SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2005
Commission file number 1-7823
ANHEUSER-BUSCH COMPANIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1162835
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Busch Place, St. Louis, Missouri 63118
(Address of principal executive offices) (Zip Code)
314-577-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act)
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
$1 Par Value Common Stock - 776,779,707 shares as of June 30, 2005
1
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
-------------------------------------------------------------------------------------------------------------------
June 30, December 31,
(In millions, except per share) 2005 2004
--------- ------------
Assets
Current Assets:
Cash $137.1 $228.1
Accounts receivable 963.9 696.1
Inventories:
Raw materials and supplies 378.1 405.0
Work in progress 103.1 80.0
Finished goods 229.3 205.3
Total inventories 710.5 690.3
Other current assets 230.5 203.9
--------- ---------
Total current assets 2,042.0 1,818.4
Investments in affiliated companies 3,060.7 3,150.2
Plant and equipment, net 8,986.5 8,847.4
Intangible assets, including goodwill of $996.6 and $984.1 1,201.3 1,191.9
Other assets 1,098.9 1,165.5
--------- ---------
Total Assets $16,389.4 $16,173.4
========= =========
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $ 1,155.4 $ 1,194.8
Accrued salaries, wages and benefits 267.9 291.4
Accrued taxes 235.8 152.9
Accrued interest 128.6 125.2
Other current liabilities 254.9 204.7
--------- ---------
Total current liabilities 2,042.6 1,969.0
--------- ---------
Postretirement benefits 443.7 454.2
--------- ---------
Debt 8,275.3 8,278.6
--------- ---------
Deferred income taxes 1,617.4 1,727.2
--------- ---------
Other long-term liabilities 1,077.0 1,076.3
--------- ---------
Shareholders Equity:
Common stock, $1.00 par, authorized 1.6 billion shares 1,466.7 1,463.0
Capital in excess of par value 1,543.6 1,425.3
Retained earnings 16,145.7 15,407.2
Treasury stock, at cost (15,214.0) (14,638.5)
Accumulated non-owner changes in equity (1,008.6) (988.9)
--------- ---------
Total Shareholders Equity 2,933.4 2,668.1
--------- ---------
Commitments and contingencies -- --
--------- ---------
Total Liabilities and Shareholders Equity $16,389.4 $16,173.4
========= =========
-------------------------------------------------------------------------------------------------------------------
See the accompanying footnotes on pages 5 -- 13.
2
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Income Statement (Unaudited)
------------------------------------------------------------------------------------------------------------------------------
Second Qtr. First Six Months
(In millions, except per share) Ended June 30, Ended June 30,
------------------------------ ------------------------------
2005 2004 2005 2004
-------- -------- -------- --------
Gross sales $4,597.3 $4,597.2 $8,682.4 $8,600.2
Excise taxes (579.2) (587.2) (1,100.6) (1,113.2)
-------- -------- -------- --------
Net sales 4,018.1 4,010.0 7,581.8 7,487.0
Cost of sales (2,476.0) (2,331.2) (4,703.2) (4,404.5)
-------- -------- -------- --------
Gross profit 1,542.1 1,678.8 2,878.6 3,082.5
Marketing, distribution and
administrative expenses (697.1) (654.3) (1,301.2) (1,236.6)
-------- -------- -------- --------
Operating income 845.0 1,024.5 1,577.4 1,845.9
Interest expense (115.9) (105.9) (230.7) (207.6)
Interest capitalized 5.5 5.8 10.7 11.0
Interest income 0.2 0.4 2.2 1.5
Other income, net 1.2 2.4 20.7 30.0
-------- -------- -------- --------
Income before income taxes 736.0 927.2 1,380.3 1,680.8
Provision for income taxes (266.2) (360.0) (503.6) (652.6)
Equity income, net of tax 137.2 106.3 243.1 195.2
-------- -------- -------- --------
Net income $607.0 $673.5 $1,119.8 $1,223.4
======== ======== ======== ========
Basic earnings per share $.78 $.84 $1.44 $1.52
======== ======== ======== ========
Diluted earnings per share $.78 $.83 $1.43 $1.50
======== ======== ======== ========
------------------------------------------------------------------------------------------------------------------------------
See the accompanying footnotes on pages 5 -- 13.
3
Anheuser-Busch Companies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
---------------------------------------------------------------------------------------------------------------------
First Six Months
(In millions) Ended June 30,
-------------------------------
2005 2004
-------- --------
Cash flow from operating activities:
Net Income $1,119.8 $1,223.4
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization 481.0 457.1
(Decrease) / Increase in deferred income taxes (55.0) 33.3
Undistributed earnings of affiliated companies (39.5) (16.2)
Gain on sale of business (15.4) ---
Other, net 102.9 93.8
-------- --------
Operating cash flow before changes in working capital 1,593.8 1,791.4
Increase in working capital (244.7) (235.2)
-------- --------
Cash provided by operating activities 1,349.1 1,556.2
-------- --------
Cash flow from investing activities:
Capital expenditures (565.4) (441.7)
Proceeds from sale of business 48.3 ---
Acquisitions -- (441.3)
-------- --------
Cash used for investing activities (517.1) (883.0)
-------- --------
Cash flow from financing activities:
Increase in debt 3.7 963.5
Decrease in debt (57.9) (502.9)
Dividends paid to shareholders (381.3) (354.3)
Acquisition of treasury stock (575.5) (792.2)
Shares issued under stock plans 88.0 82.6
-------- --------
Cash used for financing activities (923.0) (603.3)
-------- --------
Net (decrease) / increase in cash during the period (91.0) 69.9
Cash, beginning of period 228.1 191.1
-------- --------
Cash, end of period $137.1 $261.0
======== ========
---------------------------------------------------------------------------------------------------------------------
See the accompanying footnotes on pages 5 -- 13.
