<PAGE>1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1994
Commission file number 1-7823
ANHEUSER-BUSCH COMPANIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1162835
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Busch Place, St. Louis, Missouri 63118
(Address of principal executive offices) (Zip Code)
314-577-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
$1 Par Value Common Stock - 259,002,817 shares as of October 31, 1994
<PAGE>
<PAGE>2
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions, except per share data)
<CAPTION>
3RD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales........................................ $3,759.3 $3,618.1 $10,383.3 $9,921.5
Less federal and state excise taxes........ 461.4 461.4 1,288.6 1,270.6
-------- -------- -------- --------
Net sales.................................... 3,297.9 3,156.7 9,094.7 8,650.9
Cost of products and services.............. 2,062.0 1,977.4 5,808.4 5,528.4
-------- -------- -------- --------
Gross profit................................. 1,235.9 1,179.3 3,286.3 3,122.5
Marketing, distribution and administrative
expenses................................. 635.7 609.6 1,724.5 1,667.9
Restructuring charge....................... - 565.0 - 565.0
-------- -------- -------- --------
Operating income............................. 600.2 4.7 1,561.8 889.6
Other income and expenses:
Interest expense........................... (54.3) (55.5) (165.1) (155.7)
Interest capitalized....................... 5.6 4.7 15.2 30.4
Interest income............................ 1.3 1.3 2.7 4.4
Other income/(expense), net................ (3.5) .9 3.2 7.7
-------- -------- -------- --------
Income before income taxes................... 549.3 (43.9) 1,417.8 776.4
Provision for income taxes:
Current/deferred........................... (219.9) 1.9 (561.4) (315.7)
Revaluation of deferred tax liability
(FAS 109)................................ - (33.0) - (33.0)
-------- ------- -------- -------
Net income................................... 329.4 (75.0) 856.4 427.7
Retained earnings, January 1................. 6,359.4 6,121.5 6,023.4 5,794.9
Common stock dividends (per share: 3rd
quarter, 1994--$.40; 1993--$.36; nine
months, 1994--$1.12; 1993--$1.00).......... (104.2) (97.4) (295.2) (273.5)
-------- -------- -------- --------
Retained earnings, September 30.............. $6,584.6 $5,949.1 $6,584.6 $5,949.1
======== ======== ======== ========
Primary earnings per share................... $ 1.26 $ (.28) $ 3.23 $ 1.55
======== ======== ======== ========
Fully diluted earnings per share............. $ 1.24 $ (.28) $ 3.20 $ 1.55
========= ======== ======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements on Page 3.
</TABLE>
2
<PAGE>3
Notes to Consolidated Financial Statements
1. Unaudited Financial Statements: The accompanying unaudited financial
statements have been prepared in accordance with generally accepted
accounting principles and applicable SEC guidelines pertaining to
interim financial information. These statements should be read in
conjunction with the financial statements and notes thereto included in
the company's Annual Report to Shareholders for the year ended December
31, 1993. In the opinion of the company's management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of the financial statements have been included therein.
2. Earnings Per Share: Primary earnings per share of common stock are
based on the weighted average number of shares of common stock
outstanding during the period. Fully diluted earnings per share of
common stock assume the conversion of the company's 8% Convertible
Debentures due 1996 and the elimination of related after-tax interest
expense.
