-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fVvqI4a8uovRxG8N6dfpS24iJmA815o85C9XgMAzTPHTM2XBOWCpUyu2tSm1YX1t V2Hi0fRMTZZS+eX1fBvEkA== 0000310569-94-000013.txt : 19941117 0000310569-94-000013.hdr.sgml : 19941117 ACCESSION NUMBER: 0000310569-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANHEUSER BUSCH COMPANIES INC CENTRAL INDEX KEY: 0000310569 STANDARD INDUSTRIAL CLASSIFICATION: 2082 IRS NUMBER: 431162835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07823 FILM NUMBER: 94558472 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: 3145773314 MAIL ADDRESS: STREET 1: ONE BUSCH PL CITY: ST LOUIS STATE: MO ZIP: 63118 10-Q 1 THIRD QUARTER 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1994 Commission file number 1-7823 ANHEUSER-BUSCH COMPANIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 43-1162835 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Busch Place, St. Louis, Missouri 63118 (Address of principal executive offices) (Zip Code) 314-577-2000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. $1 Par Value Common Stock - 259,002,817 shares as of October 31, 1994 2 CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited) (In millions, except per share data)
3RD QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1994 1993 1994 1993 ---- ---- ---- ---- Sales........................................ $3,759.3 $3,618.1 $10,383.3 $9,921.5 Less federal and state excise taxes........ 461.4 461.4 1,288.6 1,270.6 -------- -------- -------- -------- Net sales.................................... 3,297.9 3,156.7 9,094.7 8,650.9 Cost of products and services.............. 2,062.0 1,977.4 5,808.4 5,528.4 -------- -------- -------- -------- Gross profit................................. 1,235.9 1,179.3 3,286.3 3,122.5 Marketing, distribution and administrative expenses................................. 635.7 609.6 1,724.5 1,667.9 Restructuring charge....................... - 565.0 - 565.0 -------- -------- -------- -------- Operating income............................. 600.2 4.7 1,561.8 889.6 Other income and expenses: Interest expense........................... (54.3) (55.5) (165.1) (155.7) Interest capitalized....................... 5.6 4.7 15.2 30.4 Interest income............................ 1.3 1.3 2.7 4.4 Other income/(expense), net................ (3.5) .9 3.2 7.7 -------- -------- -------- -------- Income before income taxes................... 549.3 (43.9) 1,417.8 776.4 Provision for income taxes: Current/deferred........................... (219.9) 1.9 (561.4) (315.7) Revaluation of deferred tax liability (FAS 109)................................ - (33.0) - (33.0) -------- ------- -------- ------- Net income................................... 329.4 (75.0) 856.4 427.7 Retained earnings, January 1................. 6,359.4 6,121.5 6,023.4 5,794.9 Common stock dividends (per share: 3rd quarter, 1994--$.40; 1993--$.36; nine months, 1994--$1.12; 1993--$1.00).......... (104.2) (97.4) (295.2) (273.5) -------- -------- -------- -------- Retained earnings, September 30.............. $6,584.6 $5,949.1 $6,584.6 $5,949.1 ======== ======== ======== ======== Primary earnings per share................... $ 1.26 $ (.28) $ 3.23 $ 1.55 ======== ======== ======== ======== Fully diluted earnings per share............. $ 1.24 $ (.28) $ 3.20 $ 1.55 ========= ======== ======== ======== See accompanying Notes to Consolidated Financial Statements on Page 3.
