UNITED STATES
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, 2005
Commission file number
| [X] | | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006 |
| | |
| [ ] | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
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.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE | 43-1162835 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
One Busch Place, St. Louis, Missouri 63118
(Address
(Address of principal executive offices) (Zip Code)
314-577-2000
(Registrant's
(314) 577-2000
(Registrant’s telephone number, including area code)(Former name, former address and former fiscal year, if changed since last report)
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 suchthe filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [X] | Accelerated Filer [ ] | Non-Accelerated Filer [ ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [X] No [ ]
.
Indicate the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of the latest practicable date.
$1
$1 Par Value Common Stock -
776,367,864772,798,830 shares as of March 31,
2005
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
March 31, December 31,
(In millions, except per share) 2005 2004
-------------- --------------
Assets
Current Assets:
Cash $152.3 $228.1
Accounts receivable 923.2 696.1
Inventories:
Raw materials and supplies 409.1 405.0
Work in progress 100.3 80.0
Finished goods 250.8 205.3
Total inventories 760.2 690.3
Other current assets 209.0 203.9
-------------- --------------
Total current assets 2,044.7 1,818.4
Investments in affiliated companies 3,234.1 3,150.2
Plant and equipment, net 8,947.8 8,847.4
Intangible assets, including goodwill of $973.9 and $984.1 1,180.5 1,191.9
Other assets 1,130.1 1,165.5
-------------- --------------
Total Assets $16,537.2 $16,173.4
============== ==============
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $1,112.1 $1,194.8
Accrued salaries, wages and benefits 249.1 291.4
Accrued taxes 434.4 152.9
Accrued interest 117.1 125.2
Other current liabilities 230.8 204.7
-------------- --------------
Total current liabilities 2,143.5 1,969.0
-------------- --------------
Postretirement benefits 439.6 454.2
-------------- --------------
Debt 8,585.6 8,278.6
-------------- --------------
Deferred income taxes 1,698.9 1,727.2
-------------- --------------
Other long-term liabilities 1,070.4 1,076.3
-------------- --------------
Shareholders Equity:
Common stock, $1.00 par, authorized 1.6 billion shares 1,464.3 1,463.0
Capital in excess of par value 1,473.3 1,425.3
Retained earnings 15,729.2 15,407.2
Treasury stock, at cost (15,122.1) (14,638.5)
Accumulated non-owner changes in equity (945.5) (988.9)
-------------- --------------
Total Shareholders Equity 2,599.2 2,668.1
-------------- --------------
Commitments and contingencies -- --
-------------- --------------
Total Liabilities and Shareholders Equity $16,537.2 $16,173.4
============== ==============
- -------------------------------------------------------------------------------------------------------------------
See the accompanying footnotes on pages 5 -- 10.
2006.
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
| | (in millions, except per share) | March 31, | | Dec. 31, |
| | | 2006 | | 2005 |
| | Assets | | | |
| | Current Assets: | | | |
| | Cash | $212.5 | | $225.8 |
| | Accounts receivable | 873.0 | | 681.4 |
| | Inventories | 707.7 | | 654.5 |
| | Other current assets | 208.8 | | 197.0 |
| | Total current assets | 2,002.0 | | 1,758.7 |
| | Investments in affiliated companies | 3,575.8 | | 3,448.2 |
| | Plant and equipment, net | 8,966.9 | | 9,041.6 |
| | Intangible assets, including goodwill of $1,039.1 and $1,034.5 | 1,237.0 | | 1,232.6 |
| | Other assets | 1,293.9 | | 1,073.9 |
| | Total assets | $17,075.6 | | $16,555.0 |
| | | | | |
| | | | | |
| | Liabilities and Shareholders Equity | | | |
| | Current Liabilities: | | | |
| | Accounts payable | $1,170.9 | | $1,249.5 |
| | Accrued salaries, wages and benefits | 246.6 | | 250.9 |
| | Accrued taxes | 443.7 | | 156.7 |
| | Accrued interest | 114.9 | | 123.7 |
| | Other current liabilities | 254.6 | | 201.8 |
| | Total current liabilities | 2,230.7 | | 1,982.6 |
| | Postretirement benefits | 445.5 | | 444.3 |
| | Debt | 8,127.4 | | 7,972.1 |
| | Deferred income taxes | 1,329.8 | | 1,345.9 |
| | Other long-term liabilities | 1,136.9 | | 1,130.3 |
| | Shareholders Equity: | | | |
| | Common stock, $1.00 par, authorized 1.6 billion shares | 1,469.6 | | 1,468.6 |
| | Capital in excess of par value | 2,735.6 | | 2,685.9 |
| | Retained earnings | 15,987.5 | | 15,698.0 |
| | Treasury stock, at cost | (15,507.9) | | (15,258.9) |
| | Accumulated non-owner changes in equity | (879.5) | | (913.8) |
| | Total Shareholders Equity | 3,805.3 | | 3,679.8 |
| | Commitments and contingencies | - | | - |
| | Total Liabilities and Shareholders Equity | $17,075.6 | | $16,555.0 |
See the accompanying footnotes on pages 5 to 13.
2
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Statement of Income (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------
(In millions, except per share) First Quarter Ended March 31,
-----------------------------------------
2005 2004
--------------- ---------------
Gross sales $4,085.1 $4,003.0
Excise taxes (521.4) (526.0)
--------------- ---------------
Net sales 3,563.7 3,477.0
Cost of sales (2,227.2) (2,073.3)
--------------- ---------------
Gross profit 1,336.5 1,403.7
Marketing, distribution & administrative expenses (604.1) (582.3)
--------------- ---------------
Operating income 732.4 821.4
Interest expense (114.8) (101.7)
Interest capitalized 5.2 5.2
Interest income 2.0 1.1
Other income, net 19.5 27.6
--------------- ---------------
Income before income taxes 644.3 753.6
Provision for income taxes (237.4) (292.6)
Equity income, net of tax 105.9 88.9
--------------- ---------------
Net income $512.8 $549.9
=============== ===============
Basic earnings per share $.66 $.68
=============== ===============
Diluted earnings per share $.65 $.67
=============== ===============
- -------------------------------------------------------------------------------------------------------------------------
See the accompanying footnotes on pages 5 -- 10.
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Statement of Income (Unaudited)
| | | | | |
| | (in millions, except per share) | First Quarter |
| | | Ended March 31, |
| | | 2006 | | 2005 |
| | Gross sales | $4,296.3 | | $4,085.1 |
| | Excise taxes | (540.7) | | (521.4) |
| | Net sales | 3,755.6 | | 3,563.7 |
| | Cost of sales | (2,417.7) | | (2,231.0) |
| | Gross profit | 1,337.9 | | 1,332.7 |
| | Marketing, distribution and administrative expenses | (615.7) | | (619.3) |
| | Operating income | 722.2 | | 713.4 |
| | Interest expense | (115.1) | | (114.8) |
| | Interest capitalized | 4.0 | | 5.2 |
| | Interest income | 0.6 | | 2.0 |
| | Other income, net | 3.7 | | 19.5 |
| | Income before income taxes | 615.4 | | 625.3 |
| | Provision for income taxes | (238.6) | | (230.8) |
| | Equity income, net of tax | 122.4 | | 105.9 |
| | Net income | $499.2 | | $500.4 |
| | Basic earnings per share | $.64 | | $.64 |
| | Diluted earnings per share | $.64 | | $.64 |
See the accompanying footnotes on pages 5 to 13.
3
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------
Three Months Ended
(In millions) March 31,
-----------------------------------------
2005 2004
--------------- ---------------
Cash flow from operating activities:
Net Income $512.8 $549.9
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization 236.8 224.0
Deferred income taxes (30.1) 39.8
Undistributed earnings of affiliated companies (105.9) (85.4)
Gain of sale of business (15.4) --
Other, net 53.3 64.3
--------------- ---------------
Operating cash flow before change in working capital 651.5 792.6
Increase in working capital (115.3) (199.4)
--------------- ---------------
Cash provided by operating activities 536.2 593.2
--------------- ---------------
Cash flow from investing activities:
Capital expenditures (277.3) (199.0)
Proceeds from sale of business 48.3 --
Acquisitions -- (32.9)
--------------- ---------------
Cash used for investing activities (229.0) (231.9)
--------------- ---------------
Cash flow from financing activities:
Increase in debt 278.3 500.3
Decrease in debt (22.1) (200.8)
Dividends paid to shareholders (190.8) (178.3)
Acquisition of treasury stock (483.6) (578.6)
Shares issued under stock plans 35.2 43.4
--------------- ---------------
Cash used for financing activities (383.0) (414.0)
--------------- ---------------
Net decrease in cash during the period (75.8) (52.7)
Cash, beginning of period 228.1 191.1
--------------- ---------------
Cash, end of period $152.3 $138.4
=============== ===============
- --------------------------------------------------------------------------------------------------------------------------
See the accompanying footnotes on pages 5 -- 10.
