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 June 30, 1998
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 - 482,139,946 shares as of June 30, 1998
<PAGE>1
<TABLE>
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
Second Quarter Ended Six Months Ended
June 30, June 30,
(In millions, except per share data) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales........................................... $3,521.6 $3,463.4 $6,472.8 $6,327.2
Less excise taxes............................. (515.3) (469.1) (959.0) (870.0)
--------------------------------------
Net sales....................................... 3,006.3 2,994.3 5,513.8 5,457.2
Cost of products and services................. (1,863.4) (1,869.6) (3,502.2) (3,466.6)
--------------------------------------
Gross profit.................................... 1,142.9 1,124.7 2,011.6 1,990.6
Marketing, distribution and administrative
expenses...................................... (483.7) (478.7) (884.1) (876.3)
--------------------------------------
Operating income................................ 659.2 646.0 1,127.5 1,114.3
Other income and expenses:
Interest expense.............................. (72.2) (65.3) (147.7) (122.5)
Interest capitalized.......................... 8.4 11.0 17.1 19.8
Interest income............................... 1.6 2.0 3.1 3.9
Other income/(expense), net................... 2.0 4.6 (4.1) 1.1
--------------------------------------
Income before income taxes...................... 599.0 598.3 995.9 1,016.6
Provision for income taxes...................... (227.7) (229.9) (378.7) (390.5)
Equity income, net of tax....................... 19.9 12.8 39.2 12.8
--------------------------------------
Net income...................................... 391.2 381.2 656.4 638.9
Retained earnings, beginning of period.......... 7,743.5 7,062.7 7,604.9 6,924.5
Common stock dividends (per share: 2nd quarter,
1998--$.26; 1997--$.24; six months, 1998--
$.52; 1997--$.48)............................. (125.9) (118.5) (252.5) (238.0)
--------------------------------------
Retained earnings, end of period................ $8,008.8 $7,325.4 $8,008.8 $7,325.4
=======================================
Basic earnings per share........................ $ .81 $ .77 $ 1.35 $ 1.29
=======================================
Diluted earnings per share...................... $ .80 $ .76 $ 1.34 $ 1.27
=======================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements on Pages 3 and 4.
<PAGE>2
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,
and include all adjustments necessary for a fair presentation.
These statements 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, 1997.
2. COMPREHENSIVE INCOME: Effective with the first quarter
1998, the company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (FAS 130).
FAS 130 requires that noncash changes in shareholders equity
be combined with net income and reported in a new financial
statement category entitled "comprehensive income." Adoption
of FAS 130 had no impact on the results of the company's operations.
<PAGE>3
The following table sets forth the components of comprehensive income
for the second quarter and first six months of 1998 (in millions):
<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Income $391.2 $381.2 $656.4 $638.9
Foreign currency translation adjustment (1.0) (183.1) 2.0 (192.4)
---------------------------------------------------------------------
Comprehensive Income $390.2 $198.1 $658.4 $446.5
=====================================================
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). The
Standard requires all derivative financial instruments to be
reflected on an entity's balance sheet at fair value, with
changes in fair value recognized quarterly in either earnings or
equity, depending on the nature of the exposure being hedged.
Adoption of FAS 133 requires a one-time recognition on the
balance sheet of the fair value of the company's derivatives
portfolio plus a cumulative effect adjustment to earnings for the
impact of hedges that are not highly correlated. The company's
derivatives portfolio is not material to its balance sheet.
Anheuser-Busch uses only derivative instruments that are highly
correlated to the underlying exposure and therefore anticipates
no earnings impact from the initial adoption of FAS 133. The
company plans no changes to its risk management policies or
approach as a result of adopting the new Standard.
FAS 133 is required to be adopted by Anheuser-Busch no later than
January 1, 2000. Early adoption of the Standard is permitted.
The company has not yet made a determination as to when FAS 133
will be adopted.
<PAGE>4
<TABLE>
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
JUNE 30,
<S> -------------------
(In millions) 1998 1997
- -----------------------------------------------------------------
ASSETS
CURRENT ASSETS: <C> <C>
Cash and marketable securities........... $ 152.5 $149.1
Receivables, less allowance for
doubtful accounts...................... 866.6 830.1
Inventories:
Raw materials and supplies............. 313.7 267.0
Work in progress....................... 100.6 98.0
Finished goods......................... 200.3 159.6
Total inventories.................... 614.6 524.6
Other current assets..................... 182.2 230.5
------------------------
Total current assets................... 1,815.9 1,734.3
INVESTMENTS IN AFFILIATED COMPANIES...... 1,287.7 1,202.5
INVESTMENTS AND OTHER ASSETS............. 1,109.9 1,044.7
PLANT AND EQUIPMENT, NET................. 7,869.3 7,492.5
------------------------
TOTAL ASSETS........................... $12,082.8 $11,474.0
========================
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable....................... $ 708.6 $695.6
Accrued salaries, wages and benefits... 225.7 217.9
Accrued taxes.......................... 304.5 348.9
Other current liabilities.............. 346.1 283.1
------------------------
Total current liabilities............ 1,584.9 1,545.5
------------------------
POSTRETIREMENT BENEFITS.................. 525.8 525.5
------------------------
LONG-TERM DEBT........................... 4,417.4 4,185.1
------------------------
DEFERRED INCOME TAXES.................... 1,341.9 1,238.7
SHAREHOLDERS EQUITY: ------------------------
Common stock........................... 711.0 708.0
Capital in excess of par value......... 1,052.2 967.3
Retained earnings...................... 8,008.8 7,325.4
Foreign currency translation adjustment (212.0) (201.2)
------------------------
9,560.0 8,799.5
Treasury stock, at cost................ (5,100.0) (4,538.2)
ESOP debt guarantee.................... (247.2) (282.1)
------------------------
4,212.8 3,979.2
------------------------
COMMITMENTS AND CONTINGENCIES............ -- --
------------------------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $12,082.8 $11,474.0
========================
</TABLE>
<PAGE>5
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
Six months ended June 30,
<S> ----------------------------
(In millions) 1998 1997
- ---------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES: <C> <C>
Net income......................................... $ 656.4 $ 638.9
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization.................. 360.1 330.0
Increase in deferred income taxes.............. 48.3 30.5
Undistributed earnings of affiliated companies. (23.4) (12.8)
(Increase) in noncash working capital.......... (142.7) (98.4)
Other, net..................................... (13.9) (34.3)
------------------
Cash provided by operating activities.............. 884.8 853.9
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures............................... (444.1) (596.9)
New business acquisitions.......................... --- (619.2)
------------------
Cash (used for) investing activities............... (444.1) (1,216.1)
------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in long-term debt......................... 116.7 1,034.0
Decrease in long-term debt......................... (30.0) (86.5)
Dividends paid to stockholders..................... (252.5) (238.0)
Acquisition of treasury stock...................... (306.7) (332.1)
Shares issued under stock plans.................... 37.0 40.3
------------------
Cash provided by (used for) financing activities... (435.5) 417.7
------------------
Net increase in cash and marketable
securities during the period..................... 5.2 55.5
Cash and marketable securities, beginning of
period........................................... 147.3 93.6
------------------
Cash and marketable securities, end of period...... $ 152.5 $149.1
==================
</TABLE>
<PAGE>6
A more complete 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, 1997.