4
ANHEUSER-BUSCH COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED 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's annual report on Form 10-K for the year
ended December 31, 2004.
2. Business Segments Information
-----------------------------
Comparative business segment information for the second quarter and
first six months ended June 30 are presented below (in millions):
----------------------------------------------------------------------------------------
SECOND Domestic Int'l Corporate
QUARTER Beer Beer Packaging Entertain. & Elims. Consol.
---------------------------------------------------------------------------------------------------------------
2005
Gross Sales $3,432.1 296.8 648.9 320.9 (101.4) $4,597.3
Net Sales:
- Intersegment $0.7 -- 227.5 -- (228.2) $--
- External $2,912.7 236.3 421.4 320.9 126.8 $4,018.1
Income Before
Income Taxes $773.3 26.0 44.5 78.0 (185.8) $736.0
Equity Income,
Net of Tax -- $137.2 -- -- -- $137.2
Net Income $479.5 153.3 27.6 48.4 (101.8) $607.0
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
2004
Gross Sales $3,558.2 237.5 625.8 312.5 (136.8) $4,597.2
Net Sales:
- Intersegment $0.7 -- 237.9 -- (238.6) $--
- External $3,020.6 187.5 387.9 312.5 101.5 $4,010.0
Income Before
Income Taxes $951.6 31.1 52.5 81.8 (189.8) $927.2
Equity Income,
Net of Tax -- $106.3 -- -- -- $106.3
Net Income $589.9 125.6 32.6 50.7 (125.3) $673.5
---------------------------------------------------------------------------------------------------------------
5
----------------------------------------------------------------------------------------
FIRST Domestic Int'l Corporate
SIX MONTHS Beer Beer Packaging Entertain. & Elims. Consol.
---------------------------------------------------------------------------------------------------------------
2005
Gross Sales $6,645.8 545.1 1,215.4 496.0 (219.9) $8,682.4
Net Sales:
- Intersegment $1.4 -- 436.1 -- (437.5) $--
- External $5,647.1 441.8 779.3 496.0 217.6 $7,581.8
Income Before
Income Taxes $1,554.6 47.8 80.1 71.6 (373.8) $1,380.3
Equity Income -- $243.1 -- -- -- $243.1
Net Income $963.9 272.7 49.7 44.4 (210.9) $1,119.8
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
2004
Gross Sales $6,821.1 430.6 1,147.2 466.6 (265.3) $8,600.2
Net Sales:
- Intersegment $1.4 -- 448.0 -- (449.4) $--
- External $5,790.8 346.3 699.2 466.6 184.1 $7,487.0
Income Before
Income Taxes $1,814.2 54.0 89.3 70.8 (347.5) $1,680.8
Equity Income -- $195.2 -- -- -- $195.2
Net Income $1,124.8 228.7 55.4 43.9 (229.4) $1,223.4
---------------------------------------------------------------------------------------------------------------
Effective in the first quarter 2005, the company's transportation
business is included within the domestic beer segment and its real
estate business is reported as a corporate item. These businesses
previously comprised the "other" segment. Segment results for 2004 have
been updated to conform to the 2005 reporting convention. The change in
composition is not material for any period presented.
3. 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 second quarter and first six months ended June 30
are shown in the follow table (millions of shares):
6
Second Quarter First Six Months
--------------------------- ---------------------------
2005 2004 2005 2004
----------- ------------ ------------ -----------
Basic weighted average
shares outstanding 777.1 800.9 778.2 805.7
=========== ============ ============ ===========
Diluted weighted average
shares outstanding 782.4 810.6 784.4 815.8
=========== ============ ============ ===========
4. Non-Owner Changes in Shareholders Equity
----------------------------------------
The components of accumulated non-owner changes in shareholders
equity, net of applicable income taxes, as of June 30, 2005 and
December 31, 2004 follow (in millions):
June 30, Dec. 31,
2005 2004
--------------- ---------------
Foreign currency translation loss $(493.1) $(566.5)
Deferred hedging gains 1.9 (1.3)
Deferred securities valuation gains (0.4) 95.9
Minimum pension liability (517.0) (517.0)
--------------- ---------------
Accumulated non-owner changes in shareholders equity $(1,008.6) $(988.9)
=============== ===============
Net income plus non-owner changes in shareholders equity, net of
applicable income taxes, for the second quarter and first six months
ended June 30 follows (in millions):
Second Quarter First Six Months
------------------------- ----------------------------
2005 2004 2005 2004
--------- --------- ----------- ----------
Net income $607.0 $673.5 $1,119.8 $1,223.4
Non-owner changes in equity:
Foreign currency translation
gains and (losses) 43.0 (103.5) 73.4 (21.9)
Net change in deferred hedging (losses)
and gains (1.9) (31.7) 3.2 (42.4)
Deferred securities valuation losses (104.2) (114.9) (96.3) (101.8)
--------- --------- ----------- ----------
Combined net income and non-owner changes in
equity $543.9 $423.4 $1,100.1 $1,057.3
========= ========= =========== ==========
7
5. Goodwill
--------
Following is goodwill by business segment, as of June 30, 2005 and
December 31, 2004 (in millions). For balance sheet classification,
goodwill related to consolidated companies is included in other assets,
while goodwill related to equity investments is included in investment
in affiliated companies. The change in international beer segment
goodwill during 2005 is due to post-acquisition balance sheet
adjustments related to Harbin and fluctuations in foreign currency
exchange rates.
