##### 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,
    2009oro

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-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ   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 26, 2010.
  (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


16ITEM 1B.


Unresolved Staff Comments


22ITEM 2.


Properties


22ITEM 3.


Legal Proceedings


23ITEM 4.


Reserved


23PART IIITEM 5.


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


25ITEM 6.


Selected Financial Data


25ITEM 7.


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


25ITEM 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


44ITEM 8.


Financial Statements and Supplementary Data


45ITEM 9.


Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


77ITEM 9A(T).


Controls and Procedures


77ITEM 9B.


Other Information


78PART IIIITEM 10.


Directors, Executive Officers and Corporate
    Governance


78ITEM 11.


Executive Compensation


78ITEM 12.


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


78ITEM 13.


Certain Relationships and Related Transactions,
    and Director Independence


79ITEM 14.


Principal Accountant Fees and Services


79PART IVITEM 15.


Exhibits and Financial Statement Schedules


79SIGNATURES


80EX-10.14EX-10.15EX-10.16EX-10.17EX-10.18EX-10.23EX-23.1EX-31.1EX-31.2EX-32.1   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 attempts to utilize third-party sources of
    information that the Company believes to be materially complete,
    accurate and reliable, there is no assurance of the accuracy,
    completeness or reliability of third-party information.
 PART I  Item 1.
    Business  Widmer
    Hefeweizen
       1




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Merger
    with Widmer
      Industry
    Background
       2




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##### Table of Contents



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 the A-B distribution
    network and A-B. A-Bs
  Control of production.
  Sales and marketing efforts focused on identifying and
    monetizing profitable channel
    opportunities.
 3




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Promotion of products.
  Products
    Pacific
    Ridge Pale Ale
       4




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Widmer
    Brothers Beers
  Widmer Hefeweizen.
  Drifter Pale Ale
    (Drifter).
  Other Year Round Brands

Seasonal OfferingsBroken Halo India Pale Ale (IPA)

W Series  Available late Winter through
    early SummerDeadlift Imperial IPA  introduced in 2010

Okto  Available late Summer and FallDrop Top Amber Ale 2008 GABF Gold Medal Winner

Brrr  Available late Fall and Winter   Brothers Reserve.
  Redhook
    Beers
  Long Hammer IPA (Long Hammer).  Long
    Hammer
  Redhook ESB (ESB). ESB
  Other Year Round Brands

Seasonal OfferingsCooperhook Ale

Mudslinger Spring Ale Available late Winter
    and SpringLate Harvest Autumn Ale Available late Summer
    and FallWinterhook Winter Ale Available late Fall and
    Winter   Limited Release Series
  Kona
    Brewing Beers
  Longboard Island Lager
    (Longboard).
 5




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Fire Rock Pale Ale (Fire Rock).  Fire
    Rock
  Seasonal
    Offerings
  Wailua Wheat (Wailua). Wailua
  Pipeline Porter
    (Pipeline). Pipeline
  New Products and Brands .
  Contract brewing.
  Brewing
    Operations
  The Brewing Process.
   6




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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 34 400-barrel 400-barrel, 200-barrel, 600-barrel 130-barrel
  Packaging.
  Quality Assurance.
  
    Microbiology
    Brewing Chemistry
    Sensory Evaluation
    Packaged Quality & Integrity   7




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##### Table of Contents



Ingredients and Raw Materials.
  Product
    Distribution
      Relationship with
    A-B
     8




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Relationship
    with Anheuser-Busch, Incorporated
      Kona-branded
  A-B
 9




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##### Table of Contents



Fees.
  Margin and Additional Margin. A-B
  Invoicing Cost.
  Staging Cost and Cooperage Handling
    Charge. A-B
 10




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Inventory Manager Fee.
    Wholesaler Support Center (WSC)
    Fee. A-B
      A-B
  Relationship
    with Craft Brands Alliance LLC
   11




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Rule 8-03(b)(3) Regulation S-X, Equity
    Investments.
  Sales and
    Marketing
    co-operative
  on-site point-of-sale
  word-of-mouth point-of-sale
 12




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Properties
    Seasonality
    Competition
  Industry Background
         13




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Smirnoff Ice, Bacardi Silver Mikes Hard Lemonade
    Alcohol
    Beverage Regulation and Taxation
    Licenses and Permits.
 14




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##### Table of Contents



out-of-state
  Taxation.
  Federal and State Environmental
    Regulation.
  Dram Shop Laws.
  Trademarks
    Employees
   15




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Available
    Information
  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 prolonged
    U.S. economic recession.
  Increased competition could adversely affect sales and
    results of operations.
  We are dependent upon our continuing relationship with A-B
    and the current distribution
    network.
 16




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Our agreements with A-B place limitations on our ability to
    engage in or reject certain transactions, including acquisitions
    and changes of control.
  A-B has significant control and influence over
    us.
  The impact of A-Bs ownership by a global consumer
    products conglomerate on our business remains
    unclear.
  We may incur significant operational expenses as a result of
    changes in the A-B distribution network.
  We are dependent on our distributors for the sale of our
    products.
 17




