-----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, BOjzRueJCg7BY7iN0FLKMTlXTG1JimJ4sUuJ8OielW1UGMPoVBsiNqz42tQXhKD8 vl2c6y/i6k2d7TFQ29nQvg== 0000950114-02-000007.txt : 20020415 0000950114-02-000007.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950114-02-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANHEUSER BUSCH COMPANIES INC CENTRAL INDEX KEY: 0000310569 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 431162835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07823 FILM NUMBER: 02588257 BUSINESS ADDRESS: STREET 1: ONE BUSCH PL CITY: ST LOUIS STATE: MO ZIP: 63118 BUSINESS PHONE: 3145772000 MAIL ADDRESS: STREET 1: ONE BUSCH PL CITY: ST LOUIS STATE: MO ZIP: 63118 10-K 1 eoab10k.txt ANHEUSER-BUSCH - FORM 10-K 1 ============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO --------- --------- COMMISSION FILE NUMBER 1-7823 ANHEUSER-BUSCH COMPANIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DELAWARE 43-1162835 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) ONE BUSCH PLACE, ST. LOUIS, MISSOURI 63118 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 314-577-2000 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- COMMON STOCK--$1 PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE 6 1/2% DEBENTURES DUE JANUARY 1, 2028 NEW YORK STOCK EXCHANGE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. $44,246,817,824 AS OF FEBRUARY 28, 2002 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. $1 PAR VALUE COMMON STOCK 879,119,827 SHARES AS OF MARCH 11, 2002 DOCUMENTS INCORPORATED BY REFERENCE Portions of Annual Report to Shareholders for the Year Ended December 31, 2001............................... PART I, PART II, and PART IV Portions of Definitive Proxy Statement for Annual Meeting of Shareholders on April 24, 2002............. PART III
============================================================================== 2 PART I ITEM 1. BUSINESS Anheuser-Busch Companies, Inc. (the "Company") is a Delaware corporation that was organized in 1979 as the holding company parent of Anheuser-Busch, Incorporated ("ABI"), a Missouri corporation whose origins date back to 1875. In addition to ABI, which is the world's largest brewer of beer, the Company is also the parent corporation to a number of subsidiaries that conduct various other business operations. The Company's operations are comprised of the following business segments: domestic beer, international beer, packaging, entertainment, and other. Financial information with respect to the Company's business segments appears in Note 15, "Business Segments," on pages 62-63 of the 2001 Annual Report to Shareholders, which Note hereby is incorporated by reference. Domestic beer volume was 99.5 million barrels in 2001 as compared with 98.3 million barrels in 2000. Worldwide sales of the Company's beer brands aggregated 107.2 million barrels in 2001 as compared with 105.6 million barrels in 2000 and accounted for approximately 82% of the Company's consolidated net sales dollars in 2001, 81% in 2000 and 82% in 1999. Worldwide beer volume is comprised of domestic and international volume. Domestic volume represents Anheuser-Busch brands produced and shipped within the United States including Puerto Rico and the Caribbean. International volume represents Anheuser-Busch brands produced overseas by Company-owned breweries and under license and contract brewing agreements, plus exports from the Company's U.S. breweries to markets around the world. Total volume includes worldwide Anheuser-Busch brand volume combined with the Company's pro rata share of the volume of its international equity partners. Total beer volume was 124.4 million barrels and 121.3 million barrels in 2001 and 2000, respectively. DOMESTIC BEER OPERATIONS The Company's principal product is beer, produced and distributed by its subsidiary, ABI, in a variety of containers primarily under the brand names Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Black & Tan Lager, Michelob Amber Bock, Michelob Honey Lager, Michelob Hefe-Weizen, Michelob Marzen, Busch, Busch Light, Busch Ice, Natural Light, Natural Ice, King Cobra, Red Wolf Lager, ZiegenBock Amber, Hurricane Malt Liquor, Hurricane Ice, Pacific Ridge Ale, "Doc's" Hard Lemon, "Doc's" Hard Apple, Killarney's, and Tequiza. ABI's products also include three non-alcohol malt beverages, O'Doul's, Busch NA, and O'Doul's Amber. During 2001 ABI introduced Killarney's Pub Draught and Red Label. The Company brews Kirin Light, Kirin Lager, and Kirin-Ichiban through a joint venture agreement with Kirin Brewing Company, Ltd. of Japan for sale in the United States. ABI owns a 26% equity interest in Seattle-based Redhook Ale Brewery, Inc. Through this alliance, Redhook products are distributed by many ABI wholesalers and exclusively by ABI wholesalers in all new U.S. markets entered by Redhook since 1994. ABI also owns a 36% interest in Portland-based Widmer Brothers Brewing Company. Widmer products are distributed by many ABI wholesalers and exclusively by ABI wholesalers in all new U.S. markets entered by Widmer since 1997. Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Black & Tan Lager, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Amber Bock, Michelob Honey Lager, Michelob Hefe-Weizen, Busch, Busch Light, Natural Light, Natural Ice, "Doc's" Hard Lemon, "Doc's" Hard Apple, Killarney's, Red Wolf Lager, ZiegenBock Amber, Kirin-Ichiban, Red Label, O'Doul's, O'Doul's Amber, Widmer beer products, and Redhook Ales are sold in both draught and packaged form. Busch Ice, King Cobra, Michelob Marzen, Hurricane Malt Liquor, Tequiza, Hurricane Ice, Kirin Lager, Kirin Light, and Busch NA are sold only in packaged form. Killarney's Pub Draught and Pacific Ridge Ale are sold only in draught form. Budweiser, Bud Light, Bud Ice, Michelob, Michelob Light, Michelob Amber Bock, Busch, Busch Light, Natural Light, Natural Ice, Tequiza, Killarney's, "Doc's" Hard Lemon, O'Doul's, and O'Doul's Amber are distributed and sold on a nationwide basis. Bud Ice Light and Michelob Honey Lager are sold in 49 states; Michelob Marzen and Redhook Ales in 48 states; Michelob Black & Tan Lager, Michelob Hefe-Weizen, and Red Wolf Lager in 47 states; Bud Dry, King Cobra, and Busch NA in 45 states; Kirin-Ichiban and Kirin Lager in 43 states; Hurricane Malt Liquor in 41 states; Kirin Light in 30 states; Busch Ice in 21 states; Widmer beer products in 19 states; "Doc's" Hard Apple in 15 states; Michelob Golden Draft and Michelob Golden Draft Light in 9 states; Killarney's Pub Draught in 6 states; Pacific Ridge Ale in 2 states; Hurricane Ice, ZiegenBock Amber, and Red Label in 1 state. 