##### 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, 2008oro

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
  CRAFT BREWERS ALLIANCE,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Washington

91-1141254(State of
    incorporation)

(I.R.S. Employer
    Identification Number)929 North Russell Street

97227-1733Portland, Oregon

(Zip Code)(Address of principal executive
    offices)   (503) 331-7270
  (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
  Rule 12b-2
  Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Part III incorporates specified information by reference
    from the proxy statement for the annual meeting of shareholders
    to be held on May 29, 2009.
  (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.




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##### 





CRAFT
    BREWERS ALLIANCE, INC.
  FORM
    10-K
  TABLE OF
    CONTENTS
   
 PART IITEM  1.


Business


1ITEM  1A.


Risk Factors


18ITEM  1B.


Unresolved Staff Comments


25ITEM  2.


Properties


25ITEM  3.


Legal Proceedings


26ITEM  4.


Submission of Matters to a Vote of Security
    Holders


26PART IIITEM  5.


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


28ITEM  6.


Selected Financial Data


28ITEM  7.


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


28ITEM  7A.


Quantitative and Qualitative Disclosures about
    Market Risk


48ITEM  8.


Financial Statements and Supplementary Data


49ITEM  9.


Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


83ITEM 9A(T).


Controls and Procedures


83ITEM 9B.


Other Information


84PART IIIITEM 10.


Directors, Executive Officers and Corporate
    Governance


84ITEM 11.


Executive Compensation


84ITEM 12.


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


84ITEM 13.


Certain Relationships and Related Transactions,
    and Director Independence


85ITEM 14.


Principal Accountant Fees and Services


85PART IVITEM 15.


Exhibits and Financial Statement Schedules


85SIGNATURES


86EX-10.10EX-10.23EX-10.25EX-10.38EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   i




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INFORMATION
    REGARDING FORWARD-LOOKING STATEMENTS
  In this report, we refer to Craft Brewers Alliance, Inc. as
    we, us, our, the
    Company, or CBA.
  This annual report on
    Form 10-K
    includes forward-looking statements. Generally, the words
    believe, expect, intend,
    estimate, anticipate,
    project, will, may,
    plan and similar expressions or their negatives
    identify forward-looking statements, which generally are not
    historical in nature. These statements are based upon
    assumptions and projections that the Company believes are
    reasonable, but are by their nature inherently uncertain. Many
    possible events or factors could affect the Companys
    future financial results and performance, and could cause actual
    results or performance to differ materially from those
    expressed, including those risks and uncertainties described in
    Item 1A.  Risk Factors and those
    described from time to time in the Companys future reports
    filed with the Securities and Exchange Commission. Caution
    should be taken not to place undue reliance on these
    forward-looking statements, which speak only as of the date of
    this annual report.
  Third
    Party Information
  In this report, the Company relies and refers to information
    regarding industry data obtained from market research, publicly
    available information, industry publications,
    U.S. government sources or other third parties. Although
    the Company believes the information is reliable, it cannot
    guarantee the accuracy or completeness of the information and
    has not independently verified it.
 PART I  Item 1.
    Business         1




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Merger
    with Widmer
            Industry
    Background
       2




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##### Table of Contents



on-site,
    Business
    Strategy
      Production of high-quality craft beers.
  Offering a full complement of beers through a robust
    collection of brand families.
  Strategic distribution relationship with domestic industry
    leader.
 3




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A-B
  Control of production.
  Sales and marketing efforts focused on identifying and
    monetizing profitable channel opportunities.
  Promotion of products.
   4




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Products
    Pacific
    Ridge Pale Ale
  Widmer
    Brothers Beers
  Widmer Hefeweizen.
  Drifter Pale Ale
    (Drifter).
  Drop Top Amber Ale (Drop
    Top). Drop Top
  Broken Halo IPA (Broken
    Halo). Broken Halo
  W Series. W Series
  Okto. Okto
  Brrr. Brrr
 5




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Redhook
    Beers
  Long Hammer IPA (Long
    Hammer).
  Slim Chance Light Ale (Slim
    Chance). Slim Chance Slim Chance
  Redhook ESB (ESB). ESB
  Blackhook Porter
    (Blackhook). Blackhook
  Copperhook Ale
    (Copperhook). Copperhook
  Sunrye Ale (Sunrye). Sunrye Sunrye
  Late Harvest Autumn Ale (Late
    Harvest). Late Harvest
  Winterhook. Winterhook
  Kona
    Brewing Beers
  Longboard Lager.
  Fire Rock Pale Ale (Fire
    Rock). Fire Rock
  Wailua Wheat (Wailua). Wailua
  Pipeline Porter
    (Pipeline). Pipeline
  New Products and Brands.
 6




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Drifter Broken Halo, Drop Top
  Contract brewing. Widmer Hefeweizen Widmer
    Hefeweizen Hefe-weizen agreed-upon Widmer Hefeweizen
  Brewing
    Operations
  The Brewing Process. Saccharomyces cerevisiae, Saccharomyces uvarum,
   7




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Brewing Equipment.
  100-barrel 100-barrel, 200-barrel 600-barrel 300-barrel 400-barrel
  230-barrel 750-barrel 200-barrel, 250-barrel 160-barrel 10-barrel 10-barrel 10-barrel
  100-barrel 100-barrel, 200-barrel 400-barrel 400-barrel, 200-barrel, 600-barrel 130-barrel
  Packaging.
  Quality Control. on-site on-site
  Ingredients and Raw Materials. Saccharomyces cerevisiae
  Product
    Distribution
   8




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Relationship with A-B Relationship with Craft Brands
       9




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Relationship
    with Anheuser-Busch, Incorporated
           10




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11




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Fees.
  Margin and Additional Margin.
  Invoicing Cost.
  Staging Cost and Cooperage Handling
    Charge.
  Inventory Manager Fee.
    Wholesaler Support Center Fee.
     12




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Relationship
    with 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
  Rule 8-03(b)(3)
 13




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Regulation S-X, , Equity
    Investments.
  Sales and
    Marketing
      on-site
    on-site Properties
   14




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Seasonality
    Competition
  Industry Background
         15




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Regulation
      Alcoholic Beverage Regulation and
    Taxation.
 16




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Federal and State Environmental
    Regulation.
  Dram Shop Laws.
  Trademarks
    Employees
   17




