-----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, BVKGXV0XVJflqcYlnItRGgAk/+ASkcIHdTx//cwH3lHw+8L1IYBoTDIVVKGRKWZI UqPAOS10I4XDSD85OdG8Qg== 0000310569-98-000007.txt : 19980514 0000310569-98-000007.hdr.sgml : 19980514 ACCESSION NUMBER: 0000310569-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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-Q SEC ACT: SEC FILE NUMBER: 001-07823 FILM NUMBER: 98617751 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-Q 1 FIRST QUARTER 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 March 31, 1998 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 - 485,927,336 shares as of March 31, 1998 2 CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited) Three months ended March 31, ---------------------------- (In millions, except per share data) 1998 1997 - ----------------------------------------------------------------------- Sales........................................... $2,951.2 $2,863.8 Less excise taxes............................. (443.7) (400.9) --------------------- Net sales....................................... 2,507.5 2,462.9 Cost of products and services................. (1,638.8) (1,597.0) --------------------- Gross profit.................................... 868.7 865.9 Marketing, distribution and administrative expenses...................................... (400.4) (397.6) --------------------- Operating income................................ 468.3 468.3 Other income and expenses: Interest expense.............................. (75.5) (57.2) Interest capitalized.......................... 8.7 8.8 Interest income............................... 1.5 1.9 Other expense, net............................ (6.1) (3.5) --------------------- Income before income taxes...................... 396.9 418.3 Provision for income taxes...................... (151.0) (160.6) Equity income, net of tax....................... 19.3 -- --------------------- Net income...................................... 265.2 257.7 Retained earnings, beginning of period.......... 7,604.9 6,924.5 Common stock dividends (per share: 1998--$.26; 1997--$.24)..................................... (126.6) (119.5) --------------------- Retained earnings, end of period................ $7,743.5 $7,062.7 ===================== Basic earnings per share........................ $ .54 $ .52 ===================== Diluted earnings per share...................... $ .54 $ .51 ===================== 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, and include all adjustments necessary for a fair presentation. These statements 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, 1997. 2. COMPREHENSIVE INCOME: Effective with the first quarter 1998, the company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS 130). FAS 130 requires that noncash changes in shareholders equity be combined with net income and reported in a new financial statement category entitled "comprehensive income." Adoption of FAS 130 had no impact on the results of the company's operations. The following table sets forth the components of comprehensive income for the three month period ended March 31 (in millions): ------------------------------------------------------------------ 1998 1997 ---------- -------- Net income $265.2 $257.7 Foreign currency translation adjustment 3.0 (9.3) -------------------------- Comprehensive income $268.2 $248.4 ========================== ------------------------------------------------------------------ 3 4 CONSOLIDATED BALANCE SHEET Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited) MARCH 31, ------------------- (In millions) 1998 1997 - ----------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and marketable securities........... $ 106.4 $ 266.0 Receivables, less allowance for doubtful accounts...................... 768.2 746.6 Inventories: Raw materials and supplies............. 370.9 335.2 Work in progress....................... 98.7 97.7 Finished goods......................... 208.1 173.6 Total inventories.................... 677.7 606.5 Other current assets..................... 156.4 194.9 ------------------------ Total current assets................... 1,708.7 1,814.0 ------------------------ INVESTMENTS IN AFFILIATED COMPANIES...... 1,282.4 721.8 OTHER ASSETS............................. 1,127.2 1,059.4 PLANT AND EQUIPMENT, NET................. 7,821.2 7,314.5 ------------------------ TOTAL ASSETS........................... $11,939.5 $10,909.7 ======================== LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES: Accounts payable....................... $ 709.4 $ 702.2 Accrued salaries, wages and benefits... 214.4 211.7 Accrued taxes.......................... 325.7 373.3 Other current liabilities.............. 331.5 263.5 ------------------------ Total current liabilities............ 1,581.0 1,550.7 ------------------------ POSTRETIREMENT BENEFITS.................. 526.4 525.8 ------------------------ LONG-TERM DEBT........................... 4,383.6 3,498.6 ------------------------ DEFERRED INCOME TAXES.................... 1,312.4 1,228.9 ------------------------ SHAREHOLDERS EQUITY: Common stock........................... 710.5 707.0 Capital in excess of par value......... 1,043.0 953.1 Retained earnings...................... 7,743.5 7,062.7 Foreign currency translation adjustment (211.0) (18.1) ------------------------ 9,286.0 8,704.7 Treasury stock, at cost................ (4,902.7) (4,316.9) ESOP debt guarantee.................... (247.2) (282.1) ------------------------ 4,136.1 4,105.7 ------------------------ COMMITMENTS AND CONTINGENCIES............ -- -- ------------------------ TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $11,935.5 $10,909.7 ======================== 4 5 CONSOLIDATED STATEMENT OF CASH FLOWS Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited) Three months ended March 31, ----------------------------- (In millions) 1998 1997 - --------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income......................................... $ 265.2 $ 257.7 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................. 177.5 160.8 Deferred income taxes.......................... 18.8 20.8 Undistributed earnings of affiliated companies. (19.3) -- Increase in noncash working capital............ (85.5) (56.0) Other, net..................................... (4.2) (1.2) ------------------- Net cash provided by operating activities.......... 352.5 382.1 ------------------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures............................... (237.4) (265.6) ------------------- Cash used for investing activities................. (237.4) (265.6) ------------------- CASH FLOW FROM FINANCING ACTIVITIES: Increase in long-term debt......................... 112.9 322.9 Decrease in long-term debt......................... (60.1) (61.9) Dividends paid to stockholders..................... (126.6) (119.5) Acquisition of treasury stock...................... (109.4) (110.7) Shares issued under stock plans.................... 27.2 25.1 ------------------- Cash provided by/(used for) financing activities... (156.0) 55.9 ------------------- Net increase/(decrease) in cash and marketable securities during the period..................... (40.9) 172.4 Cash and marketable securities, beginning of period........................................... 147.3 93.6 ------------------- Cash and marketable securities, end of period......$ 106.4 $ 266.0 =================== A more complete 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, 1997. 5 6 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 flows of Anheuser-Busch Companies, Inc. for the first quarter ended March 31, 1998 compared to the first quarter ended March 31, 1997 and the year ended December 31, 1997. 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, 1997. Additional information concerning the company's consolidated financial and operating results for the first quarter 1998 is contained in the Letter to Shareholders section of the first quarter 1998 Financial Report contained in the quarterly Anheuser-Busch publication Horizons. This discussion contains statements regarding the company's expectations concerning its future operations, earnings and prospects. These statements are forward-looking statements that involve significant risks and uncertainties, and accordingly, no assurances can be given that such expectations will be correct. These expectations are based upon many assumptions that the company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Important factors that could cause actual results to differ from the expectations stated in this discussion include, among others, changes in the pricing environment for the company's products; factors that may affect domestic demand for malt beverage products; changes in customer preference for the company's malt beverage products; changes in raw materials prices; changes in interest rates; changes in 6 7 foreign currency exchange rates; changes in attendance and consumer spending patterns for the company's theme park operations; changes in demand for aluminum beverage containers; changes in the company's international beer business or in the beer business of the company's international equity partners; and the effect of stock market conditions on the company's share repurchase program. FIRST QUARTER 1998 FINANCIAL RESULTS - ------------------------------------ Key operating results for the first quarter 1998 versus 1997 are summarized below: - ------------------------------------------------------------------------- First Quarter (in millions, except per share) ------------------------------------------ | 1998 vs. 1997 ------------------------------------------ 1998 | 1997 | $ | % -------|-----------|-----------|---------- | | | Gross Sales $2,951 | $2,864 | Up $87 | Up 3.1% | | | Net Sales $2,508 | $2,463 | Up $45 | Up 1.8% | | | Operating Income $468 | $468 | ---- | ---- | | | Equity Income, Net of Tax $19 | ---- | Up $19 | N/M | | | Net Income $265 | $258 | Up $7 | Up 2.9% | | | Diluted Earnings per Share $.54 | $.51 | Up $.03 | Up 5.9% - ------------------------------------------------------------------------- N/M - Not Meaningful RESULTS OF OPERATIONS - --------------------- Anheuser-Busch Companies, Inc. achieved gross sales of $3.0 billion during the first quarter 1998, an increase of $87.4 million, or 3.1%, over first quarter 1997 gross sales. The company had net sales of $2.5 billion, an increase of $44.6 million, or 1.8%, compared to the first quarter 1997. The difference between gross sales and net sales reflects beer excise taxes paid by the company on its products. The increases 7 8 in both gross and net sales were primarily due to higher domestic beer sales volume, partially offset by lower revenue per barrel and lower international beer sales volume. First quarter 1998 domestic revenue per barrel declined 1.3% versus first quarter 1997 due to the carryover impact of increasingly competitive discounting throughout 1997. However, net revenue per barrel was up versus the fourth quarter of last year, reversing the downward quarterly trend experienced in 1997. Gross sales and excise taxes in 1998 include the impact of consolidating the Stag Brewery operations in the United Kingdom. Beer volume information is summarized in the following table: - ------------------------------------------------------------------------- Beer Volume (millions of barrels) - ------------------------------------------------------------------------- First Quarter | 1998 versus 1997 ---------------- | ------------------- 1998 1997 | Barrels % ------ ------ ------- -------- Domestic 21.5 20.4 | Up 1.1 Up 5.3% | International 1.3 1.4 | Dn 0.1 Dn 8.0% ------ ------ | -------- -------- Worldwide -- A-B Brands 22.8 21.8 | Up 1.0 Up 4.4% | Equity Partner Brands 2.3 0.7 | Up 1.6 N/M ------ ------- | ------- -------- Total Brands 25.1 22.5 | Up 2.6 Up 11.5% ====== ====== | ======= ======== - ------------------------------------------------------------------------- N/M - Not Meaningful Worldwide Anheuser-Busch beer volume in the first quarter 1998 was 22.8 million barrels, up 4.4% versus the first quarter 1997. Worldwide beer volume is comprised of Anheuser-Busch brands sold domestically and internationally. Domestic volume represents Anheuser-Busch beer produced and shipped within the United States. International volume represents exports from the company's U.S. breweries to markets around the world, plus Anheuser-Busch brands produced overseas by company-owned breweries and under license and contract brewing agreements. 