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
second quarter and first six months ended June 30, 1998 compared
to the second quarter and first six months ended June 30, 1997,
and the year ended December 31, 1997. 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, 1997. Additional
information concerning the company's consolidated financial and
operating results is located in the Letter to Shareholders
section of the second quarter Financial Report contained in the
quarterly Anheuser-Busch publication Horizons.
---------
This Discussion contains statements regarding the company's
expectations concerning its operations, earnings and prospects.
These statements are forward-looking statements that involve
significant risks and uncertainties, and accordingly no
assurances can be given that such expectations will be correct.
These expectations are based upon many assumptions that the
<PAGE>7
company believes to be reasonable but such assumptions may
ultimately prove to be inaccurate or incomplete, in whole or in
part. Important factors that could cause actual results to
differ from the expectations stated in this Discussion include,
among others, changes in the pricing environment for the
company's products; factors that may affect domestic demand for
malt beverage products; changes in customer preference for the
company's malt beverage products; changes in raw materials
prices; changes in interest rates; changes in foreign currency
exchange rates; changes in attendance and consumer spending
patterns for the company's theme park operations; changes in
demand for aluminum beverage containers; changes in the company's
international beer business or in the beer business of the
company's international equity partners; and the effect of stock
market conditions on the company's share repurchase program.
SECOND QUARTER AND FIRST SIX MONTHS 1998 FINANCIAL RESULTS
- ----------------------------------------------------------
Key operating results for the second quarter and first six
months of 1998 versus the comparable periods in 1997 are
summarized below:
<PAGE>8
<TABLE>
- --------------------------------------------------------------------------------
| Second Quarter (in millions, except per share) |
| ---------------------------------------------- |
| 1998 1997 || 1998 vs. 1997 |
| ---- ---- || ---- ---- |
| || $ % |
| || ---- ---- |
|<S> <C> <C> || <C> <C> |
| Gross Sales $3,522 $3,463 || Up $59 Up 1.7% |
| Net Sales $3,006 $2,994 || Up $12 Up 0.4% |
| Operating Income $659 $646 || Up $13 Up 2.0% |
| Equity Income, Net of Tax $20 $13 || Up $7 N/M |
| Net Income $391 $381 || Up $10 Up 2.6% |
| Diluted Earnings per $.80 $.76 || Up $.04 Up 5.3% |
| Share || |
- --------------------------------------------------------------------------------
N/M - Not Meaningful
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
| Six Months Ended June 30 (in millions, except per share) |
| ----------------------------------------------------------
| 1998 1997 || 1998 vs. 1997 |
| ---- ---- || ------------- |
| || $ % |
| || ---- ---- |
| <S> <C> <C> || <C> <C> |
| Gross Sales $6,473 $6,327 || Up $146 Up 2.3% |
| Net Sales $5,514 $5,457 || Up $57 Up 1.0% |
| Operating Income $1,127 $1,114 || Up $13 Up 1.2% |
| Equity Income, Net $39 $13 || Up $26 N/M |
| of Tax || |
| Net Income $656 $639 || Up $17 Up 2.7% |
| Diluted Earnings per $1.34 $1.27 || Up $.07 Up 5.5% |
| Share || |
- --------------------------------------------------------------------------------
N/M - Not Meaningful
</TABLE>
<PAGE>9
RESULTS OF OPERATIONS
- ---------------------
Anheuser-Busch achieved gross sales of $3.5 billion and $6.5
billion, and net sales of $3.0 billion and $5.5 billion,
respectively in the second quarter and first six months of 1998.
These amounts represent gross sales increases over 1997 of $58.2
million, or 1.7%, for the second quarter and $145.6 million, or
2.3%, for the first six months. Net sales increased over 1997 by
$12.0 million, or 0.4%, and $56.6 million, or 1.0%, for the same
periods. The increases are due to higher domestic beer sales
volume, increased international beer sales volume in the second
quarter and increased sales from the company's theme park and
packaging operations, partially offset by lower revenue per
barrel. Gross sales and excise taxes in 1998 include the impact
of consolidating the Stag Brewery operations in the United
Kingdom.