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Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors  Cautionary Language Regarding Forward-Looking Statements. This report contains forward looking
    statements within the meaning of the Private Securities
    Litigation Reform Act of 1995. These statements include the
    discussion of our business strategies and expectations
    concerning future operations, margins, profitability, liquidity
    and capital resources. In addition, in certain portions of this
    report, the words anticipate, project,
    believe, estimate, may,
    will, expect, plan and
    intend and similar expressions, as they relate to us
    or our management, are intended to identify forward looking
    statements. These forward looking statements involve known and
    unknown risks, uncertainties and other factors that may cause
    the actual results, performance or achievements to be materially
    different from any future results, performance or achievements
    expressed or implied by these forward looking statements. These
    statements are based upon the current expectations and
    assumptions of, and on information available to, our management.
    Further, investors are cautioned that, unless required by law,
    we do not assume any obligation to update forward-looking
    statements based on unanticipated events or changed
    expectations. In addition to specific factors that may be
    described in connection with any particular forward-looking
    statement, factors that could cause actual results to differ
    materially from those expressed or implied by the forward
    looking statements include (but are not limited to) the
    following:
  Our business is sensitive to reductions in discretionary
    consumer spending, which may result from the recent downturn in
    the U.S. economy.
  We are partially capitalized with long-term
    debt.
 18




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We are dependent upon our continuing relationship with
    A-B.
  We may be unable to successfully integrate our operations and
    realize all of the anticipated benefits of the
    Merger.
  Our cost saving initiatives may not generate sufficient
    liquidity.
  Our agreements with A-B contain limitations on our ability to
    engage in or reject certain transactions, including acquisitions
    and changes of control.
  
    issuing equity securities;
    acquiring or selling assets or stock; 19




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
    amending our articles of incorporation or bylaws;
    granting board representation rights to others;
    entering into certain transactions with affiliates;
    distributing our products in the United States other than
    through A-B or as provided in the amended distribution agreement
    with A-B;
    distributing or licensing the production of any malt beverage
    product in any country outside of the United States; or
    voluntarily delisting or terminating our listing on the Nasdaq
    Stock Market.      A-B has significant control and influence over
    us.
  We do not know what impact, if any, the acquisition of
    Anheuser-Busch by InBev (now Anheuser-Busch Inbev) will have on
    our business.
  We are dependent on our distributors for the sale of our
    products.
  Increased competition could adversely affect sales and
    results of operations.
 20




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Future price promotions to generate demand for our products
    may be unsuccessful.
  Operating breweries at production levels substantially below
    their current designed capacities could negatively impact our
    gross margins. Accounting for the
    Impairment or Disposal of Long-Lived Assets
  Due to our concentration of sales in the Pacific Northwest
    and California, our results of operations and financial
    condition may be subject to fluctuations in regional economic
    conditions.
  The craft beer business is seasonal in nature, and we are
    likely to experience fluctuations in results of operations and
    financial condition.
  Changes in consumer preferences or public attitudes about our
    products could reduce demand.
 21




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We are dependent upon the services of our key
    personnel.
  Our gross margin may fluctuate.
  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.
    An increase in excise taxes could adversely affect our
    financial condition or results of operations.
 22




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Changes in state laws regarding distribution arrangements may
    adversely impact our operations.
    We may experience a shortage of kegs necessary to distribute
    draft beer.
  Our key raw materials may continue to increase in cost and
    adequate supplies may become even more difficult to
    secure.
  Loss of income tax benefits could negatively impact our
    results of operations.
 23




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Our common stock could be de-listed from the NASDAQ Global
    Market if our stock price were to trade below $1.00 per share
    for an extended period of time.
    The expiration of
    lock-up
    agreements entered into with certain Widmer shareholders in
    connection with the Merger could cause the market price of our
    common stock to decline. lock-up lock-up lock-up
  Our relationships with Kona and FSB may not provide
    anticipated benefits.
 24




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The fair value of our intangible Widmer trademark asset may
    decrease further.
  We do not intend to pay and are limited in our ability to
    declare or pay dividends, accordingly, shareholders must rely on
    stock appreciation for any return on their investment in
    us.
  Our modified credit agreement limits our near-term capital
    expenditures.
  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    The Washington Brewery. 100-barrel
 25




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The Oregon Brewery. 230-barrel
  The New Hampshire Brewery.
  The Rose Quarter Brewery. 10-barrel
    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   26




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Executive
    Officers of the Company
  Terry E.
    Michaelson (55)  Chief Executive Officer
    Mark D.
    Moreland (44)  Chief Financial Officer and
    Treasurer
    V.
    Sebastian Pastore (42)  Vice President, Brewing
    Operations and Technology
  Coca-Cola
  Martin J.
    Wall (37)  Vice President, Sales
     27




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


Low2008First quarter

$
6.63


$
4.00Second quarter

$
4.90


$
3.85Third quarter

$
4.89


$
2.78Fourth quarter

$
3.80


$
1.112007First quarter

$
7.80


$
5.00Second quarter

$
8.08


$
6.17Third quarter

$
8.21


$
5.68Fourth quarter

$
7.11


$
5.84       Item 6.
    Selected
    Financial Data    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Merger
    with Widmer Brothers Brewing Company
     28




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Overview
             29




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The
    Equity Method of Accounting for Investments in Common Stock
  Widmer Hefeweizen
  A-B.
   Product Distribution,   Relationship with Anheuser-Busch,
    Incorporated  Relationship
    with Craft Brands Alliance LLC.
  Shock Top Belgian White Blue Moon Belgian White. Hefeweizen
   30




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
    Brewhouse capacity, fermentation capacity, and packaging
    capacity;
    A normal production year;
    The product mix and product cycle times; and
    Brewing losses and packaging losses.        Annual WorkingCapacity atDecember 31, 2008(In barrels)Oregon Brewery(1)


377,000Washington Brewery


230,000New Hampshire Brewery


190,000797,000       400-barrel 400-barrel
 31




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Brand
    Trends
  Redhook Beers. ESB Redhook IPA Long Hammer IPA Long Hammer IPA
  Slim Chance Light Ale
    Widmer Brothers Beers. Widmer Hefeweizen Shock Top Belgian White Blue
    Moon Belgian White Widmer Hefeweizen
 32




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Drop Top Amber
    Ale Drifter Pale Ale Widmer Hefeweizen Widmer Hefeweizen
  Widmer Hefeweizen
  Kona Brewing Beers.
  Longboard Island Lager
     33




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Results
    of Operations
    Year Ended December 31,2008


2007Sales


107.8
%


112.2
%Less excise taxes


7.8



12.2Net sales


100.0



100.0Cost of sales


82.3



88.7Gross profit


17.7



11.3Selling, general and administrative expenses


24.9



19.9Loss on impairment of assets


38.4



Merger-related expenses


2.2



1.4Income from equity investment in Craft Brands


1.7



6.8Operating loss


(46.1
)


(3.2
)Loss from equity investments in Kona & FSB






Interest expense


(1.2
)


(0.7
)Interest and other income, net


0.1



1.2Loss before income taxes


(47.2
)


