##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q/A
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 for the transition period from _______________ to ______________
 COMMISSION
FILE NUMBER 0-26542
 
 REDHOOK ALE BREWERY, INCORPORATED
  Washington
(State or other jurisdiction of
incorporation or organization)
    
    91-1141254
(I.R.S. Employer
Identification No.)
 14300 NE 145thStreet, Suite 210
Woodinville, Washington
(Address of principal executive offices)
    
    98072-9045
(Zip Code)
 (425) 483-3232
 þ o
 o þ




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##### 



Explanatory Note
   REDHOOK ALE BREWERY, INCORPORATED
 FORM
10-Q/A
 For The Quarterly Period Ended June 30, 2005
 TABLE OF CONTENTS
 PagePART I. Financial InformationITEM 1. Financial StatementsBalance Sheets as of June 30, 2005 and December 31, 2004
    
    
    3Statements of Operations for the Three and Six Month Periods Ended June 30, 2005 and 2004
    
    
    4Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004
    
    
    5Notes to Financial Statements
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    29ITEM 4. Controls and Procedures
    
    
    29PART II. Other InformationITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    29ITEM 6. Exhibits
    
    
    30EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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##### Table of Contents



PART I.
 
 ITEM 1. Financial Statements
 REDHOOK ALE BREWERY, INCORPORATED
 
 BALANCE
SHEETS
 June 30,
    
    December 31,2005
    
    2004(Restated; See Note 2)
    
    (Restated; See Note 2)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    4,364,278
    
    
    $
    5,589,621Accounts Receivable
    
    
    2,564,037
    
    
    
    1,123,475Trade Receivable from Craft Brands
    
    
    1,068,124
    
    
    
    398,707Inventories
    
    
    3,257,116
    
    
    
    3,000,309Other
    
    
    466,964
    
    
    
    506,328Total Current Assets
    
    
    11,720,519
    
    
    
    10,618,440Fixed Assets, Net
    
    
    61,725,163
    
    
    
    63,018,806Receivable from Craft Brands
    
    
    
    
    
    
    277,144Investment in Craft Brands
    
    
    283,490
    
    
    
    192,857Other Assets
    
    
    15,553
    
    
    
    20,977Total Assets
    
    $
    73,744,725
    
    
    $
    74,128,224LIABILITIES AND COMMON STOCKHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    2,589,701
    
    
    $
    1,815,380Trade Payable to Craft Brands
    
    
    513,121
    
    
    
    431,089Accrued Salaries, Wages and Payroll Taxes
    
    
    1,226,002
    
    
    
    1,220,248Refundable Deposits
    
    
    2,037,806
    
    
    
    2,526,088Other Accrued Expenses
    
    
    417,245
    
    
    
    515,123Current Portion of Long-Term Debt
    
    
    450,000
    
    
    
    450,000Total Current Liabilities
    
    
    7,233,875
    
    
    
    6,957,928Long-Term Debt, Net of Current Portion
    
    
    4,950,000
    
    
    
    5,175,000Deferred Income Taxes, Net
    
    
    699,798
    
    
    
    769,798Other Liabilities
    
    
    97,354
    
    
    
    64,903CommitmentsCommon Stockholders Equity:Common Stock, Par Value $0.005 per Share, Authorized, 50,000,000
Shares; Issued and Outstanding, 8,215,159 Shares in 2005 and
8,188,199 Shares in 2004
    
    
    41,076
    
    
    
    40,941Additional Paid-In Capital
    
    
    68,813,651
    
    
    
    68,761,766Retained Earnings (Deficit)
    
    
    (8,091,029
    )
    
    
    (7,642,112
    )Total Common Stockholders Equity
    
    
    60,763,698
    
    
    
    61,160,595Total Liabilities and Common Stockholders Equity
    
    $
    73,744,725
    
    
    $
    74,128,224
  3




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##### Table of Contents



REDHOOK ALE BREWERY, INCORPORATED
 
 STATEMENTS OF OPERATIONS
  Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Sales
    
    $
    9,741,216
    
    
    $
    11,443,406
    
    
    $
    17,066,190
    
    
    $
    20,833,885Less Excise Taxes
    
    
    982,424
    
    
    