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
| | (in millions) | Three Months | |
| | | Ended March 31, | |
| | | 2006 | | | 2005 | |
| | Cash flow from operating activities: | | | | | |
| | Net income | $499.2 | | | $500.4 | |
| | Adjustments to reconcile net income to cash | | | | | |
| | provided by operating activities: | | | | | |
| | Depreciation and amortization | 245.5 | | | 236.8 | |
| | Decrease in deferred income taxes | (17.3 | ) | | (36.7 | ) |
| | Stock compensation expense | 17.1 | | | 19.0 | |
| | Undistributed earnings of affiliated companies | (122.4 | ) | | (105.9 | ) |
| | Gain on sale of business | - | | | (15.4) | |
| | Other, net | (180.9 | ) | | 47.3 | |
| | Operating cash flow before change in working capital | 441.2 | | | 645.5 | |
| | Decrease / (Increase) in working capital | 5.8 | | | (115.3 | ) |
| | Cash provided by operating activities | 447.0 | | | 530.2 | |
| | | | | | | |
| | Cash flow from investing activities: | | | | | |
| | Capital expenditures | (159.1 | ) | | (277.3 | ) |
| | Proceeds from sale of business | - | | | 48.3 | |
| | Cash used for investing activities | (159.1 | ) | | (229.0 | ) |
| | | | | | | |
| | Cash flow from financing activities: | | | | | |
| | Increase in debt | 299.3 | | | 278.3 | |
| | Decrease in debt | (143.2 | ) | | (22.1 | ) |
| | Dividends paid to shareholders | (209.8 | ) | | (190.8 | ) |
| | Acquisition of treasury stock | (259.7 | ) | | (483.6 | ) |
| | Shares issued under stock plans | 12.2 | | | 41.2 | |
| | Cash used for financing activities | (301.2 | ) | | (377.0 | ) |
| | Net decrease in cash during the period | (13.3 | ) | | (75.8 | ) |
| | Cash, beginning of period | 225.8 | | | 228.1 | |
| | Cash, end of period | $212.5 | | | $152.3 | |
See the accompanying footnotes on pages 5 to 13.
ANHEUSER-BUSCH COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Financial Statements
------------------------------
| 1. | Unaudited Financial Statements |
The unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles and applicable SEC guidelines pertaining to quarterly financial reporting, and include all adjustments necessary for a fair presentation. These statements should be read in combination with the consolidated financial statements and notes included in the company'scompany’s annual report on Form 10-K for the year ended December 31, 2004.
2. Business Segments Information
-----------------------------
2005.
| 2. | Business Segments Information |
Comparative business segment information for the first quarter ended March 31 (in millions):
---------------------------------------------------------------------------------------
Domestic Int'l Corporate
Beer Beer Packaging Entertain. & Elims. Consol.
- ----------------------------------------------------------------------------------------------------------------
2005
Gross Sales $3,213.7 248.3 566.5 175.1 (118.5) $4,085.1
Net Sales:
- - Intersegment $0.7 -- 208.6 -- (209.3) $ --
- - External $2,734.4 205.5 357.9 175.1 90.8 $3,563.7
Income Before
Income Taxes $781.3 21.8 35.6 (6.4) (188.0) $644.3
Equity Income,
Net of Tax -- $105.9 -- -- -- $105.9
Net Income $484.4 119.4 22.1 (4.0) (109.1) $512.8
- ----------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Domestic Int'l Corporate
Beer Beer Packaging Entertain. & Elims. Consol.
- ----------------------------------------------------------------------------------------------------------------
2004
Gross Sales $3,262.9 193.1 521.4 154.1 (128.5) $4,003.0
Net Sales:
- - Intersegment $0.7 -- 210.1 -- (210.8) $ --
- - External $2,770.2 158.8 311.3 154.1 82.6 $3,477.0
Income Before
Income Taxes $862.6 22.9 36.8 (11.0) (157.7) $753.6
Equity Income,
Net of Tax -- $88.9 -- -- -- $88.9
Net Income $534.9 103.1 22.8 (6.8) (104.1) $549.9
- ----------------------------------------------------------------------------------------------------------------
| | | | | | | |
| | Domestic | Int'l | | | Corporate | |
| | Beer | Beer | Packaging | Entertain. | and Elims | Consol. |
2006 | | | | | | |
| Gross Sales | $3,357.7 | 257.1 | 629.4 | 170.7 | (118.6) | $4,296.3 |
| Net Sales: | | | | | | |
| - Intersegment | $0.7 | - | 225.9 | - | (226.6) | $ - |
| - External | $2,856.5 | 216.9 | 403.5 | 170.7 | 108.0 | $3,755.6 |
| Income Before | | | | | | |
| Income Taxes | $782.5 | 22.1 | 38.7 | (17.6) | (210.3) | $615.4 |
| Equity Income | $0.6 | 121.8 | - | - | - | $122.4 |
| Net Income | $485.8 | 135.5 | 24.0 | (10.9) | (135.2) | $499.2 |
| | | | | | | |
| | | | | | | |
| | | | | | | |
2005 | | | | | | |
| Gross Sales | $3,213.7 | 248.3 | 566.5 | 175.1 | (118.5) | $4,085.1 |
| Net Sales: | | | | | | |
| - Intersegment | $0.7 | - | 208.6 | - | (209.3) | $ - |
| - External | $2,734.4 | 205.5 | 357.9 | 175.1 | 90.8 | $3,563.7 |
| Income Before | | | | | | |
| Income Taxes | $781.3 | 21.8 | 35.6 | (6.4) | (207.0) | $625.3 |
| Equity Income | - | $105.9 | - | - | - | $105.9 |
| Net Income | $484.4 | 119.4 | 22.1 | (4.0) | (121.5) | $500.4 |
| | | | | | | |
The company adopted FAS 123R, “Share-Based Payment,” effective in the first quarter 2005,2006 and has elected to apply the company's transportation
businessmodified retrospective method of adoption. Stock compensation expense is included within the domestic beer segment and its real
estate development business is reportedclassified as a corporate item. These
businesses previously comprised the "other" segment. Segment resultsitem for 2004 have been updated to conformsegment reporting purposes. Pursuant to the modified retrospective approach, the 2005 corporate information included in the company’s segment disclosures has been revised to include the impact of previously disclosed pro forma stock compensation expense.
Under the terms of the company’s stock option plans, officers, certain other employees and non-employee directors may be granted options to purchase the company’s common stock at a price equal to the market price on the date the option is granted. Options generally vest over three years and have a maximum term of 10 years. At March 31, 2006, existing stock plans authorized issuance of 120 million shares of common stock. The company issues new shares when options are exercised under employee stock option plans. Under the plan for the board of directors, shares are issued from treasury stock.
Following is a summary of stock option activity and related prices for the first quarter of 2006 (options in millions).
| | Options Outstanding | Wtd. Avg. Exercise Price | Options Exercisable | Wtd. Avg. Exercise Price |
Balance, Dec. 31, 2005 | 96.5 | $45.01 | 71.5 | $44.06 |
Granted | --- | N/A | | |
Exercised | (0.5) | $25.56 | | |
Cancelled | (0.4) | $48.63 | | |
Balance, Mar. 31, 2006 | 95.6 | $45.10 | 70.9 | $44.20 |
The following table provides additional information regarding options outstanding and options that were exercisable as of March 31, 2006 (options in millions).
| | Options Outstanding | Options Exercisable |
Range of Exercise Prices | Number | Wtd. Avg. Remaining Life | Wtd. Avg. Exercise Price | Pretax In The Money Value | Number | Wtd. Avg. Exercise Price | Pretax In The Money Value |
$20-29 | 9.6 | 2.0 years | $26.06 | $160.9 | | 9.6 | $26.06 | $160.9 | |
$30-39 | 8.0 | 3.4 years | $37.84 | 38.7 | | 8.0 | $37.84 | 38.7 | |
$40-49 | 49.9 | 6.4 years | $46.47 | --- | | 38.6 | $47.25 | --- | |
$50-53 | 28.1 | 8.0 years | $51.29 | --- | | 14.7 | $51.60 | --- | |
$20-53 | 95.6 | 6.2 years | $45.10 | $199.6 | | 70.9 | $44.20 | $199.6 | |
Prior to 2006, Anheuser-Busch accounted for employee stock compensation in accordance with FAS 123, “Accounting for Stock-Based Compensation,” and elected to recognize no expense related to employee stock compensation, since options were always granted with an exercise price equal to the market price of the company’s stock on the day of grant. In December 2004, the Financial Accounting Standards Board issued a revised and renamed standard regarding stock compensation - FAS 123R, “Share-Based Payment.” The revised standard, which was adopted by Anheuser-Busch in the first quarter of 2006, eliminates the disclosure-only election under FAS 123 and requires the recognition of compensation expense for stock options and all other forms of equity compensation generally based on the fair value of the instruments on the date of grant. In order to enhance comparability among all years presented and to provide the fullest understanding of the impact that expensing stock compensation has on the company, Anheuser-Busch has retrospectively applied the new standard to prior period results.
The fair value of stock compensation is recognized in expense over the vesting period, and is determined on the date of grant using a binomial (lattice method) option-pricing model. The company recognizes the entire fair value associated with non-forfeitable stock options (approximately 60% of the total) in stock compensation expense when options are granted. The remaining expense associated with forfeitable options is recognized ratably over the three-year option vesting period. For financial reporting convention.
3. Earnings Per Share
------------------
purposes, stock compensation expense is included in either cost of sales or marketing, distribution and administrative expenses depending on where the
recipient’s cash compensation is reported, and is classified as a corporate item for business segments reporting.
