##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number 0-26542
  REDHOOK ALE BREWERY,
    INCORPORATED
 (Exact name of registrant as
    specified in its charter)
  Washington

91-1141254(State of
    incorporation)

(I.R.S. Employer
    Identification Number)14300 NE
    145th Street,
    Suite 210

98072-6950Woodinville,
    Washington

(Zip Code)(Address of principal executive
    offices)   (425) 483-3232
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, Par Value $0.005 Per
    Share

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None.
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
   o o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
    (1)
    Excludes shares held of record on that date by directors and
    executive officers and greater than 10% shareholders of the
    registrant. Exclusion of such shares should not be construed to
    indicate that any such person directly or indirectly possesses
    the power to direct or cause the direction of the management of
    the policies of the registrant.




---



##### 



REDHOOK
    ALE BREWERY, INCORPORATED
  FORM 10-K
  TABLE OF
    CONTENTS
  PagePART I.ITEM 1.


Business


3ITEM 1A.


Risk
    Factors


20ITEM 1B.


Unresolved Staff
    Comments


26ITEM 2.


Properties


26ITEM 3.


Legal
    Proceedings


26ITEM 4.


Submission of
    Matters to a Vote of Security Holders


27ITEM 4A.


Executive Officers
    of the Company


27PART II.ITEM 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


28ITEM 6.


Selected Financial
    Data


30ITEM 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


31ITEM 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


49ITEM 8.


Financial
    Statements and Supplementary Data


50ITEM 9.


Changes In and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


76ITEM 9A.


Controls and
    Procedures


76ITEM 9B.


Other
    Information


76PART III.ITEM 10.


Directors,
    Executive Officers and Corporate Governance


76ITEM 11.


Executive
    Compensation


76ITEM 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholders Matters


77ITEM 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


77ITEM 14.


Principal
    Accountant Fees and Services


77PART IV.ITEM 15.


Exhibits and
    Financial Statement Schedules


78SIGNATURES


83EXHIBIT 10.22EXHIBIT 10.54EXHIBIT 10.55EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 31.3EXHIBIT 32.1EXHIBIT 32.2EXHIBIT 32.3   2




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##### Table of Contents



PART I.  Item 1.
    Business    Redhook ESB Redhook Long Hammer IPA Redhook Blonde Ale Blackhook Porter Nut
    Brown Sunrye Late Harvest Autumn Winterhook Copperhook Ales. Widmer Hefeweizen
    Industry
    Background
       3




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##### Table of Contents



Business
    Strategy
      Production of High-Quality Craft Beers.
  Control of Production in Company-Owned
    Breweries.
 4




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##### Table of Contents



Strategic Distribution Relationship with Industry
    Leader. A-B
  Sales and Marketing Relationship with Craft Brands Alliance
    LLC.
  Operation of Regional Brewing
    Facilities.
  Promotion of Products.
   5




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##### Table of Contents



Products
      Redhook ESB (ESB). ESB ESB Redhook Long
    Hammer IPA Widmer.
  Redhook Long Hammer IPA (Long
    Hammer). Long Hammer Long Hammer
  Redhook Blonde Ale.
  Blackhook Porter (Blackhook). Blackhook
  Copperhook Ale (Copperhook). Copperhook
  Nut Brown Ale. Nut Brown Ale
  Redhook Sunrye Ale
    (Sunrye). Sunrye Sunrye
  Late Harvest Autumn Ale (Autumn
    Ale). Autumn Ale Autumn Ale
  Winterhook. Winterhook Winterhook
  Widmer Hefeweizen Widmer
    Hefeweizen Widmer Hefeweizen Widmer
    Hefeweizen
 6




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##### Table of Contents



Widmer Hefeweizen
  Pacific Ridge Pacific Ridge Pacific Ridge
  Long
    Hammer, Redhook Blonde Ale
  Brewing
    Operations
  The Brewing Process. Saccharomyces cerevisiae,
   7




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Brewing Equipment. 100-barrel 100-barrel, 200-barrel, 600-barrel 300-barrel 400-barrel 100-barrel 100-barrel, 400-barrel 200-barrel 400-barrel 400-barrel
  Packaging.
 8




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##### Table of Contents



Quality Control. on-site on-site
  Ingredients and Raw Materials. Saccharomyces cerevisiae
  Product
    Distribution
               9




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A-B
          Relationship
    with Anheuser-Busch, Incorporated
     10




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##### Table of Contents



A-B
       11




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##### Table of Contents



Fees
    Margin. non-A-B
    Invoicing Cost.
      Staging Cost and Cooperage Handling
    Charge.
 12




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##### Table of Contents



Inventory Manager Fee.
          Relationship
    with Craft Brands Alliance LLC
       13




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14




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##### Table of Contents



Consolidation of Variable Interest Entities  an
    Interpretation of ARB No. 51, The Equity Method of
    Accounting for Investments in Common Stock. Form 10-K Exhibits and Financial
    Statement Schedules Rule 3-09 Regulation S-X.
 15




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##### Table of Contents



Sales and
    Marketing
      on-site point-of-sale
  word-of-mouth point-of-sale
  on-site Properties.
     16




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Seasonality
    Competition
           17




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Regulation
   18




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##### Table of Contents



Alcoholic
    Beverage Regulation and Taxation
        State
    and Federal Environmental Regulation
    Dram
    Shop Laws
    Subsequent
    Events
   19




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##### Table of Contents



Trademarks
    Employees
    Item 1A.
    Risk
    Factors    We are dependent upon our continuing relationship with
    Anheuser-Busch, Incorporated.
    Our agreement with A-B contains limitations on our ability to
    engage in or reject certain transactions, including acquisitions
    and changes of control.
  
    issue equity securities;
    acquire or sell assets or stock;
    amend our Articles of Incorporation or bylaws;
    grant board representation rights; 20




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
    enter into certain transactions with affiliates;
    distribute our products in the U.S. other than through A-B,
    Craft Brands or as provided in the A-B Distribution Agreement;
    voluntarily delist or terminate our listing on the NASDAQ Stock
    Market; or
    dispose of any of our interest in Craft Brands.      Our investment in Craft Brands Alliance LLC may not provide
    anticipated benefits.
    Our potential transaction with Widmer Brothers Brewing
    Company may not occur, and failure to complete the transaction
    may have a negative impact on our stock price or our future
    business and financial results.
 21




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##### Table of Contents




    failure to pursue other beneficial opportunities as a result of
    the focus of management on the potential transaction, without
    realizing any of the anticipated benefits of completing the
    transaction;
    the market price of our common stock might decline to the extent
    that the current market price reflects a market assumption that
    a transaction between the two companies will be
    completed; and
    our costs related to a potential transaction with Widmer must be
    paid even if a transaction is not completed, and these costs
    could be significant.    We are dependent on our distributors for the sale of our
    products.
  Changes in state laws regarding distribution arrangements may
    adversely impact our operations. out-of-state
  Increased competition could adversely affect sales and
    results of operations.
 22




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Future price promotions to generate demand for our products
    may be unsuccessful.
  Due to our concentration of sales in the Pacific Northwest,
    our results of operations and financial condition are subject to
    fluctuations in regional economic conditions.
  Our business is seasonal in nature, and we are likely to
    experience fluctuations in our results of operations and
    financial condition.
  Our gross margins may fluctuate while our expenses remain
    constant.
  An increase in lower margin contract brewing could negatively
    impact our overall profit margins.
 23




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##### Table of Contents



We are dependent on contract brewing to keep our production
    facilities operating at an efficient capacity;
  Changes in consumer preferences or public attitudes about our
    products could reduce demand.
  We are subject to governmental regulations affecting our
    breweries and pubs; the costs of complying with governmental
    regulations, or our failure to comply with such regulations,
    could affect our financial condition and results of
    operations.
      We may experience material losses in excess of insurance
    coverage.
 24




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Declining sales trends could adversely affect brewery
    efficiency and our financial results. Accounting for the
    Impairment or Disposal of Long-Lived Assets
  An increase in excise taxes could adversely affect our
    financial condition.
  Loss of income tax benefits could negatively impact results
    of operations.
  We are dependent upon the services of our key
    personnel.
  We are subject to the risks of litigation.
 25




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    The Washington Brewery. 100-barrel
  The New Hampshire Brewery. 400-barrel
  Item 3.
    Legal
    Proceedings   26




