<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 June 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 - 452,935,003 shares as of June 30, 2000
<PAGE> 2
<TABLE>
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
<CAPTION>
Second Quarter Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
(In millions, except per share data) 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 3,798.9 $ 3,600.8 $ 7,098.5 $ 6,758.0
Less excise taxes (533.4) (520.1) (1,021.1) (992.1)
------------------------------------------------------
Net sales 3,265.5 3,080.7 6,077.4 5,765.9
Cost of products and services (1,973.9) (1,864.5) (3,753.6) (3,576.6)
------------------------------------------------------
Gross profit 1,291.6 1,216.2 2,323.8 2,189.3
Marketing, distribution and administrative expenses (543.4) (521.6) (993.4) (958.1)
------------------------------------------------------
Operating income 748.2 694.6 1,330.4 1,231.2
Interest expense (90.7) (79.2) (177.4) (155.0)
Interest capitalized 8.3 4.2 15.2 7.5
Interest income 0.1 0.9 0.4 1.8
Other income/(expense), net 3.8 (3.1) 3.1 (4.3)
------------------------------------------------------
Income before income taxes 669.7 617.4 1,171.7 1,081.2
Provision for income taxes (254.5) (234.5) (445.2) (410.8)
Equity income, net of tax 62.5 48.1 101.5 79.7
------------------------------------------------------
Net income 477.7 431.0 828.0 750.1
Retained earnings, beginning of period 9,394.5 8,506.4 9,181.2 8,320.7
Common stock dividends (per share: 2nd quarter,
2000--$.30; 1999--$.28; six months, 2000--
$.60; 1999--$.56) (135.6) (131.9) (272.6) (265.3)
------------------------------------------------------
Retained earnings, end of period $ 9,736.6 $ 8,805.5 $ 9,736.6 $ 8,805.5
======================================================
Basic earnings per share $ 1.06 $ .92 $ 1.82 $ 1.58
======================================================
Diluted earnings per share $ 1.04 $ .90 $ 1.80 $ 1.56
======================================================
See accompanying Notes to Consolidated Financial Statements on Pages 3 through 5.
</TABLE>
2
<PAGE> 3
Notes to Consolidated Financial Statements
1. UNAUDITED FINANCIAL STATEMENTS: The accompanying unaudited financial
statements have been prepared in accordance with generally accepted
accounting principles and applicable SEC guidelines pertaining to interim
financial information, 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 SECOND QUARTER ENDED JUNE 30
($ In Millions):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
2000 Beer Beer Packaging Entertain. Other Elims. Consol.
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $3,002.4 182.8 546.3 252.5 37.0 (222.1) $3,798.9
-----------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $212.1 -- 10.0 (222.1) --
- External $2,494.9 156.9 334.2 252.5 27.0 -- $3,265.5
-----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes $ 707.5 16.8 30.5 52.2 5.9 (143.2) $ 669.7
-----------------------------------------------------------------------------------------------------------------
Equity Income, Net of Tax -- $ 62.5 -- -- -- -- $ 62.5
-----------------------------------------------------------------------------------------------------------------
Net Income $ 438.6 72.9 18.9 32.4 3.7 (88.8) $ 477.7
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
1999 Beer Beer Packaging Entertain. Other Elims. Consol.
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $2,827.9 212.9 514.3 225.7 36.1 (216.1) $3,600.8
-----------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $207.0 -- 9.1 (216.1) --
- External $2,343.4 177.3 307.3 225.7 27.0 -- $3,080.7
-----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes $ 638.5 12.2 46.2 47.7 5.8 (133.0) $ 617.4
-----------------------------------------------------------------------------------------------------------------
Equity Income, Net of Tax -- $ 48.1 -- -- -- -- $ 48.1
-----------------------------------------------------------------------------------------------------------------
Net Income $ 395.8 55.7 28.6 29.6 3.5 (82.2) $ 431.0
-----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: 1999 segment results have been updated to reflect a change in
allocation method for certain Corporate support costs.