The following table shows the fair value of stock options granted for 2005, 2004 and 2003 (in millions, except per option).
| | 2005 | 2004 | 2003 |
Fair value of each option granted | $8.81 | $10.49 | $13.58 |
Total number of options granted | 11.4 | 14.1 | 14.4 |
| | Total fair value of options granted | $100.4 | $147.9 | $195.6 |
Anheuser-Busch uses the binomial option-pricing model for the valuation of stock options because it accommodates several inputs in order to take into account multiple option exercise patterns, and essentially computes an overall value based on a weighting of the various patterns. The company used the Black-Scholes pricing model to determine the fair value of stock options granted in 2003. The assumptions used in developing the fair value of stock options granted for the years 2005, 2004 and 2003 follow. For illustrative purposes, the expected life, risk-free rate, and fair value per option shown above are weighted averages.
| | 2005 | 2004 | 2003 |
Expected life of option | 5.5 yrs. | 5.5 yrs. | 7.0 yrs. |
Risk-free interest rate | 4.4% | 3.7% | 4.0% |
Expected volatility of Anheuser-Busch stock | 21% | 22% | 22% |
Expected dividend yield on Anheuser-Busch stock | 2.5% | 1.8% | 1.7% |
Pretax stock compensation expense was $17 million and $19 million for the first quarter of 2006 and 2005, respectively. The impact on net income was $12 million for both periods, while the impact on diluted earnings per share was $.015 for the first quarter of 2006 and $.016 for the first quarter of 2005. Unrecognized pretax stock compensation cost as of March 31, 2006 was $95 million, which is expected to be recognized over a weighted average life of approximately 1.5 years.
Cash proceeds from the exercise of stock options totaled $10 million in the first quarter of 2006 and $39 million for the first quarter of 2005. Stock options exercised in the first quarter of 2006 and 2005 had an aggregate intrinsic value (amount by which the market price exceeded the exercise price on the date of exercise) of $9
million and $31 million, respectively. The income tax benefit related to the exercise of employee stock options (recognized as a reduction of current taxes payable and an increase in paid-in-capital) was $3 million and $9 million, respectively, for the first quarter of 2006 and 2005.
Following are figures pertinent to first quarter 2005 operations and the balance sheet as of December 31, 2005 as they were previously reported and for the retrospective adoption of FAS 123R.
| | Including FAS 123R | | As Previously Reported |
Operating Results and Cash Flow for First Quarter 2005 | | | |
| Cost of sales | $2,231.0 | | $2,227.2 |
| Gross profit | $1,332.7 | | $1,336.5 |
| Marketing, distribution and administrative expenses | $619.3 | | $604.1 |
| Operating income | $713.4 | | $732.4 |
| Income before income taxes | $625.3 | | $644.3 |
| Provision for income taxes | $230.8 | | $237.4 |
| Net income | $500.4 | | $512.8 |
| Basic earnings per share | $.64 | | $.66 |
| Diluted earnings per share | $.64 | | $.65 |
| | | | |
| Operating cash flow before change in working capital | $645.5 | | $651.5 |
| Cash provided by operating activities | $530.2 | | $536.2 |
| Shares issued under stock plans | $41.2 | | $35.2 |
| Cash used for financing activities | $377.0 | | $383.0 |
| | | | |
Balance Sheet as of December 31, 2005 | | | |
| Deferred income taxes | $1,345.9 | | $1,682.4 |
| Capital in excess of par value | $2,685.9 | | $1,601.8 |
| Retained earnings | $15,698.0 | | $16,445.6 |
| Shareholders equity | $3,679.8 | | $3,343.3 |
Anheuser-Busch accounts for its derivatives in accordance with FAS 133, “Accounting for Derivatives and Other Hedging Instruments,” and therefore defers in accumulated non-owner changes in shareholders equity the portion of cash flow hedging gains and losses that equal the change in cost of the underlying hedged transactions. As the underlying hedged transactions occur, the associated deferred hedging gains and losses are reclassified into earnings to match the change in cost of the transaction. For fair value hedges, the changes in value for both the derivative and the underlying hedged exposure are recognized in earnings each quarter.
Following are pretax gains and losses from derivatives which were recognized in earnings during the first quarter (in millions). These gains and losses effectively offset price or value changes in the company’s hedged exposures.
First Quarter |
2006 | | 2005 |
Gains | Losses | | Gains | Losses |
$0.5 | $26.7 | | $0.6 | $4.5 |
| | | | | |
The company immediately recognizes in earnings any portion of derivative gains or losses that are not 100% effective at offsetting price changes in the underlying transactions. Anheuser-Busch recognized net pretax losses due to this hedge ineffectiveness of $0.7 million for the first quarter of 2006 compared to net ineffective pretax losses of $0.3 million for the first quarter of 2005.
Earnings per share are calculated by dividing net income by weighted-average common shares outstanding for the period. The difference between basic and diluted weighted-average common shares is the dilutive impact of unexercised in-the-money stock options. There were no adjustments to net income for any period shown for purposes of calculating earnings per share.
Weighted-average common shares outstanding for the quarter ended March 31 are shown below (millions of shares):
| | First Quarter |
| | 2006 | | 2005 |
Basic weighted average shares outstanding | 776.1 | | 779.3 |
Diluted weighted average shares outstanding | 780.2 | | 785.9 |
First Quarter
----------------------------
2005 2004
------------ ------------
Basic weighted average shares outstanding 779.3 810.6
============ ============
Diluted weighted average shares outstanding 785.9 820.6
============ ============
| 6. | Non-Owner Changes in Shareholders Equity |
4. Non-Owner Changes in Shareholders Equity
----------------------------------------
The components of accumulated non-owner changes in shareholders equity, net of applicable taxes, as of March 31,
20052006 and December 31,
20042005 follow (in millions):
March 31, Dec. 31,
2005 2004
--------------- -------------
Foreign currency translation loss $(536.1) $(566.5)
Deferred hedging gains 3.8 (1.3)
Deferred securities valuation gains 103.8 95.9
Minimum pension liability (517.0) (517.0)
--------------- -------------
Accumulated non-owner changes in shareholders equity $(945.5) $(988.9)
=============== =============
6
| | March 31, | | Dec. 31, |
| | 2006 | | 2005 |
Foreign currency translation loss | $(347.5) | | $(382.0) |
Deferred hedging losses | (3.0) | | (2.4) |
Deferred securities valuation gains | 0.7 | | 0.3 |
Minimum pension liability | (529.7) | | (529.7) |
Accumulated non-owner changes in shareholders equity | $(879.5) | | $(913.8) |
Net income plus non-owner changes in shareholders equity, net of applicable taxes, for the quarter ended March 31 follows (in millions):
| | First Quarter |
| | 2006 | | 2005 |
Net income | $499.2 | | $500.4 |
Foreign currency translation gains | 34.5 | | 30.4 |
Net change in deferred hedging (losses) / gains | (0.6) | | 5.1 |
Deferred securities valuation gains | 0.4 | | 7.9 |
Net income plus non-owner changes in shareholders equity | $533.5 | | $543.8 |
First Quarter
-----------------------------
2005 2004
------------ -------------
Net income $512.8 $549.9
Foreign currency translation gains 30.4 81.6
Net change in deferred hedging gains/(losses) 5.1 (10.7)
Deferred securities valuation gains 7.9 13.1
------------ -------------
Net income plus non-owner changes in shareholders equity $556.2 $633.9
============ =============
| 7. | Goodwill |
5. Goodwill
--------
Following is goodwill by business segment, as of March 31, 20052006 and December 31, 20042005 (in millions). Goodwill is included in either other assets or investment in affiliated companies, as appropriate, in the consolidated balance sheet. The change in goodwill during 2005 is due tothe first quarter 2006 results from fluctuations in foreign currency exchange rates.
| | Mar. 31, 2006 | | Dec. 31, 2005 |
Domestic Beer | $21.2 | | $21.2 |
International Beer | 1,269.9 | | 1,261.1 |
Packaging | 21.9 | | 21.9 |
Entertainment | 288.3 | | 288.3 |
Total goodwill | $1,601.3 | | $1,592.5 |
Mar. 31, 2005 Dec. 31, 2004
--------------------- --------------------
Domestic Beer $21.2 $21.2
International Beer 1,173.3 1,177.8
Packaging 21.9 21.9
Entertainment 288.3 288.3
--------------------- --------------------
Total goodwill $1,504.7 $1,509.2
===================== ====================
| 8. | Pension and Postretirement Health Care Expense |
6. Derivatives
-----------
Anheuser-Busch accounts for its derivatives in accordance with FAS 133,
"Accounting for Derivatives and Other Hedging Instruments," and therefore
defers hedging gains and losses that are effective at offsetting price
changes in the underlying hedged exposures. The company reclassified
deferred gains of $0.6 million and deferred losses of $4.5 million from
non-owner changes in shareholders equity into operating income during the
first quarter 2005 as underlying hedged transactions occurred.
7
The company recognized net losses due to hedge ineffectiveness totaling
$0.3 million for the first quarter 2005, compared to net gains of $24.1
million for first quarter 2004. The first quarter 2004 gain includes $19.5
million related to the sale of commodity hedges, which is reported in other
income and classified as a corporate item for segment reporting.
7. Stock Based Compensation
------------------------
The company currently accounts for employee stock options in accordance
with FAS 123, "Accounting for Stock-Based Compensation." Under FAS 123, the
company recognizes no compensation expense related to stock options and
instead provides pro forma disclosures of net income and earnings per share
as if compensation expense had been recognized based on the fair value of
the stock options on the grant date.