3
<PAGE>4
<TABLE>
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions)
<CAPTION>
SEPTEMBER 30,
--------------------
1994 1993
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and marketable securities................. $ 81.4 $ 140.4
Receivables, less allowance for
doubtful accounts............................ 898.1 757.1
Inventories--
Raw materials and supplies................... 338.2 362.8
Work in progress............................. 113.7 102.4
Finished goods............................... 132.6 141.8
Total inventories.......................... 584.5 607.0
Other current assets........................... 324.9 312.5
--------- ---------
Total current assets......................... 1,888.9 1,817.0
INVESTMENTS AND OTHER ASSETS.................... 1,601.3 1,615.4
PLANT AND EQUIPMENT, NET........................ 7,482.0 7,369.2
--------- ---------
$10,972.2 $10,801.6
========= =========
</TABLE>
4
<PAGE>5
<TABLE>
LIABILITIES AND SHAREHOLDER'S EQUITY
(in millions)
<CAPTION>
SEPTEMBER 30,
--------------------
1994 1993
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable............................... $ 717.2 $ 760.7
Accrued salaries, wages and benefits........... 289.9 298.4
Accrued taxes, other than income taxes......... 159.6 163.9
Restructuring accrual.......................... 84.9 239.7
Other current liabilities...................... 426.8 492.0
--------- ---------
Total current liabilities.................... 1,678.4 1,954.7
--------- ---------
POSTRETIREMENT BENEFITS.......................... 632.2 565.2
--------- ---------
LONG-TERM DEBT................................... 2,949.9 2,822.2
--------- ---------
DEFERRED INCOME TAXES............................ 1,265.8 1,145.6
--------- ---------
SHAREHOLDERS EQUITY:
Common stock................................... 343.7 342.0
Capital in excess of par value................. 845.7 781.9
Retained earnings.............................. 6,584.6 5,949.1
Foreign currency translation adjustment........ (31.5) (32.0)
--------- --------
7,742.5 7,041.0
Treasury stock, at cost........................ (2,919.2) (2,320.6)
ESOP debt guarantee offset..................... (377.4) (406.5)
--------- ---------
4,445.9 4,313.9
--------- ---------
COMMITMENTS AND CONTINGENCIES.................... -- --
$10,972.2 $10,801.6
========= =========
</TABLE>
5
<PAGE>6
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions)
<CAPTION>
Nine months ended September 30,
1994 1993
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income...................................... $ 856.4 $ 427.7
Adjustments to net income to arrive at net cash
provided by operations:
Depreciation and amortization............... 465.7 450.9
(Decrease)/Increase in deferred income taxes 95.3 (131.4)
Restructuring charge........................ - 565.0
(Decrease)/Increase in non-cash working
capital................................... (276.8) 179.5
Other, net.................................. 122.0 27.0
------- -------
Cash provided by operating activities........... 1,262.6 1,518.7
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures............................ (542.2) (571.1)
New business acquisitions....................... (17.2) (502.9)
------- -------
Cash used for investing activities.............. (559.4) (1,074.0)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of long-term debt...................... 49.6 312.4
Decrease in long-term debt...................... (102.2) (100.2)
Acquisition of treasury stock................... (439.6) (477.8)
Dividends paid to stockholders.................. (295.3) (273.4)
Shares issued under stock plans................. 38.3 19.7
------- -------
Cash used for financing activities.............. (749.2) (519.3)
------- -------
Net (decrease) in cash and marketable securities
during the period............................. (46.0) (74.6)
Cash and marketable securities at beginning of
period........................................ 127.4 215.0
------- -------
Cash and marketable securities at end of period. $ 81.4 $ 140.4
======= =======
<FN>
A more adequate understanding of the company's financial position and business can be
gained by reference to the Anheuser-Busch Companies, Inc. Annual Report on Form 10-K for
the fiscal year ended December 31, 1993.
</TABLE>
6
<PAGE>7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
- - - ------------
This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and liquidity (cash flow)
of Anheuser-Busch Companies, Inc. for the third quarter and nine months ended
September 30, 1994 compared to the third quarter and nine months ended
September 30, 1993 and the year ended December 31, 1993. This discussion
should be read in conjunction with the consolidated financial statements and
notes thereto included in the company's Annual Report to Shareholders for the
year ended December 31, 1993. Additional information concerning the company's
consolidated financial and operating results is contained in the Letter to
Shareholders section of the Third Quarter 1994 Shareholders Report.
Prior Year Non-Recurring Special Charges
- - - ----------------------------------------
Financial results for the third quarter and nine months of last year
---------
(1993) were affected by two non-recurring special charges as follows:
- - - ------
1. The company's Profitability Enhancement Program, which included
----------------------------------
significant operational and organizational changes, resulted in a
one-time, pre-tax Restructuring Charge of $565 million, or $1.26
per share.
2. The Revenue Reconciliation Act of 1993, which increased the federal
--------------------------
income tax rate by one percentage point to 35% from 34%, resulted
in a $33 million, or $.12 per share, one-time increase in the
company's deferred tax liability.
