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, 1999
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 - 475,690,902 shares as of March 31, 1999
<PAGE>2
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
Three months ended March 31,
----------------------------
(In millions, except per share data) 1999 1998
- -----------------------------------------------------------------------
Sales........................................... $3,157.2 $2,951.2
Less excise taxes............................. (472.0) (443.7)
---------------------
Net sales....................................... 2,685.2 2,507.5
Cost of products and services................. (1,712.1) (1,638.8)
---------------------
Gross profit.................................... 973.1 868.7
Marketing, distribution and administrative
expenses...................................... (436.5) (400.4)
---------------------
Operating income................................ 536.6 468.3
Other income and expenses:
Interest expense.............................. (75.8) (75.5)
Interest capitalized.......................... 3.3 8.7
Interest income............................... 0.9 1.5
Other expense, net............................ (1.2) (6.1)
---------------------
Income before income taxes...................... 463.8 396.9
Provision for income taxes...................... (176.3) (151.0)
Equity income, net of tax....................... 31.6 19.3
---------------------
Net income...................................... 319.1 265.2
Retained earnings, beginning of period.......... 8,320.7 7,604.9
Common stock dividends (per share: 1999--$.28;
1998--$.26)..................................... (133.4) (126.6)
---------------------
Retained earnings, end of period................ $8,506.4 $7,743.5
=====================
Basic earnings per share........................ $ .67 $ .54
=====================
Diluted earnings per share...................... $ .66 $ .54
=====================
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, and include all
adjustments necessary for a fair presentation. These statements
should be read in conjunction with the Consolidated Financial
Statements and Notes included in the company's Annual Report
to Shareholders for the year ended December 31, 1998.
<TABLE>
2. BUSINESS SEGMENT INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, (In Millions):
-----------------------------------------------------------------------
<S> |Domestic | | | | |Corporate| |
1999 | Beer |Int'l Beer|Packaging|Entertain.| Other|& Elims. | Consol.|
- -------------------------------------------------------------------------------------
| | | | | | | | |
| | | | | | | | |
|<S> | <C> | <C> | <C> | <C> |<C> | <C> | <C> |
|Gross Sales | $2,652.7| 128.5 | 435.7 | 113.9 | 22.0 | (195.6)| $3,157.2|
| | | | | | | | |
| | | | | | | | |
|Net Sales: | | | | | | | |
|-Intersegment | -| - | $189.9 | - | 5.7 | (195.6)| $-|
| | | | | | | | |
|-External | $2,200.0| 109.2 | 245.8 | 113.9 | 16.3 | - | $2,685.2|
| | | | | | | | |
| | | | | | | | |
|Income Before | | | | | | | |
|Income Taxes | $572.2| (7.7) | 26.6 | (13.6)| (0.4)| (113.3)| $463.8|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
|Equity Income,| | | | | | | |
|Net of Tax | -| $31.6 | - | - | - | - | $31.6|
| | | | | | | | |
| | | | | | | | |
|Net Income | $354.8| 26.8 | 16.5 | (8.4)| (0.2)| (70.4)| $319.1|
- -------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>4
<TABLE>
<S>
1998
- -------------------------------------------------------------------------------------
| | | | | | | | |
|<S> |<C> | <C> | <C> | <C> |<C> | <C> |<C> |
|Gross Sales | $2,418.3| 135.9 | 428.6 | 111.3 | 30.2 | (173.1)| $2,951.2|
| | | | | | | | |
|Net Sales: | | | | | | | |
|-Intersegment | -| - | 167.0 | - | 6.1 | (173.1)| $-|
| | | | | | | | |
|-External | $1,994.9| 115.6 | 261.6 | 111.3 | 24.1 | - | $2,507.5|
| | | | | | | | |
| | | | | | | | |
|Income Before | | | | | | | |
|Income Taxes | $486.3| (6.3) | 24.1 | (14.6)| (0.1)| (92.5)| $396.9|
| | | | | | | | |
| | | | | | | | |
|Equity Income,| -| $19.3 | - | - | - | - | $19.3|
|Net of Tax | | | | | | | |
| | | | | | | | |
|Net Income | $301.5| 15.4 | 14.9 | (9.1)| (0.1)| (57.4)| $265.2|
- -------------------------------------------------------------------------------------
</TABLE>
3. COMPREHENSIVE INCOME (In Millions)
Three Months Ended March 31,
------------------------------------------------------------------
1999 1998
---------- --------
Net Income $319.1 $265.2
Foreign currency translation (11.8) 3.0
--------------------------
Comprehensive Income $307.3 $268.2