In the first quarter 2005, for pro forma reporting purposes
Anheuser-Busch began assuming 100% amortization of all non-forfeitable stock
options at the grant date. The company previously assumed all stock options
were amortized over a three-year vesting period. The company expects full
year 2005 pro forma stock option expense in the range of $.13 - $.15 per
share. Following is the pro forma impact on net income and earnings per
share for the first quarter ended March 31 (in millions, except per share).
First Quarter
--------------------------
2005 2004
--------------------------
Reported Net Income $512.8 $549.9
Pro Forma Impact of Expensing Stock Options (12.4) (29.1)
-------------------------
Pro Forma Net Income $500.4 $520.8
=========================
Reported Basic Earnings Per Share $.66 $.68
Pro Forma Impact of Expensing Stock Options (.02) (.04)
-------------------------
Pro Forma Basic Earnings Per Share $.64 $.64
=========================
Reported Diluted Earnings Per Share $.65 $.67
Pro Forma Impact of Expensing Stock Options (.02) (.04)
-------------------------
Pro Forma Diluted Earnings Per Share $.63 $.63
=========================
8
In December 2004, the FASB issued revised and renamed guidance on stock
option accounting, FAS 123R, "Share-Based Payment." FAS 123R requires
compensation expense related to stock options to be recognized in the income
statement, based on the fair value of options at the date of grant. FAS 123R
is required to be adopted in the first quarter 2006. Anheuser-Busch is
currently evaluating when it will adopt FAS 123R.
8. Pension and Postretirement Health Care Expense
----------------------------------------------
The components of quarterly expense for pensions and postretirement health care benefits are shown below for the first quarter of
20052006 and
20042005 (in millions):
Postretirement
Pensions Health Care
--------------------- ------------------------
2005 2004 2005 2004
-------- --------- --------- ------------
Service cost (benefits earned during the period) $24.3 $20.3 $6.2 $5.9
Interest cost on benefit obligation 42.2 39.6 9.6 9.4
Assumed return on plan assets (49.0) (47.7) --- ---
Amortization of prior service cost and net actuarial
(gains)/losses 22.0 15.6 (1.7) (0.8)
-------- --------- --------- ------------
Expense for| | Pensions | Postretirement Health Care |
| | 2006 | 2005 | 2006 | 2005 |
Service cost (benefits earned during the period) | $26.6 | $24.3 | $6.2 | $6.2 |
Interest cost on benefit obligation | 42.5 | 42.2 | 8.7 | 9.6 |
Assumed return on plan assets | (49.6) | (49.0) | --- | --- |
Amortization of prior service cost and net actuarial losses / (gains) | 28.5 | 22.0 | 1.3 | (1.7) |
Expense for defined benefit plans | 48.0 | 39.5 | 16.2 | 14.1 |
Cash contributed to multi-employer plans | 3.9 | 3.9 | --- | --- |
Cash contributed to defined contribution plans | 4.7 | 4.7 | --- | --- |
Total quarterly expense | $56.6 | $48.1 | $16.2 | $14.1 |
In order to enhance the funded status of its defined benefit plans 39.5 27.8 14.1 14.5
Cash contributed to multi-employer pension plans, 3.9 4.1 --- ---
Cash contributed to defined contribution pension plans 4.7 4.6 --- ---
-------- --------- --------- ------------
Total quarterly expense $48.1 $36.5 $14.1 $14.5
======== ========= ========= ============
9. Tsingtao Bond Conversion
------------------------
In April 2005, the company
converted its two remaining Tsingtao
convertible bonds into Series H common shares, thereby increasing its
economic ownershipmade a discretionary pension contribution of $214 million in
Tsingtao from 9.9%January 2006. This contribution is in addition to
27%the company’s required pension funding for 2006.
| 9. | Equity Investment in Grupo Modelo |
Summary financial information for Anheuser-Busch’s equity investee Grupo Modelo for the first quarter of 2006 and 2005 is presented below (in millions). The conversion increases
Anheuser-Busch's voting stake in Tsingtao to 20%amounts shown represent 100% of Modelo’s consolidated operating results and allowsfinancial position based on U.S. generally accepted accounting principles on a one-month lag basis, and include the company to
nominate an additional director, giving the company two of 11 board seats.
Becauseimpact of the additional share ownershipcompany’s purchase accounting adjustments.
| | First Quarter Ended March 31, |
| | 2006 | | 2005 |
Cash and marketable securities | $1,790.5 | | $1,434.5 |
Other current assets | $989.4 | | $830.2 |
Non-current assets | $4,644.3 | | $4,248.4 |
Current liabilities | $382.2 | | $359.8 |
Non-current liabilities | $367.0 | | $445.4 |
Gross sales | $1,233.0 | | $1,010.8 |
Net sales | $1,142.4 | | $930.4 |
Gross profit | $605.4 | | $518.1 |
Minority interest | $0.3 | | $0.3 |
Net income | $241.9 | | $211.0 |
Management’s Discussion and board representation,
Anheuser-Busch believes it can exercise significant influence over TsingtaoAnalysis of Operations and will therefore begin applying the equity method of accounting for the
Tsingtao investment in the second quarter 2005.
9
10. Contingencies
-------------
In January 1997, Maris Distributing Company, Inc., a former
Anheuser-Busch wholesaler in Florida, initiated litigation against the
company alleging breach of contract and 12 other claims. Anheuser-Busch
terminated its distribution agreement with Maris Distributing in March 1997.
During the course of litigation, nine claims were resolved in favor of
Anheuser-Busch and a defamation claim brought by Maris was mistried. In
August 2001, a jury rendered a verdict against the company in the amount of
$50 million on two remaining claims. The court subsequently awarded
plaintiffs an additional $22.6 million in accumulated prejudgment interest
on the jury award, which continues to accrue at a rate that is fixed
annually. Prejudgment interest is now approximately $36 million.
Anheuser-Busch continues to believe it acted appropriately in terminating
the distribution agreement of Maris Distributing. In May 2003, the Court of
Appeals remanded the case to the trial court for resolution of issues
relating to the defamation claim. In September 2003, the trial court
determined that Maris Distributing's amended defamation claim could proceed.
The trial of the defamation claim is scheduled to begin August 1, 2005.
Anheuser-Busch is vigorously contesting that claim. The appeals of the 2001
verdict cannot be heard by the Court of Appeals until matters relating to
the defamation claim are resolved. The company continues to vigorously
contest the verdict. However, resolution is not expected to occur quickly
and the ultimate impact of this matter on the company's financial position,
results of operations or cash flows cannot presently be predicted. The
company's results do not include any expense related to the Maris
Distributing judgment or interest for any period shown.
The company and certain of its subsidiaries are involved in additional
claims and legal proceedings in which monetary damages and other relief is
sought. The company is vigorously contesting these claims; however
resolution is not expected to occur quickly, and their ultimate outcome
cannot presently be predicted. It is the opinion of management that the
ultimate resolution of these claims, legal proceedings and other
contingencies, either individually or in the aggregate, will not materially
affect the company's financial position, results of operations or liquidity.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition
This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity and cash flows of Anheuser-Busch Companies, Inc. for the first quarter ended March 31, 2005,2006, compared to the first quarter ended March 31, 2004,2005, and the year ended December 31, 2004.2005. This discussion should be read in conjunction with the consolidated financial statements and notes included in the company'scompany’s annual report to shareholders for the year ended December 31, 2004.
2005.
This discussion contains forward-looking statements regarding the company'scompany’s expectations concerning its future operations, earnings and prospects. On the date the forward-looking statements are made, the statements represent the company'scompany’s expectations, but the company'scompany’s expectations concerning its future operations, earnings and prospects may change. The company'scompany’s expectations involve risks and uncertainties (both favorable and unfavorable) and are based on 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. Accordingly, there can be no assurances that the company'scompany’s expectations and the forward-looking statements will be correct. ImportantPlease refer to the company’s most recent SEC Form 10-K for a description of risk 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 U.S. demand for malt beverage
products, including as a result of changes in U.S. demand for other alcohol
beverages; changes in consumer preference for the company's malt beverage
products; changes in the cost of marketing the company's malt beverage
products; regulatory or legislative changes, including changes in beer
excise taxes at either the federal or state level and changes in income
taxes; changes in the litigation to which the company is a party; changes in
raw materials prices; changes in packaging materials costs; changes in
interest rates; changes in foreign currency exchange rates; unusual weather
conditions that could impact beer consumption in the U.S.; 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; changes in the
11
company's credit rating resulting from future acquisitions or divestitures;
and the effect of stock market conditions on the company's share repurchase
program.discussion. Anheuser-Busch disclaims any obligation to update any of these forward-looking statements.
RESULTS OF OPERATIONS
- ---------------------
Anheuser-Busch had a challenging
Results of Operations
Effective in the first quarter 2006, Anheuser-Busch adopted FAS 123R, “Share-Based Payment.” FAS 123R requires the recognition of stock compensation expense for stock options and other forms of equity compensation, based on the fair value of the instruments on the date of grant. In order to enhance the comparability of all periods presented and provide the fullest understanding of the impact that expensing stock compensation has on the company, Anheuser-Busch elected to apply the modified retrospective method of adopting FAS 123R. The company has therefore recast comparative 2005 results to incorporate the impact of previously disclosed pro forma
stock compensation expense. The impact of adopting FAS 123R is not material to the results of operations for any period presented. See Note 3 for additional information.