2 3 Notes to Consolidated Financial Statements 1. Unaudited Financial Statements: The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and applicable SEC guidelines pertaining to interim financial information. These statements should be read in conjunction with the financial statements and notes thereto included in the company's Annual Report to Shareholders for the year ended December 31, 1993. In the opinion of the company's management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial statements have been included therein. 2. Earnings Per Share: Primary earnings per share of common stock are based on the weighted average number of shares of common stock outstanding during the period. Fully diluted earnings per share of common stock assume the conversion of the company's 8% Convertible Debentures due 1996 and the elimination of related after-tax interest expense. 3 4 CONSOLIDATED BALANCE SHEET Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited) (In millions)
SEPTEMBER 30, -------------------- 1994 1993 ---- ---- ASSETS CURRENT ASSETS: Cash and marketable securities................. $ 81.4 $ 140.4 Receivables, less allowance for doubtful accounts............................ 898.1 757.1 Inventories-- Raw materials and supplies................... 338.2 362.8 Work in progress............................. 113.7 102.4 Finished goods............................... 132.6 141.8 Total inventories.......................... 584.5 607.0 Other current assets........................... 324.9 312.5 --------- --------- Total current assets......................... 1,888.9 1,817.0 INVESTMENTS AND OTHER ASSETS.................... 1,601.3 1,615.4 PLANT AND EQUIPMENT, NET........................ 7,482.0 7,369.2 --------- --------- $10,972.2 $10,801.6 ========= =========
4 5 LIABILITIES AND SHAREHOLDER'S EQUITY (in millions)
SEPTEMBER 30, -------------------- 1994 1993 ---- ---- CURRENT LIABILITIES: Accounts payable............................... $ 717.2 $ 760.7 Accrued salaries, wages and benefits........... 289.9 298.4 Accrued taxes, other than income taxes......... 159.6 163.9 Restructuring accrual.......................... 84.9 239.7 Other current liabilities...................... 426.8 492.0 --------- --------- Total current liabilities.................... 1,678.4 1,954.7 --------- --------- POSTRETIREMENT BENEFITS.......................... 632.2 565.2 --------- --------- LONG-TERM DEBT................................... 2,949.9 2,822.2 --------- --------- DEFERRED INCOME TAXES............................ 1,265.8 1,145.6 --------- --------- SHAREHOLDERS EQUITY: Common stock................................... 343.7 342.0 Capital in excess of par value................. 845.7 781.9 Retained earnings.............................. 6,584.6 5,949.1 Foreign currency translation adjustment........ (31.5) (32.0) --------- -------- 7,742.5 7,041.0 Treasury stock, at cost........................ (2,919.2) (2,320.6) ESOP debt guarantee offset..................... (377.4) (406.5) --------- --------- 4,445.9 4,313.9 --------- --------- COMMITMENTS AND CONTINGENCIES.................... -- -- $10,972.2 $10,801.6 ========= =========
5 6 CONSOLIDATED STATEMENT OF CASH FLOWS Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited) (In millions)
Nine months ended September 30, 1994 1993 ---- ---- CASH FLOW FROM OPERATING ACTIVITIES: Net income...................................... $ 856.4 $ 427.7 Adjustments to net income to arrive at net cash provided by operations: Depreciation and amortization............... 465.7 450.9 (Decrease)/Increase in deferred income taxes 95.3 (131.4) Restructuring charge........................ - 565.0 (Decrease)/Increase in non-cash working capital................................... (276.8) 179.5 Other, net.................................. 122.0 27.0 ------- ------- Cash provided by operating activities........... 1,262.6 1,518.7 ------- ------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures............................ (542.2) (571.1) New business acquisitions....................... (17.2) (502.9) ------- ------- Cash used for investing activities.............. (559.4) (1,074.0) ------- ------- CASH FLOW FROM FINANCING ACTIVITIES: Issuance of long-term debt...................... 49.6 312.4 Decrease in long-term debt...................... (102.2) (100.2) Acquisition of treasury stock................... (439.6) (477.8) Dividends paid to stockholders.................. (295.3) (273.4) Shares issued under stock plans................. 38.3 19.7 ------- ------- Cash used for financing activities.............. (749.2) (519.3) ------- ------- Net (decrease) in cash and marketable securities during the period............................. (46.0) (74.6) Cash and marketable securities at beginning of period........................................ 127.4 215.0 ------- ------- Cash and marketable securities at end of period. $ 81.4 $ 140.4 ======= ======= A more adequate understanding of the company's financial position and business can be gained by reference to the Anheuser-Busch Companies, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