==========================
------------------------------------------------------------------
4
<PAGE>5
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
MARCH 31,
-------------------
(In millions) 1999 1998
- -----------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and marketable securities........... $ 152.1 $ 106.4
Receivables, less allowance for
doubtful accounts...................... 782.9 768.2
Inventories:
Raw materials and supplies............. 372.3 370.9
Work in progress....................... 96.7 98.7
Finished goods......................... 200.7 208.1
Total inventories.................... 669.7 677.7
Other current assets..................... 179.5 156.4
------------------------
Total current assets................... 1,784.2 1,708.7
------------------------
INVESTMENTS IN AFFILIATED COMPANIES...... 1,910.7 1,282.4
OTHER ASSETS............................. 1,098.9 1,127.2
PLANT AND EQUIPMENT, NET................. 7,851.9 7,821.2
------------------------
TOTAL ASSETS........................... $12,645.7 $11,939.5
========================
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable....................... $ 775.7 $ 709.4
Accrued salaries, wages and benefits... 222.3 214.4
Accrued taxes.......................... 368.1 325.7
Other current liabilities.............. 435.1 331.5
------------------------
Total current liabilities............ 1,801.2 1,581.0
------------------------
POSTRETIREMENT BENEFITS.................. 519.2 526.4
------------------------
LONG-TERM DEBT........................... 4,714.1 4,383.6
------------------------
DEFERRED INCOME TAXES.................... 1,318.2 1,312.4
------------------------
SHAREHOLDERS EQUITY:
Common stock........................... 714.0 710.5
Capital in excess of par value......... 1,146.9 1,043.0
Retained earnings...................... 8,506.4 7,743.5
Foreign currency translation adjustment (217.5) (211.0)
------------------------
10,149.8 9,286.0
Treasury stock, at cost................ (5,646.3) (4,902.7)
ESOP debt guarantee.................... (210.5) (247.2)
------------------------
4,293.0 4,136.1
------------------------
COMMITMENTS AND CONTINGENCIES............ -- --
------------------------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $12,645.7 $11,939.5
========================
5
<PAGE>6
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
Three months ended March 31,
-----------------------------
(In millions) 1999 1998
- ---------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income......................................... $ 319.1 $ 265.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 187.8 177.5
Deferred income taxes.......................... 14.6 18.8
Undistributed earnings of affiliated companies. (31.6) (19.3)
Increase in noncash working capital............ (145.6) (85.5)
Other, net..................................... 2.2 (4.2)
-------------------
Net cash provided by operating activities.......... 346.5 352.5
-------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures............................... (184.4) (237.4)
-------------------
Cash used for investing activities................. (184.4) (237.4)
-------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of long-term debt......................... 162.1 112.9
Reduction of long-term debt........................ (130.0) (60.1)
Dividends paid to stockholders..................... (133.4) (126.6)
Acquisition of treasury stock...................... (164.2) (109.4)
Shares issued under stock plans.................... 30.7 27.2
-------------------
Cash used for financing activities.................. (234.8) (156.0)
-------------------
Net decrease in cash and marketable
securities during the period.................... (72.7) (40.9)
Cash and marketable securities, beginning of
period.......................................... 224.8 147.3
-------------------
Cash and marketable securities, end of period..... $ 152.1 $ 106.4
===================
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,
1998.
6
<PAGE>7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND
FINANCIAL CONDITION
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, 1999, compared to the first quarter
ended March 31, 1998, and the year ended December 31, 1998. 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,
1998. Additional information concerning the company's
consolidated financial and operating results for the first
quarter 1999 is contained in the Letter to Shareholders section
of the first quarter 1999 Financial Report contained in the
quarterly Anheuser-Busch publication Horizons.