1 3 ABI has developed a system of twelve breweries, strategically located across the country, to economically serve its distribution system. (See Item 2 of Part I--Properties.) Ongoing modernization programs at the Company's breweries are part of ABI's overall strategic initiatives. By using controlled environment warehouses and stringent inventory monitoring policies, the quality and freshness of the product are protected, thus providing ABI a significant competitive advantage. During 2001 approximately 94% of the beer sold by ABI, measured in barrels, reached retail channels through more than 600 independent wholesalers. ABI utilizes its regional vice-presidents, sales directors, key account and market managers, as well as certain other field sales personnel, to provide sales strategic planning and merchandising assistance to its wholesalers. In addition, ABI provides national and local media advertising, point-of-sale advertising, and sales promotion programs to help stimulate sales. The remainder of ABI's domestic beer sales in 2001 were made through thirteen branches which perform similar sales, merchandising, and delivery services as wholesalers in their respective areas; these branches are owned and operated by the Company or direct or indirect subsidiaries of the Company. ABI's peak selling periods are the second and third quarters. There are more than 100 companies engaged in the highly competitive brewing industry in the United States. ABI's domestic beers are distributed and sold in competition with other nationally distributed beers, with locally and regionally distributed beers and with imported beers. Although the methods of competition in the industry vary widely, in part due to differences in applicable state laws, the principal methods of competition are product quality, taste and freshness, packaging, price, advertising (including television, radio, sponsorships, billboards, stadium signs, and print media), point-of-sale materials, and service to retail customers (including the replacement of over-age products with fresh products at no cost to the retailer). ABI's beers compete in different price categories. Although all brands compete against the total market, Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob Golden Draft, and Michelob Golden Draft Light compete primarily with premium priced beers. Busch, Busch Light, Natural Light, Busch Ice, and Natural Ice compete with the sub-premium or popular priced beers. King Cobra, Hurricane Malt Liquor, and Hurricane Ice compete against other brands in the malt liquor segment. Michelob, Michelob Light, Michelob Amber Bock, Kirin Lager, Kirin Light, Kirin-Ichiban, Michelob Honey Lager, Michelob Black & Tan Lager, Tequiza, Red Wolf Lager, ZiegenBock Amber, Michelob Hefe-Weizen, Pacific Ridge Ale, Red Label, "Doc's" Hard Lemon, "Doc's" Hard Apple, Killarney's, Killarney's Pub Draught, Michelob Marzen, the Redhook products, and Widmer beer products compete primarily in the above premium beers segment of the malt beverage market. O'Doul's and O'Doul's Amber (premium priced) and Busch NA (sub-premium priced) compete in the non-alcohol malt beverage category. Since 1957, ABI has led the United States brewing industry in total sales volume. In 2001, its sales exceeded those of its nearest competitor by more than 60 million barrels. ABI's domestic market share (excluding exports) for 2001 was 48.8%. Major competitors in the United States brewing industry during 2001 included Philip Morris, Inc. (through its subsidiary Miller Brewing Co.), Adolph Coors Co., and Pabst Brewery Co. The Company has also entered the alternative beverage segment with its energy drink "180". 180 is distributed and sold on a nationwide basis and is available in single eight-ounce slim-line cans. The Company's wholly-owned subsidiary, Busch Agricultural Resources, Inc. ("BARI"), operates rice milling facilities in Arkansas and California; twelve grain elevators in the western and midwestern United States; barley seed processing plants in Fairfield, Montana, Idaho Falls, Idaho, and Powell, Wyoming; a barley research facility in Ft. Collins, Colorado; and a rice research facility in California. BARI also owns and operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho. Through wholly-owned subsidiaries, BARI operates land application farms in Jacksonville, Florida and Fort Collins, Colorado; hop farms in Bonners Ferry, Idaho and Huell, Germany; and an office in Winnipeg, Canada. Another wholly-owned subsidiary, Wholesaler Equity Development Corporation, shares equity positions with qualified partners in independent beer wholesalerships and is currently invested in 7 wholesalerships. INTERNATIONAL BEER OPERATIONS International beer volume was 7.7 million barrels in 2001, compared with 7.3 million barrels in 2000. Anheuser-Busch International, Inc. ("ABII"), a wholly-owned subsidiary of the Company, oversees the marketing and sale of Budweiser and other ABI brands outside the U.S., operates breweries in the United Kingdom (U.K.) and China, negotiates and administers license and contract brewing agreements on behalf of ABI with various foreign brewers, and negotiates and manages equity investments in foreign brewing partners. In addition, ABI's beer products are 2 4 being sold under import-distribution agreements in more than 80 countries and U.S. territories and to the U.S. military and diplomatic corps outside the continental United States. Through Anheuser-Busch Europe Limited ("ABEL"), an indirect, wholly-owned subsidiary of the Company, certain ABI beer brands are marketed, distributed, and sold in twenty-nine European countries. In the U.K., ABEL sells Budweiser, Bud Ice, Michelob, and Michelob Golden Draft brands to selected on-premise accounts, brewers, wholesalers, and directly to off-premise accounts. Budweiser, Bud Ice, and Michelob are brewed and packaged at the Stag Brewery near London, England which is managed and operated by ABEL. Michelob Golden Draft continues to be imported into the U.K. by ABEL. In Canada, Budweiser and Bud Light are brewed and sold through a license agreement with Labatt Brewing Co. In Japan, Budweiser is brewed and sold through a license agreement with Kirin Brewery Company, Limited. Budweiser is also brewed under license and sold by brewers in Korea (Oriental Brewery Co., Ltd.), the Republic of Ireland and Northern Ireland (Guinness Ireland Limited), Italy (Birra Peroni Industriale), and Spain (Sociedad Anonima Damm). A license agreement to brew Budweiser with Asia Brewery, Incorporated in the Philippines will be terminated during the first half or early in the second half of 2002. The Company has a partnership with Brasseries Kronenbourg, the leading brewer in France, for sale and distribution of Bud in France. In 1995, the Company formed an alliance with Compania Cervecerias Unidas S.A. ("CCU"), the leading Chilean brewer. Under the terms of the alliance, a subsidiary of CCU in Argentina ("CCU-Argentina") brews and distributes Budweiser under license in Argentina, and under contract for sale in Paraguay, Uruguay, Chile and Brazil. CCU also distributes Budweiser in Chile. The Company has a direct and indirect ownership interest of approximately 29% of CCU-Argentina. During the first six months of 2001, the Company purchased approximately 20% of CCU. In 1995, the Company purchased an initial 80% equity interest in a joint venture, renamed the Budweiser Wuhan International Brewing Company, Ltd., that owns and operates a brewery in Wuhan, the fifth-largest city in China. This ownership interest has subsequently increased to 97%. The Company also owns a 5% equity interest in Tsingtao Brewery Company, Ltd., a leading Chinese brewer. In 1993, Anheuser-Busch purchased a 17.7% direct and indirect equity interest in Grupo Modelo's operating subsidiary, Diblo, for $477 million. In May 1997, the Company increased its direct and indirect equity ownership in Diblo to 37% for an additional $605 million. In September 1998, the Company completed the purchase of an additional 13.25% of Diblo for $556.5 million, bringing the Company's total investment to $1.6 billion. The Company now owns a 50.2% direct and indirect interest in Diblo. However, the Company does not have voting or other effective control in either Grupo Modelo or Diblo. PACKAGING OPERATIONS The Company's packaging operations are handled through the following wholly-owned subsidiaries of the Company: Metal Container Corporation ("MCC"), manufactures beverage cans at eight plants and beverage can lids at three plants for sale to ABI, U.S. soft drink customers, and Grupo Modelo (See Item 2 of Part 1--Properties); Anheuser-Busch Recycling Corporation ("ABRC"), recycles aluminum cans at its plant in Hayward, California; Precision Printing