Coming off a difficult year in 2005, Anheuser-Busch achieved encouraging first quarter 2006 results. Through a number of sales initiatives the company has restored its domestic beer business, with both the beer industryvolume growth momentum, and successfully implemented a moderate price increase in early 2006. The cost pressures the company experiencing volume
declines along with higher commodity cost pressures. The company hasexperienced last year continue, but at a lesser rate, and a number of initiatives in place to reduce costs and enhance beer volume growth, including
introduction of new products, led by Budweiser Select, increased investments
in domestic marketing, stepped-up on-premise sales initiatives and tactical
price promotions. Anheuser-Busch is confident the company will successfully
restore its volume and market share growth momentum.
productivity have been implemented.
Consolidated net sales increased 2.5% in the first quarter 2005 and
reported5.4% versus prior year, while diluted earnings per share decreased 3.0%.of $.64 were level with 2005. Reported earnings per share for boththe first quarter 2005 include the one-time gain on the sale of an interest in a theme park in Spain. Excluding the one-time gain from 2005, which allows a better comparison between underlying 2006 and 2004 include one-time gains ---2005 operating results, diluted earnings per share for the first quarter increased 4.9% (see additional discussion on pages 18 through 20).
Anheuser-Busch continues to expect sales and earnings growth in 2006 and believes it is off to a $15.4 million pretax gain in
2005 relatedgood start. In addition to the sale of the company's 13% equity interest in Port
Aventura, aSpanish theme park, located near Barcelona, Spain,the company experienced other one-time items in the second and a $19.5 million
pretax gain in 2004 related tothird quarters of 2005 which impacted the saleunderlying results of commodity hedges. Excludingoperations. For informational and comparative purposes, the one-time gains in both 2005 and 2004 to maketable below sets forth the results comparable, first
quarter 2005assumptions used by company representatives when comparing expectations for full year 2006 diluted earnings per share decreased 4.5% (see additional discussion on
page 18). The company is currently forecasting earnings per share growth in
the low single-digit percent range forto 2005 results including FAS 123R stock compensation expense and excluding one-time gains, as
shown below.
items.
| Earnings |
Full Year 2005 Basis of Comparison | Per Share
-------------------------------------
2005 2004 Increase
-------------------- ------------ ------------------
Projected / Reported $2.78 - $2.86 $2.77
|
| Including FAS 123R | $2.23 |
| Gain on Sale of Spanish Theme Park | (.024) --
Commodity Hedge Gain -- (.015)
Gain |
Favorable Chile Income Tax Settlement on Sale of CCU -- (.018)
Sale | (.009) |
Deferred Income Tax Benefit Due to
Mexican IncomeFrom Ohio Tax Rate Reduction -- (.012)
-------------------- ------------Legislation | (.009) |
| Litigation Settlement | .118 |
| Including FAS 123R and Excluding One-Time Items $2.76 - $2.84 $2.73 +1% to +4%
==================== ============ ==================
| $2.31 |
12
BEER SALES RESULTS
- ------------------
The company's
Following is a summary and discussion of the company’s beer volume
is summarized inand sales results for the
following table:
- ----------------------------------------------------------------------------------------------------------
Beer Volume (millions of barrels)
--------------------------------------------------------------------------------------------------------
First Quarter 2005 versus 2004
----------------------------------------------------------------
2005 2004 Barrels %
-------------- ------------- ------------- --------------
Domestic 24.4 25.1 Dn 0.7 Dn 2.7%
International 4.4 1.9 Up 2.5 Up 130.8%
-----------------------------------------------------------------
Worldwide A-B Brands 28.8 27.0 Up 1.8 Up 6.6%
Int'l Equity Partner Brands 4.3 4.4 Dn 0.1 Dn 1.6%
-----------------------------------------------------------------
Total Brands 33.1 31.4 Up 1.7 Up 5.5%
=================================================================
- ----------------------------------------------------------------------------------------------------------
first quarter 2006 compared with the first quarter 2005. Beer Volume (millions of barrels) | |
| | First Quarter | | 2006 vs. 2005 | |
| | 2006 | | 2005 | | Barrels | | % | |
Domestic | 25.6 | | 24.4 | | Up 1.2 | | Up 4.6% | |
International | 4.8 | | 4.4 | | Up 0.4 | | Up 9.4% | |
Worldwide A-B Brands | 30.4 | | 28.8 | | Up 1.6 | | Up 5.4% | |
Equity Partner Brands | 6.4 | | 4.3 | | Up 2.1 | | Up 47.9% | |
Total Brands | 36.8 | | 33.1 | | Up 3.7 | | Up 10.9% | |
Domestic volume represents Anheuser-Busch beer produced and shipped within the United States. Domestic beer sales-to-wholesalers decreased 2.7%shipments-to-wholesalers increased 4.6% for the first quarter 2005 versus the first quarter 2004,2006, and actual wholesaler sales-to-retailers were up 3.3%. On a selling day adjusted basis, sales-to-retailers were up 1.7%. Shipments to 24.4 million
barrels.wholesalers are not selling day adjusted. Our sales-to-retailers increase was led by Bud Light, which grew mid-single digits (selling day adjusted). Wholesaler inventories at the end of the first quarter 2006 were about one-and-one-half days higherone day lower than at the end of the first quarter last year,
representing a reduction of approximately one day versus the
two-and-one-half day differential at the end of 2004.
Wholesaler sales-to-retailers were down 1.0% in the first quarter
2005 versus 2004 on a comparable selling day basis due to generally weak
industry volume conditions and the comparison with the strong performance of
Michelob ULTRA last year. Bud family sales-to-retailers increased in the
first quarter 2005, driven by solid Bud Light growth and the national
introduction in late February of Budweiser Select.
2005.
The company'scompany’s estimated domestic market share (excluding exports) for the first quarter 2005of 2006 was 51.2%, compared to first quarter 2004prior year market share of 51.7%51.1%. Domestic market share is based on estimated U.S. beer industry shipment volume using information provided by the Beer Institute and the U.S. Department of Commerce.
International volume consisting of Anheuser-Busch brands produced overseas by company-owned breweries and under license and contract brewing agreements, plus exports from the company'scompany’s U.S. breweries to markets around the world, increased 131%9% for the first quarter 2005, to 4.4 million
barrels. International beer volume in the first quarter 2005 includes 2.5
million barrels related to Harbin Brewery Group (acquired
13
in the third quarter 2004). Excluding Harbin, international beer volume
decreased 1.6%2006, driven primarily due to lower Budweiserby sales volume in China. Worldwide Anheuser-Busch brands volume is comprised of domestic volume and international volume and rose 6.6%5%, to 30.4 million barrels.
Equity partner brands volume, representing the company’s share of its foreign equity partners’ volume reported on a one-month lag, increased 48% for the first quarter 2005 versus 2004,of 2006, to 28.86.4 million barrels.
barrels due to the strong volume performance of Grupo Modelo
and the inclusion of Tsingtao volume. The company began accounting for Tsingtao on an equity basis in May 2005.
Total brands volume, which combines worldwide Anheuser-Busch brand volume with equity partner brands volume (representing the company's share
of its foreign equity partners' volume on a one-month lag basis) was 33.136.8 million barrels in the first quarter, 2005, up 1.73.7 million barrels, or 5.5%
over first quarter 2004. International equity partner brands volume declined
1.6% for the first quarter11%.
First Quarter 2006 Financial Results
Following is a summary and discussion of
2005 versus 2004, due to the loss of volume
from the sale of the company's equity investment in Compania Cervecerias
Unidas S.A. (CCU), partially offset by Modelo volume growth. Excluding CCU
volume from 2004, equity partner volume increased 275,000 barrels, or 6.8%
in the first quarter 2005.
FIRST QUARTER 2005 FINANCIAL RESULTS
- ------------------------------------
Keykey operating results for the first quarter
20052006 versus
2004 are
summarized below:
- ----------------------------------------------------------------------------------------------------------------------
($ in millions, except per share)
-----------------------------------------------------------------------
Change
First Quarter 2005 versus 2004
---------------------------------- -----------------------------------
2005 2004 $ %
---------------- ---------------- ---------------- -----------------
Gross Sales $4,085 $4,003 Up $82 Up 2.1%
Net Sales $3,564 $3,477 Up $87 Up 2.5%
Income Before Income Taxes $644 $754 Dn $110 Dn 14.5%
Equity Income, Net of Tax $106 $89 Up $17 Up 19.2%
Net Income $513 $550 Dn $37 Dn 6.7%
Diluted Earnings per Share $.65 $.67 Dn $.02 Dn 3.0%
- ----------------------------------------------------------------------------------------------------------------------
2005. | | | | | |
| $ in millions, except per share | First Quarter | | 2006 vs. 2005 | |
| | 2006 | | 2005 | | $ | | % | |
Gross Sales | $4,296 | | $4,085 | | Up $211 | | Up 5.2% | |
Net Sales | $3,756 | | $3,564 | | Up $192 | | Up 5.4% | |
Income Before Income Taxes | $615 | | $625 | | Dn $(10) | | Dn (1.6)% | |
Equity Income | $122 | | $106 | | Up $16 | | Up 15.6% | |
Net Income | $499 | | $500 | | Dn $(1) | | Dn (0.2)% | |
Diluted Earnings per Share | $.64 | | $.64 | | -- | | -- | |
Anheuser-Busch achievedreported gross sales of $4.1$4.3 billion during the first quarter 2005,2006, an increase of $82$211 million, or 2.1% over first quarter
2004 gross sales.5%. Net sales were $3.6$3.8 billion, an increase of $87$192 million, or 2.5% compared to the first quarter 2004.5%. The difference between gross and net sales in 20052006 reflects beer excise taxes of $521 million on sales of the
company's products.