These two prior year special charges make it difficult to directly compare
1994 and 1993 financial results. Accordingly, financial comparisons are
presented on both a "Normal Operations" basis (excluding the special charges)
---------
and an "As Reported" basis (including the special charges) in order to
---------
facilitate a full understanding of company results.
7
<PAGE>8
Campbell Taggart, Inc.
- - - ----------------------
The company's baking subsidiary, Campbell Taggart, Inc., continues to
report substantially lower earnings in 1994 when compared to 1993. Campbell
Taggart's earnings are now expected to decline approximately 50% for the full
year 1994 versus 1993. The company has taken steps to improve the cost
structure at its bakeries and has implemented management and organizational
changes designed to better market and distribute its products.
OPERATIONS
- - - ----------
Sales
- - - -----
Gross sales for the third quarter of 1994 were $3.8 billion, an increase
of $141 million, or 3.9%, over gross sales of $3.6 billion for the third
quarter of 1993. Gross sales for the nine months of 1994 were $10.4 billion
compared to $9.9 billion for the nine months of 1993, an increase of $462
million, or 4.7%.
Net sales for the third quarter of 1994 were $3.3 billion, an increase of
$141 million, or 4.5%, over net sales of $3.2 billion for the third quarter of
1993. Net sales for the nine months of 1994 were $9.1 billion, an increase of
$444 million or 5.1% over net sales of $8.7 billion for the nine months of
1993. The difference between gross sales and net sales represents federal and
state excise taxes paid by the company on beer sales.
The increase in gross and net sales during the period was driven primarily
by higher domestic and international beer sales and reflects beer volume
growth for established premium brands, new brand introductions and exports.
Anheuser-Busch, Inc., the company's brewing subsidiary and largest
contributor to consolidated sales, reported record third quarter sales-to-
wholesalers of 24.2 million barrels, an increase of 168,000 barrels, or 0.7%,
over the 24.0 million barrels sold during the third quarter of 1993. Sales-
to-wholesalers for the nine months of 1994 were also a record 67.8 million
barrels compared to 66.1 million barrels during the nine months of 1993, an
increase of 2.7%.
8
<PAGE>9
Anheuser-Busch beer sales for third quarter and nine months of 1994
include 117,000 and 338,000 barrels, respectively, related to a previously
announced contract-brewing arrangement for the production of Kirin Ice for
sale by the Kirin Brewery in Japan.
The Budweiser Family of premium beers was a significant contributor to the
increase in sales volume for the nine months. Bud Family sales-to-retailers
increased by more than 3.5% for the nine months, led by Bud Light, which
continues to grow at double-digit rates, and the successful introduction of
Ice Draft from Budweiser and Ice Draft Light. Importantly, the company's
flagship brand, Budweiser, has shown improvement in sales trend.
During the third quarter, Bud Light became the largest selling light beer
in the country and the second largest beer brand behind Budweiser. Anheuser-
Busch beer brands are now the leader in the regular, light and non-alcohol
beer categories, as well as the leader in each of the four price segments.
Ice Draft from Budweiser continues to perform well since its national
roll-out in January. Its success led to the introduction of Ice Draft Light,
which achieved full national distribution in the third quarter.
In 1993, the company built year-end beer inventories in anticipation of
labor negotiations. The company will reduce those inventories to more normal
levels at December 31, 1994. Accordingly, full year 1994 sales-to-wholesalers
volume growth is expected to be approximately 1.5%. Sales-to-retailers,
considered a more accurate measure of underlying consumer demand, are expected
to grow in excess of 2.5% for 1994.
Anheuser-Busch, Inc. increased its market share during the nine months
1994 compared to the nine months of 1993 by 0.6 share points, with sales
volume representing 44.0% of total brewing industry sales (including imports),
according to estimates based on information provided by the Beer Institute.
Anheuser-Busch has led the brewing industry in sales volume and market share
each quarter since 1957.
