UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2006~~2007

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROMTO

COMMISSION FILE NUMBER: 1-7823

ANHEUSER-BUSCH COMPANIES, INC.

(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 of principal executive offices) (Zip Code)~~

(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 the filing requirements for the past 90 days.

Yes x

No o

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 o

Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o

No x

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 ~~- 768,819,921~~– 749,568,124 shares as of ~~September~~June 30, ~~2006.~~2007.

Anheuser-Busch Companies, Inc. and Subsidiaries

Consolidated Balance Sheet (Unaudited)

(in millions, except per share)
Sept. 30,
2006

Dec. 31,
2005

Assets
Current Assets:
Cash $191.2 $225.8
Accounts receivable 903.4 681.4
Inventories 655.8 654.5
Other current assets 197.6 197.0
Total current assets 1,948.0 1,758.7
Investments in affiliated companies 3,525.7 3,448.2
Plant and equipment, net 8,836.0 9,041.6
Intangible assets, including goodwill of $1,061.5 and $1,034.5 1,349.2 1,232.6
Other assets 1,218.9 1,073.9
Total assets $16,877.8 $16,555.0

Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $1,314.9 $1,249.5
Accrued salaries, wages and benefits 313.8 250.9
Accrued taxes 263.2 156.7
Accrued interest 118.4 123.7
Other current liabilities 235.1 201.8
Total current liabilities 2,245.4 1,982.6
Postretirement benefits 441.1 444.3
Debt 7,392.5 7,972.1
Deferred income taxes 1,317.0 1,345.9
Other long-term liabilities 1,137.6 1,130.3
Shareholders Equity:
Common stock, $1.00 par, authorized 1.6 billion shares 1,473.0 1,468.6
Capital in excess of par value 2,870.3 2,685.9
Retained earnings 16,827.5 15,698.0
Treasury stock, at cost (15,838.5 ) (15,258.9 )
Accumulated non-owner changes in equity (988.1 ) (913.8 )
Total Shareholders Equity 4,344.2 3,679.8
Commitments and contingencies - -
Total Liabilities and Shareholders Equity $16,877.8 $16,555.0

In millions, except per share	June 30, 2007			Dec. 31, 2006
Assets
Current Assets:
Cash		$303.1			$219.2
Accounts receivable		1,046.7			720.2
Inventories		699.6			694.9
Other current assets		203.6			195.2
Total current assets		2,253.0			1,829.5
Investments in affiliated companies		3,721.2			3,680.3
Plant and equipment, net		8,830.2			8,916.1
Intangible assets, including goodwill of $1,094.4 and $1,077.8		1,451.3			1,367.2
Other assets		610.4			584.1
Total Assets		$16,866.1			$16,377.2


Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable		$1,400.8			$1,426.3
Accrued salaries, wages and benefits		301.2			342.8
Accrued taxes		309.6			133.9
Accrued interest		131.6			124.2
Other current liabilities		282.0			218.9
Total current liabilities		2,425.2			2,246.1
Retirement benefits		1,153.4			1,191.5
Debt		7,953.9			7,653.5
Deferred income taxes		1,187.0			1,194.5
Other long-term liabilities		238.0			152.9
Shareholders Equity:
Common stock, $1.00 par value, authorized 1.6 billion shares		1,479.7			1,473.7
Capital in excess of par value		3,178.4			2,962.5
Retained earnings		17,487.4			16,741.0
Treasury stock, at cost		(17,138.9	)		(16,007.7	)
Accumulated non-owner changes in equity		(1,098.0	)		(1,230.8	)
Total Shareholders Equity		3,908.6			3,938.7
Commitments and contingencies		--			--
Total Liabilities and Shareholders Equity		$16,866.1			$16,377.2

See the accompanying footnotes on pages 5 to ~~14.~~12.

Anheuser-Busch Companies, Inc. and Subsidiaries

Consolidated Statement of Income (Unaudited)

(in millions, except per share)
Third Quarter
Ended Sept. 30

Nine Months
Ended Sept. 30

2006 2005 2006 2005
Gross sales $4,876.5 $4,689.4 $14,026.8 $13,371.8
Excise taxes (595.8 ) (600.9 ) (1,734.5 ) (1,701.5 )
Net sales 4,280.7 4,088.5 12,292.3 11,670.3
Cost of sales (2,644.6 ) (2,517.6 ) (7,723.0 ) (7,228.4 )
Gross profit 1,636.1 1,570.9 4,569.3 4,441.9
Marketing, distribution and
administrative expenses (738.2 ) (723.6 ) (2,068.2 ) (2,055.1 )
Litigation settlement - (105.0 ) - (105.0 )
Operating income 897.9 742.3 2,501.1 2,281.8
Interest expense (111.3 ) (112.5 ) (341.6 ) (343.2 )
Interest capitalized 4.4 4.1 13.4 14.8
Interest income 0.6 0.2 1.4 2.4
Other income/(expense), net 0.9 (9.8 ) (2.2 ) 10.9
Income before income taxes 792.5 624.3 2,172.1 1,966.7
Provision for income taxes (311.5 ) (266.6 ) (846.9 ) (758.1 )
Equity income, net of tax 156.5 147.1 449.3 390.2
Net income
$637.5
$504.8 $1,774.5 $1,598.8
Basic earnings per share $.83 $.65 $2.30 $2.06
Diluted earnings per share $.82 $.65 $2.28 $2.04

~~See the accompanying footnotes on pages 5 to 14.~~

~~Anheuser-Busch Companies, Inc. and Subsidiaries~~

~~Consolidated Statement of Cash Flows (Unaudited)~~

(in millions) Nine Months
Ended Sept. 30
2006 2005
Cash flow from operating activities:
Net income $1,774.5 $1,598.8
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 740.3 732.3
Decrease in deferred income taxes (38.8 ) (73.3 )
Stock compensation expense 52.1 56.9
Undistributed earnings of affiliated companies (202.2 ) (180.2 )
Gain on sale of business -   (15.4 )
Other, net (131.2 ) 125.6
Operating cash flow before change in working capital 2,194.7 2,244.7
Decrease / (Increase) in working capital 30.8 (98.4 )
Cash provided by operating activities 2,225.5 2,146.3

Cash flow from investing activities:
Capital expenditures (486.5 ) (823.1 )
Acquisitions (82.3 ) -
Proceeds from sale of business -   48.3
Cash used for investing activities (568.8 ) (774.8 )

Cash flow from financing activities:
Increase in debt 317.3 -
Decrease in debt (902.8 ) (320.2 )
Dividends paid to shareholders (645.0 ) (591.1 )
Acquisition of treasury stock (580.2 ) (620.4 )
Shares issued under stock plans 119.4 124.0
Cash used for financing activities (1,691.3 ) (1,407.7 )
Net decrease in cash during the period (34.6 ) (36.2 )
Cash, beginning of period 225.8 228.1
Cash, end of period $191.2 $191.9

	Second Quarter Ended June 30,						Six Months Ended June 30,
In millions, except per share	2007			2006			2007			2006
Gross sales		$5,126.2			$4,854.0			$9,531.8			$9,150.3
Excise taxes		(610.8	)		(598.0	)		(1,158.0	)		(1,138.7	)
Net Sales		4,515.4			4,256.0			8,373.8			8,011.6
Cost of sales		(2,857.9	)		(2,660.7	)		(5,332.6	)		(5,078.4	)
Gross profit		1,657.5			1,595.3			3,041.2			2,933.2
Marketing, distribution and administrative expenses		(756.2	)		(714.3	)		(1,421.9	)		(1,330.0	)
Operating income		901.3			881.0			1,619.3			1,603.2
Interest expense		(119.7	)		(115.2	)		(239.6	)		(230.3	)
Interest capitalized		4.2			5.0			7.7			9.0
Interest income		1.5			0.2			2.0			0.8
Other income/(expense), net		9.6			(6.8	)		3.7			(3.1	)
Income before income taxes		796.9			764.2			1,393.1			1,379.6
Provision for income taxes		(314.6	)		(296.8	)		(552.7	)		(535.4	)
Equity income, net of tax		194.7			170.4			354.1			292.8
Net income		$677.0			$637.8			$1,194.5			$1,137.0

Basic earnings per share		$.90			$.83			$1.57			$1.47
Diluted earnings per share		$.88			$.82			$1.55			$1.46


Weighted average shares outstanding
Basic		754.8			769.8			759.2			773.0
Diluted		765.1			777.0			770.3			778.8

See the accompanying footnotes on pages 5 to ~~14.~~12.

Anheuser-Busch Companies, Inc. and Subsidiaries

Consolidated Statement of Cash Flows (Unaudited)

	Six Months
In millions	Ended June 30,
	2007			2006
Cash flow from operating activities:
Net income		$1,194.5			$1,137.0
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		494.2			490.0
Decrease in deferred income taxes		(39.2	)		(34.7	)
Stock-based compensation expense		31.3			35.1
Undistributed earnings of affiliated companies		49.0			(52.8	)
Gain on sale of business		(16.0	)		--
Other, net		16.8			(139.3	)
Operating cash flow before the change in working capital		1,730.6			1,435.3
Increase in working capital		(117.5	)		(55.8	)
Cash provided by operating activities		1,613.1			1,379.5

Cash flow from investing activities:
Capital expenditures		(346.2	)		(318.1	)
Acquisitions		(84.6	)		(82.3	)
Proceeds from sale of business		16.2			--
Cash used for investing activities		(414.6	)		(400.4	)

Cash flow from financing activities:
Increase in debt		333.2			300.9
Decrease in debt		(71.5	)		(437.9	)
Dividends paid to shareholders		(448.1	)		(417.8	)
Acquisition of treasury stock		(1,131.4	)		(467.8	)
Shares issued under stock plans		203.2			40.2
Cash used for financing activities		(1,114.6	)		(982.4	)
Net increase / (decrease) in cash during the period		83.9			(3.3	)
Cash, beginning of period		219.2			225.8
Cash, end of period		$303.1			$222.5

See the accompanying footnotes on pages 5 to 12.

Anheuser-Busch Companies, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

1.	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’s annual report on Form 10-K for the year ended December 31, ~~2005.~~2006.