(2.7
)Income tax benefit


(5.5
)


(0.4
)Net loss


(41.7
)%


(2.3
)%   Non-GAAP Financial
    Measures
  Liquidity and Capital
    Resources
  For the Quarter EndedDecember 31, 2008(In thousands)Net loss

$
(30,101
)Interest expense


541Income tax benefit


(2,719
)Depreciation expense


1,645Amortization expense


367Loss on impairment of assets


30,589Merger-related expenses


140Restructuring costs, as defined


1,044Loss on sale or disposal of assets


18Allowable indirect merger-related costs


150EBITDA per the modified loan agreement

$
1,674  34




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Year
    Ended December 31, 2008 Compared with Year Ended
    December 31, 2007
    Year Ended December 31,


Increase/2008


2007


(Decrease)


% Change(Dollars in thousands)Sales

$
86,013


$
46,544


$
39,469



84.8
%Less excise taxes


6,252



5,074



1,178



23.2Net sales


79,761



41,470



38,291



92.3Cost of sales


65,646



36,785



28,861



78.5Gross profit


14,115



4,685



9,430



201.3Selling, general and administrative expenses


19,894



8,257



11,637



140.9Loss on impairment of asset


30,589







30,589



Merger-related expenses


1,783



584



1,199



205.3Income from equity investment in Craft Brands


1,390



2,826



(1,436
)


(50.8
)Operating loss


(36,761
)


(1,330
)


(35,431
)


N/MLoss from equity investments in Kona and FSB


(11
)






(11
)


Interest expense


(993
)


(302
)


(691
)


228.8Interest and other income, net


110



517



(407
)


(78.7
)Loss before income taxes


(37,655
)


(1,115
)


(36,540
)


N/MIncome tax benefit


(4,377
)


(176
)


(4,201
)


N/MNet loss

$
(33,278
)

$
(939
)

$
(32,339
)


N/M     Note :
    N/M  Not Meaningful
  Sales.
  Year Ended December 31,


Increase/Sales Revenues by Category

2008


2007


(Decrease)


% Change(In thousands)A-B

$
62,364


$
18,879


$
43,485



230.3
%Craft Brands


6,914



13,885



(6,971
)


(50.2
)Contract brewing


2,956



7,363



(4,407
)


(59.9
)Alternating proprietorship


5,761







5,761



Pubs and other(1)


8,018



6,417



1,601



24.9Total Sales

$
86,013


$
46,544


$
39,469



84.8
%     (1)
    
    Other includes international, non-wholesalers and other  
    An increase in shipments of 220,700 barrels or 204.5% to
    A-B from shipments of 107,900 barrels in 2007 to
    328,600 barrels in 2008 due in part to the effects of the
    Merger, including shipments in the West for the second half of
    the year being made via A-B at wholesale price levels instead of
    Craft Brands at below wholesale price levels. Additionally, both
    draft and bottled products experienced a pricing increase at the
    wholesale level from a year ago;
    With the Merger and the related merger of Craft Brands into the
    Company, the termination of several sales and contract
    agreements effective July 1, 2008, including the
    distribution agreement with Craft 35




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Brands and the contract brewing agreement with Widmer, which led
    to a $7.0 million and $4.4 million, respectively,
    reduction in sales revenues from fiscal year 2007 to fiscal year
    2008;  
    The inclusion of alternating proprietorship fees of
    $5.8 million earned from Kona for leasing the Oregon
    Brewery and sales of raw materials during the last six months of
    2008 (no such activity occurred prior to the Merger); and
    An increase of $1.6 million in pub and other sales in 2008
    primarily due to the half year of sales generated by the pub in
    Portland, Oregon, which was acquired as a result of the Merger.  Shipments  Brand
  Year Ended December 31,2008 Shipments


2007 Shipments


Increase /


%Draft


Bottle


Total


Draft


Bottle


Total


(Decrease)


Change(In barrels)Redhook brand


61,000



139,800



200,800



66,400



139,800



206,200



(5,400
)


(2.6
)%Widmer brand(1)


100,700



76,800



177,500



67,200



43,500



110,700



66,800



60.3Kona brand


18,800



27,800



46,600















46,600



Total shipped


180,500



244,400



424,900



133,600



183,300



316,900



108,000



34.1
%     (1)
    
    Shipments of Widmer-branded product
    in 2007 and for the first six months of 2008 are only those
    products brewed and shipped by the Company and do not include
    Widmer-branded products shipped by Widmer or Craft Brands. The
    Companys shipments were made pursuant to a licensing
    agreement and contract brewing arrangements with Widmer, all of
    which were terminated in connection with the Merger.    Widmer Hefeweizen Widmer Hefeweizen Widmer
    Hefeweizen
   36




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Shipments  Customer.
  Year Ended December 31,2008 Shipments


2007 Shipments


Increase/


%Draft


Bottle


Total


Draft


Bottle


Total


(Decrease)


Change(In barrels)A-B


142,400



186,200



328,600



46,100



61,800



107,900



220,700



204.5
%Craft Brands


16,300



41,800



58,100



35,300



86,600



121,900



(63,800
)


(52.3
)Contract brewing


16,500



14,500



31,000



48,300



33,600



81,900



(50,900
)


(62.1
)Pubs and other(1)


5,300



1,900



7,200



3,900



1,300



5,200



2,000



38.5Total shipped


180,500



244,400



424,900



133,600



183,300



316,900



108,000



34.1
%     (1)
    
    International, non-wholesalers, pubs and other    Pricing and Fees. agreed-upon
       37




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Alternating Proprietorship.
  Retail Operations and Other Sales.
  Excise Taxes.
  Cost of Sales.
  Widmer Hefeweizen
       38




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Selling, General and Administrative
    Expenses.
  
