials
advertising-t-shirts
The mark consist of the words
OREGON HONEY BEER- the word
"OREGON" at top of mark with
word "HONEY BEER" arched over
word "BEER" outlined in oval
shape "HONEY" word has a
honeybee on the "H" in HONEY
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
Oregon OREGON HONEY BEER Beer & nonalcoholic drinks
A shield with "Portland
Brewing-Oregon" with
wording BLONDISH GOLD
AND LIGHT BODIED OHB
OFFERS A HINT OF
HONEY FLAVOR WITH
CRISP, DRY FINISH a
banner extends over the shield
with HONEY BEER
BREWED WITH REAL
HONEY
- -------------------------------------------------------------------------------
Washington OREGON HONEY BEER Light beverages
A shield with "Portland
Brewing-Oregon" with
wording BLONDISH GOLD
AND LIGHT BODIED OHB
OFFERS A HINT OF
HONEY FLAVOR WITH
CRISP, DRY FINISH a
banner extends over the shield
with HONEY BEER BREWED WITH REAL
HONEY
- -------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-QSB/A NO. 1 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,162
<SECURITIES> 0
<RECEIVABLES> 1,093,505
<ALLOWANCES> 48,241
<INVENTORY> 689,840
<CURRENT-ASSETS> 2,213,728
<PP&E> 8,499,941
<DEPRECIATION> 1,343,810
<TOTAL-ASSETS> 9,555,052
<CURRENT-LIABILITIES> 1,353,520
<BONDS> 801,458
0
0
<COMMON> 6,695,729
<OTHER-SE> 514,893
<TOTAL-LIABILITY-AND-EQUITY> 9,555,052
<SALES> 2,931,046
<TOTAL-REVENUES> 2,931,046
<CGS> 1,953,665
<TOTAL-COSTS> 2,874,205
<OTHER-EXPENSES> 3,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,358
<INCOME-PRETAX> 38,925
<INCOME-TAX> 15,800
<INCOME-CONTINUING> 23,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,125
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