2.	2. Business Segments Information

Comparative business ~~segment~~segments information for the ~~third~~second quarter and ~~nine~~first six months ended ~~September~~June 30 (in millions):

2^nd Quarter								U.S. Beer	International Beer	Packaging	Entertainment	Corporate & Elims	Consolidated
2007
Gross Sales								$3,749.1	349.3	744.9	400.6	(117.7)	$5,126.2
Net Sales:
- Intersegment								$0.9	0.2	249.7	-	(250.8)	$ -
- External								$3,208.1	278.4	495.2	400.6	133.1	$4,515.4
Income Before Income Taxes								$795.8	28.6	55.0	113.9	(196.4)	$796.9
Equity Income								$1.5	193.2	-			$194.7
Net Income								$494.9	210.9	34.1	70.6	(133.5)	$677.0

	Domestic	Int'l			Corporate
Third Quarter	Beer	Beer	Packaging	Entertainment	and Elims		Consolidated
2006
Gross Sales	$3,594.2	319.1	641.8	444.4	(123.0	)	$4,876.5	$3,528.5	339.9	714.7	369.4	(98.5)	$4,854.0
Net Sales:
- Intersegment	$0.7	-	240.4	-	(241.1	)	$0.0	$0.8	-	243.3	-	(244.1)	$ -
- External	$3,054.9	262.0	401.4	444.4	118.0		$4,280.7	$3,001.8	267.7	471.4	369.4	145.7	$4,256.0
Income Before
Income Taxes	$789.7	27.3	39.0	157.3	(220.8	)	$792.5
Income Before Income Taxes								$783.3	26.0	45.2	108.5	(198.8)	$764.2
Equity Income	$1.4	155.1	-	-	-		$156.5	$1.1	169.3	-			$170.4
Net Income	$491.0	172.0	24.2	97.5	(147.2	)	$637.5	$486.8	185.4	28.0	67.3	(129.7)	$637.8

2005
Gross Sales	$3,475.2	318.9	616.1	408.4	(129.2	)	$4,689.4
Net Sales:
- Intersegment	$0.7	-	238.6	-	(239.3	)	$0.0
- External	$2,940.2	252.3	377.5	408.4	110.1		$4,088.5
Income Before
Income Taxes	$738.8	22.3	40.3	143.5	(320.6	)	$624.3
Equity Income	$0.0	147.1	-	-	-		$147.1
Net Income	$458.0	161.0	24.9	89.0	(228.1	)	$504.8

First Six Months								U.S. Beer	International Beer	Packaging	Entertainment	Corporate & Elims	Consolidated
2007
Gross Sales								$7,212.6	628.8	1,349.4	585.6	(244.6)	$9,531.8
Net Sales:
- Intersegment								$1.7	0.5	481.7	-	(483.9)	$-
- External								$6,167.5	513.7	867.7	585.6	239.3	$8,373.8
Income Before Income Taxes								$1,557.9	46.2	99.5	95.4	(405.9)	$1,393.1
Equity Income								$1.6	352.5	-			$354.1
Net Income								$967.5	381.1	61.7	59.1	(274.9)	$1,194.5

	Domestic	Int'l			Corporate
Nine Months	Beer	Beer	Packaging	Entertainment	and Elims		Consolidated
2006
Gross Sales	$10,480.4	916.1	1,985.9	984.5	(340.1	)	$14,026.8	$6,886.2	597.0	1,344.1	540.1	(217.1)	$9,150.3
Net Sales:
- Intersegment	$2.2	-	709.6	-	(711.8	)	$0.0	$1.5	-	469.2	-	(470.7)	$ -
- External	$8,913.2	746.6	1,276.3	984.5	371.7		$12,292.3	$5,858.3	484.6	874.9	540.1	253.7	$8,011.6
Income Before
Income Taxes	$2,366.6	75.4	122.9	248.2	(641.0	)	$2,172.1
Income Before Income Taxes								$1,557.5	48.1	83.9	90.9	(400.8)	$1,379.6
Equity Income	$3.1	446.2	-	-	-		$449.3	$1.7	291.1	-			$292.8
Net Income	$1,470.4	492.9	76.2	153.9	(418.9	)	$1,774.5	$967.4	320.9	52.0	56.4	(259.7)	$1,137.0

2005
Gross Sales	$10,121.0	864.0	1,831.5	904.4	(349.1	)	$13,371.8
Net Sales:
- Intersegment	$2.1	-	674.7	-	(676.8	)	$0.0
- External	$8,587.3	694.1	1,156.8	904.4	327.7		$11,670.3
Income Before
Income Taxes	$2,293.4	70.1	120.4	215.1	(732.3	)	$1,966.7
Equity Income	$0.0	390.2	-	-	-		$390.2
Net Income	$1,421.9	433.7	74.6	133.4	(464.8	)	$1,598.8

3.	In 2007, the company changed reporting responsibility for certain administrative and technology support costs from Corporate to the U.S. beer segment. 2006 segment results have been updated to conform to this reporting convention. 3. Stock Compensation

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. Effective in September 2006, the grant~~stock at a price ~~for stock options is the closing market price per~~equal to the New York Stock Exchange ~~Composite Tape~~closing composite tape on the date the ~~options are~~option is granted. ~~Previously, stock options were granted with an exercise price equal to the average of the high and low market prices on the effective date of the grant.~~ Options generally vest over three years and have a maximum term of 10 years. At ~~September~~June 30, ~~2006,~~2007, existing stock plans authorized issuance of ~~116~~140 million shares of common stock. The company ~~issues~~has the choice of issuing either new shares or from treasury stock when options are exercised under employee stock compensation 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 nine months of 2006 (options in millions). Options granted in 2006 had a grant date fair value of $9.39 each and were expensed when awarded.

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 0.1 $43.65
Exercised (4.1) $27.03
Cancelled (0.7) $48.67
Balance, September 30, 2006 91.8 $45.78 67.4 $45.10

~~The following table provides additional information regarding options outstanding and options that were exercisable as of September 30, 2006 (options and in-the-money value 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 7.0 1.8 years $27.31 $141.4 7.0 $27.31 $141.4
$30-39 7.4 3.0 years $37.84 70.5 7.4 $37.84 70.5
$40-49 49.4 5.9 years $46.48 99.4 38.2 $47.26 57.7
$50-53 28.0 7.4 years $51.29 -- 14.8 $51.59 --
$20-53 91.8 5.8 years $45.78 $311.3 67.4 $45.10 $269.6

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 purposes, stock compensation expense is included in cost of sales and 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 Black-Scholes pricing model was used 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 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%

~~The following illustrates the impact of stock option activity on earnings and cash flows for the third quarter and nine months of 2006 compared to 2005 (in millions, except per share).~~ Unrecognized ~~pretax~~ stock compensation ~~cost~~expense as of ~~September~~June 30, ~~2006 was $75~~2007 totaled $87 million, which ~~is expected to~~will be recognized over a weighted average ~~life~~period of approximately 1.5 years.

Third Quarter

Nine Months
2006 2005 2006 2005
Pretax stock compensation expense $17.1 $19.0 $52.1 $56.9
After-tax stock compensation expense $11.9 $13.4 $36.4 $39.2
Diluted earnings per share impact $.015 $.017 $.047 $.050
Cash proceeds from stock option exercises $62.0 $13.2 $97.3 $100.7
In-the-money value of stock options exercised $57.5 $12.1 $91.2 $99.5
Income tax benefit of stock options exercised (reduction of current taxes payable) $21.5 $3.3 $29.7 $31.5

~~Following are figures pertinent to operations for the third quarter~~The following table provides additional information regarding options outstanding and ~~nine months of 2005, and the balance sheet~~options that were exercisable as of ~~December 31, 2005 as they were previously reported~~June 30, 2007 (options and ~~for the retrospective adoption of FAS 123R.~~in-the-money values in millions).

Operating Results for Third Quarter 2005

Including
FAS 123R

As
Previously
Reported

Cost of sales $2,517.6 $2,513.8
Gross profit $1,570.9 $1,574.7
Marketing, distribution and administrative expenses $723.6 $708.4
Operating income $742.3 $761.3
Income before income taxes $624.3 $643.3
Provision for income taxes $266.6 $272.2
Net income $504.8 $518.2
Basic earnings per share $.65 $.67
Diluted earnings per share $.65 $.66

Operating Results and Cash Flows for the Nine Months of 2005

Cost of sales $7,228.4 $7,217.0
Gross profit $4,441.9 $4,453.3
Marketing, distribution and administrative expenses $2,055.1 $2,009.6
Operating income $2,281.8 $2,338.7
Income before income taxes $1,966.7 $2,023.6
Provision for income taxes $758.1 $775.8
Net income $1,598.8 $1,638.0
Basic earnings per share $2.06 $2.11
Diluted earnings per share $2.04 $2.09

Operating cash flow before change in working capital $2,244.7 $2,266.6
Cash provided by operating activities $2,146.3 $2,168.2
Shares issued under stock plans $124.0 $102.1
Cash used for financing activities $1,407.7 $1,429.6

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

	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	3.5	1.3 years	$28.78	$80.6	3.5	$28.78	$80.6
$30 - $39	6.7	2.3 years	$37.84	94.1	6.7	$37.84	94.1
$40 - $49	56.2	5.9 years	$46.49	332.1	40.3	$46.95	171.9
$50 - $53	27.7	6.3 years	$51.29	25.6	24.0	$51.44	25.6
$20 - $53	94.1	5.6 years	$46.64	$532.4	74.5	$46.74	$372.2

4. Derivatives

4.	~~Derivatives~~

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 ~~third~~second quarter and ~~nine~~first six months (in millions). These gains and losses effectively offset changes in the cost or value of the company’s hedged exposures.

Third Quarter

Nine Months
2006 2005 2006 2005
Gains Losses Gains Losses Gains Losses Gains Losses
$5.4 $8.5 $6.6 $1.1 $5.9 $49.4 $9.0 $6.4

Second Quarter				First Six Months
2007		2006		2007		2006
Gains	Losses	Gains	Losses	Gains	Losses	Gains	Losses
$2.8	$4.3	--	$14.2	$6.5	$9.4	$0.5	$40.9

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 ~~gains~~losses due to this hedge ineffectiveness of ~~$0.5~~$2.3 million ~~and $0.1 million, respectively,~~ for the ~~third quarters~~second quarter of ~~2006 and 2005.~~2007 compared to net ineffective pretax losses of $0.7 million for the second quarter of 2006. For the ~~nine~~first six months, the company recognized net ineffective losses of ~~$0.9~~$1.4 million in both 2007 and ~~$0.3 million, respectively, in 2006 and 2005.~~2006.

