<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 2000
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 - 902,042,595 shares as of September 30, 2000
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<TABLE>
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
---------------------- ----------------------
(In millions, except per share data) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 3,942.2 $3,765.2 $11,040.7 $10,523.2
Less excise taxes (544.4) (542.9) (1,565.5) (1,535.0)
-------------------------------------------------
Net sales 3,397.8 3,222.3 9,475.2 8,988.2
Cost of products and services (2,009.7) (1,905.5) (5,763.3) (5,482.1)
-------------------------------------------------
Gross profit 1,388.1 1,316.8 3,711.9 3,506.1
Marketing, distribution and
administrative expenses (574.8) (575.2) (1,568.2) (1,533.3)
-------------------------------------------------
Operating income 813.3 741.6 2,143.7 1,972.8
Interest expense (85.5) (76.3) (262.9) (231.3)
Interest capitalized 9.0 4.2 24.2 11.7
Interest income 0.4 1.7 0.8 3.5
Other income/(expense), net 1.8 0.2 4.9 (4.1)
-------------------------------------------------
Income before income taxes 739.0 671.4 1,910.7 1,752.6
Provision for income taxes (280.9) (255.2) (726.1) (666.0)
Equity income, net of tax 56.4 45.3 157.9 125.0
-------------------------------------------------
Net income 514.5 461.5 1,342.5 1,211.6
Retained earnings, beginning of period 9,736.6 8,805.5 9,181.2 8,320.7
Common stock dividends (per share:
3rd quarter,2000--$.165; 1999--$.15;
nine months, 2000--$.465; 1999--$.43) (149.4) (140.2) (422.0) (405.5)
-------------------------------------------------
Retained earnings, end of period $10,101.7 $9,126.8 $10,101.7 $ 9,126.8
=================================================
Basic earnings per share $ .57 $ .49 $ 1.48 $ 1.29
=================================================
Diluted earnings per share $ .56 $ .49 $ 1.46 $ 1.27
=================================================
See accompanying Notes to Consolidated Financial Statements on Pages 3
through 5.
</TABLE>
2
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<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, 1999.
2. BUSINESS SEGMENT INFORMATION FOR THE THIRD QUARTER ENDED
SEPTEMBER 30, 2000 ($ In Millions):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
2000 Domestic Beer Int'l Beer Packaging Entertain. Other Corp. & Elims. Consol.
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $3,069.5 173.7 545.2 336.8 37.2 (220.2) $3,942.2
---------------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $216.2 -- 4.0 (220.2) $ --
- External $2,552.6 146.2 329.0 336.8 33.2 -- $3,397.8
---------------------------------------------------------------------------------------------------------------------
Income Before
Income Taxes $ 702.9 14.7 38.8 106.4 8.5 (132.3) $ 739.0
---------------------------------------------------------------------------------------------------------------------
Equity Income,
Net of Tax -- $ 56.4 -- -- -- -- $ 56.4
---------------------------------------------------------------------------------------------------------------------
Net Income $ 435.8 65.6 24.1 66.0 5.2 (82.2) $ 514.5
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
1999 Domestic Beer Int'l Beer Packaging Entertain. Other Corp. & Elims. Consol.
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $2,914.3 209.1 523.7 306.5 33.5 (221.9) $3,765.2
---------------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $216.1 -- 5.8 (221.9) $ --
- External $2,410.8 169.7 307.6 306.5 27.7 -- $3,222.3
---------------------------------------------------------------------------------------------------------------------
Income Before
Income Taxes $ 639.3 (4.3) 47.5 105.1 5.8 (122.0) $ 671.4
---------------------------------------------------------------------------------------------------------------------
Equity Income,
Net of Tax -- $ 45.3 -- -- -- -- $ 45.3
---------------------------------------------------------------------------------------------------------------------
Net Income $ 396.4 42.6 29.4 65.2 3.6 (75.7) $ 461.5
---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: 1999 segment results have been updated to reflect a change in
allocation method for certain Corporate support costs.