14
$540 million.
The increases in both gross and net sales were primarily due to sales increases for domestic beer, international beer and packaging and entertainment
operations. Domestic beer segment net sales increased 4.5% on higher volume. International beer net sales increased 29%5.5% primarily due to the
Harbin acquisition. Commodity-based packagingstrong sales in China. Packaging operations net sales increased 15%13% due to higher aluminum can and recycling revenues attributable to higher aluminum
prices and entertainmentvolume. Entertainment segment sales increased 14%declined 2.5% due to higher
attendance primarily due to the Easter holiday occurring in the second quarter this year versus in the first quarter 2005,
admissions pricing and in-park spending. in 2005.
Domestic beer segment net sales
decreased 1.3% primarily due to lower beer sales volume partially offset by
higher revenue per barrel.
Domesticbarrel was essentially level in 2006 versus the first quarter 2005. However, revenue per barrel grew 1.6% in4.3% compared to the fourth quarter of
2005 due to the successful implementation of price increases and discount reductions on over half the company’s domestic volume during the first quarter 2005
versus the first quarter 2004, reflecting the implementation of two-phase
price increases in October 2004 and February 2005 on approximately
two-thirds of the company's domestic volume, partially offset by the
tactical pricing actions and unfavorable product mix from lower Bacardi
Silver and Michelob ULTRA sales volumes. Domestic revenuequarter. Revenue per barrel is calculated as net sales generated by the company'scompany’s domestic beer operations on barrels of beer sold, determined on a U.S. GAAP basis, divided by the total volume of beer shipped from the company'scompany’s breweries to U.S. wholesalers.
Cost of sales for the first quarter 20052006 was $2.2$2.4 billion, an increase of $154$187 million, or 7% compared to the first quarter 2004.8%. The increase in cost of sales is attributable to higher costs for all of the
company's major business segments, including higher plant operating and
transportation costs for domestic beer; higher costs associated with the
Harbin acquisition for international beer;higher beer volume and increased aluminum costs, higher
can plant operating costs and higher glass manufacturing costs for the
commodity-based packaging businesses;materials and higher park operating expenses in
entertainment operations.energy. Gross profit as a percentage of net sales was 37.5%35.6% for the first quarter, 2005, down 290180 basis points from 40.4% for the
first quarter 2004, primarily due to the decline in domestic beerincreased volume andbeing offset by increased beer production costs.
Marketing, distribution and administrative expenses were $616 million, a decrease of $4 million, or 0.6% for the first quarter. This decrease is due to lower corporate administrative expense, primarily from reduced personnel related costs, partially offset by slightly higher overall marketing costs.
Operating income was $722 million, an increase of $9 million, or 1% for the first quarter 2005 were $604 million, an increase of $22 million, or 3.7% compared
with first quarter 2004. The increase in this category for the first quarter
2005 is due to increased domestic marketing and selling costs, primarily for
the Bud Family, including the national
15
introduction of Budweiser Select, increased international beer marketing
costs, and higher distribution costs for company-owned beer wholesalers.
Operating income was $732 million, a decrease of $89 million, or
11% for the first quarter 2005 versus 2004.2006. Operating margin for the first
quarter 2005 decreased 30080 basis points, to 20.6%19.2% due primarily to reduced
domestic beer sales and higher operating costs.
Interest expense less interest income was $112.8$115 million for the first quarter 2005,2006, an increase of $12.2$2 million, or 12% compared1.5% due to slightly lower average outstanding debt offset by higher interest rates and lower interest income. Interest capitalized of $4 million in the first quarter 2004. The increase for 2005 is2006 was down $1 million due to higher average
outstanding debt balances compared to prior year. Interest capitalized of
$5.2 million for the first quarter 2005 was level with 2004.
lower qualifying capital spending.
Other income/expense, net reflects the impact of numerous items not directly related to the company'scompany’s operations. For the first quarter of 20052006 and 2004,2005, the company had other income of $19.5$4 million and $27.6$20 million, respectively. Other income for 2005 includes the $15.4 million pretax gain ($.024 per share) from the sale of the company'scompany’s equity interest in Port
Aventura. Other income for the first quarter 2004 includes the one-time
pretax gain of $19.5 million from the sale of commodity derivatives.Spanish theme park. For business segment reporting purposes, both gains arethe gain is reported as a corporate items. First quarter 2004 results also include a $19.1 million pretaxitem. Excluding this gain, ($.014 per share) related to the sale of two beer wholesaler partnerships,
which is reported in the domestic beer segment.
other income was essentially level.
Income before income taxes for the first quarter 20052006 was $644.3$615 million, a decrease of $110$10 million, or 14.5% versus first quarter 2004.
This decrease primarily reflects lower2%, due to slightly higher profits in domestic beer, international beer and packaging operations and lower corporate costs, offset by lower entertainment results due to the timing of the Easter holiday, slightly higher net interest expense and
lower one-time gains, partially offset by improved
entertainment segment results due primarily to the Easter holiday in the
first quarter 2005.gains. Domestic beer pretax profits declined 9%improved $1 million due to lowerhigher beer sales volume mostly offset by higher packaging materials, energy and plant operations costs and the incremental costs
to support the company's stepped-up marketing and sales efforts.operating costs. International beer pretax income was down 5%up $0.3 million primarily due to profit growth in Mexico and lower Budweiser volume in China andmarketing expense, largely offset by lower operating profits in China and the United Kingdom,
partially offset by
16
the inclusion of Harbin results. The company completed its acquisition of
Harbin and began consolidating Harbin results in the third quarter 2004.Kingdom. Packaging segment pretax profits were down 3% primarilyup $3 million due to higher materials cost for glass manufacturing operations.increased profits from can manufacturing. Entertainment segment pretax results improved 42%declined $11 million due to increased
attendance, admissions pricing and in-park spending, partially offset by
higher park operating expenses.
the timing of Easter, with the holiday occurring in the second quarter in 2006 versus the first quarter of 2005.
Equity income increased $17$16 million in the first quarter 2005
versus 2004, primarily2006, reflecting the benefit of Grupo Modelo volume and pricing growth and a lower Mexican income tax rate. Equity income foras well as the first quarterinclusion of 2004 includes the company's pro rata share of CCU earnings.Tsingtao equity earnings in 2006. The company sold
itsbegan applying equity stakeaccounting for Tsingtao in CCU in the fourth quarter 2004.
Anheuser-Busch'sMay 2005.
Anheuser-Busch’s effective tax rate was 36.8% in the first quarter
2005 versus 38.8% in the first quarter 2004, and includes2006 versus 36.9% in the impact offirst quarter 2005. The effective rate for 2005 was lower than typical, reflecting a deferred income taxes related totax benefit on the sale of the Spanish theme park and the
benefit from certain domestic manufacturing activities under the American
Jobs Creation Act.
park.
Net income of $512.8$499 million in the first quarter of 20052006 represented a decrease of $37$1.2 million, or 7% compared to 2004.0.2% versus the first quarter 2005. Diluted earnings per share were $.65, a decrease of 3% compared to the first quarter
2004.$.64, unchanged from prior year. Earnings per share benefited from the company'scompany’s repurchase of 9.96 million shares in the first quarter 2005 under the company'scompany’s on-going share repurchase program. Excluding
As shown in the following table, excluding the one-time
gainsgain from the sale of the Spanish theme park in 2005,
and fromwhich the
sale of commodity hedges in 2004,
which better reflects underlying operations,company believes provides a more meaningful comparison between years, income before income taxes, net income and diluted earnings per share
would have been $.63, or a decrease of 4.5%increased 1%,
as shown below.