The company's strategy initiated at the beginning of 1998 to
reduce the emphasis on widespread price discounting that occurred
in the beer industry throughout 1997 has been successful in many
markets. Anheuser-Busch has seen a reduction in discounting
since the fourth quarter of last year, but pricing remains
competitive.
Domestic revenue per barrel declined 1.4 percent in the
second quarter 1998 versus the second quarter last year. The
decline is an improvement over first quarter 1998 results
(normalized for the impact of the first quarter wholesaler
inventory build) and represents improvement over revenue per
barrel in the fourth quarter 1997. Given the strong sales trends
<PAGE>10
thus far in 1998 and the fact that many markets have not had a
price increase in two years, the company is currently analyzing
opportunities for additional discount reductions or selective
price increases in the fourth quarter of this year, based on a
market-by-market assessment of competitive conditions. The
revenue enhancement strategy will be flexible, and the company
will not permit market share erosion.
The company's beer volume information is summarized in the
following table:
<TABLE>
- ---------------------------------------------------------------------------
| Beer Volume (millions of barrels) |
|-------------------------------------------------------------------------|
| Second Quarter || Six Months Ended June 30 |
| --------------------- || ------------------------ |
| Vs. 1997 || Vs. 1997 |
| -------- || ----------------- |
| 1998 Barrels % || 1998 Barrels % |
| ---- ------- ----- || ---- ------- ----- |
|S> <C> <C> <C> || <C> <C> <C> |
| Domestic 24.1 Up 0.3 Up 1.6% || 45.6 Up 1.4 Up 3.3% |
| International 2.0 Up 0.2 Up 9.9% || 3.3 Up 0.1 Up 2.0% |
| ---- ------- -------- || ---- ------ ------- |
| Worldwide - A-B 26.1 Up 0.5 Up 2.2% || 48.9 Up 1.5 Up 3.2% |
| Brands || |
| International || |
| Equity Partner 2.7 Up 1.5 N/M || 5.0 Up 3.1 N/M |
| Brands ---- ------- -------- || ---- ------ ------- |
| || |
| Total Brands 28.8 Up 2.0 Up 7.5% || 53.9 Up 4.6 Up 9.3% |
| ---- ------- -------- || ---- ------ ------- |
| ---- ------- -------- || ---- ------ ------- |
- ---------------------------------------------------------------------------
N/M - Not Meaningful
</TABLE>
<PAGE>11
Worldwide Anheuser-Busch beer brands were up 2.2% in the
second quarter and 3.2% for the first six months. Worldwide beer
volume is comprised of domestic volume and international volume.
Domestic volume represents Anheuser-Busch beer produced and
shipped within the United States. International volume
represents exports from the company's U.S. breweries to markets
around the world, plus Anheuser-Busch brands produced overseas by
company-owned breweries and under license and contract brewing
agreements.
Total volume, which combines equity volume (representing the
company's share of its foreign equity partners' volume) with
worldwide Anheuser-Busch brand volume, was up 2.0 million
barrels, or 7.5%, in the second quarter and up 4.6 million
barrels, or 9.3%, for the first six months. International equity
partner brands reflects the company's 37% ownership interest in
Grupo Modelo brands for 1998, compared with a 17.7% ownership
interest in Grupo Modelo in 1997.
Anheuser-Busch domestic beer shipments were up 1.6% in the
second quarter and 3.3% for the first six months of 1998. The
increase in domestic beer shipments reflects strong
sales-to-retailer performance, up over 3%, with Bud Family sales-
to-retailers up 3.0% for the first six months of 1998. The strong
sales-to-retailer performance has reduced wholesaler beer
inventories to normal seasonal levels, down from first quarter
levels. In the first quarter the company built wholesaler
inventories in anticipation of the expiration of the collective
bargaining agreement with the International Brotherhood of
Teamsters.
<PAGE>12
The company's domestic market share (excluding exports) for
the first six months of 1998 was 45.2%, an increase of 0.5
percentage points over 1997 market share of 44.7%. Including
exports, the company's share of U.S. shipments was 45.1% versus
44.4% for the first six months of 1997. Domestic market share
and share of U.S. shipments are determined based on industry
sales estimates provided by the Beer Institute. Anheuser-Busch
has led the U. S. brewing industry in sales volume and market
share since 1957.
International beer volume (excluding Modelo) increased in
the second quarter and first six months of 1998 compared to the
same periods last year. Overall, international beer volume was
up 9.9% for the second quarter and 2% for the first six months.
Second quarter volume gains in the United Kingdom, continental
Europe and the Americas more than offset weakness in Asia due to
economic conditions.
In June the company restructured its alliance granting
Labatt Brewing Company perpetual rights to brew and sell the
Budweiser and Bud Light brands in Canada. In return, Labatt will
significantly increase marketing support behind the two brands
and provide Anheuser-Busch with a greater share of associated
profits. Budweiser is currently the third largest selling beer
in Canada.
During the second quarter the company completed its
<PAGE>13
expansion of the Wuhan brewery in China. The expansion doubles
Wuhan's capacity, bringing it to 2.1 million barrels.
Cost of products and services was $1.9 billion and $3.5
billion, respectively, for the second quarter and first six
months of 1998, decreasing 0.3% and increasing 1.0% compared to
the same periods in 1997.
The decrease in costs of products and services in the second
quarter 1998 is primarily due to a change in method of accounting
for the Stag brewery operation. In 1997, before Stag was 100%
owned by Anheuser-Busch, the company accounted for its 50% share
of the operations under the equity method. Excise taxes paid by
Stag on beer sold by the company's sales office were included in
the cost of beer purchased from Stag. In 1998, under full
consolidation accounting, excise taxes are shown as a deduction
from gross sales.