5.	5. Earnings Per Share

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 ~~third~~second quarter and ~~nine~~first six months ended ~~September~~June 30 are shown below (millions of shares):

Third Quarter Nine Months
2006 2005 2006 2005
Basic weighted average shares outstanding 769.0 776.5 771.6 777.6

Diluted weighted average shares outstanding 775.9 780.8 778.0 783.2

	Second Quarter		First Six Months
	2007	2006	2007	2006
Basic weighted average shares	754.8	769.8	759.2	773.0
Diluted weighted average shares	765.1	777.0	770.3	778.8

6.	6. Non-Owner Changes in Shareholders Equity

The components of accumulated non-owner changes in shareholders equity, net of ~~deferred~~applicable taxes, as of ~~September~~June 30, ~~2006~~2007 and December 31, ~~2005~~2006 follow (in millions):

	Sept. 30, 2006	Dec. 31, 2005	June 30, 2007	Dec. 31, 2006
Foreign currency translation loss	$(453.2)	$(382.0)	$(346.3)	$(452.2)
Deferred hedging losses	(5.8)	(2.4)
Deferred hedging gains / (losses)			(1.8)	2.1
Deferred securities valuation gains	0.6	0.3	1.1	1.3
Minimum pension liability	(529.7)	(529.7)
Deferred retirement benefits costs			(751.0)	(782.0)
Accumulated non-owner changes in shareholders equity	$(988.1)	$(913.8)	$(1,098.0)	$(1,230.8)

~~Net~~Combined net income ~~plus~~and non-owner changes in shareholders equity, net of ~~deferred~~applicable taxes, for the ~~third~~second quarter and ~~nine~~first six months ended ~~September~~June 30 follows (in millions):

		Third Quarter		Nine Months			Second Quarter		First Six Months
		2006	2005	2006	2005		2007	2006	2007	2006
Net income	Net income	$637.5	$504.8	$1,774.5	$1,598.8	Net income	$677.0	$637.8	$1,194.5	$1,137.0
Foreign currency translation gains / (losses)	Foreign currency translation gains / (losses)	130.9	55.6	(71.2)	129.0	Foreign currency translation gains / (losses)	147.0	(236.6)	105.9	(202.1)
Net change in deferred hedging gains / (losses)		--	8.2	(3.4)	11.4
Deferred securities valuation gains / (losses)		(0.7)	0.4	0.3	(95.9)
Net change in deferred hedging losses						Net change in deferred hedging losses	(7.0)	(2.8)	(3.9)	(3.4)
Net change in deferred securities valuation						Net change in deferred securities valuation	0.2	0.6	(0.2)	1.0
Change in deferred retirement benefits costs						Change in deferred retirement benefits costs	31.0	--	31.0	--
	Net income plus non-owner changes in shareholders equity	$767.7	$569.0	$1,700.2	$1,643.3	Combined net income and non-owner changes in shareholders equity	$848.2	$399.0	$1,327.3	$932.5

In its 2006 annual report on Form 10-K, the company disclosed combined net income and non-owner changes in shareholders equity of $1,648.2 million, which included the impact of recognizing certain deferred retirement benefits costs in accordance with FAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” Excluding these costs, combined net income and non-owner changes in shareholders equity for the year ended December 31, 2006 would have been $2,060.2 million. The company plans to report combined net income and non-owner changes in shareholders equity for 2006 excluding the impact of FAS 158 adoption when it publishes its 2007 annual report on Form 10-K.

7. Inventories

The company’s inventories were comprised of the following as of June 30, 2007 and December 31, 2006 (in millions).

	June 30, 2007	Dec. 31, 2006
Raw Materials	$295.3	$385.6
Work-in-Process	120.1	110.8
Finished Goods	284.2	198.5
Total Inventories	$699.6	$694.9

8. Goodwill

Following is goodwill by business segment, as of ~~September~~June 30, ~~2006~~2007 and December 31, ~~2005~~2006 (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 the ~~nine~~first six months ~~of 2006~~2007 is primarily due to fluctuations in foreign currency exchange rates.

	Sept. 30, 2006	Dec. 31, 2005	June 30, 2007	Dec. 31, 2006
Domestic Beer	$21.2	$21.2	$21.2	$21.2
International Beer	1,270.2	1,261.1	1,311.6	1,283.0
Packaging	21.9	21.9	21.9	21.9
Entertainment	288.3	288.3	288.3	288.3
Total goodwill	$1,601.6	$1,592.5	$1,643.0	$1,614.4

8.	9. Pension and Postretirement Health Care Expense

The components of ~~quarterly~~ expense for pensions and postretirement health care benefits are shown below for the ~~third~~second quarter and ~~nine~~first six months of ~~2006~~2007 and ~~2005~~2006 (in millions). In order to enhance the funded status of its defined benefit pension plans, the company made a discretionary pension ~~contribution~~contributions of $85 million and $214 million in January ~~2006. This contribution is~~2007 and 2006, respectively. These contributions are in addition to the company’s required pension funding for those years.

In the first quarter, the company recognized previously deferred actuarial losses resulting from the retirement of certain executive officers in the fourth quarter 2006, in accordance with FAS 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans.” The company recognized the FAS 88 impact in the first quarter of 2007 because these individuals retired subsequent to the company’s pension accounting measurement date of October 1, 2006.

	Pensions					Pensions
	Third Quarter		Nine Months			Second Quarter		First Six Months
	2006	2005	2006	2005		2007	2006	2007	2006
Service cost (benefits earned during the period)	$26.6	$22.4	$79.7	$70.9	Service cost (benefits earned during the period)	$25.0	$26.5	$50.1	$53.1
Interest cost on benefit obligation	42.6	42.0	127.6	126.4	Interest cost on benefit obligation	44.7	42.5	89.3	85.0
Assumed return on plan assets	(49.6)	(48.3)	(148.8)	(146.3)	Assumed return on plan assets	(52.2)	(49.6)	(104.3)	(99.2)
Amortization of prior service cost and net actuarial losses	28.4	22.3	85.4	66.3	Amortization of prior service cost and net actuarial losses	21.4	28.5	42.7	57.0
Expense for defined benefit plans	48.0	38.4	143.9	117.3
FAS 88 Settlement					FAS 88 Settlement	--		19.0	--
					Expense for defined benefit plans	38.9	47.9	96.8	95.9
Cash contributed to multi-employer plans	4.3	4.1	12.2		Cash contributed to multi-employer plans	4.0		8.2	7.9
Cash contributed to defined contribution plans	4.9	5.7	14.6	14.4	Cash contributed to defined contribution plans	5.1	5.0	10.3	9.7
Total expense	$57.2	$48.2	$170.7	$143.9
					Total expense	$48.0	$56.9	$115.3	$113.5

		Postretirement Health Care
		Second Quarter		First Six Months
		2007	2006	2007	2006
Service cost (benefits earned during the period)		$6.9	$6.1	$13.4	$12.3
Interest cost on benefit obligation		11.7	8.7	22.6	17.4
Amortization of prior service cost and net actuarial losses		4.1	1.4	8.2	2.7
	Total expense	$22.7	$16.2	$44.2	$32.4

Postretirement Health Care
Third Quarter Nine Months

2006 2005 2006 2005
Service cost (benefits earned during the period) $6.2 $6.4 $18.5 $19.2
Interest cost on benefit obligation 8.6 9.9 26.0 29.6
Amortization of prior service cost and net actuarial losses 1.3 0.6 4.0 1.9
Total expense $16.1 $16.9 $48.5 $50.7

9.	10. Equity Investment in Grupo Modelo

Summary financial information for Anheuser-Busch’s equity investee Grupo Modelo for the ~~third~~second quarter and ~~nine~~first six months of ~~2006~~2007 and ~~2005~~2006 is presented below (in millions). The amounts shown represent 100% of Modelo’s consolidated operating results and financial position based on U.S. generally accepted accounting principles on a one-month lag basis, and include the impact of the company’s purchase accounting adjustments.

	Results of Operations
	Second Quarter		First Six Months
	2007	2006	2007	2006
Gross sales	$1,843.8	$1,473.5	$3,274.8	$2,706.5
Net sales	$1,743.6	$1,374.3	$3,076.0	$2,516.7
Gross profit	$947.1	$733.5	$1,663.4	$1,338.9
Minority interest expense	$67.0	$0.5	$110.4	$0.8
Net income	$380.1	$331.8	$692.8	$573.7

	As of June 30
	2007	2006
Cash / marketable securities	$1,573.6	$1,617.6
Other current assets	$1,506.8	$946.7
Non-current assets	$4,937.7	$4,281.6
Current liabilities	$623.9	$466.1
Non-current liabilities	$368.8	$353.1

Results of Operations
Third Quarter Nine Months
2006

2005 2006

2005
Gross sales $1,391.2

$1,297.9 $4,097.7

$3,565.3
Net sales $1,299.1

$1,209.6 $3,815.8

$3,311.6
Gross profit $677.2

$632.1 $2,016.1

$1,766.5
Minority interest expense $0.5

$0.4 $1.3

$1.2
Net income $296.1

$283.0 $869.8

$757.4

As of Sept. 30

2006

2005

Cash / marketable securities $1,880.5

$1,557.4

Other current assets $1,005.8

$884.8

Non-current assets $4,524.5

$4,452.8

Current liabilities $484.8

$451.5

Non-current liabilities $366.2

$414.7
In June 2007, Grupo Modelo restructured its distribution operations in Mexico City and recognized related costs in its month of June results. Anheuser-Busch reports its equity share of Modelo results on a one-month lag basis, and as such will report its share of Modelo’s June results, including the related restructuring costs, in the company’s third quarter.

11. Uncertain Tax Positions

Effective January 1, 2007, Anheuser-Busch adopted FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes.” On adoption, the company had $96.8 million in gross unrecognized tax benefits, resulting in $45.9 million of net uncertain tax benefit positions that would reduce the company’s effective income tax rate if recognized. To comply with FIN 48, Anheuser-Busch reclassified $102.6 million of tax liabilities from current to noncurrent on the balance sheet and also separately recognized $53.1 million of deferred tax assets which had previously been netted against tax liabilities. The company made no adjustments to retained earnings related to adoption, there have been no material changes in the amount of unrecognized tax benefits since adoption, and the company anticipates no significant changes in the next 12 months.