    952,566
    
    
    
    1,734,851
    
    
    
    1,723,211Net Sales
    
    
    8,758,792
    
    
    
    10,490,840
    
    
    
    15,331,339
    
    
    
    19,110,674Cost of Sales
    
    
    7,277,051
    
    
    
    7,479,198
    
    
    
    13,325,340
    
    
    
    14,053,411Gross Profit
    
    
    1,481,741
    
    
    
    3,011,642
    
    
    
    2,005,999
    
    
    
    5,057,263Selling, General and Administrative Expenses
    
    
    1,851,815
    
    
    
    2,545,796
    
    
    
    3,394,338
    
    
    
    5,074,364Income from Equity Investment in Craft Brands
    
    
    691,304
    
    
    
    
    
    
    
    950,998
    
    
    
    Craft Brands Shared Formation Expenses
    
    
    
    
    
    
    130,808
    
    
    
    
    
    
    
    537,575Operating Income (Loss)
    
    
    321,230
    
    
    
    335,038
    
    
    
    (437,341
    )
    
    
    (554,676
    )Interest Expense
    
    
    65,595
    
    
    
    42,793
    
    
    
    126,914
    
    
    
    86,400Other Income (Expense)  Net
    
    
    35,536
    
    
    
    10,957
    
    
    
    64,338
    
    
    
    23,740Income (Loss) before Income Taxes
    
    
    291,171
    
    
    
    303,202
    
    
    
    (499,917
    )
    
    
    (617,336
    )Income Tax Provision (Benefit)
    
    
    8,000
    
    
    
    10,000
    
    
    
    (51,000
    )
    
    
    10,000Net Income (Loss)
    
    $
    283,171
    
    
    $
    293,202
    
    
    $
    (448,917
    )
    
    $
    (627,336
    )Basic Earnings (Loss) per Share
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.10
    )Diluted Earnings (Loss) per Share
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.10
    )
  4




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##### Table of Contents



REDHOOK ALE BREWERY, INCORPORATED
 
 STATEMENTS OF CASH FLOWS
  Six Months Ended June 30,2005
    
    2004Operating ActivitiesNet Income (Loss)
    
    $
    (448,917
    )
    
    $
    (627,336
    )Adjustments to Reconcile Net Income (Loss) to Net Cash
(Used in) Provided by Operating Activities:Gain on Disposal of Fixed Assets
    
    
    (3,000
    )
    
    
    Depreciation and Amortization
    
    
    1,462,867
    
    
    
    1,477,591Income from Equity Investment in Craft Brands in
Excess of Cash Distribution
    
    
    (148,262
    )
    
    
    Deferred Income Taxes, Net
    
    
    (70,000
    )
    
    
    Net Change in Operating Assets and Liabilities
    
    
    (1,684,251
    )
    
    
    455,987Net Cash (Used in) Provided by Operating Activities
    
    
    (891,563
    )
    
    
    1,306,242Investing ActivitiesExpenditures for Fixed Assets
    
    
    (160,800
    )
    
    
    (28,898
    )Other, Net
    
    
    
    
    
    
    (2,500
    )Net Cash (Used in) Provided by Investing Activities
    
    
    (160,800
    )
    
    
    (31,398
    )Financing ActivitiesPrincipal Payments on Debt
    
    
    (225,000
    )
    
    
    (225,000
    )Issuance of Common Stock
    
    
    52,020
    
    
    
    233,994Net Cash
(Used in) Provided by Financing Activities
    
    
    (172,980
    )
    
    
    8,994Increase (Decrease) in Cash and Cash Equivalents
    
    
    (1,225,343
    )
    
    
    1,283,838Cash and Cash Equivalents:Beginning of Period
    
    
    5,589,621
    
    
    
    6,123,349End of Period
    
    $
    4,364,278
    
    
    $
    7,407,187
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##### Table of Contents



REDHOOK ALE BREWERY, INCORPORATED
 
 NOTES TO FINANCIAL STATEMENTS
 1. Basis of Presentation
   2. Restatement of Financial Statements
  As of June 30, 2005AsPreviously
    
    
    AsReported
    
    
    RestatedDeferred Income Taxes, Net
    
    $
    398,798
    
    
    $
    699,798Retained Earnings (Deficit)
    