June 30, 2005 Dec. 31, 2004
------------------- ----------------------
Domestic Beer $21.2 $21.2
International Beer 1,206.8 1,177.8
Packaging 21.9 21.9
Entertainment 288.3 288.3
------------------- ----------------------
Total goodwill $1,538.2 $1,509.2
=================== ======================
6. Derivatives
-----------
All of Anheuser-Busch's derivatives qualify as hedges in accordance
with FAS 133, "Accounting for Derivatives and Other Hedging
Instruments," and the company therefore defers the recognition of
effective hedging gains and losses in accumulated non-owner changes in
shareholders equity until the underlying hedged transactions actually
occur. As the underlying transactions occur, gains and losses that have
been previously deferred are reclassified into earnings. The company
reclassified the following gains and losses from accumulated non-owner
changes in equity into earnings during the second quarter and first six
months (in millions):
2005 2004
-------------------------- --------------------------
Gains Losses Gains Losses
-------- -------- --------- ---------
Second Quarter $1.8 $0.8 $18.5 $0.4
======== ======== ========= =========
First Six Months $2.4 $5.3 $36.2 $0.8
======== ======== ========= =========
8
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 losses due to such ineffectiveness totaling $0.1 million for the
second quarter and $0.4 million for the first six months of 2005,
compared to a net loss of $0.5 million for second quarter and a net
gain of $23.6 million for the first six months of 2004. The gain for
the first six months of 2004 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 that 100% of the expense associated with
non-forfeitable stock options is recognized at the grant date. The
company previously assumed all stock option expense was amortized over
the 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 second quarter and first six months ended June 30 (in millions,
except per share):
9
Second Quarter First Six Months
--------------------------- -------------------------------
2005 2004 2005 2004
------------ ----------- -------------- -------------
Reported Net Income $607.0 $673.5 $1,119.8 $1,223.4
Pro Forma Impact of Expensing
Stock Options (13.4) (29.1) (25.8) (58.2)
------------ ----------- -------------- -------------
Pro Forma Net Income $593.6 $644.4 $1,094.0 $1,165.2
============ =========== ============== =============
Reported Basic Earnings Per Share $.78 $.84 $1.44 $1.52
Pro Forma Impact of Expensing
Stock Options (.02) (.04) (.03) (.07)
------------ ----------- -------------- -------------
Pro Forma Basic Earnings Per Share $.76 $.80 $1.41 $1.45
============ =========== ============== =============
Reported Diluted Earnings Per Share $.78 $.83 $1.43 $1.50
Pro Forma Impact of Expensing
Stock Options (.02) (.04) (.03) (.07)
------------ ----------- -------------- -------------
Pro Forma Diluted Earnings Per Share $.76 $.79 $1.40 $1.43
============ =========== ============== =============
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.
10
8. Pension and Postretirement Health Care Expense
----------------------------------------------
The components of total pension expense for the second quarter and
first six months ended June 30 are shown below (in millions):
Second Quarter First Six Months
--------------------- ------------------------
2005 2004 2005 2004
-------- ------- -------- ---------
Service cost (benefits earned during the period) $24.2 $22.0 $48.5 $42.3
Interest cost on benefit obligation 42.2 39.5 84.4 79.1
Assumed return on plan assets (49.0) (47.4) (98.0) (95.1)
Amortization of prior service cost and net actuarial losses 22.0 16.3 44.0 31.9
-------- ------- -------- ---------
Expense for defined benefit plans 39.4 30.4 78.9 58.2
Cash contributed to multi-employer pension plans 4.2 4.4 8.1 8.5
Cash contributed to defined contribution pension plans 4.0 4.7 8.7 9.3
-------- ------- -------- ---------
Total pension benefits expense $47.6 $39.5 $95.7 $76.0
======== ======= ======== =========
The components of total postretirement health care expense for the
second quarter and first six months ended June 30 are shown below (in
millions):
Second Quarter First Six Months
--------------------- -----------------------
2005 2004 2005 2004
------- ------- ------- ---------
Service cost (benefits earned during the period) $6.6 $5.3 $12.8 $11.2
Interest cost on benefit obligation 10.1 8.0 19.7 17.4
Amortization of prior service cost and net actuarial
losses and (gains) 3.0 (1.9) 1.3 (2.7)
------- ------- ------- ---------
Total defined benefits expense $19.7 $11.4 $33.8 $25.9
======= ======= ======= =========
11
9. Tsingtao Bond Conversion
------------------------
In April 2005, the company converted its two remaining Tsingtao
convertible bonds into Series H common shares, thereby increasing
Anheuser-Busch's economic ownership in Tsingtao from 9.9% to 27%, and
its voting stake from 9.9% to 20%. Local government authorities hold
the proxy voting rights for the 7% difference between the company's
voting and economic stakes. The increased economic stake allows the
company to nominate an additional director, giving the company two of
11 board seats. Because of the additional share ownership and board
representation, Anheuser-Busch believes it can now exercise significant
influence over Tsingtao and therefore began applying the equity method
of accounting for Tsingtao in May 2005, on a one-month lag.
