-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H653Zd6g626VLMS/K5+jFTkpjwtyLSyS/WN6xNHj1yq190v9LlnyCY/KitoTg9wk FamHkh1q/bHZ4Ur/bpgQig== 0000310569-97-000008.txt : 19970328 0000310569-97-000008.hdr.sgml : 19970328 ACCESSION NUMBER: 0000310569-97-000008 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANHEUSER BUSCH COMPANIES INC CENTRAL INDEX KEY: 0000310569 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 431162835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07823 FILM NUMBER: 97564583 BUSINESS ADDRESS: STREET 1: ONE BUSCH PL STREET 2: C/O OFFICE OF THE VP & SEC'Y CITY: ST LOUIS STATE: MO ZIP: 63118 BUSINESS PHONE: 3145772000 MAIL ADDRESS: STREET 1: ONE BUSCH PL CITY: ST LOUIS STATE: MO ZIP: 63118 10-K 1 1996 FORM 10-K 1 ============================================================================= SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ------------- TO ------------- COMMISSION FILE NUMBER 1-7823 ANHEUSER-BUSCH COMPANIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN 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) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 314-577-2000 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- -------------------- COMMON STOCK--$1 PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE 8 5/8% SINKING FUND DEBENTURES, DUE DECEMBER 1, 2016 NEW YORK STOCK EXCHANGE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE -------------------------- 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. $21,839,322,227 AS OF FEBRUARY 28, 1997 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. $1 PAR VALUE COMMON STOCK 497,365,828 SHARES AS OF MARCH 10, 1997 DOCUMENTS INCORPORATED BY REFERENCE Portions of Annual Report to Shareholders for the Year Ended December 31, 1996........... PART I, PART II, and PART IV Portions of Definitive Proxy Statement for Annual Meeting of Shareholders on April 23, 1997....................................... PART III ============================================================================= 2 PART I ITEM 1. BUSINESS Anheuser-Busch Companies, Inc. (the "Company") is a Delaware corporation that was organized in 1979 as the holding company parent of Anheuser-Busch, Incorporated ("ABI"), a Missouri corporation whose origins date back to 1875. In addition to ABI, which is the world's largest brewer of beer, the Company is also the parent corporation to a number of subsidiaries that conduct various other business operations, including those related to the production and acquisition of brewing raw materials, the manufacture and recycling of aluminum beverage containers, and the operation of theme parks. On March 26, 1996, the Company distributed all of the outstanding shares of common stock of The Earthgrains Company, which was formerly named Campbell Taggart, Inc. ("Earthgrains"), which represented substantially all of the Company's food products business, as a special dividend to the Company's shareholders (the "Spin-Off"). During the second quarter 1996, the Company completed the sale of the majority of the assets of its Eagle Snacks, Inc. ("ESI") operations to Frito-Lay, Inc. (the "ESI Sale"). In connection with the Spin-off and the ESI Sale, and in accordance with generally accepted accounting principles, the Company has restated all prior financial statements and financial information to segregate the historical combined results of Earthgrains and ESI from all detailed financial components. As such, all Earthgrains and ESI related financial results are reported in the Company's Consolidated Financial Statements, on pages 48-51 of the Company's 1996 Annual Report to Shareholders, hereby incorporated by reference, as discontinued operations. 1996 operating results and net asset information for discontinued operations appears in Note 3 to the Consolidated Financial Statements, "Divestiture of Food Products Segment," on page 55 of the 1996 Annual Report to Shareholders, which Note is hereby incorporated by reference. Financial information with respect to the Company's remaining business segments appears in Note 17, "Business Segments," on pages 66-67 of the 1996 Annual Report to Shareholders, which Note hereby is incorporated by reference. BEER AND BEER-RELATED OPERATIONS The Company's principal product is beer, produced and distributed by its subsidiary, ABI, in a variety of containers primarily under the brand names Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Classic Dark, Michelob Malt, Michelob Amber Bock, Michelob HefeWeizen, Busch, Busch Light, Busch Ice, Natural Light, Natural Pilsner, Natural Ice, King Cobra Malt Liquor, Red Wolf Lager, ZiegenBock Amber, American Originals (which include three separate brands: Faust Golden Lager, Black & Tan Porter, and American Hop Ale), and Winter Brew (produced for the holiday season). ABI's products also include two non-alcohol malt beverages, O'Doul's and Busch NA. ABI imports Carlsberg and Carlsberg Light beers and Elephant Malt Liquor into U.S. markets as part of an agreement with the Denmark based Carlsberg A/S (formerly United Breweries, Ltd.), brewer of the brands. Additionally, ABI imports Elephant Red Lager (brewed in Canada by The Labatt Brewing Company Limited ("Labatt") and licensed by Carlsberg A/S). During 1996, the following new brands were introduced: American Hop Ale, Hurricane Malt Liquor, and Pacific Ridge Pale Ale. Clydesdale Copper Draught was also introduced but was subsequently discontinued. Also discontinued in 1996 were Elk Mountain Amber Ale, Elk Mountain Red Lager, Muenchener Munich Style Amber, and Michelob Centennial. Additionally, the Company introduced into limited distribution Rio Cristal, which is imported from Antarctica Breweries in Brazil, South America, under a separate distribution agreement. ABI also owns a 25% equity interest in Seattle-based Redhook Ale Brewery, Inc. Through this alliance, Redhook products are distributed exclusively by ABI wholesalers in all new U.S. markets entered by Redhook since 1994. Through an agreement with Kirin Brewery Company, Ltd., Anheuser-Busch brews Kirin Ice exclusively for export and distribution in Japan. In a new joint venture with Kirin, the Company will also produce Kirin brands (Kirin Lager, Kirin Ichiban and Kirin Light) for distribution in the United States. Sales of beer by the Company aggregated 91.1 million barrels in 1996 as compared with 87.5 million barrels in 1995 and accounted for approximately 76% of the Company's consolidated net sales dollars in 1996. In 1995 and 1994 the percentages were 75% and 77% respectively, which reflect the restatement for discontinued operations, as described throughout this Form 10-K. Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Classic Dark, Michelob Amber Bock, Michelob HefeWeizen, 1 3 Busch, Busch Light, Natural Light, Natural Ice, Red Wolf Lager, Carlsberg, Elephant Red Lager, ZiegenBock Amber, two of the American Originals (Faust Golden Lager and Black & Tan Porter), Pacific Ridge Pale Ale, the Redhook products, Winter Brew, and O'Doul's are sold in both draught and packaged form. Natural Pilsner, Busch Ice, King Cobra Malt Liquor, Hurricane Malt Liquor, Michelob Malt, Carlsberg Light, Elephant Malt Liquor, Rio Cristal, and Busch NA are sold only in packaged form. One of the American Originals, American Hop Ale is sold only in draught form. Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Amber Bock, Natural Light, Natural Ice, Red Wolf Lager, and O'Doul's are distributed and sold on a nationwide basis. Michelob Classic Dark and Winter Brew are sold in 49 states; Busch and Busch Light in 48 states; Carlsberg and Elephant Red Lager in 47 states; Busch NA and Michelob Dry in 46 states; King Cobra Malt Liquor and the Redhook products in 45 states; Elephant Malt Liquor in 38 states; Carlsberg Light in 24 states; Hurricane Malt Liquor in 22 states; Black & Tan Porter in 16 states; Faust Golden Lager in 15 states; Michelob Malt in 14 states; Michelob Golden Draft in 12 states; Michelob Golden Draft Light and American Hop Ale in 11 states; Michelob HefeWeizen in 10 states; Busch Ice in 5 states; Natural Pilsner in 4 states; Rio Cristal in 3 states; Pacific Ridge Pale Ale in California and Nevada; and ZiegenBock Amber in Texas. ABI has developed a system of twelve breweries, strategically located across the country, to economically serve its distribution system. (See Item 2 of Part I--Properties.) Ongoing modernization programs are part of ABI's overall strategic initiatives. By using controlled environment warehouses and stringent inventory monitoring policies, the quality and freshness of the product are enhanced, thus providing Anheuser-Busch a significant competitive advantage. This has been communicated to consumers through a comprehensive marketing campaign, which includes "Born On" freshness dating on beer packages. During 1996 approximately 95% of the beer sold by ABI reached retail channels through approximately 900 independent wholesaler locations. ABI utilizes its regional vice-presidents, sales directors, key account and retail sales managers, as well as certain other field sales personnel, to provide merchandising and sales assistance to its wholesalers. In addition, ABI provides national and local media advertising, point-of-sale advertising, and sales promotion programs to help stimulate sales. The remainder of ABI's domestic beer sales in 1996 were made through twelve ABI owned and operated branches, which perform similar sales, merchandising, and delivery services as independent wholesalers in their respective areas. There are more than 100 companies engaged in the highly competitive brewing industry in the United States. ABI's domestic beers are distributed and sold in competition with other nationally distributed beers, with locally and regionally distributed beers and, to a lesser extent, with imported beers. Although the methods of competition in the industry vary widely, in part due to differences in applicable state laws, the principal methods of competition are product quality, taste and freshness, packaging, price, advertising (including television, radio, sponsorships, billboards, stadium signs, and print media), point-of-sale materials and service to retail customers (including the replacement of over-age products with fresh products at no cost to the retailer). ABI's beers compete in different price categories. Although all brands compete against the total market, Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob Golden Draft, and Michelob Golden Draft Light compete primarily with premium priced beers. Michelob, Michelob Light, Michelob Dry, Michelob Classic Dark, and Michelob Amber Bock compete in the super-premium priced category. Busch, Busch Light, Natural Light, Natural Pilsner, Busch Ice, and Natural Ice compete with the sub-premium or popular priced beers. King Cobra Malt Liquor, Hurricane Malt Liquor, and Michelob Malt compete against other brands in the malt liquor segment. Carlsberg, Carlsberg Light, Elephant Malt Liquor, Elephant Red Lager, and Rio Cristal compete primarily with imported malt beverages. Red Wolf Lager, ZiegenBock Amber, Winter Brew, Michelob HefeWeizen, the American Originals, Pacific Ridge Pale Ale, and the Redhook products compete primarily in the specialty beers segment of the malt beverage market. O'Doul's (premium priced) and Busch NA (sub-premium priced) compete in the non-alcohol malt beverage category. Since 1957, ABI has led the United States brewing industry in total sales volume. In 1996, its sales exceeded those of its nearest competitor by more than 47 million barrels and constituted approximately 45.2% of industry sales volume, including imports, exports and non-alcohol malt beverage sales. Major competitors in the United States brewing industry during 1996 included Philip Morris, Inc. (through its subsidiary Miller Brewing Co.), Adolph Coors Co., and Stroh Brewery Co. Through various subsidiaries, the Company is involved in a number of beer-related operations. Anheuser-Busch International, Inc. ("ABII"), a wholly-owned subsidiary of the Company, negotiates and administers license and contract brewing agreements on behalf of ABI with various foreign brewers. Labatt brews Budweiser and Bud Light for sale in Canada. ABI, through ABII, participates with Kirin Brewery Company, Ltd. in a joint venture in Japan, 2 4 Budweiser Japan Company, Ltd., of which the Company is a 90% shareholder, for production, distribution and sale of Budweiser. Through Anheuser-Busch European Trade Ltd. ("ABET"), an indirect, wholly-owned subsidiary of the Company, certain ABI beer brands are marketed, distributed and sold in twenty-four European countries. In the United Kingdom (U.K.), ABET has full control of sales, marketing and distribution for the Budweiser and Michelob brands to both the on- and off-trade sectors. In 1995, ABII entered into a joint venture with Scottish Courage Ltd. which consolidated the brewing and packaging of Budweiser at the Stag Brewery in London, England; ABII has operating control and owns a 50% share of this joint venture. Michelob continues to be imported into the U.K. by ABET. Guinness Ireland, Ltd. brews and markets Budweiser under license for sale in The Republic of Ireland. Oriental Brewery Ltd. brews Budweiser under license for sale in the Republic of Korea. In 1995, ABII entered into a contract brewing agreement with Sociedad Anonima Damm, one of the largest brewers in Spain, that gives the Spanish brewer rights to contract brew and package beer under the brand name Budweiser in Spain and supplements the brand's existing distribution. In early 1996, ABII purchased an equity interest in Antarctica Empreendimentos E Participacoes ("ANEP"), a subsidiary representing approximately 75% of the operations of Companhia Antarctica Paulista ("Antarctica"), one of Brazil's leading brewers, and formed a strategic partnership with Antarctica. A component of the partnership is a joint venture company named Budweiser Brasil Ltda that markets and distributes locally-produced Budweiser in Brazil. In December 1995, the Company announced that it had formed a three-way alliance with Companhia Cervecerias Unidas S.A. ("CCU"), the leading Chilean brewer, and Buenos Aires Embotelladora S.A. ("BAESA"), PepsiCo's South American bottler. Under the terms of the alliance, a wholly-owned subsidiary of CCU in Argentina ("CCU-Argentina") brews Budweiser under license in Argentina and BAESA distributes Budweiser and CCU-Argentina brands in certain geographic regions in Argentina. CCU distributes Budweiser in Chile. The Company purchased a small initial minority stake in CCU-Argentina, with options to increase its holdings in the future. In 1996, the Company formed partnerships with France's largest, and Europe's second-largest brewer, Brasseries Kronenbourg and a leading Swiss brewer, Feldschlosschen, to distribute Bud in France and Switzerland, respectively. In July 1996, ABI through ABII entered into a licensing agreement with Asia Brewery, Inc. for the production, sale and distribution of Budweiser in the Philippines. ABI's beer products are also being sold under import-distribution agreements in more than 80 countries and U.S. territories and to the U.S. military and diplomatic corps outside the continental United States. ABII also oversees the Company's investments in international brewing companies. Since 1993, the Company has owned a 17.7% direct and indirect equity interest in Diblo, S.A. de C.V. ("Diblo"), the operating subsidiary of Mexico's largest brewer, Grupo Modelo, S.A. de C.V. ("Modelo"). The Company announced in December 1996 that it intended to purchase an additional 25% equity interest in Modelo to be completed in February 1997, which would result in the Company owning a 37% direct and indirect interest in Diblo. In early February, the Company announced that it failed to finalize the purchase of the additional 25% due to differences in opinion concerning purchase price adjustments and that the parties would continue discussions on the matter and pursue binding arbitration, if necessary, to resolve the dispute. The Company also owns a 5% equity interest in Tsingtao Brewery Company Ltd., China's largest brewer. In 1995, the Company purchased an 80% equity interest in a joint venture, Budweiser Wuhan International Brewing Company, Ltd., that owns a brewery in Wuhan, the fifth-largest city in China. This ownership interest was increased to 85% during 1996. The Company's wholly-owned subsidiary, Metal Container Corporation ("MCC"), manufactures beverage cans at eight plants and beverage can lids at three plants for sale to ABI and to soft drink and export customers. (See Item 2 of Part 1--Properties). Another wholly-owned subsidiary of the Company, Anheuser-Busch Recycling Corporation ("ABRC"), recycles aluminum cans at its plants in Marion, Ohio and Hayward, California. ABRC is in the process of selling its recycling facilities in Cocoa, Florida, Nashua, New Hampshire, and Bridgeport, New Jersey. The Company's wholly-owned subsidiary, Precision Printing and Packaging, Inc. ("PPPI"), manufactures metalized and paper labels at its plant in Clarksville, Tennessee and folding cartons at its plant in Paris, Texas. Packaging Business Services, Inc., another wholly-owned subsidiary of the Company, provides administrative services and develops existing and new businesses for MCC, ABRC and PPPI. The Company's wholly-owned subsidiary, Busch Agricultural Resources, Inc. ("BARI"), operates rice drying, milling and research facilities in Arkansas and California; twelve grain elevators in the western and midwestern United States; barley seed processing plants in Moorhead, Minnesota, Fairfield, Montana, Idaho Falls, Idaho, and Powell, Wyoming; a barley research facility in Ft. Collins, Colorado; and a wild rice processing facility in Minnesota. BARI also owns malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho. Through wholly-owned subsidiaries, BARI operates land application farms in Jacksonville, Florida, and Fort Collins, Colorado; hop farms in northern Idaho and Germany; and an international office in Mar del Plata, Argentina. BARI's land 3 5 application farm in Fayetteville, Tennessee was included in the ESI Sale, and its land application farm in Robersonville, North Carolina was sold separately in December 1996. Another wholly-owned subsidiary, Anheuser-Busch Investment Capital Corporation, shares equity positions with qualified partners in independent beer wholesalerships and is currently invested in 12 wholesalerships. Through other wholly-owned subsidiaries, the Company owns and operates a marketing communications business (Busch Creative Services Corporation) and a transportation service business (Manufacturers Railway Co. and St. Louis Refrigerator Car Co.). DISCONTINUED OPERATIONS--FOOD PRODUCTS As a result of the Spin-Off, Earthgrains became an independent publicly held company listed on the New York Stock Exchange and its operations ceased to be owned by the Company. In connection with the ESI Sale, the Company sold the ESI snack food manufacturing plants in Fayetteville, Tennessee, Visalia, California, and York, Pennsylvania and its land application farm in Fayetteville, Tennessee to Frito-Lay, Inc. The ESI snack food manufacturing plant and the Company's land application farm in Robersonville, North Carolina were sold separately in December 1996. The Company also sold its Hyannis, Massachusetts plant, which makes Cape Cod potato chips and popcorn products, in April 1996. The Company sold the Eagle brand to Procter and Gamble Company in April 1996. FAMILY ENTERTAINMENT The Company is active in the family entertainment field, primarily through its wholly-owned subsidiary, Busch Entertainment Corporation ("BEC"), which currently owns, directly and through subsidiaries, nine theme parks. BEC operates Busch Gardens theme parks in Tampa, Florida and Williamsburg, Virginia, and Sea World theme parks in Orlando, Florida, San Antonio, Texas, Aurora, Ohio, and San Diego, California. BEC also operates water park attractions in Tampa, Florida (Adventure Island) and Williamsburg, Virginia (Water Country, U.S.A.), an educational play park for children near Philadelphia, Pennsylvania (Sesame Place), and the Baseball City Sports Complex near Orlando, Florida. Due to the seasonality of the theme park business, BEC experiences higher revenues in the second and third quarters and lower revenues in the first and fourth quarters. Through a Spanish affiliate, the Company also owns a 19.9% equity interest in Port Aventura, S.A., which is a theme park near Barcelona, Spain. In March 1996, the Company sold substantially all of the assets of Civic Center Corporation (a wholly-owned subsidiary of the Company that owns Busch Stadium and other properties in downtown St. Louis) and the St. Louis National Baseball Club, Inc. (St. Louis Cardinals) to a group comprised primarily of local investors. The Company faces competition in the family entertainment field from other theme and amusement parks, public zoos, public parks, and other family entertainment events and attractions. Through its wholly-owned subsidiary, Busch Properties, Inc. ("BPI"), the Company is engaged in the business of real estate development. BPI also owns and operates a resort and conference center in Williamsburg, Virginia (Kingsmill). SOURCES AND AVAILABILITY OF RAW MATERIALS The products manufactured by the Company require a large volume of various agricultural products, including barley for malt; hops, malt, rice, and corn grits for beer; and rice for the rice milling and processing operations of BARI. The Company fulfills its commodities requirements through purchases from various sources, including purchases from its subsidiaries, through contractual arrangements, and through purchases on the open market. The Company believes that adequate supplies of the aforementioned agricultural products are available at the present time, but cannot predict future availability or prices of such products and materials. The commodity markets have experienced and will continue to experience major price fluctuations. The price and supply of raw materials will be determined by, among other factors, the level of crop production, weather conditions, export demand, and government regulations and legislation affecting agriculture. The Company requires aluminum can sheet for manufacture of 4 6 cans and lids. Market prices for aluminum can sheet fell in 1996 as supply and demand, for aluminum ingot and fabrication, returned to more normal levels. Can sheet prices in the future are expected to be impacted by similar market forces. ENERGY MATTERS The Company uses natural gas, fuel oil, and coal as its primary fuel materials. All of ABI's breweries can operate with either natural gas or fuel oil. The St. Louis brewery has the additional capability to use coal. Supplies of fuels in quantities sufficient to meet ABI's total requirements are expected to be available on a year-round basis during 1997. The supply of natural gas, fuel oils and coal is normally covered by yearly contracts and no difficulty has been experienced in entering into these contracts. The cost of fuels used by ABI increased in 1996 and is expected to be at comparable levels in 1997. Based upon information presently available, there can be no assurance that adequate supplies of fuel will always be available to the Company and, should such supplies not be available, the Company's sales and earnings would be adversely affected. BRAND NAMES AND TRADEMARKS Some of the Company's major brand names used in its principal business segments are mentioned in the discussion above. The Company regards consumer recognition of and loyalty to all of its brand names and trademarks as extremely important to the long-term success of its principal business segments. RESEARCH AND DEVELOPMENT The Company is involved in a number of research activities relating to the development of new products or services or the improvement of existing products or services. The dollar amounts expended by the Company during the past three years on such research activities and the number of employees engaged full time therein during such period, however, are not considered to be material in relation to the total business of the Company. ENVIRONMENTAL PROTECTION All of the Company's plants are subject to federal, state, and local environmental protection laws and regulations, and the Company is operating within existing laws and regulations or is taking action aimed at assuring compliance therewith. Various proactive strategies are utilized to help assure this compliance. Compliance with such laws and regulations is not expected to materially affect the Company's capital expenditures, earnings, or competitive position. The Company has devoted considerable effort to research, development and engineering of cost effective innovative systems to minimize effects on the environment from its operating facilities. A major portion of pollution prevention and pollution control expenditures in 1996 and projected for 1997 was or will be justified on the basis of cost reduction. These projects, coupled with the Company's environmental management system and an overall Company emphasis on pollution prevention and resource conservation initiatives, are improving efficiencies and creating saleable by-products from residuals and have generally resulted in low cost operating systems while reducing impact on the air, water, and land environments. ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS The states of California, Connecticut, Delaware, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont have adopted certain restrictive packaging laws and regulations for beverages that require deposits on packages. ABI continues to do business in these states. Such laws have not had a significant effect on ABI's sales, but have had a significant adverse impact on beer industry growth and are considered by the Company to be inflationary, costly, and inefficient for recycling packaging materials. Congress and a number of additional states continue to consider similar legislation, the adoption of which by Congress or a substantial number of states or additional local jurisdictions might require the Company to incur significant capital expenditures. 5 7 NUMBER OF EMPLOYEES As of December 31, 1996, the Company had 25,123 employees. As of December 31, 1996, approximately 8,870 employees were represented by the International Brotherhood of Teamsters. Eighteen other unions represented approximately 1,567 employees. The current labor agreement between ABI and the Brewery and Soft Drink Workers Conference of the International Brotherhood of Teamsters, which represents the majority of brewery workers, expires February 28, 1998. The Company considers its employee relations to be good. ITEM 2. PROPERTIES ABI has twelve breweries in operation at the present time, located in St. Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield, California; Jacksonville, Florida; Houston, Texas; Columbus, Ohio; Merrimack, New Hampshire; Williamsburg, Virginia; Baldwinsville, New York; Fort Collins, Colorado; and Cartersville, Georgia. Title to the Baldwinsville, New York brewery is held by the Onondaga County Industrial Development Agency ("OCIDA") pursuant to a Sale and Agency Agreement with ABI, which enabled OCIDA to issue tax exempt pollution control and industrial development revenue notes and bonds to finance a portion of the cost of the purchase and modification of the brewery. The brewery is not pledged or mortgaged to secure any of the notes or bonds, and the Sale and Agency Agreement with OCIDA gives ABI the unconditional right to require at any time that title to the brewery be transferred to ABI. ABI's breweries operated at approximately 93.9% of capacity in 1996; during the peak selling periods (second and third quarters), they operated at maximum capacity. The Company also owns an 85% equity interest in a joint venture that operates a brewery in Wuhan, China. The Company, through wholly-owned subsidiaries, operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota and Idaho Falls, Idaho; rice mills in Jonesboro, Arkansas and Woodland, California; a wild rice processing facility in Clearbrook, Minnesota; can manufacturing plants in Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado, Newburgh, New York, Ft. Atkinson, Wisconsin, Rome, Georgia, and Mira Loma, California; and can lid manufacturing plants in Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside, California. BEC operates its principal family entertainment facilities in Tampa, Florida; Williamsburg, Virginia; San Diego, California; Aurora, Ohio; Orlando, Florida; and San Antonio, Texas. The Tampa facility is 265 acres, Williamsburg is 364 acres, San Diego is 165 acres, Aurora is 90 acres, Orlando is 224 acres, and the San Antonio facility is 496 acres. Except for the Baldwinsville brewery, the can manufacturing plant in Newburgh, New York, the Sea World park in San Diego, California, and the brewery in Wuhan, China, all of the Company's principal properties are owned in fee. The lease for the land used by the Sea World park in San Diego, California expires in 2033. The joint venture that operates the brewery in Wuhan was granted the right to use the property for a period of 50 years from the appropriate governmental authorities. The Company considers its buildings, improvements, and equipment to be well maintained and in good condition, irrespective of dates of initial construction, and adequate to meet the operating demands placed upon them. The production capacity of each of the manufacturing facilities is adequate for current needs and, except as described above, substantially all of each facility's capacity is utilized. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or its operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 1996. 6 8 EXECUTIVE OFFICERS OF THE REGISTRANT AUGUST A. BUSCH III (age 59) is presently Chairman of the Board and President, and Director of the Company and has served in such capacities since 1977, 1974, and 1963, respectively. Since 1979 he has also served as Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Anheuser-Busch, Incorporated. PATRICK T. STOKES (age 54) is presently Vice President and Group Executive of the Company and has served in such capacity since 1981. He is also presently President of the Company's subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 1990. JOHN H. PURNELL (age 55) is presently Vice President and Group Executive of the Company and has served in such capacity since January 1991. He is also Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Anheuser-Busch International, Inc., and has served as Chairman since 1980 and as Chief Executive Officer since January 1991. W. RANDOLPH BAKER (age 50) is presently Vice President and Chief Financial Officer of the Company and has served in such capacity since June 1996. He previously served as Vice President and Group Executive of the Company (1982-1996). STEPHEN K. LAMBRIGHT (age 54) is presently Vice President and Group Executive of the Company and has served in such capacity since 1984. ALOYS H. LITTEKEN (age 56) is presently Vice President-Corporate Engineering of the Company and has served in such capacity since 1981. WILLIAM L. RAMMES (age 55) is presently Vice President-Corporate Human Resources of the Company and has served in such capacity since June 1992. He is also Chairman of the Board and President of the Company's subsidiary, Busch Properties, Inc., and has served in such capacities since January 1995. During the past five years, he also served as Vice President-Operations of the Company's subsidiary, Anheuser-Busch, Incorporated (1990-June 1992). JOHN B. ROBERTS (age 52) is presently Chairman of the Board and President of the Company's subsidiary, Busch Entertainment Corporation, and has served in such capacities since June 1992 and May 1991, respectively. JOSEPH L. GOLTZMAN (age 55) is presently Vice President and Group Executive of the Company and has served in such capacity since September 1993. He is also presently Chairman, Chief Executive Officer and President of the Company's subsidiary, Anheuser-Busch Recycling Corporation, Chairman (since December 1995), President and Chief Executive Officer of the Company's subsidiary, Metal Container Corporation, and Chairman of the Company's indirect subsidiary, Precision Printing and Packaging, Inc., and has served in such capacities since January 1993, September 1993, and December 1993, respectively. During the past five years, he also served as President of Anheuser-Busch Recycling Corporation (1988-December 1992) and Vice President-Recycling and Metals Planning (January 1992-September 1993) of the Company. DONALD W. KLOTH (age 55) is presently Vice President and Group Executive of the Company and has served in such capacity since April 1994. He is also Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Busch Agricultural Resources, Inc., and has served in such capacity since May 1994. During the past five years, he also served as Vice President-Materials Acquisition of the Company (1983-March 1994) and President of Busch Agricultural Resources, Inc. (1983-April 1994). JOHN E. JACOB (age 62) is presently Executive Vice President and Chief Communications Officer, and a Director of the Company and has served in such capacities since July 1994 and 1990, respectively. He also served as President and Chief Executive Officer of the National Urban League, Inc. (1982-July 1994). GERHARDT A. KRAEMER (age 64) is presently Senior Vice President-World Brewing and Technology and has served in such capacity since June 1996. During the past five years, he also served as Vice President-Brewing of the Company's subsidiary, Anheuser-Busch, Incorporated (1985-May 1996). THOMAS W. SANTEL (age 38) is presently Vice President-Corporate Development of the Company and has served in such capacity since June 1996. During the past five years, he also served as Director of Corporate 7 9 Development (1994-May 1996), Associate Director, Corporate Development (1993-May 1994), and Manager, Diversification Planning (1989-December 1992) of the Company. PART II The information required by Items 5, 6, 7, and 8 of this Part II are hereby incorporated by reference from pages 34 through 77 of the Company's 1996 Annual Report to Shareholders. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements with Price Waterhouse LLP, the Company's independent accountants since 1961, on accounting principles or practices or financial statement disclosures. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item with respect to Directors is hereby incorporated by reference from pages 4 through 6 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 23, 1997. The information required by this Item with respect to Executive Officers is presented on pages 7 and 8 of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is hereby incorporated by reference from page 8 and pages 11 through 18 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 23, 1997. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is hereby incorporated by reference from pages 3 and 7 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 23, 1997. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is hereby incorporated by reference from pages 18 through 20 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 23, 1997. 8 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K (A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
1. FINANCIAL STATEMENTS: PAGE ---- Consolidated Balance Sheet at December 31, 1996 and 1995 48 Consolidated Statement of Income for the three years ended December 31, 1996 49 Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 1996 50 Consolidated Statement of Cash Flows for the three years ended December 31, 1996 51 Notes to Consolidated Financial Statements 52-71 Report of Independent Accountants 77 Incorporated herein by reference from the indicated pages of the 1996 Annual Report to Shareholders. 2. FINANCIAL STATEMENT SCHEDULE: Report of Independent Accountants on Financial Statement Schedule F-1 For the years ended December 31, 1996, December 31, 1995, and December 31, 1994: Schedule VIII--Valuation and Qualifying Accounts and Reserves F-2 3. EXHIBITS: Exhibit 3.1 -- Restated Certificate of Incorporation with amendments. (Incorporated by reference to Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 1994.) Exhibit 3.2 -- By-Laws of the Company (as amended and restated October 27, 1993). (Incorporated by reference to Exhibit 3 to Form 10-Q for the quarter ended September 30, 1993.) Exhibit 4.1 -- Form of Rights Agreement, dated as of October 26, 1994 between Anheuser-Busch Companies, Inc. and Boatmen's Trust Company. (Incorporated by reference to Exhibit 4 to Form 8-K filed November 7, 1994.) Exhibit 4.2 -- No instruments defining the right of holders of long-term debt are filed since the total amount of securities authorized under any such instrument does not exceed 10% of the assets of the Company on a consolidated basis. The Company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request. Exhibit 10.1 -- Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (Amended and Restated as of January 1, 1997.) Exhibit 10.2 -- Anheuser-Busch Companies, Inc. Non-Employee Director Elective Stock Acquisition Plan effective January 1, 1996. (Incorporated by reference to Exhibit 10.6 to Form 10-K for the fiscal year ended December 31, 1995.) Exhibit 10.3 -- Anheuser-Busch Companies, Inc. 1981 Incentive Stock Option/Non-Qualified Stock Option Plan (As amended December 18, 1985, December 16, 1987, December 20, 1988, July 22, 1992, September 22, 1993, and December 20, 1995.) (Incorporated by reference to Exhibit 10.7 to Form 10-K for the fiscal year ended December 31, 1995.) 9 11 Exhibit 10.4 -- Anheuser-Busch Companies, Inc. 1981 Non-Qualified Stock Option Plan (As amended December 18, 1985, June 24, 1987, December 20, 1988, July 22, 1992, and December 20, 1995.) (Incorporated by reference to Exhibit 10.8 to Form 10-K for the fiscal year ended December 31, 1995.) Exhibit 10.5 -- Anheuser-Busch Companies, Inc. 1989 Incentive Stock Plan (As amended December 20, 1989, December 19, 1990, December 15, 1993, and December 20, 1995.) (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 1995.) Exhibit 10.6 -- Anheuser-Busch Companies, Inc. Excess Benefit Plan amended and restated effective as of October 1, 1993. (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 1994.) Exhibit 10.7 -- Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan amended and restated as of October 1, 1993. (Incorporated by reference to Exhibit 10.10 to Form 10-K for the fiscal year ended December 31, 1994.) Exhibit 10.8 -- First Amendment to the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan as amended and restated October 1, 1993 effective as of December 14, 1994. (Incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 1994.) Exhibit 10.9 -- Second Amendment to the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan as amended and restated October 1, 1993 effective as of January 1, 1996. (Incorporated by reference to Exhibit 10.13 to Form 10-K for the fiscal year ended December 31, 1995). Exhibit 10.10-- Anheuser-Busch Executive Deferred Compensation Plan effective January 1, 1994. (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year ended December 31, 1993.) Exhibit 10.11-- First Amendment to Anheuser-Busch Executive Deferred Compensation Plan effective April 1, 1994. (Incorporated by reference to Exhibit 10.13 to Form 10-K for the fiscal year ended December 31, 1994.) Exhibit 10.12-- Anheuser-Busch 401(k) Restoration Plan effective January 1, 1994 (true and correct as of February 6, 1995). (Incorporated by reference to Exhibit 10.14 to Form 10-K for the fiscal year ended December 31, 1994.) Exhibit 10.13-- Form of Indemnification Agreement with Directors and Executive Officers. (Incorporated by reference to Exhibit 10.18 to Form 10-K for the fiscal year ended December 31, 1993.) Exhibit 10.14-- Anheuser-Busch Officer Bonus Plan effective January 1, 1995. (Incorporated by reference to Exhibit A to the Definitive Proxy Statement for Annual Meeting of Shareholders on April 26, 1995.) Exhibit 10.15-- Investment Agreement By and Among Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc. and Anheuser-Busch International Holdings, Inc. and Grupo Modelo, S.A. de C.V., Diblo, S.A. de C.V. and certain shareholders thereof, dated as of June 16, 1993. (Incorporated by reference to Exhibit 10.19 to Form 10-K for the fiscal year ended December 31, 1993.) 10 12 Exhibit 10.16-- Letter agreement between Anheuser-Busch Companies, Inc. and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement filed as Exhibit 10.15 of this report. (Incorporated by reference to Exhibit 10.20 to Form 10-K for the fiscal year ended December 31, 1993.) Exhibit 12 -- Ratio of Earnings to Fixed Charges. Exhibit 13 -- Pages 34 through 77 of the Anheuser-Busch Companies, Inc. 1996 Annual Report to Shareholders, a copy of which is furnished for the information of the Securities and Exchange Commission. Portions of the Annual Report not incorporated herein by reference are not deemed "filed" with the Commission. Exhibit 21 -- Subsidiaries of the Company Exhibit 23 -- Consent of Independent Accountants, filed as page F-1 of this report. Exhibit 27 -- Financial Data Schedule - -------- A management contract or compensatory plan or arrangement required to be filed by Item 14(c) of this report.
(b) Reports on Form 8-K There were no reports on Form 8-K filed during the fourth quarter of 1996. 11 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) By AUGUST A. BUSCH III ----------------------------------------------- August A. Busch III Chairman of the Board and President Date: March 26, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. AUGUST A. BUSCH III Chairman of the Board and President March 26, 1997 - ----------------------------------------------- and Director (Principal Executive (August A. Busch III) Officer) W. RANDOLPH BAKER Vice President and Chief Financial March 26, 1997 - ----------------------------------------------- Officer (Principal Financial (W. Randolph Baker) Officer) JOHN F. KELLY Vice President and Controller March 26, 1997 - ----------------------------------------------- (Principal Accounting Officer) (John F. Kelly) Director March 26, 1997 - ----------------------------------------------- (Andrew B. Craig III) BERNARD A. EDISON Director March 26, 1997 - ----------------------------------------------- (Bernard A. Edison) CARLOS FERNANDEZ G. Director March 26, 1997 - ----------------------------------------------- (Carlos Fernandez G.) PETER M. FLANIGAN Director March 26, 1997 - ----------------------------------------------- (Peter M. Flanigan) JOHN E. JACOB Director March 26, 1997 - ----------------------------------------------- (John E. Jacob) CHARLES F. KNIGHT Director March 26, 1997 - ----------------------------------------------- (Charles F. Knight) 12 14 VERNON R. LOUCKS, JR. Director March 26, 1997 - ----------------------------------------------- (Vernon R. Loucks, Jr.) VILMA S. MARTINEZ Director March 26, 1997 - ----------------------------------------------- (Vilma S. Martinez) Director March 26, 1997 - ----------------------------------------------- (Sybil C. Mobley) JAMES B. ORTHWEIN Director March 26, 1997 - ----------------------------------------------- (James B. Orthwein) ANDREW C. TAYLOR Director March 26, 1997 - ----------------------------------------------- (Andrew C. Taylor) DOUGLAS A. WARNER III Director March 26, 1997 - ----------------------------------------------- (Douglas A. Warner III) WILLIAM H. WEBSTER Director March 26, 1997 - ----------------------------------------------- (William H. Webster) EDWARD E. WHITACRE, JR. Director March 26, 1997 - ----------------------------------------------- (Edward E. Whitacre, Jr.)
13 15 ANHEUSER-BUSCH COMPANIES, INC. INDEX TO FINANCIAL STATEMENT SCHEDULE PAGE ---- Report of Independent Accountants on Financial Statement Schedule...... F-1 Consent of Independent Accountants...................................... F-1 Financial Statement Schedule for the Years 1996, 1995 and 1994: Valuation and Qualifying Accounts and Reserves (Schedule VIII)...... F-2 All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto. Separate financial statements of subsidiaries not consolidated have been omitted because, in the aggregate, the proportionate shares of their profit before income taxes and total assets are less than 20% of the respective consolidated amounts, and investments in such companies are less than 20% of consolidated total assets. 14 16 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Anheuser-Busch Companies, Inc. Our audits of the Consolidated Financial Statements referred to in our report dated February 3, 1997 appearing on page 77 of the 1996 Annual Report to Shareholders of Anheuser-Busch Companies, Inc. (which report and Consolidated Financial Statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related Consolidated Financial Statements. PRICE WATERHOUSE LLP St. Louis, Missouri February 3, 1997 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 33-119209) and in the Registration Statements on Forms S-8 (No. 2-77829, No. 33-4664, No. 33-36132, No. 33-39714, No. 33-39715, No. 33-46846, No. 33-53333, No. 33-58221, and No. 33-58241) of Anheuser-Busch Companies, Inc. of our report dated February 3, 1997 appearing on page 77 of the Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page F-1 of this Form 10-K. PRICE WATERHOUSE LLP St. Louis, Missouri March 26, 1997 F-1 17 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (CONTINUING OPERATIONS BASIS, IN MILLIONS)
1996 1995 1994 ---- ---- ---- Reserve for doubtful accounts (deducted from related assets): Balance at beginning of period............................................. $ 1.9 $ 1.9 $ 1.4 Additions charged to costs and expenses.................................... 1.8 .9 1.1 Additions (recoveries of uncollectible accounts previously written off )... .4 .4 .5 Deductions (uncollectible accounts written off )........................... (1.0) (1.3) (1.1) ------ ------ ------ Balance at end of period................................................... $ 3.1 $ 1.9 $ 1.9 ====== ====== ====== Deferred income tax asset valuation allowance under FAS 109: Balance at beginning of period............................................. $ 66.7 $ 52.7 $ 35.1 Additions to valuation allowance charged to costs and expenses............. 16.6 15.7 17.8 Deductions from valuation allowance (utilizations and expirations)......... (1.6) (1.7) (.2) ------ ------ ------ Balance at end of period................................................... $ 81.7 $ 66.7 $ 52.7 ====== ====== ======
F-2 INDEX TO EXHIBITS Exhibit No. Exhibit - ----------- ------- 10.1 Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (Amended and Restated as of January 1, 1997.) 12 Ratio of Earnings to Fixed Charges. 13 Pages 34 through 77 of the Anheuser-Busch Companies, Inc. 1996 Annual Report to Shareholders, a copy of which is furnished for the information of the Securities and Exchange Commission. Portions of the Annual Report not incorporated herein by reference are not deemed "filed" with the Commission. 21 Subsidiaries of the Company 27 Financial Data Schedule EX-10 2 EX-10.1 DEF COMP PLAN FOR NON-EMP AMEND/RESTATED 1 EX-10.1 ANHEUSER-BUSCH COMPANIES, INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (Amended and Restated as of January 1, 1997) The Deferred Compensation Plan For Non-Employee Directors, originally effective June 24, 1981, amended and restated in is entirety effective July 24, 1981, April 2, 1987, February 22, 1989, and amended from time to time since February 22, 1989, is hereby amended and restated in its entirety, effective January 1, 1997. 1. Definitions ----------- (a) "Board" - the Board of Directors of the Company. (b) "Cash Account" - each account being administered for the benefit of a Participant pursuant to section 5 below. (c) "Company" - Anheuser-Busch Companies, Inc. (d) "Compensation" - any retainer, meeting and committee fees, or any similar fee to which a Non-Employee Director is entitled for services performed. (e) "Credited Shares" - the shares of the Company s common stock which, for accounting purposes only, are to be credited to a Participant's Share Account from time to time. At no time shall Credited Shares be considered as actual shares of common stock and a Participant shall have no rights as a stockholder with respect to the Credited Shares. (f) "Deferred Amount" - Compensation deferred by a Participant under the Plan together with all interest, dividends or other amounts credited to a Participant s account(s) pursuant to the provisions of the Plan. (g) "Market Value" - the mean between the high and low price per share of the Company's common stock, as reported on the New York Stock Exchange, for the last business day of a calendar month. (h) "Non-Employee Director" - any duly elected or appointed member of the Board who is not an employee of the 2 Company or of any subsidiary of the Company, including for this purpose any Advisory Member or any Member Emeritus. (i) "Participant" - any Non-Employee Director who elects hereunder to defer payment by the Company of any or all Compensation to which he/she may be entitled and any Non- Employee Director entitled to a benefit under the Plan pursuant to section 9 below. (j) "Plan" - the Anheuser-Busch Companies, Inc. Deferred Compensation Plan For Non-Employee Directors. (k) "Prime Rate" - The annual prime interest rate published by The Boatmen's National Bank of St. Louis or its successor. (l) "Rate/Term" - one or more combinations of interest rates and time periods which shall apply to Compensation allocated to Participants Cash Accounts for a calendar year pursuant to section 5 below. (m) "Secretary" - the duly elected Secretary of the Company. (n) "Share Account" - each account being administered for the benefit of a Participant pursuant to section 6 below. 2. Administration -------------- The Plan shall be administered by the Secretary, who shall have the authority to construe and interpret the Plan, and to establish or adopt rules, regulations, procedures and forms relating to the administration of the Plan. The Secretary shall have no authority to add to, delete from or modify the terms of the Plan without the prior approval of the Board. Neither the Secretary nor any member of the Board shall be liable for any act or determination made in good faith. Notwithstanding the foregoing, the Secretary shall have complete power from time to time to adopt, amend, and rescind such rules as the Secretary shall deem necessary, appropriate, or prudent in order to comply with or avoid liability under Section 16 of the Securities Exchange Act of 1934, as amended, 2 3 or the rules promulgated thereunder from time to time. Without limiting the generality of such authority, the Secretary may adopt, amend, and rescind rules which may have the effect of adding to, deleting from, or otherwise modifying the terms of the Plan in any respect, provided only that the Secretary in good faith determines that such rules are reasonably likely to further the objective of complying with or lawfully avoiding liability under Section 16 or the rules thereunder. In addition, from time to time the Secretary may (but need not) adopt, amend, and rescind rules which relax Plan restrictions on the timing or frequency of actions by Plan Participants if and to the extent the Secretary determines that such restrictions no longer are necessary to conform the Plan to any applicable legal requirements and no longer are appropriate to the prudent and convenient administration of the Plan. Any rules adopted, amended, or rescinded by the Secretary hereunder shall become effective at such times as the Secretary may determine, without approval or other action by the Board of Directors of the Company. The Secretary shall notify the Board promptly of any rules adopted, amended, or rescinded hereunder. The Board at all times shall retain the power to annul in whole or part any action taken by the Secretary hereunder. 3. Elections under the Plan ------------------------ The following types of election shall be available under the Plan: (a) (1) Each Non-Employee Director who desires to participate in the Plan for a calendar year shall execute and deliver to the Secretary before the beginning of the calendar year an appropriate election designating the portion of Compensation for the calendar year to be deferred. (2) An individual who becomes a Non-Employee Director after the beginning of a calendar year may make an initial election for the calendar year within 30 days after the individual becomes a Non-Employee Director, effective as of the first day of the month coincident with or next following the date the election is filed. (3) After the initial election, a Participant s failure to execute and deliver such an election before the beginning of a calendar year shall be deemed an election to 3 4 continue to defer Compensation in accordance with the election in effect for the immediately prior calendar year. (b) (1) Coincident with the initial election provided for in section 3(a), a Participant shall execute and deliver to the Secretary an appropriate election designating the portion of the Participant's future Compensation to be deferred that shall be allocated to the Cash Account and the Share Account respectively, and may make such an election from time to time thereafter with respect to future deferrals in the same manner. (2) A Participant may elect to transfer existing Deferred Amounts between the Cash Account and the Share Account from time to time as provided for in section 7. (c) Each Participant for whom a Cash Account is maintained at any time during a calendar year shall execute and deliver to the Secretary an appropriate election designating the Rate/Term combinations which shall apply to the amounts in the Participant's Cash Account as provided for in section 5 for the calendar year. (d) (1) Coincident with the initial election provided for in section 3(a), a Participant shall execute and deliver to the Secretary an appropriate election designating the date of commencement and form of distribution of the Participant s Deferred Amounts authorized in section 8(b). (2) In addition, a Participant may from time to time execute such an election designating a later date of commencement and/or a longer payment period for all or any portion of the Participant's existing Deferred Amounts and/or the Participant's Compensation to be deferred in the future, provided that no such election with respect to existing Deferred Amounts shall be valid unless it is executed and received by the Secretary at least one year prior to the date of commencement then on file with the Secretary and at least one year prior to the date the Participant's service on the Board is scheduled to end (including service as an Advisory Member or Member Emeritus). (e) (1) Any election under this section 3 shall be effective on and after the first day of the month next 4 5 following the month in which the election form is received by the Secretary or such later date as may be specified on the election form, except with respect to transfers between the Cash Account and the Share Account, which shall be effective at the end of the month in which the election form is received by the Secretary as provided for in section 7(b). (2) The receipt by the Secretary of a new election form shall constitute a revocation of any previously filed inconsistent election, provided that a Participant shall not be able to change the election provided for in section 3(a) before the first day of the following calendar year and a Participant shall not be able to change the elections provided for in section 3(b) before the later of the first day of the following calendar year or the expiration of the fixed Term, if any, that the Participant chose for any Deferred Amounts subject to the election, as provided for in section 5. (3) No election to change the amount or percentage of Compensation a Participant elects to defer shall be retroactively effective. 