9
<PAGE>10
Cost of Products and Services
- - - -----------------------------
Cost of products and services for the third quarter of 1994 was $2.1
billion, an increase of 4.3% compared to the third quarter of 1993. Cost of
products and services increased $280.0 million, or 5.1%, for the nine months
of 1994 compared to the prior year. The increase in cost of products and
services is primarily attributable to the increase in beer sales volume and
higher ingredient costs at Campbell Taggart.
Gross profit as a percentage of net sales was 37.5% for the third quarter
of 1994 compared to 37.4% for the same period of 1993. Gross profit as a
percentage of net sales was 36.1% for both the nine months of 1994 and 1993.
The third quarter statistics reflect increased margins by the company's beer
operations, partially offset by lower margins for Campbell Taggart and the St.
Louis National Baseball Club.
Marketing, Distribution and Administrative Expenses
- - - ---------------------------------------------------
Marketing, distribution and administrative expenses for the third quarter
of 1994 were $635.7 million compared with $609.6 million for the third quarter
of 1993, an increase of $26.1 million or 4.3%. Marketing, distribution and
administrative expenses during the nine months of 1994 were $1.72 billion,
compared to $1.67 billion during the first nine months of 1993, an increase of
$56.5 million or 3.4%. These expenses increased primarily due to higher beer
sales volume and the addition of marketing and distribution expenses
associated with the company's joint venture in Japan which began operations in
September 1993.
Prior Year Special Charges
- - - --------------------------
As previously noted, 1993 third quarter and nine month operating income
was affected by the Restructuring Charge. Net income and earnings per share
for 1993 were also affected by the one-time increase in the company's deferred
tax liability resulting from the Revenue Reconciliation Act of 1993. For
clarity, the following financial comparisons are presented on both a "Normal
Operations" basis (excluding the special charges) and an "As Reported" basis
---------
(including the special charges).
---------
10
<PAGE>11
Third Quarter 1994 vs. 1993
($ in millions, except per share)
1993 1993
Normal As
1994 Operations Increase Reported Increase
Operating $600.2 | $569.7 $30.5 | $ 4.7 $595.5
Income | |
| |
Pre-tax $549.3 | $521.1 $28.2 | $(43.9) $593.2
Income/(Loss) | |
| |
Net $329.4 | $311.1 $18.3 | $(75.0) $404.4
Income/(Loss) | |
- - - -----------------------------------------------------------------------------
Fully-diluted $ 1.24 | $ 1.13 $ .11 | $ (.28) $ 1.52
Earnings/
(Loss) Per
Share
Nine Months 1994 vs. 1993
($ in millions, except per share)
1993 1993
Normal As
1994 Operations Increase Reported Increase
Operating $1,561.8 | $1,454.6 $107.2 | $889.6 $672.2
Income | |
| |
Pre-tax $1,417.8 | $1,341.4 $ 76.4 | $776.4 $641.4
Income | |
| |
Net Income $ 856.4 | $ 813.8 $ 42.6 | $427.7 $428.7
- - - -----------------------------------------------------------------------------
Fully-diluted $ 3.20 | $ 2.93 $ .27 | $ 1.55 $ 1.65
Earnings Per | |
Share | |
Operating Income ("Normal Operations" basis)
- - - --------------------------------------------
Operating income was $600.2 million for the third quarter of 1994, a 5.3%
increase when compared to the third quarter of 1993. Operating income was
$1.56 billion for the nine months of 1994, a 7.4% increase compared to the
nine months of 1993.
11
<PAGE>12
The increase in operating income is primarily the result of domestic and
international beer performance, offset partially by lower earnings at Campbell
Taggart and the St. Louis National Baseball Club.
Net Interest Cost
- - - -----------------
Net interest cost (interest expense less interest income) was $53.0 million
for the third quarter of 1994, a decrease of $1.2 million, or 2.1%, compared
to net interest cost of $54.2 million for the third quarter of 1993. Net
interest cost for the nine months of 1994 was $162.4 million an increase of
$11.1 million, or 7.4%, above net interest cost of $151.3 million for the
corresponding period in 1993.
The increase in net interest cost for the nine months is due to higher
average debt balances outstanding during the period, primarily as a result of
financing international brewing investments (mid-1993) and share repurchases.