3
<PAGE> 4
<TABLE>
BUSINESS SEGMENT INFORMATION FOR THE SIX MONTHS ENDED
JUNE 30 ($ In Millions):
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
2000 Beer Beer Packaging Entertain. Other Elims. Consol.
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $5,767.3 311.2 1,014.6 363.2 57.3 (415.1) $7,098.5
-----------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $ 398.5 -- 16.6 (415.1) --
- External $4,794.2 263.2 616.1 363.2 40.7 -- $6,077.4
-----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes $1,349.7 21.2 38.6 24.7 5.1 (267.6) $1,171.7
-----------------------------------------------------------------------------------------------------------------
Equity Income, Net of Tax -- $101.5 -- -- -- -- $ 101.5
-----------------------------------------------------------------------------------------------------------------
Net Income $ 836.8 114.6 23.9 15.3 3.2 (165.8) $ 828.0
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
2000 Beer Beer Packaging Entertain. Other Elims. Consol.
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Sales $5,480.6 341.4 950.0 339.6 58.1 (411.7) $6,758.0
-----------------------------------------------------------------------------------------------------------------
Net Sales:
- Intersegment -- -- $ 396.9 -- 14.8 (411.7) --
- External $4,543.4 286.5 553.1 339.6 43.3 -- $5,765.9
-----------------------------------------------------------------------------------------------------------------
Income Before Income Taxes $1,215.2 4.6 72.9 34.2 5.4 (251.1) $1,081.2
-----------------------------------------------------------------------------------------------------------------
Equity Income, Net of Tax -- $ 79.7 -- -- -- -- $ 79.7
-----------------------------------------------------------------------------------------------------------------
Net Income $ 753.4 82.6 45.2 21.2 3.3 (155.6) $ 750.1
-----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: 1999 segment results have been updated to reflect a change in
allocation method for certain Corporate support costs.
4
<PAGE> 5
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 six months ended June 30,
are (millions of shares):
<TABLE>
<CAPTION>
Second Quarter Year-To-Date
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic weighted average
shares outstanding 452.4 470.9 454.1 473.5
====== ====== ====== ======
Diluted weighted average
shares outstanding 458.5 478.0 460.0 480.8
====== ====== ====== ======
4. COMPREHENSIVE INCOME ($ In millions)
<CAPTION>
Quarter and Six Months Ended June 30,
---------------------------------------------------------------------------------------
Second Quarter Year-To-Date
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 477.7 $431.0 $828.0 $750.1
Foreign currency translation adjustment (124.3) 34.7 (81.5) 22.8
------- ------ ------ ------
Comprehensive income $ 353.4 $465.7 $746.5 $772.9
======================================
---------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
<TABLE>
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries
<CAPTION>
(Unaudited)
June 30, December 31,
---------- ------------
(In millions) 2000 1999
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and marketable securities $ 172.0 $ 152.1
Receivables, less allowance for doubtful accounts 770.5 629.0
Inventories:
Raw materials and supplies 316.2 378.2
Work in progress 97.1 84.7
Finished goods 189.5 160.9
Total inventories 602.8 623.8
Other current assets 188.2 195.7
---------------------------
Total current assets 1,733.5 1,600.6
Investments in affiliated companies 2,034.5 2,012.5
Other assets 1,062.3 1,062.7
Plant and equipment, net 8,119.2 7,964.6
---------------------------
Total Assets $12,949.5 $12,640.4
===========================
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $ 908.1 $ 932.6
Short-term debt -- 242.3
Accrued salaries, wages and benefits 229.0 248.3
Accrued taxes 288.3 164.2
Other current liabilities 358.9 363.6
---------------------------
Total current liabilities 1,784.3 1,951.0
---------------------------
Postretirement benefits 498.8 506.4
---------------------------
Long-term debt 5,463.7 4,880.6
---------------------------
Deferred income taxes 1,357.5 1,344.7
---------------------------
Other long-term liabilities 42.2 36.2
---------------------------
Shareholders Equity:
Common stock 718.2 716.1
Capital in excess of par value 1,306.9 1,241.0
Retained earnings 9,736.6 9,181.2
Accumulated other comprehensive income:
Foreign currency translation adjustment (256.5) (175.0)
---------------------------
11,505.2 10,963.3
Treasury stock, at cost (7,530.0) (6,831.3)
ESOP debt guarantee (172.2) (210.5)
---------------------------
3,803.0 3,921.5
---------------------------
Commitments and contingencies -- --
---------------------------
Total Liabilities and Shareholders
Equity $12,949.5 $12,640.4
===========================
</TABLE>
6
<PAGE> 7
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)
<CAPTION>
Six months ended June 30,
------------------------------
(In millions) 2000 1999
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow From Operating Activities:
Net income $ 828.0 $ 750.1
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 387.9 378.5
Deferred income taxes 12.8 33.1
Undistributed earnings of affiliated companies (86.7) (78.3)
Other, net 10.0 13.2
--------------------------
Operating cash flow before changes in working capital 1,152.0 1,096.6
Increase in working capital (37.4) (164.0)
--------------------------
Cash provided by operating activities 1,114.6 932.6
--------------------------
Cash Flow From Investing Activities:
Capital expenditures (541.6) (400.8)
New business acquisitions (29.0) --
--------------------------
Cash (used for) investing activities (570.6) (400.8)
--------------------------
Cash Flow From Financing Activities:
Increase in long-term debt 403.6 547.1
Decrease in long-term debt (24.5) (164.7)
Dividends paid to stockholders (272.6) (265.3)
Acquisition of treasury stock (698.7) (780.0)
Shares issued under stock plans 68.1 39.8
--------------------------
Cash (used for) financing activities (524.1) (623.1)
--------------------------
Net increase (decrease) in cash and marketable
securities during the period 19.9 (91.3)
Cash and marketable securities, beginning of period 152.1 224.8
--------------------------
Cash and marketable securities, end of period $ 172.0 $ 133.5
==========================
</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> 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 second quarter and first six months
ended June 30, 2000, compared to the second quarter and first six months
ended June 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
<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.