4. Accounting ---------- (a) The Company shall establish on its books appropriate bookkeeping accounts for each Participant which will accurately reflect the Deferred Amount in each account of a Participant. (b) The Secretary shall furnish each Participant with a statement of the Deferred Amount in each account promptly following the end of each calendar year. 5. Cash Account ------------ (a) Each Participant's Cash Account shall consist of all of the Deferred Amounts credited pursuant to a specific election to defer, a valid transfer from the Participant s Share Account, or an election by the Participant pursuant to section 9, if any. (b) Crediting of interest on Deferred Amounts in a Participant's Cash Account shall be governed by this section 5. 5 6 (c) (1) Before the beginning of each calendar year, the Company shall offer one or more Rate/Term combinations. (2) The fixed Rates and Terms for each calendar year shall be determined by the Chief Financial Officer of the Company and shall be identical to the Rates and Terms available for the calendar year under the Anheuser-Busch Executive Deferred Compensation Plan. (3) A fixed Term elected by a Participant need not be limited to the deferral period for the amount subject to the Term elected. For example, a Participant may elect a 10- year Term for an amount that will become payable after 5 calendar years. (4) In addition to any fixed Rate/Term combinations provided for in this section 5(c), the Prime Rate shall be offered to Participants for each calendar year. Deferred Amounts subject to the Prime Rate shall be credited as of the end of each calendar quarter with an amount equal to the product of one-fourth of the Prime Rate in force at the end of that calendar quarter, multiplied by the average daily balance of such Deferred Amounts for that calendar quarter. (5) All fixed Terms shall commence on a January 1 and expire on a December 31. If a Participant executes and delivers a Rate/Term election for a calendar year before the beginning of the calendar year, it shall become effective as of January 1 of such calendar year. If a Participant does not execute and deliver the appropriate election form before the beginning of a calendar year, the Participant shall be deemed to have elected that any amounts subject to such an election as of the beginning of the calendar year be subject to the Prime Rate. As to any portion of a Participant's Cash Account subject to the Prime Rate as of the beginning of a calendar year, the Participant may make a Rate/Term election effective as of the first day of any succeeding calendar month during the calendar year. For example: (i) if before January 1, 1995, a Participant elects a combination of a 3-year Term and a 3% Rate for 1995, the 3% Rate shall apply to affected Deferred Amounts from January 1, 1995 through December 31, 1997; (ii) if a Participant elects the Prime Rate as of January 1, 1995 and then a combination of a 3-year Term and a 6 7 3% Rate as of April 1, 1995, the Prime Rate shall apply to affected Deferred Amounts from January 1, 1995 through March 31, 1995, and the 3% Rate shall apply to affected Deferred Amounts from April 1, 1995 through December 31, 1997; and (iii) if a Participant makes no Rate/Term election for any portion of a calendar year, the affected Deferred Amounts shall be subject to the Prime Rate for the entire calendar year. (d) (1) Each Participant shall elect among the Rate/Term combinations available under section 5(c) which shall apply to the Participant's Compensation allocated to the Participant's Cash Account for the calendar year, to all Deferred Amounts allocated to the Participant's Cash Account in prior calendar years which were subject to the Prime Rate as of the prior December 31, and to other Deferred Amounts allocated to the Participant's Cash Account in prior calendar years as to which the previous Terms expired on December 31 of the prior calendar year. (2) The number of Rate/Term combinations a Participant may select for a calendar year shall not exceed the number of Rate/Term combinations a participant may select under the Anheuser-Busch Executive Deferred Compensation Plan for the same calendar year. (e) Interest shall accrue on the Deferred Amounts of a Participant for each calendar year in accordance with the Participant's elections as provided for in this section 5 until payment becomes due with respect to such amounts. 6. Share Account ------------- (a) Each Participant's Share Account shall consist of all of the Deferred Amounts credited pursuant to a specific election to defer, a valid transfer from the Participant s Cash Account or an election by the Participant pursuant to section 9, if any. Any amount credited to a Share Account in a calendar month shall be converted, as of the end of that calendar month, into the maximum whole number of Credited Shares that the amount so credited could have purchased at the then Market Value. (b) As of the end of the calendar month during which the Company pays any dividend on its common stock, either in cash or property other than its common stock, a Share Account shall be credited with an amount equal to the cash dividend per 7 8 share or the value per share (as conclusively determined by the Board), of the dividend in property other than its common stock, times the Credited Shares in the Share Account on the dividend record date. The amount so credited will be converted into the maximum whole number of Credited Shares that the amount so credited could have purchased at the then Market Value. If the Company pays any stock dividend, a Share Account shall be credited, as of the end of the calendar month during which the stock dividend is paid, with an amount equal to the stock dividend declared times the Credited Shares in the Share Account on the dividend record date. (c) If any distribution other than a dividend is made on, or with respect to, the Company's common stock, or in the event of a stock split, recapitalization or other adjustment of the Company's common stock, an appropriate adjustment shall be made to the number of Credited Shares in a Share Account or to the cash credited to the Share Account on the same basis as would have been made had the Credited Shares then been actually issued and outstanding on the record date. The Board shall resolve any questions as to the appropriateness of any such adjustment, including, but not limited to, values and exchange ratios, and its determination shall be binding and conclusive. (d) All conversions into Credited Shares under subsections 6(a) through (c) above shall be made in full shares. Amounts not so converted shall be carried as excess cash in a Share Account and shall be added to any additional amounts subsequently available for conversion. 7. Election to Transfer -------------------- (a) Subject to any rules promulgated by the Secretary pursuant to section 2, a Participant may transfer from time to time: (1) all or any portion of any Deferred Amount from the Share Account to the Cash Account, or (2) all or any portion of any Deferred Amount then invested either at the Prime Rate or for a Term that expires on the effective date of the election to transfer from the Cash Account to the Share Account, by executing and delivering to the Secretary the appropriate election form. A Participant 8 9 may make such an election to transfer Deferred Amounts that then remain payable to the Participant under the Plan, including the period after termination of service as a Non- Employee Director (including service as an Advisory Member or Member Emeritus) and any period of payment in installments. If a Participant elects to transfer any portion of any Deferred Amount from the Share Account to the Cash Account, the Participant may make a Rate/Term election with respect to the amount transferred incident to the election to transfer. (b) A transfer shall be effective as of the end of the calendar month in which the election is received by the Secretary and shall be based on the Market Value of the Credited Shares for the month during which the election is made. (c) An election to transfer shall not affect any current elections to defer. No transfer may change either the date distribution is to commence or the form of distribution with respect to the Deferred Amount being transferred. 8. Distribution ------------ (a) Except in the case of the death of a Participant, distribution shall commence as of the first day of the calendar quarter coincident with or next following the date specified by the Participant. (b) Except in the case of the death of the Participant, payment of the amount in each deferred compensation account shall be either in the form of a lump sum or approximately equal quarterly installments over a period not to exceed ten (10) years as selected by the Participant; provided, if payment is made in installments and the Participant has both a Cash Account and a Share Account subject to the distribution as of the date of payment of any installment, the installment shall be paid pro rata from the Cash Account and the Share --- ---- Account. (c) In the event of the Participant's death prior to the date specified for distribution of any account, or after distribution to the Participant has commenced but before full distribution of any account has been made, the then remaining balance in each account shall be paid in a lump sum to the 9 10 beneficiary or contingent beneficiary designated by the Participant, or to the estate of the deceased Participant if there is no surviving beneficiary or contingent beneficiary. In either such event the lump sum payment shall be made as of the first day of the calendar quarter following the Participant's date of death. A Participant may change the beneficiary or contingent beneficiary from time to time by filing with the Secretary a written notice of such change; provided, however, no such notice of change of beneficiary shall be effective unless it had been received by the Secretary prior to the date of the Participant's death. 9. Amounts Attributable to the Non-Employee Directors -------------------------------------------------- Retirement Program. ------------------ (a) Any Participant who was a Non-Employee Director as of January 1, 1996 (including any former Non-Employee Director then serving as an Advisory Member) shall be eligible for a benefit under the Plan, in addition to any other amounts due the Participant under the Plan, determined as follows: (1) The present value as of January 1, 1996 of an annuity commencing as of the first day of the month following the Participant's expected retirement date, payable monthly, equal to 1/12th of the annual fee for Non-Employee Directors in effect as of January 1, 1996, shall be determined, applying the interest rate and mortality assumptions in use under the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan as of January 1, 1996. (2) Effective as of January 1, 1996, the amount so determined shall be allocated to the Participant's Cash Account and/or Share Account under the Plan, in such proportions as the Participant elects, and shall be subject to the adjustments in value provided for in sections 5 and 6 of the Plan; provided that any amount allocated to the Cash Account shall be subject to the Prime Rate and shall not be subject to any fixed Rate/Term election available with respect to other amounts allocated to the Cash Account until January 1, 1997, whereupon the amount shall be subject to all provisions of sections 5, 6 and 7 of the Plan. 10 11 (3) Effective as of January 1, 1996, the Participant shall elect a form of payment described in section 8(b) with respect to this amount. (4) As of the first day of the month following the date the Participant leaves service as a Non-Employee Director (including service as an Advisory Member or Member Emeritus), the total amount then allocated pursuant hereto to the Participant's Cash Account and Share Account shall become payable in the form elected by the Participant. The Participant may not change the date of commencement of payment of the amount subject to this section 9, but may elect a longer payment period as provided for in section 3(d)(2). (5) In the event of a Participant's death before payment of the amount provided for hereunder is complete, the then remaining balance of the amount due hereunder shall be paid as provided for in section 8(c); provided: (i) the Participant shall make a separate primary beneficiary and contingent beneficiary designation with respect to the amount due hereunder; (ii) a Participant may change the separate primary beneficiary or contingent beneficiary from time to time with respect to any payment due after death hereunder in the manner provided for generally in section 8(c); and (iii) if there is no surviving primary beneficiary or contingent beneficiary designated under the separate beneficiary designation provided for in this section 9(a)(5), the amount due hereunder shall be paid in accordance with the Participant's general beneficiary designation under section 8(c), if any, or if none, to the Participant's estate. (b) Except as expressly provided in this section 9, the generally applicable provisions of the Plan shall apply to amounts allocated to the Cash Account and the Share Account in accordance with this section 9. 10. Miscellaneous ------------- (a) The Board may amend or terminate this Plan at any time; however, any amendment or termination of this Plan shall not affect the rights of Participants or beneficiaries to payment, in accordance with section 8 of this Plan, of amounts credited to Participants' accounts hereunder at the time of such amendment or termination. 11 12 (b) This Plan does not create a trust in favor of a Participant, his/her designated beneficiary or beneficiaries, or any other person claiming on his/her behalf, and the obligation of the Company is solely a contractual obligation to make payments due hereunder. In this regard, the balance in any account shall be considered a liability of the Company and the Participant's right thereto shall be the same as any unsecured general creditor of the Company. Neither the Participant nor any other person shall acquire any right, title, or interest in or to any Deferred Amount outstanding under the Plan other than the actual payment of such Deferred Amount in accordance with the terms of the Plan. (c) No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or change, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or change the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefit. If any Participant or beneficiary shall become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or change any right or benefit hereunder, then such right or benefit shall, in the discretion of the Board, cease and terminate; and in such event, the Company may hold or apply the same or any part thereof for the benefit of the Participant or his/her beneficiary, his/her spouse, children or other dependents, at any time and in such proportion as the Board may deem proper. Any statement to the contrary notwithstanding, the Company may apply any Deferred Amount to satisfy, in whole or in part, any indebtedness of a Participant to the Company. (d) Construction of the Plan shall be governed by the laws of Missouri. (e) The terms of the Plan shall be binding upon the heirs, executors, administrators, personal representatives, successors and assigns of all parties in interest. 12 13 (f) The headings have been inserted for convenience only and shall not affect the meaning or interpretation of the Plan. (g) Each Participant shall submit to the Secretary his/her current mailing address. It shall be the duty of each Participant to notify the Secretary of any change of address. In the absence of such notice, the Secretary shall be entitled for all purposes to rely on the last known address of the Participant. (h) Any amount payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company and the Board with respect thereto. (i) Nothing in this Plan or any amendment thereto shall give a Participant, or any beneficiary of a Participant, a right not specifically provided therein. Nothing in this Plan or any amendment thereto shall be construed as giving a Participant the right to be retained as a member of the Board. 13 EX-12 3 EX-12 RATIO OF EARNINGS TO FIXED CHARGES EX-12 RATIO OF EARNINGS TO FIXED CHARGES (CONTINUING OPERATIONS) The following table sets forth the ratio of the Company's earnings to fixed charges, on a consolidated basis, for the periods indicated: Year Ended December 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- ---- 8.1X 1/ 6.6X 2/ 7.7X 5.8X 3/ 7.7X 6.3X For purposes of this ratio, earnings have been calculated by adding to income before income taxes the amount of fixed charges. Fixed charges consist of interest on all indebtedness, amortization of debt discount and expense of that portion of rental expense deemed to represent interest. 1/ The ratio for 1996 includes the gain from the sale of the Cardinals, which increased income before income taxes by $54.7 million. Excluding this one-time gain, the ratio would have been 7.9X. 2/ The ratio for 1995 includes the impact of the Tampa Brewery shutdown and the reduction of wholesaler inventories. Excluding these non-recurring items, the ratio would have been 7.6X. 3/ Includes the impact of the one-time, pre-tax restructuring charge of $401 million as a result of the company's Profitability Enhancement Program. Excluding this non-recurring special charge, the ratio would have been 7.5X. EX-13 4 EX-13 1996 ANNUAL REPORT - ----------------------------------------- |MANAGEMENT'S DISCUSSION & ANALYSIS | EX-13 |OF OPERATIONS AND FINANCIAL CONDITION | - ----------------------------------------- INTRODUCTION This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity/cash flows of Anheuser-Busch Companies, Inc. for the three-year period ended December 31, 1996. This discussion should be read in conjunction with the Letter to Shareholders, Consolidated Financial Statements and Notes to Consolidated Financial Statements included in this annual report. Financial results from continuing operations for 1996 and 1995 were impacted by certain significant one-time, nonrecurring transactions and events which make meaningful comparisons to prior years more difficult. The specific transactions and events are summarized below. 1996 TRANSACTION: 1. SALE OF THE ST. LOUIS CARDINALS NATIONAL BASEBALL CLUB During the first quarter 1996, the company completed the sale of the St. Louis Cardinals Baseball Club. The sale included Busch Memorial Stadium and several nearby parking garages and other properties in downtown St. Louis. The sale price was $150 million resulting in a $54.7 million pretax gain ($.06 per share) which is shown as a separate line item in the Consolidated Statement of Income. 1995 TRANSACTIONS: In 1995, Anheuser-Busch announced a series of strategic initiatives designed to focus maximum attention on the company's core businesses, improve future profitability and enhance shareholder value, as follows: 1. DIVESTITURE OF FOOD PRODUCTS SEGMENT In 1995, Anheuser-Busch announced its intention to divest its food products segment through the tax-free 100% spin-off to shareholders of The Earthgrains Company (formerly known as Campbell Taggart) and the divestiture of the assets of Eagle Snacks, Inc. As such, in accordance with generally accepted accounting principles, in 1995 Anheuser-Busch restated all prior period financial statements and financial information to exclude the historical combined financial results of Earthgrains and Eagle Snacks from detailed financial components. All Earthgrains and Eagle Snacks related financial results and financial information are reported in the Anheuser-Busch consolidated financial statements as "Discontinued Operations," and have no impact on continuing operations. There was no reported gain or loss on the Earthgrains spin-off. However, Anheuser-Busch recognized $19.8 million in after-tax spin-off related costs and taxes ($.04 per share) in the fourth quarter 1995. Pursuant to the decision to divest Eagle Snacks, Anheuser-Busch recognized a $205.7 million after-tax charge ($.39 per share) in the fourth quarter 1995. The spin-off related costs and taxes and the Eagle Snacks write-off are reported as part of Discontinued Operations. In connection with the Earthgrains spin-off, each Anheuser-Busch shareholder received one share of Earthgrains voting common stock for every 25 shares of Anheuser-Busch stock owned (25:1 ratio, reflected on a pre-split basis) in a special dividend distributed March 26, 1996. Earthgrains common stock began trading on the New York Stock Exchange as a separate company on March 27, 1996. Additional information concerning the divestiture of the food products segment is included in Note 3 to the Consolidated Financial Statements. 2. CONSOLIDATION OF BREWING CAPACITY RESULTING IN THE CLOSURE OF THE TAMPA BREWERY By utilizing the full production capacity of its new Cartersville, Ga., brewery, plus ongoing modernization programs at its other 11 breweries, Anheuser-Busch has added a significant amount of efficient, lower-cost capacity in recent years. The Tampa brewery was the company's highest cost-per-barrel brewery and, accordingly, was closed in 1995 resulting in a $160 million pretax write-off ($.19 per share) in the fourth quarter 1995. 34 ---------------------------------------------- |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | ---------------------------------------------- This write-off is shown as a separate line item on the company's Consolidated Statement of Income. Closing the Tampa brewery generated approximately $33 million of pretax operational cost savings in 1996. 3. REDUCTION OF BEER WHOLESALER INVENTORIES In a move designed to provide the freshest possible beer to the marketplace,achieve greater systemwide distribution efficiencies and reduce costs, Anheuser-Busch reduced wholesaler inventories by about one-third during the fourth quarter 1995. The decision to reduce wholesaler inventories resulted in Anheuser-Busch shipping approximately 1.1 million fewer barrels in the fourth quarter 1995. This reduced net sales by approximately $107 million and reduced operating profits by approximately $74.5 million. This financial impact is not separately identified in the company's Consolidated Statement of Income. The company maintained relatively low inventory levels throughout 1996 and enters 1997 with inventory levels that continue to be the lowest of all major brewers. The ability to have the freshest beer available provides Anheuser-Busch a significant competitive advantage. The company has communicated its freshness advantage to consumers through a comprehensive marketing campaign, which includes the "Born On" freshness dating on beer packages. The lower inventory levels have resulted in approximately $12 million in annual systemwide cost savings for Anheuser-Busch's network of beer wholesalers through improved scheduling, lower transportation costs and reduced working capital requirements. CONCLUSION The above-noted actions have made Anheuser-Busch a more focused and competitive company. By capitalizing on its competitive advantages in its core businesses, Anheuser-Busch plans to achieve three major objectives in coming years in order to generate the highest returns for shareholders: 1. The company will continue to gain an increased share of the brewing industry in the United States (both market share and margin share). Anheuser-Busch was the only major brewer to increase market share and sales volume in 1996. The company will continue to apply its marketing expertise and substantial cash flow to achieve these goals. 2. Anheuser-Busch will continue to globalize its beer operations by building Budweiser brand equity worldwide and making selected investments in brewers with leading brands in key international beer growth markets. International beer volume has averaged double-digit annual growth over the last 15 years and the company made significant marketing investments to build Budweiser brand recognition outside the U.S. In December 1996, the company announced its intention to purchase an additional 25% equity investment in Mexico's largest brewer, Grupo Modelo. Due diligence is complete and the companies are currently working to resolve differences of opinion concerning certain purchase price adjustments. When finalized, the company expects its total investment to approximate $1 billion. This additional investment reflects the company's commitment to international expansion. Additional information regarding the company's investment in Grupo Modelo can be found in the International Investments section of this discussion and in Note 2 to the Consolidated Financial Statements. 3. The company will support the growth of its packaging and entertainment subsidiaries. Metal Container Corporation (MCC), the company's can manufacturing subsidiary, provides significant efficiencies and cost savings in tandem with brewing operations, and the company will continue to invest in technology and capacity improvements as necessary to support MCC and beer volume growth. The company's Busch Entertainment theme park subsidiary is a significant contributor to corporate earnings and provides Anheuser-Busch with a unique opportunity to showcase the company to approximately 20 million visitors annually. 35 - ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | - ------------------------------------------ CONTINUING OPERATIONS As previously noted, the significant nonrecurring transactions in 1996 and 1995 make it difficult to directly compare 1996 vs. 1995, and 1995 vs. 1994 financial results from continuing operations. Therefore, key financial comparisons are presented in the following summaries on both a "Normalized Operations" basis (excluding the nonrecurring items) and an "As Reported" basis (including the nonrecurring items) in order to facilitate a more complete understanding of underlying company operating results. During the second quarter 1996, Anheuser-Busch completed the sale of the majority of the assets of Eagle Snacks, Inc. to Frito-Lay, a subsidiary of PepsiCo. Accordingly, Anheuser-Busch adjusted its previously estimated loss provision for the disposition of the food products segment and recognized a $33.8 million after-tax gain ($.07 per share) during the second quarter. This gain is reported entirely in Discontinued Operations and has no impact on financial results from Continuing Operations. [SALES GRAPH] Key financial comparisons from continuing operations (which exclude the financial results of The Earthgrains Company and Eagle Snacks, Inc.) are summarized below:
- ----------------------------------------------------------------------------------- FULL YEAR 1996 VS. 1995 ($ IN MILLIONS, EXCEPT PER SHARE) - ----------------------------------------------------------------------------------- 1996 | 1995 | 1996 VS. 1995 --------------------|-----------------------|---------------------- NORMALIZED AS | NORMALIZED AS | NORMALIZED AS OPERATIONS REPORTED| OPERATIONS REPORTED| OPERATIONS REPORTED --------------------|-----------------------|---------------------- | | Gross Sales $12,622 $12,622 | $12,131 $12,004 | Up 4.0% Up 5.1% Net Sales 10,884 10,884 | 10,448 10,340 | Up 4.2% Up 5.3% Operating Income 2,029 2,084 | 1,867 1,633 | Up 8.7% Up 27.6% Income from | Cont. Oper. 1,123 1,156 | 1,032 887 | Up 8.8% Up 30.4% Fully Diluted | | Earnings per Share 2.21 2.27 | 1.99 1.71 | Up 11.1% Up 32.7% - -------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------- Full Year 1995 vs. 1994 ($ in millions, except per share) - ----------------------------------------------------------------------------- 1995 Normalized Change vs. | 1995 As Change vs. Operations 1994 | Reported 1994 -------------------------------|------------------------------ | Gross Sales $12,131 Up 3.6% | $12,004 Up 2.6% Net Sales 10,448 Up 4.2% | 10,340 Up 3.1% Operating Income 1,867 Up .8% | 1,633 Dn 11.9% Income from | Cont. Oper. 1,032 Up 1.8% | 887 Dn 12.6% Fully Diluted | Earnings per Share 1.99 Up 4.5% | 1.71 Dn 10.2% - -----------------------------------------------------------------------------
DETAILED FINANCIAL STATEMENT ANALYSIS IN THE REMAINDER OF THIS DISCUSSION FOCUSES ON CONTINUING OPERATIONS ON A NORMALIZED OPERATIONS BASIS. --------------------------- SALES -- 1996 VS. 1995 Anheuser-Busch achieved record gross sales during 1996 of $12.6 billion, an increase of $491 million or 4.0% over 1995 gross sales of $12.1 billion. Gross sales include $1.74 billion in federal and state beer excise taxes for 1996. Net sales for 1996 were also a record, $10.9 billion, an increase of $436 million or 4.2% over 1995 ne sales of $10.4 billion. The increase in gross and net sales in 1996 was driven primarily by increased beer sales volume, higher net revenue per barrel sold and higher theme park revenues. Consolidated sales growth for 1996 would have been even higher if not for lower sales by the company's recycling operations due to lower aluminum prices and lower revenues due to the sale of the St. Louis Cardinals during the first quarter 1996. 36 -------------------------------------------- |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | -------------------------------------------- Anheuser-Busch, Inc., the company's brewing subsidiary and largest contributor to consolidated sales, reported record 1996 sales volume of 91.1 million barrels, an increase of 3.6 million barrels, or 4.1%, vs. the 87.5 million barrels sold during 1995. As previously noted, however, reported 1995 volume amounts were negatively impacted by the beer wholesaler inventory reduction. Excluding the inventory reduction, 1996 beer volume would have increased 2.5 million barrels, or 2.8%, over 1995. Reported market share for 1996 was 45.2% of industry shipments, an increase of 1.1 share points when compared to 1995 reported market share of 44.1%. Excluding the impact of the wholesaler inventory reduction, Anheuser-Busch's 1995 market share would have been 44.4%. Market share is determined based on industry sales estimates provided by the Beer Institute and includes exports, imports, nonalcohol brews and other malt beverages. During 1996, Anheuser-Busch's core premium and super-premium brands (the Bud and Michelob Families) continued to gain momentum, with Bud Light growing at an annualized double-digit pace. Overall, Bud Family sales were up almost 2%. The company's core brands are complemented by a broad portfolio of specialty brands, appealing to all tastes and styles, including Michelob Amber Bock, Michelob HefeWeizen, Red Wolf, the American Originals line and imported Carlsberg and Carlsberg Light. The company's international beer volume performance was strong during 1996, led by continuing sales expansion in the United Kingdom, Ireland and Japan. SALES -- 1995 VS. 1994 AND 1994 VS. 1993 Gross sales during 1995 of $12.1 billion were 3.6% higher than 1994. Gross sales for 1994 were $11.7 billion, an increase of 5.0% over 1993. Net sales for 1995 of $10.4 billion were 4.2% higher than 1994. Net sales during 1994 were $10.0 billion, an increase of 5.9% over 1993. Gross sales include approximately $1.7 billion in federal and state beer excise taxes for both 1995 and 1994. Anheuser-Busch, Inc. sold 87.5 million barrels of beer in 1995, including the impact of the beer wholesaler inventory reduction. Excluding the 1995 beer wholesaler inventory reduction, Anheuser-Busch, Inc. would have reported 1995 sales volume of 88.6 million barrels, an increase of 100,000 barrels, or .1%, vs. the 88.5 million barrels sold during 1994. Sales-to-retailers were up slightly in 1995 as compared to 1994. In 1995, Anheuser-Busch's core premium brands (the Bud and Michelob Families) gained momentum, with Bud Light increasing at a double-digit rate and Michelob Light increasing 9%. Bud Ice sales trends improved throughout 1995. Overall, the company introduced seven new beer brands in 1995. Anheuser-Busch, Inc. beer sales for 1994 were 88.5 million barrels, an increase of 1.2 million barrels, or 1.4% higher than the 87.3 million barrels sold during 1993. 1994 market share was 44.4%, an increase of .1 of a point, compared to 1993 market share. The Bud Family was a significant contributor to increased sales volume for 1994 and also contributed to an approximate 1% increase in revenue per barrel for the year. Bud Family sales-to-retailers increased 3.5% for the year, led by Bud Light, which grew at a double-digit rate. In the third quarter 1994, Bud Light became the largest-selling light beer in the country and the second-largest beer brand overall, behind Budweiser. COST OF PRODUCTS AND SERVICES Cost of products and services for 1996 was $7.0 billion, a 2.1% increase over the $6.8 billion reported for 1995. This increase follows 4.6% and 5.3% increases in 1995 and 1994, respectively. The increase in the cost of products and services in 1996 is attributable to increased beer sales volume and increased raw material costs, particularly brewing materials, partially offset by production efficiency savings and lower scrap aluminum prices related to recycling operations. 37 - ------------------------------------------- |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | - ------------------------------------------- Gross profit as a percentage of net sales was 36.0% for 1996 compared to 34.7% for 1995, an increase of 1.3 percentage points, reflecting higher net revenue per barrel sold and productivity improvements. During 1995, beer packaging costs increased substantially as a result of higher aluminum costs. However, such increases were mitigated by the company's having protected pricing on more than half of its 1995 aluminum sheet requirements at prices below market level. As a percent of net sales, gross profit for 1995 decreased .5 of a percentage point compared to 35.2% for 1994. [TOTAL Cost of products and services for 1994 increased EMPLOYEE-RELATED primarily due to higher production costs for the company's COSTS GRAPH] brewing subsidiary and other beer-related operations and higher attendance at the company's entertainment operations. MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES Marketing, distribution and administrative expenses for 1996 were $1.89 billion, an increase of 7.6% compared to 1995. These expenses increased in 1996 primarily due to sponsorship of the Centennial Olympic Games in Atlanta, increased spending to support accelerated volume growth for premium brands, global Budweiser brand building initiatives and promotional spending in support of "Born On" freshness dating. Marketing, distribution and administrative expenses for 1995 were $1.76 billion, an increase of 4.6% compared to 1994. These expenses increased in 1995 primarily due to the addition of marketing and distribution expenses for new beer brands and higher international beer marketing expenses. Marketing, distribution and administrative costs for 1994 were $1.68 billion, an increase of 4.2% over 1993. The increased expense level for 1994 was primarily the result of the company's new joint venture in Japan which began operations in September 1993. Areas of cost increase incurred by the company since 1993 include media advertising, point-of-sale materials and developmental expenses associated with new advertising and marketing programs for both established and new products, payroll and related costs, business taxes, supplies and general operating expenses. EMPLOYEE-RELATED COSTS Employee-related costs during 1996 totaled $1.80 billion, an increase of $61 million, or 3.5%, vs. 1995 costs of $1.74 billion, and reflect normal increases in salaries, wages and benefit levels. Employee-related costs during 1995 increased $30 million, or 1.8%, vs. 1994 costs of $1.71 billion and again reflect normal increases in salaries, wages and benefit levels. Employee- related costs decreased .5% in 1994, reflecting 10% fewer salaried employees due to the enhanced retirement program offered in 1993. Salaries and wages paid during 1996 totaled $1.45 billion, an increase of 5.0% vs. 1995. Pension, life insurance and health care benefits amounted to $235.8 million while payroll taxes were $110.1 million, reflecting a decrease of 4.1% and an increase of 1.0%, respectively, compared to 1995. Full-time employees for continuing operations at December 31, 1996 numbered 25,123, compared to 25,181 at December 31, 1995. During the second quarter of 1994, a four-year labor contract covering the majority of the company's beer production employees was ratified. The contract, which expires February 28, 1998, enhanced a wage and benefits package which was already the most attractive in the industry and established an improved framework for the company to achieve necessary operating productivity increases over time. 38 -------------------------------------------- |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | -------------------------------------------- TAXES The company is significantly impacted by federal, state and local taxes, including beer excise taxes. Taxes applicable to 1996 operations (not including the many indirect taxes included in materials and services purchased) totaled $2.68 billion and highlight the burden of taxation on the company and the brewing industry in general. Total taxes for 1996 increased $241 million or 9.9% vs. 1995 taxes of $2.44 billion. This follows a decrease of 4.0% in 1995 and an increase of 7.8% in 1994. Total taxes are presented on an as reported basis. [OPERATING INCOME (CONTINUING The increase in total taxes for 1996 compared to OPERATIONS BASIS) 1995 is primarily due to higher beer excise taxes from GRAPH] increased beer volume and higher income taxes on the company's higher pretax earnings level in 1996. The significant decrease in total taxes for 1995 compared to 1994 is primarily due to reduced income taxes on lower taxable income, resulting from the costs associated with closing the Tampa brewery and the impact of the beer wholesaler inventory reduction. The beer wholesaler inventory reduction also contributed to slightly lower beer excise taxes in 1995 vs. 1994. The significant increase in total taxes for 1994 compared to 1993 is due to higher income taxes resulting from the company's substantially higher earnings level compared to 1993. Earnings for 1993 were negatively impacted by a nonrecurring pretax restructuring charge of $401.3 million. OPERATING INCOME, NORMALIZED BASIS Operating income represents the measure of the company's financial performance before interest costs and other nonoperating items. Operating income for 1996 was $2.03 billion, an increase of $162 million, or 8.7%, as compared to 1995. The increase in 1996 operating income is due primarily to higher beer sales volume and significantly higher beer margins due to improved pricing and continued productivity improvements. Productivity improvements in 1996 generated nearly $100 million in cost savings vs. 1995. As anticipated, international brewing's profit contribution was down somewhat in 1996 compared to 1995 due to substantially higher investment spending on marketing for global Budweiser brand building and having a full year of operating results for the joint venture in China included in 1996 vs. only partial year results in 1995. Metal Container Corporation, the company's can manufacturing subsidiary, reported essentially flat profits during 1996 vs. 1995 primarily due to weaker can pricing. The company's Busch Entertainment theme park subsidiary was a significant contributor to corporate performance through its fifth consecutive year of record attendance and profitability in 1996. Busch Entertainment's year-round theme parks were largely responsible for this record performance which was achieved despite an unusually active hurricane season and a disruption in normal attendance patterns due to the Centennial Olympic Games in Atlanta. The Busch Entertainment facilities achieved aggregate record attendance of approximately 20 million guests in 1996, slightly exceeding the levels achieved in 1995. Operating income for 1995 was $1.87 billion, an increase of $14 million, or .8%, as compared to 1994. Operating income for 1994 increased 9.8% over 1993 operating income of $1.69 billion. The increase in operating income for 1995 was primarily due to the performance of the company's international beer, packaging and theme park operations. The increase in operating income for 1994 was primarily the result of positive domestic and international beer performance, offset by lower earnings at the St. Louis Cardinals Baseball Club (attributable primarily to the baseball players strike). 39 - ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | - ------------------------------------------ NET INTEREST COST/INTEREST CAPITALIZED Net interest cost (interest expense less interest income) for 1996 was $223.4 million, an increase of $7.4 million, or 3.4%, compared to 1995. The increase in net interest cost in 1996 was due to higher average debt balances outstanding during the period, primarily as a result of financing capital expenditures and share repurchases, largely offset by lower average interest rates. Net interest cost for 1995 was $216.0 million, a decrease of $.7 million compared to 1994. The decrease in net interest cost in 1995 was primarily the result of higher average [INCOME FROM interest rates during the year offset by lower average debt CONTINUING balances and higher interest income. Net interest cost for OPERATIONS*/ 1994 was $216.7 million, an increase of $15.0 million, or 7.4%, DIVIDENDS over 1993. The increase in net interest cost in 1994 was due ON COMMON to higher average debt balances outstanding during the period, STOCK GRAPH] primarily as a result of financing capital expenditures, share repurchases and international brewing investments. Specific information regarding company financing activity, including long-term debt activity, capital expenditures, share repurchases and dividends, is presented in the Liquidity and Capital Resources section of this discussion. Interest capitalized increased $11.2 million, to $35.5 million in 1996, after increasing $2.5 million in 1995. The increases in 1996 and 1995 were due primarily to higher construction-in-progress balances relating to ongoing modernization projects at the company's breweries. Interest capitalized decreased $13.4 million in 1994 as compared to 1993. The decline in 1994 was related to the spring 1993 start-up of the company's brewery in Cartersville, Ga., which resulted in the cessation of interest capitalization for completed areas of this facility. OTHER INCOME/(EXPENSE), NET Other income/(expense), net includes numerous items of a nonoperating nature which do not have a material impact on the company's consolidated results of operations, either individually or in the aggregate. Other (expense), net was $3.0 million in 1996 compared to $20.5 million of other income, net in 1995. The change is primarily due to the reclassification of certain purchase discounts from other income/(expense), net to cost of products and services in 1996. Other income, net was $20.5 million and $17.6 million, respectively, for 1995 and 1994, primarily reflecting dividend income from the Grupo Modelo investment and purchase discounts, offset by numerous miscellaneous items. INCOME FROM CONTINUING OPERATIONS, NORMALIZED BASIS Income from continuing operations for 1996 was $1.12 billion, an increase of 8.8% compared to 1995 income from continuing operations of $1.03 billion. 1995 income from continuing operations increased 1.8% compared to 1994. Income from continuing operations for 1994 was $1.01 billion, an increase of 8.5%, over 1993. The company's effective income tax rate was 38.9% for 1996 compared to 39.1% for 1995. The decrease in the effective rate in 1996 is due to lower state taxes and lower nondeductible costs. The effective tax rate was 39.1% for 1995 vs. 39.5% for 1994. The effective rate for 1994 was 39.5% vs. an effective rate of 42.4% in 1993. Comparisons with the 1993 effective rate are not meaningful due to the impact of the deferred tax revaluation adjustment (in accordance with FAS 109) to reflect the retroactive impact of the 1% federal tax rate increase signed into law during 1993. Excluding this nonrecurring item, the effective tax rate for 1993 was 39.7%. 40 ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | ------------------------------------------ FULLY DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS, NORMALIZED BASIS Fully Diluted Earnings Per Share from Continuing Operations, Normalized Basis Fully diluted earnings per share from continuing operations for 1996 were $2.21, an increase of $.22, or 11.1%, compared to 1995. Fully diluted earnings per share from continuing operations for 1995 were $1.99, an increase of 4.5% compared to [FULLY DILUTED 1994 earnings per share of $1.90. Earnings per share EARNINGS PER for 1994 increased 12.4% compared to 1993. SHARE FROM CONTINUING Fully diluted earnings per share continue to benefit OPERATIONS* from the company's ongoing share repurchase program. GRAPH] The company repurchased approximately 22 million shares in 1996, or approximately 4% of outstanding shares. Fully diluted earnings per share reflect the full conversion of the company's 8% Convertible Debentures Due 1996 as of September 30, 1996, and the elimination of related after-tax interest expense through that date. FINANCIAL POSITION Anheuser-Busch's strong financial profile allows it to pursue profitable growth while providing substantial direct returns to shareholders. Accordingly, the company has established well-defined priorities for its operating cash flow: 1. REINVESTING IN CORE BUSINESSES TO ACHIEVE PROFITABLE GROWTH. The company will continue to make significant investments in its capital asset base to ensure the highest efficiency and lowest cost in its operations. 2. CONTINUING DIVIDEND PAYMENTS TO SHAREHOLDERS AND REPURCHASING SHARES OF COMMON STOCK. The company has paid dividends in each of the last 63 years. During that time, Anheuser-Busch stock has split on eight different occasions and stock dividends were paid three times. Recognizing the preference of many investors, Anheuser-Busch will continue to repurchase shares of its common stock in the marketplace to provide direct returns to shareholders. The company's current intention is to repurchase 3% to 4% of outstanding common shares each year. LIQUIDITY AND CAPITAL RESOURCES The company's primary sources of liquidity are cash provided from operating activities and certain financing activities. Information on the company's consolidated cash flows (categorized by operating activities, financing activities and investing activities) for the years 1996, 1995 and 1994 is presented in the Consolidated Statement of Cash Flows in this annual report. The principal source of the company's cash flow is cash generated by operations. Additional sources of cash in 1996 included proceeds from the sale of the Cardinals and the sale of the assets of Eagle Snacks. Principal uses of cash are capital expenditures, share repurchases, dividends and new business acquisitions. Cash flow from operations for 1995 was adversely impacted by the reduction in wholesaler inventories. Working capital at December 31, 1996 was $34.9 million as compared to working capital of $268.6 million at December 31, 1995 and $57.0 million at December 31, 1994. Cash and marketable securities were $93.6 million at December 31, 1996 and 1995. Total long-term debt was $.8 million higher at December 31, 1996 vs. the balance at December 31, 1995 and was $203.7 million higher at December 31, 1995 vs. December 31, 1994. The change in debt during these periods is detailed on the next page, by key components. Included in the gross reduction in long-term debt for 1996 is the noncash conversion of the company's 8% Convertible Debentures Due 1996. 41 - ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | - ------------------------------------------ DEBT ISSUANCES $773.6 million in debt was issued in 1996, vs. $597.6 million in 1995, as follows: - -------------------------------------------------------- YEAR DESCRIPTION AMOUNT INTEREST RATE (MILLIONS) - -------------------------------------------------------- 1996 Long-Term Notes $450.0 6.75% Dual-Currency Notes 262.4 Floating Industrial Revenue Bonds 50.7 Various Other, Net 10.5 Various - -------------------------------------------------------- 1995 Debentures $350.0 Various Long-Term Notes, Net 200.0 6.75% Industrial Revenue Bonds 24.4 Various Other, Net 23.2 Various - -------------------------------------------------------- DEBT REDUCTIONS Gross debt reduction was $772.8 million in 1996, vs. $393.9 million in 1995, as follows: - -------------------------------------------------------- YEAR DESCRIPTION AMOUNT INTEREST RATE (MILLIONS) - -------------------------------------------------------- 1996 Sinking Fund Debentures $110.6 Various Convertible Debentures 166.0 8% Medium-Term Notes 13.0 7.43% Industrial Revenue Bonds 30.0 Various Commercial Paper, Net 417.0 Various ESOP Guarantee 31.7 8.3% Other, Net 4.5 Various - -------------------------------------------------------- 1995 Convertible Debentures $67.2 8% Medium-Term Notes, Net 117.0 Various Commercial Paper, Net 176.8 Various ESOP Guarantee 30.3 8.3% Other, Net 2.6 Various - -------------------------------------------------------- Gains/losses on debt reduction activities were not material, either individually or in the aggregate, to the company's consolidated financial statements during 1996, 1995 or 1994. 42 ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | ------------------------------------------ At December 31, 1996 and 1995, there were $155.5 million and $572.5 million,respectively, of outstanding commercial paper borrowings classified as long-term debt. The commercial paper is intended to be maintained on a long-term basis, with ongoing credit support provided by the company's $1 billion revolving credit agreement. Commercial paper can be refinanced with long-term notes or debentures at the company's discretion. In 1989, the company registered $300 million of seven-year convertible debentures with the Securities and Exchange Commission (SEC) as part of its Wholesaler [CASH FLOW FROM Investment Program and a total of $241.7 million were CONTINUING issued. The debentures were convertible into preferred OPERATIONS GRAPH] stock at a price of $47.60 per share, with each share of preferred stock convertible into one share of common stock. The effective conversion price was adjusted to $23.39 in 1996 to reflect the impact of the spin-off of Earthgrains and the two-for-one stock split. The debentures matured October 1, 1996 and full conversion to common stock was completed in the third quarter 1996. The company issued 7.5 million and 2.8 million shares, respectively, in 1996 and 1995 in conjunction with conversions. No preferred shares are outstanding as a result of any conversion of the debentures. A total of $166 million of these debentures was outstanding at December 31, 1995. The company utilizes SEC shelf registration statements to provide financing flexibility. At December 31, 1996, a total of $550 million was available for debt issuance under existing shelf registration statements. In addition to its long-term debt financing, the company has access to the short-term capital market through its utilization of commercial paper which is supported by its revolving credit facility. During 1994, the company terminated its previous $800 million credit agreements and established a single $1 billion credit agreement which expires August 2001. This agreement provides the company with immediate and continuing sources of liquidity. Further information on the credit agreement can be found in Note 9 to the Consolidated Financial Statements. The company's ratio of total debt to total capitalization was 44.8% and 47.1% at December 31, 1996 and 1995, respectively. The company's fixed charge coverage ratio was 7.9x for the year ended December 31, 1996 and 7.6x for the year ended December 31, 1995. A discussion of the company's risk management activities is included in Note 20 to the Consolidated Financial Statements. 43 - ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | - ------------------------------------------ CAPITAL EXPENDITURES During the next five years, the company plans to continue capital expenditure programs designed to take advantage of growth and productivity improvement opportunities for its beer/beer-related and entertainment segments. Cash flow from operating activities will provide the principal support for these capital investments. However, a capital expenditure program of this magnitude, in combination with share repurchases and possible additional international beer-related investments, may require external financing from time to time. The nature, extent and timing of external financing will vary depending upon the company's evaluation of existing market conditions and other economic factors. The company has a formal and intensive review procedure for the authorization of capital expenditures. The most important measure of capital project acceptability is its projected discounted cash flow return on investment (DCFROI). Total capital expenditures in 1996 amounted to $1.1 billion as compared with $952.5 million in 1995, an increase of 13.9%. Capital expenditures over the past five years totaled $4.0 billion. Capital expenditures for 1996 for the company's beer/ [CAPITAL beer-related operations were $902.5 million, including $90.2 EXPENDITURES/ million related to packaging operations. Major expenditures DEPRECIATION by Anheuser-Busch, Inc. included numerous modernization AND projects designed to improve productivity and reduce costs AMORTIZATION at all the company's breweries. GRAPH] Capital expenditures totaling $151.6 million were made by the company's entertainment operations. Major entertainment expenditures included new Busch Entertainment theme park attractions. The company expects its capital expenditures in 1997 to approximate $1 billion. Capital expenditures during the five-year period 1997-2001 are expected to approximate $4.5 billion. SHARE REPURCHASE The Board of Directors has approved various resolutions in recent years authorizing the company to repurchase shares of its common stock for investment purposes and to meet the requirements of the company's various stock purchase and incentive plans. The most recent resolution was approved by the Board in July 1996 authorizing the repurchase of an additional 50 million shares. The company acquired 22.2 million, 13.6 million and 21.9 million shares (split-adjusted) of common stock in 1996, 1995 and 1994 for $770.2 million, $393.4 million and $563.0 million, representing approximately 4.4%, 2.6% and 4.1% of common shares outstanding, respectively. At December 31, 1996, approximately 2.6 million shares were available for repurchase under the 1994 authorization and 50 million shares were available under the July 1996 authorization. DIVIDENDS Cash dividends paid to common shareholders were $458.9 million in 1996 and $429.5 million in 1995. Dividends on common stock are paid in the months of March, June, September and December of each year. In the third quarter 1996, effective with the September dividend, the Board of Directors increased the quarterly dividend rate by 9.1% from $.22 to $.24 per share. This increased annual dividends per common share by 9.5%, to $.92 in 1996, compared with $.84 per common share in 1995. In 1995, dividends were $.20 per share for the first two quarters and $.22 per share for the last two quarters. 