The net change in debt during the twelve month period ended September 30, 1994
is summarized in the Financial Condition Section of this discussion.
Interest Capitalized
- - - --------------------
Interest capitalized increased $.9 million for the quarter and decreased
$15.2 million for the nine months of 1994, respectively, as compared to the
corresponding periods of 1993. The decline in interest capitalized for the
nine months of 1994 is related to the Spring 1993 start-up of the company's
new brewery in Cartersville, GA, which resulted in the cessation of interest
capitalization on this major capital investment.
12
<PAGE>13
Other Income/(Expense), Net
- - - ---------------------------
Other income/(expense), net, includes numerous items of a non-operating
nature which do not have a material impact on the company's consolidated
results of operations (either individually or in the aggregate).
Income Taxes ("Normal Operations" basis)
- - - ----------------------------------------
The effective income tax rate was 40.0% of pre-tax earnings for the third
quarter and 39.6% for the nine months of 1994, as compared to 40.3% for the
third quarter and 39.3% for the nine months of 1993. The decrease in the
effective income tax rate for the third quarter of 1994 compared to the third
quarter of 1993 reflects the fact that the third quarter of 1993 includes the
cumulative nine month 1993 rate increase impact for the Revenue Reconciliation
Act of 1993. As the tax rate increase was signed into law during the third
quarter 1993, accounting rules required the cumulative impact to be reported
during that quarter.
Net Income ("Normal Operations" basis)
- - - --------------------------------------
Net income for the third quarter of 1994 was $329.4 million, an increase of
$18.3 million, or 5.9%, compared to the third quarter of 1993. For the nine
months of 1994, net income was $856.4 million, or an increase of 5.2% compared
to the prior year.
13
<PAGE>14
Earnings Per Share ("Normal Operations" basis)
- - - ----------------------------------------------
Fully diluted earnings per share for the third quarter of 1994 were $1.24,
an increase of 9.7% as compared to the third quarter of 1993. Fully diluted
earnings per share for the nine months of 1994 were $3.20, an increase of 9.2%
over the prior year.
Fully diluted earnings per share assume the conversion of the company's 8%
Convertible Debentures due 1996 and the elimination of related after-tax
interest expense. The difference between the percentage change in net income
and the percentage change in earnings per share was due to fewer shares
outstanding as a result of the company's continuing share repurchase program.
FINANCIAL CONDITION
- - - -------------------
Cash and marketable securities at September 30, 1994 were $81.4 million, a
decrease of $59.0 million from the September 30, 1993 level and a decrease of
$46.0 million from the December 31, 1993 level. The decrease in cash and
marketable securities from the September 1993 level is due primarily to cash
used to support the company's capital expenditure and share repurchase
programs, partially offset by cash generated by operations.
Total short-term and long-term debt increased $127.7 million during the
twelve month period ended September 30, 1994. The net increase in debt during
this period is primarily due to the following:
Debt Issuances ...... $425.4 million
--------------
- Commercial paper ... $425.4 million
14
<PAGE>15
Debt Reduction ......$297.7 million
--------------
- Redemption of public term debt ... $253.6 million.
- Maturity of Medium-term notes at varying interest rates ... $15 million
- ESOP debt repayment (guarantee) ... $29.1 million
At September 30, 1994, $617.1 million of commercial paper borrowings
outstanding were classified as long-term debt. This debt is expected to be
maintained on a long-term basis with ongoing credit provided by the company's
revolving credit agreements.
Capital expenditures during the third quarter and nine months of 1994 were
$104.6 million and $542.2 million, respectively, as compared to $181.1 million
and $571.1 million for the comparable periods of 1993. The company
anticipates that capital expenditures for 1994 will approximate $770 million.
ENVIRONMENTAL MATTERS
- - - ---------------------
The company is subject to federal, state and local environmental protection
laws and regulations and is operating within such laws or is taking action
aimed at assuring compliance with such laws and regulations. Compliance with
these laws and regulations is not expected to materially affect the company's
competitive position. None of the potential costs associated with
Environmental Protection Agency (EPA) designated clean-up sites for which
Anheuser-Busch has been identified as a Potentially Responsible Party (PRP)
would have a material impact on the company's consolidated financial
statements.