SECOND QUARTER AND FIRST SIX MONTHS OF 2000 FINANCIAL RESULTS
-------------------------------------------------------------
Key operating results for the second quarter and first six months of 2000
versus the comparable periods in 1999 are summarized in the following tables.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Second Quarter (in millions, except per share)
----------------------------------------------------
2000 1999 2000 vs. 1999
------ ------ -------------------
$ %
------- --------
<S> <C> <C> <C> <C>
Gross Sales $3,799 $3,601 Up $198 Up 5.5%
Net Sales $3,266 $3,081 Up $185 Up 6.0%
Operating Income $748 $695 Up $53 Up 7.7%
Equity Income, Net of Tax $63 $48 Up $15 Up 29.7%
Net Income $478 $431 Up $47 Up 10.8%
Diluted Earnings per Share $1.04 $.90 Up $.14 Up 15.6%
--------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------
Six Months Ended June 30 (in millions, except per share)
--------------------------------------------------------
2000 1999 2000 vs. 1999
------ ------ -------------------
$ %
------- --------
<S> <C> <C> <C> <C>
Gross Sales $7,099 $6,758 Up $341 Up 5.0%
Net Sales $6,077 $5,766 Up $311 Up 5.4%
Operating Income $1,330 $1,231 Up $99 Up 8.1%
Equity Income, Net of Tax $102 $80 Up $22 Up 27.3%
Net Income $828 $750 Up $78 Up 10.4%
Diluted Earnings per Share $1.80 $1.56 Up $.24 Up 15.4%
--------------------------------------------------------------------------------------------------------
</TABLE>
The second quarter 2000 is the seventh consecutive quarter of
double-digit earnings per share growth for Anheuser-Busch. With the strongest
brand portfolio in the domestic beer industry, the company believes it is
uniquely positioned to take advantage of continuing strong industry
fundamentals. Anheuser-Busch continues to
9
<PAGE> 10
achieve significant increases in sales volume and revenue per barrel, resulting
in accelerated earnings per share growth. For the full year 2000, the company
expects earnings per share growth in the 14% to 15% range. Longer term,
Anheuser-Busch is confident in its ability to consistently achieve its
double-digit earnings per share growth objective.
RESULTS OF OPERATIONS
---------------------
Anheuser-Busch achieved gross sales of $3.8 billion and $7.1 billion, and
net sales of $3.3 billion and $6.1 billion, respectively, in the second
quarter and first six months of 2000. These amounts represent gross sales
increases over 1999 of $198.1 million, or 5.5%, for the second quarter and
$340.5 million, or 5.0%, for the first six months. Net sales increased over
1999 by $184.8 million, or 6.0%, and $311.5 million, or 5.4%, for the same
periods. 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 shipments increased 4.2% for the second quarter, and
3.3% for the first six months of 2000. Domestic sales to retailer volume was
up 3.6% for the second quarter and 3.9% for the first six months of 2000.
Volume growth was led by the Bud Family along with increased Michelob brand
family sales. Bud Light continues to grow at a double-digit pace. Domestic
revenue per barrel grew 2.2% for both the second quarter and first six months
of 2000, compared to the same periods last year.
The company is currently evaluating opportunities for selected price
increases and additional discount reductions in the fourth quarter 2000.