    
    (7,790,029
    )
    
    
    (8,091,029
    )Total Common Stockholders Equity
    
    
    61,064,698
    
    
    
    60,763,698Total Liabilities and Common Stockholders Equity
    
    
    73,744,725
    
    
    
    73,744,725
 As of December 31, 2004AsPreviously
    
    
    AsReported
    
    
    RestatedDeferred Income Taxes, Net
    
    $
    468,798
    
    
    $
    769,798Retained Earnings (Deficit)
    
    
    (7,341,112
    )
    
    
    (7,642,112
    )Total Common Stockholders Equity
    
    
    61,461,595
    
    
    
    61,160,595Total Liabilities and Common Stockholders Equity
    
    
    74,128,224
    
    
    
    74,128,224
 3. Inventories
  June 30,
    
    December 31,2005
    
    2004Raw materials
    
    $
    1,263,547
    
    
    $
    1,122,290Work in process
    
    
    850,312
    
    
    
    833,846Finished goods
    
    
    577,025
    
    
    
    350,543Promotional merchandise
    
    
    428,503
    
    
    
    480,338Packaging materials
    
    
    137,729
    
    
    
    213,292$
    3,257,116
    
    
    $
    3,000,309
  4. Craft Brands Alliance LLC
    6




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REDHOOK ALE BREWERY, INCORPORATED
 NOTES TO FINANCIAL STATEMENTS (Continued)
   Consolidation of
Variable Interest Entities  an Interpretation of ARB No. 51 The Equity Method of Accounting for Investments in Common Stock
   7




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REDHOOK ALE BREWERY, INCORPORATED
 NOTES TO FINANCIAL STATEMENTS (Continued)
   5. Refundable Deposits
  6. Common Stockholders Equity
  7. Earnings (Loss) per Share
 Earnings
per Share
  8




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REDHOOK ALE BREWERY, INCORPORATED
 NOTES
TO FINANCIAL STATEMENTS (Continued)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Basic earnings (loss) per share computation:Numerator:Net income (loss)
    
    $
    283,171
    
    
    $
    293,202
    
    
    $
    (448,917
    )
    
    $
    (627,336
    )Preferred stock accretion
    
    
    
    
    
    
    (11,100
    )
    
    
    
    
    
    
    (22,200
    )Income (loss) available to common
stockholders
    
    $
    283,171
    
    
    $
    282,102
    
    
    $
    (448,917
    )
    
    $
    (649,536
    )Denominator:Weighted average common shares
    
    
    8,197,240
    
    
    
    6,296,769
    
    
    
    8,192,989
    
    
    
    6,262,228Basic earnings (loss) per share
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.10
    )Diluted earnings (loss) per share computation:Numerator:Net income (loss)
    
    $
    283,171
    
    
    $
    293,202
    
    
    $
    (448,917
    )
    
    $
    (627,336
    )Preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,200
    )Numerator  income (loss) available
to common stockholders
    
    $
    283,171
    
    
    $
    293,202
    
    
    $
    (448,917
    )
    
    $
    (649,536
    )Denominator:Weighted average common shares
    
    
    8,197,240
    
    
    
    6,296,769
    
    
    
    8,192,989
    
    
    
    6,262,228Effect of dilutive securities:Series B convertible preferred stock
    
    
    
    
    
    
    1,289,872
    
    
    
    
    
    
    
    Stock options, net
    
    
    255,603
    
    
    
    125,901
    
    
    
    
    
    
    
    Denominator for diluted earnings (loss)
per share
    
    
    8,452,843
    
    
    
    7,712,541
    
    
    
    8,192,989
    
    
    
    6,262,228Diluted earnings (loss) per share
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.10
    )
 7. Stock-Based Compensation
 Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation
 9




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##### Table of Contents



REDHOOK ALE BREWERY, INCORPORATED
 NOTES
TO FINANCIAL STATEMENTS (Continued)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income (loss), as reported
    
    $
    283,171
    
    
    $
    293,202
    
    
    $
    (448,917
    )
    
    $
    (627,336
    )Add: Stock-based employee
compensation expense as
reported under APB 25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Less: Stock-based employee
compensation expense
determined under fair value
based method for all options,
net of related tax effects
    