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We are dependent on certain A-B information systems and
    operational support.
  We face liquidity risk.
  Operating breweries at production levels substantially below
    their current designed capacities could negatively impact our
    gross margins.
  Our sales are concentrated in the Pacific Northwest and
    California.
  The craft beer business is seasonal in nature, and we are
    likely to experience fluctuations in results of operations and
    financial condition.
 18




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Changes in consumer preferences or public attitudes about
    alcohol could decrease demand for our
    products.
  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.
   19




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An increase in excise taxes could adversely affect our
    financial condition and results of
    operations.
  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 use of fixed price contracts for significant portions of
    our key raw materials may result in a cost structure greater
    than our competitors.
  We are dependent on certain suppliers for key raw materials,
    packaging materials and production
    inputs. back-up
 20




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Loss of income tax benefits could negatively impact our
    results of operations.
  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.
    A small number of shareholders hold a significant ownership
    percentage of the Company and uncertainty over their continuing
    ownership plans could cause the market price of our common stock
    to decline. lock-up
  Our relationships with Kona and FSB may not provide
    anticipated benefits.
 21




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The fair value of our intangible Widmer trademark asset may
    experience future declines.
  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.
  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Overview
  The Washington Brewery. 100-barrel month-to-month
  The Oregon Brewery. 230-barrel
 22




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##### Table of Contents



The New Hampshire Brewery.
  The Rose Quarter Brewery. 10-barrel
    Item 3.
    Legal
    Proceedings    Item 4.
    Reserved  Executive
    Officers of the Company
  Terry E.
    Michaelson (56)  Chief Executive Officer
    Mark D.
    Moreland (45)  Chief Financial Officer and
    Treasurer
   23




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##### Table of Contents



V.
    Sebastian Pastore (43)  Vice President, Brewing
    Operations and Technology
  Coca-Cola
  Martin J.
    Wall (38)  Vice President, Sales
    Danielle
    A. Katcher (39)  Vice President, Marketing
     24




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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    2009


2008High


Low


High


LowFirst quarter

$
1.32


$
0.85


$
6.63


$
4.00Second quarter

$
2.78


$
0.93


$
4.90


$
3.85Third quarter

$
4.20


$
1.61


$
4.89


$
2.78Fourth quarter

$
3.87


$
2.03


$
3.80


$
1.11       Item 6.
    Selected
    Financial Data    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  period-to-period period-to-period
  Merger
    with Widmer Brothers Brewing Company
     25




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Overview
    Widmer Hefeweizen
          Widmer Hefeweizen
   26




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 Product Distribution,  Relationship with Anheuser-Busch,
    Incorporated  Relationship
    with Craft Brands Alliance LLC.
  Shock Top Belgian White Blue Moon Belgian White Hefeweizen
     27




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
    Brewhouse capacity, fermentation capacity, and packaging
    capacity;
    A normal production year;
    The brand mix and associated product cycle times; and
    Brewing losses and packaging losses.        Annual WorkingCapacity atDecember 31, 2009(In barrels)Oregon Brewery(1)


481,000Washington Brewery


236,000New Hampshire Brewery


212,000929,000        28




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Brand
    Trends
  Widmer Brothers Beers. Widmer Hefeweizen Shock Top Belgian White Blue
    Moon Belgian White Widmer Hefeweizen
  Widmer Hefeweizen Widmer Hefeweizen
  Widmer Hefeweizen Drop Top Amber Ale Drifter Pale Ale.
    Drifter Pale Ale
  Widmer Hefeweizen
  Redhook Beers. Redhook IPA Long Hammer IPA Long Hammer IPA Long Hammer IPA
 29




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Long Hammer IPA
  Copperhook Ale Mudslinger Spring
    Ale
    Kona Brewing Beers.
  Longboard Island Lager Longboard Island Lager Fire
    Rock Pale Ale
     30




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##### Table of Contents



Results
    of Operations
    Year Ended December 31,2009


2008Sales


107.0
%


107.8
%Less excise taxes


7.0



7.8Net sales


100.0



100.0Cost of sales


77.4



82.3Gross profit


22.6



17.7Selling, general and administrative expenses


20.5



24.9Loss on impairment of assets






38.4Merger-related expenses


0.2



2.2Income from equity investment in Craft Brands






1.7Operating income (loss)


1.9



(46.1
)Income from equity investments in Kona & FSB


0.4



Interest expense


(1.7
)


(1.2
)Interest and other income, net


0.3



0.1Income (loss) before income taxes


0.9



(47.2
)Income tax provision (benefit)


0.2



(5.5
)Net income (loss)


0.7
%


(41.7
)%   Non-GAAP Financial
    Measures
  Liquidity and Capital
    Resources.
  For the Trailing FourQuarters EndedDecember 31, 2009(In thousands)Net income