44 ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | ------------------------------------------ ACQUISITIONS AND INVESTMENTS As more fully described in Notes 2 and 6 to the Consolidated Financial Statements, Anheuser-Busch made several major acquisitions and business investments in 1996, 1995 and 1994. A summary of these acquisitions and business investments follows. 1996 TRANSACTIONS 1. In 1993, the company purchased a 17.7% direct and indirect interest in Diblo, the operating subsidiary of Grupo Modelo, Mexico's largest brewer, for $477 million. The purchase agreement gave Anheuser-Busch options to increase its direct investment in Grupo Modelo to approximately 35% and to acquire an additional direct interest in Diblo. In December 1996, Anheuser-Busch announced its intention to purchase an additional 25% interest in Grupo Modelo. Due diligence is complete and the companies are currently working to resolve differences of opinion concerning certain purchase price adjustments. When finalized, the company expects its total investment to approximate $1 billion and Anheuser-Busch will directly and indirectly own 37% of Diblo. The company will have remaining options, which expire on December 31, 1997, to increase its direct interest in Diblo to approximately 23%. A complete exercise of these options would increase the company's direct and indirect ownership in Diblo to 50.2%. The company has not made a decision as to if, when, or to what extent, it will exercise the remaining Diblo options. The company accounted for its Modelo investment on the cost basis in 1996, 1995 and 1994. Due to the nature of Anheuser-Busch's initial investment, the company was not required to adjust its Modelo investment to fair market value. In addition, the initial investment was configured such that the company's return was largely protected against devaluation of the Mexican peso. Therefore, the 1994 peso devaluation and subsequent depreciation relative to the U. S. dollar did not have a significant effect on earnings in 1996, 1995 or 1994. Commensurate with the additional purchase, Anheuser-Busch will begin accounting for its investment in Grupo Modelo on the equity basis and will therefore recognize its pro rata share of Modelo's net earnings as a separate line-item in the Consolidated Statement of Income beginning in 1997. The difference between income recognized on the cost basis in 1996, 1995 and 1994 and what would have been recognized had the company applied equity accounting in those years is not material. Effective January 1, 1997, Mexico's economy is considered hyperinflationary in accordance with Financial Accounting Standard No. 52 (FAS 52), "Foreign Currency Translation." Under FAS 52, the U.S. dollar becomes the functional currency for entities operating in hyperinflationary environments. As such, the impact of financial statement translation adjustments for monetary assets and liabilities is recognized in earnings in the current period. Accordingly, all translation gains and losses relating to the Modelo investment will be recognized in earnings while the Mexican economy is considered hyperinflationary. Depending on certain circumstances, primarily the ongoing value of the peso relative to the dollar, hyperinflationary accounting may expose the company to earnings volatility it would not otherwise normally experience. It is anticipated the Mexican economy will cease to be classified as hyperinflationary sometime in late 1998. 2. In April 1996, the company invested $52.5 million to purchase a 5% equity stake in Antarctica Empreendimentos e Participacoes (ANEP), a subsidiary representing approximately 75% of the operations of Companhia Antarctica Paulista (Antarctica), one of Brazil's leading brewers. The investment agreement also provided the company with options to increase its investment to approximately 30% of ANEP beginning April 22, 1996 and generally expiring on April 21, 2002. Concurrent with the investment in ANEP, the company entered into a joint venture with Antarctica called Budweiser Brasil Ltda. which is owned 51% by Anheuser-Busch and 49% by Antarctica. Under the joint venture agreement, ANEP will contract brew Budweiser on behalf of the joint venture while the joint venture will concentrate on the sales, marketing and distribution of Budweiser in Brazil. The investment in Budweiser Brasil Ltda. is accounted for on a consolidated basis. 45 - ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | - ------------------------------------------ As a result of holding certain minority rights under the investment agreement and having gained representation on ANEP's Board of Directors in late 1996, the company will change its method of accounting for the investment in ANEP from the cost to the equity method effective January 1, 1997. The difference between income recognized on the cost basis in 1996 and what would have been recognized had the company applied equity accounting is not material 3. In February 1996, the company entered into an alliance with Companhia Cervecerias Unidas S.A. (CCU) and Buenos Aires Embotelladora S.A. (BAESA). Under the agreement, the company invested cash and donated equipment with a market value of approximately $4 million to CCU-Argentina, a brewing subsidiary of CCU, in exchange for a 4.4% equity interest in CCU-Argentina. The investment agreement also provided the company with options to increase its investment to 20% of CCU-Argentina beginning October 1, 1998 and generally expiring no later than December 31, 2002. The investment in CCU-Argentina is accounted for on a cost basis. 1995 TRANSACTIONS 1. In April 1995, the company entered into a 50% owned joint venture with Scottish Courage Ltd. which consolidated the brewing and packaging of Budweiser in the Stag Brewery at Mortlake in London, England. The joint venture is accounted for on an equity basis. 2. In February 1995, the company finalized the purchase of an 80% interest in a joint venture that owns the Wuhan Brewery, in the fifth-largest city in the People's Republic of China. The brewery has been modified to brew Budweiser for distribution in the northern, central and eastern regions of China. In 1996, the company purchased an additional 5.3% interest in the joint venture pursuant to certain contract provisions. The investment in the Wuhan joint venture is accounted for on a consolidated basis. 1994 TRANSACTION In the fourth quarter 1994, the company purchased a 25% equity interest in Redhook Ale Brewery, Inc. of Seattle, Wash., for $18 million. During 1995, in conjunction with Redhook's initial public offering, Anheuser-Busch invested an additional $12 million to maintain its 25% equity ownership level. The equity investment in Redhook is accounted for on an equity basis. COMMON STOCK A discussion of share repurchases and dividends paid on common stock can be found in the Liquidity and Capital Resources section of this discussion. At December 31, 1996, common stock shareholders of record numbered 65,079 compared with 64,118 at the end of 1995. Total shares outstanding were 497.4 million at December 31, 1996 compared to 508.0 million at December 31, 1995. PRICE RANGE OF COMMON STOCK The company's common stock is listed on the New York Stock Exchange (NYSE) under the symbol "BUD." The table below summarizes BUD high and low closing prices on the NYSE. - ------------------------------------------------ PRICE RANGE OF ANHEUSER-BUSCH COMMON STOCK (BUD) - ------------------------------------------------ 1996 1995 ---------------- ---------------- QUARTER HIGH LOW HIGH LOW First....35 5/8 32 5/8 29 1/2 25 3/8 Second...38 1/4 32 1/2 29 7/8 27 5/8 Third....39 7/8 35 3/4 32 1/4 27 3/8 Fourth...42 7/8 37 3/8 34 31 - -------------------------------------------- 46 ------------------------------------------ |MANAGEMENT'S DISCUSSION & ANALYSIS | |OF OPERATIONS AND FINANCIAL CONDITION | ------------------------------------------ The closing price of the company's common stock at December 31, 1996 and 1995 was $40 and $33 3/8, respectively. The book value of each share of common stock at December 31, 1996 was $8.10, as compared to $7.22 at December 31, 1995. SHAREHOLDERS EQUITY Shareholders equity was $4.03 billion at December 31, 1996, as compared with $4.43 billion at December 31, 1995. The decrease in shareholders equity during the year is attributable to the spin-off of Earthgrains, share repurchases and dividends, offset by net income on an as reported basis and the reduction of the ESOP debt guarantee. In July 1996, the Board of Directors authorized a two-for-one stock split, effective for shareholders of record August 15, 1996. Certificates for one additional share of Anheuser-Busch common stock for each share held at the record date were distributed to shareholders on September 12, 1996. All share and per share information has been adjusted to reflect the impact of the split. [SHAREHOLDERS EQUITY/LONG-TERM EMPLOYEE STOCK OWNERSHIP PLAN DEBT GRAPH] As more fully described in Note 11 to the Consolidated Financial Statements, the company added an employee stock ownership plan (ESOP) feature to its existing Deferred Income Stock Purchase and Savings Plans in 1989. At that time, the ESOP borrowed $500 million, guaranteed by the company, and used the proceeds to buy approximately 22.7 million shares of common stock from the company. The ESOP shares are being allocated to participants over 15 years as contributions are made to the plan. Through the various company stock ownership plans, employees of Anheuser-Busch control approximately 10% of the company's outstanding common stock. ENVIRONMENTAL MATTERS The company is subject to federal, state and local environmental protection laws and regulations and is operating within such laws or is taking action aimed at assuring compliance with such laws and regulations. Compliance with these laws and regulations is not expected to materially affect the company's competitive position. None of the Environmental Protection Agency (EPA) designated clean-up sites for which Anheuser- Busch has been identified as a Potentially Responsible Party (PRP) would have a material impact on the company's consolidated financial statements. The company has traditionally provided a strong commitment to environmental protection. This commitment is manifested through the Environmental Policy Committee, a committee of senior corporate executives which reports to the Board of Directors. Under the direction of the Environmental Policy Committee, the company is implementing a corporatewide environmental management system based on the Business Charter for Sustainable Development. This system is designed to help ensure compliance with applicable laws, while simultaneously reducing costs. The company's Environmental Policy, the foundation of the environmental management system, integrates good business practices with sound environmental practices. The policy provides specific guidance for how the environment must be factored into business judgments and mandates special consideration of environmental issues in conjunction with other business issues when any of the company's facilities or business units plan capital projects or changes in processes. In addition, the company is piloting systems to ensure that its standards are met by outside contractors and by suppliers. INFLATION General inflation has not had a significant impact on the company over the past three years and is not expected to have a significant impact in the foreseeable future. 47 - ------------------------------ |Consolidated Balance Sheet | - ------------------------------ Anheuser-Busch Companies, Inc., and Subsidiaries (In millions) - -------------------------------------------------------------------------- DECEMBER 31, 1996 1995 - -------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and marketable securities.......................$ 93.6 $ 93.6 Accounts and notes receivable, less allowance for doubtful accounts of $3.1 and $1.9 in 1996 and 1995 632.7 544.3 Inventories Raw materials and supplies......................... 319.5 382.2 Work in process.................................... 80.6 58.6 Finished goods..................................... 131.0 141.9 Total inventories................................ 531.1 582.7 Other current assets................................. 208.4 290.0 ------------------- Total current assets............................... 1,465.8 1,510.6 INVESTMENTS AND OTHER ASSETS........................... 1,789.6 1,553.3 INVESTMENT IN DISCONTINUED OPERATIONS.................. -- 764.0 PLANT AND EQUIPMENT, NET............................... 7,208.2 6,763.0 ------------------- Total Assets.......................................$10,463.6 $10,590.9 =================== LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES: Accounts payable.....................................$ 726.8 $ 682.8 Accrued salaries, wages and benefits................. 227.6 247.0 Accrued taxes........................................ 233.0 86.3 Other current liabilities............................ 243.5 225.9 ------------------- Total current liabilities.......................... 1,430.9 1,242.0 ------------------- POSTRETIREMENT BENEFITS................................ 524.6 512.1 ------------------- LONG-TERM DEBT......................................... 3,270.9 3,270.1 ------------------- DEFERRED INCOME TAXES.................................. 1,208.1 1,132.8 ------------------- COMMON STOCK AND OTHER SHAREHOLDERS EQUITY: Common stock, $1.00 par value, authorized 800,000,000 shares................................. 705.8 347.3 Capital in excess of par value....................... 929.2 1,012.2 Retained earnings.................................... 6,924.5 6,869.6 Foreign currency translation adjustment.............. (8.8) (12.1) ------------------- 8,550.7 8,217.0 Treasury stock, at cost.............................. (4,206.2) (3,436.0) ESOP debt guarantee offset........................... (315.4) (347.1) ------------------- 4,029.1 4,433.9 ------------------- COMMITMENTS AND CONTINGENCIES.......................... -- -- Total Liabilities and Equity.......................$10,463.6 $10,590.9 =================== - -------------------------------------------------------------------------- The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 52-71 of this report. 48 ------------------------------------- |Consolidated Statement of Income | ------------------------------------- Anheuser-Busch Companies, Inc., and Subsidiaries (In millions, except per share) - --------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 1995 1994 - --------------------------------------------------------------------------- Sales........................................$12,621.5 $12,004.5 $11,705.0 Less federal and state excise taxes........ 1,737.8 1,664.0 1,679.7 ------------------------------ Net sales.................................... 10,883.7 10,340.5 10,025.3 Cost of products and services.............. 6,964.6 6,791.0 6,492.1 ------------------------------ Gross profit................................. 3,919.1 3,549.5 3,533.2 Marketing, distribution and administrative expenses................................. 1,890.0 1,756.6 1,679.9 Gain on sale of St. Louis Cardinals........ 54.7 -- -- Shutdown of Tampa brewery.................. -- (160.0) -- ------------------------------ Operating income............................. 2,083.8 1,632.9 1,853.3 Interest expense........................... (232.8) (225.9) (219.3) Interest capitalized....................... 35.5 24.3 21.8 Interest income............................ 9.4 9.9 2.6 Other income/(expense), net................ (3.0) 20.5 17.6 ------------------------------ Income before income taxes................... 1,892.9 1,461.7 1,676.0 ------------------------------ Provision for income taxes: Current.................................... 643.0 523.8 597.5 Deferred................................... 93.8 51.3 64.0 ------------------------------ 736.8 575.1 661.5 ------------------------------ Income from continuing operations............ 1,156.1 886.6 1,014.5 Income/(loss) from discontinued operations... 33.8 (244.3) 17.6 ------------------------------ NET INCOME...................................$ 1,189.9 $ 642.3 $ 1,032.1 ============================== PRIMARY EARNINGS PER SHARE: Continuing operations......................$ 2.28 $ 1.72 $ 1.92 Discontinued operations.................... .07 (.48) .04 ------------------------------ Net income.................................$ 2.35 $ 1.24 $ 1.96 ============================== FULLY DILUTED EARNINGS PER SHARE: Continuing operations......................$ 2.27 $ 1.71 $ 1.90 Discontinued operations.................... .07 (.47) .04 ------------------------------ Net income.................................$ 2.34 $ 1.24 $ 1.94 ============================== - --------------------------------------------------------------------------- The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 52-71 of this report. 49 - -------------------------------------- |Consolidated Statement of | |Changes in Shareholders Equity | - -------------------------------------- Anheuser-Busch Companies, Inc., and Subsidiaries
(In millions, except per share) - -------------------------------------------------------------------------------------------------------------------------- ESOP FOREIGN CAPITAL IN DEBT CURRENCY COMMONEXCESS OFRETAINEDTREASURYGUARANTEETRANSLATION STOCKPAR VALUEEARNINGSSTOCK OFFSETADJUSTMENT -------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1993 $342.5 $ 808.7 $6,023.4 $(2,479.6) $(406.5) $(33.0) Net income................... 1,032.1 Common dividends paid ($0.76 per share).......... (398.8) Shares issued under stock plans and conversions of convertible debentures.. 1.3 48.1 Reduction of ESOP debt guarantee.................. 29.1 Treasury stock acquired...... (563.0) Foreign currency translation adjustment................. 11.2 ---------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1994 343.8 856.8 6,656.7 (3,042.6) (377.4) (21.8) Net income................... 642.3 Common dividends paid ($0.84 per share).......... (429.5) Shares issued under stock plans and conversions of convertible debentures.. 3.5 155.4 .1 Reduction of ESOP debt guarantee.................. 30.3 Treasury stock acquired...... (393.4) Foreign currency translation adjustment................. 9.7 ---------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1995 347.3 1,012.2 6,869.6 (3,436.0) (347.1) (12.1) Net income................... 1,189.9 Common dividends paid ($0.92 per share).......... (458.9) Shares issued under stock plans and conversions of convertible debentures.. 9.0 266.5 3.9 Two-for-one stock split...... 349.5 (349.5) Reduction of ESOP debt guarantee.................. 31.7 Treasury stock acquired...... (770.2) Foreign currency translation adjustment................. 3.3 Spin-off of The Earthgrains Company.... (680.0) ---------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1996. $705.8 $ 929.2 $6,924.5 $(4,206.2) $(315.4) $ (8.8) ============================================================================================== - ----------------------------------------------------------------------------------------------------------------------------
The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 52-71 of this report. 50 ----------------------------------- |Consolidated Statement | |of Cash Flows | ----------------------------------- Anheuser-Busch Companies, Inc., and Subsidiaries
(In millions) - -------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 1995 1994 - -------------------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income........................................$1,189.9 $ 642.3 $1,032.1 Discontinued operations........................... (33.8) 244.3 (17.6) ----------------------------------- Income from continuing operations................. 1,156.1 886.6 1,014.5 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization................. 593.9 565.6 517.0 Deferred income taxes......................... 93.8 51.3 68.5 After-tax gain on sale of St. Louis Cardinals. (33.4) -- -- Shutdown of Tampa brewery..................... -- 112.3 -- Decrease/(increase) in noncash working capital............................. 233.7 (262.0) (57.0) Other, net.................................... (75.2) 72.1 120.0 ----------------------------------- Cash provided by continuing operations............ 1,968.9 1,425.9 1,663.0 Net cash provided by/(provided to) discontinued operations..................... 52.0 (11.0) (93.5) ----------------------------------- Total cash provided by operating activities....... 2,020.9 1,414.9 1,569.5 ----------------------------------- CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of St. Louis Cardinals......... 116.6 -- -- Capital expenditures..............................(1,084.6) (952.5) (662.8) New business acquisitions......................... (135.7) (82.9) (28.8) ----------------------------------- Cash used for investing activities................(1,103.7) (1,035.4) (691.6) ----------------------------------- CASH FLOW FROM FINANCING ACTIVITIES: Increase in long-term debt........................ 773.6 597.6 182.2 Decrease in long-term debt........................ (575.1) (296.4) (102.5) Dividends paid to shareholders.................... (458.9) (429.5) (398.8) Acquisition of treasury stock..................... (770.2) (393.4) (563.0) Shares issued under stock plans................... 113.4 91.8 45.5 ---------------------------------- Cash used for financing activities................ (917.2) (429.9) (836.6) ---------------------------------- Net increase/(decrease) in cash and marketable securities during the year............. -- (50.4) 41.3 Cash and marketable securities, beginning of year... 93.6 144.0 102.7 ----------------------------------- Cash and marketable securities, end of year.........$ 93.6 $ 93.6 $ 144.0 =================================== - ---------------------------------------------------------------------------------------
The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 52-71 of this report. 51 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES This summary of the significant accounting principles and policies of Anheuser-Busch Companies, Inc. and its subsidiaries is presented to assist in evaluating the company's financial statements included in this report. These principles and policies conform to generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions which impact the reported amounts of assets and iabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the company and all its subsidiaries. All significant intercompany transactions have been eliminated. FOREIGN CURRENCY TRANSLATION Financial statements of foreign operations where the local currency is the functional currency are translated using exchange rates in effect at period-end for assets and liabilities, and weighted average exchange rates during the period for the results of operations. Related translation adjustments are reported as a separate component of shareholders equity. (Translation practice differs for foreign operations in hyperinflationary economies. See Note 2 for additional discussion). Adjustments related to foreign currency transactions are recognized in income. CASH AND MARKETABLE SECURITIES Cash and marketable securities include cash on hand, demand deposits and short-term investments with original maturities of 90 days or less. EXCESS OF COST OVER NET ASSETS OF ACQUIRED BUSINESSES (GOODWILL) The excess of the cost over the net assets of acquired businesses, which is included in Investments and Other Assets on the Consolidated Balance Sheet, is amortized on a straight-line basis over a period of 40 years. Accumulated amortization at December 31, 1996 and 1995 was $93.7 million and $79.7 million, respectively. INVENTORIES AND PRODUCTION COSTS Inventories are valued at the lower of cost or market. Cost is determined under the last-in, first-out method (LIFO) for a majority of the company's inventories. See Note 7 for additional discussion. PLANT AND EQUIPMENT Plant and equipment is carried at cost and includes expenditures for new facilities and expenditures which substantially increase the useful lives of existing facilities. Maintenance, repairs and minor renewals are expensed as incurred. When plant and equipment are retired or otherwise disposed, the related cost and accumulated depreciation are eliminated and any gain or loss on disposition is reflected in the income statement. Depreciation is provided on the straight-line method over the estimated useful lives of the assets, resulting in depreciation rates on buildings ranging from 2% to 10% and on machinery and equipment ranging from 4% to 25%. CAPITALIZATION OF INTEREST Interest relating to the cost of acquiring certain fixed assets is capitalized. The capitalized interest is included as part of the cost of the related asset and is amortized over its estimated useful life. 52 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- INCOME TAXES The provision for income taxes is based on the income and expense amounts as reported in the Consolidated Statement of Income. The company has elected to utilize certain provisions of federal income tax laws and regulations to reduce current taxes payable. Deferred income taxes are recognized for the effect of temporary differences between financial and tax reporting in accordance with the requirements of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." DERIVATIVE FINANCIAL INSTRUMENTS The company utilizes certain derivative financial instruments, including forward exchange contracts, futures contracts, options and swaps to manage its exposures to foreign currency exchange, commodity price and interest rate risk incurred in the normal course of business. Anheuser-Busch has well-established policies and procedures governing the use of derivatives. The company hedges only actual or anticipated transactions and company policy prohibits the use of derivatives for speculation, including the sale (writing) of freestanding options. The company neither holds nor issues financial instruments for trading purposes. Under current uses, all derivative instruments are accounted for on the deferral basis. Changes in fair value over the life of the derivatives are recorded in the same category as the underlying asset or liability. Gains or losses upon settlement of derivative positions when the underlying transaction occurs are recognized in the income statement or recorded as part of the underlying asset or liability, as appropriate depending on the circumstances. Option premiums paid are recorded as assets and amortized over the life of the option. Purchased options, foreign exchange contracts and futures contracts generally have initial terms of less than two years. Derivatives are either regulated exchange instruments which are highly liquid or over-the-counter instruments transacted with highly rated financial institutions. No credit loss is anticipated as the counterparties to nonexchange-traded instruments are major financial institutions having long-term debt ratings from Standard and Poor's or Moody's no lower than A+ or A1, respectively. The fair value of derivative financial instruments is monitored based on the estimated amounts the company would receive or have to pay to terminate the contracts. See Note 20 for additional discussion. RESEARCH AND DEVELOPMENT, ADVERTISING AND PROMOTIONAL COSTS, AND INITIAL PLANT COSTS Research and development, advertising and promotional costs, and certain initial plant costs are expensed in the year in which these costs are incurred. Advertising expenses were $701.3 million, $683.0 million and $672.6 million in 1996, 1995 and 1994, respectively. COMMON STOCK SPLIT All share and per share amounts have been adjusted to reflect the two-for-one common stock split distributed on September 12, 1996. EARNINGS PER SHARE Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during the respective years as shown below (in millions): ----------------------------------------------------------------- 1996 1995 1994 -------------------------- Primary weighted average shares........ 