The increase in cost of products and services for the first
six months is primarily attributable to higher domestic beer
volume and higher depreciation, partially offset by productivity
improvements.
Gross profit as a percentage of net sales was 38.0% for the
second quarter 1998, an increase of 0.4 percentage points versus
the second quarter 1997, and 36.5% for the first six months of
1998, unchanged versus prior year.
<PAGE>14
Marketing, distribution and administrative expenses for the
second quarter 1998 were $483.7 million compared with $478.7
million for the second quarter 1997, an increase of $5.0 million,
or 1.1%. For the first six months of 1998, these expenses were
$884.1 million, an increase of $7.8 million, or 0.9% compared
with $876.3 million in 1997. These increases are primarily due to
higher domestic and international marketing expense in support of
premium brands, primarily the Bud Family, partially offset by
reduced general and administrative costs.
Operating income for the second quarter 1998 was $659.2
million, an increase of $13.2 million, or 2.0%, over the
comparable period last year. Operating income for the first six
months of 1998 was $1.1 billion, an increase of $13.2 million, or
1.2% versus the first six months of 1997. The increases in
operating income are primarily due to increased domestic beer
sales volume offset by lower revenue per barrel, increased
international beer sales volume in the second quarter, continued
brewery operating efficiencies and improved performance by the
company's theme park and packaging operations. Theme park
operating results for the second quarter 1998 benefited from
increased attendance due to the Easter holiday falling within the
second quarter and higher in-park spending by visitors.
<PAGE>15
Equity income, net of tax, increased $7.1 million, to $19.9
million for the second quarter and increased $26.4 million, to
$39.2 million for the first six months of 1998. The increases
are principally due to the company's larger equity stake in Grupo
Modelo. In 1998, equity income includes the company's 37% share
of the net earnings of Modelo (December 1997 through May 1998
reporting on a one-month-delay basis) versus 17.7% share of
Modelo's earnings in 1997 (January 1997 through May 1997 on a one-
month delay).
The company began recognizing its share of net earnings of
Modelo under the equity method for the first time during the
second quarter 1997. Consistent with the initial adoption of the
equity method, the equity income recognized in the second quarter
1997 included recognition of the company's year-to-date share of
Modelo net earnings (January through May 1997 at a 17.7%
ownership interest).
In May 1998, the International Accounting Task Force of the
American Institute of Certified Public Accountants, in
conjunction with the Securities and Exchange Commission (SEC),
concluded that the Mexican economy continues to be highly
inflationary for accounting purposes. Accordingly, the company
will continue to apply hyperinflationary accounting for its
investment in Grupo Modelo for at least the remainder of 1998.
The Task Force and the SEC will reconsider Mexico's inflationary
status in December 1998 to determine if hyperinflationary
accounting should continue into 1999. The change to non-
hyperinflation accounting, when approved by the SEC, is expected
to be favorable to Anheuser-Busch due to the strong net monetary
asset position of Modelo.
<PAGE>16
Net interest cost (interest expense less interest income)
was $70.6 million for the second quarter 1998, an increase of
$7.3 million, or 11.5%, compared to net interest cost of $63.3
million for the second quarter 1997. Net interest cost for the
first six months of 1998 was $144.6 million, an increase of $26.0
million, or 21.9%, over net interest cost of $118.6 million for
the corresponding period in 1997. These increases reflect higher
average outstanding debt balances, principally due to the
additional investment in Grupo Modelo in May 1997.
Interest capitalized declined $2.6 million and $2.7 million
for the second quarter and first six months of 1998, to $8.4
million and $17.1 million, respectively. The decreases are the
result of lower construction-in-progress balances due to reduced
capital expenditures as the company completes its brewery
modernization projects.
The components of other income/(expense), net provided
income of $2.0 million for the second quarter and reflected
expense of $4.1 million for the first six months of 1998. Other
income/(expense), net includes numerous items of a nonoperating
nature which do not have a material impact on the company's
consolidated results of operations, either individually or in the
aggregate.
The effective tax rate was 38.0% of pretax earnings for the
second quarter and first six months of 1998, a decline of 0.4
percentage points in both periods versus the comparable periods
in 1997. The decline is principally due to lower state taxes.
Net income was $391.2 million for the second quarter 1998,
an increase of $10.0 million, or 2.6%, compared to the second
quarter 1997. For the first six months of 1998, net income was
<PAGE>17
$656.4 million, an increase of $17.5 million, or 2.7%, compared
to 1997.
Diluted earnings per share for the second quarter 1998 were
$.80, an increase of $.04, or 5.3%, compared to the second
quarter 1997. For the first six months of 1998, diluted
earnings per share were $1.34, an increase of $.07, or 5.5%,
compared to 1997. Diluted earnings per share are based on the
weighted average outstanding shares of the company's common
stock.
Earnings per share growth continues to benefit from fewer
shares outstanding due to the company's ongoing share repurchase
program. The company has repurchased over 6.5 million shares
through the first six months of 1998 and continues to anticipate
the repurchase in 1998 of approximately 3% of total shares
outstanding.
FINANCIAL CONDITION
- -------------------
Cash and marketable securities at June 30, 1998 totaled
$152.5 million, representing increases of $3.4 million from June
30, 1997 and $5.2 million since December 31, 1997. The principal
source of the company's cash flow is cash generated by
operations. Additional sources of cash during the twelve-month
period ended June 30, 1998 were financing activities. Principal
uses of cash during the period were capital expenditures, share
repurchases and dividends.