and Packaging, Inc. ("PPPI"), manufactures metalized and paper labels at its plant in Clarksville, Tennessee; and Eagle Packaging, Inc. ("EPI"), manufactures crown and closure liner materials for ABI. Through a wholly-owned limited partnership known as Longhorn Glass Manufacturing, L.P., the Company owns and operates a glass manufacturing plant in Jacinto City, Texas, which manufactures glass bottles for the Company's nearby Houston brewery. FAMILY ENTERTAINMENT The Company is active in the family entertainment field, primarily through its wholly-owned subsidiary, Busch Entertainment Corporation ("BEC"), which currently owns, directly and through subsidiaries, nine theme parks. BEC operates Busch Gardens theme parks in Tampa, Florida and Williamsburg, Virginia, and SeaWorld theme parks in Orlando, Florida, San Antonio, Texas, and San Diego, California. BEC operates water park attractions in Tampa, Florida (Adventure Island), Williamsburg, Virginia (Water Country, U.S.A.), and Langhorne, Pennsylvania (Sesame Place), as well as Discovery Cove in Orlando Florida, a reservations only attraction offering interaction with 3 5 marine animals. Due to the seasonality of the theme park business, BEC experiences higher revenues in the second and third quarters than in the first and fourth quarters. Through a Spanish affiliate, the Company also owns a 16.1% equity interest in Port Aventura, S.A., which is a theme park near Barcelona, Spain. The Company faces competition in the family entertainment field from other theme and amusement parks, public zoos, public parks, and other family entertainment events and attractions. OTHER Through its wholly-owned subsidiary, Busch Properties, Inc. ("BPI"), the Company is engaged in the business of real estate development. BPI also owns and operates The Kingsmill Resort and Conference Center in Williamsburg, Virginia. Through other wholly-owned subsidiaries, the Company owns and operates a marketing communications business (Busch Creative Services Corporation) and a transportation service business (Manufacturers Railway Co.). SOURCES AND AVAILABILITY OF RAW MATERIALS The products manufactured by the Company require a large volume of various agricultural products, including barley for malt; hops, malt, rice, and corn grits for beer; and rice for the rice milling and processing operations of BARI. The Company fulfills its commodities requirements through purchases from various sources, including purchases from its subsidiaries, through contractual arrangements, and through purchases on the open market. The Company believes that adequate supplies of the aforementioned agricultural products are available at the present time, but cannot predict future availability or prices of such products and materials. The above referenced commodity markets have experienced and will continue to experience price fluctuations. The price and supply of raw materials will be determined by, among other factors, the level of crop production both in the U.S. and around the world, weather conditions, export demand, and government regulations and legislation affecting agriculture. ENERGY MATTERS The Company uses natural gas, fuel oil, and coal as its primary fuel materials. Supplies of fuel and electricity in quantities sufficient to meet ABI's requirements are expected to be available on a year-round basis during 2002. The cost of fuel and electricity used by ABI increased in 2001, but is expected to decrease in 2002. Based upon information presently available, there can be no assurance that adequate supplies of fuel and electricity will always be available to the Company. In the event of a supply disruption, the Company's sales and earnings could be adversely affected. However, where applicable, the Company does have alternate fuel capability and limited electric generation to ensure continued operation of essential processes. BRAND NAMES AND TRADEMARKS Some of the Company's major brand names used in its principal business segments are mentioned in the discussion above. The Company regards consumer recognition of and loyalty to all of its brand names and trademarks as extremely important to the long-term success of its principal business segments. RESEARCH AND DEVELOPMENT The Company is involved in a number of research activities relating to the development of new products or services or the improvement of existing products or services. The dollar amounts expended by the Company during the past three years on such research activities and the number of employees engaged full time therein during such period, however, are not considered to be material in relation to the total business of the Company. 4 6 ENVIRONMENTAL PROTECTION All of the Company's facilities are subject to federal, state, and local environmental protection laws and regulations, and the Company is operating within existing laws and regulations or is taking action aimed at assuring compliance therewith. Various proactive strategies are utilized to help assure this compliance. Compliance with such laws and regulations is not expected to materially affect the Company's capital expenditures, earnings, or competitive position. The Company has devoted considerable effort to research, development, and engineering of cost effective innovative systems to minimize effects on the environment from its operating facilities. These projects, coupled with the Company's Environmental Management System and an overall Company emphasis on pollution prevention and resource conservation initiatives, are improving efficiencies and creating saleable by-products from residuals. They have generally resulted in low cost operating systems while reducing impact to air, water, and land. ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS The states of California, Connecticut, Delaware, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont have adopted certain restrictive packaging laws and regulations for beverages that require deposits on packages. ABI continues to do business in these states. Such laws have not had a significant effect on ABI's sales, but have had a significant adverse impact on beer industry growth and are considered by the Company to be inflationary, costly, and inefficient for recycling packaging materials. Congress and a number of additional states continue to consider similar legislation, the adoption of which by Congress or a substantial number of states or additional local jurisdictions might require the Company to incur significant capital expenditures to comply. NUMBER OF EMPLOYEES As of December 31, 2001, the Company had 23,432 full-time employees. As of December 31, 2001, approximately 8,155 employees were represented by the International Brotherhood of Teamsters. Nineteen other unions represented approximately 1,387 employees. In May 2001, ABI and the Brewery and Soft Drink Workers Conference of the International Brotherhood of Teamsters, which represents the majority of brewery workers, reached an agreement on a new labor agreement covering Teamster-represented employees at all of the Company's domestic U.S. breweries through February 2004. The terms of the agreement are essentially the same as those unilaterally implemented by the Company in September 1998 upon reaching an impasse in negotiations, except an additional year was added to the term of the contract. The Company considers its employee relations to be good. ITEM 2. PROPERTIES ABI has twelve breweries in operation at the present time, located in St. Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield, California; Jacksonville, Florida; Houston, Texas; Columbus, Ohio; Merrimack, New Hampshire; Williamsburg, Virginia; Baldwinsville, New York; Fort Collins, Colorado; and Cartersville, Georgia. Title to the Baldwinsville, New York brewery is held by the Onondaga County Industrial Development Agency ("OCIDA") pursuant to a Sale and Agency Agreement with ABI, which enabled OCIDA to issue tax exempt pollution control and industrial development revenue notes and bonds to finance a portion of the cost of the purchase and modification of the brewery. The brewery is not pledged or mortgaged to secure any of the notes or bonds, and the Sale and Agency Agreement with OCIDA gives ABI the unconditional right to require at any time that title to the brewery be transferred to ABI. ABI's breweries operated at approximately 96% of capacity in 2001; during the peak selling periods (second and third quarters), they operated at maximum capacity. The Company also owns a 97% equity interest in a joint venture that owns and operates a brewery in Wuhan, China. The Company also leases and operates the Stag Brewery near London, England. The Company, through wholly-owned subsidiaries, operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho; rice mills in Jonesboro, Arkansas and Woodland, California; hop farms in Bonners Ferry, Idaho and Huell, Germany; can manufacturing plants in Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado, Newburgh, New York, Ft. Atkinson, Wisconsin, Rome, Georgia, and Mira Loma, 5 7 California; can lid manufacturing plants in Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside, California; a crown and closure liner material plant in Bridgeton, Missouri; and an aluminum can recycling plant in Hayward, California. The Company operates a glass manufacturing plant in Jacinto City, Texas through a limited partnership. BEC operates its principal family entertainment facilities in Tampa, Florida; Williamsburg, Virginia; San Diego, California; Orlando, Florida; and San Antonio, Texas. The Tampa facility is 265 acres, Williamsburg is 364 acres, San Diego is 182 acres, Orlando is 284 acres, and the San Antonio facility is 496 acres. Except for the Baldwinsville brewery, the can manufacturing plants in Newburgh, New York and Rome, Georgia, the SeaWorld park in San Diego, California, the Stag Brewery, and the brewery in Wuhan, China, all of the Company's principal properties are owned in fee. The lease for the land used by the SeaWorld park in San Diego, California expires in 2048. The Company leases the Stag Brewery from Scottish Courage, Ltd. In 1995, the joint venture that operates the brewery in Wuhan was granted the right to use the property for a period of 50 years from the appropriate governmental authorities. The Company also leases a bottling line at its brewery in Cartersville, Georgia and a can manufacturing plant in Rome, Georgia. The Company considers its buildings, improvements, and equipment to be well maintained and in good condition, irrespective of dates of initial construction, and adequate to meet the operating demands placed upon them. The production capacity of each of the manufacturing facilities is adequate for current needs and, except as described above, substantially all of each facility's capacity is utilized. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or its operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 2001. 6 8 EXECUTIVE OFFICERS OF THE REGISTRANT AUGUST A. BUSCH III (age 64) is presently Chairman of the Board and President, and a Director of the Company and has served in such capacities since 1977, 1974, and 1963, respectively. Since 1979 he has also served as Chairman of the Board of the Company's subsidiary, Anheuser-Busch, Incorporated and also previously served as its Chief Executive Officer (1979-2000). PATRICK T. STOKES (age 59) is presently Senior Executive Vice President and a Director of the Company and has served in such capacities since 2000. He previously served as Vice President and Group Executive of the Company since 1981. He is also presently Chief Executive Officer and President of the Company's subsidiary, Anheuser-Busch, Incorporated, and has served in such capacities since 2000 and 1990 respectively, and Chairman of the Board of the Company's subsidiary, Anheuser-Busch International, Inc., and has served in such capacity since 1999. W. RANDOLPH BAKER (age 55) is presently Vice President and Chief Financial Officer of the Company and has served in such capacity since 1996. He previously served as Vice President and Group Executive of the Company (1982-1996). STEPHEN K. LAMBRIGHT (age 59) is presently Group Vice President and General Counsel of the Company and has served in such capacity since 1997. He previously served as Vice President and Group Executive of the Company (1984-1997). DONALD W. KLOTH (age 60) is presently Vice President and Group Executive of the Company and has served in such capacity since 1994. He is also Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Busch Agricultural Resources, Inc., and has served in such capacity since 1994. JOHN E. JACOB (age 67) is presently Executive Vice President and Chief Communications Officer, and a Director of the Company and has served in such capacities since 1994 and 1990, respectively. THOMAS W. SANTEL (age 43) is presently Vice President-Corporate Development of the Company and has served in such capacity since 1996. STEPHEN J. BURROWS (age 50) is presently Vice President-International Operations of the Company and has served in such capacity since 1999. He previously served as Vice President-International Marketing of the Company (1992-1998). He is also presently Chief Executive Officer and President of the Company's subsidiary, Anheuser-Busch International, Inc., and has served as Chief Executive Officer since 1999 and as President since 1994. During the past five years, he also served as Chief Operating Officer of Anheuser-Busch International, Inc. (1994-1998). VICTOR G. ABBEY (age 46) is presently Chairman of the Board and President of the Company's subsidiary, Busch Entertainment Corporation, and has served in such capacities since 2000. During the past five years, he also served as Executive Vice President and General Manager of the SeaWorld theme park in Orlando, Florida (1997-2000), and Executive Vice President and General Manager of the former SeaWorld theme park in Cleveland, Ohio (1995-1997). AUGUST A. BUSCH IV (age 37) is presently Vice President and Group Executive of the Company and has served in such capacity since 2000. He is also presently Group Vice President-Marketing and Wholesale Operations of the Company's subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 2000 and had previously served as its Vice President-Marketing (1996-2000). MARK T. BOBAK (age 42) is presently Vice President-Corporate Human Resources of the Company and has served in such capacity since 2000. He had previously served as Vice President and Deputy General Counsel of the Company (1998-2000) and Vice President-Litigation (1996-1998) of the Company. JOSEPH P. SELLINGER (age 56) is presently Vice President and Group Executive of the Company and has served in such capacity since 2000. He is also presently Chairman, Chief Executive Officer and President of the Company's direct subsidiaries, Anheuser-Busch Packaging Group, Inc., Anheuser-Busch Recycling Corporation, Metal Container Corporation, Eagle Packaging, Inc., and Precision Printing and Packaging, Inc., and has served in all such capacities since 2000. He had previously served as Vice President- Operations of the Company's subsidiary, Anheuser-Busch, Incorporated (1992-2000). 