6 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION - - - ------------ This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity (cash flow) of Anheuser-Busch Companies, Inc. for the third quarter and nine months ended September 30, 1994 compared to the third quarter and nine months ended September 30, 1993 and the year ended December 31, 1993. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in the company's Annual Report to Shareholders for the year ended December 31, 1993. Additional information concerning the company's consolidated financial and operating results is contained in the Letter to Shareholders section of the Third Quarter 1994 Shareholders Report. Prior Year Non-Recurring Special Charges - - - ---------------------------------------- Financial results for the third quarter and nine months of last year --------- (1993) were affected by two non-recurring special charges as follows: - - - ------ 1. The company's Profitability Enhancement Program, which included ---------------------------------- significant operational and organizational changes, resulted in a one-time, pre-tax Restructuring Charge of $565 million, or $1.26 per share. 2. The Revenue Reconciliation Act of 1993, which increased the federal -------------------------- income tax rate by one percentage point to 35% from 34%, resulted in a $33 million, or $.12 per share, one-time increase in the company's deferred tax liability. These two prior year special charges make it difficult to directly compare 1994 and 1993 financial results. Accordingly, financial comparisons are presented on both a "Normal Operations" basis (excluding the special charges) --------- and an "As Reported" basis (including the special charges) in order to --------- facilitate a full understanding of company results. 7 8 Campbell Taggart, Inc. - - - ---------------------- The company's baking subsidiary, Campbell Taggart, Inc., continues to report substantially lower earnings in 1994 when compared to 1993. Campbell Taggart's earnings are now expected to decline approximately 50% for the full year 1994 versus 1993. The company has taken steps to improve the cost structure at its bakeries and has implemented management and organizational changes designed to better market and distribute its products. OPERATIONS - - - ---------- Sales - - - ----- Gross sales for the third quarter of 1994 were $3.8 billion, an increase of $141 million, or 3.9%, over gross sales of $3.6 billion for the third quarter of 1993. Gross sales for the nine months of 1994 were $10.4 billion compared to $9.9 billion for the nine months of 1993, an increase of $462 million, or 4.7%. Net sales for the third quarter of 1994 were $3.3 billion, an increase of $141 million, or 4.5%, over net sales of $3.2 billion for the third quarter of 1993. Net sales for the nine months of 1994 were $9.1 billion, an increase of $444 million or 5.1% over net sales of $8.7 billion for the nine months of 1993. The difference between gross sales and net sales represents federal and state excise taxes paid by the company on beer sales. The increase in gross and net sales during the period was driven primarily by higher domestic and international beer sales and reflects beer volume growth for established premium brands, new brand introductions and exports. Anheuser-Busch, Inc., the company's brewing subsidiary and largest contributor to consolidated sales, reported record third quarter sales-to- wholesalers of 24.2 million barrels, an increase of 168,000 barrels, or 0.7%, over the 24.0 million barrels sold during the third quarter of 1993. Sales- to-wholesalers for the nine months of 1994 were also a record 67.8 million barrels compared to 66.1 million barrels during the nine months of 1993, an increase of 2.7%. 