3
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<TABLE>
BUSINESS SEGMENT INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2000 ($ In Millions):
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
2000 Domestic Beer Int'l Beer Packaging Entertain. Other Corp. & Elims. Consol.
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $8,836.8 484.9 1,559.8 700.0 94.5 (635.3) $11,040.7
---------------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $ 614.7 -- 20.6 (635.3) $ --
- External $7,346.8 409.4 945.1 700.0 73.9 -- $ 9,475.2
---------------------------------------------------------------------------------------------------------------------
Income Before
Income Taxes $2,052.6 35.9 77.4 131.1 13.6 (399.9) $ 1,910.7
---------------------------------------------------------------------------------------------------------------------
Equity Income,
Net of Tax -- $157.9 -- -- -- -- $ 157.9
---------------------------------------------------------------------------------------------------------------------
Net Income $1,272.6 180.2 48.0 81.3 8.4 (248.0) $ 1,342.5
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
1999 Domestic Beer Int'l Beer Packaging Entertain. Other Corp. & Elims. Consol.
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $8,394.9 550.5 1,473.7 646.1 91.6 (633.6) $10,523.2
---------------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $ 613.0 -- 20.6 (633.6) $ --
- External $6,954.2 456.2 860.7 646.1 71.0 -- $ 8,988.2
---------------------------------------------------------------------------------------------------------------------
Income Before
Income Taxes $1,854.5 0.3 120.4 139.3 11.2 (373.1) $ 1,752.6
---------------------------------------------------------------------------------------------------------------------
Equity Income,
Net of Tax -- $125.0 -- -- -- -- $ 125.0
---------------------------------------------------------------------------------------------------------------------
Net Income $1,149.8 125.2 74.6 86.4 6.9 (231.3) $ 1,211.6
---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: 1999 segment results have been updated to reflect a change in
allocation method for certain Corporate support costs.
4
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3. EARNINGS PER SHARE
Earnings per share are computed by dividing net income by weighted
average common shares outstanding for the period. Weighted average
common shares outstanding for the quarter and nine months ended September
30, are (millions of shares):
<TABLE>
<CAPTION>
Third Quarter Year-To-Date
-------------- -----------------
2000 1999 2000 1999
----- ----- ------- -------
<S> <C> <C> <C> <C>
Basic weighted average shares
outstanding 904.5 934.4 907.0 942.8
===== ===== ======= =======
Diluted weighted average shares
outstanding 917.5 948.9 919.5 957.8
===== ===== ======= =======
</TABLE>
4. COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Quarter and Nine Months Ended September 30, ($ in millions)
----------------------------------------------------------------------------
Third Quarter Year-To-Date
-------------- -----------------
2000 1999 2000 1999
----- ----- ------- -------
<S> <C> <C> <C> <C>
Net income 514.5 461.5 1,342.5 1,211.6
Foreign currency translation
adjustment 68.8 31.0 (12.7) 53.8
----- ----- ------- -------
Comprehensive income 583.3 492.5 1,329.8 1,265.4
===== ===== ======= =======
</TABLE>
5
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<TABLE>
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries
<CAPTION>
Unaudited
Sept. 30, Dec. 31,
--------- ---------
(In millions) 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and marketable securities $ 134.9 $ 152.1
Receivables, less allowance for
doubtful accounts 720.8 629.0
Inventories:
Raw materials and supplies 322.1 378.2
Work in progress 83.3 84.7
Finished goods 183.0 160.9
Total inventories 588.4 623.8
Other current assets 178.5 195.7
--------- ---------
Total current assets 1,622.6 1,600.6
Investments in affiliated companies 2,179.2 2,012.5
Investments and other assets 1,070.3 1,062.7
Plant and equipment, net 8,168.6 7,964.6
--------- ---------
Total Assets $13,040.7 $12,640.4
========= =========
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $ 927.4 $ 932.6
Short-term debt -- 242.3
Accrued salaries, wages and benefits 254.3 248.3
Accrued taxes 215.5 164.2
Other current liabilities 347.7 363.6
--------- ---------
Total current liabilities 1,744.9 1,951.0
--------- ---------
Postretirement benefits 493.9 506.4
--------- ---------