Total long-term debt increased $232.3 million during the
twelve-month period ended June 30, 1998. The net increase in
<PAGE>18
debt during this period is shown below, by key component:
<TABLE>
Debt Issuances . . . $658.6 million, comprised of the following:
---------------
<S>
- $250.0 million of long-term notes (interest rate: 7.125%)
- $200.0 million of debentures (interest rates: $100.0 million at 6.75% and $100.0 million at 6.5%)
- $162.8 million of dual-currency notes (quarterly floating interest rate)
- $20.4 million of industrial revenue bonds (various fixed interest rates)
- $25.4 million of other miscellaneous borrowings
Debt Reduction . . . $426.3 million, comprised of the following:
--------------
<S>
- $45.0 million of debentures (interest rates: $22.5 million at 8.625% and $22.5 million at 8.5%)
- $40.0 million of medium-term notes (various fixed interest rates)
- $306.4 million of commercial paper (weighted average interest rate: 5.6%)
- $34.9 million reduction of the ESOP debt guarantee (interest rate: 8.3%)
</TABLE>
At June 30, 1998, $592.3 million of commercial paper
borrowings were outstanding, a decrease of $306.4 million
compared to the June 30, 1997 balance and an increase of $0.4
million over the balance at December 31, 1997. Commercial paper
is classified as long-term debt since it is intended to be
maintained on a long-term basis with on-going credit support
provided by the company's $1 billion revolving credit agreement.
Capital expenditures during the second quarter 1998
were $206.7 million compared to $331.3 million for the second
quarter 1997, a decrease of 37.6%, and $444.1 million for the
<PAGE>19
first six months of 1998 versus $596.9 million for the first six
months of 1997, a decrease of 25.6%. Capital expenditures are
down versus the prior year as the company completes its brewery
modernization program.
RISK MANAGEMENT
- ---------------
The company's derivatives holdings will fluctuate during the
year based on normal and recurring changes in purchasing and
production activity. Since December 31, 1997, there have been no
significant changes in the company's interest rate, commodity
price and foreign currency exposures, changes in the types of
derivative instruments used to hedge those exposures, or changes
in underlying market conditions.
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 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.
<PAGE>20
PART II - OTHER INFORMATION
---------------------------
Item 5: Other Information
Labor Negotiations
- ------------------
The labor agreement covering employees at the company's 12
U.S. breweries represented by the International Brotherhood of
Teamsters expired March 29, 1998 after a 30-day extension. The
company's contract offer was rejected by union membership on May
1. Following that balloting, discussions were held with the
union to clarify the provisions of the company's offer, including
sessions facilitated by the former head of the Federal Mediation
and Conciliation Service, John Calhoun Wells.
The company stipulated as a condition of those talks that a
secret mail ballot contract vote be held immediately upon their
completion. Union leadership agreed, but recommended members
reject the contract offer. The ballots from the second vote were
tabulated on July 30 and the union membership again rejected the
company's contract offer. Union leadership has recently
contacted the company to discuss possible next steps towards
reaching a new labor agreement. The company anticipates reaching
an agreement with the union, but remains fully prepared to
operate in the event of a work stoppage.
Grupo Modelo Arbitration
- ------------------------
In June 1997, the company exercised its remaining option to
increase its direct and indirect ownership in Grupo Modelo's
operating subsidiary, Diblo, to 50.2% for approximately $550
million. The company and the controlling shareholders of Grupo
Modelo are currently pursuing arbitration in accordance with the
investment agreement to resolve a dispute concerning the purchase
price for the option shares. It is anticipated that Anheuser-
Busch will complete the transaction in the fourth quarter 1998.
<PAGE>21
Dividend Increase
- -----------------
On July 22, 1998, the Board of Directors approved an
increase in the quarterly dividend on the company's common stock
from 26 cents to 28 cents per share, an increase of $.02, or
7.7%. The dividend is payable September 9, 1998 to shareholders
of record on August 10, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
10.1 - Consulting and Indemnification Agreement between Anheuser-Busch
Companies, Inc. and a current director.
10.2 - Amendment to the Consulting and Indemnification Agreement between
Anheuser-Busch Companies, Inc. and a current director.
12 - Ratio of Earnings to Fixed Charges
27.1 - Financial Data Schedule
27.2 - Restated Financial Data Schedule for the fiscal quarters ended
March 31, June 30 and September 30 of 1997.
27.3 - Restated Financial Data Schedule for each fiscal quarter of 1996.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three month period ending
June 30, 1998.
<PAGE>22
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/ W. Randolph Baker
------------------------------------------
W. Randolph Baker
Vice President and Chief Financial Officer
(Chief Financial Officer)
August 12, 1998
/s/ John F. Kelly
------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
August 12, 1998
<PAGE>23
CONSULTING AND INDEMNIFICATION AGREEMENT
This Consulting and Indemnification Agreement ("Agreement")
is between Anheuser-Busch Companies, Inc. ("A-BC") and James R.
Jones (the "Director Designee").
WHEREAS, Anheuser-Busch International Holdings, Inc., a
subsidiary of A-BC, has nominated Director Designee to be a
director of Grupo Modelo, S.A. de C.V. ("Grupo Modelo"); and
WHEREAS, Director Designee has agreed to serve as a director
of Grupo Modelo and to provide certain consulting services to A-
BC;
NOW, THEREFORE, in consideration of the foregoing premises
and respective representations, warranties, covenants and
agreements, and upon the terms and subject to the conditions
hereinafter set forth, and intending to be legally bound hereby,
the parties do hereby agree as follows:
1. Certain Definitions:
--------------------
(a) Claim: any threatened, pending or completed
------
action, suit or proceeding, or any
inquiry, hearing or investigation, whether
conducted by A-BC or any other party, that Director
Designee in good faith believes might lead to the
institution of any such action, suit or proceeding,
whether civil, criminal, administrative,
investigative or other.