505.8 515.7 528.2 Fully diluted weighted average shares.. 510.6 524.4 538.0 ----------------------------------------------------------------- Fully diluted earnings per share of common stock reflect the full conversion of the company's convertible debentures in 1996 and the elimination of related after-tax interest expense. Fully diluted earnings per share for 1995 and 1994 assume the conversion of the convertible debentures and the elimination of the related after-tax interest expense. 53 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- IMPAIRMENT OF LONG-LIVED ASSETS, IDENTIFIABLE INTANGIBLE ASSETS AND GOODWILL The company reviews long-lived assets, identifiable intangibles and goodwill for impairment whenever events or changes in business circumstances indicate the carrying amount of the assets may not be fully recoverable. The company performs nondiscounted cash flow analysis to determine if an impairment exists. If impairment is determined to exist, any related impairment loss is calculated based on the present value of cash flows using discount rates which reflect the inherent risk of the underlying business. Impairment losses on assets to be disposed (if any) are based on the estimated proceeds to be received less costs of disposal. SYSTEMS DEVELOPMENT COSTS The company defers systems development costs which meet established criteria. Amounts deferred are amortized to expense over a five-year period. Deferred systems development costs were $83.0 million and $43.7 million in 1996 and 1995, respectively. STOCK-BASED COMPENSATION The company accounts for employee stock options in accordance with Accounting Principles Board No. 25 (APB 25), "Accounting for Stock Issued to Employees." Under APB 25, the company applies the intrinsic value method of accounting and therefore does not recognize compensation expense for options granted, because options are only granted at a price equal to market value on the day of grant. During 1996, Statement of Financial Accounting Standards No. 123 (FAS 123), "Accounting for Stock Based Compensation," became effective for the company. FAS 123 prescribes the recognition of compensation expense based on the fair value of options determined on the grant date. However, FAS 123 allows companies currently applying APB 25 to continue using that method. The company has therefore elected to continue applying the intrinsic value method under APB 25. For companies that choose to continue applying the intrinsic value method, FAS 123 mandates certain pro forma disclosures as if the fair value method had been utilized. See Note 10 for additional discussion. INVESTMENTS IN DEBT AND EQUITY SECURITIES The company has certain investments in debt and equity securities which are classified as held-to-maturity in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Unrealized gains or losses on these investments were not material for 1996, 1995 or 1994. - -------------------------------------------------------------------- 2. EXERCISE OF GRUPO MODELO OPTION In June 1993, the company purchased a 10% interest in Grupo Modelo (Modelo), Mexico's largest brewer, and a 10% interest in Diblo, its operating subsidiary, for a combined $477 million. Modelo holds 76.75% of the stock of Diblo. Accordingly, the initial investment resulted in an effective Anheuser-Busch ownership (direct and indirect) in Diblo of 17.7%. The original purchase agreement gave the company options to increase its direct investment in Modelo to approximately 35%, plus options to increase its direct investment in Diblo to approximately 23%. On December 18, 1996, the company announced its intention to exercise its option to purchase the additional 25% stake in Modelo which will result in an effective ownership (direct and indirect) in Diblo of approximately 37%. Due diligence is complete and the companies are currently working to resolve differences of opinion concerning certain purchase price adjustments. When finalized, the company expects its total investment to approximate $1 billion. The company's remaining options on additional Diblo shares expire on December 31, 1997. The company has not made a decision as to if, when, or to what extent, it will exercise the remaining Diblo options. The company currently accounts for its investments in Modelo and Diblo on the cost basis. Concurrent with finalization of the additional investment in Modelo, the company will adopt the equity method of accounting for both investments. The difference between income recognized on the cost basis in 1996, 1995 and 1994 and what would have been recognized had the company applied equity accounting in those years is not material. The purchase price will be financed through a combination of operating cash flow and debt issuance. 54 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- For foreign operations in countries whose economies are considered highly inflationary (and the U.S. dollar is therefore deemed the functional currency), currency translation practice in accordance with Statement of Financial Accounting Standard No. 52 (FAS 52), "Foreign Currency Translation," requires that property, other long-lived assets, long-term liabilities and related profit and loss accounts be translated at historical rates of exchange. Under FAS 52, net monetary asset and liability related translation adjustments are included in earnings for operations in highly inflationary economies. Effective January 1, 1997, Mexico's economy will be considered highly inflationary for accounting purposes under FAS 52 and, accordingly, all monetary translation gains and losses related to the Modelo and Diblo investments will be recognized in earnings. ---------------------------------------------------------------- 3. DIVESTITURE OF FOOD PRODUCTS SEGMENT In the fourth quarter 1995, the Board of Directors approved management's plan to divest the company's food products segment, which included The Earthgrains Company (formerly known as Campbell Taggart) and Eagle Snacks, Inc. Earthgrains was divested in a tax-free 100% spin-off to shareholders on March 26, 1996. In the second quarter 1996, the company sold most of its Eagle Snacks production facilities. Accordingly, the company revised its estimated loss provision for the disposition of the food products segment and recorded a $33.8 million after-tax gain ($.07 per share) in the second quarter which is reported as income from discontinued operations. Because the food products segment is discontinued, amounts in the Consolidated Financial Statements and related Notes for all periods shown have been restated to reflect discontinued operations accounting. The net assets of the food products segment are reflected as Investment in Discontinued Operations in the Consolidated Balance Sheet at December 31, 1995, and are comprised of the following (in millions): ---------------------------------------------------------------- 1995 -------------------- Current assets.............................. $292.7 Plant and equipment, net.................... 756.3 Other assets................................ 264.6 Current liabilities......................... (253.2) Deferred income taxes....................... (166.6) Other noncurrent liabilities................ (129.8) -------- Net assets.................................. $764.0 ==================== ---------------------------------------------------------------- Sales, income/(loss) before income taxes, and related income tax provision/(benefit) of the food products segment (discontinued operations) were as follows: ----------------------------------------------------------------- YEAR ENDED DECEMBER 31, ----------------------------- 1996 1995 1994 ----------------------------- Sales.............................. $ -- $1,985.0 $2,028.5 ----------------------------- Pretax income/(loss)............... $ -- $ (29.2) $ 31.1 Tax (provision)/benefit............ -- 10.4 (13.5) ----------------------------- Net income/(loss).................. $ -- $ (18.8) $ 17.6 ----------------------------- Gain/(Loss) on divestiture: Gain/(Loss) on divestiture....... $ 53.8 $ (318.0) $ -- Direct costs of disposal......... -- (5.0) -- Estimated operating losses during phase-out period............... -- (12.0) -- ---------------------------- 53.8 (335.0) -- Income tax (provision)/benefit... (20.0) 109.5 -- ---------------------------- Gain/(Loss) on divestiture of the food products segment.......... $ 33.8 $ (225.5) $ -- ---------------------------- Total income/(loss) from discontinued operations.......... $ 33.8 $ (244.3) $ 17.6 ============================ ---------------------------------------------------------------- 55 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- 4. CLOSURE OF THE TAMPA BREWERY - ----------------------------------------------------------------- During the fourth quarter 1995, the company closed its brewery located in Tampa, Fla., resulting in a nonrecurring, pretax charge of $160 million ($.19 per share). The charge is comprised of the write-down of the carrying value of plant assets of $113.7 million, employee severance costs of $19.4 million and other disposal costs of $26.9 million. The majority of the brewery's plant and equipment was either sold or disposed during 1996. - ------------------------------------------------------------------ 5. SALE OF THE CARDINALS During the first quarter 1996, the company completed the sale of its Major League Baseball team, the St. Louis Cardinals. The sale included Busch Memorial Stadium, nearby parking garages and other properties in downtown St. Louis. The sale price was $150 million and resulted in a pretax gain of $54.7 million ($.06 per share), which is presented as a separate line item in the Consolidated Statement of Income. - ------------------------------------------------------------------- 6. ACQUISITIONS AND BUSINESS INVESTMENTS In April 1996, the company invested $52.5 million to purchase a 5% equity stake in Antarctica Empreendimentos e Participacoes (ANEP), a subsidiary representing approximately 75% of the operations of Companhia Antarctica Paulista (Antarctica), one of Brazil's leading brewers. The investment agreement also provided the company with options to increase its investment to approximately 30% of ANEP beginning April 22, 1996 and expiring, subject to certain conditions, on April 21, 2002. Concurrent with the investment in ANEP, the company entered into a joint venture with Antarctica called Budweiser Brasil Ltda. which is owned 51% by Anheuser-Busch and 49% by Antarctica. Under the joint venture agreement, ANEP will contract brew Budweiser on behalf of the joint venture while the joint venture will concentrate on the sales, marketing and distribution of Budweiser in Brazil. As a result of holding certain minority rights and having gained representation on the ANEP Board of Directors in late 1996, the company will change its accounting method for the investment in ANEP from the cost to the equity method effective January 1, 1997. The difference between income recognized on the cost basis in 1996 and what would have been recognized had the company applied equity accounting is not material. The investment in Budweiser Brasil Ltda. is accounted for on a consolidated basis. In February 1996, the company entered into an alliance with Companhia Cervecerias Unidas S.A. (CCU) and Buenos Aires Embotelladora S.A. (BAESA). The agreement called for the company to invest cash and donate equipment with a market value of approximately $4 million to CCU-Argentina, a brewing subsidiary of CCU operating in Argentina, in exchange for a 4.4% stake in CCU-Argentina. The investment agreement also provided the company with options to increase its investment to 20% of CCU-Argentina beginning on October 1, 1998 and generally expiring no later than December 31, 2002. The investment in CCU- Argentina is accounted for on a cost basis. In February 1995, the company invested $52.8 million for an 80% interest in a joint venture which owns the Wuhan brewery located in the People's Republic of China (China). Under the original investment agreement, certain minority shareholders retained the right to put their investments to Anheuser-Busch in accordance with the terms of the investment agreement. Effective September 1996, certain minority shareholders exercised their put options, resulting in the company investing an additional $3.5 million in exchange for an additional 5.3% interest in the joint venture. The joint venture brews and distributes Budweiser and certain local brands primarily in the northern, eastern and central regions of China. An approximate $70-80 million expansion of the Wuhan brewery, which is anticipated to double capacity, is expected to be completed in 1998. The investment is accounted for on a consolidated basis. In April 1995, the company entered into a joint venture with Scottish Courage Ltd., with each partner owning 50%. The joint venture consolidated the brewing and packaging of Budweiser in the Stag Brewery at Mortlake in London, England. Scottish Courage owns and leases the Stag Brewery site to the joint venture. The investment is accounted for under the equity method. 56 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- In the fourth quarter 1994, the company purchased a 25% equity interest in Redhook Ale Brewery, Inc. (Redhook) of Seattle, Wash., for $18 million. In conjunction with Redhook's initial public offering of shares in August 1995, the company invested an additional $12 million to maintain its 25% equity position. Under a distribution alliance agreement, Redhook products are distributed exclusively through Anheuser-Busch wholesalers in substantially all major U.S. markets. The company accounts for the investment under the equity method. ---------------------------------------------------------------- 7. INVENTORY VALUATION Approximately 76% of total inventories at both December 31, 1996 and 1995, are stated on the last-in, first-out (LIFO) inventory valuation method. Had the average-cost method (which approximates replacement cost) been used with respect to such inventories at December 31, 1996 and 1995, total inventories would have been $124.3 million and $101.5 million higher, respectively. ---------------------------------------------------------------- 8. CREDIT AGREEMENT The company's revolving credit agreements totaling $800 million were terminated in December 1994. These agreements were replaced by a single committed revolving credit agreement, totaling $1 billion, which expires in August 2001. The agreement provides that under certain circumstances the company may select among various loan arrangements with differing maturities and among a variety of interest rates, including a negotiated rate. At December 31, 1996 and 1995, the company had no outstanding borrowings under the agreement. Fees under the agreements were $.7 million, $.8 million and $.8 million in 1996, 1995 and 1994, respectively. ---------------------------------------------------------------- 9. LONG-TERM DEBT Long-term debt at December 31 consisted of the following (in millions): ----------------------------------------------------------------- 1996 1995 --------------------- Commercial paper (weighted average interest rates of 5.3% in 1996 and 5.9% in 1995)... $ 155.5 $ 572.5 Medium-term Notes Due 1997 to 2001 (interest rates from 5.5% to 8.0%).................. 95.0 108.0 8% Convertible Debentures Due 1996.......... -- 166.0 8.75% Notes Due 1999........................ 250.0 250.0 5.1% Dual-currency Notes Due 1999........... 262.4 -- 6.9% Notes Due 2002......................... 200.0 200.0 6.75% Notes Due 2003........................ 200.0 -- 6.75% Notes Due 2005........................ 200.0 200.0 7% Notes Due 2005........................... 100.0 100.0 6.75% Notes Due 2006........................ 250.0 -- 9% Debentures Due 2009...................... 350.0 350.0 7.25% Debentures Due 2015................... 150.0 150.0 7.375% Debentures Due 2023.................. 200.0 200.0 7% Debentures Due 2025...................... 200.0 200.0 Sinking Fund Debentures..................... 151.3 261.9 Industrial Revenue Bonds.................... 157.4 136.7 ESOP Debt Guarantee......................... 315.4 347.1 Other Long-term Debt........................ 33.9 27.9 --------------------- $3,270.9 $3,270.1 ===================== ----------------------------------------------------------------- 57 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- The company's sinking fund debentures at December 31 are as follows (in millions): - -------------------------------------------------------------------- 1996 1995 ------------------- 8.625% Debentures maturing 1997 to 2016.......... $105.8 $150.0 8.5% Debentures maturing 1998 to 2017............ 45.5 150.0 10% Debentures maturing 1999 to 2018............. -- 68.0 Less: Debentures held in treasury................ -- (106.1) ------------------- $151.3 $261.9 =================== - -------------------------------------------------------------------- The company's dual currency notes at December 31 are as follows: - -------------------------------------------------------------------- 1996 1995 - -------------------------------------------------------------------- 5.1% Japanese Yen/Australian Dollar Notes Due 1999... $255.3 $ -- Effect of U.S. Dollar/Australian Dollar exchange agreement ....................................... 7.1 -- ---------------- $262.4 $ -- ================ - --------------------------------------------------------------------- The company utilizes SEC shelf registration statements to provide financing flexibility. In 1996, the company registered $700 million of debt securities for future issuance and, at December 31, 1996, total debt of $550 million was available for issuance. In 1996, the company cancelled all sinking fund debentures it held in treasury. Gains/losses on debt redemptions (either individually or in the aggregate) were not material to the company's Consolidated Financial Statements for any year presented. At December 31, 1996 and 1995, there were $155.5 million and $572.5 million, respectively, of outstanding commercial paper borrowings classified as long-term debt. The commercial paper is intended to be maintained on a long-term basis with ongoing credit support provided by the company's revolving credit agreement. The company may also choose to refinance some or all of its commercial paper debt with long-term notes or debentures. In December 1996, the company issued $262.4 million (30 billion yen) of 5.1% Japanese yen/Australian dollar notes. Simultaneous with issuance, the company entered into a $262.4 million notional value interest rate swap and currency exchange agreement. Under the agreement, the counterparty will fund the semi-annual fixed-rate yen-denominated coupon payments and Anheuser-Busch will make quarterly LIBOR-based U.S. dollar-denominated floating-rate payments to the counterparty. The agreement also requires Anheuser-Busch to pay the counterparty $262.4 million at maturity in exchange for the counterparty funding the Australian dollar redemption liability. Due to the terms of the agreement, the U.S. dollar floating-rate interest payments and the $262.4 million redemption obligation are the only obligations the company has relating to the dual-currency notes. All currency exchange risk among the U.S. dollar, the Australian dollar and the Japanese yen is borne by the counterparty. Only in the event of counterparty default would Anheuser-Busch be exposed to any interest rate or currency exchange risk. The company considers the risk of counterparty failure to be remote. During 1992, the company entered into an interest rate swap agreement on a notional amount of $200 million. The company is obligated to pay a fixed rate of 6.54% per year for the four-year period ending December 31, 1997. In return, the company receives floating rate interest payments based on commercial paper rates. The swap agreement does not have a material impact on the company's weighted-average interest rate. In 1989, the company issued $241.7 million of 8% convertible debentures to certain Qualified Holders, primarily independently owned beer wholesalers and related parties. At issue, the debentures were convertible into 5% convertible preferred stock, par value $1.00, at a conversion price of $47.60 per share, with each share of preferred stock convertible into one share of the company's common stock. Due to the spin-off of The Earthgrains Company and the two-for-one stock split, the effective conversion price was adjusted to $23.39 in 1996. The debentures matured October 1, 1996 with optional redemption at the holder's discretion available since 1992. In 1996, the company completed the conversion of all outstanding convertible debentures. In 1996 and 1995, the company issued 7.5 and 2.8 million common shares, respectively, in conjunction with conversions. No preferred shares are outstanding as a result of any conversions. 58 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- The fair value of long-term debt, based on future cash flows discounted at interest rates currently available to the company for debt with similar maturities and characteristics, was $3.4 billion and $3.6 billion, respectively, at December 31, 1996 and 1995. The aggregate maturities on all long-term debt are $41 million, $40 million, $555 million, $55 million and $23 million, respectively, for each of the years ending December 31, 1997 through 2001. These aggregate maturities do not include the future maturities of the ESOP debt guarantee or commercial paper. ---------------------------------------------------------------- 10. STOCK OPTION PLANS Under terms of the company's incentive stock option plans, officers and key employees may be granted options to purchase the company's common stock at no less than 100% of the market price on the date the option is granted. Options generally vest over three years and have a maximum term of 10 years. At December 31, 1996, 1995 and 1994, a total of 31.0 million, 36.1 million and 41.1 million shares, respectively, were reserved for future issuance under the plans. Certain of the plans also provide for the granting of stock appreciation rights (SARs) in tandem with stock options. The exercise of an SAR cancels the related option and the exercise of an option cancels the related SAR. There were no SARs outstanding under the plans at December 31, 1996. The company applies APB 25 in accounting for its stock option plans. Accordingly, because the grant price equals the market price on the date of grant, no compensation expense is recognized for stock options issued. Had compensation cost for the company's stock options been recognized based upon the fair value on the grant date under the methodology prescribed by FAS 123, the company's income from continuing operations and earnings per share for the year ended December 31, 1996 would have been impacted as indicated in the following table (in millions, except per share). The pro forma results shown below reflect only the impact of options granted in 1995 and 1996. Because options are granted at the end of the year, there is no pro forma impact for 1995. Also, since option vesting occurs over three years, the pro forma impact shown for 1996 is not representative of what the impact will be in future years. The pro forma impact is expected to increase for the next two years and then remain relatively constant thereafter, absent significant changes to valuation assumptions or option grant patterns. ---------------------------------------------------------------- 1996 --------------- Reported income from continuing operations....... $1,156.1 Pro forma income from continuing operations...... $1,149.0 Reported fully diluted earnings per share from continuing operations........................ $2.27 Pro forma fully diluted earnings per share from continuing operations........................ $2.26 ---------------------------------------------------------------- The fair value of options granted (which is amortized to expense over the option vesting period in determining the pro forma impact), is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: ----------------------------------------------------------------- 1996 1995 -------------- Expected life of option............................ 5 yrs. 5 yrs. Risk-free interest rate............................ 6.2% 5.5% Expected volatility of Anheuser-Busch stock........ 15% 15% Expected dividend yield on Anheuser-Busch stock.... 2.3% 2.5% ----------------------------------------------------------------- The weighted average fair value of options granted during 1996 and 1995 is as follows: ----------------------------------------------------------------- 1996 1995 ------------ Fair value of each option granted....................$ 8.30 $5.98 Total number of options granted (in millions)........ 4.1 5.8 ------------ Total fair value of all options granted (in millions)$34.0 $34.7 ============ ----------------------------------------------------------------- 59 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- In accordance with FAS 123, the weighted average fair value of stock options granted is required to be based on a theoretical statistical model using the preceding Black-Scholes assumptions. In actuality, because the company's incentive stock options do not trade on a secondary exchange, employees can receive no value nor derive any benefit from holding stock options under these plans without an increase in the market price of Anheuser-Busch stock. Such an increase in stock price would benefit all stockholders commensurately. Presented below is a summary of stock option plans activity for the years shown:
- --------------------------------------------------------------------------------------------- Wtd. Avg. Wtd. Avg. Options Exercise Price Options Exercisable Exercise Price ------- -------------- ------------------- -------------- Balance, December 31, 1993 23,095,868 $21.34 Granted 4,759,556 24.90 Exercised (2,520,224) 16.89 Cancelled (464,020) 26.62 ----------- Balance, December 31,1994 24,871,180 $22.37 16,273,595 $20.90 Granted 5,779,850 32.33 Exercised (5,051,464) 18.59 Cancelled (306,688) 25.79 ----------- Balance, December 31, 1995 25,292,878 $25.36 15,259,418 $22.93 Granted 4,149,588 40.59 Exercised (4,945,152) 22.37 Cancelled (175,973) 28.22 ----------- Balance, December 31, 1996 24,321,341 $28.55 15,234,258 $24.67 ================================================================= - ---------------------------------------------------------------------------------------------
The following table summarizes information for options currently outstanding and exercisable at December 31, 1996:
- ---------------------------------------------------------------------------------------- Options Outstanding Options Exercisable --------------------------------------------- ------------------------- Range of Wtd. Avg. Wtd. Avg. Wtd. Avg. Prices Number Remaining Life Exercise Price Number Exercise Price ------ ------ -------------- -------------- ------ -------------- $15-26 11,070,753 6 yrs $22.10 9,798,046 $21.74 27-37 9,164,286 8 yrs 30.93 5,436,212 29.95 38-43 4,086,302 10 yrs 40.69 -- -- ---------- ---------- $15-43 24,321,341 7 yrs $28.55 15,234,258 $24.67 ======================================================================================== - ----------------------------------------------------------------------------------------
Option quantities and prices in the preceding tables have been adjusted for the effect of the spin-off of Earthgrains effective March 26, 1996 and the two-for-one stock split distributed September 12, 1996, for all years shown. 60 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- The plans provide for acceleration of exercisability of the options upon the occurrence of certain events relating to a change of control, merger, sale of assets or liquidation of the company (Acceleration Events). Certain of the plans also provide that optionees may be granted Limited Stock Appreciation Rights (LSARs). LSARs become exercisable, in lieu of the option or SAR, upon the occurrence, six months following the date of grant, of an Acceleration Event. These LSARs entitle the holder to a cash payment per share equivalent to the excess of the share value (under terms of the LSAR) over the grant price. As of December 31, 1996 and 1995, there were 1.0 million and 1.7 million, respectively, of LSARs outstanding. ---------------------------------------------------------------- 11. EMPLOYEE STOCK OWNERSHIP PLAN In 1989, the company added an Employee Stock Ownership Plan (ESOP) to its existing Deferred Income Stock Purchase and Savings Plans. Substantially all regular salaried and hourly employees are eligible for participation in the ESOP. The ESOP borrowed $500 million for a term of 15 years at an interest rate of 8.3% and used the proceeds to buy approximately 22.7 million shares of common stock from the company. The ESOP debt is guaranteed by the company, and ESOP shares are being allocated to participants over 15 years as contributions are made to the plans. ESOP cash contributions and ESOP expense accrued during the calendar year are determined by several factors, including the market price and number of shares allocated to participants, ESOP debt service, dividends on unallocated shares and the company's matching contribution. Over the 15-year life of the ESOP, total expense recognized will equal the total cash contributions made by the company. ESOP cash contributions are made in March and September, based on the plan year which ends March 31. A summary of ESOP cash contributions and dividends on unallocated ESOP shares for the three years ended December 31 is presented below (in millions): ----------------------------------------------------------------- 1996 1995 1994 ------------------------------------- Cash contributions.......... $21.8 $45.8 $41.8 ===================================== Dividends................... $10.4 $10.8 $10.9 ===================================== ----------------------------------------------------------------- Total ESOP expense is allocated to operating expense and interest expense based upon the ratio of principal and interest payments on the debt. Total ESOP expense for the three years ended December 31 is presented below (in millions): ----------------------------------------------------------------- 1996 1995 1994 ------------------------------------ Operating expense............ $14.3 $19.6 $23.3 Interest expense............. 11.6 18.0 24.0 ------------------------------------ Total expense................ $25.9 $37.6 $47.3 ==================================== ----------------------------------------------------------------- 61 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- 12. RETIREMENT BENEFITS PENSION PLANS The company has pension plans covering substantially all of its regular employees. Total pension expense for the three years ended December 31 is presented below (in millions): - ------------------------------------------------------------------------ 1996 1995 1994 ------------------------------ Single-employer defined benefit plans..... $18.6 $29.6 $27.1 Multi-employer plans...................... 20.2 26.1 25.5 Defined contribution plans................ 18.3 15.0 15.1 ------------------------------ $57.1 $70.7 $67.7 ============================== - ------------------------------------------------------------------------ Net pension expense for single-employer defined benefit plans was comprised of the following for the three years ended December 31 (in millions): - -------------------------------------------------------------------------- 1996 1995 1994 ------------------------ Service cost (benefits earned during the year).... $49.3 $41.0 $42.3 Interest cost on projected benefit obligation..... 76.3 64.4 60.2 Assumed return on assets.......................... (107.9) (80.6) (68.9) Amortization of prior service cost, actuarial gains/losses and the excess of market value of plan assets over projected benefit obligation at January 1, 1986.............................. .9 4.8 (6.5) ------------------------- Net pension expense.............................. $18.6 $29.6 $27.1 ========================= - --------------------------------------------------------------------------- The key actuarial assumptions used in determining annual pension expense for single-employer defined benefit plans were as follows for the years ended December 31: - --------------------------------------------------------------------------- 1996 1995 1994 -------------------------- Discount rate.................................... 7.5% 8.0% 7.5% Long-term rate of return on plan assets.......... 10.0% 10.0% 10.0% Weighted-average rate of compensation increase... 5.5% 5.5% 5.5% - --------------------------------------------------------------------------- The actual dollar return on pension assets was $142.3 million, $140.9 million and $12.5 million in 1996, 1995 and 1994, respectively. The following tables set forth the funded status of all company single-employer defined benefit plans at December 31 (in millions): - --------------------------------------------------------------------------- 1996 1995 -------------------- Plan assets at fair market value primarily corporate equity securities and publicly traded bonds.......... $1,237.4 $935.8 -------------------- Accumulated benefit obligation: Vested benefits...................................... (846.7) (724.5) Nonvested benefits................................... (84.1) (61.7) ------------------- Accumulated benefit obligation......................... (930.8) (786.2) Effect of projected compensation increases............. (180.5) (138.6) ------------------- Projected benefit obligation........................... (1,111.3) (924.8) ------------------- Plan assets in excess of projected benefit obligation.. $ 126.1 $ 11.0 =================== - --------------------------------------------------------------------------- 62 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- Plan assets in excess of projected benefit obligation consist of the following at December 31: ----------------------------------------------------------------- 1996 1995 ---------------- Unamortized excess of market value of plan assets over projected benefit obligation at January 1, 1986 being amortized over 15 years............ $ 40.5 $33.6 Unrecognized net actuarial (losses)............. (7.8) (21.9) Prior service costs............................. (73.9) (81.4) Prepaid pension................................. 167.3 80.7 --------------- $126.1 $11.0 =============== ----------------------------------------------------------------- The assumptions used in determining the funded status of the plans as of December 31 were as follows: ----------------------------------------------------------------- 1996 1995 ----------------- Discount rate................................... 7.75% 7.5% Weighted-average rate of compensation increase.. 5.5% 5.5% ----------------------------------------------------------------- Contributions to multi-employer plans in which the company and its subsidiaries participate are determined in accordance with the provisions of negotiated labor contracts and are based on employee hours worked. POSTRETIREMENT BENEFITS The company provides certain health care and life insurance benefits to eligible retired employees. Salaried participants generally become eligible for retiree health care benefits after reaching age 55 with 10 years of service, or after reaching age 65. Bargaining unit employees generally become eligible for retiree health care benefits after reaching age 55 with from 10 to 15 years of service, or after reaching age 65. The following table sets forth the accumulated postretirement benefit obligation (APBO) and the total postretirement benefit liability for all single-employer defined benefit plans at December 31 (in millions): ----------------------------------------------------------------- 1996 1995 ------------- Retirees............................................$125.4 $141.1 Fully eligible active plan participants............. 77.0 135.1 Other active plan participants...................... 94.2 74.0 ------------- Accumulated postretirement benefit obligation (APBO) 296.6 350.2 Unrecognized prior service benefits................. 111.2 125.5 Unrecognized net actuarial gains.................... 128.8 51.8 ------------- Total postretirement benefit liability..............$536.6 $527.5 ============= ----------------------------------------------------------------- As of December 31, 1996 and 1995, $12.0 million and $15.4 million of this obligation were classified as current liabilities and $524.6 million and $512.1 million were classified as long-term liabilities, respectively. Net periodic postretirement benefits expense for single-employer defined benefit plans was comprised of the following for the three years ended December 31 (in millions):
------------------------------------------------------------------------------------------ 1996 1995 1994 ------------------------ Service cost (benefits attributed to service during the year)..... $17.1 $20.8 $16.4 Interest cost on accumulated postretirement benefit obligation.... 22.9 23.9 25.8 Amortization of prior service (benefit)........................... (11.7) (11.8) (11.5) Amortization of actuarial (gain)/loss............................. (7.4) -- .3 ------------------------- Net periodic postretirement benefits expense...................... $20.9 $32.9 $31.0 ========================= -------------------------------------------------------------------------------------------
63 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- In measuring the APBO, annual trend rates for health care costs of 9.0%, 12.5% and 12.5% were assumed for 1996, 1995 and 1994, respectively. These rates were assumed to decline ratably over the subsequent 9-12 years to 6.5% and remain at that level thereafter. The weighted average discount rate used in determining the APBO was 8.25% and 8.0%, respectively, at December 31, 1996 and 1995. If the assumed health care cost trend rate changed by 1%, the APBO as of December 31, 1996 would change by 15.3%. The effect of a 1% change in the cost trend rate on the service and interest cost components of net periodic postretirement benefits expense would be a change of 19.4%. - ------------------------------------------------------------------ 13. INCOME TAXES The provision for income taxes consists of the following for the three years ended December 31 (in millions): - ------------------------------------------------------------------ 1996 1995 1994 ------------------------------ Current tax provision: Federal........................... $490.9 $435.4 $480.2 State and foreign................. 106.8 106.4 108.4 ------------------------------ 597.7 541.8 588.6 ------------------------------ Deferred tax provision: Federal........................... 139.2 (76.6) 74.1 State and foreign................. 19.9 (10.0) 12.3 ------------------------------ 159.1 (86.6) 86.4 ------------------------------ Total tax provision................. $756.8 $455.2 $675.0 ============================== - ------------------------------------------------------------------ The provision for income taxes included in the Consolidated Statement of Income is as follows (in millions): - ------------------------------------------------------------------ 1996 1995 1994 ----------------------------- Continuing operations................ $736.8 $575.1 $661.5 Discontinued operations.............. 20.0 (119.9) 13.5 ----------------------------- Total tax provision.................. $756.8 $455.2 $675.0 ============================= - ------------------------------------------------------------------ The deferred tax provision results from differences in the recognition of income and expense for tax and financial reporting purposes. The primary differences for continuing operations are related to fixed assets (tax effect of $56.9 million in 1996, $45.4 million in 1995 and $63.3 million in 1994) and the Tampa brewery closure benefit ($52.2 million) in 1995. At December 31, 1996 the company had deferred tax liabilities of $1,741.0 million and deferred tax assets of $532.9 million. The temporary differences included in deferred tax liabilities are primarily related to fixed assets ($1,481.8 million). The temporary differences included in deferred tax assets are related to accrued postretirement benefits ($203.4 million), closure of the Tampa brewery ($54.4 million) and other accruals and temporary differences ($275.1 million) which are not deductible for tax purposes until paid or utilized. The company's effective tax rate for continuing operations was 38.9% in 1996, 39.3% in 1995 and 39.5% in 1994. A reconciliation between the statutory tax rate and the effective tax rate for continuing operations is presented below: - ---------------------------------------------------------------------- 1996 1995 1994 ---------------------- Federal statutory tax rate...................... 35.0% 35.0% 35.0% State income taxes, net of federal benefit...... 3.6 4.0 4.0 Other........................................... .3 .3 .5 ---------------------- Effective tax rate.............................. 38.9% 39.3% 39.5% ====================== - ---------------------------------------------------------------------- 64 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- ----------------------------------------------------------------- 14. CASH FLOWS For purposes of the Statement of Cash Flows, all short-term investments, generally with original maturities of 90 days or less, are considered cash equivalents. The effect of currency exchange rate fluctuations was not material for 1996, 1995 and 1994. Accounts payable include $92.8 million and $86.9 million, respectively, of outstanding checks at December 31, 1996 and 1995. Supplemental information with respect to the Statement of Cash Flows for the three years ended December 31 is presented below (in millions):
------------------------------------------------------------------------------- CASH PAID DURING THE YEAR: 1996 1995 1994 ------------------------------- Interest, net of interest capitalized........... $ 208.0 $ 198.0 $ 200.8 Income taxes.................................... 533.6 546.6 575.8 Excise taxes.................................... 1,720.1 1,680.6 1,692.0 NONCASH FINANCING ACTIVITIES: Conversions of 8% convertible debentures........ $ 166.0 $ 67.2 $ 3.9 CHANGES IN NONCASH WORKING CAPITAL: Decrease/(increase) in noncash current assets: Accounts receivable........................... $ (88.4) $ 54.2 $ (47.2) Inventories................................... 51.6 (51.9) 5.0 Other current assets.......................... 81.6 (17.2) 1.7 Increase/(decrease) in current liabilities: Accounts payable.............................. 44.0 (73.8) 54.2 Accrued salaries, wages and benefits.......... (19.4) 8.1 44.3 Accrued taxes................................. 146.7 (10.3) (14.6) Restructuring accrual......................... -- (50.2) (87.3) Other current liabilities..................... 17.6 (120.9) (13.1) ------------------------------- Decrease/(increase) in noncash working capital.. $ 233.7 $(262.0) $ (57.0) ============================== -------------------------------------------------------------------------------
----------------------------------------------------------------- 15. PREFERRED AND COMMON STOCK STOCK ACTIVITY Activity for the company's common stock for the three years ended December 31 is summarized below: ----------------------------------------------------------------- COMMON STOCK COMMON STOCK ISSUED IN TREASURY ---------------------------- BALANCE, DECEMBER 31, 1993........... 685,164,878 (151,091,528) Shares issued under stock plans...... 2,266,326 -- Conversion of convertible debentures. 163,854 -- Net treasury stock acquired.......... -- (21,922,816) ---------------------------- BALANCE, DECEMBER 31, 1994........... 687,595,058 (173,014,344) Shares issued under stock plans...... 4,123,070 -- Conversion of convertible debentures. 2,812,120 -- Net treasury stock acquired.......... -- (13,562,980) ---------------------------- BALANCE, DECEMBER 31, 1995........... 694,530,248 (186,577,324) Shares issued under stock plans...... 3,726,242 -- Conversion of convertible debentures. 7,535,902 -- Net treasury stock acquired.......... -- (21,857,871) ---------------------------- BALANCE, DECEMBER 31, 1996........... 705,792,392 (208,435,195) ============================ ----------------------------------------------------------------- At December 31, 1996 and 1995, 40,000,000 shares of $1.00 par value preferred stock were authorized and unissued. 65 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- STOCK REPURCHASE PROGRAMS The Board of Directors has approved various resolutions authorizing the company to purchase shares of its common stock for investment purposes and to meet the requirements of the company's various stock purchase and incentive plans. The most recent resolution was approved by the Board in July 1996 and authorized the repurchase of 50 million shares. The company has acquired 22.2 million, 13.6 million and 21.9 million shares of common stock in 1996, 1995 and 1994 for $770.2 million, $393.4 million and $563.0 million, respectively. At December 31, 1996, approximately 2.6 million shares were available for repurchase under the 1994 authorization and 50 million shares remained available under the July 1996 authorization. STOCKHOLDER RIGHTS PLAN The Board of Directors adopted a Stockholder Rights Plan in 1985 (extended in 1994) which in certain circumstances would permit shareholders to purchase common stock at prices which would be substantially below market value. - ---------------------------------------------------------------- 16. COMMITMENTS AND CONTINGENCIES In connection with plant expansion and improvement programs, the company had commitments for capital expenditures of approximately $388.7 million at December 31, 1996. Obligations under capital and operating leases are not material. The company and certain of its subsidiaries are involved in certain claims and legal proceedings in which monetary damages and other relief are sought. The company is vigorously contesting these claims. However, resolution of these claims 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 all existing claims, legal proceedings and other contingencies, either individually or in the aggregate, will not materially affect either the company's financial position, liquidity or results of operations. - ------------------------------------------------------------------- 17. BUSINESS SEGMENTS The company's principal business segments are beer/beer- related and entertainment. The beer/beer-related segment produces and sells the company's beer products. Included in this segment are the company's raw material acquisition, malting, can manufacturing, recycling, communications and transportation operations. The entertainment segment consists of the company's Sea World, Busch Gardens and other theme parks and real estate development operations. Sales between segments, export sales and non-U.S. sales are not material. The company's equity in earnings of affiliated companies is included in other income and expense. No single customer accounted for more than 10% of sales. 66 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- Summarized below is the company's business segment information for 1996, 1995 and 1994 (in millions). Intersegment sales have been eliminated from each segment's reported net sales.
----------------------------------------------------------------------------------- NET SALES (1) | OPERATING INCOME (2) (3) (4) 1996 1995 1994 | 1996 1995 1994 --------------------------------|------------------------------ Beer/beer-related.. $10,143.9 $ 9,585.9 $ 9,283.8| $1,934.2 $1,557.7 $1,784.5 Entertainment...... 739.8 754.6 741.5| 149.6 75.2 68.8 ---------------------------------|------------------------------ Consolidated....... $10,883.7 $10,340.5 $10,025.3| $2,083.8 $1,632.9 $1,853.3 =================================|============================== -----------------------------------------------------------------------------------
(1) Net sales for 1995 include the adverse impact of the beer wholesaler inventory reduction. (2) Operating income excludes other expense, net, which is not allocated among segments. For 1996, 1995 and 1994, other expense, net of $190.9 million, $171.2 million and $177.3 million, includes net interest expense, other income and expense, and equity in earnings of affiliated companies. (3) Operating income for 1996 includes the $54.7 million pretax gain on the sale of the Cardinals. (4) Operating income for 1995 includes the impact of the one-time, pretax charge of $160.0 million for the closure of the Tampa brewery, and the adverse impact of the beer wholesaler inventory reduction.
DEPRECIATION AND IDENTIFIABLE ASSETS (5) AMORTIZATION EXPENSE ------------------------------------------------------------- 1996 1995 1994 | 1996 1995 1994 ------------------------------------------------------------- Beer/beer-related........ $ 8,458.6 $ 7,915.4 $ 7,719.0 | $493.9 $469.2 $427.5 Entertainment............ 1,484.3 1,463.1 1,426.7 | 78.5 77.6 72.5 Corporate................ 520.7 448.4 404.4 | 21.5 18.8 17.0 Discontinued operations.. -- 764.0 997.3 | -- -- -- ----------------------------------|-------------------------- Consolidated............. $10,463.6 $10,590.9 $10,547.4 | $593.9 $565.6 $517.0 =============================================================
(5) Corporate assets principally include cash, marketable securities and certain fixed assets. ----------------------------------------------------------------- CAPITAL EXPENDITURES ------------------------------------- 1996 1995 1994 ------------------------------------- Beer/beer-related........... $ 902.5 $808.8 $539.3 Entertainment............... 151.6 101.9 96.2 Corporate................... 30.5 41.8 27.3 ------------------------------------- Consolidated................ $1,084.6 $952.5 $662.8 ===================================== ----------------------------------------------------------------- 67 - ------------------------------------------------ |NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | - ------------------------------------------------ - --------------------------------------------------------------------- 18. SUPPLEMENTAL INFORMATION The components of plant and equipment, net, are summarized below (in millions): - --------------------------------------------------------------------- 1996 1995 --------------------------- Land.................................... $ 237.9 $ 248.4 Buildings............................... 3,172.2 3,081.7 Machinery and equipment................. 8,148.8 7,333.3 Construction in progress................ 655.8 656.3 --------------------------- 12,214.7 11,319.7 Accumulated depreciation................ (5,006.5) (4,556.7) --------------------------- $ 7,208.2 $ 6,763.0 =========================== - --------------------------------------------------------------------- The components of investments and other assets are summarized below (in millions): - ------------------------------------------------------------------------- 1996 1995 ------------------- Investments in and advances to affiliated companies... $ 741.2 $ 671.6 Investment properties................................. 129.3 125.2 Deferred charges...................................... 483.3 312.7 Goodwill.............................................. 435.8 443.8 ------------------- $1,789.6 $1,553.3 =================== - -------------------------------------------------------------------------- Summarized below is selected financial information for Anheuser-Busch, Inc. (a wholly owned subsidiary of Anheuser-Busch Companies, Inc.) for the years ended December 31 (in millions): - --------------------------------------------------------------------------- 1996 (3) 1995 (3) 1994 (3) -------------------------------- Income Statement Information: Net sales................................$ 8,100.3 $ 7,594.9 $7,797.3 Gross profit............................. 3,172.4 2,889.6 2,937.7 Income from continuing operations (1) (2) 907.1 713.7 854.1 Balance Sheet Information: Current assets...........................$ 526.9 $ 550.1 Noncurrent assets........................ 13,772.8 13,004.6 Current liabilities...................... 671.0 670.4 Noncurrent liabilities (1)............... 3,569.7 3,725.2 - --------------------------------------------------------------------------- (1) Anheuser-Busch, Inc. is co-obligor for substantially all outstanding Anheuser-Busch Companies, Inc. indebtedness. Accordingly, all such guaranteed debt is included as an element of noncurrent liabilities, with interest thereon included in the determination of income from continuing operations. (2) Income from continuing operations for 1995 reflects the after-tax charge of $99.2 million relating to the closure of the Tampa brewery, and the after-tax impact of the beer wholesaler inventory reduction. (3) Net sales for 1994 include export sales. In 1995, the company changed its sales reporting to exclude export sales from Anheuser-Busch, Inc. results. 68 ------------------------------------------------- |NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ------------------------------------------------- ----------------------------------------------------------------- 19. QUARTERLY FINANCIAL DATA (UNAUDITED)
------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER| ANNUAL ------------------------------------------------------------------------------------|------------ Net Sales....................... $2,371.8 $2,961.1 $3,063.5 $2,487.3 | $10,883.7 Gross Profit.................... 833.7 1,114.8 1,177.8 792.8 | 3,919.1 Income from | continuing operations......... 275.5 353.4 377.2 150.0 | 1,156.1 Income from operations of | discontinued segment.......... -- 33.8 -- -- | 33.8 ------------------------------------------------------------------------------------|------------ Net Income...................... $ 275.5 $ 387.2 $ 377.2 $ 150.0 | $ 1,189.9 ------------------------------------------------------------------------------------|------------ Fully diluted earnings per share: | Income from | continuing operations....... $ .53 $ .70 $ .74 $ .30 | $ 2.27 Income from operations | of discontinued segment..... -- .07 -- -- | .07 ------------------------------------------------------------------------------------|------------ Net Income...................... $ .53 $ .77 $ .74 $ .30 | $ 2.34 -------------------------------------------------------------------------------------------------
First quarter 1996 income from continuing operations includes the nonrecurring after-tax gain of $33.4 million related to the sale of the St. Louis Cardinals.