    
    (27,270
    )
    
    
    (45,473
    )
    
    
    (36,153
    )
    
    
    (99,022
    )Pro forma net income (loss)
    
    $
    255,901
    
    
    $
    247,729
    
    
    $
    (485,070
    )
    
    $
    (726,358
    )Earnings (loss) per share:Basic  as reported
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.10
    )Basic  pro forma
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.06
    )
    
    $
    (0.12
    )Diluted  as reported
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.10
    )Diluted  pro forma
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.06
    )
    
    $
    (0.12
    )
 10




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
     11




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##### Table of Contents



Critical
Accounting Policies and Estimates
  Income Taxes. Accounting for Income Taxes
 12




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##### Table of Contents



Long-Lived Assets. Accounting for the Impairment or Disposal of Long-Lived Assets
 Investment in Craft Brands Alliance LLC. Consolidation of Variable
Interest Entities  an Interpretation of ARB No. 51 The Equity Method of Accounting for Investments in Common Stock.
 13




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##### Table of Contents



Revenue Recognition.
 Results of Operations
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Sales
    
    
    111.2
    %
    
    
    109.1
    %
    
    
    111.3
    %
    
    
    109.0
    %Less Excise Taxes
    
    
    11.2
    
    
    
    9.1
    
    
    
    11.3
    
    
    
    9.0Net Sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of Sales
    
    
    83.1
    
    
    
    71.3
    
    
    
    86.9
    
    
    
    73.5Gross Profit
    
    
    16.9
    
    
    
    28.7
    
    
    
    13.1
    
    
    
    26.5Selling, General and Administrative Expenses
    
    
    21.1
    
    
    
    24.3
    
    
    
    22.1
    
    
    
    26.6Income from Equity Investment in Craft
Brands
    
    
    7.9
    
    
    
    
    
    
    
    6.2
    
    
    
    Craft Brands Shared Formation Expenses
    
    
    
    
    
    
    1.2
    
    
    
    
    
    
    
    2.8Operating Income (Loss)
    
    
    3.7
    
    
    
    3.2
    
    
    
    (2.8
    )
    
    
    (2.9
    )Interest Expense
    
    
    0.8
    
    
    
    0.4
    
    
    
    0.8
    
    
    
    0.4Other Income (Expense)  Net
    
    
    0.4
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    0.1Income (Loss) before Income Taxes
    
    
    3.3
    
    
    
    2.9
    
    
    
    (3.2
    )
    
    
    (3.2
    )Income Tax Provision (Benefit)
    
    
    0.1
    
    
    
    0.1
    
    
    
    (0.3
    )
    
    
    0.1Net Income (Loss)
    
    
    3.2
    %
    
    
    2.8
    %
    
    
    (2.9
    )%
    
    
    (3.3
    )%
 14




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##### Table of Contents



Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
  Three Months EndedJune 30,
    
    Increase/
    
    %2005
    
    2004
    
    (Decrease)
    
    ChangeSales
    
    $
    9,741,216
    
    
    $
    11,443,406
    
    
    $
    (1,702,190
    )
    
    
    (14.9
    )%Less Excise Taxes
    
    
    982,424
    
    
    
    952,566
    
    
    
    29,858
    
    
    
    3.1Net Sales
    
    
    8,758,792
    
    
    
    10,490,840
    
    
    
    (1,732,048
    )
    
    
    (16.5
    )Cost of Sales
    
    
    7,277,051
    
    
    
    7,479,198
    
    
    
    (202,147
    )
    
    
    (2.7
    )Gross Profit
    
    
    1,481,741
    
    
    
    3,011,642
    
    
    
    (1,529,901
    )
    
    
    (50.8
    )Selling, General and Administrative Expenses
    
    
    1,851,815
    
    
    
    2,545,796
    
    
    
    (693,981
    )
    
    
    (27.3
    )Income from Equity Investment in Craft Brands
    
    
    691,304
    
    
    
    
    
    
    
    691,304
    
    
    
    100.0Craft Brands Shared Formation Expenses
    
    
    
    
    
    
    130,808
    
    
    
    (130,808
    )
    