(b) Expenses: include attorneys' fees and
---------
all other costs, expenses and obligations paid or
incurred in connection with investigating,
defending, being a witness in or participating in
(including on appeal) any Claim relating to any
Indemnifiable Event.
(c) Indemnifiable Event: any event or
---------------------
occurrence related to the fact that Director
Designee is or was a director, alternate director,
agent or fiduciary of Grupo Modelo, or by reason of
anything done or not done by Director Designee in
any such capacity.
(d) Reviewing Party: any appropriate person
-----------------
or body consisting of a member or members of A-
BC's Board of Directors; any other person or body
appointed by the Board who is not a party to the
particular Claim for which Director Designee is
seeking indemnification and, to the extent
permitted by applicable law, any officer of A-BC
authorized therefor.
<PAGE>1
2. Consulting Services. Director Designee agrees to serve
--------------------
as a director of Grupo Modelo and agrees to refrain from
resigning as a director without giving A-BC at least 30 days'
advance written notice. From time to time, Director Designee
agrees to be reasonably available to A-BC for discussions and
advice concerning Grupo Modelo.
3. Compensation. A-BC shall annually pay to the Director
-------------
Designee any amount by which the aggregate cash fees that A-BC
would have paid Director Designee for each calendar year had the
Director Designee been a member of the Board of Directors of A-BC
exceeds the cash fees actually paid to the Director Designee by
Grupo Modelo for services on the Board of Directors of Grupo
Modelo, taking into account (i) the committees of the Board of
Directors of Grupo Modelo on which the Director Designee served
and the capacities in which the Director Designee served; (ii)
the meetings of the Board of Directors of Grupo Modelo and of the
committees thereof on which the Director Designee served,
scheduled and held during that calendar year and the number of
such meetings that the Director Designee attended; and (iii) the
portion of such calendar year during which Director Designee
served on the Board of Directors of Grupo Modelo or any committee
thereof. Within 45 days after the end of each of the first three
calendar quarters in each year, A-BC shall pay to Director
Designee its estimate of one-quarter of the annual amount
required to be paid by A-BC under this Section 3, and on or prior
to February 15 of each year A-BC shall pay to the Director
Designee any amount by which the annual amount required to be
paid by A-BC under this Section 3 exceeds the aggregate payments
previously made by A-BC with respect to such calendar year.
4. Basic Indemnification Arrangement.
-----------------------------------
(a) In the event Director Designee was, is or
becomes a party to or witness or other participant
in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason
of (or arising in part out of) an Indemnifiable
Event, A-BC shall indemnify Director Designee to
the fullest extent permitted by law, as soon as
practicable but in any event no later than thirty
days after written demand is presented to A-BC,
against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement (including
all interest, assessments and other Charges paid or
payable in connection with or in respect of such
Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim and any
federal, state, local or foreign taxes imposed on
the Director Designee as a result of the actual or
deemed receipt of any payments under this
Agreement. Notwithstanding anything in this
Agreement to the contrary and except as provided in
Section 5, Director Designee shall not be entitled
<PAGE>2
to indemnification pursuant to this Agreement in
connection with any Claim initiated by Director
Designee against A-BC or any director or officer of
A-BC unless A-BC has joined in or consented to the
initiation of such Claim. If so requested by
Director Designee, A-BC shall advance (within two
business days of such request) any and all Expenses
to Director Designee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the
obligations of A-BC under Section 4(a) shall be
subject to the condition that the Reviewing Party
shall not have determined that the Director
Designee is not entitled to be indemnified under
applicable law, and (ii) the obligation of A-BC to
make an Expense Advance pursuant to Section 4(a)
shall be subject to the condition that, if, when
and to the extent that the Reviewing Party
determines that Director Designee would not be
permitted to be so indemnified under applicable
law, A-BC shall be entitled to be reimbursed by
Director Designee (who hereby agrees to reimburse A-
BC) for all such amounts theretofore paid;
provided, however, that if Director Designee has
commenced legal proceedings in a court of competent
jurisdiction to secure a determination that
Director Designee should be indemnified under
applicable law, any determination made by the
Reviewing Party that Director Designee would not be
permitted to be indemnified under applicable law
shall not be binding and Director Designee shall
not be required to reimburse A-BC for any Expense
Advance until a final judicial determination is
made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or lapsed).
Director Designee's obligation to reimburse A-BC
for Expense Advances shall be unsecured and no
interest shall be charged thereon. If there has
been no determination by the Reviewing Party or if
the Reviewing Party determines that Director
Designee substantively would not be permitted to be
indemnified in whole or in part under applicable
law, Director Designee shall have the right to
commence litigation in any court in the States of
Missouri or Delaware having subject matter
jurisdiction thereof and in which venue is proper,
seeking an initial determination by the court or
challenging any such determination by the Reviewing
Party or any aspect thereof, and A-BC hereby
consents to service of process and to appear in any
such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and
binding on A-BC and Director Designee.
<PAGE>3
5. Indemnification for Additional Expenses. A-BC shall
-------------------------------------------
indemnify Director Designee against any and all expenses
(including attorneys' fees) and, if requested by Director
Designee, shall (within two business days of such request)
advance such expenses to Director Designee, which are incurred by
Director Designee in connection with any claim asserted against
or action brought by Director Designee for (i) indemnification or
advance payment of Expenses by A-BC under this Agreement or any
other agreement or under applicable law or the Company's
Restated Certificate of Incorporation or By-laws now or hereafter
in effect relating to Claims for Indemnifiable Events and/or (ii)
recovery under any directors' and officers' liability insurance
policies maintained by A-BC, in each case under (i) or (ii)
regardless of whether Director Designee ultimately is determined
to be entitled to such indemnification, advance expense payment
or insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Director Designee is
-----------------------
entitled under any provision of this Agreement to indemnification
by A-BC for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, A-BC shall
nevertheless indemnify Director Designee for the portion thereof
to which Director Designee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the
extent that Director Designee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or
in part to an Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Director
Designee shall be indemnified against all Expenses incurred in
connection therewith. In connection with any determination by
the Reviewing Party or otherwise as to whether Director Designee
is entitled to be indemnified hereunder, the burden of proof
shall be on A-BC to establish that Director Designee is not so
entitled.