The company’s policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes. The liability for accrued interest totaled $7.8 million as of January 1, 2007. Interest is computed on the difference between the company’s uncertain tax benefit positions under FIN 48 and the amount deducted or expected to be deducted in the company’s tax returns.

The principal jurisdictions for which Anheuser-Busch files income tax returns are U.S. federal and the various city, state, and international locations where the company has operations. The company participates in the IRS Compliance Assurance Process program for the examination of U.S. federal income tax returns, and examinations are substantively complete through 2006. City and state examinations are substantially complete through 2001. The status of international tax examinations varies by jurisdiction. The company does not anticipate any material adjustments to its financial statements resulting from tax examinations currently in progress.

Management’s Discussion and Analysis of Operations and 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 ~~third~~second quarter and ~~nine~~six months ended ~~September~~June 30, ~~2006,~~2007, compared to the ~~third~~second quarter and ~~nine~~first six months ended ~~September~~June 30, ~~2005,~~2006, and the year ended December 31, ~~2005.~~2006. 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, ~~2005.~~2006.

This discussion contains forward-looking statements regarding the company’s expectations concerning its future operations, earnings and prospects. On the date the forward-looking statements are made, the statements represent the company’s expectations, but the company’s expectations concerning its future operations, earnings and prospects may change. The company’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’s expectations and the forward-looking statements will be correct. Please 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. Anheuser-Busch disclaims any obligation to update any of these forward-looking statements.

Results of Operations

~~Effective in the first~~Anheuser-Busch reported that second 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’s financial results, 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.

~~Led by strong domestic beer revenues and earnings, consolidated~~2007 net sales ~~for the third quarter~~increased 6.1% and ~~nine months increased 4.7% and 5.3%, respectively, versus prior year, while~~ diluted earnings per share increased ~~26.2%~~7.3%. For the first six months of 2007, net sales increased 4.5% and ~~11.8%~~diluted earnings per share increased 6.2%. ~~Earnings growth for~~Led by U.S. beer operations, all of the ~~domestic beer~~company’s business ~~accelerated~~segments reported improved earnings in the ~~third~~second quarter ~~with segment pretax income up 7%. Beer shipments~~and Anheuser-Busch is on track to ~~wholesalers increased 1.1%~~deliver accelerating earnings growth in the ~~third quarter while revenue per barrel was up 2.8% versus last~~second half of the year. ~~Productivity~~The positive outlook is based on a favorable pricing environment, the company’s broadened U.S. beer portfolio that provides access to high-margin growth opportunities, successful productivity improvement initiatives ~~along with somewhat lesser energy~~that are mitigating cost ~~increases, have helped mitigate continuing cost pressures. In addition,~~pressures and enhanced earnings contributions from the ~~company’s~~ international beer segment, led by Grupo ~~Modelo, and its entertainment segment are having outstanding years.~~Modelo. Anheuser-Busch ~~expects its positive performance~~continues to ~~continue through the end of the year and expects earnings to continue to improve in 2007.~~

~~Reported~~target long term earnings per share ~~for~~growth in the ~~third quarter of 2005~~7% to 10% range, and ~~nine months~~expects the company’s 2007 earnings per share increase to exceed this range.

The second quarters of both ~~2006~~2007 and ~~2005~~2006 include one-time items that impact the comparability of reported operating results between periods. In the third quarter of 2005, the company settled litigation involving a domestic beer wholesaler and incurred a one-time pretax charge of $105 million, which is reported as a separate line item in the income statement.results. In the second quarter of ~~both~~2007, the company recorded a $16 million pretax gain ($.01 per share) on the sale of its remaining interest in its Spanish theme park investment and in the second quarter of 2006, ~~and 2005,~~ Anheuser-Busch ~~experienced favorable income tax events --- in 2006,~~recognized a $7.8 million tax provision benefit ~~from~~due to the reduction of deferred income taxes resulting from state tax legislation ~~enacted~~ in Texas; and in 2005, a similar $7.2 million favorable reduction of deferred income taxes due to tax legislation in Ohio plus a $6.8 million favorable settlement of certain Chilean taxes associated with the December 2004 sale of the company’s equity stake in Compañía Cervecerías Unidas S.A. (CCU). In the first quarter of 2005, the company also reported a $15.4 million pretax gain on the sale of a theme park interest in Spain.Texas. Excluding the impact of these one-time items from both years, which the company believes allows a better comparison of

underlying operating results, diluted earnings per share increased ~~7.9%~~7.4% for the ~~third~~second quarter and ~~7.1%~~6.2% for the ~~nine~~first six months (see additional discussion on pages 2017 through ~~23)~~19).

Beer Sales Results

Following is a summary and discussion of the company’s beer volume and sales results for the ~~third~~second quarter and ~~nine~~first six months of ~~2006~~2007 versus comparable ~~2005~~2006 periods.

Reported Beer Volume (millions of barrels) for Periods Ended September 30

Reported Beer Volume (millions of barrels) for Periods Ended June 30

Third Quarter

Nine Months

Second Quarter

Six Months

Versus 2005

Versus 2006

2006

Barrels

2006

Barrels

2007

Barrels

2007

Barrels

Domestic

27.5

Up 0.3

Up 1.1%

80.0

Up 2.0

Up 2.6%

U.S.

27.5

Up 0.6

Up 2.3%

53.3

Up 0.8

Up 1.5%

International

6.5

Up 0.4

Up 5.9%

17.1

Up 1.7

Up 10.9%

5.9

Up 0.1

Up 1.6%

11.1

Up 0.5

Up 4.8%

Worldwide A-B Brands

34.0

Up 0.7

Up 2.0%

97.1

Up 3.7

Up 4.0%

33.4

Up 0.7

Up 2.2%

64.4

Up 1.3

Up 2.0%

Int’l Equity Partner Brands

9.2

Up 0.5

Up 6.6%

24.1

Up 4.3

Up 22.0%

9.1

Up 0.6

Up 6.8%

15.7

Up 0.8

Up 5.6%

Total Brands

43.2

Up 1.2

Up 2.9%

121.2

Up 8.0

Up 7.1%

42.5

Up 1.3

Up 3.2%

80.1

Up 2.1

Up 2.7%

~~Domestic~~U.S. beer ~~shipments-to-wholesalers~~volume represents beer shipments to wholesalers in the United States. U.S. beer volume increased ~~1.1%~~2.3% for the ~~third~~second quarter, while sales-to-retailers ~~decreased 0.4% (on a selling day adjusted basis), with Rolling Rock, Grolsch and Tiger contributing 0.8 points of growth to both shipments and sales-to-retailers.~~

~~Year-to-date, shipments-to-wholesalers~~ increased ~~2.6% and sales-to-retailers increased 0.9%, with Rolling Rock, Grolsch and Tiger contributing 0.4~~0.1%. Import brands contributed 1.9 points of growth to shipments and 1.6 points to sales-to-retailers. ~~The increase in year-to-date~~

For the first six months of 2007, shipments-to-wholesalers increased 1.5%, and sales-to-retailers ~~was led by Bud Light, which grew over 4%.~~increased 0.1% with acquired and import brands contributing 1.7 points of growth to shipments and 1.6 points to sales-to-retailers. Wholesaler inventories at the end of the ~~third~~second quarter were ~~just under two days~~slightly higher than at the end of the ~~third~~second quarter ~~2005.~~2006.

The company’s estimated ~~domestic~~U.S. beer market share ~~(excluding exports)~~ for the ~~nine~~first six months of ~~2006~~2007 was ~~49.0%,~~48.8% compared to prior year market share of 48.9%. ~~Domestic market~~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’s U.S. breweries, ~~to markets around the world,~~ increased 6%1.6% for the ~~third~~second quarter and ~~11%~~4.8% for the ~~nine months~~first half of ~~2006. These~~2007, driven primarily by volume increases ~~are primarily due to increased~~in China, Canada and Mexico, partially offset by lower volume in ~~China~~the United Kingdom. Worldwide Anheuser-Busch brands volume is comprised of U.S. and ~~Canada in both periods plus an increase in Mexico year-to-date. United Kingdom beer~~international volume, ~~declined in~~and rose 2.2% for the ~~third~~second quarter and ~~year-to-date.~~2.0% year-to-date, to 33.4 million and 64.4 million barrels, respectively.

Equity partner brands volume, which represents the company’s share of its foreign equity partners’ volume reported on a one-month lag, increased 6.8% for the second quarter of 2007, to 9.1 million

~~Worldwide Anheuser-Busch brands volume, comprised of domestic volume~~barrels, and ~~international volume,~~ increased ~~2% and 4%, respectively,~~5.6% for the ~~third quarter and nine~~first six months ~~of 2006 versus 2005,~~ to ~~34 million and 97~~15.7 million barrels, ~~respectively.~~

due to Modelo and Tsingtao volume growth in both periods. Total brands volume, which combines worldwide Anheuser-Busch brand volume with equity partner brands volume ~~(representing the company’s share of its equity partners’ volume on a one-month lag basis)~~ was 4342.5 million barrels in the ~~third~~second quarter ~~2006, up 1 million barrels, or 3%. Total brands volume was up 7%, to 121~~and 80.1 million barrels for the ~~nine~~six months, ~~of 2006.~~

~~Equity partner brands volume grew 7%~~up 3.2% and ~~22%~~2.7%, ~~respectively, for the third quarter and nine months of 2006 due to Modelo and Tsingtao volume growth. The company began equity accounting for Tsingtao in May 2005.~~respectively.

~~2006~~2007 Financial Results

Following is a summary and discussion of key operating results for the ~~third~~second quarter and ~~nine~~first six months of ~~2006~~2007 versus comparable ~~2005~~2006 periods.