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Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 4A.
    Executive
    Officers of the Company  Paul S.
    Shipman (54)  Chief Executive Officer and Chairman of
    the Board
    David J.
    Mickelson (47)  President
    Gerard C.
    Prial (52)  Vice President, Sales and Eastern
    Operations
    Allen L.
    Triplett (48)  Vice President, Brewing
    Jay T.
    Caldwell (54)  Chief Financial Officer and
    Treasurer
   27




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##### Table of Contents



PART II.  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    High


Low2006First quarter

$
3.74


$
3.10Second quarter

$
4.00


$
3.43Third quarter

$
4.18


$
3.31Fourth quarter

$
5.31


$
3.762005First quarter

$
4.20


$
3.05Second quarter

$
3.75


$
2.86Third quarter

$
3.34


$
2.75Fourth quarter

$
3.42


$
2.90      28




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##### Table of Contents



Comparative
    Performance Graph
    
  2001


2002


2003


2004


2005


2006Redhook


$
100



$
123



$
155



$
209



$
189



$
310Peer Group Index


$
100



$
90



$
124



$
152



$
173



$
228Russell 2000 Index


$
100



$
78



$
114



$
133



$
138



$
168    29




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Managements Discussion and Analysis
    of Financial Condition and Results of Operations Form 10-K.
  Year Ended December 31,2006


2005


2004


2003


2002Statement of Operations Data
    (in thousands except earnings (loss) per share):Sales

$
40,007


$
34,520


$
36,640


$
42,213


$
40,913Less excise taxes


4,292



3,421



3,268



3,498



3,465Net sales


35,715



31,099



33,372



38,715



37,448Cost of sales


30,918



27,544



27,171



28,702



27,597Gross profit


4,797



3,555



6,201



10,013



9,851Selling, general and
    administrative expenses


6,848



6,784



7,639



11,689



10,910Income from equity investment in
    Craft Brands


2,655



2,392



1,123







Craft Brands shared formation
    expenses










535







Operating income (loss)


604



(837
)


(850
)


(1,676
)


(1,059
)Interest expense


347



271



189



192



230Other income, net


384



125



116



59



30Income (loss) before income taxes


641



(983
)


(923
)


(1,809
)


(1,259
)Income tax provision (benefit)


125



217



331



30



(126
)Net income (loss)

$
516


$
(1,200
)

$
(1,254
)

$
(1,839
)

$
(1,133
)Basic earnings (loss) per share

$
0.06


$
(0.15
)

$
(0.18
)

$
(0.30
)

$
(0.18
)Diluted earnings (loss) per share

$
0.06


$
(0.15
)

$
(0.18
)

$
(0.30
)

$
(0.18
)Operating Data (in
    barrels):Beer shipped


271,600



225,300



216,400



228,800



225,900Production capacity, end of
    period(1)


460,000



375,000



375,000



375,000



360,000Balance Sheet Data (in
    thousands):Cash and cash equivalents

$
9,435


$
6,436


$
5,590


$
6,123


$
7,007Working capital


8,310



5,232



3,661



4,511



4,346Total assets


73,841



72,578



74,128



77,131



79,982Long-term debt, net of current
    portion(2)


4,322



4,752



5,175



5,625



6,075Convertible preferred stock














16,233



16,188Common stockholders equity


60,692



60,027



61,161



47,916



50,027     (1)
    
    Based on the Companys estimate of theoretical production
    capacity of equipment, assuming ideal brewing conditions,
    installed as of the end of such period. Amounts do not reflect
    maximum designed production capacity. See Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.(2)
    
    Includes term loan and capital lease Obligations. See
    Note 7 to the Financial Statements included elsewhere
    herein. 30




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  period-to-period period-to-period
  Overview
  Craft Brands Alliance LLC
       31




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400-barrel
      Risk Factors
 32




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##### Table of Contents



Results
    of Operations
    Year Ended December 31,2006


2005


2004Sales


112.0
%


111.0
%


109.8
%Less excise taxes


12.0
%


11.0
%


9.8
%Net sales


100.0
%


100.0
%


100.0
%Cost of sales


86.6
%


88.6
%


81.4
%Gross profit


13.4
%


11.4
%


18.6
%Selling, general and
    administrative expenses


19.2
%


21.8
%


22.9
%Income from equity investment in
    Craft Brands


7.4
%


7.7
%


3.4
%Craft Brands shared formation
    expenses










1.6
%Operating income (loss)


1.6
%


(2.7
)%


(2.5
)%Interest expense


1.0
%


0.9
%


0.6
%Other income, net


1.1
%


0.4
%


0.3
%Income (loss) before income taxes


1.7
%


(3.2
)%


(2.8
)%Income tax provision


0.3
%


0.7
%


1.0
%Net income (loss)


1.4
%


(3.9
)%


(3.8
)%   Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
    Year Ended December 31,


Increase /2006


2005


(Decrease)


% ChangeSales

$
40,007


$
34,520


$
5,487



15.9
%Less excise taxes


4,292



3,421



871



25.5
%Net sales


35,715



31,099



4,616



14.8
%Cost of sales


30,918



27,544



3,374



12.2
%Gross profit


4,797



3,555



1,242



34.9
%Selling, general and
    administrative expenses


6,848



6,784



64



0.9
%Income from equity investment in
    Craft Brands


2,655



2,392



263



11.0
%Operating income (loss)


604



(837
)


1,441



172.2
%Interest expense


347



271



76



28.0
%Other income, net


384



125



259



207.2
%Income (loss) before income taxes


641



(983
)


1,624



165.2
%Income tax provision


125



217



(92
)


42.4
%Net income (loss)

$
516


$
(1,200
)

$
1,716



143.0
%Beer shipped (in barrels)


271,600



225,300



46,300



20.6
%  33




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##### Table of Contents



Sales.
  
    An increase in pricing and increase in shipments in the midwest
    and eastern U.S. resulted in a $3,035,000 increase in sales
    in 2006;
    An increase in pricing and decrease in shipments in the western
    U.S. (not including beer brewed on a contract basis)
    resulted in a $345,000 decrease in sales in 2006;
    An increase in shipments of beer brewed on a contract basis,
    partially offset by a decrease in pricing of these shipments,
    contributed to a $2,483,000 increase in sales in 2006; and
    Pub and other sales increased $204,000 in 2006.  Shipments.
  Year Ended December 31,2006


2005Draft


Bottles


Total


Draft


Bottles


Total


Increase /Shipped


Shipped


Shipped


Shipped


Shipped


Shipped


(Decrease)


% ChangeA-B


44,600



56,800



101,400



39,700



45,400



85,100



16,300



19
%Craft Brands Alliance


37,200



85,400



122,600



39,900



86,600



126,500



(3,900
)


(3
%)Contract brewing


43,000







43,000



8,900







8,900



34,100



383
%Pubs and other


3,400



1,200



4,600



3,500



1,300



4,800



(200
)


(4
%)Total shipped


128,200



143,400



271,600



92,000



133,300



225,300



46,300



21
%   Widmer Hefeweizen
   34




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Widmer
    Hefeweizen Widmer Hefeweizen Widmer
    Hefeweizen Widmer Hefeweizen Widmer
    Hefeweizen Widmers Widmer Hefeweizen Widmer Hefeweizen Widmer Hefeweizen
  Widmer Hefeweizen
   35




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Pricing and Fees. agreed-upon
          Retail Operations and Other
    Sales.
  Excise Taxes.
  Cost of Sales.
 36




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##### Table of Contents



Widmer Hefeweizen
    Selling, General and Administrative
    Expenses. Share-Based Payment
  Income from Equity Investment in Craft
    Brands.
  Interest Expense.
  Other Income, Net.
  Income Taxes.
 37




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##### Table of Contents



Craft
    Brands Alliance LLC
  The
    Equity Method of Accounting for Investments in Common Stock. Form 10-K Exhibits and Financial
    Statement Schedules, Rule 3-09 Regulation S-X.
  Sales.
  Cost of Sales. Widmer Hefeweizen
  Selling, General and Administrative
    Expenses.
  Net Income.
 38




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##### Table of Contents



Year
    Ended December 31, 2005 Compared to Year Ended
    December 31, 2004
    Year Ended December 31,


Increase /2005


2004


(Decrease)


% ChangeSales

$
34,520


$
36,640


$
(2,120
)


5.8
%Less excise taxes


3,421



3,268



153



4.7
%Net sales


31,099



33,372



(2,273
)


6.8
%Cost of sales


27,544



27,171



373



1.4
%Gross profit


3,555



6,201



(2,646
)


42.7
%Selling, general and
    administrative expenses


6,784



7,639



(855
)


11.2
%Income from equity investment in
    Craft Brands


2,392



1,123



1,269



113.0
%Craft Brands shared formation
    expenses






535



(535
)Operating income (loss)


(837
)


(850
)


13



1.5
%Interest expense


271



189



82



43.4
%Other income, net


125



116



9



7.8
%Income (loss) before income taxes


(983
)


(923
)


(60
)


6.5
%Income tax provision


217



331



(114
)


34.4
%Net income (loss)

$
(1,200
)

$
(1,254
)

$
54



4.3
%Beer shipped (in barrels)


225,300



216,400



8,900



4.1
%   Sales.
  