$
887Interest expense


2,139Income tax provision


186Depreciation expense


6,378Amortization expense


935Merger-related expenses


225Other non-cash charges


74EBITDA per the modified loan agreement

$
10,824  31




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##### Table of Contents



Year
    Ended December 31, 2009 Compared with Year Ended
    December 31, 2008
    Year Ended December 31,


Increase2009


2008


(Decrease)


% Change(Dollars in thousands)Sales

$
131,704


$
86,013


$
45,691



53.1
%Less excise taxes


8,595



6,252



2,343



37.5Net sales


123,109



79,761



43,348



54.3Cost of sales


95,349



65,646



29,703



45.2Gross profit


27,760



14,115



13,645



96.7Selling, general and administrative expenses


25,188



19,894



5,294



26.6Loss on impairment of assets






30,589



(30,589
)


(100.0
)Merger-related expenses


225



1,783



(1,558
)


(87.4
)Income from equity investment in Craft Brands






1,390



(1,390
)


(100.0
)Operating income (loss)


2,347



(36,761
)


39,108



N/MIncome (loss) from equity investments in Kona and FSB


552



(11
)


563



N/MInterest expense


(2,139
)


(993
)


(1,146
)


115.4Interest and other income, net


313



110



203



184.5Income (loss) before income taxes


1,073



(37,655
)


38,728



N/MIncome tax provision (benefit)


186



(4,377
)


4,563



N/MNet income (loss)

$
887


$
(33,278
)

$
34,165



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


IncreaseSales Revenues by Category

2009


2008


(Decrease)


% Change(Dollars in thousands)A-B

$
110,515


$
62,364


$
48,151



77.2
%Craft Brands






6,914



(6,914
)


(100.0
)Contract brewing


431



2,956



(2,525
)


(85.4
)Alternating proprietorship


10,744



5,761



4,983



86.5Pubs and other(1)


10,014



8,018



1,996



24.9Total Sales

$
131,704


$
86,013


$
45,691



53.1
%     Note 1 
    Other includes international, non-wholesalers and other
  
    An increase in shipments of 244,600 barrels or 74.4% to A-B
    from shipments of 328,600 barrels in 2008 to
    573,200 barrels in 2009 due in large part to the effects of
    the Merger. This increase in shipments is primarily due to
    shipments of Widmer-branded products inclusive of all shipment
    activities and Kona-branded products pursuant to a distribution
    agreement with Kona. The Company did not sell Kona-branded
    products prior to the Merger, effective July 1, 2008, and
    only sold the Widmer-branded Widmer Hefeweizenunder
    agreements with Craft Brands and with Widmer, as discussed
    below, which were terminated as a result of the Merger. 32




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##### Table of Contents




    The increase in revenues was also due to shipments in the West
    being made via A-B at wholesale pricing levels for the entire
    period in 2009 as compared with 2008 during which the first six
    months prior to the Merger, shipments were made through Craft
    Brands at below wholesaler pricing levels. Contributing to this
    increase were price increases at the wholesale level for the
    Companys draft and bottled products and the package mix
    shift towards a higher percentage of bottled products to total
    shipments for 2009 compared with 2008.
    The termination of the Craft Brand distribution agreement and
    the contract brewing agreement with Widmer as a result of the
    Merger and the related merger of Craft Brands led to a reduction
    in sales revenues for Craft Brands and contract brewing of
    $6.9 million and $2.5 million, respectively, from
    fiscal year 2008 to fiscal year 2009. The decrease in contract
    revenues was partially offset by revenues earned during 2009,
    beginning in the third quarter, under the Companys
    contract brewing arrangement with a third party.
    Revenues included an increase of alternating proprietorship fees
    of $5.0 million earned from Kona for leasing the Oregon
    Brewery and sales of raw materials during all of 2009 while such
    leasing activity occurred only in the second half of 2008 as no
    such activity occurred prior to the Merger.
    Revenues from pub and other sales increased by $2.0 million
    for 2009 primarily due to the sales generated by the pub in
    Portland, Oregon, for the full year in 2009 as compared with
    2008, which were only for the second half of 2008 as a result of
    the Merger.  Shipments  Customer.
  Year Ended December 31,2009  Shipments


2008  Shipments


Increase


%Draft


Bottle


Total


Draft


Bottle


Total


(Decrease)


Change(In barrels)A-B


229,400



340,800



573,200



142,400



186,200



328,600



244,600







74.4
%Craft Brands














16,300



41,800



58,100



(58,100
)






(100.0
)Contract brewing


5,000







5,000



16,500



14,500



31,000



(26,000
)






(83.9
)Pubs and other(1)


7,100



5,200



9,300



5,300



1,900



7,200



2,100







29.2Total shipped


241,500



346,000



587,500



180,500



244,400



424,900



162,600







38.3
%     Note 1 
    Other includes international, non-wholesalers, pubs and other
      Pricing and Fees. agreed-upon
 33