$ in millions, except per share	Third Quarter		2006 vs. 2005		Second Quarter		2007 vs. 2006
	2006	2005	$	%	2007	2007	$	%
Gross Sales	$4,877	$4,689	Up $188	Up 4.0%	$5,126	$4,854	Up $272	Up 5.6%
Net Sales	$4,281	$4,089	Up $192	Up 4.7%	$4,515	$4,256	Up $259	Up 6.1%
Income Before Income Taxes	$793	$624	Up $169	Up 26.9%	$797	$764	Up $33	Up 4.3%
Equity Income	$157	$147	Up $10	Up 6.4%	$195	$170	Up $25	Up 14.2%
Net Income	$638	$505	Up $133	Up 26.3%	$677	$638	Up $39	Up 6.1%
Diluted Earnings per Share	$.82	$.65	Up $.17	Up 26.2%	$.88	$.82	Up $.06	Up 7.3%


$ in millions, except per share	Nine Months		2006 vs. 2005		First Six Months		2007 vs. 2006
	2006	2005	$	%	2007	2006	$	%
Gross Sales	$14,027	$13,372	Up $655	Up 4.9%	$9,532	$9,150	Up $382	Up 4.2%
Net Sales	$12,292	$11,670	Up $622	Up 5.3%	$8,374	$8,012	Up $362	Up 4.5%
Income Before Income Taxes	$2,172	$1,967	Up $205	Up 10.4%	$1,393	$1,380	Up $13	Up 1.0%
Equity Income	$449	$390	Up $59	Up 15.1%	$354	$293	Up $61	Up 20.9%
Net Income	$1,775	$1,599	Up $176	Up 11.0%	$1,195	$1,137	Up $58	Up 5.1%
Diluted Earnings per Share	$2.28	$2.04	Up $.24	Up 11.8%	$1.55	$1.46	Up $.09	Up 6.2%

Anheuser-Busch reported gross sales of ~~$4.9~~$5.1 billion during the ~~third~~second quarter ~~2006,~~2007, an increase of ~~$188~~$272 million, or 4%5.6%. Gross sales increased ~~4.9%~~4.2%, or ~~$655~~$382 million, to ~~$14~~$9.5 billion for the ~~nine~~first six months. Net sales were ~~$4.3~~$4.5 billion and ~~$12.3~~$8.4 billion, increases of ~~$192~~$259 million and ~~$622~~$362 million, respectively, or ~~4.7% and 5.3%~~6.1% for the ~~two periods.~~quarter and 4.5% year-to-date. The differences between gross and net sales in ~~2006~~2007 are due to beer excise taxes of ~~$596~~$611 million and ~~$1.7~~$1.2 billion, respectively.

The sales increases ~~in both gross and net sales~~ were driven by higher sales ~~increases~~ for all operating ~~segments.~~segments, with the exception of a year-to-date decline in packaging segment sales. For the ~~third~~second quarter and ~~nine~~first six months, respectively, ~~domestic~~U.S. beer segment net sales increased ~~3.9%~~6.9%, or $206 million, and ~~3.8%~~5.3%, or $309 million on higher volume, ~~and~~ increased revenue per ~~barrel;~~barrel, higher promotional prices over the key summer holiday periods and

favorable brand mix; international beer net sales increased ~~3.8%~~4% and ~~7.6%~~6% primarily due to volume gains in China, Canada and ~~Canada~~Mexico offset by declines in ~~both periods and in Mexico year-to-date;~~the United Kingdom; packaging operations net sales increased ~~6.3%~~5% for the second quarter on higher aluminum can and ~~10.3% due to higher~~ recycling ~~revenues;~~revenues, but decreased 1% for the first six months on lower can manufacturing sales; and entertainment segment sales increased ~~8.8%~~8.4% in both periods due to increased attendance, higher ticket pricing and ~~8.9%, respectively, on~~ higher ~~attendance and increased~~ in-park spending.

~~Domestic~~ U.S. beer revenue per barrel was up ~~2.8%~~3.1% in the ~~third~~second quarter ~~2006~~2007 and grew ~~1.2%~~2.7% compared to the ~~nine months~~first half of ~~2005,~~2006, due to the successful implementation of price increases and discount reductions on over half the company’s ~~domestic volume. Revenue per barrel growth includes~~U.S. volume earlier in the ~~impact of acquired and import brands Rolling Rock, Grolsch and Tiger.~~year. Revenue per barrel increases accounted for ~~$95~~$128 million and ~~$134~~$216 million, respectively, of the increases in ~~domestic~~U.S. beer net sales in the ~~third~~second quarter and ~~nine~~first six months, ~~with~~while higher beer volume ~~contributing $20~~contributed $78 million and ~~$192~~$93 million, ~~respectively.~~respectively, to the increases for the same periods. Revenue per barrel is calculated as net sales generated by the company’s ~~domestic~~U.S. beer operations on barrels of beer sold, determined on a U.S. GAAP basis, divided by the total volume of beer shipped to U.S. wholesalers. Consistent with ~~the~~its pattern for ~~2006~~ pricing actions in recent years, the company ~~plans~~expects to implement increases on the majority of its ~~beer~~ volume in early ~~2007,~~next year, with a few selective increases in the fourth quarter ~~2006.~~2007. As in the past, pricing initiatives will be tailored to selected markets, brands and packages.

The cost of sales for the ~~third~~second quarter ~~2006~~2007 was ~~$2.6~~$2.9 billion, an increase of ~~$127~~$197 million, or 7.4%, and was up $254 million, or 5%, ~~and was up $495 million, or 6.8%,~~ to ~~$7.7~~$5.3 billion for the ~~nine~~first six months. The increases in cost of sales are primarily attributable to ~~production~~the costs associated with higher U.S. and international beer volume ~~worldwide,~~of $101 million and $8 million, respectively, for the second quarter and $132 million and $24 million, respectively, for the first six months. Additional factors include increased costs for ~~domestic beer~~brewing and packaging materials and higher labor and operating costs for entertainment operations, partially offset by lower energy costs and ~~increased~~lower packaging segment costs ~~for recycling and entertainment operations.~~due to lower volumes. Gross profit as a percentage of net sales was ~~38.2%~~36.7% for the ~~third~~second quarter and ~~37.2%~~36.3% year-to-date, down 2080 basis points and 9030 basis points, ~~respectively, due primarily to lower margins for the commodity-based packaging segment.~~respectively.

Marketing, distribution and administrative expenses were ~~$738~~$756 million for the ~~third~~second quarter and ~~$2.1~~$1.4 billion year-to-date, representing ~~increases of $15~~a $42 million increase for the quarter and ~~$13~~a $92 million increase year-to-date. ~~These increases~~The changes versus prior year periods are due to higher ~~general~~U.S. beer marketing costs, including incremental marketing and ~~administrative~~selling expense for the company’s new import beer portfolio, increased marketing costs ~~partially offset by lower marketing expenses and favorable distribution~~for entertainment operations, higher delivery costs for company-owned beer ~~wholesale operations due to having one less location.~~wholesalerships, and increased administrative expenses year-to-date. Administrative expenses for the first six months include a FAS 88 settlement charge and an asset disposition gain.

Operating income was ~~$898~~$901 million, an increase of ~~$156~~$20 million, or ~~21%~~2.3% for the ~~third~~second quarter ~~2006. Operating margin for the quarter increased 280 basis points, to 21.0% due primarily to increased sales and the adverse impact of the litigation settlement on 2005 results.~~2007. For the ~~nine~~first six months of ~~2006,~~2007, operating income was ~~$2.5~~$1.6 billion, an increase of ~~$219~~$16 million, or 9.6%, while operating margin was 20.3%, 70 basis points higher than 2005. Excluding the litigation settlement from 2005, operating margins increased 30 basis points and declined 20 basis points, respectively, for the third quarter and nine months of 2006 as shown below.

Third Quarter Nine Months
2006 2005 Change 2006 2005 Change
Reported Operating Margin 21.0% 18.2% 280 bps 20.3% 19.6% 70 bps
Impact of Litigation Settlement --- 2.5 (250) bps --- 0.9 (90) bps
Excluding Litigation Settlement 21.0% 20.7% 30 bps 20.3% 20.5% (20) bps

1%. Operating margins declined 70 basis points for both the second quarter and first six months, to 20.0% and 19.3%, respectively.

Interest expense less interest income was ~~$111~~$118 million for the ~~third~~second quarter and ~~$340~~$238 million for the ~~nine~~first six months of 2007, increases versus respective 2006 ~~both amounts essentially level with comparable 2005~~ periods of $3 million and $8 million. The increases are due to ~~lower~~higher interest rates combined with higher average outstanding debt ~~balances mostly offset by~~during the quarter and higher interest rates ~~and~~partially offset by lower ~~interest~~average debt balances year-to-date. Interest income ~~year-to-date.~~was greater in both 2007 periods versus 2006. Interest capitalized of ~~$4.4~~$4.2 million in the ~~third~~second quarter ~~2006 was up slightly,~~ and $7.7 million for the first six months was down ~~$1.4 million year-to-date,~~slightly due to ~~a mix~~the timing of ~~lower qualifying~~ capital spending and ~~higher interest rates.~~project in-service dates.

Other income/~~expense,~~(expense), net reflects the impact of numerous items not directly related to the company’s operations. For the ~~third~~second quarter of ~~2006,~~2007, the company had other income of $1$9.6 million versus other expense of ~~$10~~$6.8 million in ~~2005.~~2006. Year-to-date the company recognized income of $3.7 million in 2007 compared to expense of ~~$2 million in 2006 compared to income of $11 million in 2005.~~$3.1 million. Other income for the ~~nine~~second quarter and first six months of ~~2005~~2007 includes the ~~$15.4~~$16.0 million gain from the sale of the company’s ~~equity~~remaining interest in ~~the~~its Spanish theme ~~park.~~park investment. For business segment reporting purposes, the gain is reported as a corporate item.

Income before income taxes for the ~~third~~second quarter ~~2006~~2007 was ~~$793~~$797 million, an increase of ~~$169~~$33 million, or ~~26.9%.~~4.3%, due to improved results for all segments. Year-to-date, pretax income ~~increased $205~~was $1.4 billion, an increase of $13 million or ~~10.4%~~1%, ~~to $2.2 billion. These increases are~~ primarily due to higher ~~profits in domestic beer,~~earnings from the packaging and entertainment segments partially offset by lower earnings for international beer ~~and entertainment~~ operations and ~~the impact on 2005 results of the litigation settlement. For the third quarter~~higher interest and ~~nine months, domestic~~administrative expenses. U.S. beer pretax profits improved ~~$51~~$12.5 million in the second quarter and ~~$73 million,~~were essentially level with 2006 for the first six months, due to higher beer sales volume and increased pricing ~~and lower marketing, partially~~being offset by higher ~~packaging materials, energy~~marketing expenses and ~~plant operating~~beer production costs. International beer pretax income ~~was up $5~~increased $2.6 million ~~for both periods due to~~in the second quarter and decreased $1.9 million year-to-date on profit growth ~~attributable to volume increases~~ in China, Canada and ~~Canada in both periods and in~~ Mexico ~~year-to-date, mostly~~plus lower marketing costs, partially offset by lower ~~earnings in the United Kingdom. Profits~~results in the United Kingdom ~~were down primarily due to lower pricing, lower volume~~in the quarter, and ~~unfavorable revenue mix.~~fully offset for the six months. Packaging segment pretax profits were ~~down $1~~up $9.8 million ~~in the quarter~~ and ~~up $3~~$15.6 million, ~~for the nine months. Lower~~respectively, primarily due to increased profits from can manufacturing ~~offset increased bottle manufacturing profits during the third quarter, while increased bottle~~ and ~~can profits year-to-date were~~aluminum recycling on improved pricing partially offset by ~~higher~~lower volume, and increased label manufacturing ~~costs.~~earnings from higher volumes. Entertainment segment pretax ~~income~~profits grew ~~$14~~$5.4 million and ~~$33~~$4.5 million, respectively, due to ~~higher~~increased attendance, increased ticket pricing and higher in-park spending partially offset by higher park operating costs in both periods.