This discussion contains statements regarding the company's
expectations concerning its future 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
company believes to be reasonable but such assumptions may
ultimately prove to be inaccurate or incomplete, in whole or in
7
<PAGE>8
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; regulatory or legislative
changes; 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.
FIRST QUARTER 1999 FINANCIAL RESULTS
- ------------------------------------
Key operating results for the first quarter 1999 versus 1998
are summarized below:
- -----------------------------------------------------------------
| (in millions, except per share) |
| ----------------------------------------
| First Quarter | 1999 versus 1998 |
| ----------------------------------------
| 1999 1998 | $ % |
| ------ ----- | ------- -------- |
|Gross Sales $3,157 $2,951 | Up $206 Up 7.0% |
|Excise Taxes $472 $444 | Up $28 Up 6.4% |
|Net Sales $2,685 $2,507 | Up $178 Up 7.1% |
|Operating Income $536 $468 | Up $68 Up 14.6% |
|Equity Income, Net of Tax $31 $19 | Up $12 Up 63.5% |
|Net Income $319 $265 | Up $54 Up 20.3% |
|Diluted Earnings per Share $.66 $.54 | Up $.12 Up 22.2% |
| | |
- -----------------------------------------------------------------
8
<PAGE>9
RESULTS OF OPERATIONS
- ---------------------
Anheuser-Busch Companies, Inc. achieved gross sales of $3.2
billion during the first quarter 1999, an increase of $206.0
million, or 7.0%, over first quarter 1998 gross sales. The
company had net sales of $2.7 billion, an increase of $177.7
million, or 7.1%, compared to the first quarter 1998. The
difference between gross sales and net sales reflects beer excise
taxes paid by the company on its products.
The increases in both gross and net sales were primarily due
to higher domestic beer sales volume combined with increased
revenue per barrel. Beer volume was driven by a domestic sales-
to-retailers volume increase of approximately 4.5% in the first
quarter, which included the roll out of Anheuser-Busch's new
brand, Tequiza. Domestic revenue per barrel increased over 2%
versus the comparable period last year.
This sales volume and revenue performance is the result of
Anheuser-Busch's total marketing effort which includes highly
effective and award-winning brand advertising, outstanding retail
sales execution by its wholesaler network and a continued focus
on brand and market specific revenue enhancement strategies that
provide the company with maximum competitive flexibility.
First quarter 1999 domestic beer sales-to-wholesalers were
up 7.9%, increasing more than sales-to-retailers due to the
9
<PAGE>10
planned wholesaler inventory build, which is the company's
standard contingency whenever there is no signed labor contract.
Accordingly, first quarter 1999 results are not indicative of
expectations for the full year.
The company's beer volume is summarized in the following table:
- ------------------------------------------------------------------
| Beer Volume (millions of barrels) |
|----------------------------------------------------------------|
| First Quarter | 1999 versus 1998 |
| ------------- |---------------------|
| 1999 1998| Barrels % |
| ---- ----| ------- -------- |
|Domestic 23.2 21.5| Up 1.7 Up 7.9% |
|International 1.3 1.3| Up .04 Up 2.9% |
| ---- ----| ------- -------- |
| Worldwide A-B Brands 24.5 22.8| Up 1.7 Up 7.6% |
|Int'l Equity Partner Brands 3.3 2.3| Up 1.0 Up 43.0% |
| ---- ----| ------- -------- |
| Total Brands 27.8 25.1| Up 2.7 Up 10.9% |
| ---- ----| ------- -------- |
| ---- ----| ------- -------- |
- -------------------------------------------------------------------
Worldwide Anheuser-Busch beer sales volume for the first
quarter 1999 rose 7.6%, to 24.5 million barrels, versus first
quarter 1998. 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 volume, was 27.8 million barrels in the first quarter
10
<PAGE>11
1999, up 2.7 million barrels, or 10.9%, over first quarter 1998.
Total volume includes Anheuser-Busch's 50% ownership in Grupo
Modelo in the first quarter 1999 compared to a 37% ownership in
the first quarter 1998.
Domestic Beer Volume
- --------------------
Anheuser-Busch reported domestic beer shipments of 23.2
million barrels, an increase of 1.7 million barrels, or 7.9%, for
the first quarter 1999 compared to the first quarter 1998. The
increase in beer shipments reflects the strong underlying sales-
to-retailer trends, led by Bud Family sales, the planned increase
in wholesaler inventories and the roll out of Tequiza.