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Shipments  Brand.
  Year Ended December 31,2009  Shipments


2008  Shipments


Increase


%Draft


Bottle


Total


Draft


Bottle


Total


(Decrease)


Change(In barrels)Widmer brand(1)


144,600



141,100



285,700



100,700



76,800



177,500



108,200



61.0
%Redhook brand


50,100



133,500



183,600



61,000



139,800



200,800



(17,200
)


(8.6
)Kona brand


41,800



71,400



113,200



18,800



27,800



46,600



66,600



142.9Total shipped(2)


236,500



346,000



582,500



180,500



244,400



424,900



157,600



37.1
%     Notes: 1
    Shipments of Widmer-branded product
    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.  2 
    Total shipments by brand exclude private label shipments
    produced under the Companys contract brewing arrangement.  Widmer Hefeweizen Widmer Hefeweizen
 34




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Excise Taxes.
  Cost of Sales.
  Widmer
    Hefeweizen
 35




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##### Table of Contents



Overview
    Selling, General and Administrative
    Expenses.
   36




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##### Table of Contents




    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. There were not significant costs associated with
    this action in 2009.
    The Company incurs costs for the promotion of its products
    through a variety of advertising programs with its wholesalers
    and downstream retailers. These costs are included in SG&A
    expenses and frequently involve the local wholesaler sharing in
    the cost of the program. Reimbursements from wholesalers for
    advertising and promotion activities are recorded as a reduction
    to SG&A expenses in the Companys statements of
    operations. Reimbursements for pricing discounts to wholesalers
    are recorded as a reduction to sales. The wholesalers
    contribution toward these activities was an immaterial
    percentage of net sales for the year ended December 31,
    2009 and 2008, respectively.  Loss on Impairment of Assets. Critical Accounting Policies and
    Estimates
  Merger-related Expenses.
  Exit or Disposal Cost
    Obligations (formerly referenced as Statement of Financial
    Accounting Standards Accounting for Costs Associated with Exit or Disposal
    Activities
   37




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##### Table of Contents



Income from Equity Investment in Craft
    Brands.
  Income (Loss) from Equity Investments in Kona and
    FSB.
  Interest Expense.
  Interest and Other Income, net.
  Income Taxes.  Critical Accounting Policies
    and Estimates
    Liquidity
    and Capital Resources
   38




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##### Table of Contents



250-barrel
  sub-limit.
       39




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##### Table of Contents



agreed-upon
    Financial
    Covenants Required by Loan Agreement
    as Revised by the Modification Agreement
  Ratio of Funded Debt to EBITDA, as definedFrom March 31, 2010 through September 30, 2010


3.50 to 1From December 31, 2010 and thereafter


3.00 to 1Fixed Charge Coverage Ratio


1.25 to 1Asset Coverage Ratio


1.50 to 1        40




---



##### Table of Contents



Trend
      Certain
    Considerations: Issues and Uncertainties
    Critical
    Accounting Policies and Estimates
   41




---



##### Table of Contents



Goodwill, other intangible assets and long-lived
    assets. Intangibles  Goodwill and Other Goodwill and Other Intangible Assets
  Loss on Impairment of
    Assets
  360-10-35-15, Property, Plant, and Equipment 
    Overall  Subsequent Measurement 
    Impairment or Disposal of Long-Lived Assets Accounting for the
    Impairment or Disposal of Long-Lived Assets.
  Refundable Deposits on Kegs.
   42




---



##### Table of Contents



Revenue Recognition.
      Income Taxes. Income Taxes Accounting for Income Taxes
       43




---



##### Table of Contents



Fair value of financial instruments.
  Derivatives and Hedging Accounting for
    Derivative Instruments and Hedging Activities
  Recent
    Accounting Pronouncements
  Amendments to FASB Interpretation No. 146(R) 810-10, Consolidation  Overall
  The
    FASB Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles  a
    replacement of FASB Statement No. 162 Generally Accepted Accounting
    Principles
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk     44




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               45




---



##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  BALANCE
    SHEETS
  December 31,


December 31,2009


2008(Dollars in thousands except  per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
11


$
11Accounts receivable, net of allowance for doubtful accounts of
    $50 and $64 at December 31, 2009 and 2008, respectively


11,122



12,499Inventories, net


9,487



9,729Income tax receivable






724Deferred income tax asset, net


970



767Other current assets


3,941



3,951Total current assets


25,531



27,681Property, equipment and leasehold improvements, net


97,339



101,389Equity investments


5,702



5,189Intangible and other assets, net


13,013



13,546Total assets

$
141,585


$
147,805LIABILITIES AND COMMON STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
14,672