7. No Presumption. For purposes of this Agreement, the
----------------
termination of any claim, action, suit or proceeding, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Director
Designee did not meet any particular standard of conduct or have
any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
<PAGE>4
8. Non-exclusivity, Etc. The rights of the Director
----------------------
Designee hereunder shall be in addition to any other rights
Director Designee may have under A-BC's Restated Certificate of
Incorporation or By-laws or the Delaware General Corporation Law
or otherwise. To the extent that a change in the Delaware
General Corporation Law (whether by statute or judicial decision)
occurring after the date hereof permits greater indemnification
by agreement than would be afforded currently under A-BC's
Restated Certificate of Incorporation and By-laws and this
Agreement, it is the intent of the parties hereto that Director
Designee shall enjoy by this Agreement the greater benefits so
afforded by such change.
9. Liability Insurance. To the extent A-BC maintains an
--------------------
insurance policy or policies providing directors' and officers'
liability insurance, Director Designee shall be covered by such
policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available to Director Designee.
10. Amendments, Etc. No supplement, modification or
-----------------
amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provisions hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
11. Subrogation. In the event of payment under this
------------
Agreement, A-BC shall be subrogated to the extent of such payment
to all of the rights of recovery of Director Designee against any
other party, including Grupo Modelo, and Director Designee shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable A-BC effectively to bring suit to
enforce such rights.
12. No Duplication of Payments. A-BC shall not be liable
---------------------------
under this Agreement to make any payment in connection with any
claim made against Director Designee to the extent Director
Designee has otherwise actually received payment (under any
insurance policy, from Grupo Modelo or otherwise) of the amounts
otherwise indemnifiable hereunder.
<PAGE>5
13. Binding Effect, Etc. This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the
business and/or assets of A-BC, spouses, heirs, and personal and
legal representatives. A-BC shall require and cause any
successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a
substantial part, of the business and/or assets of A-BC, by
written agreement in form and substance satisfactory to Director
Designee, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that A-BC would be
required to perform if no such succession had taken place.
14. Severability. The provisions of this Agreement shall be
-------------
severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible,
the provisions of this Agreement (including, without limitation,
each portion of this Agreement containing any provision held to
be invalid, void or otherwise unenforceable, that is not itself
invalid, void or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
15. Governing Law. This Agreement shall be governed by and
--------------
construed and enforced in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in
such State without giving effect to the principles of conflicts
of laws.
<PAGE>6
16. Termination.
------------
(a) At the option of A-BC, A-BC may terminate this
Agreement and its obligations hereunder by written
notice to the Director Designee delivered to his
address as recorded upon the records of A-BC. Upon
receipt by Director Designee of such notice, A-BC
shall have no further obligations hereunder;
provided that such termination shall not limit the
rights of the Director Designee or the obligations
of A-BC with respect to any Claim arising prior to
such termination.
(b) In the event that Director Designee terminates
service as a director of Grupo Modelo, this
Agreement shall terminate, but such termination
shall not limit the rights or obligations of
Director Designee or A-BC hereunder arising prior
to such termination.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of October 1, 1997.
ANHEUSER-BUSCH COMPANIES, INC.
By: /s/ W. Randolph Baker
-------------------------------------------------
Title: Vice President and Chief Financial Officer
/s/ James R. Jones
-------------------------------------------------
James R. Jones
<PAGE>7
AMENDMENT TO CONSULTING
AND INDEMNIFICATION AGREEMENT
This Amendment to Consulting and Indemnification Agreement
("Amendment") is between Anheuser-Busch Companies, Inc. ("A-BC")
and James R. Jones (the "Director Designee").
WHEREAS, A-BC and Director Designee have entered into a
Consulting and Indemnification Agreement (the "Indemnification
Agreement") dated as of October 1, 1997;
WHEREAS, A-BC and Director Designee have agreed to clarify
certain provisions in the Indemnification Agreement;
NOW, THEREFORE, in consideration of the foregoing premises
and the respective covenants and agreements, and upon the terms
and subject to the conditions hereinafter set forth, and
intending to be legally bound hereby, the parties do hereby agree
as follows:
1. Section 16(a) of the Indemnification Agreement is
hereby deleted and the following is hereby inserted in its place:
(a) At the option of A-BC, A-BC may terminate this
Agreement and its obligations hereunder by written
notice to the Director Designee delivered to his
address as recorded upon the records of A-BC. Upon
receipt by Director Designee of such notice, A-BC
shall have no further obligations hereunder;
provided that such termination shall not limit the
rights of the Director Designee or the obligations
of A-BC with respect to any Indemnifiable Event
occurring prior to such termination.
2. This Amendment shall be effective and shall apply and
take effect as of the date of the Indemnification Agreement. All
other provisions of the Indemnification Agreement that are not
explicitly modified hereby shall remain in full force and effect,
and this Amendment shall be construed in connection with and as
part of the Indemnification Agreement.
3. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such State
without giving effect to the principles of conflicts of laws.
<PAGE>1
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Amendment as of January 1, 1998.
ANHEUSER-BUSCH COMPANIES, INC.