Beer Market Share
- -----------------
The company's domestic market share (excluding exports) for
the first quarter 1999 was 48.1%, an increase of 1.5 percentage
points over 1998 market share of 46.6%. Including exports, the
company's share of U. S. shipments was 47.9%, versus 46.5% for
the first quarter 1998. Domestic market share and share of U. S.
shipments are determined based on industry sales estimates
provided by the Beer Institute and were influenced by the
company's inventory build.
International Beer
- ------------------
International Anheuser-Busch beer volume for the first
quarter 1999 was 1.3 million barrels, an increase of 38,000
barrels, or 2.9%, compared to the first quarter 1998.
International beer volume reflects strong results in Canada and
Latin America, partially offset by continued weakness in Asia and
a slowdown in the United Kingdom.
11
<PAGE>12
Cost of products and services for the first quarter 1999 was
$1.71 billion, a $73.3 million, or 4.5%, increase compared to the
first quarter 1998. The increase in cost of products and
services is principally due to higher domestic beer volume.
Gross profit as a percentage of net sales was 36.2% for the first
quarter 1999, up 1.6 percentage points from 34.6% for the first
quarter 1998, reflecting the impact of higher revenue per barrel.
Marketing, distribution and administrative expenses for
the first quarter 1999 were $436.5 million, compared with $400.4
million for the first quarter 1998, an increase of $36.1 million,
or 9.0%. The increase in marketing, distribution and
administrative expenses in the first quarter 1999 compared to the
prior year is due primarily to higher overall marketing spending
and increased distribution costs associated with the significant
increase in domestic beer volume. Marketing, distribution and
administrative expenses for the full year 1999 are expected to
increase approximately 5% compared to 1998.
Operating income for the first quarter 1999 was $536.6
million, up $68.3 million, or 14.6%, compared to operating income
of $468.3 million for the first quarter 1998. This increase is
primarily due to higher domestic beer sales volume and increased
revenue per barrel, partially offset by lower operating results
from international beer operations and the higher marketing,
distribution and administrative expenses.
12
<PAGE>13
Operating results from international beer operations
(excluding Modelo) were lower in the first quarter 1999 compared
to 1998 primarily due to continuing weak economic conditions in
Asia, and a slowdown in the United Kingdom. The decline in
international beer operations was more than offset by the
increase in equity earnings from Modelo.
Net interest cost (interest expense less interest income)
was $74.9 million for the first quarter 1999, an increase of $0.9
million, or 1.3%, compared to the first quarter 1998. Interest
capitalized decreased $5.4 million, to $3.3 million, for the
first quarter 1999 compared to the corresponding period in 1998
due to lower average construction in progress balances.
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.
Equity income, net of tax, increased $12.3 million, to $31.6
million, for the first quarter 1999, due to the increased
ownership in Grupo Modelo from 37% to 50% and the strong
underlying volume and earnings results of Modelo's operations.
Net income for the first quarter 1999 increased $53.9
million, or 20.3%, to $319.1 million, versus the same period last
year. Diluted earnings per share for the first quarter were
$.66, an increase of $.12, or 22.2%, compared to the first
quarter 1998. These increases reflect higher domestic beer sales
volume, increased revenue per barrel and increased equity
earnings from the company's Modelo investment, partially offset
by increased marketing, distribution and administrative expenses.
13
<PAGE>14
The rate of earnings per share growth in the first quarter
benefited from the company's planned wholesaler inventory build.
The company expects double-digit earnings per share growth for
the full year, but at levels below the first quarter results.
LIQUIDITY AND FINANCIAL CONDITION
- ----------------------------------
Cash and marketable securities at March 31, 1999 were $152.1
million, an increase of $45.7 million from the March 31, 1998
level, and a decrease of $72.7 million from December 31, 1998.
The principal source of the company's cash flow is cash generated
by operations. Issuance of long-term debt provided additional
sources of cash during the twelve month period ended March 31,
1999. Significant uses of cash during the 12-month period were
capital expenditures, share repurchases, dividends and the
additional investment in Grupo Modelo. See the Consolidated
Statement of Cash Flows for detailed information.