These revenue
10
<PAGE> 11
enhancement initiatives will again be tailored to specific markets, brands and
packages, but the total scope is anticipated to be somewhat less than in the
fourth quarter last year.
The company's beer volume information is summarized in the following
table:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Reported Beer Volume (million of barrels)
--------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months Ended June 30
----------------------------------------------------------------------------
vs. 1999 vs. 1999
----------------------- -----------------------
2000 Barrels % 2000 Barrels %
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Domestic 25.8 Up 1.0 Up 4.2% 49.5 Up 1.6 Up 3.3%
International 1.9 Dn .02 Dn 0.9% 3.4 Up 0.1 Up 3.6%
------ -------- --------- ----- -------- ---------
Worldwide - A-B Brands 27.7 Up 1.0 Up 3.8% 52.9 Up 1.7 Up 3.3%
Int'l Equity Partner Brands <F1> 4.2 Dn .04 Dn 0.9% 7.6 Dn .03 Dn 0.4%
------ -------- --------- ----- -------- ---------
Total Brands <F1> 31.9 Up 1.0 Up 3.2% 60.5 Up 1.7 Up 2.9%
====== ======== ========= ===== ======== =========
--------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Normalized to exclude 1999 volume related to Anheuser-Busch's previously
held equity stake in Antarctica, equity partner volume increased
2.3 percent in the second quarter and 4.1 percent for the first six
months of 2000. Normalized total volume increased 3.6 percent in the
second quarter and 3.4 percent for the first six months of 2000 versus
comparable periods last year.
</TABLE>
Worldwide Anheuser-Busch beer brand sales volume grew 3.8% to 27.7
million barrels in the second quarter, and was 52.9 million barrels for the
first six months of 2000, an increase of 3.3%. 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 partner's volume) with worldwide Anheuser-Busch
brand volume, was 31.9 million barrels, up 3.2% in the second quarter and
60.5 million barrels, up
11
<PAGE> 12
2.9% for the first six months. Normalized to exclude 1999 volume related to
Anheuser-Busch's previously held equity stake in Antarctica, equity partner
volume increased 2.3% in the second quarter and 4.1% for the first six months
of 2000. Normalized total volume increased 3.6% in the second quarter and 3.4%
for the first six months of 2000 versus comparable periods last year.
The company's domestic market share (excluding exports) for the first six
months of 2000 was 47.6%, an increase of 1.0 percentage point over 1999
market share of 46.6%. Including exports, the company's share of U.S.
shipments was 47.3% versus 46.3% for the first six 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 essentially even in the
second quarter compared to prior year, and grew 3.6% for the first six months
of 2000. International beer operations experienced solid volume growth in
Canada and China.
Cost of products and services was $2.0 billion and $3.8 billion,
respectively, for the second quarter and first six months of 2000, reflecting
increases of $109.5 million, or 5.9%, for the second quarter and $177.0
million, or 4.9% for the first six months compared to 1999.
The increases in cost of products and services are principally due to
higher domestic beer volume and increased costs associated with the company's
can manufacturing and commodity aluminum recycling businesses. Gross profit
as a percentage of net sales was 39.6% for the second quarter and 38.2% for
the first six
12
<PAGE> 13
months of 2000, increasing 10 and 20 basis points, respectively, versus
comparable periods in 1999.
Marketing, distribution and administrative expenses for the second
quarter 2000 were $543.4 million, an increase of $21.8 million, or 4.2%. For
the first six months of 2000, these expenses were $993.4 million, an increase
of $35.3 million, or 3.7% compared with 1999. The 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 $53.6 million, or 7.7%, in the first quarter and
$99.2 million, or 8.1%, for the first six months versus the comparable
periods in 1999. These increases are primarily due to the domestic beer
segment's strong performance.
International beer segment net income increased 30.9% in the second
quarter and 38.7% for the first six months of 2000, due to a strong
performance by Grupo Modelo and improved operating results. International
beer operating profits, excluding Modelo, improved, reflecting volume gains
in Canada and China and lower costs in Japan due to the conversion of the
joint venture into a licensing agreement.
Packaging segment operating profits were down $15.7 million, or 33.9%,
for the second quarter and $34.3 million, or 47.1%, for the first six months
compared to 1999, reflecting continuing lower pricing on Metal Container's
beer and soft drink can sales,
13
<PAGE> 14
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 in the second quarter
due primarily to strong attendance in the Florida market.