8 9 Total volume, which combines equity volume (representing the company's share of its foreign equity partners' volume) with worldwide volume, was 25.1 million barrels in the first quarter 1998, up 2.6 million barrels, or 11.5% over first quarter 1997. Total volume includes Anheuser-Busch's 37% ownership in Grupo Modelo in the first quarter 1998 compared to a 17.7% ownership in the first quarter 1997. Assuming a constant Anheuser-Busch ownership level of 37% of Modelo, total beer volume would have increased 4.4%. Domestic Beer Volume - -------------------- Anheuser-Busch reported domestic beer shipments of 21.5 million barrels, an increase of 1.1 million barrels, or 5.3% for the first quarter 1998 compared to the first quarter 1997. The increase in beer shipments reflects strong underlying sales-to-retailer growth of nearly 2%, led by Bud Family sales, and the planned increase in beer wholesaler inventories associated with the expiration of the collective bargaining agreement with the International Brotherhood of Teamsters in February. Wholesaler inventories will be reduced once a labor agreement is ratified. The company has also been successful in the first quarter in reducing discounts in most markets compared with the levels that existed in the fourth quarter of last year. The company's domestic market share (excluding exports) for the first quarter 1998 was 46.9%, an increase of 1.4 percentage points over 1997 market share of 45.5%. Including exports, the company's share of U. S. shipments was 46.7% versus 45.2% for the first quarter 1997. Domestic market share and share of U. S. shipments are determined based on industry sales estimates provided by the Beer Institute and are influenced by the company's inventory build. Excluding the impact of the 9 10 planned increase in beer wholesaler inventories, the company's domestic market share and share of U.S. shipments were 46.1% and 45.9%, respectively. Cost of products and services for the first quarter 1998 was $1.6 billion, a $41.8 million, or 2.6%,increase compared to the first quarter 1997. The increase in cost of products and services is principally due to higher domestic beer volume and higher depreciation. Gross profit as a percentage of net sales was 34.6% for the first quarter 1998, down 0.6 of a percentage point from 35.2% for the first quarter 1997 reflecting the impact of lower revenue per barrel in the quarter. Marketing, distribution and administrative expenses for the first quarter 1998 were $400.4 million compared with $397.6 million for the first quarter 1997, an increase of 0.7%. The increase is primarily due to higher domestic marketing expense for the Bud Family, largely offset by reduced general and administrative costs. Operating income for the first quarter 1998 was $468.3 million, level with operating income for the first quarter 1997, reflecting higher domestic beer sales volume offset by lower revenue per barrel and lower operating results from the company's theme park and international beer operations. Theme park operations reported lower attendance and earnings in the first quarter 1998 compared to 1997, largely due to the impact of the Easter holiday occurring in April in 1998 versus March in 1997. Operating results from international beer operations (excluding Grupo Modelo) were lower in the first quarter 1998 due to a decline in volume compared with the particularly strong first quarter 1997, which included rollouts in new markets in China, Argentina and the Philippines. Adjusted for the comparison with the strong 1997 first quarter, 1998 international volume would have grown by only a small amount, reflecting weak economic 10 11 conditions in Asia and related conditions in South America. The decline in international beer operations was more than offset by the increase in Grupo Modelo-related earnings. On April 8, 1998, the company and its Brazilian equity partner, Antarctica, announced the successful conclusion of an agreement with the Brazilian antitrust agency, CADE, that approved the two brewers' partnership in Brazil and permits the long-term continuation of the relationship. Net interest cost (interest expense less interest income) was $74.0 million for the first quarter 1998, an increase of $18.7 million, or 33.8%, compared to the first quarter 1997. This increase reflects higher average debt balances primarily due to the additional investment in Grupo Modelo in May 1997. The net change in debt is summarized in the Liquidity and Financial Condition section of this discussion. Interest capitalized decreased $0.1 million, or 0.9%, for the first quarter 1998 compared to the corresponding period in 1997. 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. Net income for the first quarter 1998 was $265.2 million, an increase of $7.5 million, or 2.9%, versus the comparable period last year. Net income includes $19.3 million for the company's pro rata share of the net earnings of Grupo Modelo, accounted for on the equity basis. The company's investment in Grupo Modelo was accounted for on the cost basis in the first quarter 1997. The company adopted the equity method of 11 12 accounting for Modelo in the second quarter 1997 concurrent with increasing its ownership to 37%. The difference between income recognized on the cost basis for the first quarter 1997 and what would have been recognized based on the equity method is not material. The company currently expects the Mexican economy to cease being hyperinflationary for accounting purposes (three-year cumulative inflation in excess of 100%) sometime in 1998. The change to non-hyperinflation accounting is expected to be favorable to Anheuser-Busch compared to hyperinflation accounting. The effective income tax rate was 38.0% of pretax earnings for the first quarter 1998, a decline of 0.4 of a percentage point compared to first quarter 1997. The decrease in the effective tax rate is primarily due to lower state taxes. Diluted earnings per share for the first quarter 1998 were $.54, an increase of $.03, or 5.9%, compared to the first quarter 1997. Diluted earnings per share are based on the weighted average shares of the company's outstanding common stock and common stock equivalents. Earnings per share continue to benefit from fewer shares outstanding due to the company's ongoing share repurchase program. The company anticipates repurchasing approximately 3% of shares outstanding in 1998. LIQUIDITY AND FINANCIAL CONDITION - --------------------------------- Cash and marketable securities at March 31, 1998 were $106.4 million, a decrease of $159.6 million from the March 31, 1997 level and a decrease of $40.9 million from the December 31, 1997 level. The principal source of the company's cash flow is cash generated by operations. Financing activities provided additional sources of cash during the twelve month period ended March 31, 1998. Significant uses of cash during the 12 13 12-month period were capital expenditures, share repurchases, dividends and the additional investment in Grupo Modelo. See the Consolidated Statement of Cash Flows for additional information. Total long-term debt increased $885.0 million during the twelve month period ended March 31, 1998. The following outlines the change in debt during this period: Debt Issuances ... $1,029.5 million, comprised of the following: -------------- - $500.0 million of long-term notes ($250.0 million of 7.1%, $250.0 million of 7.125%) - $200.0 million of debentures ($100.0 million of 6.5%, $100.0 million of 6.75%) - $162.8 million of dual-currency notes (floating interest rate) - $107.0 million of commercial paper (weighted average interest of 5.6%) - $28.9 million, net of industrial development revenue bonds (various fixed interest rates) - $30.8 million of other miscellaneous borrowings Debt Reduction ... $144.5 million, comprised of the following: -------------- - $40.0 million of medium notes (various fixed interest rates) - $45.0 million of sinking fund debentures ($22.5 million of 8.625%, $22.5 million of 8.5%) - $34.9 million of ESOP debt (interest rate, 8.3%) - $24.6 million of other miscellaneous reductions 13 14 At March 31, 1998, $561.9 million of commercial paper borrowings were outstanding, an increase of $107.0 million compared to the balance at March 31, 1997 and a decrease of $30.0 million over the December 31, 1997 balance. Commercial paper is classified as long-term debt since it is intended to be maintained on a long-term basis with on-going credit support provided by the company's $1 billion revolving credit agreement. Capital expenditures during the first quarter 1998 were $237.4 million compared to $265.6 million for the first quarter 1997, a decrease of 10.6%. RISK MANAGEMENT - --------------- The company's derivatives holdings will fluctuate during the year based on normal and recurring changes in purchasing and production activity. Since December 31, 1997, there have been no significant changes in the company's interest rate, commodity price and foreign currency exposures, changes in the types of derivative instruments used to hedge those exposures, or changes in underlying market conditions. PART II - OTHER INFORMATION Item 2. Changes in Securities On January 2, 1998, the company issued out of treasury shares a total of 916 shares of the company's common stock ($1 par value) to one member of the Board of Directors of the company in lieu of cash for that member's 1998 annual retainer fee pursuant to the company's Non-Employee Director Elective Stock Acquisition Plan. The transaction was exempt from registration and propectus delivery requirements of the Securities Act of 1933 pursuant to Section 4(2) of the Act. 14 15 Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Shareholders of the company held April 22, 1998, the following matters were voted upon: 1. Election of August A. Busch III, Carlos Fernandez G., James R. Jones, Andrew C. Taylor and Douglas A. Warner III to serve as Directors of the company for a term of three years. For Withheld Non-Votes --- --------- --------- August A. Busch III 401,666,291 12,164,196 0 Carlos Fernandez G. 403,216,259 10,614,228 0 James R. Jones 403,601,639 10,228,848 0 Andrew C. Taylor 403,870,271 9,960,216 0 Douglas A. Warner III 403,723,193 10,107,294 0 2. Approve the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan. For 352,893,220 Against 51,107,386 Abstain 9,829,881 Non-Votes 0 3. Approve the employment of Price Waterhouse LLP, as independent accountants, to audit the books and accounts of the company for 1998. For 405,354,522 Against 6,703,993 Abstain 1,771,972 Non-Votes 0 4. Shareholder proposal to require preparation of a report on beer consumption. For 22,148,646 Against 349,294,439 Abstain 8,649,683 Non-Votes 33,737,719 15 16 Item 5. Other Information Labor Negotiations - ------------------ The company's labor contract with the International Brotherhood of Teamsters, representing approximately 8,000 Anheuser-Busch employees, expired at midnight on March 29, 1998 after a 30 day extension from the original expiration date of February 28, 1998. The company presented its final proposal to the Teamsters bargaining committee on March 27, 1998, which was rejected by the employees of the company represented by the Teamsters in early May. The company has agreed to meet with representatives of the Teamsters in order to clarify proposals in the company's final offer. The company anticipates reaching an agreement but remains fully prepared to operate in the event of a work stoppage. Grupo Modelo Investment - ----------------------- In June 1997, the company exercised its remaining option to increase its direct and indirect ownership in Grupo Modelo's operating subsidiary, Diblo, to 50.2% for approximately $550 million. The company and the controlling shareholders of Grupo Modelo are currently pursuing arbitration in accordance with the investment agreement to resolve a dispute concerning the purchase price for the option shares. It is anticipated that Anheuser-Busch will complete the transaction in the fourth quarter 1998. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits -------- 3.2 - By-Laws of the Company (as amended and restated April 22, 1998) 4.2 - Indenture dated as of August 1, 1995 between the Company and The Chase Manhattan Bank, as Trustee (Incorporated by Reference to Exhibit 4.1 in the Form S-3 of the Company, Registration 16 17 Statement No. 33-60885.) (Other indentures are not filed, but the Company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request.) 10 - Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan 12 - Ratio of Earnings to Fixed Charges 27 - Financial Data Schedule (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the three month period ending March 31, 1998. 17 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ANHEUSER-BUSCH COMPANIES, INC. (Registrant) /s/ W. Randolph Baker ------------------------------------------ W. Randolph Baker Vice President and Chief Financial Officer (Chief Financial Officer) May 13, 1998 /s/ John F. Kelly ------------------------------------------ John F. Kelly Vice President and Controller (Chief Accounting Officer) May 13, 1998 18 19 INDEX TO EXHIBITS Exhibit No. Exhibit - ------- ------- 3.2 By-Laws of the Company (as amended and restated April 22, 1998) 10 Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan 12 Ratio of Earnings to Fixed Charges 27 Financial Data Schedule EX-3 2 BY-LAWS OF THE COMPANY AMENDED & RESTATED 4/22/98 EXHIBIT 3.2 BY-LAWS OF ANHEUSER-BUSCH COMPANIES, INC. (As Amended and Restated April 22, 1998) INCORPORATED UNDER THE LAWS OF DELAWARE TABLE OF CONTENTS BY-LAWS OF ANHEUSER-BUSCH COMPANIES, INC. Page Page ARTICLE I: Section 4:3 Executive Committee - LOCATION AND OFFICES Notice of Meetings...... 8 Section 4:4 Executive Committee - Section 1:1 Principal Office........ 1 Quorum and Powers Section 1:2 Other Offices........... 1 of Majority............ 9 Section 4:5 Executive Committee - ARTICLE II: Reporting............... 9 STOCKHOLDERS Section 4:6 Other Committees........ 9 Section 2:1 Annual Meeting.......... 1 ARTICLE V: Section 2:2 Business to be Conducted OFFICERS at Annual Meeting.... 1 Section 2:3 Special Meetings........ 2 Section 5:1 Appointment............. 9 Section 2:4 Place of Meetings....... 2 Section 5:2 Tenure.................. 9 Section 2:5 Notice of Meetings...... 2 Section 5:3 Salaries................10 Section 2:6 Quorum and Voting....... 2 Section 5:4 Chief Executive Officer................10 Section 2:7 Voting; Proxy........... 3 Section 5:5 Chairman of the Board..................10 Section 2:8 Voting by Fiduciaries, Section 5:6 President...............10 Pledgee and Pledgors... 3 Section 5:7 Other Officers..........10 Section 2:9 Nomination of Directors. 4 Section 2:10 List of Stockholders.... 5 ARTICLE VI: Section 2:11 Appointment of Inspectors CAPITAL STOCK AND DIVIDENDS of Election and Reslution of Questions Section 6:1 Certificates for Shares.10 Concerning Right to Section 6:2 Stock Records...........11 Vote................... 5 Section 6:3 Transfers...............11 ARTICLE III: Section 6:4 Regulations Governing DIRECTORS Issuance and Transfers of Shares..............11 Section 6:5 Transfer Agents and Section 3:1 General Powers.......... 5 Registrars.............11 Section 3:2 Number and Section 6:6 Lost or Destroyed Qualifications......... 5 Certificates...........11 Section 3:3 Election................ 5 Section 6:7 Fractions of Shares.....11 Section 3:4 Place of Meetings....... 5 Section 6:8 Determination of Section 3:5 Annual Organization Stockholders...........12 Meetings............... 6 Section 6:9 Record Date.............12 Section 3:6 Regular Meetings........ 6 Section 3:7 Special Meetings........ 6 Section 3:8 Quorum.................. 7 Section 3:9 Waiver of Notice........ 7 ARTICLE VII: Section 3:10 Consent................. 7 MISCELLANEOUS Section 3:11 Notice to Members of the Board of Directors... 7 Section 7:1 Voting Shares in Other Section 3:12 Presiding Officer....... 8 Corporations..........12 Section 7:2 Execution of Other Papers ARTICLE IV: and Documents.........12 COMMITTEES Section 7:3 Corporate Seal.........12 Section 7:4 Amendments.............13 Section 4:1 Executive Committee - Section 7:5 Books and Records......13 Appointment and Tenure 8 Section 4:2 Executive Committee - Powers............... 8 1 BY-LAWS OF ANHEUSER-BUSCH COMPANIES, INC. (AS AMENDED AND RESTATED APRIL 22, 1998) ARTICLE I: LOCATION AND OFFICES PRINCIPAL OFFICE. SECTION 1:1. The principal office of the corporation shall be at such place as the Board of Directors may from time to time determine, but until a change is effected such principal office shall be at One Busch Place, in the City of St. Louis, Missouri. OTHER OFFICES. SECTION 1:2. The corporation may also have other offices, in such places (within or without the State of Delaware) as the Board of Directors may from time to time determine. ARTICLE II: STOCKHOLDERS ANNUAL MEETING. SECTION 2:1. An annual meeting of the stockholders of the corporation shall be held at 10:00 o'clock a.m. on the fourth Wednesday in April of each year if not a legal holiday, and if a legal holiday then on the next succeeding day not a legal holiday. The purpose of the meeting shall be to elect directors and to transact such other business as properly may be brought before the meeting. If the corporation shall fail to hold said meeting for the election of directors on the date aforesaid, the Board of Directors shall cause the election to be held by the stockholders as soon thereafter as convenient. BUSINESS TO BE CONDUCTED AT ANNUAL MEETING. SECTION 2:2.1 At an annual meeting of stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors (or any duly organized committee thereof), or (iii) by any stockholder of the corporation who is a stockholder of record on the date of giving of the notice provided for in this By-Law and on the record date for the determination of stockholders entitled to vote at such meeting and who has complied with the notice procedures set forth in this By-Law. SECTION 2:2.2 In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice in proper written form to the Secretary which notice is not withdrawn by such stockholder at or prior to such annual meeting. SECTION 2:2.3 To be timely, a stockholder's notice to the Secretary must be delivered or mailed to and received by the Secretary at the principal executive offices of the corporation, not less than sixty days nor more than ninety days prior to the first anniversary of the preceding 2 year's annual meeting; provided, however, that in the event that the date of the meeting is changed by more than thirty days from such anniversary date, notice by the stockholder must be received not later than the close of business on the tenth day following the earlier of the day on which notice of the date of the annual meeting was mailed or public disclosure was made. SECTION 2:2.4 To be in proper written form, such stockholder's notice must set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business to be brought before the annual meeting and the reasons for conducting such business at such meeting; (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class and the number of shares of the corporation's stock which are beneficially owned by the stockholder, and the beneficial owner, if any, on whose behalf the proposal is made; (iv) any material interest of the stockholder, and of the beneficial owner, if any, on whose behalf the proposal is made, in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. SECTION 2:2.5 Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this By-Law. The chairman of the meeting may, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this By-Law; and if the chairman should so determine, the chairman shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder with respect to the matters set forth in this By-Law. SPECIAL MEETINGS. SECTION 2:3. At any time the Chief Executive Officer may, and either the Chief Executive Officer or the Secretary at the written request of any five members of the Board of Directors shall, issue a call for a special meeting of the stockholders. Such request shall state the purpose or purposes of the proposed meeting, and at such special meeting only such matters as may be specified in the call therefor shall be considered. PLACE OF MEETINGS. SECTION 2:4. All meetings of the stockholders shall be held at the principal office of the corporation, or at such other place, within or without the State of Delaware, as may be determined by the Board of Directors and stated in the notice of the meeting. NOTICE OF MEETINGS. SECTION 2:5. Written notice of each meeting of the stockholders stating the place, date, and hour of the meeting, and, in case of a special meeting or where otherwise required by statute, the purpose or purposes for 3 which the meeting is called, shall be delivered by mail not less than ten nor more than sixty days before the date of the meeting, by or at the direction of the person calling the meeting, to each stockholder entitled to vote at such meeting. The notice of a stockholders' meeting shall be deemed to be delivered when deposited in the United States mail with postage prepaid, addressed to each stockholder at such stockholder's address as it appears on the records of the corporation. QUORUM AND VOTING. SECTION 2:6.1 The holders of a majority of the outstanding shares (exclusive of treasury stock) entitled to vote at any meeting of the stockholders, when present in person or by proxy, shall constitute a quorum for the transaction of business, except as otherwise provided by statute, the Certificate of Incorporation, or these By-Laws; but in the absence of such a quorum the holders of a majority of the shares represented at the meeting shall have the right successively to adjourn the meeting to a specified date. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 2:6.2 The absence from any meeting of the number of shares required by statute, the Certificate of Incorporation or these By-Laws for action upon one matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if the number of shares required in respect of such other matters shall be present. SECTION 2:6.3 When a quorum is present at any meeting of the stockholders, the vote of the holders (present in person or represented by proxy) of a majority of the shares of stock which are actually voted (and have the power to vote) on any proposition or question properly brought to a vote at such meeting shall decide any such proposition or question, unless the proposition or question is one upon which by express provision of statute or of the Certificate of Incorporation, or of these By-Laws, a different vote is required, in which case such express provision shall govern and establish the number of votes required to determine such proposition or question. VOTING; PROXY. SECTION 2:7.1 Whenever the law requires or the chairman orders that a vote be taken by ballot, each stockholder entitled to vote on a particular question at a meeting of stockholders, pursuant to law or the Certificate of Incorporation, shall be entitled to one vote for each share of voting stock held by such stockholder. The date for determining the stockholders entitled to vote at a meeting of the stockholders shall be determined pursuant to Section 6:9. 4 SECTION 2:7.2 Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent in writing without a meeting may authorize another person or persons to act for such stockholder by proxy; but no such proxy shall be voted or acted upon after three years from its date,unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. VOTING BY FIDUCIARIES, PLEDGEE AND PLEDGORS. SECTION 2:8. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee or the pledgee's proxy may represent such stock and vote thereon. If shares or other securities having voting power stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) If only one votes, that person's act binds all; (b) If more than one vote, the act of the majority so voting binds all; (c) If more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or any person voting the shares, or a beneficiary, if any, may apply to the Court of Chancery or such other court as may have jurisdiction to appoint an additional person to act with the persons so voting the shares, which shall then be voted as determined by a majority of such persons and the person appointed by the Court. If the instrument so filed shows that any such tenancy is held in unequal interest, a majority or even-split for the purpose of this subsection shall be a majority or even-split in interest. NOMINATION OF DIRECTORS. SECTION 2:9.1 Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the corporation, except as may be otherwise provided in the Certificate of Incorporation of the corporation with respect to the right of holders of preferred stock of the corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of the corporation who is a stockholder of record on the date 5 of the giving of the notice provided for in this By-Law and on the record date for the determination of stockholders entitled to vote at such meeting and who complies with the notice procedures set forth in this By-Law. SECTION 2:9.2 In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the corporation. SECTION 2:9.3 To be timely, a stockholder's notice to the Secretary must be delivered or mailed to and received by the Secretary at the principal executive offices of the corporation (i) in the case of an annual meeting, not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever occurs first, and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever occurs first. SECTION 2:9.4 To be in proper written form, a stockholder's notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and the number of shares of capital stock of the corporation which are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice or the beneficial owner on whose behalf the nomination is made, (A) the name and address of such stockholder as they appear on the corporation's books, (B) the class or series and the number of shares of capital stock of the corporation beneficially owned by such stockholder or beneficial owner, (C) a description of all arrangements or understandings between such stockholder or beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder or beneficial owner, (D) a representation that such stockholder or beneficial owner intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. 6 SECTION 2:9.5 No person shall be eligible for election as a director of the corporation, at any annual meeting of stockholders or at any special meeting of stockholders called for the purpose of electing directors, unless nominated in accordance with the procedures set forth in this By-Law. If the chairman of the meeting determines that a nomination was not made inaccordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. LIST OF STOCKHOLDERS. SECTION 2:10. The Secretary shall prepare and make, or cause to be made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the election, either at a place within the city where the election is to be held and which place shall be specified in the notice of the meeting, or, if not so specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of election during the whole time thereof and subject to the inspection of any stockholder who may be present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this By-Law or the books of the corporation, or to vote in person or by proxy at any meeting of the stockholders. APPOINTMENT OF INSPECTORS OF ELECTION AND RESOLUTION OF QUESTIONS CONCERNING RIGHT TO VOTE. SECTION 2:11. The Board of Directors, in advance of the meeting of stockholders or, if it does not act, the chairman of the meeting, shall appoint not less than two persons who are not directors to serve as inspectors of election. It shall be their duty to receive and canvass the votes for election of directors and on any proposal voted on by ballot and to certify the results to the chairman. In all cases where the right to vote upon any share of the corporation shall be questioned, it shall be the duty of the inspectors to examine the stock ledger of the corporation as evidence of the shares held, and all shares that appear standing thereon in the name of any person or persons may be voted upon by such person or persons. Each inspector of election before entering upon the duties of such office shall take and subscribe the following oath before an officer authorized by law to administer oaths: "I do solemnly swear that I will execute the duties of an inspector of the election now to be held with strict impartiality and according to the best of my ability." ARTICLE III: DIRECTORS GENERAL POWERS. SECTION 3:1. The Board of Directors shall control and manage the business and property of the corporation. The Board may exercise all such powers of the corporation and do all lawful acts and things as are not by law, the Certificate of Incorporation, or these By-Laws directed or required to be exercised or done by the stockholders or some particular officer of the corporation. 7 NUMBER AND QUALIFICATIONS. SECTION 3:2. The number of directors shall be determined from time to time by resolution of the Board of Directors in accordance with the terms of Article FIFTH of the Certificate of Incorporation. From and after the first public distribution of the Common Stock of the corporation, each director shall be a stockholder of the corporation, except in such specific case or cases as shall be otherwise authorized by the Board of Directors upon a showing of reasonable cause therefor. ELECTION. SECTION 3:3. The directors who are to be elected at the annual meeting of the stockholders shall be elected by ballot by the holders of shares entitled to vote. PLACE OF MEETINGS. SECTION 3:4. The place where meetings of the Board of Directors are held shall be as follows: (a) The annual meeting shall be held in the city of the principal office of the corporation in Missouri, provided that in the event the annual meeting of shareholders is held in a metropolitan area other than St. Louis, Missouri, the annual meeting of the Board of Directors shall be held in the metropolitan area where the annual meeting of stockholders is held. (b) Regular meetings shall be held at such place within the City or County of St. Louis, Missouri as may be prescribed in the call, provided that any regular meeting may be held elsewhere, either within or without the State of Delaware, pursuant to resolution of the Board of Directors or pursuant to the call of the Chief Executive Officer acting with the consent of a majority of the directors. (c) Special meetings shall be held at such place as may be prescribed in the notice, provided that if a special meeting is held on less than three days' notice, it shall be held at the principal office of the corporation unless all directors agree upon a different location. (d) Members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participating in the meeting in this manner shall constitute presence in person at such meeting. ANNUAL ORGANIZATION MEETINGS. SECTION 3:5. Organization meetings of the Board of Directors shall be held immediately after each annual meeting of the shareholders for the purpose of organizing the Board, appointing officers and members of committees and transacting other business. No notice other than this By-Law shall be required for any such meeting. 8 REGULAR MEETINGS. SECTION 3:6. Regular meetings shall be held at least once each month on such day as the Board of Directors may by resolution prescribe, and at such hour as may be stated in the notice of the meeting, provided that the Chief Executive Officer shall have the discretion to dispense with one or two monthly meetings during the course of a calendar year. Three days' notice of the time and place of each such meeting shall be personally served upon or mailed to each member of the Board. Neither the business to be transacted at, nor the purpose of any regular meeting need be specified in the notice or waiver of notice of such meeting. SPECIAL MEETINGS. SECTION 3:7. Special meetings of the Board of Directors may be held at the call of the Chief Executive Officer or five members of the Board at such time as may be prescribed in the call of the meeting. The purpose of the special meeting need not be stated in the notice of the meeting. Notice of a special meeting may be given by any one or more of the following methods and the method used need not be the same for each director being notified: (a) Written notice sent by mail at least three days prior to the meeting; (b) Personal service at least twenty-four (24) hours prior to the date of the meeting; (c) Telegraphic notice at least twenty-four (24) hours prior to the date of the meeting, said notice to be sent as a straight full-rate telegram; (d) Telephonic notice at least twenty-four (24) hours prior to the date of the meeting. (e) Facsimile transmission at least twenty-four (24) hours prior to the date of the meeting. QUORUM. SECTION 3:8. A majority of the persons serving as directors of the corporation at the time of a meeting of the Board of Directors shall constitute a quorum for the transaction of any business by the Board at such meeting. At any meeting of the Board, no action shall be taken (except adjournment, in the manner provided below) until after a quorum has been established. The act of a majority of directors who are present at a meeting at which a quorum previously has been established (or at any adjournment of such meeting, provided that a quorum previously shall have been established at such adjourned meeting) shall be the act of the Board of Directors, regardless of whether or not a quorum is present at the time such action is taken. In determining the number of directors who are present at the time any such action is taken (for the purpose of establishing the number of votes required to take action on any proposition or question submitted to the Board), any director who is in attendance at such meeting but who, for just cause, is disqualified to vote on such proposition or question, shall not be considered as being present at the time of such action. 9 In the event a quorum cannot be established at the beginning of a meeting, a majority of the directors present at the meeting, or the director, if there be only one person, or the Secretary of the corporation, if there be no director present, may adjourn the meeting from time to time until a quorum be present. Only such notice of such adjournment need be given as the Board may from time to time prescribe. WAIVER OF NOTICE. SECTION 3:9. Any notice which is required by law or by the Certificate of Incorporation or by these By-Laws to be given to any director may be waived in writing, signed by such director, whether before or after the time stated therein. Attendance of a director at any meeting shall constitute waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. CONSENT. SECTION 3:10. Any action required or permitted to be taken at any meeting of the Board of Directors (or of any committee thereof) may be taken without a meeting if all members of the Board (or committee) consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board (or committee). NOTICE TO MEMBERS OF THE BOARD OF DIRECTORS. SECTION 3:11. Each member of the Board of Directors shall file with the Secretary of the corporation an address to which mail or telegraphic notices shall be sent and a telephone number to which a telephonic or facsimile notice may be transmitted. A notice mailed, telegraphed, telephoned or transmitted by facsimile in accordance with the instructions provided by the director shall be deemed sufficient notice. Such address or telephone number may be changed at any time and from time to time by a director by giving written notice of such change to the Secretary. Failure on the part of any director to keep an address and telephone number on file with the Secretary shall automatically constitute a waiver of notice of any regular or special meeting of the Board which might be held during the period of time that such address and telephone number are not on file with the Secretary. A notice shall be deemed to be mailed when deposited in the United States mail, postage prepaid. A notice shall be deemed to be telegraphed when the notice is delivered to the transmitter of the telegram and either payment or provision for payment is made by the corporation. Notice shall be deemed to be given by telephone if the notice is transmitted over the telephone to some person (whether or not such person is the director) answering the telephone at the number which the director has placed on file with the Secretary. Notice shall be deemed to be given by facsimile transmission when sent to the telephone number which the director has placed on file with the Secretary. PRESIDING OFFICER. SECTION 3:12. The Chairman of the Board shall preside at all meetings of the Board of Directors at which the Chairman is present. In the Chairman's absence, the Vice Chairman (if any) shall preside. In the absence of the Chairman and the Vice Chairman, the Board shall select a chairman of the meeting from among the directors present. 