<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 March 31, 1995
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 - 256,358,489 shares as of April 30, 1995
<PAGE>2
CONSOLIDATED STATEMENT OF INCOME
AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions, except per share data)
Three months ended March 31, 1995 1994
- ---------------------------- ---- ----
Sales........................................... $3,143.6 $3,015.2
Less federal and state excise taxes........... 387.1 387.6
-------- --------
Net sales....................................... 2,756.5 2,627.6
Cost of products and services................. 1,818.2 1,733.9
-------- --------
Gross profit.................................... 938.3 893.7
Marketing, distribution and administrative
expenses...................................... 530.1 508.8
-------- --------
Operating income................................ 408.2 384.9
Other income and expenses:
Interest expense.............................. (57.1) (54.8)
Interest capitalized.......................... 5.5 4.4
Interest income............................... 1.4 .8
Other income/(expense), net................... (2.0) 2.7
-------- --------
Income before income taxes...................... 356.0 338.0
Provision for income taxes...................... (139.9) (133.6)
-------- --------
Net Income...................................... 216.1 204.4
Retained earnings, January 1.................... 6,656.7 6,023.4
Common stock dividends (per share: 1995--$.40;
1994--$.36) (102.7) (95.8)
-------- --------
Retained earnings, March 31..................... $6,770.1 $6,132.0
======== ========
Primary earnings per share...................... $ .83 $ .76
======== ========
Fully diluted earnings per share................ $ .83 $ .76
======== ========
See accompanying Notes to Consolidated Financial Statements on Page 3.
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, 1994. 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
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions)
MARCH 31,
ASSETS 1995 1994
CURRENT ASSETS: ---- ----
Cash and marketable securities........... $ 122.2 $ 92.8
Receivables, less allowance for
doubtful accounts...................... 827.0 889.8
Inventories--
Raw materials and supplies............. 472.5 392.4
Work in progress....................... 101.8 111.9
Finished goods......................... 173.3 171.1
Total inventories.................... 747.6 675.4
Other current assets..................... 300.4 324.8
--------- ---------
Total current assets................... 1,997.2 1,982.8
INVESTMENTS AND OTHER ASSETS............. 1,664.1 1,593.9
PLANT AND EQUIPMENT, NET................. 7,601.3 7,518.0
--------- ---------
TOTAL ASSETS........................... $11,262.6 $11,094.7
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Short-term debt........................ $ 95.0 $ 403.7
Accounts payable....................... 713.5 685.9
Accrued salaries, wages and benefits... 301.3 254.5
Accrued taxes, other than
income taxes......................... 141.4 127.4
Restructuring accrual.................. 30.9 177.6
Other current liabilities.............. 501.2 515.3
--------- ---------
Total current liabilities............ 1,783.3 2,164.4
--------- ---------
POSTRETIREMENT BENEFITS.................. 630.9 619.7
--------- ---------
LONG-TERM DEBT........................... 3,047.7 2,822.4
--------- ---------
DEFERRED INCOME TAXES.................... 1,282.8 1,194.4
--------- ---------
SHAREHOLDERS EQUITY:
Common stock........................... 344.4 343.2
Capital in excess of par value......... 880.1 826.3
Retained earnings...................... 6,770.1 6,132.0
Foreign currency translation adjustment (13.6) (36.8)
--------- --------
7,981.0 7,264.7
Treasury stock, at cost................ (3,116.0) (2,593.5)
ESOP debt guarantee offset............. (347.1) (377.4)
--------- ---------
4,517.9 4,293.8
--------- ---------
COMMITMENTS AND CONTINGENCIES............ - -
TOTAL LIABILITIES AND EQUITY........... $11,262.6 $11,094.7
========= =========
4
<PAGE>5
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
(In millions)
Three months ended March 31, 1995 1994
- ---------------------------- ---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income........................................ $ 216.1 $ 204.4
Adjustments to net income to arrive at net cash
provided by operations:
Depreciation and amortization................. 154.9 155.8
Increase in deferred income taxes............. 24.5 24.0
Decrease in non-cash working capital.......... (150.6) (277.1)
Other, net.................................... 39.3 3.5
------- -------
Cash provided by operating activities............. 284.2 110.5
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures.............................. (205.2) (170.6)
New business acquisitions......................... (55.6) (6.7)
-------- -------
Cash used for investing activities................ (260.8) (177.3)
------- ------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in short-term debt....................... 95.0 403.7
Increase in long-term debt........................ 14.5 .5
Decrease in long-term debt........................ (14.9) (180.6)
Acquisition of treasury stock..................... (73.4) (113.9)
Dividends paid to stockholders.................... (102.7) (95.8)
Shares issued under stock plans................... 23.9 18.3
------- ------
Cash (used for)/provided by financing activities.. (57.6) 32.2
------- ------
Net decrease in cash and marketable securities
during the period............................... (34.2) (34.6)
Cash and marketable securities at beginning of
period.......................................... 156.4 127.4
------- ------
Cash and marketable securities at end of period... $ 122.2 $ 92.8
======= ======
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, 1994.