    While all sales in the western U.S. in 2005 were made to
    Craft Brands at discounted rates, sales in the western
    U.S. in 2004 were at two distinct pricing
    levels  at historical wholesale prices for the first
    six months of 2004, and at discounted rates for the last six
    months of 2004. This difference in the pricing structure for
    2005 relative to 2004 resulted in a $3,830,000 decline in total
    sales in 2005;
    Improvements in overall pricing to Craft Brands resulted in a
    $245,000 increase in sales in 2005;
    A decline in shipments in the western U.S. resulted in an
    $855,000 decline in sales in 2005 over 2004;
    An increase in shipments of beer brewed on a contract basis as
    well as an improvement in pricing of these shipments contributed
    a $480,000 increase in sales in 2005;
    Improvements in overall pricing in the midwest and eastern
    U.S. resulted in a $280,000 increase in sales in 2005 over
    2004;
    An increase in shipments in the midwest and eastern
    U.S. resulted in a $995,000 increase in sales in
    2005; and
    An increase of $269,000 in pub and other sales in 2005. 39




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##### Table of Contents



Shipments.
  Year Ended December 31,2005


2004Draft


Bottles


Total


Draft


Bottles


Total


Increase/Shipped


Shipped


Shipped


Shipped


Shipped


Shipped


(Decrease)


% ChangeA-B


39,700



45,400



85,100



33,600



44,200



77,800



7,300



9
%Craft Brands Alliance *


39,900



86,600



126,500



41,100



90,500



131,600



(5,100
)


(4
%)Contract brewing


8,900







8,900



2,300







2,300



6,600



287
%Pubs and other


3,500



1,300



4,800



3,400



1,300



4,700



100



2
%Total shipped


92,000



133,300



225,300



80,400



136,000



216,400



8,900



4
%     *
    
    Distribution through Craft Brands Alliance did not exist prior
    to July 1, 2004. Shipments from January 1, 2004 to
    June 30, 2004 were distributed through A-B, however for
    comparative purposes the Company has included these shipments in
    this line item. Shipments of products in the pre-Craft Brands
    Alliance territory for January 1, 2004 to June 30,
    2006 were 68,000 barrels.       40




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##### Table of Contents



Pricing and Fees. agreed-upon
        non-A-B
  Retail Operations and Other
    Sales.
  Excise Taxes.
 41




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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. start-up
  Interest Expense.
  Other Income, Net.
 42




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##### Table of Contents



Income Taxes.
  Craft
    Brands Alliance LLC
  The
    Equity Method of Accounting for Investments in Common Stock. Form 10-K Exhibits and Financial
    Statement Schedules, Rule 3-09 Regulation S-X.
  Sales.
  Cost of Sales.
  Selling, General and Administrative
    Expenses.
 43




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##### Table of Contents



Net Income.
  Liquidity
    and Capital Resources
           44




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##### Table of Contents



Quarter EndedRequired by Term Loan

December 31, 2006Capital ratio

Less than: 1.25:1

0.22:1Working capital

Greater than: $1,900,000

$8,309,940Fixed charge coverage ratio

Greater than: 1.15:1

3.314:1   Contractual Commitments.
  Year Ended December 31,2007


2008


2009


2010


2011


Thereafter


TotalLong-term debt(1)

$
468


$
468


$
468


$
462


$
453


$
2,475


$
4,794Operating leases(2)


70



70



102



272



276



11,728



12,518Malt and hop commitments(3)


2,533



579



















3,112Other operational commitments(4)


138



101



31



21



19



1



311$
3,209


$
1,218


$
601


$
755


$
748


$
14,204


$
20,735     (1)
    
    Represents annual principal payments required on the
    Companys Term Loan and annual lease payments (including
    portion of payments imputed as interest) on capital lease
    obligations. Interest on the Term Loan accrues at LIBOR plus
    1.75% and interest on capital leases are calculated at the
    Companys incremental borrowing rate at the inception of
    each lease. Monthly interest payments on the Term Loan are not
    reflected above. The termination of the A-B Distribution
    Agreement for any reason would constitute an event of default
    under the credit agreement and the bank may declare the entire
    outstanding loan balance immediately due and payable.(2)
    
    Represents minimum aggregate future lease payments under
    noncancelable operating leases.(3)
    
    Represents purchase commitments to ensure that the Company has
    the necessary supply of malted barley and specialty hops to meet
    future production requirements. Payments for malted barley are
    made as deliveries are received. Hop contracts generally provide
    for payment upon delivery of the product with the balance due on
    any unshipped product during the year following the harvest
    year. The Company believes that, based upon its relationships
    with its hop suppliers, the risk of non-delivery is low and that
    if non-delivery of its required supply of hops were to occur,
    the Company would be able to purchase hops to support its
    operations from other competitive sources. Malt and hop
    commitments in excess of future requirements, if any, will not
    materially affect the Companys financial condition or
    results of operations.(4)
    
    Represents legally-binding production and operating purchase
    commitments. 45




---



##### Table of Contents



Certain
    Considerations: Issues and Uncertainties
  Risk Factors
  Critical
    Accounting Policies and Estimates
    Income Taxes.
  Long-Lived Assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets.
 46




---



##### Table of Contents



Investment in Craft Brands. Consolidation of
    Variable Interest Entities  an Interpretation of ARB
    No. 51. The Equity Method of
    Accounting for Investments in Common Stock. Form 10-K Exhibits and Financial
    Statement Schedules Rule 3-09 Regulation S-X.
  Revenue Recognition.
  Recent
    Accounting Pronouncements
  Inventory Costs  an Amendment of ARB No. 43,
    Chapter 4.
  Share-Based Payment
 47




---



##### Table of Contents



Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim
    Financial Statements.
  No. 04-10, Determining Whether to Aggregate Operating Segments That Do
    Not Meet the Quantitative Thresholds No. 04-10 Disclosures about
    Segments of an Enterprise and Related Information No. 04-10
  No. 04-13, Accounting for Purchases and Sales of Inventory with the Same
    Counterparty. No. 04-13 No. 04-13 No. 04-13
  No. 06-3, How Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (That Is, Gross versus Net Presentation). No. 06-3 No. 06-3 No. 06-3,
  Accounting for Uncertainty in Income Taxes. Accounting for Income Taxes.
 48




---



##### Table of Contents



Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements in Current Year Financial
    Statements.
  Fair Value Measurements.
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    Including an Amendment of FASB Statement No. 115.
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk     49




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             
    50




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  BALANCE
    SHEETS
  December 31,2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
9,435,073


$
6,435,609Accounts receivable, net of
    allowance for doubtful accounts of $68,808 and $7,599 in 2006
    and 2005, respectively


1,842,388



1,297,404Trade receivable from Craft Brands


854,507



698,272Inventories


2,571,732



3,027,720Deferred income tax asset, net


506,886



Other


203,594



502,667Total current assets


15,414,180



11,961,672Fixed assets, net


58,076,434



60,379,901Investment in Craft Brands


127,555



92,806Other assets


222,573



143,326Total assets

$
73,840,742


$
72,577,705LIABILITIES AND COMMON
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,233,689


$
1,990,627Trade payable to Craft Brands


324,900



367,590Accrued salaries, wages and
    payroll taxes


1,547,482



1,259,823Refundable deposits


2,153,127



2,440,796Other accrued expenses


380,394



211,200Current portion of long-term debt
    and capital lease obligations


464,648



459,245Total current liabilities


7,104,240



6,729,281Long-term debt and capital lease
    obligations, net of current portion