10 ARTICLE IV: COMMITTEES EXECUTIVE COMMITTEE--APPOINTMENT AND TENURE. SECTION 4:1. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate six directors, including the Chief Executive Officer, to constitute an Executive Committee, provided that a majority of said committee shall at all times be made up of members of the Board who are neither officers nor employees of the corporation and who shall serve at the pleasure of the Board. In the case of the death, resignation or removal of any member of the Executive Committee or in case any such member shall cease to be a member of the Board, the vacancy shall be filled by the Board. The Board shall designate the chairman of the Executive Committee. EXECUTIVE COMMITTEE--POWERS. SECTION 4:2. The Executive Committee, to the extent provided in the resolution of the Board of Directors appointing suchcommittee or in any subsequent resolution, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it, but shall not have the power or authority with respect to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, or recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets; nor shall the Executive Committee have the power or authority to declare a dividend or to authorize the issuance of stock; but the designation of such Executive Committee and the delegation of authority thereto shall not operate to relieve the Board, or any member thereof, of any responsibility imposed upon it or them by the provisions of the Delaware General Corporation Law, as amended. EXECUTIVE COMMITTEE--NOTICE OF MEETINGS. SECTION 4:3. A meeting of the Executive Committee may be held on call by the Chief Executive Officer or on the call of any three of the other members of the Committee. Meetings of the Executive Committee may be held, upon notice as short as twenty-four (24) hours, at such place or places as shall be determined by resolution of the Committee, or in the absence of a resolution of the Executive Committee with respect thereto, at such place or places as may be determined by the Chief Executive Officer. If notice is given at least three days prior to the meeting of the Committee, notice may be given in any of the ways set forth in Section 3:7, dealing with special meetings of the Board of Directors. If less than three days' notice is given, notice shall not be given by mail but shall be given by one of the other methods described in Section 3:7. With respect to any such notice, all the provisions of Section 3:11 shall be equally applicable in the case of notice of an Executive Committee meeting as they are in the case of a notice of a meeting of the Board of Directors. Meetings of the Executive Committee shall be held at such place either within or without the States of Missouri or Delaware as may be designated by a resolution of the Board; or in the absence of such resolution, at such place within the metropolitan St. Louis, Missouri area as may be designated in the notice. Any such notice may be waived in the same manner provided in Section 3:9 with respect to waiver of notice of a directors' meeting. 11 EXECUTIVE COMMITTEE--QUORUM AND POWERS OF MAJORITY. SECTION 4:4. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business at any meeting of the Executive Committee. Unless otherwise provided by the Board of Directors, a majority of the members of the Executive Committee shall constitute aquorum, and the acts of a majority of the members present at a meeting at which a quorum is present shall be the acts of the Executive Committee. EXECUTIVE COMMITTEE--REPORTING. SECTION 4:5. At each regular meeting of the Board of Directors all actions taken by the Executive Committee since the last prior meeting of the Board shall be reported, and the Board shall take such action to approve or rescind such action of the Executive Committee as the Board may deem appropriate, but no rescission of such action shall affect any rights which have attached pursuant to such Executive Committee action. If no regular meeting of the Board is scheduled within seven days after the date of a meeting of the Executive Committee, then no later than five days after such meeting of the Executive Committee, the minutes thereof (even though they may not as yet have been approved by the Executive Committee) shall be deposited in the mail by the Secretary addressed to each member of the Board at the address on file with the Secretary pursuant to the provisions of Section 3:11, provided that if any member of the Board shall have failed to place an address on file with the Secretary, such member shall be deemed to have waived the right to receive a copy of the minutes of the Executive Committee meeting. OTHER COMMITTEES. SECTION 4.6. Other Committees may be established, and their members appointed, from time to time by the Board of Directors. Such other committees shall have such purpose(s) and such power(s) as the Board by resolution may confer. Unless otherwise provided by the Board, a majority of the members of such other Committee shall constitute a quorum, and the acts of a majority of the members present at a meeting at which a quorum is present shall be the act of such other Committee. ARTICLE V: OFFICERS APPOINTMENT. SECTION 5:1. The Board of Directors shall appoint from its membership a Chairman of the Board and a President. The Board shall appoint such number of Vice Presidents as the Board may from time to time determine, a Controller, a Secretary, a Treasurer, one or more Assistant Controllers, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers, as the Board may from time to time deem necessary or appropriate. The Board of Directors may appoint a Vice Chairman of the Board, but the person holding that position shall not be considered an officer of the corporation. 12 TENURE. SECTION 5:2. Officers appointed by the Board of Directors shall hold their respective offices for the term of one year and until their respective successors shall have been duly appointed and qualified; provided, however, that any officer appointed by the Board may be removed by the Board with or without a hearing and with or without cause whenever in its judgment the best interests of the corporation will be served thereby. SALARIES. SECTION 5:3. The salaries of all officers of the corporation shall be fixed by the Board of Directors. CHIEF EXECUTIVE OFFICER. SECTION 5:4. So long as the offices of Chairman of the Board and President are held by the same person, that person shall be the Chief Executive Officer of the corporation. Otherwise, the Chief Executive Officer shall be the Chairman of the Board or the President, as designated by the Board of Directors. The Chief Executive Officer shall have general supervision and control over all the business and property of the corporation and shall be responsible at all times to the Board of Directors and the Executive Committee. The Chief Executive Officer shall also preside at all meetings of the stockholders. In the event the Chief Executive Officer shall fail or for any reason be unable to serve as such, the Board of Directors shall promptly act to fill such vacancy. CHAIRMAN OF THE BOARD. SECTION 5:5. The Chairman of the Board shall preside as chairman of all meetings of the Board of Directors at which the Chairman shall be present and shall have such other powers, responsibilities and duties as shall be assigned by the Board. PRESIDENT. SECTION 5:6. The President shall have such powers, responsibilities and duties as shall be assigned by the Board of Directors. OTHER OFFICERS. SECTION 5:7. Subject to the ultimate authority of the Board of Directors, all other officers of the corporation shall have such powers, responsibilities and duties as shall be assigned to them from time to time by the Chief Executive Officer. ARTICLE VI: CAPITAL STOCK AND DIVIDENDS CERTIFICATES FOR SHARES. SECTION 6:1. Certificates for shares of the capital stock of the Company shall be in such form, not inconsistent with the Certificate of Incorporation, as shall be approved by the Board of Directors, and 13 shall be signed by the Chairman or Vice Chairman of the Board of Directors or by the President or a Vice-President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, provided that the signatures of any such officers thereon may be facsimiles. The seal of the corporation shall be impressed, by original or by facsimile, printed or engraved, on all such certificates. The certificate shall also be signed by the transfer agent and a registrar and the signature of either the transfer agent or the registrar may also be facsimile, engraved or printed. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if such officer, transfer agent, or registrar had not ceased to be such officer, transfer agent, or registrar at the date of its issue. STOCK RECORDS. SECTION 6:2. The corporation shall keep at its principal office stock books in which shall be recorded the number of shares issued, the names of the owners of the shares, the number owned by them respectively, and the transfer of such shares with the date of transfer. TRANSFERS. SECTION 6:3. Certificates representing shares of stock of the corporation shall be transferable only on the books of the corporation by the person or persons named in the certificate or by the attorney lawfully constituted in writing representing such person or persons and upon surrender of the certificate or certificates being transferred which certificate shall be properly endorsed for transfer or accompanied by a duly executed stock power. Whenever a certificate is endorsed by or accompanied by a stock power executed by someone other than the person or persons named in the certificate, evidence of authority to transfer shall also be submitted with the certificate. All certificates surrendered to the corporation for transfer shall be cancelled. REGULATIONS GOVERNING ISSUANCE AND TRANSFERS OF SHARES. SECTION 6:4. The Board of Directors shall have the power and authority to make all such rules and regulations as it shall deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the corporation. TRANSFER AGENTS AND REGISTRARS. SECTION 6:5. Transfer agents and registrars for the corporation's stock shall be banks, trust companies or other financial institutions located within or without the State of Delaware as shall be appointed by the Board of Directors. The Board shall also define the authority of such transfer agents and registrars. LOST OR DESTROYED CERTIFICATES. SECTION 6:6. Where a certificate for shares of the corporation has been lost or destroyed, the Board of Directors may authorize the issuance of a new certificate in lieu thereof upon satisfactory proof of such loss 14 or destruction, and upon the giving of an open penalty bond with surety satisfactory to the corporation's General Counsel and Treasurer, to protect the corporation or any person injured by the issuance of the new certificate from any liability or expense which it or they may incur by reason of the original certificate's remaining outstanding, and upon payment of the corporation's reasonable costs incident thereto. FRACTIONS OF SHARES. SECTION 6:7. The corporation shall not issue fractions of a share. It shall, however, (1) arrange for the disposition of fractional interests by those entitled thereto, and (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip or warrants aggregating a full share. Scrip or warrants shall not, unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, or to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board may impose. DETERMINATION OF STOCKHOLDERS. SECTION 6:8. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware. RECORD DATE. SECTION 6:9. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment or any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed: (1) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. 15 (2) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. ARTICLE VII: MISCELLANEOUS VOTING SHARES IN OTHER CORPORATIONS. SECTION 7:1. The corporation may vote any and all shares of stock and other securities having voting rights which may at any time and from time to time be held by it in any other corporation or corporations and such vote may be cast either in person or by proxy by such officer of the corporation as the Board of Directors may appoint or, in default of such appointment, the Chief Executive Officer, the President or a Vice President. EXECUTION OF OTHER PAPERS AND DOCUMENTS. SECTION 7:2. All checks, bills, notes, drafts, vouchers, warehouse receipts, bonds, mortgages, contracts, registration certificates and all other papers and documents of the corporation shall be signed or endorsed for the corporation by such of its officers, other employees and agents as the Board of Directors may from time to time determine, or in the absence of such determination, by the Chief Executive Officer, the President or a Vice President, provided that instruments requiring execution with the formality of deeds shall be signed by the Chief Executive Officer, the President or a Vice President and impressed with the Seal of the corporation, duly attested by the Secretary or an Assistant Secretary. CORPORATE SEAL. SECTION 7:3. The Board of Directors shall provide a suitable seal, containing the name of the corporation, which seal shall be in the custody of the Secretary of the corporation, and may provide for one or more duplicates thereof to be kept in the custody of such other officer of the corporation as the Board may prescribe. AMENDMENTS. SECTION 7:4. These By-Laws may be amended or repealed, or new By-Laws may be adopted (a) by the affirmative vote of a majority of the shares issued and outstanding and entitled to vote at any annual or special meeting of stockholders, or (b) by the affirmative vote of the majority of the Board of Directors at any regular or special meeting; provided that the notice of such meeting of stockholders or directors, whether regular or special, shall specify as one of the purposes thereof the making of such amendment or repeal, and provided further that any amendment of the By-Laws made by the Board may be further amended or repealed by the stockholders. 16 BOOKS AND RECORDS. SECTION 7:5. Except as the Board of Directors may from time to time direct or as may be required by law, the corporation shall keep its books and records at its principal office. EX-10 3 98 INCENTIVE STOCK PLAN EXHIBIT 10 ANHEUSER-BUSCH COMPANIES, INC. 1998 INCENTIVE STOCK PLAN SECTION 1. PURPOSE The purpose of this Plan is to attract, retain, motivate and reward employees of the Company and its Subsidiaries and Affiliates with certain stock-related compensation arrangements. SECTION 2. MAXIMUM NUMBER OF SHARES (a) The maximum number of shares of Stock which may be issued pursuant to Awards under this Plan, and the maximum number of shares for which ISOs may be granted under this Plan, shall be 21,000,000 shares, subject to adjustment as provided in Section 9. For this purpose: (i) The number of shares underlying an Award shall be counted against this Plan maximum ("used") at the time of grant. (ii) When an Award is payable in cash only, the number of shares of Stock on which the amount of such cash is based shall be deemed used at the time of grant. (iii) Shares which underlie Awards that (in whole or part) expire, terminate, are forfeited, or otherwise become non-payable, and shares which are recaptured by the Company in connection with a forfeiture, may be re-used in new grants to the extent of such expiration, termination, forfeiture, non-payability, or recapture. (iv) For all purposes of this Section 2, shares underlying two or more alternative Awards shall be treated as underlying only a single Award, with no multiple counting of shares. Accordingly: shares underlying alternative Awards shall be used only once at the time of grant; if one such Award is exercised or paid, no re-usage of shares shall result from the termination of the unexercised alternative Awards. (b) Notwithstanding any other provisions of this Plan, the maximum number of shares underlying Awards that may be granted to any Eligible Person during any calendar year shall be 750,000, subject to adjustment as provided in Section 9. (c) In its discretion, the Company may issue treasury shares or authorized but unissued shares, but shall issue treasury shares to the extent required by the Committee or applicable law. Shares of Stock may be represented by certificates or may be issued in uncertificated form, as determined by the Company from time to time. SECTION 3. ELIGIBILITY Officers and management employees of the Company, Subsidiaries, or Affiliates shall be eligible to receive Awards under this Plan. A director of the Company, a Subsidiary, or an Affiliate shall be eligible only if he or she also is an officer or management employee of at least one such entity. Notwithstanding the foregoing, persons employed only by Affiliates shall not be eligible to receive ISOs. 2 SECTION 4. GENERAL PROVISIONS RELATING TO AWARDS (a) Subject to the limitations in this Plan, the Committee may cause the Company to grant Awards to such Eligible Persons, at such times, of such types, in such amounts, for such periods, becoming exercisable or otherwise vesting at such times, with such features, with such option prices, purchase prices or base prices, and subject to such other terms, conditions, and restrictions as the Committee deems appropriate. Each Award shall be evidenced by a written Award Document, which (as determined by the Committee) may be a formal agreement between the Company and the Recipient or a communication by the Company to the Recipient. The Award Document may be written and transmitted on paper, electronically, or using any other medium selected by the Committee, and may be set forth in a single document or in several documents. In granting an Award, the Committee may take into account any factor it deems appropriate and consistent with the purposes of this Plan. Awards may be granted as additional compensation, or in lieu of other compensation. All or any portion of any payment to a Recipient, whether in cash or shares of Stock, may be deferred to a later date if and as provided in the Award Document. Deferrals may be for such periods and upon such terms and conditions (including the provision of interest, dividend equivalents, or other return) as the Committee may determine. (b) Except as otherwise provided in this Plan, one or more Awards may be granted separately or as alternatives to each other. If Awards are alternatives to each other: (i) the exercise of all or part of one automatically shall cause an immediate equal and corresponding termination of the other; and (ii) unless the Award Document or the Committee expressly permit otherwise, alternative Awards which are transferable may be transferred only as a unit, and alternative Awards which are exercisable must be exercisable by the same person or persons. (c) Award Documents may contain any provision approved by the Committee relating to the period for exercise or vesting after termination of employment, and relating to the circumstances under which a termination is deemed to occur. Except to the extent otherwise expressly provided in the Award Document or determined by the Committee, termination of employment includes the separation of a Recipient, directly or through the separation of his or her Employer, from the group of companies comprised of the Company and its Subsidiaries and Affiliates for any reason, including: (i) separation of the Recipient by reason of death, permanent or indefinite disability, retirement, resignation, dismissal, permanent or indefinite layoff, or other event having a similar effect; and (ii) separation of the Employer by any method which results in the Employer ceasing to be a Subsidiary or an Affiliate. (d) Award Documents may, in the discretion of the Committee, contain a provision permitting a Recipient to designate the person who may exercise an Award after the Recipient's death, either by will or by appropriate notice to the Company. The Committee may impose such conditions and limitations on such designations as it deems appropriate. (e) A Recipient shall have none of the rights of a shareholder with respect to shares of Stock which underlie his or her Award until shares are issued in his or her name. 3 (f) Except as otherwise provided in an Award Document pursuant to this Section, Awards shall not be transferable other than by will or the laws of descent and distribution, and shall be exercisable during the Recipient's lifetime only by the Recipient or his or her guardian or legal representative. However, except in the case of ISOs and Awards which are alternatives to ISOs, the Committee may expressly provide in any Award Document that the Award is transferable. Transferability (if permitted) may be subject to such conditions and limitations as the Committee deems appropriate. (g) Notwithstanding Section 14(a), in its discretion the Committee may provide in any Award Document for the acceleration of vesting or the termination of any condition or forfeiture provision upon the happening of any specified event (including, for example, an event which results in an Acceleration Date). (h) Subject to Section 14(a) in the case of ISOs, and subject to any express limitations contained in the applicable Award Document: (i) the Committee may accelerate vesting or waive or terminate any condition or forfeiture provision of any Award at any time and for any reason; and (ii) the Committee may amend an Award Document after grant at any time and for any reason so long as such amendment is not inconsistent with this Plan. (i) No Award by its terms shall be exercisable after the expiration of ten years from the date it is granted. SECTION 5. OPTIONS AND SARS (a) Except as provided in Section 9, the option price per share of Options or the base price of SARs shall not be less than Fair Market Value per share of Stock on the Options' or the SARs' grant date, except that SARs which are alternatives to Options but which are granted at a later time may have a base price equal to the option price even though the base price is less than Fair Market Value on the date the SARs are granted. (b) The grant of Options and their related Award Document must identify the Options as either ISOs or as NQSOs. (c) If Options, SARs, and/or Limited Rights are granted as alternatives to each other, the option prices and the base prices (as applicable) shall be equal and the expiration dates shall be the same. (d) In the case of SARs, the Award Document may specify the form of payment or may provide that the form is to be determined at a later date, and may require the satisfaction of any rules or conditions in connection with receiving payment in any particular form. (e) Notwithstanding