5
<PAGE>6
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 flows
of Anheuser-Busch Companies, Inc. for the first quarter ended March 31, 1995
compared to the first quarter ended March 31, 1994 and the year ended December
31, 1994. This discussion 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, 1994. Additional information
concerning the company's consolidated financial and operating results is
contained in the Letter to Shareholders section of the First Quarter 1995
Shareholders Report.
OPERATIONS
- ----------
Anheuser-Busch Companies, Inc. achieved record gross sales of $3.14 billion
during the first quarter of 1995, an increase of 4.3% over 1994 first quarter
gross sales of $3.02 billion. Anheuser-Busch also achieved record net sales
of $2.76 billion during the first quarter of 1995, an increase of 4.9% over
the same period in 1994. The increase in gross and net sales during the
quarter is primarily attributable to higher beer sales and stronger sales by
the company's packaging subsidiaries.
Anheuser-Busch, Inc., the company's brewing subsidiary and largest
contributor to consolidated sales, reported record sales of 20.4 million
barrels of beer during the first quarter of 1995. This sales volume level
represents an increase of 115,000 barrels --- or 0.6% --- over first quarter
1994 beer volume
6
<PAGE>7
sales of 20.2 million barrels. Anheuser-Busch, Inc. market share remained
constant during the first quarter of 1995 at 44.3% of total industry shipments
(including imports, exports and non-alcohol brews), as estimated 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.
There are two key factors to be considered in comparing the company's 1995
beer volume results to the first quarter 1994:
1. First quarter 1994 beer shipments were unusually high due to a planned
wholesaler inventory build in advance of 1994 national labor negotiations.
These negotiations were successfully concluded in 1994, allowing the company
to reduce wholesaler inventories and return to a more normal shipment pattern
in 1995.
2. Sales of Anheuser-Busch ice beers during the first quarter 1995 were
significantly lower than last year. The relatively high 1994 volume was the
result of product introduction in the new ice beer category. 1994 shipment
volume reflected consumer trial of the new product combined with the building
of inventory at the wholesaler and retailer levels.
The company's 1994 and 1995 beer market pricing activity has narrowed the
spread between the premium and sub-premium beer price categories. Wider
spreads, which developed after the federal excise tax on beer was doubled in
1991, had given consumers an incentive to trade down. This trend has been
reversed, and sales trends for the company's premium beer products have
improved.
7
<PAGE>8
Cost of products and services for the first quarter of 1995 was $1.82
billion, a 4.9% increase compared to the $1.73 billion reported for the first
quarter of 1994. The increase in cost of products and services is
attributable to higher material costs of the company's packaging subsidiaries,
the increase in beer sales volume and increased costs associated with beer
packaging materials.
Gross profit as a percentage of net sales was 34.0% for both the first
quarter of 1995 and the first quarter of 1994.
Marketing, distribution and administration expenses for the first quarter of
1995 were $530.1 million compared with $508.8 million for the first quarter of
1994, an increase of 4.2%. The increase during first quarter 1995 compared to
1994 is primarily related to increased marketing and distribution costs
associated with the company's international beer operations.
Operating income was $408.2 million for the first quarter of 1995, an
increase of $23.3 million, or 6.0%, compared to $384.9 million for the first
quarter of 1994. Operating income was favorably impacted by higher beer
margins and increased profits at the company's metal container subsidiary.
Campbell Taggart, Inc., the company's baking and food products subsidiary,
reported higher operating profits (excluding the effects of bakery closings)
during first quarter 1995 compared to first quarter 1994. It is expected that
this subsidiary's operating profits will significantly improve in 1995 from a
disappointing 1994, as Campbell Taggart continues to improve its cost
structure through improved bakery efficiencies.