    
    (100.0
    )Operating Income (Loss)
    
    
    321,230
    
    
    
    335,038
    
    
    
    (13,808
    )
    
    
    (4.1
    )Interest Expense
    
    
    65,595
    
    
    
    42,793
    
    
    
    22,802
    
    
    
    53.3Other Income (Expense)  Net
    
    
    35,536
    
    
    
    10,957
    
    
    
    24,579
    
    
    
    224.3Income (Loss) before Income Taxes
    
    
    291,171
    
    
    
    303,202
    
    
    
    (12,031
    )
    
    
    (4.0
    )Income Tax Provision (Benefit)
    
    
    8,000
    
    
    
    10,000
    
    
    
    (2,000
    )
    
    
    (20.0
    )Net Income (Loss)
    
    $
    283,171
    
    
    $
    293,202
    
    
    $
    (10,031
    )
    
    
    (3.4
    )%Beer Shipped (in barrels)
    
    
    64,000
    
    
    
    62,000
    
    
    
    2,000
    
    
    
    3.2
    %
 Sales.
 Sales to Craft Brands
 Shipments
  15




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##### Table of Contents



Pricing and Fees
    Retail Operations and Other Sales
 Excise Taxes
 16




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##### Table of Contents



Cost of Sales.
 Widmer Hefeweizen Widmer Hefeweizen
 Selling, General and Administrative Expenses
 Income from Equity Investment in Craft Brands.
  Craft Brands Shared Formation Expenses.
 17




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Interest Expense.
 Other Income (Expense) Net
 Income Taxes
 Craft Brands Alliance LLC
 The Equity Method of Accounting for Investments in Common Stock Exhibits and Financial Statement Schedules
  Sales.
 Cost of Sales.
 Selling, General and Administrative Expenses
 Net Income
 18




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##### Table of Contents



Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
  Six Months EndedJune 30,
    
    Increase/
    
    %2005
    
    2004
    
    (Decrease)
    
    ChangeSales
    
    $
    17,066,190
    
    
    
    20,833,885
    
    
    $
    (3,767,695
    )
    
    
    (18.1
    )%Less Excise Taxes
    
    
    1,734,851
    
    
    
    1,723,211
    
    
    
    11,640
    
    
    
    0.7Net Sales
    
    
    15,331,339
    
    
    
    19,110,674
    
    
    
    (3,779,335
    )
    
    
    (19.8
    )Cost of Sales
    
    
    13,325,340
    
    
    
    14,053,411
    
    
    
    (728,071
    )
    
    
    (5.2
    )Gross Profit
    
    
    2,005,999
    
    
    
    5,057,263
    
    
    
    (3,051,264
    )
    
    
    (60.3
    )Selling, General and Administrative Expenses
    
    
    3,394,338
    
    
    
    5,074,364
    
    
    
    (1,680,026
    )
    
    
    (33.1
    )Income from Equity Investment in Craft Brands
    
    
    950,998
    
    
    
    
    
    
    
    950,998
    
    
    
    100.0Craft Brands Shared Formation Expenses
    
    
    
    
    
    
    537,575
    
    
    
    (537,575
    )
    
    
    (100.0
    )Operating Income (Loss)
    
    
    (437,341
    )
    
    
    (554,676
    )
    
    
    (117,335
    )
    
    
    (21.2
    )Interest Expense
    
    
    126,914
    
    
    
    86,400
    
    
    
    40,514
    
    
    
    46.9Other Income (Expense)  Net
    
    
    64,338
    
    
    
    23,740
    
    
    
    40,598
    
    
    
    171.0Income (Loss) before Income Taxes
    
    
    (499,917
    )
    
    
    (617,336
    )
    
    
    (117,419
    )
    
    
    (19.0
    )Provision (Benefit) for Income Taxes
    
    
    (51,000
    )
    
    
    10,000
    
    
    
    (61,000
    )
    
    
    (610.0
    )Net Income (Loss)
    
    $
    (448,917
    )
    
    $
    (627,336
    )
    
    $
    (178,419
    )
    
    
    (28.4
    )%Beer Shipped (in barrels)
    
    
    113,200
    
    
    
    112,200
    
    
    
    1,000
    
    
    