$
15,000Accrued salaries, wages, severance and payroll taxes


4,432



3,630Refundable deposits


6,288



6,191Other accrued expenses


1,185



2,393Current portion of long-term debt and capital lease obligations


1,481



1,394Total current liabilities


28,058



28,608Long-term debt and capital lease obligations, net of current
    portion


24,685



31,834Fair value of derivative financial instruments


842



1,252Deferred income tax liability, net


7,015



6,552Other liabilities


353



278Commitments and contingenciesCommon stockholders equity:Common stock, par value $0.005 per share, 50,000,000 shares
    authorized; 17,074,063 shares and 16,948,063 shares at
    December 31, 2009 and 2008, respectively, issued and
    outstanding


85



85Additional paid-in capital


122,682



122,433Accumulated other comprehensive loss, net


(478
)


(693)Retained deficit


(41,657
)


(42,544)Total common stockholders equity


80,632



79,281Total liabilities and common stockholders equity

$
141,585


$
147,805    46




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##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  STATEMENTS
    OF OPERATIONS
  Year Ended December 31,2009


2008(In thousands, exceptper share amounts)Sales

$
131,704


$
86,013Less excise taxes


8,595



6,252Net sales


123,109



79,761Cost of sales


95,349



65,646Gross profit


27,760



14,115Selling, general and administrative expenses


25,188



19,894Loss on impairments of assets






30,589Merger-related expenses


225



1,783Income from equity investment in Craft Brands






1,390Operating income (loss)


2,347



(36,761
)Income (loss) from equity investments in Kona and FSB


552



(11
)Interest expense


(2,139
)


(993
)Interest and other income, net


313



110Income (loss) before income taxes


1,073



(37,655
)Income tax provision (benefit)


186



(4,377
)Net income (loss)

$
887


$
(33,278
)Basic and diluted earnings (loss) per share

$
0.05


$
(2.63
)    47




---



##### 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


Loss, Net


Deficit


Equity(In thousands)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 loss:Unrealized losses on derivative financial instruments, net of
    tax benefit 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
)


79,281Issuance of shares under stock plans


108







207











207Stock-based compensation


18







42











42Comprehensive income:Unrealized gains on derivative financial instruments, net of tax
    provision of $117














215







215Net income


















887



887Total comprehensive income






















1,102Balance as of December 31, 2009


17,074


$
85


$
122,682


$
(478
)

$
(41,657
)

$
80,632    48




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##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  STATEMENTS
    OF CASH FLOWS
   Year Ended December 31,2009


2008(In thousands)Operating ActivitiesNet income (loss)

$
887


$
(33,278
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


7,313



5,474Income from equity investments less than (in excess of) cash
    distributions from Craft Brands


(552
)


88Deferred income taxes


(56
)


(4,400
)Loss on impairment of assets






30,589Provision for inventory obsolescence


(30
)


155Loss on sale or disposal of property, equipment and leasehold
    improvements


31



42Stock-based compensation


42



20Other


(106
)


(45
)Changes in operating assets and liabilities:Accounts receivable


1,391



1,416Trade receivables from Craft Brands






120Inventories


(202
)


(1,844
)Income tax receivable and other current assets


791



(2,709
)Other assets


72



(295
)Accounts payable and other accrued expenses


(1,162
)


(1,134
)Trade payable to Craft Brands






60Accrued salaries, wages, severance and payroll taxes


802



734Refundable deposits and other liabilities


(306
)


134Net cash provided by (used in) operating activities


8,915



(4,873
)Investing ActivitiesExpenditures for property, equipment and leasehold improvements


(2,303
)


(6,667
)Proceeds from sale of property, equipment and leasehold
    improvements


136



442Cash acquired in acquisition of Widmer Brothers Brewing Company,
    net






2,274Other, net


39



Net cash used in investing activities


(2,128
)


(3,951
)Financing ActivitiesPrincipal payments on debt and capital lease obligations


(1,394
)


(642
)Net borrowings (repayments) under revolving line of credit


(5,600
)


3,500Issuance of common stock


207



475Amounts paid for debt issue costs






(25
)Net cash provided by (used in) financing activities


(6,787
)


3,308Increase (decrease) in cash and cash equivalents






(5,516
)Cash and cash equivalents:Beginning of period


11



5,527End of period

$
11


$
11Supplemental DisclosuresCash paid for interest

$
2,265


$
837Cash paid (received) for income taxes

$
(760
)

$
47Non-cash TransactionNet assets of Widmer Brothers Brewing Company acquired in
    exchange for issuance of common stock and assumption of debt
    (see Note 11)

$



$
80,072    49




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##### Table of Contents



CRAFT
    BREWERS ALLIANCE, INC.
  NOTES
    TO FINANCIAL STATEMENTS
  1.
    Nature of
    Operations            2.
    Significant
    Accounting Policies  Cash
    and Cash Equivalents
   50




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Accounts
    Receivable
    Inventories
  first-in,
      Equity
    Investments
     51




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    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   Intangible
    Assets
  Goodwill and
    Intangible Assets Intangibles  Goodwill and Other
      Accounting
    for the Impairment or Disposal of Long-Lived Assets 360-10-20, Property, Plant, and Equipment 
    Overall  Glossary  Component of an
    Entity
 52