17
Income Provision
Before for
Income Income Net Earnings
Taxes Taxes Income Per Share
------------ --------------- ------------ -------------
First Quarter 2005
- ------------------
Reported $644.3 $(237.4) $512.8 $.65
Gain on Sale of Spanish Theme Park (15.4) (3.5) (18.9) (.02)
------------ --------------- ------------ -------------
Excluding One-Time Gain $628.9 $(240.9) $493.9 $.63
============ =============== ============ =============
First Quarter 2004
- ------------------
Reported $753.6 $(292.6) $549.9 $.67
Commodity Hedge Gain (19.5) 7.4 (12.1) (.015)
------------ --------------- ------------ -------------
Excluding One-Time Gain $734.1 $(285.2) $537.8 $.66
============ =============== ============ =============
Earnings Per Share Decrease
- ---------------------------
Reported (6.7)% (3.0)%
============ =============
Excluding One-Time Gains (8.2)% (4.5)%
============ =============
LIQUIDITY AND FINANCIAL CONDITION
- ---------------------------------
4% and 5%, respectively, while the effective income tax rate increased 40 basis points.
| | | | | | | | | | | | | | | | |
Reconciliation of Comparative First Quarter Results | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | Income | | | | | | | | | | | | |
| | | | Before | | | Provision | | | | | | | | | |
| | | | Income | | | for Income | | | Net | | | Earnings | | | Effective |
| | | | Taxes | | | Taxes | | | Income | | | Per Share | | | Tax Rate |
| | 2006 | | | | | | | | | | | | | | |
| | Reported | | $615.4 | | | ($238.6 | ) | | $499.2 | | | $.64 | | | 38.8% |
| | | | | | | | | | | | | | | | |
| | 2005 | | | | | | | | | | | | | | |
| | As Reported | | $644.3 | | | ($237.4 | ) | | $512.8 | | | $.653 | | | |
| | FAS 123R Impact | | (19.0 | ) | | 6.6 | | | (12.4 | ) | | (.016 | ) | | |
| | Including FAS 123R | | 625.3 | | | (230.8 | ) | | 500.4 | | | .637 | | | 36.9% |
| | Gain on Sale of Spanish Theme Park | (15.4 | ) | | (3.5 | ) | | (18.9 | ) | | (.024 | ) | | |
| | Excluding One-Time Gain | | $609.9 | | | ($234.3 | ) | | $481.5 | | | $.61 | | | 38.4% |
| | | | | | | | | | | | | | | | |
| | Percentage Change - 2006 vs. 2005 | | | | | | | | | | | | | | |
| | Including FAS 123R | | -1.6% | | | | | | -0.2% | | | - | | | 1.9% |
| | Excluding One-Time Gain | | 0.9% | | | | | | 3.7% | | | 4.9% | | | 0.4% |
Liquidity and Financial Condition
Cash at March 31, 20052006 was $152$213 million, a decrease of $76$13 million from the December 31, 20042005 balance. See the consolidated statement of cash flows for detailed information. The primary source of the company'scompany’s cash flow is cash generated by operations. Principal uses of cash are capital expenditures, share repurchase, dividends and business investments. The
company generated operating cash flow before the change in working capital
of $652 million for the first quarter 2005. See the consolidated statement
of cash flows for detailed information. Cash generated by the company'scompany’s business segments is projected to exceed funding requirements for each segment'ssegment’s anticipated capital spending. The net issuance of debt provides an additional source of cash as necessary for share repurchase, dividends and business investments. The nature, extent and timing of debt financing variesvary depending on the company'scompany’s evaluation of existing market conditions and other factors.
The company'scompany generated operating cash flow before the change in working capital of $441 million for the first quarter 2006, a decline of $204 million due to the discretionary contribution of $214 million in January 2006 to the company’s defined benefit pension
plans. This contribution is in addition to the company’s required pension funding for 2006. Full year pension contributions for 2006 are projected to be $270 million.
There have been only normal and recurring changes in the company’s cash commitments since December 31, 2005.
Capital expenditures during the first quarter 2006 were $159 million, compared to $277 million for the first quarter 2005. Full year 2006 capital expenditures are expected to be approximately $900 million.
At its April 2006 meeting, the Board of Directors declared a regular quarterly dividend of $.27 per share on outstanding shares of the company’s common stock, payable June 9, 2006, to shareholders of record May 9, 2006. The dividend rate for the comparable 2005 period was $.245 per share.
The company’s debt balance increased
$307a net $155 million since December 31,
2004,2005, compared to
ana net increase of
$247$307 million during the first quarter
2004.2005. The details of the quarterly changes in debt are outlined below.
18
Increases
- ----------------------------------------------------------------------------------------------------------------------
Amount Interest Rate
Description (Millions) (Fixed Unless Noted)
- ----------------------------------------------------------------------------------------------------------------------
First Three Months of 2005
- --------------------------
Commercial Paper $278.3 2.49% Wtd. avg., floating
United Kingdom Brewery Capital Lease Obligation 53.7 6.25%
Other 0.4 Various
----------------
$332.4
================
First Three Months of 2004
- --------------------------
U.S. Dollar Notes $300.0 5.0%
Commercial Paper 192.0 1.02% Wtd. avg., floating
Industrial Revenue Bonds 1.0 5.875%
Issuance Discounts (0.8) N/A
Other, net 8.4 Various
----------------
$500.6
- --------------------------------------------------------------------================----------------------------------
Reductions
- ----------------------------------------------------------------------------------------------------------------------
Amount Interest Rate
Description (Millions) (Fixed Unless Noted)
- ----------------------------------------------------------------------------------------------------------------------
First Three Months of 2005
- --------------------------
U.S. Dollar Notes $0.4 5.35%
Chinese Renminbi-Denominated Bank Loans 21.6 5.41% Wtd. avg.
Other 3.4 Various
-----------------
$25.4
=================
First Three Months of 2004
- --------------------------
Euro Notes $200.0 6.5%
ESOP Guarantee (Expired March 31, 2004) 46.3 8.25%
Other, net 7.4 Various
-----------------
$253.7
- -------------------------------------------------------------------=================----------------------------------
Increases in debt (in millions) | | | | |
Description | Amount | | | Interest Rate (Fixed Unless Noted) |
First Three Months of 2006 | | | | |
U.S. dollar debentures | $300.0 | | | 5.75% |
Issuance discounts | (0.7) | | | N/A |
Other, net | 1.7 | | | Various |
| | $301.0 | | | |
First Three Months of 2005 | | | | |
Commercial paper | $278.3 | | | 2.49% Wtd. avg., floating |
United Kingdom brewery lease | 52.9 | | | 6.25% |
Other, net | 1.2 | | | Various |
| | $332.4 | | | |
Reductions of debt (in millions) | | | | |
| Description | Amount | | | Interest Rate (Fixed Unless Noted) |
First Three Months of 2006 | | | | |
Commercial paper | $136.9 | | | 4.53% Wtd. avg., floating |
Chinese Renminbi-denominated bank loans | 5.8 | | | 5.4% Wtd. avg. |
Other, net | 3.0 | | | Various |
| | $145.7 | | | |
First Three Months of 2005 | | | | |
U.S. dollar notes | $0.4 | | | 5.35% |
Chinese Renminbi-denominated bank loans | 21.6 | | | 5.41% Wtd. avg. |
Other | 3.4 | | | Various |
| | $25.4 | | | |
The company has $1.75$1.35 billion of debt available for issuance through existing SEC shelf registrations.
19
The company'scompany’s commercial paper borrowings of $1.4 billion$966 million at March 31, 20052006 were classified as long-term, since commercial paper is maintained on a long-term basis with on-going support provided by the company'scompany’s $2 billion revolving credit agreement. Capital expenditures during the firstThe quarter 2005 were $277
million, compared to $199 million for the first quarter 2004. Full year 2005
capital expenditures are expected in the range of $1 billion to $1.1
billion.
At its April 2005 meeting, the Board of Directors declared a
regular quarterly dividend of $.245 per share on outstanding shares of the
company's common stock, payable June 9, 2005, to shareholders of record May
9, 2005. end commercial paper interest rate was 4.9%.
Item 3. Disclosures About Market Risks
The dividend rate for the comparable 2004 period was $.22 per
share.
There have been only normal and recurring changes in the company's
cash commitments since December 31, 2004.
Return on capital employed for the 12 months ended March 31, 2005
was 17.9%, compared to 18.8% for the 12 months ended March 31, 2004. Return
on capital employed is computed as 12 months of net income before after-tax
net interest (interest expense less interest capitalized) divided by average
net investment. Net investment is defined as total assets less non-debt
current liabilities. For the 12 months ended March 31, 2005, after-tax net
interest expense was $259 million, calculated as pretax net interest expense
of $418 million less income taxes applied using a 38% tax rate. For the 12
months ended March 31, 2004, after-tax net interest expense was $235
million, calculated as pretax net interest expense of $379 less income taxes
applied using a 38% tax rate.
ITEM 3. RISK MANAGEMENT
The company'scompany’s derivatives holdings fluctuate during the year based on normal and recurring changes in purchasing and production activity. The company has experienced slightly higher derivatives use over the last few years as raw material inputs have increased in conjunction with increases in domestic beer volume. Since December 31, 2004,2005, there have been no significant changes in the company'scompany’s interest rate, foreign currency or commodity exposures. There have been no changes in the 20
types of derivative instruments used to hedge the company'scompany’s exposures. Underlying commodity market conditions have been trending towards higher prices.
ITEM
Item 4. CONTROLS AND PROCEDURES
Controls and Procedures
It is the responsibility of the chief executive officer and chief financial officer to ensure the company maintains disclosure controls and procedures designed to provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is identified and communicated to senior management on a timely basis. The company'scompany’s disclosure controls and procedures include mandatory communication of material subsidiary events, automated accounting processing and reporting, management review of monthly and quarterly results, periodic subsidiary business reviews, an established system of internal controls and rotating internal control reviews by the company'scompany’s internal auditors.
The chief executive officer and chief financial officer evaluated the company'scompany’s disclosure controls and procedures as of the end of the quarter ended March 31, 20052006 and have concluded that they are effective as of March 31, 20052006 in providing reasonable assurance that such information is identified and communicated on a timely basis. Additionally, there were no changes in the company'scompany’s internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company'scompany’s internal control over financial reporting.