10. Contingencies
-------------
In January 1997, Maris Distributing Company, Inc., a former
independent 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 $37 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
12
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.
13
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 second quarter and first six
months ended June 30, 2005, compared to the second quarter and first six
months ended June 30, 2004, and the year ended December 31, 2004. 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, 2004.
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. Important factors that could cause actual
results to differ (favorably or unfavorably) from the expectations stated in
this discussion include, among others, changes in the pricing environment
for the company's products; changes in U.S. demand for malt beverage
products, including 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 economies of the countries in
which the company's international beer business or its international equity
partners operate; changes in the company's credit rating resulting from
future
14
acquisitions or divestitures; and the effect of stock market conditions on
the company's share repurchase program. Anheuser-Busch disclaims any
obligation to update or revise any of these forward-looking statements.
RESULTS OF OPERATIONS
---------------------
Anheuser-Busch had a challenging first six months in its domestic beer
business. Both the company and the domestic beer industry experienced volume
declines and higher cost pressures. The company has implemented a number of
initiatives to enhance beer volume and market share growth including
introduction of new products and packaging, increased investments in
domestic marketing, stepped-up on-premise sales activities and tactical
price promotions, and Anheuser-Busch is encouraged by its sales improvement
in June. During the second quarter 2005, wholesaler inventories were reduced
significantly and are now below last year.
Consolidated net sales increased 0.2% and 1.3%, respectively, in the
second quarter and first six months of 2005, while reported diluted earnings
per share decreased 6% for the quarter and 4.7% year-to-date. Reported
earnings per share for both periods in 2005 and the first six months of 2004
include one-time gains that make comparisons between periods difficult.
These one-time gains include settlement of tax matters in Chile related to
the sale of the company's investment in Compania Cervecerias Unidas S.A.
(CCU), Ohio state income tax reform legislation and a gain on the sale of an
interest in a theme park in Spain in 2005, and a gain in 2004 related to the
sale of commodity hedges. Excluding these one-time items to make 2005 and
2004 results comparable, earnings per share for the second quarter and first
six months of 2005 decreased 8.4% and 6.7%, respectively (see complete
discussion on pages 21 through 24).
Although Anheuser-Busch is confident it will restore its sales momentum
and return to solid earnings growth in the future, the company is currently
forecasting 2005 earnings per share to be below 2004 results, excluding
one-time gains for both years, as shown below.
15
Earnings Per Share
--------------------------------------
2005 2004 Decrease
--------------------- ------------- ---------------------
Projected / Reported $2.61 - $2.69 $2.77
Gain on Sale of Spanish Theme Park (.024) --
Chile Income Tax Settlement on CCU Sale (.009) --
Deferred Income Tax Benefit from Ohio
Tax Legislation (.009) --
Commodity Hedge Gain -- (.015)
Gain on Sale of CCU -- (.018)
Deferred Income Tax Benefit From
Mexican Income Tax Rate Reduction -- (.012)
--------------------- -------------
Excluding One-Time Gains $2.57 - $2.65 $2.73 (6)% to (3)%
===================== ============= =====================
BEER SALES RESULTS
------------------
The company's beer volume for the second quarter and first six months
is summarized in the following table:
---------------------------------------------------------------------------------------------------------------------
Reported Beer Volume (millions of barrels) for Periods Ended June 30
--------------------------------------------------------------------------------------------------------------------
Second Quarter First Six Months
------------------------------------ ------------------------------------
Versus 2004 Versus 2004
------------------------- --------------------------
2005 Barrels % 2005 Barrels %
------- --------- ----------- ------ --------- -----------
Domestic 26.3 Dn 1.0 Dn 3.7% 50.8 Dn 1.7 Dn 3.2%
International 4.9 Up 2.6 Up 115.6% 9.3 Up 5.1 Up 122.5%
------- --------- ----------- ------ --------- -----------
Worldwide A-B Brands 31.2 Up 1.6 Up 5.4% 60.1 Up 3.4 Up 6.0%
Int'l Equity Partner Brands 6.8 Up 1.6 Up 31.1% 11.1 Up 1.5 Up 16.1%
------- --------- ----------- ------ --------- -----------
Total Brands 38.0 Up 3.2 Up 9.2% 71.2 Up 4.9 Up 7.5%
======= ========= =========== ====== ========= ===========
---------------------------------------------------------------------------------------------------------------------
Domestic volume represents Anheuser-Busch beer shipped within the
United States. During the second quarter of 2005, domestic beer
sales-to-wholesalers volume decreased 3.7% compared with the second quarter
2004, and wholesaler sales-to-retailers declined 0.2%. Wholesaler
inventories were reduced significantly during the quarter, from
approximately 1.5 days higher than prior year at the beginning of the
quarter to over one day lower than 2004 at the end of the quarter. During
the first six months of 2005, domestic beer sales-to-wholesalers declined
3.2%, while wholesaler sales-to-retailers declined 0.4% on a comparable
selling day adjusted basis. Wholesaler sales-to-retailer trends improved
significantly in June. Bud family sales-to-
16
retailers increased in the second quarter 2005 and first six months driven
by the growth of Bud Light and the national introduction in late February of
Budweiser Select.