Long-term debt 5,304.7 4,880.6
--------- ---------
Deferred income taxes 1,365.7 1,344.7
--------- ---------
Other long-term liabilities 40.6 36.2
--------- ---------
Shareholders Equity:
Common stock 1,438.3 716.1
Capital in excess of par value 654.2 1,241.0
Retained earnings 10,101.7 9,181.2
Accumulated other comprehensive income:
Foreign currency translation
adjustment (187.7) (175.0)
--------- ---------
12,006.5 10,963.3
Treasury stock, at cost (7,743.4) (6,831.3)
ESOP debt guarantee (172.2) (210.5)
--------- ---------
4,090.9 3,921.5
--------- ---------
Commitments and Contingencies -- --
--------- ---------
Total Liabilities and Shareholders
Equity $13,040.7 $12,640.4
========= =========
</TABLE>
6
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<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
<CAPTION>
Nine months ended Sept. 30,
---------------------------
(In millions) 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow from Operating Activities:
Net income $1,342.5 $1,211.6
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 591.1 571.6
Deferred income taxes 21.0 53.8
Undistributed earnings of affiliated companies (143.0) (123.1)
Other, net 33.5 7.9
-------- --------
Operating cash flow before change in working
capital 1,845.1 1,721.8
Increase in working capital (3.0) (44.9)
-------- --------
Cash provided by operating activities 1,842.1 1,676.9
-------- --------
Cash Flow from Investing Activities:
Capital expenditures (794.5) (610.4)
New business acquisitions (42.9) --
Proceeds from sale of business -- 59.6
-------- --------
Cash used for investing activities (837.4) (550.8)
-------- --------
Cash Flow from Financing Activities:
Increase in long-term debt 403.1 344.5
Decrease in long-term debt (183.0) (191.6)
Dividends paid to stockholders (422.0) (405.5)
Acquisition of treasury stock (912.1) (1,031.5)
Shares issued under stock plans 92.1 64.9
-------- --------
Cash used for financing activities (1,021.9) (1,219.2)
-------- --------
Net decrease in cash and marketable
securities during the period (17.2) (93.1)
Cash and marketable securities, beginning of
period 152.1 224.8
-------- --------
Cash and marketable securities, end of period $ 134.9 $ 131.7
======== ========
</TABLE>
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 year ended December 31, 1999.
7
<PAGE>
<PAGE> 8
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 third quarter and nine months ended
September 30, 2000, compared to the third quarter and nine months ended
September 30, 1999, and the year ended December 31, 1999. This discussion
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, 1999.
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 part.
Important factors that could cause actual results to differ (favorably or
unfavorably) from the expectations stated in this discussion include, among
others, changes in the pricing environment for the company's products;
changes in 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
8
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<PAGE> 9
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 partner; and the effect of stock market
conditions on the company's share repurchase program. The company disclaims
any obligation to update any of these forward-looking statements. If the
company determines to update any forward-looking statement, it will do so
publicly. No private statements by the company or its personnel should be
interpreted as updating the forward-looking statements.
THIRD QUARTER AND NINE MONTHS OF 2000 FINANCIAL RESULTS
-------------------------------------------------------
Key operating results for the third quarter and nine months of 2000
versus the comparable periods in 1999 are summarized in the following
tables.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Third Quarter (in millions, except per share)
-----------------------------------------------
2000 1999 2000 vs. 1999
-----------------------------------------------
$ %
-------------------------
<S> <C> <C> <C> <C>
Gross Sales $3,942 $3,765 Up $177 Up 4.7%
Net Sales $3,398 $3,222 Up $176 Up 5.4%
Operating Income $ 813 $ 742 Up $71 Up 9.7%
Equity Income, Net of Tax $ 56 $ 45 Up $11 Up 24.2%
Net Income $ 515 $ 462 Up $53 Up 11.5%
Diluted Earnings per Share $ .56 $ .49 Up $.07 Up 14.3%<F1>
-----------------------------------------------------------------------------
<FN>
<F1> Third quarter 1999 earnings per share is reported as $.49 versus $.485,
after adjusting for the two-for-one stock split in September 2000.