8 9 Anheuser-Busch beer sales for third quarter and nine months of 1994 include 117,000 and 338,000 barrels, respectively, related to a previously announced contract-brewing arrangement for the production of Kirin Ice for sale by the Kirin Brewery in Japan. The Budweiser Family of premium beers was a significant contributor to the increase in sales volume for the nine months. Bud Family sales-to-retailers increased by more than 3.5% for the nine months, led by Bud Light, which continues to grow at double-digit rates, and the successful introduction of Ice Draft from Budweiser and Ice Draft Light. Importantly, the company's flagship brand, Budweiser, has shown improvement in sales trend. During the third quarter, Bud Light became the largest selling light beer in the country and the second largest beer brand behind Budweiser. Anheuser- Busch beer brands are now the leader in the regular, light and non-alcohol beer categories, as well as the leader in each of the four price segments. Ice Draft from Budweiser continues to perform well since its national roll-out in January. Its success led to the introduction of Ice Draft Light, which achieved full national distribution in the third quarter. In 1993, the company built year-end beer inventories in anticipation of labor negotiations. The company will reduce those inventories to more normal levels at December 31, 1994. Accordingly, full year 1994 sales-to-wholesalers volume growth is expected to be approximately 1.5%. Sales-to-retailers, considered a more accurate measure of underlying consumer demand, are expected to grow in excess of 2.5% for 1994. Anheuser-Busch, Inc. increased its market share during the nine months 1994 compared to the nine months of 1993 by 0.6 share points, with sales volume representing 44.0% of total brewing industry sales (including imports), according to estimates based on information provided by the Beer Institute. Anheuser-Busch has led the brewing industry in sales volume and market share each quarter since 1957. 9 10 Cost of Products and Services - - - ----------------------------- Cost of products and services for the third quarter of 1994 was $2.1 billion, an increase of 4.3% compared to the third quarter of 1993. Cost of products and services increased $280.0 million, or 5.1%, for the nine months of 1994 compared to the prior year. The increase in cost of products and services is primarily attributable to the increase in beer sales volume and higher ingredient costs at Campbell Taggart. Gross profit as a percentage of net sales was 37.5% for the third quarter of 1994 compared to 37.4% for the same period of 1993. Gross profit as a percentage of net sales was 36.1% for both the nine months of 1994 and 1993. The third quarter statistics reflect increased margins by the company's beer operations, partially offset by lower margins for Campbell Taggart and the St. Louis National Baseball Club. Marketing, Distribution and Administrative Expenses - - - --------------------------------------------------- Marketing, distribution and administrative expenses for the third quarter of 1994 were $635.7 million compared with $609.6 million for the third quarter of 1993, an increase of $26.1 million or 4.3%. Marketing, distribution and administrative expenses during the nine months of 1994 were $1.72 billion, compared to $1.67 billion during the first nine months of 1993, an increase of $56.5 million or 3.4%. These expenses increased primarily due to higher beer sales volume and the addition of marketing and distribution expenses associated with the company's joint venture in Japan which began operations in September 1993. Prior Year Special Charges - - - -------------------------- As previously noted, 1993 third quarter and nine month operating income was affected by the Restructuring Charge. Net income and earnings per share for 1993 were also affected by the one-time increase in the company's deferred tax liability resulting from the Revenue Reconciliation Act of 1993. For clarity, the following financial comparisons are presented on both a "Normal Operations" basis (excluding the special charges) and an "As Reported" basis --------- (including the special charges). --------- 10 11 Third Quarter 1994 vs. 1993 ($ in millions, except per share) 1993 1993 Normal As 1994 Operations Increase Reported Increase Operating $600.2 | $569.7 $30.5 | $ 4.7 $595.5 Income | | | | Pre-tax $549.3 | $521.1 $28.2 | $(43.9) $593.2 Income/(Loss) | | | | Net $329.4 | $311.1 $18.3 | $(75.0) $404.4 Income/(Loss) | | - - - ----------------------------------------------------------------------------- Fully-diluted $ 1.24 | $ 1.13 $ .11 | $ (.28) $ 1.52 Earnings/ (Loss) Per Share Nine Months 1994 vs. 1993 ($ in millions, except per share) 1993 1993 Normal As 1994 Operations Increase Reported Increase Operating $1,561.8 | $1,454.6 $107.2 | $889.6 $672.2 Income | | | | Pre-tax $1,417.8 | $1,341.4 $ 76.4 | $776.4 $641.4 Income | | | | Net Income $ 856.4 | $ 813.8 $ 42.6 | $427.7 $428.7 - - - ----------------------------------------------------------------------------- Fully-diluted $ 3.20 | $ 2.93 $ .27 | $ 1.55 $ 1.65 Earnings Per | | Share | | Operating Income ("Normal Operations" basis) - - - -------------------------------------------- Operating income was $600.2 million for the third quarter of 1994, a 5.3% increase when compared to the third quarter of 1993. Operating income was $1.56 billion for the nine months of 1994, a 7.4% increase compared to the nine months of 1993. 