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Trade name and trademarks

IndefiniteRecipes

IndefiniteDistributor agreements

15 yearsNon-compete agreements

3 years   Refundable
    Deposits on Kegs
      Fair
    Value of Financial Instruments
      Derivatives and Hedging Accounting for Derivative Instruments
    and Hedging Activities
 53




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Comprehensive
    Income
  Comprehensive Income Reporting Comprehensive Income
  Revenue
    Recognition
        Excise
    Taxes
    Shipping
    and Handling Costs
   54




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Advertising
    Expenses
      Stock-Based
    Compensation
  Compensation  Stock Compensation Share-Based Payment
  Earnings
    (Loss) per Share
  Earnings per Share Earnings per
    Share
  Income
    Taxes
  Income Taxes Accounting for Income Taxes
   55




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Segment Information
  Segment
    Reporting Disclosures about Segments of an Enterprise and Related
    Information
  Use of
    Estimates
    Reclassifications
    Recent
    Accounting Pronouncements
  Amendments to FASB Interpretation No. 146(R) 810-10, Consolidation  Overall
  The FASB Accounting Standards
    Codification and the Hierarchy of Generally Accepted Accounting
    Principles  a replacement of FASB Statement
    No. 162 Generally Accepted Accounting Principles
 56




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   3.
    Inventories    December 31,2009


2008(In thousands)Raw materials

$
3,660


$
4,258Work in process


2,023



1,921Finished goods


1,647



1,624Packaging materials, net


954



950Promotional merchandise, net


1,122



907Pub food, beverages and supplies


81



69$
9,487


$
9,729     4.
    Other
    Current Assets    December 31,2009


2008(In thousands)Deposits paid to keg lessor

$
3,279


$
3,182Prepaid property taxes


171



177Prepaid insurance


88



201Other


403



391$
3,941


$
3,951   5.
    Property,
    Equipment, and Leasehold Improvements    December 31,2009


2008(In thousands)Brewery equipment

$
75,734


$
74,224Buildings


50,896



50,927Land and improvements


7,594



7,573Furniture, fixtures and other equipment


3,234



3,931Leasehold improvements


2,946



2,731Vehicles


105



84Construction in progress


924



675141,433



140,145Less accumulated depreciation and amortization


44,094



38,756$
97,339


$
101,389  57




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    6.
    Equity
    Investments    December 31,2009


2008(In thousands)Fulton Street Brewery, LLC (FSB)

$
4,544


$
4,103Kona Brewery LLC (Kona)


1,158



1,086$
5,702


$
5,189   FSB
    Kona
        Craft
    Brands
   58




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
              2008 Period ThroughTermination ofCraft Brands(Dollars in thousands)Net sales

$
38,463Gross profit

$
12,089Operating income

$
3,311Income before income taxes

$
3,310Net income

$
3,310Shipments (in barrels)


180,300   7.
    Intangible
    and Other Assets    December 31,2009


2008(In thousands)Trademarks and other

$
10,027


$
10,027Distributor agreements


2,200



2,200Recipes


700



700Non-compete agreements


100



100Favorable contracts


643



643Promotional merchandise


321



39313,991



14,063Less accumulated amortization


978



517$
13,013


$
13,546  59




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      December 31,2009


2008(In thousands)Trademarks and other

$
203


$
201Distributor agreements


220



73Non-compete agreements


50



17Favorable contracts


505



226$
978


$
517     Year Ended December 31,Estimated Amortization Expense

2010


2011


2012


2013


2014(In thousands)Trademarks and other

$
3


$
3


$
3


$
3


$
3Distributor agreements


147



147



147



147



147Non-compete agreements


33



17











Favorable contracts


104



28



5



1



$
287


$
195


$
155


$
151


$
150   8.
    Debt and
    Capital Lease Obligations    December 31,2009


2008(In thousands)Term loan payable to bank, due July 1, 2018

$
13,012


$
13,363Line of credit payable to bank, due January 1, 2013


6,400



12,000Promissory notes payable to individual lenders, all due
    July 1, 2015


600



600Premium on promissory notes


587



654Capital lease obligations on equipment


5,567



6,61126,166



33,228Less current portion of long-term debt


1,481



1,394$
24,685


$
31,834   sub-limit.
 60




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        agreed-upon
    Financial
    Covenants Required by the Loan Agreement
    as Revised by the Modification Agreement
  Ratio of Funded Debt to EBITDA, as definedFrom March 31, 2010 through September 30, 2010


3.50 to 1From December 31, 2010 and thereafter


3.00 to 1Fixed Charge Coverage Ratio


1.25 to 1Asset Coverage Ratio


1.50 to 1
  61




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
           62




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Long Term Debt


CapitalLine of


Term


Promissory


LeaseCredit


Loan


Notes


Obligations(In thousands)Succeeding periods:2010

$



$
374


$



$
1,4402011






396







1,4322012






421







1,4292013


6,400



451







1,4282014






477







714Thereafter






10,893



600



6,400



13,012



600



6,443Amounts representing interest














(876
)$
6,400


$
13,012


$
600


$
5,567   9.
    Derivative
    Financial Instruments and Fair Value Measurements  Interest
    Rate Swap Contracts
        63