Equity income of $195 million for the second quarter and $354 million year-to-date increased $25 million and $61 million, respectively, reflecting the benefit of improved Grupo Modelo earnings from higher volume and benefits associated with the new Crown import and distribution joint venture. Equity income includes

~~Equity income increased $10~~benefits of $12 million and $29 million, respectively, in the ~~third~~second quarter ~~2006~~ and ~~$59 million year-to-date, reflecting~~for the first six months due to the return of advertising funds that were part of prior import contracts. The benefit for the first six months was partially offset by a timing change in the recognition of ~~Grupo Modelo volume growth, price increases taken in Mexico at~~Modelo’s export sales to the ~~beginning of the year and a lower Mexican income tax rate, plus Tsingtao equity income growth in both periods. The company began applying equity accounting for Tsingtao in May 2005.~~U.S.

Anheuser-Busch’s effective income tax ~~rates of 39.3% in the third quarter and 39.0%~~rate was 39.5% for the ~~nine~~second quarter 2007 and 39.7% for the first six months, representing increases of ~~2006 represent a decrease of 340~~70 and 90 basis points, ~~and an increase of 50 basis points,~~ respectively, versus 2005. The third quarter decrease is due to the high effective tax rate in 2005 that resulted from limited tax deductibility available for the litigation settlement, partially offset by higher taxes on foreign earnings in 2006. The year-to-date increase is primarily due to higher taxes on foreign earnings and the favorable impact of the Texas state income tax legislation in 2006, ~~and~~partially offset by a step-up in the ~~mix of one-time favorable deferred tax items~~domestic manufacturing deduction in ~~both years, including a favorable tax impact from the 2005 Spanish theme park sale. Both the quarterly and year-to-date~~2007. The effective tax rates for ~~2006~~2007 include a benefit from partial capital loss utilization.

Net income of ~~$638~~$677 million in the ~~third~~second quarter of ~~2006~~2007 represented an increase of ~~$133~~$39 million, or ~~26.3%~~6.1%. Net income grew ~~11%~~5.1%, to ~~$1.8~~$1.2 billion for the ~~nine~~first six months of ~~2006.~~2007. Diluted earnings per share were ~~$.82~~$.88 and ~~$2.28,~~$1.55, respectively, for the ~~third~~second quarter and ~~nine~~first six months of ~~2006,~~2007, representing increases of ~~26.2%~~7.3% and ~~11.8%~~6.2%, respectively. Diluted earnings per share benefited from the ~~company’s~~ repurchase of ~~13.2~~22.4 million shares in the ~~nine~~first six months under the company’s ~~on-going~~ share repurchase program.

~~As shown in the following table,~~The company believes excluding the ~~favorable income tax events in 2006 and 2005 and the litigation settlement and~~ one-time gain from the sale of the Spanish theme park investment in ~~2005, which~~2007 and the ~~company believes~~favorable income tax benefit in 2006 provides more meaningful comparisons between ~~periods,~~periods. As shown in the following table, pretax income, ~~before income taxes,~~ net income and diluted earnings per share excluding these one-time items increased ~~8.7%~~2.2%, ~~6.7%~~5.9% and ~~7.9%~~7.4%, respectively for the ~~third~~second quarter, while the effective income tax rate ~~increased 100~~decreased 40 basis points. For the ~~nine~~first six months, income before income taxes declined 0.2%, while net income, diluted earnings per share and the effective income tax rate increased ~~5.6%~~4.9%, ~~6.5%, 7.1%~~6.2% and ~~100~~30 basis points, respectively.

Reconciliation of Comparative Operating Results

Income
Before Provision Diluted
Income for Income Net Earnings Effective

Third Quarter
Taxes Taxes Income Per Share Tax Rate

2006

Reported $792.5 ($311.5) $637.5 $.82 39.3%

2005

As Reported $643.3 ($272.2) $518.2 $0.66
FAS 123R Impact (19.0) 5.6 (13.4) (0.017)
Including FAS 123R 624.3 (266.6) 504.8 0.65 42.7%
Litigation Settlement 105.0 (12.6) 92.4 0.118
Excluding One-Time Items $729.3 ($279.2) $597.2 $0.76 38.3%

Percentage Change - 2006 vs. 2005

Including FAS 123R 26.9% 26.3% 26.2% -3.4%
Excluding One-Time Items 8.7% 6.7% 7.9% 1.0%

Nine Months

2006

Reported $2,172.1 ($846.9) $1,774.5 $2.28 39.0%
Texas Income Tax Legislation Benefit (7.8) (7.8) (0.010)
Excluding One-Time Items $2,172.1 ($854.7) $1,766.7 $2.27 39.3%

2005

As Reported $2,023.6 ($775.8) $1,638.0 $2.09
FAS 123R Impact (56.9) 17.7 (39.2) (.050)
Including FAS 123R 1,966.7 (758.1) 1,598.8 2.04 38.5%
Gain on Sale of Spanish Theme Park (15.4) (3.5) (18.9) (.024)
CCU Sale Chile Income Tax Settlement (6.8) (6.8) (.009)
Ohio Income Tax Legislation Benefit (7.2) (7.2 ) (.009)
Litigation Settlement 105.0 (12.6) 92.4 .118
Excluding One-Time Items $2,056.3 ($788.2) $1,658.3 $2.12 38.3%

Percentage Change - 2006 vs. 2005

Including FAS 123R 10.4% 11.0% 11.8% 0.5%
Excluding One-Time Items 5.6% 6.5% 7.1% 1.0%

($ in millions, except per share)	Income Before Income Taxes			Provision for Income Taxes			Net Income			Diluted Earnings Per Share			Effective Tax Rate
Second Quarter
2007
Reported	$	796.9		$	(314.6	)	$	677.0		$	0.88			39.5%
Gain on Sale of Spanish Theme Park		(16.0	)		6.1			(9.9	)		(0.01	)
Excluding One-Time Item	$	780.9		$	(308.5	)	$	667.1		$	0.87			39.5%

2006
Reported	$	764.2		$	(296.8	)	$	637.8		$	0.82			38.8%
Texas Income Tax Legislation Benefit		--			(7.8	)		(7.8	)		(0.01	)
Excluding One-Time Item	$	764.2		$	(304.6	)	$	630.0		$	0.81			39.9%

Percentage Change – 2007 vs. 2006
Reported		4.3%						6.1%			7.3%		70 pts
Excluding One-Time Items		2.2%						5.9%			7.4%		(40) pts

First Six Months
2007
Reported	$	1,393.1		$	(552.7	)	$	1,194.5		$	1.55			39.7%
Gain on Sale of Spanish Theme Park		(16.0	)		6.1			(9.9	)		(0.01	)
Excluding One-Time Item	$	1,377.1		$	(546.6	)	$	1,184.6		$	1.54			39.7%

2006
Reported	$	1,379.6		$	(535.4	)	$	1,137.0		$	1.46			38.8%
Texas Income Tax Legislation Benefit		--			(7.8	)		(7.8	)		(0.01	)
Excluding One-Time Item	$	1,379.6		$	(543.2	)	$	1,129.2		$	1.45			39.4%

Percentage Change – 2007 vs. 2006
Reported		1.0%						5.1%			6.2%		90 pts
Excluding One-Time Items		(0.2)%						4.9%			6.2%		30 pts

Liquidity and Financial Condition

~~Cash at September 30, 2006 was $191 million, a decrease of $35 million from the December 31, 2005 balance. See the consolidated statement of cash flows for detailed information.~~ The primary source of the company’s cash flow is ~~cash~~ generated by operations. Principal uses of cash are capital expenditures, share repurchase, dividends and business investments. Cash generated by the company’s business segments is projected to exceed funding requirements for each segment’s anticipated capital spending. The net issuance of debt provides an additional source of cash as necessary for share ~~repurchase,~~repurchasing, dividends and business investments. The nature, extent and timing of debt financing vary depending on the company’s evaluation of existing market conditions and other factors.

Cash at June 30, 2007 was $303 million, an increase of $84 million from the December 31, 2006 balance. The company generated operating cash flow before the change in working capital of ~~$2.2~~$1.7 billion for the ~~nine~~first six months of ~~2006, a decline~~2007, an increase of ~~$50~~$295 million due primarily to ~~the $214 million~~increased earnings, higher Grupo Modelo dividends and a lower discretionary defined benefit pension contribution in ~~January 2006, partially offset by increased earnings. The discretionary contribution is~~2007, $85 million versus $214 million in ~~addition to~~2006. See the consolidated statement of cash flows for additional information on the company’s required pension funding for the year. Full year pension contributions for 2006 are projected to be $270 million. The company also reported a favorable change in working capital for the first nine monthssources and uses of ~~2006 primarily due to higher accrued incentive compensation.~~cash.

~~There have been only normal and recurring changes in the company’s cash commitments since December 31, 2005.~~

Capital expenditures during the third quarter 2006 were $168 million, compared to $258 million for the third quarter 2005. Year-to-date capital expenditures totaled $487 million and $823 million, respectively for 2006 and 2005. Full year 2006 capital expenditures are expected to approximate $825 million.

At its October 2006 meeting, the Board of Directors declared a regular quarterly dividend of $.295 per share on outstanding shares of the company’s common stock, payable December 11, 2006, to shareholders of record November 9, 2006.

The company’s debt balance ~~decreased~~increased $300 million in the first half of 2007 compared to a ~~net $580~~decrease of $136 million ~~during the nine months of~~in 2006. The ~~details of the~~ changes in debt for the first half of 2007 and 2006 ~~and 2005~~ are ~~outlined below.~~summarized below (in millions).