any other provision of Sections 4 or 5: (i) no Options or SARs shall be granted in exchange for so-called "underwater" Options or SARs (which have option or base prices in excess of the then-current Fair Market Value per share of Stock), nor shall underwater Options or SARs be amended to reduce their option or base price; and, (ii) no Options or SARs shall contain a so-called "reload" feature under which additional Options or SARs are granted automatically to Recipients upon exercise of the original Options or SARs. 4 SECTION 6. LIMITED RIGHTS (a) The Committee shall have authority to grant a special type of stock appreciation rights ("Limited Rights") to any Recipient of any Options or SARs granted under this Plan (the "Related Award"). Limited Rights are stock appreciation rights which are exercisable only after the occurrence of one or more extraordinary events specified by the Committee; such events may include, for example, the events which result in an Acceleration Date. Limited Rights shall not be granted separately, but shall be granted only as alternatives to their Related Award. Limited Rights may be granted either at the time of grant of the Related Award or at any time thereafter during its term. Limited Rights shall be exercisable or payable at such times, payable in such amounts, and subject to such other terms, conditions, and restrictions as the Committee deems appropriate. (b) The Committee shall place on any Limited Rights for which the Related Awards are ISOs such restrictions as may be required by the Code at the time of grant, and shall amend this Plan accordingly to the extent required by the Code. SECTION 7. STOCK ISSUANCE, PAYMENT, AND WITHHOLDING (a) The Recipient of Options may pay the option price in cash, Stock (including shares of previously-owned Stock or Stock issuable in connection with the Award), or other property, to the extent permitted or required by the Award Document or the Committee from time to time. (b) Except to the extent prohibited by applicable law, the Committee or the Company may take any necessary or appropriate steps in order to facilitate the payment of an option price. The Committee may permit deemed or constructive transfers of shares in lieu of actual transfer and physical delivery of certificates. The Committee may require satisfaction of any rules or conditions in connection with paying the option price at any particular time or in any particular form. (c) If shares used to pay the option price of Options are subject to any transfer or other restrictions, an equal number of the shares of Stock purchased shall be made subject to such prior restrictions in addition to any further restrictions imposed on such purchased shares by the terms of the Award Document or Plan. (d) After the obligation arises to collect and pay Required Withholding Taxes, the Recipient shall reimburse the Company or Employer (as required by the Committee or Company) for the amount of such Required Withholding Taxes in cash, unless the Award Document or the Committee permits or requires payment in another form. In the discretion of the Committee or its delegate and at the Recipient's request, the Committee or its delegate may cause the Company or Employer to pay to the appropriate taxing authority withholding taxes in excess of Required Withholding Taxes on behalf of a Recipient, which shall be reimbursed by the Recipient in any manner determined by the Company or the Committee from time to time. In the Award Document or otherwise, the Committee may allow a Recipient to reimburse the Company or Employer for payment of withholding taxes with shares of Stock or other property. The Committee may require the satisfaction of any rules or conditions in connection with any non-cash payment of withholding taxes. (e) If provided in the Award Document relating to an ISO, the Committee may (i) cause the Company to hold the shares of Stock issued in the 5 Recipient's name upon exercise, or (ii) prohibit the transfer by a Recipient of such shares into the name of a nominee and require the placement of a legend on certificates for such shares reflecting such prohibition. SECTION 8. FORFEITURES In its discretion, the Committee may adopt and amend any policies, and may include in any Award Document any provisions relating to, forfeitures. Such forfeiture provisions may include, for example, prohibitions on competing with the Company and its Subsidiaries and Affiliates and on engaging in other detrimental conduct. Forfeiture provisions for one Award type may differ from those for another type, and also may differ among Awards of the same type granted at different times or to Recipients in different circumstances. As used in this Plan, a "forfeiture" of an Award includes the recapture of Stock issued or other economic benefits derived from an Award, as well as the forfeiture of an Award itself; however, the Committee may define the term more narrowly for specific Award Documents. SECTION 9. ADJUSTMENTS AND ACQUISITIONS (a) Subject to Section 9(c), in the event that the Committee shall determine that, as a result of any dividend or other distribution (whether in the form of cash, Stock, other securities, or other property), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of Stock or other securities of the Company, issuance of warrants or other rights to purchase Stock or other securities of the Company, or any other similar corporate transaction, change, or event, an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under outstanding Awards or under the Plan (an "Adjustment Event"), then the Committee shall, in such manner as it may deem equitable, adjust any or all of: (i) the number and types of shares of Stock (or other securities or property) subject to outstanding Awards; (ii) the maximum number of shares of Stock with respect to which Awards may be issued set forth in Section 2(a) of this Plan, the maximum number of shares of Stock for which ISOs may be granted set forth in Section 2(a) of this Plan, and the maximum number of shares of Stock which may be granted to any Eligible Person during any calendar year set forth in Section 2(b) of this Plan (collectively the "Share Limitations"); and (iii) the option price, base price, or other similar price with respect to any Award. Alternatively to (i) and (iii), if there is an Adjustment Event and the Committee deems it appropriate, it may provide for cash payments to holders of outstanding Awards. (b) Subject to Section 9(c), in the event of an acquisition by the Company by means of a merger, consolidation, acquisition of property or stock, reorganization or otherwise, the Committee shall be authorized: 6 (i) to cause the Company to issue Awards or assume stock options or stock appreciation rights issued by the acquired company, whether or not in a transaction to which Section 424(a) of the Code applies, by means of issuance of new Awards in substitution for, or an assumption of, previously issued options or rights, but only if and to the extent that such issuance or assumption is consistent with the other provisions of this Plan and any applicable law, and/or (ii) to increase the Share Limitations to reflect such issuance or assumption. (c) The Committee shall not make an adjustment under Section 9(a), issue Awards or assume options or rights under Section 9(b)(i), or increase the Share Limitations under Section 9(b)(ii), (i) to the extent such action would affect ISOs or the Share Limitation relating to ISOs and would require shareholder approval under Section 422 of the Code, or (ii) to the extent such action would affect the Share Limitation set forth in Section 2(b) of this Plan and would require shareholder approval in order to qualify such Awards, such assumed options or rights, or Awards granted thereafter as performance-based compensation under Section 162(m) of the Code, unless such action(s) by the Committee are made subject to shareholder approval and are so approved by the shareholders. (d) In the event that the Board approves any merger or consolidation of the Company with or into any other corporation or business entity as a result of which the Company shall not be the surviving corporation, with respect to each Award, either (i) the Committee shall, in such manner as it may deem equitable, cause such Award to vest prior to the effective date of such merger or consolidation or (ii) the Committee or the Board shall approve arrangements to substitute an award issued by the surviving corporation for such Award on terms and conditions deemed equitable by the Committee or the Board. SECTION 10. ACCELERATION AND VESTING (a) An "Acceleration Date" occurs when any of the following events occur: (i) any Person (as defined herein) becomes the beneficial owner directly or indirectly (within the meaning of Rule 13d-3 under the Act) of more than 30% of the Company's then outstanding voting securities (measured on the basis of voting power); (ii) the shareholders of the Company approve a definitive agreement of merger or consolidation with any other corporation or business entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the consummation of the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the surviving entity of such merger or consolidation outstanding immediately after such merger or consolidation; 7 (iii) Continuing Directors cease to constitute at least a majority of the directors of the Company; or (iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. An Acceleration Date as described in (i) above shall not occur as a result of the ownership of voting securities by (A) the Company or any of its Subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries or (C) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Stock. Securities held by an underwriter pursuant to an offering of such securities for a period not to exceed 40 days shall be deemed to be outstanding but shall not be deemed to be beneficially owned by such underwriter for purposes of clause (i) above. For purposes of this Section 10(a), (X) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Act; (Y) "Continuing Directors" shall mean any directors of the Company who either (i) were directors of the Company on the date of adoption of the Plan, or (ii) became directors of the Company subsequent to such date and whose election or nomination for election by the shareholders of the Company was duly approved, either by a specific vote or by approval of the proxy statement issued by the Company in which such individuals were named as nominees for director of the Company, by a majority of the Continuing Directors who were at the time of election or nomination directors of the Company; and (Z) "Person" shall mean any individual, firm, corporation, partnership or other entity and shall include the Affiliates and Associates of such Person. (b) If an Acceleration Date occurs while Awards remain outstanding under this Plan, then all Awards shall vest. This Section shall apply to ISOs notwithstanding Section 14(a). (c) When Awards "vest," they become fully exercisable. Vesting does not mean that an Award becomes non-forfeitable, except to the extent provided in the Award Document or otherwise by the Committee pursuant to Sections 4(g) or 4(h) above. SECTION 11. ADMINISTRATION (a) This Plan shall be administered by the Stock Option Plans Committee of the Board, or another committee appointed by the Board from time to time, consisting of three or more persons, each of whom at all times shall be a member of the Board and none of whom shall be an officer or employee of the Company or any of its Subsidiaries at the time of service. Committee members shall not be eligible for selection to receive Awards under this Plan. (b) During any time when one or more Committee members may not be qualified to serve under Rule 16b-3, under Section 162(m) of the Code, or under any other rule or law which contains special qualifications for Committee members in order to avoid a penalty or to obtain a benefit, the Committee may form a sub-Committee from among its qualifying members. The sub-Committee may act, in