The company's estimated domestic market share (excluding exports) for
the first six months of 2005 was 48.8%, compared to 2004 market share of
49.8%. 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. Anheuser-Busch's market share performance based
on shipments was primarily due to the company's wholesaler inventory
reduction. At the consumer level, Anheuser-Busch gained share in
supermarkets and convenience stores combined for the first six months of
2005 versus 2004, according to IRI data.
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 116% for the second quarter and 123% for the first six
months of 2005. These increases for the second quarter and year-to-date 2005
include 2.5 million and 5.1 million barrels, respectively, from the Harbin
Brewery, which the company acquired and began consolidating in the third
quarter 2004. Excluding Harbin, international beer volume increased 3.5% and
1.2%, respectively, primarily due to increased volume in Canada, partially
offset by lower sales volume in Ireland and the United Kingdom for both the
second quarter and first six months of 2005 and lower Bud-Wuhan operations
volume in China year-to-date. Bud-Wuhan operations volume in China was up 2%
for the second quarter 2005.
Worldwide Anheuser-Busch brands volume, comprised of domestic volume
and international volume, increased 5.4% and 6.0%, respectively, for the
second quarter and first six months of 2005 to 31.2 million and 60.1 million
barrels versus 2004.
Total brands volume, which combines worldwide Anheuser-Busch brand
volume with international equity partner volume (representing the company's
share of its foreign equity partners' volume on a one-month lag) was 38.0
million barrels in the second quarter 2005, up 3.2 million barrels, or 9.2%
over second quarter 2004. Total brands volume was up 7.5%, to 71.2 million
barrels for the first six months of 2005.
International equity partner brands volume grew 31.1% and 16.1%,
respectively, for the second quarter and first six months of 2005 due to
Modelo volume growth and the addition of Tsingtao equity volume beginning in
May 2005, partially offset by the loss of
17
volume from the sale of the company's equity investment in CCU in the fourth
quarter 2004.
Consistent with the company's stated priorities to restore U.S. volume
and market share momentum, the company plans to defer additional price
increases throughout most of the country until early 2006. A single phase
price increase is being planned for early 2006. As always, future revenue
enhancement initiatives will be tailored to specific markets, brands and
packages.
SECOND QUARTER AND FIRST SIX MONTHS OF 2005 FINANCIAL RESULTS
-------------------------------------------------------------
Key operating results for the second quarter and first six months of
2005 are summarized below:
-----------------------------------------------------------------------------------------------------------------------
($ in millions, except per share)
--------------------------------------------------------------
Second Quarter 2005 vs. 2004
-------------------------- ---------------------------
2005 2004 $ %
-------- -------- --------- ----------
Gross Sales $4,597 $4,597 -- --
Net Sales $4,018 $4,010 Up $8 Up 0.2%
Income Before Income Taxes $736 $927 Dn $191 Dn 20.6%
Equity Income $137 $106 Up $31 Up 29.0%
Net Income $607 $674 Dn $67 Dn 9.9%
Diluted Earnings per Share $.78 $.83 Dn $.05 Dn 6.0%
-----------------------------------------------------------------------------------------------------------------------
18
-----------------------------------------------------------------------------------------------------------------------
($ in millions, except per share)
--------------------------------------------------------------
First Six Months 2005 vs. 2004
-------------------------- ---------------------------
2005 2004 $ %
-------- -------- --------- ----------
Gross Sales $8,682 $8,600 Up $82 Up 1.0%
Net Sales $7,582 $7,487 Up $95 Up 1.3%
Income Before Income Taxes $1,380 $1,681 Dn $301 Dn 17.9%
Equity Income $243 $195 Up $48 Up 24.5%
Net Income $1,120 $1,223 Dn $103 Dn 8.5%
Diluted Earnings per Share $1.43 $1.50 Dn $.07 Dn 4.7%
-----------------------------------------------------------------------------------------------------------------------
Anheuser-Busch reported gross sales of $4.6 billion and $8.7 billion,
and net sales of $4.0 billion and $7.6 billion, respectively, in the second
quarter and first six months of 2005. These amounts represent gross sales
being level versus 2004 for the second quarter and increasing 1.0% for the
first six months. Net sales increased over 2004 by 0.2% and 1.3%,
respectively, for the same periods. The differences between gross and net
sales reflect beer excise taxes of $579 million and $1.1 billion for the
second quarter and first six months, respectively.
The increases in net sales for the second quarter and first six months
of 2005 were due to sales increases for international beer, packaging and
entertainment operations partially offset by declines in domestic beer
revenues. International beer net sales increased 26% and 28%, respectively,
primarily due to incremental volume from the Harbin acquisition.
Commodity-based packaging operations net sales increased 9% in the second
quarter and 11.5% for the first six months due to higher can and recycling
revenues attributable to higher aluminum prices. Entertainment segment sales
increased 3% for the second quarter and 6% year-to-date primarily due to
higher admissions pricing and higher in-park spending for both periods. For
the second quarter and first six months, domestic beer segment net sales
decreased 3.6% and 2.5%, respectively, primarily due to lower beer sales
volume partially offset by higher revenue per barrel. Second quarter also
includes higher sales for the company's real estate subsidiary.
Domestic beer revenue per barrel grew 0.2% and 0.9% for the second
quarter and first six months of 2005. Domestic revenue per barrel is
calculated as net sales generated by the company's domestic beer operations
on barrels of beer sold,
19
determined on a U.S. GAAP basis, divided by the volume of beer shipped from
the company's breweries to independent U.S. wholesalers.