    Prior to July 1, 2008, selling, general and administrative
    expense in the Companys statements of operations reflected
    the sales and marketing efforts only for the Midwest and Eastern
    United States because Craft Brands performed these functions for
    the Western United States. In the third and fourth quarters of
    2008, all promotion, marketing and sales efforts for the entire
    United States for all malt beverage products are reflected in
    the Companys statements of operations.
    Finance, accounting and information technology functions
    performed in Woodinville, Washington prior to the Merger were
    transferred to staff in the Portland, Oregon office following
    the Merger. Because the transition of these functions was not
    complete until the end of the third quarter of 2008, selling,
    general and administrative expenses for 2008 include salaries
    and related administrative costs associated with both locations
    for an entire quarter.
    The Company experienced a work-force reduction during the fourth
    quarter of 2008 as a result of the execution of its
    cost-containment strategies. This action was intended to reduce
    duplicative functions, but also represented a redeployment of
    certain functions to more profitable opportunities. During the
    fourth quarter of 2008, the Company recorded costs of
    $1.0 million for severance and benefit accruals related to
    this action. The Company does not expect there will be
    significant costs recognized in succeeding years associated with
    this action.  Loss on Impairment of Assets. Critical
    Accounting Policies and Estimates.
  Merger-related Expenses.
 39




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##### Table of Contents



Income from Equity Investment in Craft
    Brands.
  Loss from Equity Investments in Kona and
    FSB.
  Interest Expense.
  Interest and Other Income, net.
  Income Taxes.
    Liquidity
    and Capital Resources
     40




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41




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##### Table of Contents



agreed-upon
        Financial
    Covenants Required by Modification Agreement
  Minimum EBITDA, as defined (in thousands)For the quarter ending March 31, 2009

$
850For the quarter ending June 30, 2009

$
2,300For the quarter ending September 30, 2009 and thereafter


Does not applyAsset Coverage RatioFor the quarter ending March 31, 2009 and thereafter


1.50 to 1Capital Expenditures (in thousands)To spend or incur obligations less than the following:For the quarter ending March 31, 2009(1)

$
1,350For the quarter ending June 30, 2009(1)

$
550For the quarter ending September 30, 2009 and thereafter


Does not apply     (1)
    
    - Provides for carryover spending of any amount not used in the
    prior quarter     42




---



##### Table of Contents



Trend
      Certain
    Considerations: Issues and Uncertainties
   43




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    Goodwill, other intangible assets and long-lived
    assets. Goodwill and Other Intangible Assets
      Fair Value Measurements
   44




---



##### Table of Contents



Accounting for the
    Impairment or Disposal of Long-Lived Assets
  Refundable Deposits on Kegs.
    Revenue Recognition.
 45




---



##### Table of Contents



Income Taxes. Accounting for Income Taxes
          Fair value of financial instruments.
 46




---



##### Table of Contents



Accounting for Derivative Instruments
    and Hedging Activities
  Recent
    Accounting Pronouncements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115
  No. 07-1, Accounting for Collaborative Arrangements (EITF 07-1). No. 99-19 EITF 07-1 EITF 07-1
  Disclosures about Derivative Instruments and Hedging
    Activities  An Amendment of FASB Statement
    No. 133
  No. 142-3, Determination of the Useful Life of Intangible Assets FAS 142-3). FAS 142-3 FAS 142-3 FAS 142-3
 47




---



##### Table of Contents



FAS 142-3
  FAS No. 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset is Not Active FAS 157-3), FAS 157-3 FAS 157-3 FAS 157-3
  No. 08-6, Equity Method Investment Accounting Considerations (EITF 08-6). EITF 08-6 Business Combinations EITF 08-6 EITF 08-6 EITF 08-6
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk     48




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            
    49




---



##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  BALANCE
    SHEETS
  December 31,


December 31,2008


2007(Dollars in thousands except per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
11


$
5,527Accounts receivable, net of allowance for doubtful accounts of
    $64 and $95 in 2008 and 2007, respectively


12,499



3,893Trade receivable from Craft Brands






670Inventories, net


9,729



2,928Income tax receivable


724



Deferred income tax asset, net


767



944Other


3,951



1,043Total current assets


27,681



15,005Property, equipment and leasehold improvements, net


101,389



55,862Equity investments


5,189



416Intangible and other assets, net


13,546



107Total assets

$
147,805


$
71,390LIABILITIES AND COMMON STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
15,000


$
3,149Trade payable to Craft Brands






416Accrued salaries, wages, severance and payroll taxes


3,630



1,524Refundable deposits


6,191



3,500Other accrued expenses


2,393



687Current portion of long-term debt and capital lease obligations


1,394



15Total current liabilities


28,608



9,291Long-term debt and capital lease obligations, net of current
    portion


31,834



31Fair value of derivative financial instruments


1,252



Deferred income tax liability, net


6,552



1,762Other liabilities


278



226Common Stockholders Equity:Common stock, par value $0.005 per share, 50,000,000 shares
    authorized; 16,948,063 shares in 2008 and
    8,354,239 shares in 2007 issued and outstanding


85



42Additional paid-in capital


122,433



69,304Accumulated other comprehensive income


(693
)


Retained deficit


(42,544
)


(9,266
)Total common stockholders equity


79,281



60,080Total liabilities and common stockholders equity

$
147,805


$
71,390    50




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##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  STATEMENTS
    OF OPERATIONS
  Year Ended December 31,2008


2007(In thousands, except per share amounts)Sales

$
86,013


$
46,544Less excise taxes


6,252



5,074Net sales


79,761



41,470Cost of sales


65,646



36,785Gross profit


14,115



4,685Selling, general and administrative expenses


19,894



8,257Loss on impairments of assets


30,589



Merger-related expenses


1,783



584Income from equity investment in Craft Brands


1,390



2,826Operating loss


(36,761
)


(1,330
)Loss from equity investments in Kona and FSB


(11
)


Interest expense


(993
)


(302
)Interest and other income, net


110



517Loss before income taxes


(37,655
)


(1,115
)Income tax benefit


(4,377
)


(176
)Net loss

$
(33,278
)

$
(939
)Basic and diluted loss per share

$
(2.63
)

$
(0.11
)    51




---



##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  STATEMENTS
    OF COMMON STOCKHOLDERS EQUITY
  AccumulatedCommon Stock


Additional


Other





Total CommonPar


Paid-In


Comprehensive


Retained


StockholdersShares


Value


Capital


Income


Deficit


Equity(In thousands)Balance as of December 31, 2006


8,281


$
41


$
68,978


$



$
(8,327
)

$
60,692Issuance of shares under stock plans


49



1



157











158Stock-based compensation


24







169











169Net loss


















(939
)


(939
)Balance as of December 31, 2007


8,354



42



69,304







(9,266
)


60,080Issuance of shares under stock plans


228



1



474











475Stock-based compensation


4







20











20Issuance of shares pursuant to merger with Widmer Brothers
    Brewing Company


8,362



42



52,635











52,677Comprehensive income:






















Unrealized losses on derivative financial instruments, net of
    taxes of $407














(693
)






(693
)Net loss


















(33,278
)


(33,278
)Total comprehensive loss






















(33,971
)Balance as of December 31, 2008


16,948


$
85


$
122,433


$
(693
)

$
(42,544
)

$
79,281    52




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##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  STATEMENTS
    OF CASH FLOWS
  Year Ended December 31,2008


2007(In thousands)Operating ActivitiesNet loss

$
(33,278
)

$
(939
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization


5,474



2,863Income from equity investments less than (in excess of) cash
    distributions