By: /s/ W. Randolph Baker
-------------------------------------------------
Title: Vice President and Chief Financial Officer
/s/ James R. Jones
-------------------------------------------------
James R. Jones
<PAGE>2
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:
Six Months
Ended
June 30, Year Ended December 31,
-------------- ----------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
7.2X 8.4X 7.3X 8.1X 1/ 6.6X 2/ 7.7X 5.8X 3/
For purposes of this ratio, earnings have been calculated by adding
to income before income taxes the distributed earnings of investees
accounted for under the equity method and 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/ The ratio for 1996 includes the gain from the sale of the
Cardinals, which increased income before income taxes by $54.7
million for the year. Excluding this one-time gain, the ratio
would have been 7.9X.
2/ The ratio for 1995 includes the impact of the Tampa Brewery
shutdown and the reduction of beer wholesaler inventories. Excluding
these non-recurring items, the ratio would have been 7.6X.
3/ Includes the impact of the one-time, pretax restructuring charge
of $401.3 million as a result of the company's Profitability Enhancement
Program. Excluding this non-recurring special charge, the ratio would
have been 7.5X.
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 152,500
<SECURITIES> 0
<RECEIVABLES> 866,600
<ALLOWANCES> 0
<INVENTORY> 614,600
<CURRENT-ASSETS> 1,815,900
<PP&E> 7,869,300
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,082,800
<CURRENT-LIABILITIES> 1,584,900
<BONDS> 4,417,400
0
0
<COMMON> 711,000
<OTHER-SE> 3,501,800
<TOTAL-LIABILITY-AND-EQUITY> 12,082,800
<SALES> 5,513,800
<TOTAL-REVENUES> 5,513,800
<CGS> 3,502,200
<TOTAL-COSTS> 4,386,300
<OTHER-EXPENSES> 4,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147,700
<INCOME-PRETAX> 995,900
<INCOME-TAX> 378,700
<INCOME-CONTINUING> 656,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 656,400
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.34
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CURRENCY> U.S.
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<EXCHANGE-RATE> 1 1 1
<CASH> 266,000 149,100 116,200
<SECURITIES> 0 0 0
<RECEIVABLES> 746,600 830,100 804,300
<ALLOWANCES> 0 0 0
<INVENTORY> 606,500 524,600 532,900
<CURRENT-ASSETS> 1,814,000 1,734,300 1,633,800
<PP&E> 12,455,600 12,711,500 12,944,100
<DEPRECIATION> 5,141,100 5,219,000 5,335,300
<TOTAL-ASSETS> 10,909,700 11,474,000 11,542,600
<CURRENT-LIABILITIES> 1,550,700 1,545,500 1,552,200
<BONDS> 3,498,600 4,185,100 4,065,600
0 0 0
0 0 0
<COMMON> 707,000 708,000 708,700
<OTHER-SE> 3,398,700 3,271,200 3,433,100
<TOTAL-LIABILITY-AND-EQUITY> 10,909,700 11,474,000 11,542,600
<SALES> 2,462,900 5,457,200 8,558,800
<TOTAL-REVENUES> 2,462,900 5,457,200 8,558,800
<CGS> 1,597,000 3,466,600 5,390,200
<TOTAL-COSTS> 1,994,600 4,342,900 6,785,700
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 57,200 122,500 192,100
<INCOME-PRETAX> 418,300 1,016,600 1,618,500
<INCOME-TAX> 160,600 390,500 621,600
<INCOME-CONTINUING> 257,700 638,900 1,032,400
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 257,700 638,900 1,032,400
<EPS-PRIMARY> .52 1.29 2.09
<EPS-DILUTED> .51 1.27 2.06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CURRENCY> U.S.
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<EXCHANGE-RATE> 1 1 1 1
<CASH> 219,400 132,800 122,500 93,600
<SECURITIES> 0 0 0 0
<RECEIVABLES> 607,900 762,600 649,200 635,800
<ALLOWANCES> 0 0 0 3,100
<INVENTORY> 631,900 550,700 527,400 531,100
<CURRENT-ASSETS> 1,692,100 260,300 1,562,300 1,465,800
<PP&E> 11,446,900 11,648,200 11,879,000 12,214,700
<DEPRECIATION> 4,630,400 4,704,200 4,831,700 5,006,500
<TOTAL-ASSETS> 10,212,500 10,374,100 10,393,500 10,463,600
<CURRENT-LIABILITIES> 1,327,600 1,332,400 1,365,900 1,430,900
<BONDS> 3,451,700 3,559,800 3,235,300 3,270,900
0 0 0 0
0 0 0 0
<COMMON> 348,600 348,900 704,900 705,800
<OTHER-SE> 3,389,200 3,434,100 3,357,900 3,323,300
<TOTAL-LIABILITY-AND-EQUITY> 10,212,500 10,374,100 10,393,500 10,463,600
<SALES> 2,371,800 5,332,900 8,396,400 10,883,700
<TOTAL-REVENUES> 2,371,800 5,332,900 8,396,400 10,883,700
<CGS> 1,538,100 3,384,300 5,270,100 6,964,500
<TOTAL-COSTS> 1,926,100 4,249,700 6,603,000 8,799,900
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 58,200 119,900 178,500 232,800
<INCOME-PRETAX> 452,900 1,034,200 1,647,800 1,892,900
<INCOME-TAX> 177,400 405,300 641,700 736,800
<INCOME-CONTINUING> 275,500 628,900 1,006,100 1,156,100
<DISCONTINUED> 0 33,800 33,800 33,800
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 275,500 662,700 1,039,900 1,189,900
<EPS-PRIMARY> .55 1.26 2.02 2.31
<EPS-DILUTED> .53 1.23 1.97 2.27
</TABLE>