</TABLE>
9
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<PAGE> 10
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Nine Months Ended September 30 (in millions,
except per share)
-----------------------------------------------
2000 1999 2000 vs. 1999
-----------------------------------------------
$ %
-------------------------
<S> <C> <C> <C> <C>
Gross Sales $11,041 $10,523 Up $518 Up 4.9%
Net Sales $ 9,475 $ 8,988 Up $487 Up 5.4%
Operating Income $ 2,144 $ 1,973 Up $171 Up 8.7%
Equity Income, Net of Tax $ 158 $ 125 Up $33 Up 26.2%
Net Income $ 1,343 $ 1,212 Up $131 Up 10.8%
Diluted Earnings per Share $ 1.46 $ 1.27 Up $.19 Up 15.0%
-----------------------------------------------------------------------------
</TABLE>
The third quarter 2000 is the eighth consecutive quarter of solid
double-digit earnings per share growth for Anheuser-Busch. The company has
the leading brand portfolio in the industry which combined with marketing,
sales and distribution strengths allow it to capitalize on significantly
improved domestic industry fundamentals. As a result, accelerated growth in
revenue per barrel and strong unit volume growth in domestic beer operations
generated record sales and earnings for the company.
For 2000, Anheuser-Busch expects earnings per share growth of
approximately 15%, consistent with year-to-date results. Longer term, the
company is confident in its ability to consistently achieve its double-digit
earnings per share growth objective with a 12% target for 2001.
RESULTS OF OPERATIONS
---------------------
Anheuser-Busch achieved gross sales of $3.9 billion and $11.0 billion,
and net sales of $3.4 billion and $9.5 billion, respectively, in the third
quarter and nine months of 2000. These amounts represent gross sales
increases over 1999 of $177.0 million, or
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4.7%, for the third quarter and $517.5 million, or 4.9%, for the first nine
months. Net sales increased over the same periods by $175.5 million and
$487.0 million, respectively, both up 5.4%. 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 domestic revenue per
barrel. Domestic beer sales to wholesalers were 75.8 million barrels, an
increase of 3.1% for the nine months of 2000, reflecting strong underlying
retail demand led by Bud Light, which continues to grow at a double-digit
pace.
Domestic revenue per barrel grew over 3% in the third quarter 2000 and is
up 2.5% for the nine months, compared to the same periods last year. Strong
revenue per barrel growth in the third quarter reflects improved industry
fundamentals and the company's strategy to focus on beer profit margin
growth.
Domestic beer sales-to-wholesalers increased 2.7% for the third quarter
and 3.1% for the nine months of 2000. Domestic sales-to-retailers volume was
up 1.7% for the third quarter and 3.1% for the nine months of 2000, compared
to the same periods last year. As previously communicated, third quarter
2000 sales-to-retailers results were negatively impacted by the timing of the
4th of July holiday which shifted volume from July to June. Normalized for
this timing impact, third quarter sales-to-retailer volume increased 2.7%
versus the third quarter last year.
The strong domestic beer industry environment continues to support select
price increases and additional discount reductions. Further discount
reductions were realized in the third quarter and the company implemented the
first stage of its planned revenue
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enhancement strategy for 2001 at the beginning of October. Selected price
increases and discount reductions have been put into effect in markets
representing 40% of the company's domestic volume. These revenue enhancement
initiatives are being tailored to specific markets, brands and packages.
Although in the early stages, preliminary results are once again encouraging.
The second stage of revenue enhancement initiatives is expected to occur in
the first quarter 2001.
The company's beer volume information is summarized in the following
table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Reported Beer Volume (millions of barrels)
------------------------------------------------------------------------------------------------
Nine Months Ended
Third Quarter September 30
------------------------ --------------------------
vs. 1999 vs. 1999
----------------- ------------------
2000 Barrels % 2000 Barrels %
---- ------- ------- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Domestic 26.3 Up 0.7 Up 2.7% 75.8 Up 2.3 Up 3.1%
International 2.0 Up .05 Up 2.7% 5.4 Up 0.2 Up 3.2%
---- ------ ------- ---- ------ -------
Worldwide-AB Brands 28.3 Up 0.8 Up 2.7% 81.2 Up 2.5 Up 3.1%
Int'l Equity Partner Brands 4.3 Up 0.3 Up 7.8% 11.9 Up 0.3 Up 2.4% <F1>
---- ------ ------- ---- ------ -------
Total Brands 32.6 Up 1.1 Up 3.4% 93.1 Up 2.8 Up 3.0% <F1>
==== ====== ======= ==== ====== =======
------------------------------------------------------------------------------------------------
<FN>
<F1> Normalized to exclude 1999 volume related to Anheuser-Busch's previously
held equity stake in Antarctica, Equity Partner volume increased 5.4% for
the nine months of 2000. Normalized Total Brands volume increased 3.4%
for the nine months of 2000 versus the same period last year.