4,321,616



4,751,920Deferred income tax liability, net


1,548,699



946,395Other liabilities


173,768



123,542Common stockholders equity:Common stock, par value
    $0.005 per share, authorized, 50,000,000 Shares;
    issued and outstanding, 8,281,489 shares in 2006 and
    8,222,609 shares in 2005


41,407



41,113Additional paid-in capital


68,977,402



68,828,009Retained deficit


(8,326,390
)


(8,842,555
)Total common stockholders
    equity


60,692,419



60,026,567Total liabilities and common
    stockholders equity

$
73,840,742


$
72,577,705    51




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##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  STATEMENTS
    OF OPERATIONS
  Year Ended December 31,2006


2005


2004Sales

$
40,006,708


$
34,520,401


$
36,639,552Less excise taxes


4,292,324



3,421,494



3,267,513Net sales


35,714,384



31,098,907



33,372,039Cost of sales


30,918,137



27,543,639



27,171,255Gross profit


4,796,247



3,555,268



6,200,784Selling, general and
    administrative expenses


6,848,050



6,783,821



7,639,290Income from equity investment in
    Craft Brands


2,655,248



2,391,936



1,123,283Craft Brands shared formation
    expenses










534,628Operating income (loss)


603,445



(836,617
)


(849,851
)Interest expense


346,455



271,460



189,662Other income, net


384,025



125,308



115,619Income (loss) before income taxes


641,015



(982,769
)


(923,894
)Income tax provision


124,850



217,674



331,000Net income (loss)

$
516,165


$
(1,200,443
)

$
(1,254,894
)Basic earnings (loss) per share

$
0.06


$
(0.15
)

$
(0.18
)Diluted earnings (loss) per share

$
0.06


$
(0.15
)

$
(0.18
)    52




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  STATEMENTS
    OF COMMON STOCKHOLDERS EQUITY
  Common Stock


Additional





Total CommonPar


Paid-In


Retained


StockholdersShares


Value


Capital


Deficit


EquityBalance as of January 1, 2004


6,226,306


$
31,132


$
54,250,059


$
(6,365,018
)

$
47,916,173Issuance of common stock to A-B in
    exchange for Series B preferred stock


1,808,243



9,041



14,245,814







14,254,855Issuance of common stock


153,650



768



265,893







266,661Other














(22,200
)


(22,200
)Net loss














(1,254,894
)


(1,254,894
)Balance as of December 31,
    2004


8,188,199



40,941



68,761,766



(7,642,112
)


61,160,595Issuance of common stock


34,410



172



66,243







66,415Net loss














(1,200,443
)


(1,200,443
)Balance as of December 31,
    2005


8,222,609



41,113



68,828,009



(8,842,555
)


60,026,567Issuance of common stock


58,880



294



149,393







149,687Net income














516,165



516,165Balance as of December 31,
    2006


8,281,489


$
41,407


$
68,977,402


$
(8,326,390
)

$
60,692,419    53




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  STATEMENTS
    OF CASH FLOWS
  Year Ended December 31,2006


2005


2004Operating ActivitiesNet income (loss)

$
516,165


$
(1,200,443
)

$
(1,254,894
)Adjustments to reconcile net
    income (loss) to net cash provided by (used in) operating
    activities:Depreciation and amortization


2,999,916



2,938,088



2,944,412Deferred income taxes


95,418



176,597



301,000Loss on disposition of fixed assets






25,631



Income from equity investment in
    Craft Brands less than (in excess of) cash distributions


(34,749
)


377,195



(219,901
)Stock-based compensation


53,760







Changes in operating assets and
    liabilities:Accounts receivable


(544,984
)


(173,929
)


563,260Trade receivables from Craft Brands


(156,235
)


(299,565
)


(398,707
)Inventories


455,988



(27,411
)


341,697Other current assets


299,073



3,661



(259,290
)Other assets


(86,146
)


(131,140
)


4,400Accounts payable and other accrued
    expenses


243,062



(128,676
)


(274,059
)Trade payable to Craft Brands


(42,690
)


(63,499
)


431,089Accrued salaries, wages and
    payroll taxes


287,659



39,575



(341,278
)Refundable deposits


354,850



(85,292
)


253,760Other liabilities


219,420



58,639



64,903Net cash provided by operating
    activities


4,660,507



1,509,431



2,156,392Investing ActivitiesExpenditures for fixed assets


(1,295,668
)


(585,392
)


(252,098
)Investment in Craft Brands










(250,100
)Proceeds from disposition of fixed
    assets






305,260



Other, net






4,961



(4,583
)Net cash used in investing
    activities


(1,295,668
)


(275,171
)


(506,781
)Financing ActivitiesPayment to A-B pursuant to
    exchange and recapitalization agreement










(2,000,000
)Principal payments on debt and
    capital lease obligations


(461,302
)


(454,687
)


(450,000
)Issuance of common stock


95,927



66,415



266,661Net cash used in financing
    activities


(365,375
)


(388,272
)


(2,183,339
)Increase (decrease) in cash and
    cash equivalents


2,999,464



845,988



(533,728
)Cash and cash equivalents:Beginning of period


6,435,609



5,589,621



6,123,349End of period

$
9,435,073


$
6,435,609


$
5,589,621Supplemental
    DisclosuresCash paid for interest

$
343,629


$
182,202


$
186,888Cash paid for taxes Acquisition of
    fixed assets under capital leases

$
36,401


$
40,852


$
Issuance of 1,808,243 shares
    of common stock to A-B and payment of $2,000,000 to A-B in
    exchange for 1,289,872 shares of preferred stock held by A-B

$



$



$
14,232,655    54




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS
  1.
    Nature of
    Operations            2.
    Subsequent
    Events   55




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    3.
    Significant
    Accounting Policies  Cash
    and Cash Equivalents
    Accounts
    Receivable
    Inventories
  first-in,
  Fixed
    Assets
    Buildings


31 - 40 yearsBrewery equipment


10 - 25 yearsFurniture, fixtures and other
    equipment


2 - 10 yearsVehicles


5 years  56




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  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.
  Long-Lived
    Assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets.
  Revenue
    Recognition
    Excise
    Taxes
   57




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Shipping
    and Handling Costs
    Income
    Taxes
  Accounting for Income Taxes
  Advertising
    Expenses
    Segment
    Information
  Disclosures about Segments of an Enterprise and Related
    Information.
  Stock-Based
    Compensation
    Share-Based Payment Accounting for Stock Issued to Employees. Accounting for
    Stock-Based Compensation Accounting for Stock-Based
    Compensation  Transition and Disclosure.
   58




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        Year Ended December 31,2005


2004Net loss as reported

$
(1,200,443
)

$
(1,254,894
)Add:Stock compensation as reported under APB 25






Less:Stock-based employee compensation expense determined under the
    fair value based method for all options, net of related tax
    effects


(244,585
)


(256,161
)Pro forma net loss

$
(1,445,028
)

$
(1,511,055
)Net loss per
    shareBasicAs reported

$
(0.15
)

$
(0.18
)Proforma

$
(0.18
)

$
(0.21
)DilutedAs reported

$
(0.15
)

$
(0.18
)Proforma

$
(0.18
)

$
(0.21
)    59




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          2006


2005


2004Expected life (years)


0 days



5 yrs.