11 12 The increase in operating income is primarily the result of domestic and international beer performance, offset partially by lower earnings at Campbell Taggart and the St. Louis National Baseball Club. Net Interest Cost - - - ----------------- Net interest cost (interest expense less interest income) was $53.0 million for the third quarter of 1994, a decrease of $1.2 million, or 2.1%, compared to net interest cost of $54.2 million for the third quarter of 1993. Net interest cost for the nine months of 1994 was $162.4 million an increase of $11.1 million, or 7.4%, above net interest cost of $151.3 million for the corresponding period in 1993. The increase in net interest cost for the nine months is due to higher average debt balances outstanding during the period, primarily as a result of financing international brewing investments (mid-1993) and share repurchases. The net change in debt during the twelve month period ended September 30, 1994 is summarized in the Financial Condition Section of this discussion. Interest Capitalized - - - -------------------- Interest capitalized increased $.9 million for the quarter and decreased $15.2 million for the nine months of 1994, respectively, as compared to the corresponding periods of 1993. The decline in interest capitalized for the nine months of 1994 is related to the Spring 1993 start-up of the company's new brewery in Cartersville, GA, which resulted in the cessation of interest capitalization on this major capital investment. 12 13 Other Income/(Expense), Net - - - --------------------------- Other income/(expense), net, includes numerous items of a non-operating nature which do not have a material impact on the company's consolidated results of operations (either individually or in the aggregate). Income Taxes ("Normal Operations" basis) - - - ---------------------------------------- The effective income tax rate was 40.0% of pre-tax earnings for the third quarter and 39.6% for the nine months of 1994, as compared to 40.3% for the third quarter and 39.3% for the nine months of 1993. The decrease in the effective income tax rate for the third quarter of 1994 compared to the third quarter of 1993 reflects the fact that the third quarter of 1993 includes the cumulative nine month 1993 rate increase impact for the Revenue Reconciliation Act of 1993. As the tax rate increase was signed into law during the third quarter 1993, accounting rules required the cumulative impact to be reported during that quarter. Net Income ("Normal Operations" basis) - - - -------------------------------------- Net income for the third quarter of 1994 was $329.4 million, an increase of $18.3 million, or 5.9%, compared to the third quarter of 1993. For the nine months of 1994, net income was $856.4 million, or an increase of 5.2% compared to the prior year. 13 14 Earnings Per Share ("Normal Operations" basis) - - - ---------------------------------------------- Fully diluted earnings per share for the third quarter of 1994 were $1.24, an increase of 9.7% as compared to the third quarter of 1993. Fully diluted earnings per share for the nine months of 1994 were $3.20, an increase of 9.2% over the prior year. Fully diluted earnings per share assume the conversion of the company's 8% Convertible Debentures due 1996 and the elimination of related after-tax interest expense. The difference between the percentage change in net income and the percentage change in earnings per share was due to fewer shares outstanding as a result of the company's continuing share repurchase program. FINANCIAL CONDITION - - - ------------------- Cash and marketable securities at September 30, 1994 were $81.4 million, a decrease of $59.0 million from the September 30, 1993 level and a decrease of $46.0 million from the December 31, 1993 level. The decrease in cash and marketable securities from the September 1993 level is due primarily to cash used to support the company's capital expenditure and share repurchase programs, partially offset by cash generated by operations. Total short-term and long-term debt increased $127.7 million during the twelve month period ended September 30, 1994. The net increase in debt during this period is primarily due to the following: Debt Issuances ...... $425.4 million -------------- - Commercial paper ... $425.4 million 14 15 Debt Reduction ......