</TABLE>
Worldwide Anheuser-Busch beer sales volume grew 2.7% to 28.3 million
barrels in the third quarter and was 81.2 million barrels, up 3.1% for the
nine months of 2000, compared to the same periods last year. 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,
12
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<PAGE> 13
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 partner's volume) with worldwide Anheuser-Busch
brand volume, was 32.6 million barrels, up 3.4% in the third quarter and 93.1
million barrels, up 3.0% for the nine months. Normalized to exclude 1999
volume related to Anheuser-Busch's previously held equity stake in
Antarctica, Equity Partner volume increased 5.4% for the nine months of 2000.
Normalized Total Volume increased 3.4% for the nine months of 2000 versus the
comparable period last year.
The company's domestic market share (excluding exports) for the nine
months of 2000 was 47.9%, an increase of .7 percentage point over 1999 market
share of 47.2%. Including exports, the company's share of U.S. shipments was
47.7% versus 47.0% for the nine months of 1999. Domestic market share and
share of U.S. shipments are determined based on industry sales estimates
provided by the Beer Institute.
International beer volume (excluding Modelo) was up 2.7% in the third
quarter 2000 compared to prior year, and grew 3.2% for the nine months of
2000, due primarily to solid volume growth in Canada and China.
Cost of products and services was $2.0 billion and $5.8 billion,
respectively, for the third quarter and nine months of 2000, reflecting
increases of $104.2 million, or 5.5%, for the third quarter and $281.2
million, or 5.1% for the nine months compared to 1999.
The increases in cost of products and services are principally due to
costs associated with higher domestic beer volume and increased costs at the
company's
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entertainment, can manufacturing and commodity aluminum recycling businesses.
Gross profit as a percentage of net sales was 40.9% for the third quarter and
39.2% for the nine months of 2000. For the nine months, the consolidated
gross margin increased 20 basis points compared to the same period last year.
Marketing, distribution and administrative expenses for the third quarter
2000 were $574.8 million, essentially even with third quarter 1999. For the
nine months of 2000, these expenses were $1.57 billion, an increase of $34.9
million, or 2.3% compared with 1999. The year-to-date increase in these
expenses in 2000 is due to higher marketing and administrative costs for the
domestic beer segment and higher one-time marketing costs for the
entertainment segment related to the opening of the Discovery Cove park,
partially offset by lower international beer marketing expenses in Japan due
to the conversion of the company's joint venture into an exclusive licensing
agreement effective January 1, 2000.
Operating income grew $71.7 million, or 9.7%, in the third quarter and
$170.9 million, or 8.7%, for the nine months versus the comparable periods in
1999. These increases are primarily due to the domestic beer segment's
strong performance, plus improved international beer operations performance.
International beer segment net income increased 54.0% in the third
quarter and 43.9% for the nine months of 2000, due to improved operating
results and a strong performance by Grupo Modelo. International beer
operating profits, excluding Modelo, improved on volume gains in Canada and
China and lower costs in Japan due to the conversion of the joint venture
into a licensing agreement.
14
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Packaging segment operating profits were down $8.7 million, or 18.3%, for
the third quarter and down $43.0 million, or 35.7%, for the nine months
compared to 1999, reflecting continuing lower pricing on Metal Container's
beer and soft drink can sales, and the first quarter adjustment to correct
prior year accounting errors at the company's label manufacturing business in
Clarksville, Tennessee.
Entertainment segment operating results, excluding start-up costs
associated with the new Discovery Cove park, improved during the nine months
due primarily to strong attendance in the Florida market. Discovery Cove
began initial operations in July and results to date have been positive.