5 yrs.Risk-free interest rate


4.70
%


3.88
%


3.88
%Expected volatility rate


0.00
%


46.0
%


52.0
%Expected dividend yield


0.00
%


0.0
%


0.0
%     2006


2005


2004Total number of options granted


14,000



16,000



16,000Estimated fair value of each
    option granted

$
3.84


$
1.24


$
1.08Total estimated fair value of all
    options granted

$
54,000


$
20,000


$
17,000     Earnings
    (Loss) per Share
  Earnings per
    Share.
 60




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Use of
    Estimates
    Fair
    Value of Financial Instruments
    Recent
    Accounting Pronouncements
  Inventory Costs  an Amendment of ARB No. 43,
    Chapter 4.
  Share-Based Payment
  Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim
    Financial Statements.
  No. 04-10, Determining Whether to Aggregate Operating Segments That Do
    Not Meet the Quantitative Thresholds
 61




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  EITF No. 04-10 Disclosures about
    Segments of an Enterprise and Related Information No. 04-10
  No. 04-13, Accounting for Purchases and Sales of Inventory with the Same
    Counterparty. No. 04-13 No. 04-13 No. 04-13
  No. 06-3, How Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (That Is, Gross versus Net
    Presentation). No. 06-3 No. 06-3 No. 06-3,
  Accounting for Uncertainty in Income
    Taxes. Accounting for Income Taxes.
  Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements in Current Year Financial
    Statements.
  Fair Value Measurements.
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    Including an Amendment of FASB Statement
    No. 115.
 62




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   4.
    Inventories    December 31,2006


2005Raw materials

$
666,938


$
1,180,831Work in process


622,352



950,827Finished goods


247,333



262,618Promotional merchandise


538,339



372,073Packaging materials


496,770



261,371$
2,571,732


$
3,027,720     5.
    Fixed
    Assets    December 31,2006


2005Brewery equipment

$
46,387,322


$
46,119,789Buildings


35,838,145



35,831,040Land and improvements


4,601,427



4,601,427Furniture, fixtures and other
    equipment


2,284,062



2,277,994Vehicles


81,730



81,730Construction in progress


460,389



51,54489,653,075



88,963,524Less accumulated depreciation and
    amortization


31,576,641



28,583,623$
58,076,434


$
60,379,901     6.
    Craft
    Brands Alliance LLC     63




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
              64




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     Form 10-K Exhibits and Financial Statement Schedules Rule 3-09 Regulation S-X.
  start-up
  7.
    Debt and
    Capital Lease Obligations    December 31,2006


2005Term loan, payable to bank monthly
    at $37,500 plus accrued interest; interest at 7.1% at
    December 31, 2006; due June 5, 2012

$
4,725,000


$
5,175,000Various capital lease obligations


61,264



36,1654,786,264



5,211,165Current portion, term loan


(450,000
)


(450,000
)Current portion, capital leases


(14,648
)


(9,245
)Total current portion of term loan
    and capital leases


(464,648
)


(459,245
)Long-term portion of term loan and
    capital leases

$
4,321,616


$
4,751,920   Term
    Loan
     65




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        2007

$
450,0002008


450,0002009


450,0002010


450,0002011


450,000Thereafter


2,475,000$
4,725,000   Capital
    Leases Obligations
    2007

$
17,8542008


17,8542009


17,8542010


11,7102011


3,669Total minimum lease payments


68,941Less amount representing interest


(7,677
)Present value of minimum lease
    payments

$
61,264     8.
    Common
    Stockholders Equity  Issuance
    of Common Stock
     66




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Stock
    Option Plans
         67




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     WeightedWeighted

Weighted





AverageShares

Average

Average

Aggregate

Options

ExerciseSubject to

Price per

Remaining

Intrinsic

Exercisable

Price perOptions

Share

Contractual Life

Value

at End of Year

ShareBalance at January 1, 2004


1,372,322


$
3.61



6.71


$
285,124



766,562


$
4.85Granted


16,000


$
2.45Exercised


(153,650
)

$
1.74Canceled


(180,142
)

$
6.19Balance at December 31, 2004


1,054,530


$
3.43



5.89


$
624,841



703,760


$
4.18Granted


16,000


$
3.15Exercised


(34,410
)

$
1.93Canceled


(189,800
)

$
4.92Balance at December 31, 2005


846,320


$
3.15



5.08


$
700,258



846,320


$
3.15Granted


14,000


$
0.01Exercised


(58,880
)

$
1.63Canceled


(18,000
)

$
17.04Balance at December 31, 2006


783,440


$
2.89



4.10


$
1,950,534



783,440


$
2.89       Options OutstandingWeighted Average



Options ExercisableRemaining

Weighted Average



Weighted AverageNumber of

Contractual Life

Exercise Price per

Number of

Exercise Price perRange of Exercise Price

Outstanding

(Years)

Share

Exercisable

Share$1.49 to $ 1.86


345,190



4.57


$
1.86



345,190


$
1.861.87 to  2.02


153,334



5.65


$
2.02



153,334


$
2.022.03 to  2.18


8,000



6.38


$
2.18



8,000


$
2.182.19 to  2.45


18,666



6.67


$
2.44



18,666


$
2.442.46 to  3.15


16,000



8.39


$
3.15



16,000


$
3.153.15 to  3.97


163,600



2.38


$
3.97



163,600


$
3.973.98 to  5.73


43,050



1.38


$
5.73



43,050


$
5.735.74 to  7.63


24,000



0.39


$
7.63



24,000


$
7.637.64 to 10.13


11,600



0.10


$
10.13



11,600


$
10.13$1.49 to $10.13


783,440



4.10


$
2.89



783,440


$
2.89    68




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Shareholder
    Rights Agreement
    9.
    Earnings
    (Loss) Per Share    Year Ended December 31,2006


2005


2004Net income (loss)

$
516,165


$
(1,200,443
)

$
(1,254,894
)Preferred stock accretion










(22,200
)Income (loss) available to common
    stockholders


516,165



(1,200,443
)


(1,277,094
)Weighted average common shares
    outstanding


8,250,613



8,206,219



7,228,674Dilutive effect of stock options
    on weighted average common shares outstanding


274,542







Diluted weighted average common
    shares outstanding


8,525,155



8,206,219



7,228,674Basic net income (loss) per share

$
0.06


$
(0.15
)

$
(0.18
)Diluted net income (loss) per share

$
0.06


$
(0.15
)

$
(0.18
)     10.
    Income
    Taxes    Year Ended December 31,2006


2005


2004Current

$
29,432


$
41,077


$
30,000Deferred


95,418



176,597



301,000Income tax provision


124,850



217,674



331,000    69




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     Year Ended December 31,2006


2005


2004Federal statutory rate


34.0
%


(34.0
)%


(34.0
)%State taxes, net of federal benefit


2.9
%


(2.9
)%


(2.7
)%Permanent differences, primarily
    meals and entertainment


11.6
%


6.8
%


6.9
%Other items, net


11.7
%


1.1
%


20.6
%Adjustment to deferred tax asset
    tax rate


52.4
%


0.0
%


0.0
%Valuation allowance


(93.1
)%


51.1
%


45.0
%Effective income tax rate


19.5
%


22.1
%


35.8
%       Year Ended December 31,2006


2005Deferred tax liabilities:Tax-over-book
    depreciation

$
9,760,169


$
10,549,576Other






154,3499,760,169



10,703,925Deferred tax assets:NOL and AMT credit carryforwards


9,405,515



10,938,218Other


372,163



475,445Valuation allowance


(1,059,322
)


(1,656,133
)8,718,356



9,757,530Net deferred tax liability, net

$
1,041,813


$
946,395      70




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    11.
    Commitments      2007

$
69,9572008


69,9572009


102,1472010


271,8662011


276,251Thereafter


11,727,947$
12,518,125         2007

$
2,671,0152008


680,4452009


30,5152010


20,7892011


18,528Thereafter


772$
3,422,064  71




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    12.
    Employee
    Benefit Plan    13.
    Financial
    Instruments, Major Customers, and Related-Party
    Transactions        non-A-B
 72




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    A-B
    Pacific Ridge
              Widmer Hefeweizen Widmer Hefeweizen
 73




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Widmer Hefeweizen
   74




---



##### Table of Contents



REDHOOK
    ALE BREWERY, INCORPORATED
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  14.
    Quarterly
    Financial Data (Unaudited)  Quarter Ended12/31/06


9/30/06


6/30/06


3/31/06


12/31/05


9/30/05


6/30/05


3/31/05Sales

$
9,381


$
10,813


$
11,144


$
8,669


$
7,956


$
9,498


$
9,741


$
7,325Less excise taxes


1,046



1,169



1,187



890



740



947



982



752Net sales


8,335



9,644



9,957



7,779



7,216



8,551



8,759



6,573Cost of sales


7,554



8,012



8,110



7,242



6,789



7,429



7,277



6,048Gross profit


781



1,632



1,847



537



427



1,122



1,482



525Selling, general and administrative
    expenses


1,557



1,777



1,800



1,714



1,484



1,905



1,852



1,543Income from equity investment in
    Craft Brands


579



743



819



514



767



674



691



259Operating income (loss)


(197
)


598



866



(663
)


(290
)


(109
)


321



(759
)Interest expense


88



92



84



83



72



72



66



61Other income, net


185



57



88



54



40



20



36



29Income (loss) before income taxes


(100
)