lieu of the full Committee, with respect to all 8 or any category of Awards granted or to be granted to all or any group of Recipients, and may take other actions deemed appropriate and convenient to prevent, control, minimize, or eliminate any penalties, loss of benefits, or other adverse effects of such potential disqualification. Any such sub-Committee shall have the full authority of the full Committee under this Plan, except to the extent the full Committee limits the sub-Committee's powers. (c) At the Committee's request or on its own motion, the Board may ratify or approve grants, or any terms of any grants, made by the Committee during any time that any member of the Committee may not be qualified to approve such grants or terms under Rule 16b-3 or any other rule or law. (d) A majority of the members of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all of the members of the Committee, shall be the acts of the Committee. The Committee may meet in person, by telephone or television conference, or in any other manner (unless prohibited by applicable law). From time to time the Committee may adopt, amend, and rescind such rules and regulations for carrying out this Plan and implementing Award Documents, and the Committee may take such action in the administration of this Plan, as it deems proper. The interpretation of any provisions of this Plan by the Committee shall be final and conclusive unless otherwise determined by the Board. (e) To the extent the Committee deems it convenient and appropriate, the Committee may delegate such of its powers and duties, including (among other things) its power to grant Awards, to one or more officers of the Company. Any such delegation shall be subject to such limitations and conditions as the Committee deems appropriate. However, notwithstanding the foregoing: (i) the power to grant Awards may not be delegated to an officer who is not also a director of the Company except in conformity with applicable Delaware law; and, (ii) no officer may grant Awards to him- or herself or to his or her superiors unless such grants are ratified by the Committee or the Board. SECTION 12. AMENDMENT, TERMINATION, SHAREHOLDER APPROVAL. (a) The Board may amend or terminate this Plan at any time, except that without the approval of the Company's shareholders, no amendment shall (i) increase the maximum number of shares issuable, or the maximum number of shares for which ISOs may be granted, under this Plan, (ii) change the class of persons eligible to receive ISOs, (iii) change the annual limit on Awards which may be granted to an Eligible Person provided in Section 2(b), or (iv) change the provisions of this Section 12(a). (b) The Committee may amend this Plan from time to time to the extent necessary to (i) comply with Rule 16b-3 and, to the extent it deems appropriate, (ii) prevent benefits under this Plan from constituting "applicable employee remuneration" within the meaning of Section 162(m) of the Code. (c) No Awards may be granted under this Plan after April 21, 2008. (d) The approval by shareholders shall consist of the approving vote of the holders of a majority of the outstanding shares of Stock present (in person or by proxy) and voted (for or against) at a meeting of the shareholders at which a quorum is present, unless a greater vote is 9 required by the Company's charter or by-laws, by the Board, by the Company's principal stock exchange, or by applicable law (including Delaware law, Rule 16b-3, or Section 162(m) of the Code). SECTION 13. DEFINITIONS (a) "Acceleration Date" has the meaning given in Section 10(a). (b) "Act" means the Securities Exchange Act of 1934, as amended from time to time. (c) "Adjustment Event" has the meaning given in Section 9(a). (d) "Affiliate" means any entity in which the Company has a substantial direct or indirect equity interest (other than a Subsidiary), but only if expressly so designated by the Committee from time to time. Without limiting the generality of the foregoing, the term "Affiliate" shall not include any beer wholesaler or distributor in which Anheuser-Busch Investment Capital Corporation or other Subsidiary invests, unless the Committee expressly determines otherwise; the Committee may also revoke or reinstate any such designation from time-to-time. (e) "Award" means a grant of ISOs, NQSOs, SARs, or Limited Rights. (f) "Award Document" means the written agreement or other document referred to in Section 4(a) evidencing an Award. (g) "Board" means the Board of Directors of the Company. (h) Options "cease to qualify as ISOs" when they fail or cease to qualify for the exclusion from income provided in Section 421 (or any successor provision) of the Code. (i) "Code" means the U.S. Internal Revenue Code as in effect from time to time. (j) "Committee" means the committee of the Board described in Section 11 hereof and any sub-committee established by such committee pursuant to Section 11(b). (k) "Company" means Anheuser-Busch Companies, Inc. and its successors. (l) "Eligible Person" means a person who is eligible to receive an Award under Section 3 of this Plan. (m) "Employer" means the Company, the Subsidiary, or the Affiliate which employs the Recipient. (n) "Fair Market Value" of Stock on a given valuation date means (i) the average of the highest and lowest selling prices per share of Stock reported on the New York Stock Exchange Composite Tape or similar quotation service for such date, (ii) if Stock is not listed on the New York Stock Exchange, the average of the highest and lowest selling prices per share of Stock as reported for such valuation date on the principal stock exchange or quotation system in the U.S. on which Stock is listed or quoted (as determined by the Committee), or (iii) if neither of the preceding clauses is applicable, the value per share determined by the Committee in a manner consistent with the Treasury Regulations under Section 2031 of the Code. If 10 no sale of Stock occurs on such valuation date, but there were sales reported within a reasonable period both before and after such valuation date, the weighted average of the means between the highest and lowest selling prices on the nearest date before and the nearest date after such valuation date shall be used, with the average to be weighted inversely by the respective numbers of trading days between the selling dates and such valuation date. (o) "Forfeiture" has the meaning given in Section 8. (p) "ISO" or "Incentive Stock Option" means an option to purchase one share of Stock for a specified option price which is designated by the Committee as an "Incentive Stock Option" and which qualifies as an "incentive stock option" under Section 422 (or any successor provision) of the Code. (q) "Limited Right" has the meaning given in Section 6. (r) "NQSO" or "Non-Qualified Stock Option" means an option to purchase one share of Stock for a specified option price which is designated by the Committee as a "Non-Qualified Stock Option," or which is designated by the Committee as an ISO but which ceases to qualify as an ISO. (s) "Option" means an ISO or an NQSO. (t) "Optionee" means a person to whom Options are granted pursuant to this Plan. (u) "Plan" means the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan, as amended from time to time. (v) "Recipient" means an Eligible Person to whom an Award is granted pursuant to this Plan. (w) "Reporting Person," as of a given date, means a Recipient who would be required to report a purchase or sale of Stock occurring on such date to the Securities and Exchange Commission pursuant to Section 16(a) of the Act and the rules and regulations thereunder. (x) "Rule 16b-3" means Rule 16b-3 (as amended from time to time) promulgated by the Securities and Exchange Commission under the Act, and any successor thereto. (y) "Share Limitations" has the meaning given in Section 9(a). (z) "SAR" means a stock appreciation right, which is a right to receive cash, Stock, or other property having a value on the date the SAR is exercised equal to (i) the excess of the Fair Market Value of one share of Stock on the exercise date over (ii) the base price of the SAR. The term "SAR" does not include a Limited Right. (aa) "Stock" means shares of the common stock of the Company, par value $1.00 per share, or such other class or kind of shares or other securities as may be applicable under Section 9. (bb) "Subsidiary" means a "subsidiary corporation" of the Company as defined in Section 424(f) (or any successor provision) of the Code, other than corporations expressly excluded by the Committee from time-to-time. 11 (cc) "Vest" has the meaning given in Section 10(c). (dd) "Required Withholding Taxes" means, in connection with the exercise of or other taxable event relating to an Award, the total amount of Federal and state income taxes, social security taxes, and other taxes which the Employer of the Recipient is required to withhold. SECTION 14. MISCELLANEOUS (a) Each provision of this Plan and the Award Documents relating to ISOs shall be construed so that all ISOs shall be "incentive stock options" as defined in Section 422 of the Code or any statutory provision that may replace Section 422, and any provisions thereof which cannot be so construed shall be disregarded, subject however to Sections 4(g) and 10(b) and provided that Award Documents are permitted to have provisions which cause Options which qualify as ISOs at the time of grant to cease to qualify as ISOs at a later time or upon the happening of a later event. No discretion granted or allowed to the Committee under this Plan shall apply to ISOs after their grant except (i) to the extent the related Award Document shall so provide or (ii) to the extent that the application of such discretion would not cause such ISOs to cease to qualify as ISOs. Notwithstanding the foregoing, nothing shall prohibit an amendment to or action regarding outstanding ISOs which would cause them to cease to qualify as ISOs, so long as the Company and the Recipient shall consent to such amendment or action. (b) Without amending this Plan, Awards may be granted to Eligible Persons who are foreign nationals or who are employed outside the United States or both, on such terms and conditions different from those specified in this Plan as may, in the judgment of the Committee, be necessary or desirable to further the purposes of this Plan. Such different terms and conditions may be reflected in Addenda to this Plan. However, no such different terms or conditions shall be employed if such terms or conditions constitute, or in effect result in, an increase in the aggregate number of shares which may be issued under this Plan or a change in the definition of Eligible Person. (c) Notwithstanding any other provision in this Plan, the Committee shall not act with respect to any Reporting Person in a manner which would result in a forfeiture under Section 16(b) of the Act of some or all of the economic benefits relating to his or her Awards, without in each case the written consent of such Reporting Person. (d) Nothing in this Plan or any Award Document shall confer on any person any expectation to continue in the employ of his or her Employer, or shall interfere in any manner with the absolute right of the Employer to change or terminate such person's employment at any time for any reason or for no reason. EX-12 4 RATIO OF EARNINGS TO FIXED CHARGES 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: Three Months Ended March 31, Year Ended December 31, -------------- ---------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- ---- ---- 5.7X 7.5X 7.3X 8.1X 1/ 6.6X 2/ 7.7X 5.8X 3/ 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-27 5 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the Form 10-Q for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 106,411 0 773,837 5,639 677,702 1,708,700 13,387,738 5,566,583 11,939,473 1,581,014 4,383,551 0 0 710,519 3,425,561 11,939,473 2,507,524 2,507,524 1,638,779 2,039,218 0 0 75,486 396,899 151,016 265,186 0 0 0 265,186 0.54 0.54
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