Net interest cost (interest expense less interest income) was $85.1
million for the third quarter and $262.1 million for the nine months of 2000.
This represents increases of $10.5 million, or 14.1%, and $34.3 million, or
15.1%, compared to the corresponding periods in 1999. The increases in net
interest cost are primarily due to higher average debt balances outstanding
compared to last year.
Interest capitalized increased $4.8 million and $12.5 million for the
third quarter and nine months of 2000, to $9.0 million and $24.2 million,
respectively compared to 1999, due to higher average construction-in-progress
balances related primarily to brewery capacity expansion projects.
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.
Net income increased $53.0 million, or 11.5%, for the third quarter, and
increased $130.9 million, or 10.8%, for the nine months of 2000. Diluted
earnings per
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share for the third quarter 2000 were $.56, an increase of 14.3% versus third
quarter 1999. Diluted earnings per share for the nine months of 2000 were
$1.46, an increase of 15.0% versus the same period last year.
Earnings per share growth is due primarily to increased domestic beer
sales volume, higher domestic revenue per barrel and the strong performance
from the company's international beer segment, including the company's 50%
ownership in Grupo Modelo, Mexico's leading brewer. Earnings per share
benefited from the company's ongoing share repurchase program. The company
repurchased over 26 million shares through the nine months of 2000.
LIQUIDITY AND FINANCIAL CONDITION
---------------------------------
Cash and marketable securities at September 30, 2000 were $134.9 million,
representing an increase of $3.2 million from September 30, 1999 and a
decrease of $17.2 million from December 31, 1999. The principal source of
the company's cash flow is cash generated by operations. Issuance of debt
provided additional sources of cash during the twelve-month period ended
September 30, 2000. Principal uses of cash are capital expenditures, share
repurchases and dividends. See the Consolidated Statement of Cash Flows for
detailed information.
Total debt increased $469.9 million during the twelve month period ended
September 30, 2000. The following outlines the change in debt during this
period:
Debt Issuances ... $1,046.4 million, comprised of the following:
--------------
-- $620.2 million of commercial paper (6.05% weighted average
rate)
-- $400.0 million of long-term notes ($200 million at 7.5%
fixed rate; $200 million at floating rate)
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-- $26.2 million of industrial development revenue bonds
(various rates)
Debt Reduction ... $576.5 million, comprised of the following:
--------------
-- $262.4 million of dual-currency notes (floating rate)
-- $250.0 million of long-term notes (8.75% fixed rate)
-- $38.3 million of ESOP debt (8.25% fixed rate)
-- $15.0 million of medium-term notes (7.8% weighted average
rate)
-- $10.8 million of other miscellaneous reductions (various
rates)
In June 2000, the company registered an additional $510 million in
long-term debt with the U.S. Securities and Exchange Commission.
At September 30, 2000, $1.1 billion of commercial paper borrowings were
outstanding, representing an increase of $620.2 million compared to the
balance at September 30, 1999, and a decrease of $165.6 million compared to
the balance at December 31, 1999. Outstanding commercial paper is classified
as long-term as it is maintained on a long-term basis supported by the
company's $2 billion revolving credit agreement. The borrowing limit on the
revolving credit agreement was increased from $1 billion to $2 billion
effective June 30, 2000.
Capital expenditures during the third quarter 2000 were $252.9 million
compared to $209.6 million for the third quarter 1999, and $794.5 million for
the nine months of 2000, versus $610.4 million in 1999.
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, 1999, there have been no significant changes in the company's
interest
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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.
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.
PART II - OTHER INFORMATION
---------------------------
Item 5: Other Information
Labor Negotiations
------------------
On October 27, 2000 the company was notified by officials of the
International Brotherhood of Teamsters that the last two local unions
representing brewery employees have ratified the final offer which the
company implemented more than two years ago. The offer requires that
National Labor Relations Board charges and other court cases be resolved
before the contract can be signed. The company and union representatives
have met to discuss these matters.
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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 September 30, 2000.
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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)
November 9, 2000
/s/ John F. Kelly
------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
November 9, 2000
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