7 9 DOUGLAS J. MUHLEMAN (age 48) is presently Group Vice President-Brewing Operations and Technology of the Company's subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since October, 2001 and had previously served as its Vice President-Brewing (1996-September, 2001). PART II The information required by Items 5 (except as set forth below), 6, 7, and 8 of this Part II are hereby incorporated by reference from pages 34 through 67 of the Company's 2001 Annual Report to Shareholders. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS On November 29, 2001, the Company issued out of treasury shares a total of 174 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 his annual retainer fee for the period November 28, 2001-December 31, 2001 pursuant to the Company's Non-Employee Director Elective Stock Acquisition Plan. The transaction was exempt from registration and prospectus delivery requirements of the Securities Act of 1933 pursuant to Section 4(2) of the Act. ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item with respect to Directors is hereby incorporated by reference from pages 7 through 9 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 24, 2002. The information required by this Item with respect to Executive Officers is presented on pages 7 and 8 of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is hereby incorporated by reference from page 11 and pages 15 through 18 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 24, 2002. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is hereby incorporated by reference from pages 10 and 11 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 24, 2002. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is hereby incorporated by reference from pages 22 and 23 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 24, 2002. 8 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K (A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT: 1. FINANCIAL STATEMENTS: PAGE ---- Consolidated Balance Sheet at December 31, 2001 and 2000 48* Consolidated Statement of Income for the three years ended December 31, 2001 49* Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 2001 50* Consolidated Statement of Cash Flows for the three years ended December 31, 2001 51* Notes to Consolidated Financial Statements 52-63* Report of Independent Accountants 47* *Incorporated herein by reference from the indicated pages of the 2001 Annual Report to Shareholders. 2. FINANCIAL STATEMENT SCHEDULE: Report of Independent Accountants on Financial Statement Schedule F-1 For the three years ended December 31, 2001: Schedule VIII--Valuation and Qualifying Accounts and Reserves F-2 3. EXHIBITS: Exhibit 3.1 -- Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 1999). Exhibit 3.2 -- By-Laws of the Company (As amended and restated December 16, 1998). (Incorporated by reference to Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 1998.) Exhibit 4.1 -- Form of Rights Agreement, dated as of October 26, 1994 between Anheuser-Busch Companies, Inc. and Boatmen's Trust Company (Incorporated by reference to Exhibit 4.1 to Form 10-K for the fiscal year ended December 31, 1999). Exhibit 4.2 -- Letter Agreement dated March 19, 1998 between Anheuser- Busch Companies, Inc., Boatmen's Trust Company, and ChaseMellon Shareholder Services, L.L.C. amending the Form of Rights Agreement filed as Exhibit 4.1 of this report (Incorporated by reference to Exhibit 4.2 to Form 10-K for the fiscal year ended December 31, 1998). Exhibit 4.3 -- 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 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.) Exhibit 4.4 -- Credit Agreement dated as of June 30, 2000 among the Company, ABI and The Chase Manhattan Bank, as Administrative Agent (Incorporated by reference to Exhibit 4.4 to Form 10-K for the fiscal year ended December 31, 2000). 9 11 Exhibit 10.1 -- Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors amended and restated as of March 1, 2000 (Incorporated by reference to Exhibit 10.1 to Form 10-K for the fiscal year ended December 31, 1999).* Exhibit 10.2 -- Anheuser-Busch Companies, Inc. Non-Employee Director Elective Stock Acquisition Plan amended and restated as of March 1, 2000 (Incorporated by reference to Exhibit 10.2 to Form 10-K for the fiscal year ended December 31, 1999).* Exhibit 10.3 -- Anheuser-Busch Companies, Inc. Stock Plan for Non- Employee Directors as amended (Incorporated by reference to Exhibit 10.3 to Form 10-K for the fiscal year ended December 31, 2000).* Exhibit 10.4 -- Anheuser-Busch Companies, Inc. 1981 Incentive Stock Option/Non-Qualified Stock Option Plan (As amended December 18, 1985, December 16, 1987, December 20, 1988, July 22, 1992, September 22, 1993, December 20, 1995, and November 26, 1997). (Incorporated by reference to Exhibit 10.3 to Form 10-K for the fiscal year ended December 31, 1997.)* Exhibit 10.5 -- Anheuser-Busch Companies, Inc. 1989 Incentive Stock Plan (As amended December 20, 1989, December 19, 1990, December 15, 1993, December 20, 1995, and November 26, 1997). (Incorporated by reference to Exhibit 10.5 to Form 10-K for the fiscal year ended December 31, 1997.)* Exhibit 10.6 -- Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan as amended (Incorporated by reference to Appendix A to the Definitive Proxy Statement for Annual Meeting of Shareholders on April 25, 2001).* Exhibit 10.7 -- Anheuser-Busch Companies, Inc. Excess Benefit Plan amended and restated as of March 1, 2000 (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 1999).* Exhibit 10.8 -- Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan amended and restated as of March 1, 2001 (Incorporated by reference to Exhibit 10.8 to Form 10-K for the fiscal year ended December 31, 2000).* Exhibit 10.9 -- Anheuser-Busch Executive Deferred Compensation Plan amended and restated as of January 1, 2001 (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 2000).* Exhibit 10.10 -- Resolutions amending the Anheuser-Busch Executive Deferred Compensation Plan effective January 1, 2002. Exhibit 10.11 -- Anheuser-Busch 401(k) Restoration Plan amended and restated as of March 1, 2000 (Incorporated by reference to Exhibit 10.12 to Form 10-K for the fiscal year ended December 31, 1999).* Exhibit 10.12 -- Form of Indemnification Agreement with Directors and Executive Officers (Incorporated by reference to Exhibit 10.13 to Form 10-K for the fiscal year ended December 31, 1999).* Exhibit 10.13 -- Anheuser-Busch Officer Bonus Plan as amended and restated on November 24, 1999 (Incorporated by reference to Exhibit A to the Definitive Proxy Statement for Annual Meeting of Shareholders on April 26, 2000).* Exhibit 10.14 -- Investment Agreement By and Among Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc. and Anheuser-Busch International Holdings, Inc. and Grupo Modelo, S.A. de C.V., Diblo, S.A. de C.V. and certain shareholders thereof, dated as of June 16, 1993 (Incorporated by reference to Exhibit 10.15 to Form 10-K for the fiscal year ended December 31, 1999). 10 12 Exhibit 10.15 -- Letter agreement between Anheuser-Busch Companies, Inc. and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement filed as Exhibit 10.14 of this report (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year ended December 31, 1999). Exhibit 12 -- Ratio of Earnings to Fixed Charges. Exhibit 13 -- Pages 34 through 67 of the Anheuser-Busch Companies, Inc. 2001 Annual Report to Shareholders, a copy of which is furnished for the information of the Securities and Exchange Commission. Portions of the Annual Report not incorporated herein by reference are not deemed "filed" with the Commission. Exhibit 21 -- Subsidiaries of the Company Exhibit 23 -- Consent of Independent Accountants, filed as part of page F-1 of this report. - ------- *A management contract or compensatory plan or arrangement required to be filed by Item 14(c) of this report.