21
PART II - OTHER INFORMATION
ITEM
Item 1. LEGAL PROCEEDINGSLegal Proceedings
In 2005, the Company was served with a complaint brought by two individuals seeking to bring a class action on behalf of all California residents who, while they were under 21 years of age, purchased alcohol beverages manufactured by the Company and another defendant during the last four years. The company is a party to a lawsuitsuit sought disgorgement of unspecified profits earned by the Company in the past and other unspecified damages and equitable relief. By order dated January 28, 2005, the California state court granted the defendants judgment on the pleadings and dismissed the case in its entirety. The plaintiffs in that action have appealed.
Additionally, the Company has been served with the Maris Distributing
Company. Information regarding this lawsuit is containedsimilar complaints in Note 10,
"Contingencies," on page 10.
A law firm has named the company (and many other brewers and
distillers) as a defendant in very similarputative class action lawsuits in Florida,
Michigan, New Jersey, Ohio, Wisconsin and West Virginia state courts.and Wisconsin. In these suits, which name a large number of other brewers and distillers, the parents of illegal underage drinkers are suing to recover the sums that their offspring purportedly spent illegally buying alcohol from persons or entities other than the defendants. EachThe claims asserted against the Company vary depending on the suit, allegesbut include negligence, unjust enrichment, violation of the state'sstate’s Sales PracticesPractice Act or other statutory provisions, nuisance, fraudulent concealment and civil conspiracy. The Wisconsin suit also contains public nuisance and
negligence per se counts.filed in Michigan includes a claim under the Michigan Consumer Protection Act. Each suit seeks money damages, punitive damages and injunctive and equitable relief, including so-called disgorgement of profits allegedly attributable to illegal underage drinking. The companyCompany removed the Ohio case to federal court in the Northern District of Ohio in June 2004.2005, removed the West Virginia case to federal court in the Northern District of West Virginia in May 2005 and removed the Michigan case to federal court in the Eastern District of Michigan in July 2005. The companyCompany filed motions to dismiss the Ohio and Wisconsin cases, and the Ohio federal court and the Wisconsin state court dismissed the entire cases with prejudice. The plaintiffs in the Ohio case have appealed the dismissal to the federal court of appeals. Motions to dismiss are pending in Michigan and West Virginia. Similar actions were filed by the same law firm in New York and Florida, but the Company was not served in either case, and the Florida case has been voluntarily
dismissed by the plaintiffs. The Company believes that it has strong legal and factual defenses to these class actions and intends to defend itself vigorously.
ITEM
Item 2. CHANGES IN SECURITIES
Unregistered Sales of Equity Securities and Use of Proceeds
On January 4, 2005,3, 2006, the company issued out of treasury shares a total of 3,7954,425 shares of the company'sCompany’s common stock ($1 par value) to four members of the Board of Directors of the company in lieu of cash for all or a portion of those members' 2005members’ 2006 annual retainer fee pursuant to the company'scompany’s Non-Employee Director Elective Stock Acquisition Plan. These transactions were exempt from registration and prospectus delivery requirements of the Securities Act of 1933 pursuant to Section 4(2) of the Act.
22
Following are the
company'sCompany’s monthly common stock purchases during the first quarter
20052006 (in millions, except per share):
Shares Avg. Price
---------------- ----------------
Shares Remaining Authorized Under Disclosed
Repurchase Programs at January 1, 2005 44.3
----------------
Share Repurchases
- -----------------
January 5.5 $49.34
================
February 3.1 $48.39
================
March 1.3 $47.50
---------------- ================
Total 9.9 $48.81
---------------- ================
Shares Remaining Authorized Under Disclosed
Repurchase Programs at March 31, 2005 34.4
================
| | Shares | | | Avg. Price | |
Shares Remaining Authorized Under Disclosed Repurchase Programs at December 31, 2005 | 31.4 | | | | |
| | | | | | |
Share Repurchases | | | | | |
January | 0.4 | | | $43.27 | |
February | 1.5 | | | $41.13 | |
March | 4.0 | | | $42.59 | |
Total | 5.9 | | | $42.27 | |
Shares Remaining Authorized Under Disclosed Repurchase Programs at March 31, 2006 | 25.5 | | | | |
All shares are repurchased under Board of Directors authorization. The Board authorized the current program to repurchase 100 million shares in March 2003. There is no prescribed termination date for this program. The numbers of shares shown include shares delivered to the company to exercise stock options.
ITEM
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Submission of Matters to a Vote of Security Holders
At the annual meetingAnnual Meeting of shareholdersStockholders of the companyCompany held April 27,
2005,26, 2006, the following matters were voted on:
1. Election of John E. Jacob, Charles F. Knight, Joyce M. Roche,
Henry Hugh Shelton and Patrick T. Stokes
| 1. | Election of James J. Forese, Vernon R. Loucks, Jr., Vilma S. Martinez, William Porter Payne and Edward E. Whitacre, Jr. to serve as directors of the company for a term of three years. |
| | For | | Withheld |
| James J. Forese | 659,018,017 | | 17,406,326 |
| Vernon R. Loucks, Jr. | 656,874,140 | | 19,550,202 |
| Vilma S. Martinez | 644,892,499 | | 31,531,843 |
| William Porter Payne | 657,959,181 | | 18,465,161 |
| Edward E. Whitacre, Jr. | 642,932,011 | | 33,492,331 |
| 2. | Amendment of the Restated Certificate of Incorporation |
| For | 662,560,880 |
| Against | 7,769,223 |
| Abstain | 6,094,238 |
| Non-Votes | 0 |
| 3. | Approve the 2006 Restricted Plan for Non-Employee Directors |
| For | 506,974,898 |
| Against | 56,572,453 |
| Abstain | 8,611,114 |
| Non-Votes | 104,265,878 |
| 4. | Approve the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for 2006 |
| For | 663,555,033 |
| Against | 7,379,251 |
| Abstain | 5,490,059 |
| Non-Votes | 0 |
Item 5. Other Information
At the Annual Meeting of Stockholders of the company for aCompany held on April 26, 2006, the stockholders approved an amendment to Article Fifth of the Company’s Restated Certificate of Incorporation to eliminate the classified board structure. The amendment results in all directors elected at the 2007 Annual Meeting of Stockholders and thereafter being elected to one-year terms, but would not shorten the existing term of three years.
For Withheld
--------------- -----------------
John E. Jacob 674,694,110 21,940,581
Charles F. Knight 657,363,344 39,271,347
Joyce M. Roche 682,240,825 14,393,866
Henry Hugh Shelton 682,390,191 14,244,500
Patrick T. Stokes 658,011,593 38,623,098
23
2. Approveany director elected prior to the Officer Bonus Plan,2007 Annual Meeting of Stockholders. The Certificate of Amendment of Restated Certificate of Incorporation is attached as amended
For 640,914,111
Against 40,503,311
Abstain 15,216,567
Non-Votes 0
3. ApproveExhibit 3.1 to this Form 10-Q.
Also at the 1998 IncentiveAnnual Meeting of Stockholders held on April 26, 2006, the stockholders approved the 2006 Restricted Stock Plan as amended.
For 470,263,112
Against 119,246,830
Abstain 14,885,146
Non-Votes 92,239,603
4. Approvefor Non-Employee Directors which is referenced in Exhibit 10.24 to this Form 10-Q. This plan provides for the appointmentautomatic award of PricewaterhouseCoopers LLP as
independent registered public accounting firm500 shares of restricted company stock at the time of each Annual Meeting of Stockholders for 2005.
For 676,326,618
Against 13,959,693
Abstain 6,348,380
Non-Votes 0
ITEM 6. EXHIBITS
12 Ratio of Earnings to Fixed Charges
31.1 Certification of Chief Executive Officer
requiredeach non-employee director who is first elected or re-elected by Rule 13a-14(a) or 15d-14(a) under
the Exchange Act
31.2 Certification of Chief Financial Officer
required by Rule 13a-14(a) or 15d-14(a) understockholders and for each non-employee director and each advisory director who continues in office. The awards are effective on the Exchange Act
32.1 Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906date of the Sarbanes-Oxley ActAnnual Meeting of 2002.
32.2 Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906Stockholders, beginning with the April 26, 2006 meeting. The forms of the Sarbanes-Oxley ActNotice of 2002.
24
Award and Information Memorandum issued under this plan are attached as Exhibits 10.25 and 10.26 to this Form 10-Q.
Item 6.Exhibits
Exhibit | | Description |
3.1 | | Certificate of Amendment |
10.24 | | Anheuser-Busch Companies, Inc. 2006 Restricted Stock Plan for Non-Employee Directors (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 26, 2006). |
10.25 | | Form of Notice of Award and Information Memorandum under Anheuser-Busch Companies, Inc. 2006 Restricted Plan for Non-Employee Directors. |
10.26 | | Form of Notice of Award and Information Memorandum under Anheuser-Busch Companies, Inc. 2006 Restricted Stock Plan for Non-Employee Director who is a citizen of Mexico. |
12 | | Ratio of Earnings to Fixed Charges |
31.1 | | Certification of Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) under the Exchange Act |
31.2 | | Certification of Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a) under the Exchange Act |
32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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)
ANHEUSER-BUSCH COMPANIES, INC. (Registrant) |
/s/W. Randolph Baker |
W. Randolph Baker Vice President and Chief Financial Officer (Chief Financial Officer) April 28, 2006 |
|
|
|
| /s/John F. Kelly |
John F. Kelly Vice President and Controller (Chief Accounting Officer) April 28, 2006 |
29 2005
/s/ John F. Kelly
--------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
April 29, 2005
25