14
<PAGE>15
Total long-term debt increased $330.5 million during the
twelve month period ended March 31, 1999. The following outlines
the change in debt during this period:
Debt Issuances...$478.5 million, comprised of the following:
--------------
- $450 million of long-term notes ($150 million at 5.75%; $100
million each at 5.65%, 5.375% and 5.125%)
- $4.4 million of industrial development revenue bonds (various
fixed interest rates)
- $24.1 million of other miscellaneous borrowings (various
fixed interest rates)
Debt Reduction...$148.0 million, comprised of the following:
--------------
- $45.5 million of sinking fund debentures ($22.5 million at
8.625%; $23.0 million at 8.5%)
- $43.2 million of commercial paper (4.9% weighted average
interest rate)
- $36.7 million of ESOP debt (8.25%)
- $15.0 million of medium notes (7.65% weighted average
interest rate)
- $7.6 million of other miscellaneous reductions (various
fixed interest rates)
At March 31, 1999, $518.7 million of commercial paper
borrowings were outstanding, a decrease of $43.2 million compared
to the balance at March 31, 1998, and a decrease of $96.6 million
15
<PAGE>16
from December 31, 1998. 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 first quarter 1999 were
$184.4 million, compared to $237.4 million for the first quarter
1998, a decrease of 22.3%. For the full year, capital
expenditures are expected to approximate $900 million, compared
to $817.5 million in 1998.
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, 1998, 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
significant changes in underlying market conditions.
16
<PAGE>17
SYSTEM-RELATED YEAR 2000 COSTS
- ------------------------------
Anheuser-Busch has identified its significant systems,
facilities and equipment issues related to Year 2000 date
recognition for key accounting and operating systems. The
company is working to resolve the Year 2000 matter through
either the replacement of existing systems with new Year 2000-
ready systems or the reprogramming of existing systems. There
may be some diversion of information systems funding for the
Year 2000 effort, but material delays of critical non-Year
2000 information technology initiatives are not anticipated.
Completion of all reprogramming, hardware replacement and
appropriate testing of significant systems is expected prior
to June 30, 1999.
All costs related to the assessment, reprogramming and
testing of existing systems for the Year 2000 effort are
expensed as incurred. Costs associated with replacement of
hardware that is not Year 2000 ready will be capitalized in
accordance with the company's existing fixed asset accounting
policies. The company has incurred Year 2000-related
reprogramming costs of $3.7 million for the first three months
of 1999, compared to costs of $15.5 million and $6.6 million
for the full years 1998 and 1997, respectively, and nominal
costs for 1996. The company estimates incurring an additional
$17 million to complete the Year 2000 reprogramming effort.
Hardware replacement costs are not expected to be significant.
Although the company expects to be Year 2000 ready,
failure of the company or significant key suppliers or
customers to be fully Year 2000 ready could potentially have a
material adverse impact on the results of the company's
operations. However, due to the many factors involved,
including factors impacting third parties which the company
cannot readily ascertain, Anheuser-Busch is currently unable
17
<PAGE>18
to estimate the potential impact. The company is assessing
important third party Year 2000 preparedness and is working
with its key suppliers and customers to ensure Year 2000
issues are adequately addressed to the extent possible. In
that regard, the company is developing methodology to monitor
those third party remediation efforts.
The company considers the likelihood of non-Year 2000
readiness by Anheuser-Busch to be remote, but is unable to
determine with certainty the likelihood of Year 2000 non-
readiness by key suppliers or customers. Contingency plans
are being developed to ensure critical operations continue
uninterrupted in the event either Anheuser-Busch or key
suppliers or customers fail to resolve their respective Year
2000 issues in a timely manner. Such plans will be in place
prior to December 31, 1999.
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.