$297.7 million -------------- - Redemption of public term debt ... $253.6 million. - Maturity of Medium-term notes at varying interest rates ... $15 million - ESOP debt repayment (guarantee) ... $29.1 million At September 30, 1994, $617.1 million of commercial paper borrowings outstanding were classified as long-term debt. This debt is expected to be maintained on a long-term basis with ongoing credit provided by the company's revolving credit agreements. Capital expenditures during the third quarter and nine months of 1994 were $104.6 million and $542.2 million, respectively, as compared to $181.1 million and $571.1 million for the comparable periods of 1993. The company anticipates that capital expenditures for 1994 will approximate $770 million. 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 potential costs associated with 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. 15 16 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits -------- 10 - Consulting Agreement between Anheuser-Busch Companies, Inc. and a former executive officer 12 - Ratio of Earnings to Fixed Charges 27 - Financial Data Schedule No instruments defining the rights of holders of long-term debt are filed since the total amount of securities authorized under any such instruments does not exceed 10% of the total assets of the Company on a consolidated basis. The Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the three month period ending September 30, 1994. 16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ANHEUSER-BUSCH COMPANIES, INC. (Registrant) s/Jerry E. Ritter ---------------------------------- Jerry E. Ritter Executive Vice President - Chief Financial and Administrative Officer (Chief Financial Officer) November 10, 1994 s/Gerald C. Thayer ---------------------------------- Gerald C. Thayer Vice President and Controller (Chief Accounting Officer) November 10, 1994 18 INDEX TO EXHIBITS Exhibit No. Exhibit ----------- ------- 10 Consulting Agreement between Anheuser-Busch Companies, Inc. and a former executive officer 12 Ratio of Earnings to Fixed Charges 27 Financial Data Schedule 18 EX-10 2 EXHIBIT 10,CONSULTING AGREEMENT 1 EXHIBIT 10 CONSULTING AGREEMENT THIS AGREEMENT made and entered into this 9th day of September, 1994, and effective October 1, 1994, by and between ANHEUSER-BUSCH COMPANIES, INC., a Delaware corporation with principal offices at One Busch Place, St. Louis, Missouri 63118 (hereinafter referred to as "A-BC"), and MICHAEL J. ROARTY, residing at 2705 Covington Place Estates, Town & Country, Missouri 63131 (hereinafter referred to as "Consultant"). WHEREAS, Consultant has elected to retire effective September 30, 1994 from his employment as Executive Vice President-Corporate Marketing and Communications for A-BC, as Chairman of the Board and Chief Executive Officer of Busch Creative Services Corporation, as Chairman of the Board and President of A-B Sports, Inc., and as Chairman of the Board of Busch Media Group, Innervision Productions, and Optimus, Inc; and WHEREAS, Consultant, while an employee of A-BC, gained invaluable knowledge and experience regarding the business operations of A-BC and its subsidiaries, especially in the areas of beer marketing and advertising for its beer company Anheuser-Busch, Inc. ("A-BI"); and WHEREAS, A-BC desires (i) to retain Consultant so that his services will be available to A-BC in his area of specialized knowledge and experience; (ii) to assure itself that Consultant does not use his specialized knowledge and experience for the benefit of a competitor of A-BC or any of its subsidiaries, including A-BI. NOW, THEREFORE, in consideration of the mutual covenants contained herein, it is hereby agreed as follows: 1. Term ---- (a) The term of this Agreement shall commence October 1, 1994, and shall end on September 30, 1996, except with respect to the provisions of subsection 3(c)(ii), unless sooner terminated in accordance with the provisions of Section 1(b) hereof. 2 (b) A-BC reserves the absolute right to terminate this Agreement in its sole discretion, without further obligation, at any time in the event of Consultant's death, his inability to perform services as a result of mental or physical disability, his purchase of an A-BI beer distributorship, or material breach of this Agreement. 