Net interest cost (interest expense less interest income) was $90.6
million for the second quarter and $177.0 million for the first six months of
2000. This represents increases of $12.3 million, or 15.7% and $23.8
million, or 15.5%, compared to the corresponding periods in 1999. The
increases in net interest cost are due to higher average debt balances
outstanding combined with higher interest rates compared to last year.
Interest capitalized increased $4.1 million and $7.7 million for the
second quarter and first six months of 2000, to $8.3 million and $15.2 million,
respectively, due to higher average construction-in-progress balances and
higher interest rates compared to 1999.
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 $46.7 million, or 10.8%, for the second quarter,
and increased $77.9 million, or 10.4%, for the first six months of 2000.
Diluted earnings per share for the second quarter 2000 were $1.04, an
increase of 15.6% versus second quarter 1999. Diluted earnings per share for
the first six months of 2000 were $1.80, an increase of 15.4% versus the same
period last year.
14
<PAGE> 15
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 50% ownership in Grupo Modelo. Earnings per share
benefited from the company's ongoing share repurchase program. The company
has repurchased over 10 million shares through the first six months of 2000.
LIQUIDITY AND FINANCIAL CONDITION
---------------------------------
Cash and marketable securities at June 30, 2000 were $172.0 million,
representing increases of $38.5 million from June 30, 1999 and $19.9 million
from December 31, 1999 levels. 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 June 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 $399.4 million during the twelve month period ended
June 30, 2000. The following outlines the change in debt during this period:
Debt Issuances ... $973.3 million, comprised of the following:
--------------
- $546.8 million of commercial paper (5.85% weighted average rate)
- $400.0 million of long-term notes ($200 million at 7.5% fixed
rate; $200 million at floating rate)
- $26.5 million of industrial development revenue bonds (various
fixed rates)
15
<PAGE> 16
Debt Reduction ... $573.9 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 (7.78% weighted average rate)
- $8.2 million of other miscellaneous reductions (various fixed
rates)
In June 2000, the company registered an additional $510 million in
long-term debt with the U. S. Securities and Exchange Commission which
increased total registered debt available for issuance to $1.0 billion as of
June 30, 2000.
At June 30, 2000, $1.23 billion of commercial paper borrowings were
outstanding, an increase of $546.8 million compared to the balance at June
30, 1999, and level with the balance at December 31, 1999.
Effective June 30, 2000, the company entered into a new $2 billion
revolving credit agreement expiring in 2005. Commercial paper debt up to $2
billion is classified as long-term as it is maintained on a long-term basis
with support provided by the revolving credit agreement. Any commercial paper
in excess of $2 billion would be classified as short-term debt.
Capital expenditures during the second quarter 2000 were $262.1 million
compared to $216.4 million for the second quarter 1999, and $541.6 million
for the first six months of 2000, versus $400.8 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
16
<PAGE> 17
December 31, 1999, 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.
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
On July 26, 2000, the Board of Directors approved the following:
(1) A 10% increase in the regular quarterly dividend, to $.33 per share from
$.30 on a pre-split basis. The $.03 increase in the quarterly dividend
compares to annual increases in the quarterly rate of $.02 since 1992.
The new $.33 quarterly dividend rate is payable on September 11, 2000 to
shareholders of record on August 9, 2000.
(2) A two-for-one common stock split, effective for shareholders of record
on August 17, 2000. Certificates for one additional share of
Anheuser-Busch common
17
<PAGE> 18
stock for each share held at the record date will be distributed to
shareholders September 18, 2000. Shares distributed for the stock split
will not participate in the dividend to be paid on September 11, 2000.
Presented below are pro forma diluted earnings per share, giving
retroactive effect for the two-for-one split for the periods presented.
<TABLE>
<CAPTION>
2nd quarter Six months
ended June 30, ended June 30,
-------------- --------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Diluted Earnings Per Share $.52 $.45 $.90 $.78
==== ==== ==== ====
</TABLE>
Labor Negotiations
------------------
There has been no material change in the status of the company's labor
negotiations with the Teamsters since the previous SEC Form 10-Q filed May
12, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
12 - Ratio of Earnings to Fixed Charges
27 - Financial Data Schedule
99 - Effect of Stock Split on the Shares of Common Stock Registered on
Form S-8
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the three month period
ending June 30, 2000.
18
<PAGE> 19
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 10, 2000
/s/ John F. Kelly
--------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
August 10, 2000
19