(b) Reports on Form 8-K There were no reports on Form 8-K filed during the fourth quarter of 2001. 11 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANHEUSER-BUSCH COMPANIES, INC. ------------------------------------------------ (Registrant) By /s/ August A. BUSCH III ------------------------------------------------ August A. Busch III Chairman of the Board and President Date: March 27, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ AUGUST A. BUSCH III Chairman of the Board and President and March 27, 2002 - ------------------------------------------------------ Director (Principal Executive (August A. Busch III) Officer) /s/ W. RANDOLPH BAKER Vice President and Chief Financial March 27, 2002 - ------------------------------------------------------ Officer (Principal Financial Officer) (W. Randolph Baker) /s/ JOHN F. KELLY Vice President and Controller March 27, 2002 - ------------------------------------------------------ (Principal Accounting Officer) (John F. Kelly) /s/ BERNARD A. EDISON Director March 27, 2002 - ------------------------------------------------------ (Bernard A. Edison) /s/ CARLOS FERNANDEZ G. Director March 27, 2002 - ------------------------------------------------------ (Carlos Fernandez G.) /s/ JOHN E. JACOB Director March 27, 2002 - ------------------------------------------------------ (John E. Jacob) /s/ JAMES R. JONES Director March 27, 2002 - ------------------------------------------------------ (James R. Jones) /s/ CHARLES F. KNIGHT Director March 27, 2002 - ------------------------------------------------------ (Charles F. Knight) /s/ VERNON R. LOUCKS, JR. Director March 27, 2002 - ------------------------------------------------------ (Vernon R. Loucks, Jr.) 12 14 /s/ VILMA S. MARTINEZ Director March 27, 2002 - ------------------------------------------------------ (Vilma S. Martinez) /s/ JAMES B. ORTHWEIN Director March 27, 2002 - ------------------------------------------------------ (James B. Orthwein) /s/ WILLIAM PORTER PAYNE Director March 27, 2002 - ------------------------------------------------------ (William Porter Payne) /s/ JOYCE M. ROCHE Director March 27, 2002 - ------------------------------------------------------ (Joyce M. Roche) Director March 27, 2002 - ------------------------------------------------------ (Henry Hugh Shelton) /s/ PATRICK T. STOKES Director March 27, 2002 - ------------------------------------------------------ (Patrick T. Stokes) /s/ ANDREW C. TAYLOR Director March 27, 2002 - ------------------------------------------------------ (Andrew C. Taylor) /s/ DOUGLAS A. WARNER III) Director March 27, 2002 - ------------------------------------------------------ (Douglas A. Warner III) /s/ EDWARD E. WHITACRE, JR. Director March 27, 2002 - ------------------------------------------------------ (Edward E. Whitacre, Jr.)
13 15 ANHEUSER-BUSCH COMPANIES, INC. INDEX TO FINANCIAL STATEMENT SCHEDULE
PAGE ---- Report of Independent Accountants on Financial Statement Schedule................................... F-1 Consent of Independent Accountants................... F-1 Financial Statement Schedule for the Years 2001, 2000 and 1999: Valuation and Qualifying Accounts and Reserves (Schedule VIII)...................................... F-2
All other Financial Statement Schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements and Notes. Separate financial statements of subsidiaries not consolidated have been omitted because, in the aggregate, the Company's proportionate share of investees' profit before income taxes is less than 20% of Anheuser-Busch's consolidated pretax income, and Anheuser-Busch's investments in such companies are less than 20% of consolidated total assets. 14 16 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Anheuser-Busch Companies, Inc. Our audits of the consolidated financial statements referred to in our report dated February 5, 2002 appearing in the 2001 Annual Report to Shareholders of Anheuser-Busch Companies, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP St. Louis, Missouri February 5, 2002 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 333-64996) and in the Registration Statements on Forms S-8 (No. 33-36132, No. 33-39714, No. 33-39715, No. 33-46846, No. 33-53333, No. 33-58221, No. 33-58241, No. 333-67027, No. 333-71309, No. 333-71311, No. 333-88015, No. 333-50058, and No. 333-60216) of Anheuser-Busch Companies, Inc. of our report dated February 5, 2002 relating to the consolidated financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 5, 2002 relating to the financial statement schedule, which appears on page F-1 of this Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP St. Louis, Missouri March 27, 2002 F-1 17 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN MILLIONS)
2001 2000 1999 ---- ---- ---- Reserve for doubtful accounts (deducted from related assets): Balance at beginning of period.............................. $ 8.2 $ 6.4 $ 5.5 Additions charged to costs and expenses..................... .9 1.8 1.0 Additions (recoveries of uncollectible accounts previously written off).............................................. .1 .1 .1 Deductions (uncollectible accounts written off)............. (1.5) (.1) (.2) ------ ------ ------ Balance at end of period.................................... $ 7.7 $ 8.2 $ 6.4 ====== ====== ====== Deferred income tax asset valuation allowance under FAS 109: Balance at beginning of period.............................. $ 14.7 $ 13.6 $117.0 Additions to valuation allowance charged to costs and expenses.................................................. 3.6 9.7 3.5 Deductions from valuation allowance (utilizations and expirations).............................................. (6.3) (8.6) (14.1) Reductions due to changes in foreign business operations.... -- -- (92.8) ------ ------ ------ Balance at end of period.................................... $ 12.0 $ 14.7 $ 13.6 ====== ====== ======
F-2 EX-10.10 3 eoex10p.txt EXHIBIT 10.10 1 EXHIBIT 10.10 RESOLUTIONS AMENDING ANHEUSER-BUSCH ----------------------------------- EXECUTIVE DEFERRED COMPENSATION PLAN ------------------------------------ WHEREAS, Anheuser-Busch Companies, Inc. (the "Company") maintains a certain plan of deferred compensation for a select group of management and highly compensated employees of the Company and subsidiaries which have adopted the plan, known as the Anheuser-Busch Executive Deferred Compensation Plan (Amended and Restated as of January 1, 2001) (the "Plan"); and WHEREAS, Article IX (a) of the Plan provides that amendments that provide for substantial increases in benefits shall require approval by this Committee; and WHEREAS, This Committee deems it necessary and desirable to amend the Plan in a manner that may increase the benefits available under the Plan. NOW, THEREFORE, BE IT RESOLVED, That this Committee hereby authorizes amendment of the Plan as follows: 1. By deleting Section II in its entirety and substituting the following therefor: II. ELIGIBILITY An Employee shall be an Eligible Employee for a Year if: (a) the Employee is an Officer on the confidential payroll of a Participating Employer as of January 1 of the Year, or (b) if the Employee's market rate of annual compensation determined for other purposes as of January 1 of the Year equals or exceeds $200,000, as adjusted for each Year after 2002 in accordance with the Company's budgeted internal merit increase factor for that Year. 2 2. By deleting the term "$250,000 as Adjusted" each place it appears in the Plan and substituting the term "$200,000" therefor. RESOLVED, That these changes shall become effective January 1, 2002. RESOLVED, That the Chief Financial Officer of the Company may authorize such other changes in the Plan in connection with the amendments approved herein as he deems appropriate in his sole discretion, as provided for in Article IX of the Plan. EX-12 4 eoex12.txt EXHIBIT 12 1 EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of the Company's earnings to fixed charges, on a consolidated basis for the periods indicated:
Year Ended December 31 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2001 2000 1999 1998 1997 1996 - - - - - - - - - - - - - - - - - - - - - - - - - 7.0X 6.7X 6.9X 6.8X 7.3X 8.1X 1/ For purposes of this ratio, earnings have been calculated by adding to income before income taxes the distributed earnings of investees accounted for under the equity method and the amount of fixed charges. Fixed charges consist of interest on all indebtedness, amortization of debt discounts and that portion of rental expense deemed to represent interest. 1/ The ratio for 1996 includes the gain from the sale of the St. Louis Cardinals Major League Baseball Club, which increased income before income taxes by $54.7 million. Excluding this one-time gain, the ratio would have been 7.9X.