563



870



(692
)


(322
)


(161
)


291



(791
)Income tax provision (benefit)


(93
)


199



11



8



259



10



8



(59
)Net income (loss)

$
(7
)

$
364


$
859


$
(700
)

$
(581
)

$
(171
)

$
283


$
(732
)Basic earnings (loss) per share *

$



$
0.04


$
0.10


$
(0.09
)

$
(0.07
)

$
(0.02
)

$
0.03


$
(0.09
)Diluted earnings (loss) per share *

$



$
0.04


$
0.10


$
(0.09
)

$
(0.07
)

$
(0.02
)

$
0.03


$
(0.09
)Barrels shipped


64.7



72.9



76.0



58.0



50.5



61.6



64.0



49.2     *
    
    Summing the earnings per share amounts for each of the quarters
    will not equal the full year earnings per share due to rounding.  Seasonality
   75




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##### Table of Contents



Item 9.
    Changes
    In and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rule 13a-15(e) 15d-15(e)) Form 10-K.
        Item 9B.
    Other
    Information   PART III.  Item 10.
    Directors,
    Executive Officers and Corporate Governance      Form 8-K
  Item 11.
    Executive
    Compensation   76




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number of SecuritiesRemaining Availablefor Future IssuanceNumber to be Issued

Weighted Average

Under EquityUpon Exercise of

Exercise Price of

Compensation PlansOutstanding

Outstanding

(Excluding SecuritiesPlan Category

Warrants (a)

Warrants and Rights (b)

Reflected in Column (a))(c)Equity compensation plans approved
    by security holders


783,440


$
2.89



95,959Equity compensation plans not
    approved by security holders










     Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   77




---



##### Table of Contents



PART IV.  Item 15.
    Exhibits
    and Financial Statement Schedules  (a)
    The
    following documents are filed as part of this report:  
  Page1.


Audited Financial
    Statements Report of Moss
    Adams LLP, Independent Registered Public Accountants


50 Balance Sheets
    as of December 31, 2006 and 2005


51 Statements of
    Operations for the Years Ended December 31, 2006, 2005 and
    2004


52 Statements of
    Common Stockholders Equity for the Years Ended
    December 31, 2006, 2005 and 2004


53 Statements of
    Cash Flows for the Years Ended December 31, 2006, 2005 and
    2004


54 Notes to
    Financial Statements


552.


Financial Statement
    Schedules Report of Moss
    Adams LLP, Independent Registered Public Accountants


85 Craft Brands
    Alliance LLC Balance Sheets as of December 31, 2006 and 2005


86 Craft Brands
    Alliance LLC Statement of Income for the Years Ended
    December 31, 2006 and 2005


87 Craft Brands
    Alliance LLC Statement of Members Equity for the Years
    Ended December 31, 2006 and 2005


88 Craft Brands
    Alliance LLC Statement of Cash Flows for the Years Ended
    December 31, 2006 and 2005


89 Notes to
    Financial Statements


90   3.
    Exhibits  Regulation S-K:
  EXHIBIT NO. 3 Articles
    of Incorporation and Bylaws3
.1

Restated Articles of Incorporation
    of Registrant, dated July 7, 2004 (Incorporated by
    reference from Exhibit 3.1 to the Companys
    Form 10-Q
    for the quarter ended June 30, 2004)3
.2

Amended and Restated Bylaws of
    Registrant, dated April 7, 2004 (Incorporated by reference
    from Exhibit 3.1 to the Companys
    Form 10-Q
    for the quarter ended March 31, 2004)EXHIBIT NO. 10 Material
    ContractsExecutive Compensation Plans and
    Agreements10
.1

Registrants Incentive Stock
    Option Plan, dated September 12, 1990 (Incorporated by
    reference from Exhibit 10.15 to the Companys
    Registration Statement on
    Form S-1,
    No. 33-94166)10
.2

Amended and Restated
    Registrants Directors Stock Option Plan (Incorporated by
    reference from Exhibit 10.14 to the Companys
    Registration Statement on
    Form S-1,
    No. 33-94166)10
.3

Amendment dated as of
    February 27, 1996, to Amended and Restated
    Registrants Directors Stock Option Plan (Incorporated by
    reference from Exhibit 10.32 to the Companys
    Form 10-Q
    for the quarter ended June 30, 1996,
    No. 0-26542)10
.4

Form of Stock Option Agreement for
    Registrants Directors Stock Option Plan (Incorporated by
    reference from Exhibit 10.4 to the Companys
    Form 10-K
    for the year ended December 31, 2004)10
.5

Registrants 1992 Stock
    Incentive Plan, approved October 20, 1992, as amended,
    October 11, 1994 and May 25, 1995 (Incorporated by
    reference from Exhibit 10.16 to the Companys
    Registration Statement on
    Form S-1,
    No. 33-94166) 78




---



##### Table of Contents



10
.6

Amendment dated as of
    July 25, 1996, to Registrants 1992 Stock Incentive
    Plan, as amended (Incorporated by reference from
    Exhibit 10.33 to the Companys
    Form 10-Q
    for the quarter ended June 30, 1996,
    No. 0-26542)10
.7

Amendment dated as of
    February 27, 1996, to Registrants 1992 Stock
    Incentive Plan, as amended (Incorporated by reference from
    Exhibit 10.31 to the Companys
    Form 10-Q
    for the quarter ended June 30, 1996,
    No. 0-26542)10
.8

Form of Stock Option Agreement for
    Registrants 1992 Stock Incentive Plan, as amended
    (Incorporated by reference from Exhibit 10.8 to the
    Companys
    Form 10-K
    for the year ended December 31, 2004)10
.9

Registrants 2002 Stock
    Option Plan (Incorporated by reference from the Addendum to the
    Companys Proxy Statement for 2002 Annual Meeting of
    Shareholders)10
.10

Form of Stock Option Agreement
    (Directors Grants) for Registrants 2002 Stock Option Plan
    (Incorporated by reference from Exhibit 10.10 to the
    Companys
    Form 10-K
    for the year ended December 31, 2004)10
.11

Form of Stock Option Agreement
    (Executive Officer Grants) for Registrants 2002 Stock
    Option Plan (Incorporated by reference from Exhibit 10.11
    to the Companys
    Form 10-K
    for the year ended December 31, 2004)10
.12

Employment Agreement between
    Registrant and Paul Shipman, dated November 1, 2000
    (Incorporated by reference from Exhibit 10.43 to the
    Companys
    Form 10-K
    for the year ended December 31, 2000)10
.13

Letter of agreement regarding
    employment between Registrant and Paul S. Shipman, dated
    June 23, 2005 (Incorporated by reference from
    Exhibit 10.1 to the Companys
    Form 8-K
    filed on June 28, 2005)10
.14

Employment Agreement between
    Registrant and David J. Mickelson, dated August 1, 2000
    (Incorporated by reference from Exhibit 10.27 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2000)10
.15

Letter of agreement regarding
    employment between Registrant and David J. Mickelson, dated
    June 23, 2005 (Incorporated by reference from
    Exhibit 10.2 to the Companys
    Form 8-K
    filed on June 28, 2005)10
.16

Employment Agreement between
    Registrant and Allen L. Triplett, dated August 1, 2000
    (Incorporated by reference from Exhibit 10.28 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2000)10
.17

Letter of agreement regarding
    employment between Registrant and Allen L. Triplett, dated
    December 6, 2005 (Incorporated by reference from
    Exhibit 10.2 to the Companys
    Form 8-K
    filed on December 7, 2005)10
.18

Employment Agreement between
    Registrant and Pamela J. Hinckley, dated August 1, 2000
    (Incorporated by reference from Exhibit 10.29 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2000)10
.19

Employment Agreement between
    Registrant and Greg Marquina, dated August 1, 2000
    (Incorporated by reference from Exhibit 10.41 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2000)10
.20

Employment Agreement between
    Registrant and Gerard C. Prial, dated August 1, 2000
    (Incorporated by reference from Exhibit 10.46 to the
    Companys
    Form 10-K
    for the year ended December 31, 2001)10
.21

Letter of agreement regarding
    employment between Registrant and Gerard C. Prial, dated
    December 6, 2005 (Incorporated by reference from
    Exhibit 10.1 to the Companys
    Form 8-K
    filed on December 7, 2005)10
.22

Summary Sheet of Director
    Compensation and Executive Cash CompensationOther Material Contracts10
.23