88



(288
)Deferred income taxes


(4,400
)


(224
)Loss on impairment of assets


30,589



Reserve for obsolete inventory


155



205(Gain) loss on disposition of property, equipment and leasehold
    improvements


42



(3
)Stock compensation


20



169Other


(45
)


79Changes in operating assets and liabilities, net of effects of
    acquisition of Widmer Brothers Brewing Company:Accounts receivable


1,416



(2,077
)Trade receivables from Craft Brands


120



184Inventories


(1,844
)


(561
)Other current assets


(3,431
)


(839
)Income taxes receivable


722



Other assets


(295
)


113Accounts payable and other accrued expenses


(1,134
)


1,221Trade payable to Craft Brands


60



91Accrued salaries, wages and payroll taxes


734



(23
)Refundable deposits


134



1,626Net cash provided by (used in) operating activities


(4,873
)


1,597Investing ActivitiesExpenditures for fixed assets


(6,667
)


(1,410
)Proceeds from disposition of fixed assets


442



487Cash acquired in acquisition of Widmer Brothers Brewing Company,
    net


2,274



Net cash used in investing activities


(3,951
)


(923
)Financing ActivitiesPrincipal payments on debt and capital lease obligations


(642
)


(4,740
)Net borrowings under revolving line of credit


3,500



Issuance of common stock


475



158Amounts paid for debt issue costs


(25
)


Net cash provided by (used in) financing activities


3,308



(4,582
)Decrease in cash and cash equivalents


(5,516
)


(3,908
)Cash and cash equivalents:Beginning of period


5,527



9,435End of period

$
11


$
5,527Supplemental DisclosuresCash paid for interest

$
837


$
332Cash paid for income taxes

$
47


$
53Non-cash TransactionNet assets of Widmer Brothers Brewing Company acquired in
    exchange for issuance of common stock and assumption of debt
    (see Note 2)

$
80,072


$
    53




---



##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  NOTES TO FINANCIAL STATEMENTS
  1.
    Nature of
    Operations          2.
    Merger
    with Widmer  Form 8-K Form S-4/A
   54




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##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        Merger-Related
    Costs
  Business Combinations )
  Year Ended December 31,2008


2007(In thousands)Merger-related costs and expenses:Reflected in Statements of Operations

$
1,783


$
584Reflected in Balance Sheets






154Total Merger-related costs & expenses

$
1,783


$
738     Accounting
    for Costs Associated with Exit or Disposal Activities
 55




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Accounting
    for the Acquisition of Widmer
  Goodwill and
    Intangible Assets
      (In thousands)Fair value of Common Stock issued

$
52,677Interest-bearing debt assumed


29,669Total purchase price

$
82,346    56




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (In thousands)Widmer assets acquired and liabilities assumed:Current assets

$
18,887Income tax receivable


1,491Property, equipment and leasehold improvements


44,929Equity investments


6,600Trade name and trademarks


16,300Intangible assets  recipes, distributor agreements,
    and non-compete agreements


3,000Favorable contracts


643Total assets acquired


91,850Current liabilities


(19,821
)Fair value of derivative financial instrument


(186
)Premium on promissory notes payable


(686
)Deferred income tax liability, net and other noncurrent
    liabilities


(10,718
)Total liabilities assumed


(31,411
)Net assets acquired


60,439Excess of purchase price over net assets acquired


21,907Incremental direct merger costs incurred by the Company


879Elimination of valuation allowance for deferred tax assets


(1,059
)Elimination of receivables and payables due to/from Widmer and
    Craft Brands


623Elimination of investment in Craft Brands


339782Goodwill recorded

$
22,689   Unaudited
    Pro Forma Results of Operations
    
    the year ended December 31, 2008 as if the Merger had been
    completed on January 1, 2008; and
    the year ended December 31, 2007 as if the Merger had been
    completed on January 1, 2007.  Proforma ResultsYear Ended December 31,2008


2007(In thousands, exceptper share data)Net sales

$
117,654


$
100,656Loss before income taxes

$
(39,287
)

$
(1,109
)Net loss

$
(34,357
)

$
(729
)Basic and diluted loss per share

$
(2.03
)

$
(0.04
)    57




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    3.
    Significant
    Accounting Policies  Cash
    and Cash Equivalents
    Accounts
    Receivable
    Inventories
  first-in,
      Investment
    in Subsidiaries
  Consolidation of Variable Interest Entities  an
    Interpretation of ARB No. 51
 58




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  The Equity Method of
    Accounting for Investments in Common Stock
    Property,
    Equipment and Leasehold Improvements
      Buildings


31 - 50 yearsBrewery equipment


10 - 25 yearsFurniture, fixtures and other equipment


2 - 10 yearsVehicles


5 yearsLeasehold improvements


Useful life or term of
    lease, whichever less   Goodwill
    and Other Intangible Assets
     59




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Accounting for the Impairment or Disposal of Long-Lived
    Assets
    Trade name and trademarks

IndefiniteRecipes

IndefiniteDistributor agreements

15 yearsNon-compete agreements

3 years   Refundable
    Deposits on Kegs
      Fair
    Value of Financial Instruments
   60




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Accounting for Derivative Instruments
    and Hedging Activities
  Comprehensive
    Income
  Reporting Comprehensive Income,
  Revenue
    Recognition
        Excise
    Taxes
   61




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  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
 62




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Earnings
    (Loss) per Share
  Earnings per
    Share
  Use of
    Estimates
    Reclassifications
    Recent
    Accounting Pronouncements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115
  No. 07-1, Accounting for Collaborative Arrangements (EITF 07-1). No. 99-19 EITF 07-1 EITF 07-1
 63




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Disclosures about Derivative Instruments and Hedging
    Activities  An Amendment of FASB Statement
    No. 133
  No. 142-3, Determination of the Useful Life of Intangible Assets FAS 142-3). FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3
  FAS No. 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset is Not Active FAS 157-3), Fair Value Measurements FAS 157-3 FAS 157-3 FAS 157-3
  No. 08-6, Equity Method Investment Accounting Considerations (EITF 08-6). EITF 08-6 Business Combinations EITF 08-6 EITF 08-6 EITF 08-6
 64




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  4.
    Inventories    December 31,2008


2007(In thousands)Raw materials

$
4,258


$
538Work in process


1,921



922Finished goods


1,624



511Packaging materials, net


950



487Promotional merchandise, net


907



470Pub food, beverages and supplies


69



$
9,729


$
2,928     5.
    Other
    Current Assets    December 31,2008


2007(In thousands)Deposits paid to keg lessor

$
3,182


$
656Merger-related costs (see Note 2)