18
<PAGE>19
PART II - OTHER INFORMATION
Item 2. Changes in Securities
On January 4, 1999, the company issued out of treasury shares a total of
904 shares of the company's common stock ($1 par value) to two members of
the Board of Directors of the company in lieu of cash for all or a portion
of those members' 1999 annual retainer fees pursuant to the company's
Non-Employee Director Elective Stock Acquisition Plan. The transaction was
exempt from registration and propectus delivery requirements of the Securities
Act of 1933 pursuant to Section 4(2) of the Act.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of the company held April 28,
1999, the following matters were voted upon:
1. Election of John E. Jacob, Charles F. Knight, James B. Orthwein and
Joyce M. Roche' to serve as Directors of the company for a term of
three years.
For Withheld Non-Votes
--- --------- ---------
John E. Jacob 404,098,133 5,586,779 0
Charles F. Knight 402,059,686 7,625,226 0
James B. Orthwein 403,530,991 6,153,921 0
Joyce M. Roche' 404,429,963 5,254,949 0
2. Approve the Amendment of the Restated Certificate of Incorporation
to increase the number of authorized shares of common stock.
For 364,385,871
Against 44,298,493
Abstain 997,748
Non-Votes 2,800
3. Approve the employment of PricewaterhouseCoopers LLP, as independent
accountants, to audit the books and accounts of the company for
1999.
For 407,267,423
Against 1,592,529
Abstain 824,960
Non-Votes 0
4. Shareholder proposal concerning option exercise period.
For 18,021,137
Against 351,726,564
Abstain 5,917,286
Non-Votes 34,019,925
5. Shareholder proposal concerning option exercise price.
For 53,137,063
Against 313,753,066
Abstain 4,993,390
Non-Votes 37,801,393
19
<PAGE>20
6. Shareholder proposal concerning Shareholder Rights Plan.
For 183,485,226
Against 186,424,904
Abstain 4,397,983
Non-Votes 35,376,799
7. Shareholder proposal concerning Board Composition.
For 18,611,950
Against 350,457,432
Abstain 5,144,137
Non-Votes 35,471,393
8. Shareholder proposal concerning Classified Board.
For 171,535,710
Against 198,394,648
Abstain 4,382,557
Non-Votes 35,371,997
9. Shareholder proposal concerning Chairman of the Board.
For 57,556,444
Against 312,314,370
Abstain 4,416,652
Non-Votes 35,397,446
Item 5. Other Information
LABOR NEGOTIATIONS
- ------------------
Teamsters-represented employees are working under the terms
of the company's final contract offer which was implemented
September 21, 1998, and have not voted on the contract offer
since July 1998. Although the company does not expect a work
stoppage it remains fully prepared to operate its breweries if
one occurs.
20
<PAGE>21
The company's implemented final offer includes an 11.5% pay
increase over the five year life of the contract and enhanced
pension benefits. Also included in the offer are provisions to
support productivity improvement, promote workplace flexibility,
reduce absenteeism, improve the grievance procedure and institute
a more effective drug-testing program.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
12 - Ratio of Earnings to Fixed Charges
27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three month period
ending March 31, 1999.
21
<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)
May 12, 1999
/s/ John F. Kelly
------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
May 12, 1999
22
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,
-------------- ----------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
6.4X 5.7X 6.8X 7.3X 8.1X 1/ 6.6X 2/ 7.7X
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 discounts and that portion of
rental expense deemed to represent interest.
1/ The ratio for 1996 includes the gain from the sale of the St.
Louis Cardinals, which increased income before income taxes by
$54.7 million. 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.
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 152,100
<SECURITIES> 0
<RECEIVABLES> 782,900
<ALLOWANCES> 0
<INVENTORY> 669,700
<CURRENT-ASSETS> 1,784,200
<PP&E> 13,980,700
<DEPRECIATION> 6,128,800
<TOTAL-ASSETS> 12,645,700
<CURRENT-LIABILITIES> 1,801,200
<BONDS> 4,714,100
0
0
<COMMON> 714,000
<OTHER-SE> 3,579,000
<TOTAL-LIABILITY-AND-EQUITY> 12,645,700
<SALES> 2,685,200
<TOTAL-REVENUES> 2,685,200
<CGS> 1,712,100
<TOTAL-COSTS> 2,148,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,800
<INCOME-PRETAX> 463,800
<INCOME-TAX> 176,300
<INCOME-CONTINUING> 319,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319,100
<EPS-PRIMARY> .67
<EPS-DILUTED> .66
</TABLE>