------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1995 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ANNUAL ------------------------------------------------------------------------------------------------ Net Sales......................... $2,318.2 $2,823.2 $2,966.5 $2,232.6 | $10,340.5 Gross Profit...................... 776.8 1,027.8 1,088.0 656.9 | 3,549.5 Income/(Loss) from | continuing operations......... 221.7 329.9 343.9 (8.9) | 886.6 (Loss) from operations of | discontinued segment.......... (5.6) (0.8) (4.2) (8.2) | (18.8) (Loss) on disposal of | discontinued segment.......... -- -- -- (225.5) | (225.5) ------------------------------------------------------------------------------------|----------- Net Income/(Loss) $ 216.1 $ 329.1 $ 339.7 $ (242.6) | $ 642.3 ------------------------------------------------------------------------------------|----------- Fully diluted earnings per share: | Income/(Loss) from | continuing operations......... $ .43 $ .63 $ .66 $ (.01) | $ 1.71 (Loss) from operations | of discontinued segment...... (.01) -- (.01) (.02) | (.03) (Loss) on disposal of | discontinued segment......... -- -- -- (.44) | (.44) -----------------------------------------------------------------------------------|------------ Net Income/(Loss)............... $ .42 $ .63 $ .65 $ (.47) | $ 1.24 ------------------------------------------------------------------------------------------------
Fourth quarter 1995 income from continuing operations includes the nonrecurring after-tax charge of $99.2 million ($.19 per share) related to the closure of the Tampa brewery, and the after-tax impact of the beer wholesaler inventory reduction. 69 - ----------------------------------------------- | Notes to Consolidated Financial Statements | - ----------------------------------------------- - ---------------------------------------------------------------- 20. RISK MANAGEMENT In the ordinary course of business, Anheuser-Busch is exposed to foreign currency exchange, interest rate and commodity price risks. These exposures primarily relate to the sale of product to foreign customers, purchases from foreign suppliers, acquisition of raw materials from both domestic and foreign suppliers, and changes in interest rates. The company attempts to mitigate these exposures with derivative financial instruments, primarily through purchased options and forward contracts for foreign exchange risk; swaps for interest rate risk; and futures, swaps and purchased options for commodity price risk. Specific hedging strategies depend on several factors, including the magnitude of the exposure, natural offset through contract terms, cost and availability of appropriate instruments, the anticipated time horizon and the nature of the item being hedged. The company's overall risk management objective is to obtain the most favorable transaction costs possible while minimizing Anheuser-Busch's exposure to market volatility. To achieve this goal the company is willing to forego certain opportunities to participate in favorable market movements. The following table summarizes the notional value for outstanding derivatives, by risk category and instrument type, at December 31 (in millions): - ------------------------------------------------------------------------ NOTIONAL VALUE --------------------- 1996 1995 --------------------- Foreign Currency: Forwards......................................... $ 35.3 $108.5 Options.......................................... 209.2 208.1 --------------------- 244.5 316.6 --------------------- Interest Rate: Swaps............................................ 487.4 238.0 --------------------- Commodity: Options.......................................... 68.3 109.9 Swaps............................................ 105.2 89.4 Futures.......................................... 37.1 25.1 --------------------- 210.6 224.4 --------------------- Total notional value of outstanding derivatives.... $942.5 $779.0 ===================== - ------------------------------------------------------------------------ The interest rate swap and currency exchange agreement related to the dual currency notes discussed in Note 9 is included as an interest rate swap in the preceding table. 70 ----------------------------------------------- | Notes to Consolidated Financial Statements | ----------------------------------------------- The following table summarizes the notional value of outstanding foreign currency forward and purchased option contracts, by currency, with a designation of "long" or "short" with respect to the underlying exposure, at December 31 (in millions): ----------------------------------------------------------------- NET UNDERLYING EXPOSURE NOTIONAL VALUE --------------------------------------------- 1996 1995 1996 1995 --------------------------------------------- Japanese yen....... Long Long $117.9 $191.8 German mark........ Short Short 32.9 37.1 British pound...... Long Long 76.5 43.9 Other currencies... Long and Short Long and Short 17.2 43.8 --------------- $244.5 $316.6 =============== ----------------------------------------------------------------- "Long" indicates the company has foreign currency in excess of its needs. "Short" indicates the company requires additional foreign currency to meet its needs. For commodity derivatives, as a net user of raw materials the company's underlying exposure is naturally short, indicating additional quantities must be obtained to meet anticipated production requirements. OFF-BALANCE-SHEET RISK AND CONCENTRATION OF CREDIT RISK Anheuser-Busch's derivative hedging instruments are primarily carried off-balance-sheet. The company executes these instruments with major financial institutions having high debt ratings and considers the risk of counterparty nonperformance to be remote. The company does not have a material concentration of accounts receivable or other credit risk. NONDERIVATIVE FINANCIAL INSTRUMENTS Nonderivative financial instruments included in the Consolidated Balance Sheet are cash, commercial paper and long-term debt. Long-term debt is the only significant financial instrument of the company with a fair value different from its carrying value. See Note 9 for a discussion of the fair value of long-term debt at December 31, 1996 and 1995. 71 - --------------------------------------- |FINANCIAL SUMMARY -- OPERATIONS | Anheuser-Busch Companies, Inc. - --------------------------------------- and Subsidiaries
(In millions, except per share data) ----------------------------------------------------------------------------------------------- 1996 1995 1994 ------------------------------------ CONSOLIDATED SUMMARY OF OPERATIONS Barrels of beer sold....................................... 91.1 87.5 88.5 =================================== Sales...................................................... $ 12,621.5 $12,004.5 $11,705.0 Federal and state excise taxes........................... 1,737.8 1,664.0 1,679.7 ----------------------------------- Net sales.................................................. 10,883.7 10,340.5 10,025.3 Cost of products and services............................ 6,964.6 6,791.0 6,492.1 ----------------------------------- Gross profit............................................... 3,919.1 3,549.5 3,533.2 Marketing, distribution and administrative expenses...... 1,890.0 1,756.6 1,679.9 Gain on sale of St. Louis Cardinals...................... 54.7 -- -- Shutdown of Tampa brewery................................ -- 160.0 -- Restructuring charge..................................... -- -- -- ------------------------------------ Operating income........................................... 2,083.8(1) 1,632.9(2) 1,853.3 Interest expense......................................... (232.8) (225.9) (219.3) Interest capitalized..................................... 35.5 24.3 21.8 Interest income.......................................... 9.4 9.9 2.6 Other income/(expense), net.............................. (3.0) 20.5 17.6 ------------------------------------ Income before income taxes................................. 1,892.9(1) 1,461.7(2) 1,676.0 Income taxes (current and deferred)...................... 736.8 575.1 661.5 Revaluation of deferred tax liability.................... -- -- -- ------------------------------------ Income from continuing operations.......................... 1,156.1(1) 886.6(2) 1,014.5 Income/(loss) from discontinued operations................. 33.8 (244.3) 17.6 ------------------------------------ Income before cumulative effect of accounting changes...... 1,189.9 642.3 1,032.1 Cumulative effect of changes in the method of accounting for postretirement benefits (FAS 106) and income taxes (FAS 109), net of tax benefit of $186.4 million.......... -- -- -- ------------------------------------ NET INCOME................................................. $ 1,189.9 $ 642.3 $ 1,032.1 ===================================== PRIMARY EARNINGS PER SHARE: Continuing operations.................................... $ 2.28 $ 1.72 $ 1.92 Discontinued operations.................................. .07 (.48) .04 ------------------------------------- Income before cumulative effect.......................... 2.35 1.24 1.96 Cumulative effect of accounting changes.................. -- -- -- -------------------------------------- Net income............................................... $ 2.35 $ 1.24 $ 1.96 ====================================== FULLY DILUTED EARNINGS PER SHARE: Continuing operations.................................... $ 2.27(1) $ 1.71(2) $ 1.90 Discontinued operations.................................. .07 (.47) .04 -------------------------------------- Income before cumulative effect.......................... 2.34 1.24 1.94 Cumulative effect of accounting changes.................. -- -- -- -------------------------------------- Net income............................................... $ 2.34 $ 1.24 $ 1.94 ====================================== Cash dividends paid: Common stock............................................. 458.9 429.5 398.8 Per share.............................................. .92 .84 .76 Preferred stock.......................................... -- -- -- Per share.............................................. -- -- -- Weighted average number of common shares: Primary.................................................. 505.8 515.7 528.2 Fully diluted............................................ 510.6 524.4 538.0 - -------------------------------------------------------------------------------------------------
NOTE: All per share information and average number of common shares data reflect the September 12, 1996 two-for-one stock split and the September 12, 1986 two-for-one stock split. All financial information has been restated to recognize the 1995 divestiture of the food products segment. All amounts include the acquisition of Sea World as of December 1, 1989. Financial information prior to 1988 has been restated to reflect the 1988 adoption of Financial Accounting Standards No. 94, "Consolidation of Majority-Owned Subsidiaries." (1) 1996 results include the impact of the gain on the sale of the St. Louis Cardinals. Excluding the Cardinal gain, operating income, pretax income, income from continuing operations and fully diluted earnings per share would have been $2,029.1 million, $1,838.3 million, $1,122.7 million and $2.21, respectively. (2) 1995 results include the impact of the one-time pretax charge of $160 million for the closure of the Tampa brewery, and the $74.5 million pretax impact of the beer wholesaler inventory reduction. Excluding these nonrecurring special items, operating income, pretax income, income from continuing operations and fully diluted earnings per share would have been $1,867.3 million, $1,696.2 million, $1,032.3 million and $1.99, respectively. 72 Anheuser-Busch Companies, Inc., and Subsidiaries ----------------------------------- |FINANCIAL SUMMARY -- OPERATIONS | -----------------------------------
- ----------------------------------------------------------------------------------------- 1993 1992 1991 1990 1989 1988 1987 1986 - ----------------------------------------------------------------------------------------- 87.3 86.8 86.0 86.5 80.7 78.5 76.1 72.3 ========================================================================================= $11,147.3 $11,008.6 $10,631.9 $9,716.1 $8,553.7 $8,120.5 $7,605.0 $7,001.5 1,679.8 1,668.6 1,637.9 868.1 802.3 781.0 760.7 724.5 - ----------------------------------------------------------------------------------------- 9,467.5 9,340.0 8,994.0 8,848.0 7,751.4 7,339.5 6,844.3 6,277.0 6,167.6 6,051.8 5,953.5 5,963.4 5,226.5 4,878.1 4,467.1 4,122.7 - ----------------------------------------------------------------------------------------- 3,299.9 3,288.2 3,040.5 2,884.6 2,524.9 2,461.4 2,377.2 2,154.3 1,612.1 1,583.7 1,409.5 1,364.9 1,244.3 1,245.2 1,274.4 1,179.9 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 401.3 -- -- -- -- -- -- -- - ------------------------------------------------------------------------------------------ 1,286.5 (3) 1,704.5 1,631.0 1,519.7 1,280.6 1,216.2 1,102.8 974.4 (205.1) (194.6) (234.0) (277.2) (172.9) (134.6) (114.1) (85.5) 35.2 46.9 45.6 52.5 49.8 42.9 38.9 31.0 3.4 4.4 6.6 4.3 7.9 9.8 12.8 9.6 21.0 (2.5) 1.3 (16.5) 17.7 (15.5) 3.9 (1.2) - ------------------------------------------------------------------------------------------ 1,141.0(3) 1,558.7 1,450.5 1,282.8 1,183.1 1,118.8 1,044.3 928.3 (4) 452.6 594.6 549.6 481.4 438.2 422.0 439.1 419.0 31.2 -- -- -- -- -- -- -- - ------------------------------------------------------------------------------------------ 657.2 (3) 964.1 900.9 801.4 744.9 696.8 605.2 509.3 (4) (62.7) 30.1 38.9 41.0 22.3 19.1 9.5 8.7 - ------------------------------------------------------------------------------------------ 594.5 994.2 939.8 842.4 767.2 715.9 614.7 518.0 -- (76.7) -- -- -- -- -- -- - ------------------------------------------------------------------------------------------- $ 594.5 $ 917.5 $ 939.8 $ 842.4 $ 767.2 $ 715.9 $ 614.7 $ 518.0 =========================================================================================== $ 1.20 $ 1.69 $ 1.56 $ 1.41 $ 1.30 1.19 $ 1.00 $ .83 (.11) .05 .07 .07 .04 .04 .02 .02 - ------------------------------------------------------------------------------------------- 1.09 1.74 1.63 1.48 1.34 1.23 1.02 .85 -- (.13) -- -- -- -- -- -- - ------------------------------------------------------------------------------------------- $ 1.09 $ 1.61 $ 1.63 $ 1.48 $ 1.34 $ 1.23 $ 1.02 $ .85 ============================================================================================ $ 1.20(3)$ 1.68 $ 1.56 $ 1.40 $ 1.30 $ 1.19 $ 1.00 $ .83 (4) (.11) .05 .06 .07 .04 .04 .02 .02 - -------------------------------------------------------------------------------------------- 1.09 1.73 1.62 1.47 1.34 1.23 1.02 .85 -- (.13) -- -- -- -- -- -- - -------------------------------------------------------------------------------------------- $ 1.09 $ 1.60 $ 1.62 $ 1.47 $ 1.34 $ 1.23 $ 1.02 $ .85 ============================================================================================ 370.0 338.3 301.1 265.0 226.2 188.6 148.4 120.2 .68 .60 .53 .47 .40 .33 .27 .22 -- -- -- -- -- -- 20.1 26.9 -- -- -- -- -- -- 3.23 3.60 548.6 571.6 575.8 569.2 572.4 584.4 603.0 613.2 558.6 581.6 585.8 579.4 572.4 584.4 603.0 613.2 - ------------------------------------------------------------------------
(3) 1993 results include the impact of two nonrecurring special charges. These charges are (1) a restructuring charge ($401.3 million pretax) and (2) a revaluation of the deferred tax liability due to the 1% increase in federal tax rates ($31.2 million after-tax). Excluding these nonrecurring special charges, operating income, pretax income, income from continuing operations and fully diluted earnings per share would have been $1,687.8 million, $1,542.3 million, $935.2 million and $1.69, respectively. (4) Effective January 1, 1986, the company adopted the provisions of Financial Accounting Standards No. 87 (FAS 87), "Employers' Accounting For Pensions." The financial effect of FAS 87 adoption was to increase 1986 income before income taxes $33.9 million, income from continuing operations $18 million and earnings per share $.03. 73 - ------------------------------------ | Financial Summary -- Balance | | Sheet and Other Information | - ------------------------------------ Anheuser-Busch Companies, Inc., and Subsidiaries (In millions, except per share and statistical data) - --------------------------------------------------------------------------- 1996 1995 1994 ------------------------------ BALANCE SHEET INFORMATION: Working capital (deficit)................$ 34.9 $ 268.6 $ 57.0 Current ratio............................ 1.0 1.2 1.0 Plant and equipment, net................. 7,208.2 6,763.0 6,494.6 Long-term debt........................... 3,270.9 3,270.1 3,066.4 Total debt to total capitalization ratio. 44.8% 47.1% 47.3% Deferred income taxes.................... 1,208.1 1,132.8 1,081.5 Convertible redeemable preferred stock... -- -- -- Shareholders equity...................... 4,029.1 4,433.9 4,415.5 Return on shareholders equity............ 30.0%(1) 25.0%(2) 29.9% Book value per share..................... 8.10 7.22 6.64 Total assets............................. 10,463.6 10,590.9 10,547.4 OTHER INFORMATION: Capital expenditures.....................$ 1,084.6 $ 952.5 $ 662.8 Depreciation and amortization............ 593.9 565.6 517.0 Effective tax rate....................... 38.9% 39.3% 39.5% Price/earnings ratio..................... 17.6(1) 19.6(2) 13.1 Percent of pretax profit on net sales.... 17.4% 14.1% 16.7% Market price range of common stock (high-low)............................. 42 7/8- 34- 27 5/8- 32 1/2 25 3/8 23 1/2 - --------------------------------------------------------------------------- NOTE: All share and per share information reflects the September 12, 1996 two-for-one stock split and the September 12, 1986 two-for-one stock split. All financial information has been restated to recognize the 1995 divestiture of the food products segment. All amounts include the acquisition of Sea World as of December 1, 1989. Financial information prior to 1988 has been restated to reflect the adoption in 1988 of Financial Accounting Standards No. 94, "Consolidation of Majority-Owned Subsidiaries." (1) These ratios have been calculated based on reported income from continuing operations, which includes the $54.7 million pretax gain on the sale of the St. Louis Cardinals. Excluding the Cardinal gain, return on shareholders equity would have been 29.2% and the price/earnings ratio would have been 18.1. (2) These ratios have been calculated based on reported income from continuing operations. Excluding the two nonrecurring 1995 items ($160 million pretax charge for closure of the Tampa brewery and $74.5 million impact of the beer wholesaler inventory reduction), return on shareholders equity would have been 29.1% and the price/earnings ratio would have been 16.8. (3) These ratios have been calculated based on reported income from continuing operations. Excluding the two nonrecurring 1993 charges ($401.3 million pretax restructuring charge and $31.2 million after-tax FAS 109 charge), return on shareholders equity would have been 26.7% and the price/earnings ratio would have been 13.8. (4) These ratios have been calculated based on income from continuing operations before the cumulative effect of accounting changes. (5) This percentage has been calculated by including convertible redeemable preferred stock as part of equity, as it was convertible into common stock and traded primarily on its equity characteristics. 74 ------------------------------------ |FINANCIAL SUMMARY -- BALANCE | |SHEET AND OTHER INFORMATION | ------------------------------------ Anheuser-Busch Companies, Inc., and Subsidiaries
- -------------------------------------------------------------------------------------------------------------- 1993 1992 1991 1990 1989 1988 1987 1986 - -------------------------------------------------------------------------------------------------------------- $ (41.3) $ 247.8 $ 107.9 $ (62.8) $ (82.8) $ (23.7) $ 42.5 $ 9.3 1.0 1.2 1.1 0.9 0.9 1.0 1.0 1.0 6,454.7 6,424.7 6,260.6 6,102.2 5,768.0 4,624.2 4,177.4 3,478.5 3,019.7 2,630.3 2,627.9 3,115.8 3,268.9 1,570.0 1,366.4 1,097.8 47.3% 42.0% 43.9% 54.5% 60.7% 41.7% 40.6% 37.7%(5) 1,013.1 1,065.5 1,401.0 1,309.3 1,241.9 1,155.8 1,123.7 1,075.8 -- -- -- -- -- -- -- 286.9 4,255.5 4,620.4 4,438.1 3,679.1 3,099.9 3,102.9 2,892.2 2,313.7 18.8%(3) 27.6%(4) 30.2% 34.0% 34.6% 33.3% 31.8% 28.7%(5) 6.31 6.51 5.90 4.60 3.74 3.87 3.40 2.83 10,267.7 9,954.9 9,642.5 9,274.2 8,690.1 6,788.9 6,260.3 5,605.0 $ 656.3 $ 628.8 $ 625.5 $ 805.3 $ 979.0 $ 858.1 $ 716.9 $ 661.1 492.7 453.3 437.0 404.3 333.1 306.5 267.9 232.0 42.4% 38.1% 37.9% 37.5% 37.0% 37.7% 42.0% 45.1% 22.6(3) 16.9(4) 18.9 14.6 14.4 12.9 16.4 15.5 12.1% 16.7% 16.1% 14.5% 15.3% 15.2% 15.3% 14.8% 30-22 301/4-26 303/4-193/4 221/2-171/8 227/8-151/4 17-141/2 197/8-131/4 141/4-10 - --------------------------------------------------------------------------------------------------------------
- ------------------------------------------- |RESPONSIBILITY FOR FINANCIAL STATEMENTS | - ------------------------------------------- The management of Anheuser-Busch Companies, Inc. is responsible for the financial statements and other information included in this annual report. Management has selected those generally accepted accounting principles it considers appropriate to prepare the financial statements and other data contained herein. The company maintains accounting and reporting systems, supported by a system of internal accounting control, which management believes are adequate to provide reasonable assurances that assets are safeguarded against loss from unauthorized use or disposition and financial records are reliable for preparing financial statements. During 1996, the company's internal auditors, in conjunction with Price Waterhouse LLP, the company's independent accountants, performed a comprehensive review of the adequacy of the company's internal accounting control system. Based on that comprehensive review, it is management's opinion that the company has an effective system of internal accounting control. The Audit Committee of the Board of Directors, which consists of eight nonmanagement directors, oversees the company's financial reporting and internal control systems, recommends selection of the company's public accountants and meets with the public accountants and internal auditors to review the overall scope and specific plans for their respective audits. The Committee held five meetings during 1996. A more complete description of the functions performed by the Audit Committee can be found in the company's proxy statement. The report of Price Waterhouse LLP on its examinations of the Consolidated Financial Statements of the company appears on the next page. 76 ----------------------------------------- | Report of Independent Accountants | ----------------------------------------- 800 Market Street St. Louis, MO 63101 PRICE WATERHOUSE LLP [LOGO] February 3, 1997 To the Shareholders and Board of Directors of Anheuser-Busch Companies, Inc. We have audited the accompanying Consolidated Balance Sheet of Anheuser-Busch Companies, Inc. and its subsidiaries as of December 31, 1996 and 1995, and the related Consolidated Statements of Income, Changes in Shareholders Equity and Cash Flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements audited by us present fairly, in all material respects, the financial position of Anheuser-Busch Companies, Inc. and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. PRICE WATERHOUSE LLP 77 APPENDIX In Exhibit 13 to the printed Form 10-K, the following bar graphs appear, all depicting data for 1992, 1993, 1994, 1995 and 1996: on page 36, "SALES" depicting gross sales and net sales in billions of dollars; on page 38, "TOTAL EMPLOYEE-RELATED COSTS" depicting total employee-related costs in millions of dollars; on page 39, "OPERATING INCOME (CONTINUING OPERATIONS BASIS)" depicting operating income in millions of dollars; on page 40, "INCOME FROM CONTINUING OPERATIONS*/DIVIDENDS ON COMMON STOCK" depicting income from continuing operations and dividends in millions of dollars; on page 41, "FULLY DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS*" depicting fully diluted earnings per share data; on page 43, "CASH FLOW FROM CONTINUING OPERATIONS" depicting cash flow from continuing operations in millions of dollars; on page 44, "CAPITAL EXPENDITURES/DEPRECIATION AND AMORTIZATION" depicting capital expenditures and depreciation and amortization in millions of dollars; and, on page 47, "SHAREHOLDERS EQUITY/LONG-TERM DEBT" depicting shareholders equity and long-term debt in millions of dollars. EX-21 5 EX-21 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES INC EX-21 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------
STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- ------------- Anheuser-Busch, Incorporated Missouri Anheuser-Busch, Incorporated Anheuser-Busch International, Delaware Anheuser-Busch International, Incorporated Incorporated Busch Agricultural Resources, Inc. Delaware Busch Agricultural Resources, Inc. Busch Entertainment Corporation Delaware Busch Entertainment Corporation Metal Container Corporation Delaware Metal Container Corporation
All other subsidiaries of the Company, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of December 31, 1996. EX-27 6 EX-27 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the Form 10-K for the fiscal year ended December 31, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 93,550 0 635,837 3,142 531,059 1,465,769 12,214,726 5,006,515 10,463,631 1,430,908 3,270,918 0 0 705,799 3,323,264 10,463,631 10,883,666 10,883,666 6,964,531 8,799,889 0 0 187,958 1,892,934 736,861 1,156,073 33,786 0 0 1,189,859 2.35 2.34
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