EX-13 5 eoex13.txt EXHIBIT 13 1 EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION INTRODUCTION This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity/cash flows of Anheuser-Busch Companies, Inc. for the three-year period ended Dec. 31, 2001. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in this annual report. This discussion contains forward-looking statements regarding the company's expectations concerning its future operations, earnings and prospects. On the date the forward-looking statements are made, the statements represent the company's expectations, but such expectations may change. These expectations involve risks and uncertainties (both favorable and unfavorable) and are based on many assumptions that the company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Accordingly, there can be no assurances that the company's expectations and forward-looking statements will be correct. Important factors that could cause actual results to differ (favorably or unfavorably) from the expectations stated in this discussion include, among others, changes in the pricing environment for the company's products; changes in U.S. demand for malt beverage products; changes in consumer preference for the company's malt beverage products; regulatory or legislative changes; changes in raw materials prices; changes in interest rates; changes in 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. Anheuser-Busch disclaims any obligation to update any of these forward-looking statements. If the company determines to update any forward-looking statement, it will do so publicly. No private statements by the company or its personnel should be interpreted as updating forward-looking statements. OBJECTIVES Anheuser-Busch remains focused on its three major objectives to enhance shareholder value: * Increasing domestic per barrel profitability which, when combined with continued market share growth, will provide the base for solid long-term earnings per share growth. * Profitable expansion of the international beer segment by making selected investments in leading brewers in key international beer growth markets, and building the Budweiser brand worldwide. The company has made significant marketing investments to build Budweiser brand recognition outside the United States and operates breweries in China and the United Kingdom. The company also has a 50% equity position in Grupo Modelo, Mexico's largest brewer and producer of the Corona brand, as well as a 20% equity position in Compania Cervecerias Unidas (CCU), the leading brewer in Chile. * Continued growth in profit and free cash flow in packaging and entertainment operations. Packaging operations provide significant efficiencies, cost savings and quality assurance for domestic beer operations. Entertainment operations enhance the company's corporate image by showcasing Anheuser-Busch's heritage, values, commitment to quality and social responsibility to approximately 21 million visitors annually. 34 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 2 OPERATING RESULTS In a difficult economic environment, Anheuser-Busch continues to realize consistent and dependable earnings growth, and has now achieved thirteen consecutive quarters of strong double-digit earnings per share growth. Anheuser-Busch is a simple, straightforward consumer products company with significant competitive strengths which enable it to achieve these consistently strong results. Strong growth in domestic revenue per barrel has driven significantly enhanced profit margins, increasing return on capital employed another 70 basis points in 2001. In addition, the international beer segment once again made a considerable contribution to earnings per share growth in 2001 (20% plus) through the strong performance of the company's equity partner Grupo Modelo, and significant increases in volume and profits on the sale of Anheuser-Busch products overseas. Comparisons of key operating results for the last three years are summarized in the following tables. - ------------------------------------------------------------------------------------------- COMPARISON OF OPERATING RESULTS ($ IN MILLIONS, EXCEPT PER SHARE) - -------------------------------------------------------------------------------------------
2001 2000 2001 VS. 2000 Gross sales $14,973 $14,534 $439 3.0% Net sales $12,911 $12,499 $412 3.3% Operating income $2,723 $2,495 $228 9.2% Equity income, net of tax $240 $200 $40 20.1% Net income $1,705 $1,552 $153 9.9% Diluted earnings per share $1.89 $1.69 $.20 11.8% - ------------------------------------------------------------------------------------------- 2000 1999 2000 VS. 1999 Gross sales $14,534 $13,915 $619 4.5% Net sales $12,499 $11,895 $604 5.1% Operating income $2,495 $2,302 $193 8.4% Equity income, net of tax $200 $158 $42 27.0% Net income $1,552 $1,402 $150 10.7% Diluted earnings per share $1.69 $1.47 $.22 15.0% - ------------------------------------------------------------------------------------------- 1999 1998 1999 VS. 1998 Gross sales $13,915 $13,343 $572 4.3% Net sales $11,895 $11,380 $515 4.5% Operating income $2,302 $2,125 $177 8.3% Equity income, net of tax $158 $85 $73 85.2% Net income $1,402 $1,233 $169 13.7% Diluted earnings per share $1.47 $1.27 $.20 16.2% - -------------------------------------------------------------------------------------------
BEER VOLUME SALES Total worldwide beer sales volume results for the last three years are summarized in the following table: - ------------------------------------------------------------------------------------------- WORLDWIDE BEER SALES VOLUME (MILLIONS OF BARRELS) - -------------------------------------------------------------------------------------------
2001 2000 CHANGE Domestic 99.5 98.3 1.2% International 7.7 7.3 6.1% --------------------------------------- Worldwide A-B brands 107.2 105.6 1.5% International equity partner brands 17.2 15.7 9.7% (1) --------------------------------------- Total brands 124.4 121.3 2.6% (1) ======================================= (1) Normalized to exclude incremental volume contributed by the 2001 acquisition of CCU, Equity Partner Brands volume increased 4.9%, and Total Brands volume increased 2.0%, for 2001 vs. 2000. - ------------------------------------------------------------------------------------------- 2000 1999 CHANGE Domestic 98.3 95.7 2.7% International 7.3 7.2 1.3% --------------------------------------- Worldwide A-B brands 105.6 102.9 2.6% International equity partner brands 15.7 15.1 3.9% (2) --------------------------------------- Total brands 121.3 118.0 2.8% (2) ======================================= (2) Normalized to exclude 1999 volume related to Anheuser-Busch's previously held equity stake in Antarctica, Equity Partner Brands volume increased 6.2%, and Total Brands volume increased 3.1%, for 2000 vs. 1999. - ------------------------------------------------------------------------------------------- 1999 1998 CHANGE Domestic 95.7 92.7 3.2% International 7.2 7.1 1.2% --------------------------------------- Worldwide A-B brands 102.9 99.8 3.1% International equity partner brands 15.1 11.2 34.7% --------------------------------------- Total brands 118.0 111.0 6.3% ======================================= - -------------------------------------------------------------------------------------------