Increases in Debt (in millions)

Description

Amount

Interest Rate
(Fixed Unless Noted)
Nine Months of 2006

U.S. Dollar Debentures $300.0 5.75%
Industrial Revenue Bonds 17.7 4.98% Wtd. avg.
Other, including issuance discounts and
related amortization 7.3 Various
$325.0

Nine Months of 2005

United Kingdom Brewery Capital Lease $51.5 6.25%
Other, including issuance discounts and
related amortization 1.3 Various
$52.8

Description				Amount	Interest Rate (Fixed Unless Noted)
First Six Months of 2007
Increases:
	U.S. Dollar Notes			$317.3	$300.0 at 5.6% and $17.3 at 5.54%
	Industrial Revenue Bonds			12.5	Various
	Other, net			42.0	Various
		Total increases		371.8

Decreases:
	Commercial Paper			(69.2)	5.38% Wtd. avg., floating
	Other, net			(2.2)	Various
		Total decreases		(71.4)
			Net Increase in Debt	$300.4

First Six Months of 2006
Increases:
	U.S. dollar debentures			$300.0	5.75%
	Other, net			6.9	Various
		Total increases		306.9

Decreases:
	Commercial Paper			(428.2)	4.77% Wtd. avg., floating
	Other, net			(14.3)	Various
		Total decreases		(442.5)
			Net Decrease in Debt	($135.6)

Reductions of Debt (in millions)

Description

Amount

Interest Rate
(Fixed Unless Noted)
Nine Months of 2006

Commercial Paper $698.7 4.88% Wtd. avg., floating
U. S. Dollar EuroNotes 100.0 4.51%
U. S. Dollar Notes 52.0 $50.0 at 5.6%; $2.0 at 5.35%
Net Change in Chinese Renminbi-Denominated debt 31.0 5.4% Wtd. avg.
Industrial Revenue Bonds 20.0 6.63% Wtd. avg.
Other, net 2.8 Various
$904.5

Nine Months of 2005

U.S. Dollar Debentures $150.0 7.25%
Commercial Paper 127.0 2.68% Wtd. avg., floating
Net Change in Chinese Renminbi-Denominated Debt 39.0 5.41% Wtd. avg.
U.S. Dollar Notes 1.3 5.35%
Other, net 6.2 Various
$323.5

~~The~~As of June 30, 2007, the company has ~~$1.4~~$1.05 billion of debt available for issuance through existing SEC shelf registrations.

The company’s commercial paper obligation of ~~$404~~$589 million at ~~September~~June 30, ~~2006~~2007 is classified as long-term, since commercial paper is maintained on a long-term basis with on-going support provided by the company's $2 billion revolving credit agreement. The interest rates for commercial paper at June 30, 2007 and 2006 were ~~5.45% at September 30, 2006~~5.28% and ~~3.75% at September 30, 2005.~~5.41%, respectively.

There have been only normal and recurring changes in the company’s cash commitments since December 31, 2006.

~~Other Matters~~

~~Grupo Modelo Joint Venture~~

~~In July, Grupo Modelo announced~~Capital expenditures during the ~~creation of a joint venture with Constellation Brands~~second quarter 2007 were $192 million, compared to $159 million for the ~~importing~~second quarter 2006. Capital expenditures totaled $346 million and ~~marketing~~$318 million, respectively, for the first six months of ~~Modelo's beer brands~~2007 and 2006. Full year 2007 capital expenditures are expected to be in the ~~United States and Guam. The joint venture is expected~~range of $900 to ~~become operational~~$950 million.

At its July 2007 meeting, the Board of Directors increased the company’s regular quarterly dividend rate on ~~January 2,~~outstanding shares of the company’s common stock 11.9%, to $.33 per share from $.295, payable September 10, 2007, ~~with the agreement running through December 31, 2016. The contract will renew in 10-year periods unless Modelo gives notice of cancellation prior to the end of year seven of any term.~~

~~New Accounting Pronouncements~~

In July 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” The Interpretation requires that realization of an uncertain income tax position must be “more likely than not” (i.e., greater than 50% likelihood of receiving a benefit) before it can be recognized in the financial statements. Further, the Interpretation prescribes the benefit to be recorded in the financial statements as the amount most likely to be realized assuming a review by tax authorities having all relevant information and applying current conventions. The Interpretation also clarifies the financial statement classification of tax-related penalties and interest and sets forth new disclosures regarding unrecognized tax benefits. The Interpretation is effective in the first quarter 2007 for Anheuser-Busch and the company plans to adopt the Interpretation when required. The Interpretation is currently being evaluated by Anheuser-Busch for its full impact. At this time, the company believes it has properly and adequately provided for all income tax positions and therefore expects minimal impact from adopting the Interpretation.

In September 2006, the Financial Accounting Standards Board issued FASB No. 157, “Fair Value Measurements.” FAS 157 is definitional and disclosure oriented and addresses how companies should approach measuring fair value when required by GAAP; it does not create or modify any current GAAP requirements to apply fair value accounting. The Standard provides a single definition for fair value that is to be applied consistently for all accounting applications, and also generally describes and prioritizes according to reliability the methods and inputs used in valuations. FAS 157 prescribes various disclosures about financial statement categories and amounts which are measured at fair value, if such disclosures are not already specified elsewhere in GAAP. The new measurement and disclosure requirements of FAS 157 are effective for Anheuser-Busch in the first quarter 2008. The company expects no significant impact from adopting the Standard.

In September 2006, the Financial Accounting Standards Board issued FASB No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” FAS 158 focuses primarily on balance sheet reporting for the funded status of benefit plans and requires recognition of benefit liabilities for under-funded plans and benefit assets for over-funded plans, with offsetting impacts to shareholders equity. These changes are required to be adopted prospectively, effective with the company’s December 31, 2006 financial statements. Anheuser-Busch is in a net under-funded position for its pension and retiree health care plans and will therefore recognize incremental retirement benefit liabilities on adoption. The company has not yet quantified these amounts. The new rules will also require companies to measure benefit plan assets and liabilities and determine the discount rate for subsequent year expense recognition as of the balance sheet date for financial reporting purposes, thus eliminating the opportunity to use a measurement date up to 90 days prior to the balance sheet date. The effective date for this change is delayed until year-end 2008. The company currently uses an October 1 measurement date and will adopt a December 31 measurement date in 2008 as required. Switching to the new measurement date will require a one-time adjustment to retained earnings per the transition guidance in FAS 158. None of the changes prescribed by FAS 158 will impact the company’s results of operations or cash flows.

record August 9, 2007.

Item 3. Disclosures About Market Risks

The company’s derivatives holdings fluctuate during the year based on normal and recurring changes in purchasing and production activity. Since December 31, ~~2005,~~2006, there have been no significant changes in the company’s interest rate, foreign currency or commodity exposures. There have been no changes in the types of derivative instruments used to hedge the company’s exposures. ~~Underlying commodity market conditions have been trending towards higher prices.~~

Item 4. 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’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’s internal auditors.

The chief executive officer and chief financial officer evaluated the company’s disclosure controls and procedures as of the end of the quarter ended ~~September~~June 30, ~~2006~~2007 and have concluded that they are effective as of ~~September~~June 30, ~~2006~~2007 in providing reasonable assurance that such information is identified and communicated on a timely basis. Additionally, there were no changes in the company’s internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

PART II -– OTHER INFORMATION

Item 1. Legal Proceedings

In 2004, 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 suit 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 appealed, their appeal was dismissed and the action is now definitively resolved in favor of the Company.

Additionally, the Company has been served with similar complaints in putative class action lawsuits in Michigan, Ohio, West Virginia 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. The claims asserted against the Company vary depending on the suit, but include negligence, unjust enrichment, violation of the state’s Sales Practice Act or other statutory provisions, nuisance, fraudulent concealment and civil conspiracy. The suit 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 Company removed the Ohio case to federal court in the Northern District of Ohio in June 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 Company filed motions to dismiss the Michigan, Ohio, West Virginia and Wisconsin cases, and the Michigan federal court, the Ohio federal court, the West Virginia federal court and the Wisconsin state court dismissed the entire cases with prejudice. The plaintiffs in the Michigan and Ohio cases have appealed the dismissals to the federal court of appeals, and the federal court of appeals is hearing the appeals on a consolidated basis. The plaintiffs in the West Virginia case have

appealed the dismissal to the federal court of appeals. The plaintiffs in the Wisconsin case have appealed the dismissal to the Wisconsin state court of appeals. 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.

On September 19, 2006, one of the ~~company's~~Company’s cansheet suppliers, Novelis Corporation ~~("Novelis"~~(“Novelis”), instituted a lawsuit ~~in federal court in the Northern District of Ohio,~~ seeking relief from continued performance of its obligations under its cansheet supply agreement with the ~~company. On that same day, the company instituted a declaratory judgment~~Company. This action is being heard in federal court in the ~~Eastern~~Northern District of ~~Missouri, requesting a finding that Novelis is required to continue to comply with its obligations under the agreement.~~Ohio. The ~~company~~Company believes that the assertions of Novelis are without merit, intends to vigorously defend its rights under the cansheet supply agreement and expects to prevail in the litigation.

Reference is made to the Company's 10-K for the fiscal year ended December 31, 2006, which provides a description of certain putative class action lawsuits filed against the Company. On July 17, 2007, the U.S. Court of Appeals for the Sixth Circuit dismissed the Michigan and Ohio cases on the grounds that the plaintiffs lacked standing to sue and thus that the court lacked federal jurisdiction to hear the claims. The court also held that the plaintiffs did not plead an injury and could not plead causation because the illegal activities involved in underage drinking were an intervening legal cause and consequently that the claim asserted by the plaintiffs was not redressable in court.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Following are the ~~company’s~~Company’s monthly common stock purchases during the ~~third~~second quarter ~~2006~~2007 (in millions, except per share). All shares are repurchased under Board of Directors authorization. The ~~Board authorized the current program~~Board’s most recent authorization to repurchase 100 million shares occurred in ~~March 2003.~~December 2006. There is no prescribed termination date for this program. The numbers of shares shown include shares delivered to the company to exercise stock options.