154Prepaid property taxes


177



Prepaid insurance


201



201Other


391



32$
3,951


$
1,043   6.
    Property,
    Equipment and Leasehold Improvements    December 31,2008


2007(In thousands)Brewery equipment

$
74,224


$
47,082Buildings


50,927



35,846Land and improvements


7,573



4,604Furniture, fixtures and other equipment


3,931



2,337Leasehold improvements


2,731



2Vehicles


84



82Construction in progress


675



314140,145



90,267Less accumulated depreciation and amortization


38,756



34,405$
101,389


$
55,862  65




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    7.  Equity
    Investments
    December 31,2008


2007(In thousands)Fulton Street Brewery, LLC (FSB)

$
4,103


$
Kona Brewery LLC (Kona)


1,086



Craft Brands Alliance LLC (Craft Brands)






416$
5,189


$
416     FSB
    Kona
    Craft
    Brands
   66




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
            Year Ended December 31,2008


2007(Dollars in thousands)Net sales

$
38,463


$
65,358Gross profit

$
12,089


$
21,271Operating income

$
3,311


$
6,711Income before income taxes

$
3,310


$
6,728Net income

$
3,310


$
6,728Shipments (in barrels)


180,300



425,500  67




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  8.
    Intangible
    and Other Assets    December 31,2008


2007(In thousands)Trademarks and other

$
10,027


$
378Distributor agreements


2,200



Recipes


700



Non-compete agreements


100



Favorable contracts


643



Promotional merchandise


393



9814,063



476Less accumulated amortization


517



369$
13,546


$
107       December 31,2008


2007(In thousands)Trademarks and other

$
201


$
369Distributor agreements


73



Non-compete agreements


17



Favorable contracts


226



$
517


$
369     Year Ended December 31,Estimated Amortization Expense

2009


2010


2011


2012


2013(In thousands)Trademarks and other

$
3


$
3


$
3


$
2


$
3Distributor agreements


147



146



147



146



147Non-compete agreements


33



33



17







Favorable contracts


278



104



29



5



1$
461


$
286


$
196


$
153


$
151  68




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  9.
    Debt and
    Capital Lease Obligations    December 31,2008


2007(In thousands)Term loan payable to bank, due July 1, 2018

$
13,363


$
Line of credit payable to bank, due January 1, 2013


12,000



Promissory notes payable to individual lenders, all due
    July 1, 2015


600



Premium on promissory notes


654



Capital lease obligations on equipment


6,611



4633,228



46Less current portion of long-term debt


1,394



15$
31,834


$
31        69




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    agreed-upon
        Financial
    Covenants Required by Modification Agreement
  Minimum EBITDA, as defined (in thousands)For the quarter ending March 31, 2009

$
850For the quarter ending June 30, 2009

$
2,300For the quarter ending September 30, 2009 and thereafter


Does not applyAsset Coverage RatioFor the quarter ending March 31, 2009 and thereafter


1.50 to 1Capital Expenditures (in thousands)To spend or incur obligations less than the following:For the quarter ending March 31, 2009(1)

$
1,350For the quarter ending June 30, 2009(1)

$
550For the quarter ending September 30, 2009 and thereafter


Does not apply     (1)
    
    - Provides for carryover spending of any amount not used in the
    prior quarter     70




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
             71




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Long-term DebtLine of





Promissory


CapitalCredit


Term Loan


Notes


Lease Obligations(In thousands)Succeeding periods:2009

$



$
351


$



$
1,4462010






374







1,4402011






396







1,4322012






421







1,4282013


12,000



451







1,428Thereafter






11,370



600



715$
12,000


$
13,363


$
600



7,889Amount representing interest














(1,278
)$
12,000


$
13,363


$
605


$
6,611   10.
    Derivative
    Financial Instruments and Fair Value Measurements        Fair
    Value Measurements
   72




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Level 1:
  Level 2:
  Level 3:
    Fair Value Hierarchy AssessmentLevel 1

Level 2

Level 3

Total(In thousands)RecurringDerivative financial instruments  interest rate
    swaps

$



$
1,252


$



$
1,252Non-recurringGoodwill














Trademarks










10,002



10,002Equity investments










5,189



5,189   11.
    Common
    Stockholders Equity  Issuance
    of Common Stock
  Stock-Based Compensation
    Expense
  Stock-Based Compensation Expense
     73




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Stock
    Plans
      A-B
    Stock-Based
    Compensation Expense
  Issuance of Common
    Stock
 74




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Stock
    Option Plan Activity
    WeightedWeighted


Average


AggregateAverage


Remaining


IntrinsicOptions


Exercise Price


Contractual Life


Value(In thousands)


(Per share)


(In years)


(In thousands)Outstanding at January 1, 2008


689


$
2.57



3.33


$
2,809Granted


Exercised


(228
)Canceled


(30
)Outstanding at December 31, 2008


431


$
2.61



2.36


$
Exercisable at December 31, 2008


431


$
2.61



2.36


$
       Outstanding and ExercisableWeighted


WeightedAverage


AverageRemaining


ExerciseRange of Exercise Prices

Options


Contractual Life


Price(In thousands)


(In years)


(Per share)$1.49 to $2.00


178



2.56


$
1.86$2.01 to $3.00


106



3.89


$
2.11$3.01 to $3.97


147



1.04


$
3.88$1.49 to $3.97


431



2.36


$
2.61   12.
    Loss on
    Impairment of Assets    Year EndedDecember 31,Asset Category

2008(In thousands)Goodwill

$
22,689Trademark


6,500Equity investments


1,400Loss on impairment of assets

$
30,589  75




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
         76




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  13.
    Loss per
    Share    Year Ended December 31,2008


2007(In thousands, except per share amounts)Numerator for basic and diluted net loss per share:Net loss

$
(33,278
)

$
(939
)Denominator for basic and diluted net loss per share:Weighted average common shares outstanding


12,660



8,331Basic and diluted net loss per share

$
(2.63
)

$
(0.11
)     14.
    Income
    Taxes    Year Ended December 31,2008


2007(In thousands)Current

$
23


$
48Deferred


(4,400
)


(224
)Income tax benefit

$
(4,377
)

$
(176
)       Year Ended December 31,2008


2007(In thousands)Benefit at U.S. statutory rate

$
(12,803
)

$
(379
)State taxes, net of federal benefit


(418
)


(25
)Permanent differences, primarily meals and entertainment


130



80Loss on impairment of assets


7,714



Merger expenses






148Valuation allowance


1,000



Income tax benefit

$
(4,377
)

$
(176
)  77




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      December 31,2008


2007(In thousands)Deferred tax liabilities:Property, equipment and leasehold improvements