2. Consulting Duties ----------------- (a) During the term of this Agreement, Consultant shall be responsible for managing A-BI's annual sponsorship of the Irish Derby within the budgetary parameters established by the A-BC Chairman of the Board and President. (b) Consultant will continue to serve as A-BI's representative on the Board of Advertising Council and will make his best effort to ensure that as soon as practicable Tony Ponturo is appointed as his successor on the Council. (c) Consultant will maintain relationships and contacts with the following organizations within the Irish American community: the Ireland/U.S. Council for Commerce and Industry; the Ireland Chamber of Commerce,USA (ICCUSA); and the American Ireland Fund. Consultant will also maintain his membership in the Prime Minister of Ireland's Advisory Council through the Irish Embassy in Washington D.C. All expenses related to these memberships will be subject to the provisions of Section 5 of this Agreement unless otherwise approved in advance in writing by the Chairman of the Board and President of A-BC. (d) Consultant will provide such other services and work on such other special projects as requested in writing by the A-BC corporate office. (e) In providing services under this Agreement, Consultant will be acting as an independent contractor and not as an employee of A-BC or any of its subsidiaries. Consultant shall have no power to bind A-BC or any of its subsidiaries or to commit them to any policy position, contract or other course of 2 3 action. Subject to the provisions of Section 6, Consultant is free to render services to such other business entities as he chooses. 3. Compensation ------------ (a) During the term of this Agreement, Consultant will be paid a monthly fee of $16,667. All payments will be made on the last day of each month commencing October 31, 1994. (b) Consultant's active participation in A-BC's various retiree benefit plans (other than the retiree medical benefits plan) shall cease as of September 30, 1994. The fees and other compensation received by Consultant hereunder shall not be deemed to be "compensation" or "salary" for purposes of the Anheuser-Busch Salaried Employees' Pension Plan, the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan or for any other purpose. Amounts paid hereunder shall not be subject to federal, state or local income or employment tax withholding and will be reported by A-BC on Internal Revenue Form 1099. Consultant will be responsible for reporting this income and paying all applicable income and self-employment taxes. (c) In addition to the above monthly compensation. A-BC agrees to: (i) continue the payment of Consultant's Country Club dues during the term of this Agreement pursuant to the terms of its current arrangement with Consultant; (ii) to provide Consultant with Company paid financial services with Price Waterhouse through April, 1997 equivalent to the financial services provided to its Policy Committee Members; (iii) to provide Consultant with an automobile equivalent to the automobile provided to its Policy Committee Members during the term of this Agreement. Consultant agrees to 3 4 account to A-BC monthly for his personal use of the automobile, in such form and detail as A-BC may require; (iv) to provide beer services at Consultant's residence. 4. Purchase of Distributorship --------------------------- A-BC agrees that during the term of this Agreement, it will attempt to locate an A-BI distributorship in the United States suitable for purchase by Consultant. 5. Business and Travel Expenses ---------------------------- (a) In the event Consultant is requested to travel beyond the St. Louis metropolitan area in performing services for A-BC or its subsidiaries, Consultant will be entitled to reimbursement for all ordinary, necessary and reasonable travel expenses subject to the limitations set out in Section 5(c) below. Consultant agrees to submit an itemized expense report to the office of the A-BC Chairman of the Board and President within 15 days after completion of each travel assignment as a basis for reimbursement by A-BC. (b) Subject to the limitations set out in Section 5(c) below, A-BC agrees to reimburse Consultant for all ordinary, reasonable and necessary business expenses incurred in performing services hereunder upon presentation of proper receipts, vouchers or similar documents evidencing the nature and amount of the expense incurred. (c) A-BC's obligation to reimburse Consultant for business expenditures, office/secretarial services and travel expenses shall be limited to $80,000 per twelve month period of this Agreement. The budget for all projects undertaken by Consultant, including the Irish Derby, shall be approved in advance in writing by the Chairman of the Board and President of A-BC. 4 5 6. Non-Competition/Non-Disclosure/Non-Disparagement ------------------------------------------------ (a) Consultant agrees that the terms and conditions of a Confidentiality and Non-Competition Agreement dated