15
<PAGE>16
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
10 - Consulting Agreement between Anheuser-Busch
Companies, Inc. and a former executive officer
12 - Ratio of Earnings to Fixed Charges
27 - Financial Data Schedule
No instruments defining the rights of holders of long-term
debt are filed since the total amount of securities authorized
under any such instruments does not exceed 10% of the total assets
of the Company on a consolidated basis. The Company agrees to
furnish a copy of such instruments to the Securities and Exchange
Commission upon request.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three month
period ending September 30, 1994.
16
<PAGE>17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ANHEUSER-BUSCH COMPANIES, INC.
(Registrant)
s/Jerry E. Ritter
----------------------------------
Jerry E. Ritter
Executive Vice President -
Chief Financial and Administrative
Officer
(Chief Financial Officer)
November 10, 1994
s/Gerald C. Thayer
----------------------------------
Gerald C. Thayer
Vice President and Controller
(Chief Accounting Officer)
November 10, 1994
<PAGE>18
INDEX TO EXHIBITS
Exhibit No. Exhibit
----------- -------
10 Consulting Agreement between Anheuser-Busch
Companies, Inc. and a former executive officer
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
18
<PAGE>1
EXHIBIT 10
CONSULTING AGREEMENT
THIS AGREEMENT made and entered into this 9th day of September, 1994,
and effective October 1, 1994, by and between ANHEUSER-BUSCH COMPANIES, INC.,
a Delaware corporation with principal offices at One Busch Place, St. Louis,
Missouri 63118 (hereinafter referred to as "A-BC"), and MICHAEL J. ROARTY,
residing at 2705 Covington Place Estates, Town & Country, Missouri 63131
(hereinafter referred to as "Consultant").
WHEREAS, Consultant has elected to retire effective September 30, 1994
from his employment as Executive Vice President-Corporate Marketing and
Communications for A-BC, as Chairman of the Board and Chief Executive Officer
of Busch Creative Services Corporation, as Chairman of the Board and President
of A-B Sports, Inc., and as Chairman of the Board of Busch Media Group,
Innervision Productions, and Optimus, Inc; and
WHEREAS, Consultant, while an employee of A-BC, gained invaluable
knowledge and experience regarding the business operations of A-BC and its
subsidiaries, especially in the areas of beer marketing and advertising for
its beer company Anheuser-Busch, Inc. ("A-BI"); and
WHEREAS, A-BC desires (i) to retain Consultant so that his services
will be available to A-BC in his area of specialized knowledge and experience;
(ii) to assure itself that Consultant does not use his specialized knowledge
and experience for the benefit of a competitor of A-BC or any of its
subsidiaries, including A-BI.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed as follows:
1. Term
----
(a) The term of this Agreement shall commence October 1, 1994,
and shall end on September 30, 1996, except with respect to the provisions of
subsection 3(c)(ii), unless sooner terminated in accordance with the
provisions of Section 1(b) hereof.
<PAGE>2
(b) A-BC reserves the absolute right to terminate this Agreement
in its sole discretion, without further obligation, at any time in the event
of Consultant's death, his inability to perform services as a result of mental
or physical disability, his purchase of an A-BI beer distributorship, or
material breach of this Agreement.
2. Consulting Duties
-----------------
(a) During the term of this Agreement, Consultant shall be
responsible for managing A-BI's annual sponsorship of the Irish Derby within
the budgetary parameters established by the A-BC Chairman of the Board and
President.
(b) Consultant will continue to serve as A-BI's representative
on the Board of Advertising Council and will make his best effort to ensure
that as soon as practicable Tony Ponturo is appointed as his successor on the
Council.
(c) Consultant will maintain relationships and contacts with the
following organizations within the Irish American community: the Ireland/U.S.
Council for Commerce and Industry; the Ireland Chamber of Commerce,USA
(ICCUSA); and the American Ireland Fund. Consultant will also maintain his
membership in the Prime Minister of Ireland's Advisory Council through the
Irish Embassy in Washington D.C. All expenses related to these memberships
will be subject to the provisions of Section 5 of this Agreement unless
otherwise approved in advance in writing by the Chairman of the Board and
President of A-BC.