$
10,815


$
9,059Intangible assets


4,789



Equity investments


1,133



Other


269



Total deferred tax liabilities


17,006



9,059Deferred tax assets:Net operating losses and AMT credit carryforwards


10,372



8,781Accrued salaries and severance


834



335Other


1,015



184Valuation allowance


(1,000
)


(1,059
)Total deferred tax assets


11,221



8,241Net deferred tax liability

$
5,785


$
818As Presented on the Balance Sheet:Long-term deferred income tax liability, net

$
6,552


$
1,762Current deferred income tax asset, net


767



944$
5,785


$
818      78




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##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      15.
    Employee
    Benefit Plan    16.
    Commitments    10-year
 79




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##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (In thousands)2009

$
5802010


5742011


5162012


4232013


422Thereafter


12,490$
15,005             Total Noncancelable CommitmentsPurchase


SponsorshipObligations


Obligations


Total(In thousands)2009

$
9,038


$
293


$
9,3312010


10,732



247



10,9792011


1,834



94



1,9282012


1,522







1,5222013


1,356







1,356$
24,482


$
634


$
25,116  80




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##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  17.
    Related-Party
    Transactions            Pacific Ridge
        Widmer Hefeweizen
 81




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##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Widmer Hefeweizen
           82




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##### Table of Contents



Item 9.
    Changes
    In and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A(T).
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15(e) 15d-15(e))
      Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15 15d-15
  Report of
    Management on Internal Control over Financial
    Reporting
  Rule 13a-15(f).
  Internal
    Control  Integrated Framework
   83




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##### Table of Contents



Item 9B.
    Other
    Information   PART III Item 10.
    Directors,
    Executive Officers and Corporate Governance      Code of
    Conduct
  Form 8-K
  Item 11.
    Executive
    Compensation    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

Options and Rights (a)


Options and Rights (b)


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


430,790


$
2.61



171,499Equity compensation plans not approved by security holders










Total


430,790


$
2.61



171,499    84




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a)  The
    following documents are filed as part of this report:
  1.  Audited
    Financial Statements
  PageReport of Moss Adams LLP, Independent Registered
    Public Accountants


49Balance Sheets as of December 31, 2008 and
    2007


50Statements of Operations for the Years Ended
    December 31, 2008 and 2007


51Statements of Common Stockholders Equity
    for the Years Ended December 31, 2008 and 2007


52Statements of Cash Flows for the Years Ended
    December 31, 2008 and 2007


53Notes to Financial Statements


54   2.
    Exhibits  Form 10-K.
 85




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##### Table of Contents



SIGNATURES    Craft Brewers Alliance, Inc.
  By:
    /s/  JOSEPH
    K. OBRIEN   Controller and Chief Accounting Officer
    Signature

Title

Date/s/  Terry
    E. MichaelsonTerry
    E. Michaelson

Chief Executive Officer 
    (Principal Executive Officer)

March 25, 2009/s/  Mark
    D. MorelandMark
    D. Moreland

Chief Financial Officer and Treasurer (Principal Financial
    Officer)

March 25, 2009/s/  Joseph
    K. OBrienJoseph
    K. OBrien

Controller
    (Principal Accounting Officer)

March 25, 2009/s/  Kurt
    R. WidmerKurt
    R. Widmer

Chairman of the Board and  Director

March 25, 2009/s/  Timothy
    P. BoyleTimothy
    P. Boyle

Director

March 25, 2009/s/  Andrew
    R. GoelerAndrew
    R. Goeler

Director

March 25, 2009/s/  Kevin
    R. KellyKevin
    R. Kelly

Director

March 25, 2009/s/  David
    R. LordDavid
    R. Lord

Director

March 25, 2009/s/  John
    D. Rogers, Jr.John
    D. Rogers, Jr.

Director

March 25, 2009Anthony
    J. Short

Director  86




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##### Table of Contents



Exhibit Index
  ExhibitNumber

Description2
.1

Agreement and Plan of Merger between the Registrant and Widmer
    Brothers Brewing Company, dated November 13, 2007, as amended by
    Amendment No. 1 dated April 30, 2008 and Amendment No. 2 dated
    May 13, 2008 (incorporated by reference from Annex A to the
    Registrants Registration Statement on Form S-4, No.
    333-149908)3
.1

Restated Articles of Incorporation of the Registrant, dated July
    1, 2008 (incorporated by reference from Exhibit 3.1 to the
    Registrants Current Report on Form 8-K filed on July 2,
    2008)3
.2

Amended and Restated Bylaws of the Registrant, dated July 1,
    2008 (incorporated by reference from Exhibit 3.2 to the
    Registrants Current Report on Form 8-K filed on July 2,
    2008)10
.1*

Amended and Restated Directors Stock Option Plan (incorporated
    by reference from Exhibit 10.14 to the Registrants
    Registration Statement on Form S-1, No. 33-94166)10
.2*

Amendment dated as of February 27, 1996 to Amended and Restated
    Directors Stock Option Plan (incorporated by reference from
    Exhibit 10.32 to the Registrants Form 10-Q for the quarter
    ended June 30, 1996 (File No. 0-26542) (1996 Form
    10-Q))10
.3*

Form of Stock Option Agreement for the Directors Stock Option
    Plan (incorporated by reference from Exhibit 10.4 to the
    Registrants Form 10-K for the year ended December 31, 2004)10
.4*

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 Registrants Registration
    Statement on Form S-1, No. 33-94166)10
.5*

Amendment dated as of February 27, 1996 to the 1992 Stock
    Incentive Plan, as amended (incorporated by reference from
    Exhibit 10.31 to the 1996 Form 10-Q)10
.6*

Amendment dated as of July 25, 1996 to 1992 Stock Incentive
    Plan, as amended (incorporated by reference from Exhibit 10.33
    to the 1996 Form 10-Q)10
.7*

Form of Incentive Stock Option Agreement for the 1992 Stock
    Incentive Plan, as amended (incorporated by reference from
    Exhibit 10.8 to the Registrants Form 10-K for the year
    ended December 31, 2004)10
.8*

2002 Stock Option Plan (incorporated by reference from Exhibit A
    to the Registrants Proxy Statement for its 2002 Annual
    Meeting of Shareholders (File No. 0-26542)10
.9*

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

Form of Nonqualified Stock Option Agreement (Executive Officer
    Grants) for the 2002 Stock Option Plan10
.11*

2007 Stock Incentive Plan (incorporated by reference from
    Appendix B to the Registrants Proxy Statement for its 2007
    Annual Meeting of Shareholders)10
.12*

Amended and Restated Employment Agreement between the Registrant
    and Paul S. Shipman, dated February 13, 2008 (incorporated by
    reference from Exhibit 10.1 to the Registrants Current
    Report on Form 8-K filed on February 19, 2008)10
.13*