8
<PAGE>9
Net interest cost (interest expense less interest income) was $55.7 million
for the first quarter of 1995, an increase of $1.7 million, or 3.0%, compared
to net interest cost of $54.0 million for the first quarter of 1994. The
increase is due primarily to higher average interest rates during the period
on the company's commercial paper borrowings. The net change in debt during
this period is summarized in the Financial Condition Section of this
Discussion.
Interest capitalized increased $1.1 million, or 24.6%, for the first quarter
of 1995 as compared to the corresponding period of 1994. The increase in
interest capitalized in 1995 is primarily related to construction of the new
Metal Container Corporation plant in Mira Loma, California.
The effective income tax rate was 39.3% of pretax earnings for the first
quarter of 1995 compared to 39.5% for the first quarter of 1994. Net income
for the first quarter of 1995 was $216.1 million, an increase of 5.7% over the
comparable period in 1994.
Fully diluted earnings per share for the first quarter of 1995 were $.83, an
increase of 9.2% as compared to the first quarter of 1994. 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 (5.7%) and the
percentage change in earnings per share (9.2%) was due to the reduction in the
number of shares outstanding as a result of the company's continuing share
repurchase program.
9
<PAGE>10
FINANCIAL CONDITION
- -------------------
Cash and marketable securities at March 31, 1995 were $122.2 million, an
increase of $29.4 million from the March 31, 1994 level and a decrease of
$34.2 million from the December 31, 1994 level. The increase in cash and
marketable securities at March 31, 1995 compared to the March 31, 1994 level
is primarily related to cash generated from operating activities and increased
commercial paper borrowings, offset partially by cash used for the company's
capital expenditure and share repurchase programs.
Total short-term and long-term debt decreased $83.4 million during the
twelve month period ended March 31, 1995. The net decrease in debt during
this period is primarily due to the following:
Debt Issuances ... $44.7 million of net incremental commercial paper
--------------
Debt Reduction ... $128.1 million
--------------
- Redemption of $97.8 million of long-term debt.
- ESOP debt repayment (guarantee) ... $30.3 million.
At March 31, 1995, $858.4 million of commercial paper borrowings were
outstanding ... $95.0 million required to meet short-term financing needs and
classified as short-term debt and $763.4 million intended to be maintained on
a long-term basis and classified as long-term debt. Commercial paper
borrowings are supported by the company's $1 billion credit agreement.
Capital expenditures during the first quarter of 1995 were $205.2 million
compared to $170.6 million for the first quarter of 1994. The company
continues to expect that capital expenditures in 1995 will approximate $950
million.
10
<PAGE>11
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. The company has not been identified as a Potentially
Responsible Party (PRP) at an Environmental Protection Agency designated
clean-up site which could have a material impact on the company's
consolidated financial statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The company's wholly owned indirect subsidiary, Campbell Taggart Baking
Companies, Inc., had been served with a subpoena by the Antitrust Division of
the U.S. Department of Justice in connection with a federal grand jury
investigation regarding the sale of bread and bread products, principally in
the State of Texas. In April, 1995, the U.S. Department of Justice indicated
to the company's wholly owned subsidiary, Campbell Taggart, Inc. (Campbell
Taggart), the parent company of Campbell Taggart Baking Companies, Inc., that
its Dallas baking operations had become a target of this investigation. The
company cannot predict what action, if any, the U.S. Department of Justice may
institute against Campbell Taggart. The company believes that Campbell
Taggart has substantial factual and legal defenses against any action that
may be instituted against it, and that the ultimate rsolution of this
matter will not materially affect the company's financial position,
liquidity or results of operations.
11
<PAGE>7
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of the company held April 26, 1995,
the following matters were voted upon:
1. Election of Pablo Aramburuzabala O., August A. Busch III, Peter M.
Flanigan, Andrew C. Taylor and Douglas A. Warner III to serve as
Directors of the company for a term of three years.
For Withheld Non-Votes
--- -------- ---------
Pablo Aramburuzabala O. 222,259,039 2,522,469 0
August A. Busch III 222,630,862 2,150,646 0
Peter M. Flanigan 222,325,928 2,455,579 0
Andrew C. Taylor 222,462,310 2,319,198 0
Douglas A. Warner III 222,446,579 2,334,929 0
2. Approve the Officer Bonus Plan.
For 198,107,731
Against 23,413,200
Abstain 3,260,577
Non-Votes 0
3. Approve the employment of Price Waterhouse LLP, as independent
accountants, to audit the books and accounts of the company for 1995.