(d) Consultant will provide such other services and work on such
other special projects as requested in writing by the A-BC corporate office.
(e) In providing services under this Agreement, Consultant will
be acting as an independent contractor and not as an employee of A-BC or any
of its subsidiaries. Consultant shall have no power to bind A-BC or any of
its subsidiaries or to commit them to any policy position, contract or other
course of
2
<PAGE>3
action. Subject to the provisions of Section 6, Consultant is free to render
services to such other business entities as he chooses.
3. Compensation
------------
(a) During the term of this Agreement, Consultant will be paid a
monthly fee of $16,667. All payments will be made on the last day of each
month commencing October 31, 1994.
(b) Consultant's active participation in A-BC's various retiree
benefit plans (other than the retiree medical benefits plan) shall cease as of
September 30, 1994. The fees and other compensation received by Consultant
hereunder shall not be deemed to be "compensation" or "salary" for purposes of
the Anheuser-Busch Salaried Employees' Pension Plan, the Anheuser-Busch
Deferred Income Stock Purchase and Savings Plan or for any other purpose.
Amounts paid hereunder shall not be subject to federal, state or local income
or employment tax withholding and will be reported by A-BC on Internal Revenue
Form 1099. Consultant will be responsible for reporting this income and
paying all applicable income and self-employment taxes.
(c) In addition to the above monthly compensation. A-BC agrees
to:
(i) continue the payment of Consultant's Country Club dues
during the term of this Agreement pursuant to the
terms of its current arrangement with Consultant;
(ii) to provide Consultant with Company paid financial
services with Price Waterhouse through April, 1997
equivalent to the financial services provided to its
Policy Committee Members;
(iii) to provide Consultant with an automobile equivalent to
the automobile provided to its Policy Committee
Members during the term of this Agreement. Consultant
agrees to
3
<PAGE>4
account to A-BC monthly for his personal use of the
automobile, in such form and detail as A-BC may
require;
(iv) to provide beer services at Consultant's residence.
4. Purchase of Distributorship
---------------------------
A-BC agrees that during the term of this Agreement, it will
attempt to locate an A-BI distributorship in the United States suitable for
purchase by Consultant.
5. Business and Travel Expenses
----------------------------
(a) In the event Consultant is requested to travel beyond the
St. Louis metropolitan area in performing services for A-BC or its
subsidiaries, Consultant will be entitled to reimbursement for all ordinary,
necessary and reasonable travel expenses subject to the limitations set out in
Section 5(c) below. Consultant agrees to submit an itemized expense report to
the office of the A-BC Chairman of the Board and President within 15 days
after completion of each travel assignment as a basis for reimbursement by
A-BC.
(b) Subject to the limitations set out in Section 5(c) below,
A-BC agrees to reimburse Consultant for all ordinary, reasonable and necessary
business expenses incurred in performing services hereunder upon presentation
of proper receipts, vouchers or similar documents evidencing the nature and
amount of the expense incurred.
(c) A-BC's obligation to reimburse Consultant for business
expenditures, office/secretarial services and travel expenses shall be limited
to $80,000 per twelve month period of this Agreement. The budget for all
projects undertaken by Consultant, including the Irish Derby, shall be
approved in advance in writing by the Chairman of the Board and President of
A-BC.
4
<PAGE>5
6. Non-Competition/Non-Disclosure/Non-Disparagement
------------------------------------------------
(a) Consultant agrees that the terms and conditions of a
Confidentiality and Non-Competition Agreement dated August 29, 1994 is hereby
incorporated into and made a part of this Consulting Agreement. Consultant
further agrees that he will not disclose to any person, firm, corporation or
other entity any confidential or proprietary data, information or material of
A-BC or any of its subsidiaries disclosed to him as a Consultant without the
prior written approval of A-BC. The provisions of this Section 6 shall
survive termination of the Agreement. Consultant further agrees that he
will not voluntarily disclose the terms of this Agreement to anyone other than
his wife, the Internal Revenue Service and his legal or financial advisors
without the express written consent of A-BC.