Shares

Avg. Price
Repurchases Remaining Authorized Under Disclosed
Programs at June 30, 2006

20.5

Share Repurchases

July 0.1 $45.97
August 0.5 $47.87
September 1.7 $47.36
Total 2.3

Repurchases Remaining Authorized Under Disclosed
Programs at September 30, 2006

18.2

	Shares	Avg. Price
Repurchases Remaining Authorized Under Disclosed Programs at March 31, 2007	105.3
Share Repurchases
April	1.1	$51.08
May	8.7	$50.13
June	3.1	$52.48
Total	12.9
Repurchases Remaining Authorized Under Disclosed Programs at June 30, 2007	92.4

Item 6.Exhibits

~~10.5~~Exhibit		~~Anheuser-Busch Companies, Inc. 1998 Incentive Plan as Amended on September 27, 2006~~Description

~~10.24~~		~~Summary of Executive Tax and Financial Consulting Program for Executive Officers of the Company.~~
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) ~~October~~July 27, ~~2006~~2007




	/s/ John F. Kelly
	John F. Kelly Vice President and Controller (Chief Accounting Officer) ~~October~~July 27, ~~2006~~2007

(in millions, except per share)	Sept. 30, 2006		Dec. 31, 2005

Assets
Current Assets:
Cash	$191.2		$225.8
Accounts receivable	903.4		681.4
Inventories	655.8		654.5
Other current assets	197.6		197.0
Total current assets	1,948.0		1,758.7
Investments in affiliated companies	3,525.7		3,448.2
Plant and equipment, net	8,836.0		9,041.6
Intangible assets, including goodwill of $1,061.5 and $1,034.5	1,349.2		1,232.6
Other assets	1,218.9		1,073.9
Total assets	$16,877.8		$16,555.0


Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable	$1,314.9		$1,249.5
Accrued salaries, wages and benefits	313.8		250.9
Accrued taxes	263.2		156.7
Accrued interest	118.4		123.7
Other current liabilities	235.1		201.8
Total current liabilities	2,245.4		1,982.6
Postretirement benefits	441.1		444.3
Debt	7,392.5		7,972.1
Deferred income taxes	1,317.0		1,345.9
Other long-term liabilities	1,137.6		1,130.3
Shareholders Equity:
Common stock, $1.00 par, authorized 1.6 billion shares	1,473.0		1,468.6
Capital in excess of par value	2,870.3		2,685.9
Retained earnings	16,827.5		15,698.0
Treasury stock, at cost	(15,838.5	)	(15,258.9	)
Accumulated non-owner changes in equity	(988.1	)	(913.8	)
Total Shareholders Equity	4,344.2		3,679.8
Commitments and contingencies	-		-
Total Liabilities and Shareholders Equity	$16,877.8		$16,555.0

(in millions, except per share)	Third Quarter Ended Sept. 30				Nine Months Ended Sept. 30
	2006		2005		2006		2005
Gross sales	$4,876.5		$4,689.4		$14,026.8		$13,371.8
Excise taxes	(595.8	)	(600.9	)	(1,734.5	)	(1,701.5	)
Net sales	4,280.7		4,088.5		12,292.3		11,670.3
Cost of sales	(2,644.6	)	(2,517.6	)	(7,723.0	)	(7,228.4	)
Gross profit	1,636.1		1,570.9		4,569.3		4,441.9
Marketing, distribution and
administrative expenses	(738.2	)	(723.6	)	(2,068.2	)	(2,055.1	)
Litigation settlement	-		(105.0	)	-		(105.0	)
Operating income	897.9		742.3		2,501.1		2,281.8
Interest expense	(111.3	)	(112.5	)	(341.6	)	(343.2	)
Interest capitalized	4.4		4.1		13.4		14.8
Interest income	0.6		0.2		1.4		2.4
Other income/(expense), net	0.9		(9.8	)	(2.2	)	10.9
Income before income taxes	792.5		624.3		2,172.1		1,966.7
Provision for income taxes	(311.5	)	(266.6	)	(846.9	)	(758.1	)
Equity income, net of tax	156.5		147.1		449.3		390.2
Net income	$637.5		$504.8		$1,774.5		$1,598.8
Basic earnings per share	$.83		$.65		$2.30		$2.06
Diluted earnings per share	$.82		$.65		$2.28		$2.04

(in millions)	Nine Months
	Ended Sept. 30
	2006		2005
Cash flow from operating activities:
Net income	$1,774.5		$1,598.8
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization	740.3		732.3
Decrease in deferred income taxes	(38.8	)	(73.3	)
Stock compensation expense	52.1		56.9
Undistributed earnings of affiliated companies	(202.2	)	(180.2	)
Gain on sale of business	-		(15.4	)
Other, net	(131.2	)	125.6
Operating cash flow before change in working capital	2,194.7		2,244.7
Decrease / (Increase) in working capital	30.8		(98.4	)
Cash provided by operating activities	2,225.5		2,146.3

Cash flow from investing activities:
Capital expenditures	(486.5	)	(823.1	)
Acquisitions	(82.3	)	-
Proceeds from sale of business	-		48.3
Cash used for investing activities	(568.8	)	(774.8	)

Cash flow from financing activities:
Increase in debt	317.3		-
Decrease in debt	(902.8	)	(320.2	)
Dividends paid to shareholders	(645.0	)	(591.1	)
Acquisition of treasury stock	(580.2	)	(620.4	)
Shares issued under stock plans	119.4		124.0
Cash used for financing activities	(1,691.3	)	(1,407.7	)
Net decrease in cash during the period	(34.6	)	(36.2	)
Cash, beginning of period	225.8		228.1
Cash, end of period	$191.2		$191.9

	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	0.1	$43.65
Exercised	(4.1)	$27.03
Cancelled	(0.7)	$48.67
Balance, September 30, 2006	91.8	$45.78	67.4	$45.10

		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

Operating Results for Third Quarter 2005	Including FAS 123R	As Previously Reported

Cost of sales	$2,517.6	$2,513.8
Gross profit	$1,570.9	$1,574.7
Marketing, distribution and administrative expenses	$723.6	$708.4
Operating income	$742.3	$761.3
Income before income taxes	$624.3	$643.3
Provision for income taxes	$266.6	$272.2
Net income	$504.8	$518.2
Basic earnings per share	$.65	$.67
Diluted earnings per share	$.65	$.66

Operating Results and Cash Flows for the Nine Months of 2005
Cost of sales	$7,228.4	$7,217.0
Gross profit	$4,441.9	$4,453.3
Marketing, distribution and administrative expenses	$2,055.1	$2,009.6
Operating income	$2,281.8	$2,338.7
Income before income taxes	$1,966.7	$2,023.6
Provision for income taxes	$758.1	$775.8
Net income	$1,598.8	$1,638.0
Basic earnings per share	$2.06	$2.11
Diluted earnings per share	$2.04	$2.09

Operating cash flow before change in working capital	$2,244.7	$2,266.6
Cash provided by operating activities	$2,146.3	$2,168.2
Shares issued under stock plans	$124.0	$102.1
Cash used for financing activities	$1,407.7	$1,429.6

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


Reconciliation of Comparative Operating Results


		Income
		Before	Provision			Diluted
		Income	for Income	Net		Earnings	Effective
	Third Quarter	Taxes	Taxes	Income		Per Share	Tax Rate
	2006
	Reported	$792.5	($311.5)	$637.5		$.82	39.3%
	2005
	As Reported	$643.3	($272.2)	$518.2		$0.66
	FAS 123R Impact	(19.0)	5.6	(13.4)		(0.017)
	Including FAS 123R	624.3	(266.6)	504.8		0.65	42.7%
	Litigation Settlement	105.0	(12.6)	92.4		0.118
	Excluding One-Time Items	$729.3	($279.2)	$597.2		$0.76	38.3%

	Percentage Change - 2006 vs. 2005
	Including FAS 123R	26.9%		26.3%		26.2%	-3.4%
	Excluding One-Time Items	8.7%		6.7%		7.9%	1.0%


	Nine Months
	2006
	Reported	$2,172.1	($846.9)	$1,774.5		$2.28	39.0%
	Texas Income Tax Legislation Benefit		(7.8)	(7.8)		(0.010)
	Excluding One-Time Items	$2,172.1	($854.7)	$1,766.7		$2.27	39.3%
	2005
	As Reported	$2,023.6	($775.8)	$1,638.0		$2.09
	FAS 123R Impact	(56.9)	17.7	(39.2)		(.050)
	Including FAS 123R	1,966.7	(758.1)	1,598.8		2.04	38.5%
	Gain on Sale of Spanish Theme Park	(15.4)	(3.5)	(18.9)		(.024)
	CCU Sale Chile Income Tax Settlement		(6.8)	(6.8)		(.009)
	Ohio Income Tax Legislation Benefit		(7.2)	(7.2	)	(.009)
	Litigation Settlement	105.0	(12.6)	92.4		.118
	Excluding One-Time Items	$2,056.3	($788.2)	$1,658.3		$2.12	38.3%

	Percentage Change - 2006 vs. 2005
	Including FAS 123R	10.4%		11.0%		11.8%	0.5%
	Excluding One-Time Items	5.6%		6.5%		7.1%	1.0%

Increases in Debt (in millions)
Description	Amount	Interest Rate (Fixed Unless Noted)
Nine Months of 2006
U.S. Dollar Debentures	$300.0	5.75%
Industrial Revenue Bonds	17.7	4.98% Wtd. avg.
Other, including issuance discounts and
related amortization	7.3	Various
	$325.0
Nine Months of 2005
United Kingdom Brewery Capital Lease	$51.5	6.25%
Other, including issuance discounts and
related amortization	1.3	Various
	$52.8

Reductions of Debt (in millions)
Description	Amount	Interest Rate (Fixed Unless Noted)
Nine Months of 2006
Commercial Paper	$698.7	4.88% Wtd. avg., floating
U. S. Dollar EuroNotes	100.0	4.51%
U. S. Dollar Notes	52.0	$50.0 at 5.6%; $2.0 at 5.35%
Net Change in Chinese Renminbi-Denominated debt	31.0	5.4% Wtd. avg.
Industrial Revenue Bonds	20.0	6.63% Wtd. avg.
Other, net	2.8	Various
	$904.5
Nine Months of 2005
U.S. Dollar Debentures	$150.0	7.25%
Commercial Paper	127.0	2.68% Wtd. avg., floating
Net Change in Chinese Renminbi-Denominated Debt	39.0	5.41% Wtd. avg.
U.S. Dollar Notes	1.3	5.35%
Other, net	6.2	Various
	$323.5