Cost of sales was $2.5 billion and $4.7 billion, respectively, for the
second quarter and first six months of 2005, reflecting increases of $145
million, or 6.2%, and $299 million, or 6.8%, respectively, compared to 2004.
The increases in cost of sales are attributable to higher costs for all of
the company's major business segments, including higher aluminum and other
packaging materials expense and increased energy costs for domestic beer;
incremental production costs for international beer associated with the
timing of the Harbin acquisition; increased aluminum costs and higher can
and glass manufacturing costs for the commodity-based packaging businesses;
and higher park operating expenses in entertainment operations. Gross profit
as a percentage of net sales decreased 320 basis points in the first half of
2005, to 38.0%, while second quarter 2005 gross margin was 38.4%, a decline
of 350 basis points versus 2004. These decreases are primarily due to the
decline in domestic beer volume combined with domestic beer production costs
per barrel significantly exceeding revenue per barrel.
Marketing, distribution and administrative expenses for the second
quarter 2005 were $697 million, an increase of $43 million, or 6.5% compared
with second quarter 2004. For the first six months of 2005, these expenses
were $1.3 billion, an increase of $65 million, or 5.2% versus prior year.
For both the second quarter and year-to-date, the increases are the result
of higher domestic beer marketing and selling costs, primarily for the Bud
Family and including the national introduction of Budweiser Select;
increased international beer marketing costs and higher beer distribution
costs for company-owned U.S. beer wholesalers and for China operations,
partially offset reduced general and administrative expenses.
Operating income decreased $180 million, or 17.5% in the second quarter
2005 and declined $269 million, or 14.5% for the first six months versus
comparable 2004 periods. Operating margins for the second quarter and first
six months of 2005 were 21.0% and 20.8%, respectively, decreases of 450 and
390 basis points, due primarily to reduced domestic beer sales volume and
higher costs.
Interest expense less interest income was $116 million for the second
quarter 2005, an increase of $10 million, or 9.7% compared to the second
quarter 2004. Year-to-date, interest expense less interest income was $229
million, an increase of $22 million, or
20
11% versus 2004. These increases are due to higher average outstanding debt
balances partially reduced by slightly lower interest rates compared to
prior year. Interest capitalized, which fluctuates depending on the amount
and timing of capital project in-service dates, was $5.5 million and $10.7
million, respectively for the second quarter and first six months of 2005,
down slightly compared with 2004 amounts.
Other income/(expense), net reflects the impact of numerous items not
directly related to the company's operations. For the second quarter and
first six months of 2005, the company had other income of $1.2 million and
$20.7 million, respectively, representing decreases versus 2004 of 50% and
31%, respectively. Other income for the first six months of 2005 includes
the $15.4 million pretax gain ($.024 per share) from the sale of the
company's equity interest in the Port Aventura theme park in Spain, while
other income for the first six months of 2004 includes the one-time pretax
gain of $19.5 million ($.015 per share) from the sale of commodity
derivatives. For business segment reporting purposes, both of these gains
are reported as corporate items. Year-to-date 2004 results also include a
$19.1 million pretax gain related to the sale of two beer wholesaler
partnerships, which is reported in the domestic beer segment results.
Income before income taxes for the second quarter 2005 was $736
million, a decrease of $191 million, or 21% versus second quarter 2004.
Pretax income for the first six months of 2005 was $1.4 billion, a decline
of $301 million, or 18% versus 2004. Decreases for both periods primarily
reflect lower profits in domestic beer, higher interest expense, and lower
results for international beer and packaging operations, partially offset by
improved performance for the company's real estate subsidiary in the second
quarter. Entertainment operating results were down for the second quarter
and up year-to-date in 2005.
Domestic beer segment pretax profits declined 19%, or $178 million and
14%, or $260 million, respectively, in the second quarter and first six
months of 2005 due to lower beer sales volume, higher aluminum, energy and
plant operating costs and the incremental expenses to support the company's
stepped-up pricing and marketing efforts and national introduction of
Budweiser Select.
International beer pretax income was down $5 million for the second
quarter and down $6 million year-to-date. The second quarter decline is
primarily due to lower profits in the United Kingdom caused by lower sales
volume, and the adoption of equity accounting for the company's investment
in Tsingtao during the quarter. In 2004, Tsingtao was accounted for on the
cost basis and the company therefore reported its
21
Tsingtao dividend (declared in the second quarter) in pretax income. The
change to equity accounting in 2005 resulted in a decrease in international
beer pretax income versus last year, which is offset by equity income from
Tsingtao this year. For the first six months, international beer pretax
income declined primarily due to lower United Kingdom results and lower
volume and profits for Bud-Wuhan operations in China, partially offset by
the Harbin acquisition. The company completed its acquisition and began
consolidating Harbin results in the third quarter 2004.
Packaging segment pretax profits were down $8 million and $9 million
for the second quarter and first six months, respectively, primarily due to
higher materials cost for both can and glass manufacturing operations.
Entertainment segment pretax results were down $4 million for the
second quarter and improved $1 million for the first six months of 2005. The
entertainment segment had increased admissions pricing and higher in-park
spending along with higher park operating expenses for both the second
quarter and first six months. Attendance was level with prior year for the
second quarter and up for the first six months of 2005. The decline in
entertainment segment results for the second quarter essentially reflects
the timing of the Easter holiday in 2005, which occurred in the first
quarter this year versus the second quarter of 2004.