Investment Agreement dated as of
    October 18, 1994, between the Registrant and
    Anheuser-Busch, Incorporated (Incorporated by reference from
    Exhibit 10.4 to the Companys Registration Statement
    on
    Form S-1,
    No. 33-94166)10
.24

Registration Rights Agreement
    dated as of October 18, 1994, between Registrant and
    Anheuser-Busch, Incorporated (Incorporated by reference from
    Exhibit 10.7 to the Companys Registration Statement
    on
    Form S-1,
    No. 33-94166)10
.25

Master Distributor Agreement
    between Registrant and Anheuser-Busch, Incorporated, dated
    October 18, 1994 (Incorporated by reference from
    Exhibit 10.21 to the Companys Registration Statement
    on
    Form S-1,
    No. 33-94166)*10
.26

Amendment No. 1 dated as of
    June 26, 1996, to Master Distribution Agreement between
    Registrant and Anheuser-Busch, Incorporated, dated
    October 18, 1994 (Incorporated by reference from
    Exhibit 10.30 to the Companys
    Form 10-Q
    for the quarter ended June 30, 1996,
    No. 0-26542) 79




---



##### Table of Contents



10
.27

Letter Agreement dated as of
    July 31, 1995, between Registrant and Anheuser-Busch,
    Incorporated (Incorporated by reference from Exhibit 10.25
    to the Companys Registration Statement on
    Form S-1,
    No. 33-94166)10
.28

Consent, Waiver and Amendment,
    dated September 19, 1997, to Master Distributor Agreement
    between Registrant and Anheuser-Busch, Incorporated, dated
    October 18, 1994 (Incorporated by reference from
    Exhibit 10.36 to the Companys
    Form 10-Q
    for the quarter ended September 30, 1997,
    No. 0-26542)10
.29

Purchasing Agreement dated as of
    March 27, 1998, between Registrant and Anheuser-Busch,
    Incorporated (Incorporated by reference from Exhibit 10.37
    to the Companys
    Form 10-Q
    for the quarter ended March 31, 1998)10
.30

Purchasing Agreement dated as of
    November 21, 2002, between Registrant and Anheuser-Busch,
    Incorporated (Incorporated by reference from Exhibit 10.21
    to the Companys
    Form 10-K
    for the year ended December 31, 2002)10
.31

Sublease between Pease Development
    Authority as Sublessor and Registrant as Sublessee, dated
    May 30, 1995 (Incorporated by reference from
    Exhibit 10.11 to the Companys Registration Statement
    on
    Form S-1,
    No. 33-94166)10
.32

Assignment of Sublease and
    Assumption Agreement dated as of July 1, 1995, between
    Registrant and Redhook of New Hampshire, Inc. (Incorporated by
    reference from Exhibit 10.24 to the Companys
    Registration Statement on
    Form S-1,
    No. 33-94166)10
.33

Amended and Restated Credit
    Agreement between U.S. Bank of Washington, National
    Association and Registrant, dated June 5, 1995
    (Incorporated by reference from Exhibit 10.18 to the
    Companys Registration Statement on
    Form S-1,
    No. 33-94166)10
.34

First Amendment dated as of
    July 25, 1996, to Amended and Restated Credit Agreement
    between U.S. Bank of Washington, National Association and
    Registrant, dated June 5, 1995 (Incorporated by reference
    from Exhibit 10.34 to the Companys
    Form 10-Q
    for the quarter ended September 30, 1996,
    No. 0-26542)10
.35

Second Amendment to Amended and
    Restated Credit Agreement between U.S. Bank of Washington,
    National Association and Registrant, dated September 15,
    1997 (Incorporated by reference from Exhibit 10.35 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 1997,
    No. 0-26542)10
.36

Third Amendment to Amended and
    Restated Credit Agreement between U.S. Bank of Washington,
    National Association and Registrant, dated February 22,
    1999 (Incorporated by reference from Exhibit 10.38 to the
    Companys
    Form 10-Q
    for the quarter ended March 31, 1999)10
.37

Fourth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated August 10, 2000
    (Incorporated by reference from Exhibit 10.42 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2000)10
.38

Fifth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated June 19, 2001
    (Incorporated by reference from Exhibit 10.44 to the
    Companys
    Form 10-Q
    for the quarter ended June 30, 2001)10
.39

Sixth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated December 31, 2001
    (Incorporated by reference from Exhibit 10.45 to the
    Companys
    Form 10-K
    for the year ended December 31, 2001)10
.40

Seventh Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated June 21, 2002
    (Incorporated by reference from Exhibit 10.47 to the
    Companys
    Form 10-Q
    for the quarter ended June 30, 2002)10
.41

Eighth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated March 18, 2003
    (Incorporated by reference from Exhibit 10.1 to the
    Companys
    Form 10-Q
    for the quarter ended March 31, 2003)10
.42

Ninth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated as of October 31, 2003
    (Incorporated by reference from Exhibit 10.34 to the
    Companys
    Form 10-K
    for the year ended December 31, 2003)10
.43

Tenth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registrant, dated as of February 9, 2004
    (Incorporated by reference from Exhibit 10.35 to the
    Companys
    Form 10-K
    for the year ended December 31, 2003) 80




---



##### Table of Contents



10
.44

Eleventh Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registration, dated as of September 28,
    2004 (Incorporated by reference from Exhibit 10.1 to the
    Companys
    Form 8-K
    filed on October 26, 2004)10
.45

Twelfth Amendment to Amended and
    Restated Credit Agreement between U.S. Bank National
    Association and Registration, dated as of January 30, 2006
    (Incorporated by reference from Exhibit 10.1 to the
    Companys
    Form 8-K
    filed on February 15, 2006)10
.46

Thirteenth Amendment to Amended
    and Restated Credit Agreement between U.S. Bank National
    Association and Registration, dated as of June 5, 2006
    (Incorporated by reference from Exhibit 10.1 to the
    Companys
    Form 8-K
    filed on June 8, 2006)10
.47

Exchange and Recapitalization
    Agreement dated as of June 30, 2004 between the Registrant
    and Anheuser-Busch, Incorporated (Incorporated by reference from
    Exhibit 10.1 to the Companys
    Form 8-K
    filed on July 2, 2004)10
.48

Master Distributor Agreement dated
    as of July 1, 2004 between the Registrant and
    Anheuser-Busch, Incorporated (Incorporated by reference from
    Exhibit 10.2 to the Companys
    Form 8-K
    filed on July 2, 2004)*10
.49

Registration Rights Agreement
    dated as of July 1, 2004 between the Registrant and
    Anheuser-Busch, Incorporated (Incorporated by reference from
    Exhibit 10.3 to the Companys
    Form 8-K
    filed on July 2, 2004)10
.50

Supply, Distribution and Licensing
    Agreement dated as of July 1, 2004 between the Registrant
    and Craft Brands Alliance LLC (Incorporated by reference from
    Exhibit 10.4 to the Companys
    Form 8-K
    filed on July 2, 2004)*10
.51

Master Distributor Agreement dated
    as of July 1, 2004 between Craft Brands Alliance LLC and
    Anheuser-Busch, Incorporated (Incorporated by reference from
    Exhibit 10.5 to the Companys
    Form 8-K
    filed on July 2, 2004)*10
.52

Amendment No. 1, dated as of
    May 18, 2004, to Amended and Restated Rights Agreement
    dated May 12, 1999 between Redhook Ale Brewery,
    Incorporated and Mellon Investor Services LLC (formerly known as
    ChaseMellon Shareholder Services, L.L.C.), as Rights Agent
    (Incorporated by reference from Exhibit 1 to the
    Companys
    Form 8-A/A
    filed on June 28, 2004)10
.53

Licensing Agreement dated as of
    February 1, 2003 between the Registrant and Widmer Brothers
    Brewing Company (Incorporated by reference from
    Exhibit 10.1 to the Companys
    Form 10-Q
    filed on May 15, 2006)*10
.54

Manufacturing and Licensing
    Agreement dated as of August 28, 2006 between the
    Registrant and Widmer Brothers Brewing Company10
.55

Amendment No. 1, dated as of
    December 31, 2006, to Manufacturing and Licensing Agreement
    dated August 28, 2006 between the Registrant and Widmer
    Brothers Brewing CompanyEXHIBIT NO. 16 Letter
    regarding Change in Certifying Accountant16
.1