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Liability Derivatives at December 31, 2009Balance Sheet Location

Fair Value(In thousands)Derivatives designated as hedging instruments under ASC
    815Interest rate swap contracts

Non-current liabilities  derivative financial
    instruments

$
768Derivatives not designated as hedging instruments under
    ASC 815Interest rate swap contracts

Non-current liabilities  derivative financial
    instruments


74Total derivatives

$
842     Fair
    Value Measurements
  Value Measurements and Disclosures Fair Value
    Measurements
  Level 1:
  Level 2:
  Level 3:
    Fair Value Hierarchy AssessmentLevel 1


Level 2


Level 3


Total(In thousands)2009RecurringDerivative financial instruments  interest rate swap
    contracts

$



$
842


$



$
8422008RecurringDerivative financial instruments  interest rate swap
    contracts

$



$
1,242


$



$
1,242Non-RecurringGoodwill














Trademark










10,002



10,002Equity Investments










5,189



5,189  64




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   10.
    Common
    Stockholders Equity  Issuance
    of Common Stock
  Stock-Based Compensation
    Expense
  Stock-Based Compensation Expense
    Stock
    Plans
         65




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Stock-Based
    Compensation Expense
  Issuance of Common Stock
  Compensation  Stock Compensation Share-based Payments
  Stock
    Option Plan Activity
    Weighted AverageRemaining


AggregateExercise


Contractual


IntrinsicOptions


Price


Life


Value(In thousands)


(Per share)


(In years)


(In thousands)Outstanding at December 31, 2008


431


$
2.61



2.4


$
Granted


30



1.25



10.0



Exercised


(108
)


(1.92
)


(2.3
)Canceled


(106
)


(2.31
)


(2.2
)Expired


(110
)


(3.97
)


(0.4
)Outstanding at December 31, 2009


137


$
2.00



4.4


$
67Exercisable at December 31, 2009


107


$
2.22



3.0


$
33    66




---



##### Table of Contents



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


ExercisableWeighted Average





Weighted AverageRemaining








RemainingExercise


Contractual





Exercise


ContractualRange of Exercise Prices

Options


Price


Life


Options


Price


Life(In thousands)


(Per share)


(In years)


(In thousands)


(Per share)


(In years)$1.25 to $2.00


51


$
1.47



5.9



21


$
1.78



1.3$2.01 to $3.00


70



2.13



3.0



70



2.13



3.0$3.01 to $3.15


16



3.15



5.4



16



3.15



5.4$1.25 to $3.15


137


$
2.00



4.4



107


$
2.22



3.0     2009Total number of options granted


30,000Estimated fair value of each option granted

$
0.89Total estimated fair value of all options granted (in thousands)

$
27     2009Expected life (years)


10 yrs.Risk-free interest rate


2.87
%Expected volatility rate


60.98
%Expected dividend yield


0.00
%   11.
    Merger
    with Widmer     67




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Merger-Related
    Costs
  Business
    Combinations
  Year Ended December 31,2009


2008(In thousands)Merger-related costs and expenses reflected in Statements of
    Operations

$
225


$
1,783   Exit or Disposal Cost Obligations Accounting for Costs Associated with Exit or Disposal
    Activities
  Accounting
    for the Acquisition of Widmer
      Unaudited
    Pro Forma Results of Operations
    Pro Forma Resultsfor the Year EndedDecember 31, 2008(In thousands, exceptper share data)Net sales

$
117,654Loss before income taxes

$
(39,287
)Net loss

$
(34,357
)Basic and diluted loss per share

$
(2.03
)  68




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    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        69




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      13.
    Earnings
    (Loss) per Share    Year Ended December 31,2009


2008(In thousands, except per share amounts)Numerator for basic and diluted earnings (loss) per share:Net income (loss)

$
887


$
(33,278
)Denominator for basic earnings (loss) per share Weighted average common shares outstanding


17,004



12,660Dilutive effect of stock options on weighted average common
    shares


37



Denominator for diluted earnings (loss) per share


17,041



12,660Basic and diluted earnings (loss) per share

$
0.05


$
(2.63
)     14.
    Income
    Taxes    Year Ended December 31,2009


2008(In thousands)Current

$
242


$
23Deferred


(56
)


(4,400
)Income tax provision (benefit)

$
186


$
(4,377
)    70




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended December 31,2009


2008(thousands)Provision (Benefit) at U.S. statutory rate

$
365


$
(12,803
)State taxes, net of federal benefit


119



(418
)Permanent differences, primarily meals and entertainment


171



130Loss on impairment of assets






7,714True up of Merger treatment and accrual of examination issues


118



Increase to deferred tax asset tax rate


313



Valuation allowance


(900
)