Equity income increased $31 million and $48 million in the second
quarter and first six months of 2005, respectively. These increases
primarily reflect the benefit of Grupo Modelo pricing and volume growth, a
lower Mexican income tax rate and the recognition of the company's pro rata
share in the net earnings of Tsingtao Brewing Company beginning in May 2005.
Equity income for the comparable 2004 periods includes the company's share
of CCU earnings. As previously noted, the company sold its equity stake in
CCU in the fourth quarter 2004.
Anheuser-Busch's effective tax rate was 36.2% in the second quarter
2005, a decline of 260 basis points versus the second quarter 2004. The
quarterly decline is due primarily to a $6.8 million favorable impact from
the settlement of certain tax matters in Chile associated with the fourth
quarter 2004 sale of the company's equity stake in CCU, a $7.2 million
reduction of deferred income taxes resulting from income tax reform
legislation enacted in Ohio, plus ongoing benefits received under the
American Jobs Creation Act. For the first six months of 2005 the effective
income tax rate was 36.5% versus 38.8% in 2004. The year-to-date decrease
reflects the CCU settlement, the Ohio
22
legislation and the American Jobs Creation Act benefit from the second
quarter, plus a favorable deferred income tax impact related to the first
quarter sale of the company's investment in the Spanish theme park.
Net income decreased $67 million, or 9.9% during the second quarter,
and was down $103 million, or 8.5% for the first six months of 2005, versus
the same periods last year. Reported diluted earnings per share were $.78
for the second quarter 2005, a decrease of 6.0% compared to prior year, and
were $1.43 for the first six months, a decrease of 4.7% compared to the
first half of 2004. Earnings per share benefited from the company's
repurchase of nearly 12 million shares in the first half of 2005.
Excluding the one-time gains as applicable, the effective tax rates for
the second quarter and first six months of 2005 would have been 38.1% and
38.2%, respectively, while net income and diluted earnings per share would
have declined 11.9% and 8.4%, respectively, for the second quarter and
decreased 10.3% and 6.7%, respectively, year-to-date, as shown in the
following tables (in millions, except per share). Excluding the nonrecurring
gains from earnings better reflects the company's underlying operations and
enhances comparability between periods.
23
Income
Before Provision
Income for Income Net Earnings
SECOND QUARTER Taxes (1) Taxes (1) Income Per Share
-------------- -------------- --------------- ------------- --------------
2005
----
Reported $736.0 $(266.2) $607.0 $.78
Chile Income Tax Settlement on CCU
Sale -- (6.8) (6.8) (.009)
Deferred Income Tax Benefit from Ohio
Tax Legislation -- (7.2) (7.2) (.009)
-------------- --------------- ------------- --------------
Excluding One-Time Gains $736.0 $(280.2) $593.0 $.76
============== =============== ============= ==============
2004
----
Reported $927.2 $(360.0) $673.5 $.83
============== =============== ============= ==============
Percentage Decrease --- 2005 vs. 2004
-------------------------------------
Reported (9.9)% (6.0)%
============= ==============
Excluding One-Time Gains (11.9)% (8.4)%
============= ==============
FIRST SIX MONTHS
----------------
2005
----
Reported $1,380.3 $(503.6) $1,119.8 $1.43
Gain on Sale of Spanish Theme Park (15.4) (3.5) (18.9) (.024)
Chile Income Tax Settlement on CCU
Sale -- (6.8) (6.8) (.009)
Deferred Income Tax Benefit from Ohio
Tax Legislation -- (7.2) (7.2) (.009)
------------- --------------- ------------- -------------
Excluding One-Time Gains $1,364.9 $(521.1) $1,086.9 $1.386
============= =============== ============= =============
2004
----
Reported $1,680.8 $(652.6) $1,223.4 $1.50
Commodity Hedge Gain (19.5) 7.4 (12.1) (.015)
------------- --------------- ------------- -------------
Excluding One-Time Gain $1,661.3 $(645.2) $1,211.3 $1.485
============= =============== ============= =============
Percentage Decrease --- 2005 vs. 2004
-------------------------------------
Reported (8.5)% (4.7)%
============= =============
Excluding One-Time Gains (10.3)% (6.7)%
============= =============
The effective tax rates excluding one-time gains of 38.1% and 38.2% for the
second quarter and first six months of 2005, respectively, are computed by
dividing the provision for income taxes excluding one-time gains by income
before income taxes excluding one-time gains.
24
LIQUIDITY AND FINANCIAL CONDITION
---------------------------------
Cash at June 30, 2005 was $137 million, a decrease of $91 million from
the December 31, 2004 balance. 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. The
company generated operating cash flow before changes in working capital of
$1.6 billion for the first six months of 2005. See the consolidated
statement of cash flows for detailed information. 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 for share repurchase, dividends and
business investments in order to maintain the company's leverage position.
The nature, extent and timing of debt financing vary depending on the
company's evaluation of existing market conditions and other factors.
The company's debt balance declined $3 million since December 31, 2004,
compared to an increase of $403 million during the first six months of 2004.
The details of the changes in debt are outlined below.