    0.9
    %
 Sales.
 Sales to Craft Brands
 Shipments
  19




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##### Table of Contents



Pricing and Fees
    Retail Operations and Other Sales
 20




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##### Table of Contents



Excise Taxes
 Cost of Sales.
 Widmer Hefeweizen Widmer Hefeweizen
 Selling, General and Administrative Expenses
 Income from Equity Investment in Craft Brands.
  Craft Brands Shared Formation Expenses.
 21




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##### Table of Contents



Interest Expense.
 Other Income (Expense) Net
 Income Taxes
 Craft Brands Alliance LLC
  Sales.
 Cost of Sales.
 Selling, General and Administrative Expenses
 Net Income
 22




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##### Table of Contents



Liquidity and Capital Resources
        23




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##### Table of Contents



Required by
    
    Quarter EndedTerm Loan
    
    June 30, 2005(Restated; See Note 2)Tangible Net Worth
    
    Greater than $60,000,000
    
    $60,748,145Capital Ratio
    
    Less than: 1.25:1
    
    0.21:1Working Capital
    
    Greater than $1,900,000
    
    $4,486,645Fixed Charge Coverage Ratio
    
    Greater than 1.15:1
    
    3.098:1
 Certain Considerations: Issues and Uncertainties
  Relationship with Anheuser-Busch, Incorporated and Craft Brands Alliance LLC.
 Craft Brands Alliance LLC.
  24




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##### Table of Contents



Dependence on Distributors.
 Effect of Competition on Future Sales.
 Sales Prices.
 Dependence on Sales in Washington State
 25




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##### Table of Contents



Variability of Gross Margin and Cost of Sales.
 Advertising and Promotional Costs
 Customer Acceptance, Consumer Trends and Public Attitudes.
 Effect of Sales Trends on Brewery Efficiency and Operations Accounting for the Impairment or Disposal of Long-Lived Assets
 Income
Tax Benefits
 26




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##### Table of Contents



27




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##### Table of Contents



Recent Accounting Pronouncements
 Inventory Costs  an Amendment of ARB No. 43,
Chapter 4
 Share-Based Payment
 28




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
   
 ITEM 4. Controls and Procedures
    
 PART II.
 
 ITEM 4. Submission of Matters to a Vote of Security Holders
   Director
    
    Votes For
    
    Votes WithheldFrank H. Clement
    
    
    7,459,198
    
    
    
    296,621David R. Lord
    
    
    7,158,995
    
    
    
    296,621Michael Loughran
    
    
    7,159,398
    
    
    
    296,621Patrick J. McGauley
    
    
    7,443,937
    
    
    
    296,621John D. Rogers, Jr.
    
    
    7,250,925
    
    
    
    296,621Paul S. Shipman
    
    
    7,506,107
    
    
    
    296,621Anthony J. Short
    
    
    7,450,265
    
    
    
    296,621
  Votes For: 7,592,319Votes Against: 47,695Abstain: 3,582
  29




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##### Table of Contents



ITEM 6. Exhibits
 The following exhibits are filed as part of this report.31.1
    
    
    Certification of Chief Executive Officer of Redhook Ale Brewery,
Incorporated pursuant to Exchange Act Rule 13a-14(a)31.2
    
    
    Certification of Chief Financial Officer of Redhook Ale Brewery,
Incorporated pursuant to Exchange Act Rule 13a-14(a)32.1
    
    
    Certification of Chief Executive Officer of Redhook Ale Brewery,
Incorporated pursuant to Exchange Act 13a-14(b) and 18 U.S.C. Section
135032.2
    
    
    Certification of Chief Financial Officer of Redhook Ale Brewery,
Incorporated pursuant to Exchange Act 13a-14(b) and 18 U.S.C. Section
1350
 30




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##### Table of Contents



SIGNATURES
  REDHOOK ALE BREWERY, INCORPORATEDMarch 31, 2006
    
    
    
    BY: /s/ David J. MickelsonDavid J. MickelsonPresident,Chief Financial Officer and Chief Operating OfficerMarch 31, 2006
    
    
    
    BY: /s/ Lorri L. JonesLorri L. JonesController and Treasurer,Principal Accounting Officer
 31