Letter of agreement between the Registrant and David Mickelson
    dated June 30, 2008 (incorporated by reference from Exhibit 10.4
    to the Registrants Current Report on Form 8-K filed on
    July 2, 2008)10
.14*

Amended and Restated Letter of Agreement between the Registrant
    and Terry E. Michaelson dated March 12, 2009 (incorporated by
    reference from Exhibit 10.1 to the Registrants Current
    Report on Form 8-K filed on March 25, 2009)10
.15*

Amended and Restated Letter of Agreement between the Registrant
    and Mark D. Moreland dated March 12, 2009 (incorporated by
    reference from Exhibit 10.2 to the Registrants Current
    Report on Form 8-K filed on March 25, 2009)10
.16*

Letter of agreement between the Registrant and Timothy G. McFall
    dated June 30, 2008 (incorporated by reference from Exhibit 10.6
    to the Registrants Current Report on Form 8-K filed on
    July 2, 2008) 87




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##### Table of Contents



ExhibitNumber

Description10
.17*

Amended and Restated Letter of Agreement between the Registrant
    and V. Sebastian Pastore dated March 12, 2009 (incorporated by
    reference from Exhibit 10.3 to the Registrants Current
    Report on Form 8-K filed on March 25, 2009)10
.18*

Amended and Restated Letter of Agreement between the Registrant
    and Martin J. Wall, IV dated March 12, 2009 (incorporated by
    reference from Exhibit 10.4 to the Registrants Current
    Report on Form 8-K filed on March 25, 2009)10
.19*

Employment Agreement between the Registrant and Kurt Widmer
    dated June 30, 2008 (incorporated by reference from Exhibit 10.2
    to the Registrants Current Report on Form 8-K filed on
    July 2, 2008)10
.20*

Employment Agreement between the Registrant and Robert Widmer
    dated June 30, 2008 (incorporated by reference from Exhibit 10.9
    to the Registrants Current Report on Form 8-K filed on
    July 2, 2008)10
.21*

Non-Competition and Non-Solicitation Agreement dated June 30,
    2008 between the Registrant and Kurt Widmer  (incorporated by
    reference from Exhibit 10.10 to the Registrants Current
    Report on Form 8-K filed on July 2, 2008)10
.22*

Non-Competition and Non-Solicitation Agreement dated June 30,
    2008 between the Registrant and Robert Widmer  (incorporated by
    reference from Exhibit 10.11 to the Registrants Current
    Report on Form 8-K filed on July 2, 2008)10
.23*

Summary of Compensation Arrangements for Non-Employee Directors10
.24*

Form of Lock-Up Agreement with Kurt Widmer, Robert Widmer and
    Terry Michaelson (incorporated by reference from Exhibit B to
    the Agreement and Plan of Merger dated November 13, 2007,
    between the Registrant and Widmer Brothers Brewing Company,
    which was filed as Exhibit 2.1 to the Registrants Current
    Report on Form 8-K filed on November 13, 2007)10
.25

Services Agreement dated January 1, 2009 between the
    Registrant and Kona Brewery LLC10
.26

Sublease between Pease Development Authority as Sublessor and
    the Registrant as Sublessee, dated May 30, 1995 (incorporated by
    reference from Exhibit 10.11 to the Registrants
    Registration Statement on Form S-1, No. 33-94166)10
.27

Assignment of Sublease and Assumption Agreement dated as of July
    1, 1995, between the Registrant and CBA of New Hampshire, Inc.
    (incorporated by reference from Exhibit 10.24 to the
    Registrants Registration Statement on Form S-1, No.
    33-94166)10
.28

Loan Agreement dated as of July 1, 2008 between Registrant and
    Bank of America, N.A. (incorporated by reference from Exhibit
    10.1 to the Registrants Current Report on Form 8-K filed
    on July 7, 2008)10
.29

Loan Modification Agreement dated November 14, 2008 to Loan
    Agreement dated July 1, 2008 between Registrant and Bank of
    America, N.A. (incorporated by reference from Exhibit 10.1 to
    the Registrants Form 10-Q for the quarter ended September
    30, 2008)10
.30

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
    Registrants Current Report on Form 8-K filed on July 2,
    2004)10
.31

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 Registrants Current
    Report on Form 8-K filed on July 2, 2004)10
.32

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 Registrants Current
    Report on Form 8-K filed on July 2, 2004)10
.33

Consent and Amendment dated as of July 1, 2008 among the
    Registrant, Widmer Brothers Brewing Company, Craft Brands
    Alliance LLC, and Anheuser-Busch, Incorporated (incorporated by
    reference from Exhibit 10.1 to the Registrants Current
    Report on Form 8-K filed on July 2, 2008)10
.34

Master Lease Agreement dated as of June 6, 2007 between Banc of
    America Leasing & Capital, LLC and Widmer Brothers Brewing
    Company (incorporated by reference to Exhibit 10.2 from
    Amendment No. 1 to the Registrants Registration Statement
    on Form S-4, No. 333-149908 filed on May 1, 2008 (S-4
    Amendment No. 1)) 88




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##### Table of Contents



ExhibitNumber

Description10
.35

Amended and Restated License Agreement dated as of February 28,
    1997 between Widmer Brothers Brewing Company and Widmers
    Wine Cellars, Inc. and Canandaigua Wine Company, Inc.
    (incorporated by reference to Exhibit 10.3 from the S-4
    Amendment No. 1)10
.36

Restated Lease dated as of January 1, 1994 between Smithson
    & McKay Limited Liability Company and Widmer Brothers
    Brewing Company (incorporated by reference to Exhibit 10.4 from
    the S-4 Amendment No. 1)10
.37

Commercial Lease (Restated) dated as of December 18, 2007
    between Widmer Brothers LLC and Widmer Brothers Brewing Company
    (incorporated by reference to Exhibit 10.5 from the S-4
    Amendment No. 1)10
.38

Amended and Restated Continental Distribution and Licensing
    Agreement between the Registrant and Kona Brewing LLC dated
    March 26, 200923
.1

Consent of Moss Adams LLP, Independent Registered Public
    Accounting Firm31
.1

Certification of Chief Executive Officer of Craft Brewers
    Alliance, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2

Certification of Chief Financial Officer of Craft Brewers
    Alliance, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1

Certification of Chief Executive Officer of Craft Brewers
    Alliance, Inc. pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer of Craft Brewers
    Alliance, Inc. pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002     *
    
    Denotes a management contract or a compensatory plan or
    arrangement.
    
    Confidential treatment has been requested with respect to
    portions of this exhibit. A complete copy of the agreement,
    including the redacted terms, has been separately filed with the
    Securities and Exchange Commission 89