INCREASES
---------------------------------------------------------------------------------------------------------------------
Amount Interest Rate
Description (millions) (fixed unless noted)
---------------------------------------------------------------------------------------------------------------------
First Six Months of 2005
------------------------
Commercial Paper $3.7 2.32% Weighted Average, Floating
United Kingdom Brewery Capital Lease Obligation 51.5 6.25%
Other 0.8 Various
-------------
$56.0
=============
First Six Months of 2004
------------------------
U.S. Dollar Notes $550.0 $300.0 at 5.0%; $250.0 at 4.7%
Commercial Paper 406.3 1.0% Weighted Average, Floating
Industrial Revenue Bonds 1.0 5.875%
Issuance Discounts (1.0) N/A
Other, net 8.0 Various
-------------
$964.3
=============
25
REDUCTIONS
---------------------------------------------------------------------------------------------------------------------
Amount Interest Rate
Description (millions) (fixed unless noted)
---------------------------------------------------------------------------------------------------------------------
-------------
First Six Months of 2005
------------------------
U.S. Dollar Notes $0.7 5.35%
Chinese Renminbi-Denominated Bank Loans 54.5 5.41% Weighted Average
Other 4.1 Various
-------------
$59.3
=============
First Six Months of 2004
------------------------
Euro Notes $251.0 $200.0 at 6.5%; $51.0 at 4.6%
U.S. Dollar Notes 250.4 $250.0 at 7.1%; $0.4 at 5.35%
ESOP Note 46.3 8.25%
Other, net 13.2 Various
-------------
$560.9
=============
The company has $1.8 billion of debt available for issuance through
existing SEC shelf registrations.
The company's commercial paper borrowings of $1.2 billion at June 30,
2005 were 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.
Capital expenditures during the first six months of 2005 were $565
million, compared to $442 million for the first six months of 2004. Full
year 2005 capital expenditures are expected in the range of $1 billion to
$1.1 billion.
At its July 2005 meeting, the Board of Directors announced a $.025, or
10.2% increase in the regular quarterly dividend on outstanding shares of
the company's common stock, from $.245 per share to $.27 per share. The new
dividend rate is payable September 9, 2005, to shareholders of record August
9, 2005. This increase reflects Anheuser-Busch's substantial cash flow and
management's confidence regarding the company's long-term prospects.
There have been only normal and recurring changes in the company's
commitments since December 31, 2004.
Return on capital employed for the 12 months ended June 30, 2005 was
17.3%, compared to 18.6% for the 12 months ended June 30, 2004. The decline
in return on capital employed is due to the decrease in net income in 2005
versus 2004. Return on
26
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 June 30, 2005, after-tax net interest
expense was $266 million, calculated as pretax net interest expense of $428
million less income taxes applied using a 38% tax rate. For the 12 months
ended June 30, 2004, after-tax net interest expense was $238 million,
calculated as pretax net interest expense of $384 less income taxes applied
using a 38% tax rate.
ITEM 2. OTHER INFORMATION
Anheuser-Busch was party to an agreement with its wholesaler in St.
Louis County, Missouri, providing the company with the option to purchase
substantially all of the assets of the wholesaler's business. Anheuser-Busch
has assigned its rights under the agreement to an entity owned by David
Stokes, who is the son of Patrick T. Stokes. Prior to the assignment, David
Stokes was the vice president and general manager of the company's Sylmar,
California wholesale beer distribution operation. Based upon the company's
extensive experience in valuing wholesale beer operations, Anheuser-Busch
believes the price required to be paid by the entity for the acquired assets
and business is a fair market value price.
ITEM 3. RISK MANAGEMENT
The company's derivatives holdings fluctuate during any given 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 as a result of increases in
domestic beer volume. Since December 31, 2004, there have been no
significant changes in the company's interest rate, foreign currency or
commodity exposures, and 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 due to
increased worldwide demand.
27
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 June 30, 2005 and have concluded that they are effective as of June
30, 2005 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
The company is a party to a lawsuit with the Maris Distributing
Company. Information regarding this lawsuit is contained in Note 10,
"Contingencies," on page 12.
A law firm has named the company (and many other brewers and
distillers) as a defendant in very similar class action lawsuits in Florida,
Michigan, New York, Ohio, Wisconsin and West Virginia state courts. In these
suits, 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
28
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 underage drinking. The company removed the Ohio case to
federal court in the Northern District of Ohio in June 2004, 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 believes that it has
strong legal and factual defenses to these class actions and intends to
defend itself vigorously.
ITEM 2. CHANGES IN SECURITIES
Following are the company's monthly common stock purchases during the
second quarter 2005 (in millions, except per share):
Shares Avg. Price
---------------- ----------------
Shares Remaining Authorized Under Disclosed
Repurchase Programs at March 31, 2005 34.4
----------------
Share Repurchases
-----------------
April 0.5 $45.93
================
May 0.8 $46.64
================
June 0.7 $47.12
---------------- ================
Total 2.0 $46.63
---------------- ================
Shares Remaining Authorized Under Disclosed
Repurchase Programs at June 30, 2005 32.4
================
All shares have been repurchased under a March 2003 Board of Directors
authorization to repurchase 100 million shares. There is no prescribed
termination date for this program. The numbers of shares shown include
shares delivered to the company to exercise stock options.
29
ITEM 6. EXHIBITS
12 Ratio of Earnings to Fixed Charges
31.1 Certification of Chief Executive Officer required by
Rules 13a-14(a) or 15d-14(a) under the Exchange Act
31.2 Certification of Chief Financial Officer required by
Rules 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.
30
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)
July 28, 2005
/s/ John F. Kelly
-------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
July 28, 2005
31