(b) Consultant agrees not to act in any manner detrimental to
A-BC, or any of its subsidiaries, nor to make any statement which disparages
or which may be detrimental to A-BC, or any of its subsidiaries, or their
directors, officers, or employees.
(c) Consultant understands and agrees that any breach of the
provisions of Section 6(a) or (b) shall constitute a material breach of this
Agreement and that A-BC, in addition to its right to terminate the Agreement,
shall be entitled to injunctive and other equitable relief to prevent the
threatened or continued breach of this Agreement.
5
<PAGE>6
7. Indemnity
---------
In the event that Consultant is named as a defendant in any civil
suit as a result of his performing duties pursuant to this Agreement, ABC
agrees to indemnify Consultant against expenses (including attorney fees),
judgments, fines or amounts paid in settlement if Consultant is successful on
the merits or, if unsuccessful, the Board of Directors has determined,
pursuant to Delaware corporate law, that Consultant's actions were taken in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of A-BC. Consultant agrees to notify A-BC in writing
within seven (7) days of any claims made against him which are covered by this
indemnity provision.
8. Notices
-------
All notices required to be given hereunder shall be sent to A-BC
at its corporate headquarters and directed to the attention of its Chairman of
the Board and President, and to Consultant at his last known address.
9. Audit Rights
------------
For a period of at least two years following the completion of
this Agreement, Consultant shall maintain such records as are necessary to
substantiate that all invoices and other charges for payment hereunder are
valid and properly chargeable to A-BC. A-BC or its representative shall, upon
reasonable prior notice to Consultant, be given the opportunity to audit such
records in order to verify the accuracy of such invoices and charges.
10. Entire Agreement
----------------
This Agreement constitutes the entire understanding and agreement
of the parties and cancels and supersedes all prior negotiations,
understandings and agreements whether oral or written. No waiver or
modification of any term or condition of this Agreement shall be valid unless
in writing and duly executed by both parties.
6
<PAGE>7
11. Governing Law
-------------
This Agreement shall be governed by and construed under the laws
of the State of Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year indicated above.
ANHEUSER-BUSCH COMPANIES, INC.
By:s/AUGUST A. BUSCH III
-----------------------------------
Chairman of the Board and President
CONSULTANT
s/MICHAEL J. ROARTY
---------------------
MICHAEL J. ROARTY
roarty.agr
<PAGE>1
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings
to fixed charges, on a consolidated basis, for the periods
indicated:
Nine Months
Ended
Sept. 30 Year Ended December 31
------------- ------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
8.4X 5.2X 1/ 5.2X 1/ 7.8X 6.4X 5.1X 6.6X
For purposes of this ratio, earnings have been calculated by adding
to income before income taxes the amount of fixed charges. Fixed
charges consist of interest on all indebtedness, amortization of
debt discount and that portion of rental expense deemed to
represent interest.
1/ Includes the impact of the one-time, pretax restructuring charge
of $565 million as a result of the company's Profitability
Enhancement Program. Excluding the non-recurring special charge,
the ratio would have been 8.3X for the nine months ended Sept. 30
and 7.6X for year ended December 31st.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000310569
<NAME> ANHEUSER-BUSCH COMPANIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 62,069
<SECURITIES> 19,359
<RECEIVABLES> 905,208
<ALLOWANCES> 7,084
<INVENTORY> 584,498
<CURRENT-ASSETS> 1,888,911
<PP&E> 12,047,253
<DEPRECIATION> 4,565,260
<TOTAL-ASSETS> 10,972,207
<CURRENT-LIABILITIES> 1,678,425
<BONDS> 2,949,933
<COMMON> 343,714
0
0
<OTHER-SE> 4,102,205
<TOTAL-LIABILITY-AND-EQUITY> 10,972,207
<SALES> 9,094,654
<TOTAL-REVENUES> 10,383,287
<CGS> 5,808,399
<TOTAL-COSTS> 1,724,481
<OTHER-EXPENSES> (3,270)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 165,119
<INCOME-PRETAX> 1,417,790
<INCOME-TAX> 561,374
<INCOME-CONTINUING> 856,416
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 856,416
<EPS-PRIMARY> 3.23
<EPS-DILUTED> 3.20
</TABLE>