August 29, 1994 is hereby incorporated into and made a part of this Consulting Agreement. Consultant further agrees that he will not disclose to any person, firm, corporation or other entity any confidential or proprietary data, information or material of A-BC or any of its subsidiaries disclosed to him as a Consultant without the prior written approval of A-BC. The provisions of this Section 6 shall survive termination of the Agreement. Consultant further agrees that he will not voluntarily disclose the terms of this Agreement to anyone other than his wife, the Internal Revenue Service and his legal or financial advisors without the express written consent of A-BC. (b) Consultant agrees not to act in any manner detrimental to A-BC, or any of its subsidiaries, nor to make any statement which disparages or which may be detrimental to A-BC, or any of its subsidiaries, or their directors, officers, or employees. (c) Consultant understands and agrees that any breach of the provisions of Section 6(a) or (b) shall constitute a material breach of this Agreement and that A-BC, in addition to its right to terminate the Agreement, shall be entitled to injunctive and other equitable relief to prevent the threatened or continued breach of this Agreement. 5 6 7. Indemnity --------- In the event that Consultant is named as a defendant in any civil suit as a result of his performing duties pursuant to this Agreement, ABC agrees to indemnify Consultant against expenses (including attorney fees), judgments, fines or amounts paid in settlement if Consultant is successful on the merits or, if unsuccessful, the Board of Directors has determined, pursuant to Delaware corporate law, that Consultant's actions were taken in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of A-BC. Consultant agrees to notify A-BC in writing within seven (7) days of any claims made against him which are covered by this indemnity provision. 8. Notices ------- All notices required to be given hereunder shall be sent to A-BC at its corporate headquarters and directed to the attention of its Chairman of the Board and President, and to Consultant at his last known address. 9. Audit Rights ------------ For a period of at least two years following the completion of this Agreement, Consultant shall maintain such records as are necessary to substantiate that all invoices and other charges for payment hereunder are valid and properly chargeable to A-BC. A-BC or its representative shall, upon reasonable prior notice to Consultant, be given the opportunity to audit such records in order to verify the accuracy of such invoices and charges. 10. Entire Agreement ---------------- This Agreement constitutes the entire understanding and agreement of the parties and cancels and supersedes all prior negotiations, understandings and agreements whether oral or written. No waiver or modification of any term or condition of this Agreement shall be valid unless in writing and duly executed by both parties. 6 7 11. Governing Law ------------- This Agreement shall be governed by and construed under the laws of the State of Missouri. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year indicated above. ANHEUSER-BUSCH COMPANIES, INC. By:s/AUGUST A. BUSCH III ----------------------------------- Chairman of the Board and President CONSULTANT s/MICHAEL J. ROARTY --------------------- MICHAEL J. ROARTY roarty.agr EX-12 3 EXHIBIT 12, RATIO OF EARNINGS TO THIRD QUARTER 10Q 1 EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of the Company's earnings to fixed charges, on a consolidated basis, for the periods indicated: Nine Months Ended Sept. 30 Year Ended December 31 ------------- ------------------------------------------ 1994 1993 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- ---- ---- 8.4X 5.2X 1/ 5.2X 1/ 7.8X 6.4X 5.1X 6.6X 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 that portion of rental expense deemed to represent interest. 1/ Includes the impact of the one-time, pretax restructuring charge of $565 million as a result of the company's Profitability Enhancement Program. Excluding the non-recurring special charge, the ratio would have been 8.3X for the nine months ended Sept. 30 and 7.6X for year ended December 31st. EX-27 4 EXHIBIT 27, FINANCIAL DATA SCHEDULE
5 0000310569 ANHEUSER-BUSCH COMPANIES, INC. 1,000 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 62,069 19,359 905,208 7,084 584,498 1,888,911 12,047,253 4,565,260 10,972,207 1,678,425 2,949,933 343,714 0 0 4,102,205 10,972,207 9,094,654 10,383,287 5,808,399 1,724,481 (3,270) 0 165,119 1,417,790 561,374 856,416 0 0 0 856,416 3.23 3.20
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