Letter dated July 29, 2004
    from the Companys former principal independent accountants
    (Incorporated by reference from Exhibit 16.1 to the
    Companys
    Form 8-K
    filed on July 30, 2004)16
.2

Letter dated August 20, 2004
    from the Companys former principal independent accountants
    (Incorporated by reference from Exhibit 16.1 to the
    Companys
    Form 8-K/A
    filed on August 20, 2004)EXHIBIT NO. 21
    Subsidiaries of the Registrant21
.1

Subsidiaries of the Registrant
    (Incorporated by reference from Exhibit 21.1 to the
    Companys Registration Statement on
    Form S-1,
    No. 33-94166)EXHIBIT NO. 23 Consents
    of Experts and Counsel23
.1

Consent of Moss Adams LLP,
    Independent Registered Public AccountantsEXHIBIT NO. 31 &
    32 Certifications31
.1

Certification of Chief Executive
    Officer of Redhook Ale Brewery, Incorporated pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 81




---



##### Table of Contents



31
.2

Certification of President of
    Redhook Ale Brewery, Incorporated pursuant to Section 302
    of the Sarbanes-Oxley Act of 200231
.3

Certification of Chief Financial
    Officer of Redhook Ale Brewery, Incorporated pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1

Certification of Chief Executive
    Officer of Redhook Ale Brewery, Incorporated pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of President of
    Redhook Ale Brewery,, Incorporated pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 200232
.3

Certification of Chief Financial
    Officer of Redhook Ale Brewery,, Incorporated pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     (*)
    
    Confidential treatment has been granted for portions of this
    document. 82




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##### Table of Contents



SIGNATURES    REDHOOK ALE BREWERY, INCORPORATED
  By
    /s/  JAY
    T. CALDWELL   Chief Financial Officer and Treasurer
    Signature

Title

Date/s/  Paul
    S. ShipmanPaul
    S. Shipman

Chief Executive Officer and
    Chairman of the Board (Principal Executive Officer)

March 23, 2007/s/  David
    J.
    MickelsonDavid
    J. Mickelson

President

March 23, 2007/s/  Jay
    T. CaldwellJay
    T. Caldwell

Chief Financial Officer and
    Treasurer (Principal Financial Officer)

March 23, 2007/s/  Frank
    H. ClementFrank
    H. Clement

Director

March 23, 2007/s/  Michael
    LoughranMichael
    Loughran

Director

March 23, 2007/s/  David
    R. LordDavid
    R. Lord

Director

March 23, 2007/s/  John
    W. GlickJohn
    W. Glick

Director

March 23, 2007/s/  John
    D. Rogers,
    Jr.John
    D. Rogers, Jr.

Director

March 23, 2007/s/  Anthony
    J. ShortAnthony
    J. Short

Director

March 23, 2007  83




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##### Table of Contents



Regulation S-X,
  CRAFT
    BRANDS ALLIANCE LLC
    REPORT OF INDEPENDENT
    REGISTERED PUBLIC ACCOUNTING FIRM
    and
    FINANCIAL STATEMENTS
    DECEMBER 31, 2006 AND 2005
 84




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS           
    85




---



##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
 BALANCE
    SHEETS  December 31,2006


2005ASSETSCURRENT ASSETSCash and cash equivalents

$



$
177,131Accounts receivable, less
    allowance for doubtful accounts of $10,000 for 2006 and 2005


4,587,486



2,808,631Inventory


1,959,801



1,138,658Prepaid expenses


258,775



154,3246,806,062



4,278,744FIXED ASSETS, net


67,290



33,456OTHER ASSETS


102,667



TOTAL ASSETS

$
6,976,019


$
4,312,200LIABILITIES AND MEMBERS
    EQUITYCURRENT LIABILITIESBank overdraft

$
308,477


$
Accounts payable


4,712,043



3,132,033Other accrued expenses


1,647,872



957,8946,668,392



4,089,927COMMITMENTS
    (NOTE 6)MEMBERS EQUITY


307,627



222,273TOTAL LIABILITIES AND
    MEMBERS EQUITY

$
6,976,019


$
4,312,200  86




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
 STATEMENTS
    OF INCOME  Years Ended December 31,2006


2005SALES

$
68,703,435


$
60,783,551COST OF SALES


50,135,137



44,821,500Gross profit


18,568,298



15,962,051OPERATING EXPENSES


11,878,976



9,708,203Income from operations


6,689,322



6,253,848OTHER INCOME
    (EXPENSE)Interest expense


(117
)


Miscellaneous income (expense)


7,125



(125,136
)Royalty expense


(357,700
)


(205,052
)Total other income (expense)


(350,692
)


(330,188
)NET INCOME

$
6,338,630


$
5,923,660  87




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
 STATEMENT
    OF MEMBERS EQUITY  BALANCE, December 31,
    2004

$
274,066Net income


5,923,660Profit distributions to members


(5,975,453
)BALANCE, December 31,
    2005


222,273Net income


6,338,630Profit distributions to members


(6,253,276
)BALANCE, December 31,
    2006

$
307,627  88




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
 STATEMENTS
    OF CASH FLOWS  Years Ended December 31,2006


2005CASH FLOWS FROM OPERATING
    ACTIVITIESNet income

$
6,338,630


$
5,923,660Depreciation expense


9,608



6,311Amortization expense


7,333



Change in assets and liabilitiesAccounts receivable, net


(1,778,855
)


(891,752
)Inventory


(821,143
)


(383,880
)Prepaid expenses


(104,451
)


(42,646
)Other assets


(110,000
)


Accounts payable and other accrued
    expenses


2,578,465



1,434,235Net cash from operating activities


6,119,587



6,045,928CASH FLOWS FROM INVESTMENT
    ACTIVITIESFixed asset additions


(43,442
)


(39,767
)CASH FLOWS FROM FINANCING
    ACTIVITIESProfit distribution


(6,253,276
)


(5,975,453
)NET INCREASE/(DECREASE) IN CASH
    AND CASH EQUIVALENTS


(177,131
)


30,708CASH AND CASH EQUIVALENTS,
    beginning of year


177,131



146,423CASH AND CASH EQUIVALENTS, end
    of year

$



$
177,131SUPPLEMENTAL CASH FLOW
    INFORMATIONCash paid for interest

$
117


$
  89




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
 NOTES TO
    FINANCIAL STATEMENTS  NOTE 1 
    COMPANY OPERATING AGREEMENT
                             90




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
       Limited Liability Company Profit Distribution
  Master Distributor Agreement with
    Anheuser-Busch
      NOTE 2 
    DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES
  Description of operations
  Cash equivalents
 91




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Accounts receivable
  Inventory
  2006


2005Merchandise

$
941,350


$
702,174Point of Sale


1,018,451



436,484$
1,959,801


$
1,138,658   Fixed Assets
  Accounting for the Disposal of Long-Lived
    Assets.
  2006


2005Office and data processing
    equipment

$
83,209


$
39,767Accumulated depreciation


(15,919
)


(6,311
)$
67,290


$
33,456   Other assets
  Income taxes
  Use of estimates
  Concentration of credit risk
   92




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Fair value of financial instruments
  Product purchase price 12-months 12-month
  Shipping and handling costs
  Research and Development Expense
  Advertising
  Recent accounting pronouncements
  NOTE 3 
    RELATED PARTY TRANSACTIONS
    For the Year Ended 2006Widmer


Redhook


Kona


A-B


TotalPayables

$
2,229,198


$
854,507


$
552,617


$
323,369


$
3,959,691Receivables

$
526,111


$
324,900


$
75,912


$
3,648,334


$
4,575,257   For the Year Ended 2005Widmer


Redhook


Kona


A-B


TotalPayables

$
1,652,676


$
698,273


$
338,448


$
129,408


$
2,818,805Receivables

$
207,267


$
367,590


$
26,387


$
2,175,322


$
2,776,566   NOTE 4 
    MEMBERS EQUITY
    Member

# of Units

Initial InvestmentRedhook Ale Brewery


500


$
100Widmer Bros. Brewing Co.


500


$
100    93




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##### Table of Contents



CRAFT
    BRANDS ALLIANCE LLC
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    NOTE 5 
    RETIREMENT PLAN
    NOTE 6 
    COMMITMENTS
  and/or
  NOTE 7 
    SUBSEQUENT EVENTS
   94