1,000Income tax provision (benefit)

$
186


$
(4,377
)    71




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    December 31,2009


2008(In thousands)Deferred tax liabilities:Property, equipment and leasehold improvements

$
11,343


$
10,815Intangible assets


4,743



4,789Equity investments


1,267



1,133Other


123



269Total deferred tax liabilities


17,476



17,006Deferred tax assets:Net operating losses and alternative minimum tax credit
    carryforwards


9,736



10,372Accrued salaries and severance


927



834Other


868



1,015Valuation allowance


(100
)


(1,000
)Total deferred tax assets


11,431



11,221Net deferred tax liability

$
6,045


$
5,785As Presented on the Balance Sheet:Long-term deferred income tax liability, net

$
7,015


$
6,552Current deferred income tax asset, net


970



767Net deferred tax liability

$
6,045


$
5,785        72




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    15.
    Employee
    Benefit Plan    16.
    Commitments      (In thousands)2010

$
7682011


6332012


5232013


4812014


434Thereafter


12,075$
14,914      73




---



##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  10-year
  month-to-month
          Total Noncancelable CommitmentsPurchase


SponsorshipObligations


Obligations


Total(In thousands)2010

$
11,096


$
347


$
11,4432011


3,242



164



3,4062012


1,598







1,5982013


1,422







1,4222014


534







534Thereafter


534







534$
18,426


$
511


$
18,937  74




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##### Table of Contents



Craft
    Brewers Alliance, Inc.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   17.
    Related-Party
    Transactions            Pacific Ridge
        Widmer Hefeweizen
 75




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##### Table of Contents



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




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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).
     77




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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


136,990


$
2.00



127,999Equity compensation plans not approved by security holders










Total


136,990


$
2.00



127,999    78




---



##### 



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 Independent Registered Public
    Accounting Firm  Moss Adams LLP


45Balance Sheets as of December 31, 2009 and
    2008


46Statements of Operations for the Years Ended
    December 31, 2009 and 2008


47Statements of Common Stockholders Equity
    for the Years Ended December 31, 2009 and 2008


48Statements of Cash Flows for the Years Ended
    December 31, 2009 and 2008


49Notes to Financial Statements


50    2.
    Exhibits  Form 10-K.
 79




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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. Michaelson     Terry
    E. Michaelson

Chief Executive Officer 
    (Principal Executive Officer)

March 29, 2010/s/  Mark
    D. Moreland     Mark
    D. Moreland

Chief Financial Officer and Treasurer 
    (Principal Financial Officer)

March 29, 2010/s/  Joseph
    K. OBrien     Joseph
    K. OBrien

Controller 
    (Principal Accounting Officer)

March 29, 2010/s/  Kurt
    R. Widmer     Kurt
    R. Widmer

Chairman of the Board and Director

March 29, 2010/s/  Timothy
    P. Boyle     Timothy
    P. Boyle

Director

March 29, 2010Andrew
    R. Goeler

Director/s/  Kevin
    R. Kelly     Kevin
    R. Kelly

Director

March 29, 2010/s/  David
    R. Lord     David
    R. Lord

Director

March 29, 2010/s/  John
    D. Rogers, Jr.     John
    D. Rogers, Jr.

Director

March 29, 2010Anthony
    J. Short

Director  80




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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 Plan (incorporated by
    reference from Exhibit 10.10 to the Registrants
    Form 10-K
    for the year ended December 31, 2008)10
.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*

Letter of Agreement between the Registrant and Terry E.
    Michaelson dated March 29, 201010
.15*

Letter of Agreement between the Registrant and Mark D. Moreland
    dated March 29, 201010
.16*

Letter of Agreement between the Registrant and V. Sebastian
    Pastore dated March 29, 201010
.17*

Letter of Agreement between the Registrant and Martin J. Wall,
    IV dated March 29, 201010
.18*

Letter of Agreement between the Registrant and Danielle Katcher,
    dated March 29, 201010
.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) 81




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##### Table of Contents



ExhibitNumber

Description10
.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

Services Agreement dated January 1, 2009 between the
    Registrant and Kona Brewery LLC (incorporated by reference from
    Exhibit 10.25 to the Registrants
    Form 10-K
    for the year ended December 31, 2008)10
.25

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
.26

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
.27

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
.28

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
.29

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
.30

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
.31

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
.32

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))10
.33

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
.34

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
.35

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
.36

Amended and Restated Continental Distribution and Licensing
    Agreement between the Registrant and Kona Brewery LLC dated
    March 26, 2009 (incorporated by reference from
    Exhibit 10.38 to the Registrants
    Form 10-K
    for the year ended December 31, 2008)23
.1

Consent of Moss Adams LLP, Independent Registered Public
    Accounting Firm 82




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##### Table of Contents



ExhibitNumber

Description31
.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
    Form 10-K
    for the year ended December 31, 2009 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 83