For 222,397,503
Against 1,386,450
Abstain 997,555
Non-Votes 0
12
<PAGE>13
4. Shareholder proposal to abolish the Retirement Plan for Non-Employee
--------------------------------
Directors.
---------
For 43,622,654
Against 158,653,293
Abstain 5,289,885
Non-Votes 17,215,675
5. Shareholder proposal to require preparation of a beer marketing
report.
For 12,388,203
Against 184,427,978
Abstain 10,781,101
Non-Votes 17,184,225
Item 5. Other Information
Prior to the company's annual shareholders' meeting, Anheuser-Busch
announced a number of agreements that significantly enhance the company's
international presence:
1. On January 27, Anheuser-Busch announced a partnership with Sociedad
Anonima Damm, one of Spain's largest brewers. Damm will brew and package
the "Bud" brand under contract in Spain. Anheuser-Busch will also use
Damm's wholesalers, on a non-exclusive basis, to supplement and broaden
the brand's existing distribution in Spain.
2. On February 22, the company announced plans for the purchase of an equity
stake and formation of a strategic partnership with Companhia Antarctica
Paulista, one of the largest brewers in Brazil. Antarctica's flagship
brand, Antarctica, has recently gained the leadership position in the
Brazilian beer market. The planned $105 million investment will give
Anheuser-Busch a 10 percent interest in a new Antarctica subsidiary which
will control approximately 75% of Antarctica's subsidiaries.
Anheuser-Busch also has an option to increase its equity investment in
the new subsidiary to 30 percent in the future. The investment is subject
to satisfactory completion of due diligence and approval from all
appropriate authorities.
13
<PAGE>14
3. On February 27, the company announced finalization of the purchase of a
controlling interest in a brewery located in the People's Republic of
China, the world's second largest beer market. The company purchased an
80 percent interest in a joint venture that owns the brewery located in
the city of Wuhan. The remaining 20 percent of the new joint venture,
Budweiser Wuhan International Brewing Co. Ltd., will be owned by the
original joint venture partners. This transaction represents
Anheuser-Busch's first purchase of a majority interest in an
international brewery.
4. On April 12, Anheuser-Busch and Courage Limited announced a joint venture
that will consolidate the brewing and packaging of Budweiser in the Stag
Brewery at Mortlake in London. This new arrangement will help meet the
increasing demand in the U.K. for Budweiser, which recently became the
country's number one premium packaged lager.
Anheuser-Busch will have operating control and will own a 50 percent
share of the joint venture. A new bottling line at Mortlake is expected
to be installed in mid-1996. Courage is leasing the Stag Brewery site to
the joint venture.
These agreements build upon a foundation that firmly establishes Anheuser-
Busch as a direct participant in most major beer markets in Western Europe,
Asia-Pacific and the Americas.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
4 - No instruments defining the right of holders of long-term
debt are filed since the total amount of securities
authorized under any such instrument does not exceed 10% of
the assets of the Company on a consolidated basis. The
Company agrees to furnish copies of such instruments to the
Securities and Exchange Commission upon request.
12 - Ratio of Earnings to Fixed Charges
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three month
period ending March 31, 1995.
14
<PAGE>15
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)
May 12, 1995
/s/GERALD C. THAYER
-----------------------------------
Gerald C. Thayer
Vice President and Controller
(Chief Accounting Officer)
May 12, 1995
15
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:
Three Months
Ended
March 31, Year Ended December 31
------------- ----------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
7.6X 7.6X 5.2X 1/ 7.8X 6.4X 5.1X
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 7.6X.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
the Form 10-Q for the quarter ended March 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 113,750
<SECURITIES> 8,430
<RECEIVABLES> 835,278
<ALLOWANCES> 8,248
<INVENTORY> 747,605
<CURRENT-ASSETS> 300,364
<PP&E> 12,385,246
<DEPRECIATION> 4,783,930
<TOTAL-ASSETS> 11,262,567
<CURRENT-LIABILITIES> 1,783,286
<BONDS> 3,047,738
<COMMON> 344,385
0
0
<OTHER-SE> 4,173,487
<TOTAL-LIABILITY-AND-EQUITY> 11,262,567
<SALES> 2,756,519
<TOTAL-REVENUES> 3,143,605
<CGS> 1,818,208
<TOTAL-COSTS> 2,348,344
<OTHER-EXPENSES> 1,929
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,082
<INCOME-PRETAX> 356,036
<INCOME-TAX> 139,922
<INCOME-CONTINUING> 216,114
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216,114
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
</TABLE>