Worldwide Anheuser-Busch brands volume is comprised of domestic volume and international volume. Domestic volume represents Anheuser-Busch brands 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 breweries in China and the United Kingdom and under various license and contract brewing agreements. Budweiser and other Anheuser-Busch beer brands are sold in more than 80 countries worldwide. Total Brands sales volume combines worldwide Anheuser-Busch brand volume with the company's pro rata share of volume in international equity partners Grupo Modelo and CCU. Total Brands also includes Anheuser-Busch's equity share of former Brazilian brewer Antarctica's beer volume through July 1999. The company sold its equity investment back to Antarctica in July 1999. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 35 3 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION SALES In the fourth quarter of 2001, the company changed its presentation of pass-through finished product delivery costs reimbursed by customers. These items were previously offset for zero impact within Cost of Products and Services. The company now presents these items separately as Sales and Cost of Products and Services. This change has a minor impact on revenue and profit margins growth, and has no impact on cash flow, operating income, net income and earnings per share. For comparability, prior year information has been recast to conform to the 2001 presentation. [SALES* (1997-2001 -- COMPARES GROSS SALES AND NET SALES) -- GRAPH] * THE DIFFERENCE BETWEEN GROSS SALES AND NET SALES REPRESENTS BEER EXCISE TAXES. SALES -- 2001 VS. 2000 Anheuser-Busch achieved record gross sales of $15.0 billion and record net sales of $12.9 billion in 2001, representing increases of 3.0%, and 3.3%, respectively, compared to 2000. These increases were principally due to increased domestic revenue per barrel and higher domestic beer sales volume, plus sales increases from the international beer and entertainment segments. Gross and net sales include pass-through finished goods delivery costs reimbursed by customers of $266.8 million. The difference between gross and net sales represents beer excise taxes of $2.1 billion. Domestic revenue per barrel growth exceeded expectations throughout 2001, growing 3.0% for the full year. This growth reflects the continued favorable pricing environment and Anheuser-Busch's successful strategy of balancing pricing increases and market share gains. Revenue per barrel has now increased by 2% or more for 13 consecutive quarters, including increases of over 2.5% for the last six quarters. The consistent increases in revenue per barrel over the past three years reflect the company's sharp focus on beer profit margin growth and earnings. For 2002, the outlook for continued increases in revenue per barrel remains favorable. Consistent with the company's practice of implementing annual revenue enhancement initiatives in two phases, the company successfully implemented the first stage of planned 2002 revenue enhancements at the beginning of October 2001 in markets representing just over 40% of domestic volume. The company implemented the second stage of pricing actions on another 25% of domestic volume in February 2002. These revenue initiatives have again been tailored to specific markets, brands and packages and consist primarily of front-line price increases, but also include discount reductions in some markets. Initial results are encouraging, consistent with results seen in recent years. Domestic beer sales-to-wholesalers volume increased 1.2% for full year 2001, to 99.5 million barrels, compared to prior year. Wholesaler sales-to-retailers grew 1.8% for the full year 2001. The Bud Family led the increases in sales to wholesalers and to retailers. Bud Light continued its strong sales performance in 2001 and is now the No. 1 selling beer brand in the United States, followed by Budweiser, which continues to be the No. 1 beer brand in the world. Anheuser-Busch's 2001 success was made possible by the company's ability to capitalize on continued favorable domestic industry fundamentals and the ongoing strong performance by our international beer segment. Gross and operating profit margins increased 100 and 110 basis points for the year, respectively, compared to 2000. The company has the highest quality products in the industry, which, in conjunction with brand strength and successful pricing strategies, provides a solid foundation for future growth. The company expects to again accomplish its double-digit earnings per share growth objective in 2002, with a current target of 10% to 12% growth. Longer-term, the company remains confident in its ability to consistently achieve double-digit earnings per share growth. Worldwide Anheuser-Busch brand sales volume for 2001 grew 1.5%, to 107.2 million barrels, compared to full year 2000. Total Brands sales volume was 124.4 million barrels for the year, up 2.6%. International beer volume, excluding Modelo and CCU, grew 6.1% for the full year, to 7.7 million barrels, due primarily to solid volume growth in Canada and China. The company's domestic market share (excluding exports) for 2001 was 48.8%, an increase of 0.3 percentage points over 2000 market share of 48.5%. Domestic market share is determined based on industry sales estimates provided by the Beer Institute and the U.S. Department of Commerce. The company has led the U.S. brewing industry in sales volume and market share since 1957. 36 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 4 SALES -- 2000 VS. 1999 Anheuser-Busch achieved gross sales of $14.5 billion and net sales of $12.5 billion in 2000, representing increases of 4.5% and 5.1%, respectively, compared to 1999. The primary factors responsible for these increases were increased domestic revenue per barrel and higher domestic beer sales volume, partially offset by lower international beer sales resulting from the conversion of the company's 90%-owned Japan joint venture into an exclusive licensing arrangement. Gross and net sales include pass-through finished goods delivery costs reimbursed by customers of $237.6 million. The difference between gross and net sales in 2000 is beer excise taxes of $2.03 billion. Domestic revenue per barrel grew 2.5% for the full year 2000 compared to 1999. Domestic beer sales-to-wholesalers increased 2.7%, to 98.3 million barrels, for full year 2000. Domestic volume growth was led by the Bud Family, with Bud Light registering double-digit growth. Domestic sales-to-retailers were up 2.5% for 2000 compared to 1999. Worldwide Anheuser-Busch brand sales volume grew to 105.6 million barrels, up 2.6% for 2000 compared to 1999. Total Brands sales volume was 121.3 million barrels, up 2.8% for the year. Normalized to exclude 1999 volume related to Anheuser-Busch's previously held equity stake in Antarctica, equity partner volume increased 6.2% for the year, and Total Brands sales volume increased 3.1%. The company's reported domestic market share (excluding exports) for 2000 was 48.5%, an increase of 1.0 share points over 1999 market share of 47.5%. Industry estimates provided by the Beer Institute for market share calculations were not adjusted for the impact of a wholesaler inventory reduction initiated by Miller Brewing Company in the fourth quarter of 2000. International beer volume (excluding foreign equity investment volume) grew 1.3% in 2000, due primarily to growth in Canada and China, partially offset by lower volume in the United Kingdom. SALES -- 1999 VS. 1998 Anheuser-Busch achieved gross sales of $13.9 billion and net sales of $11.9 billion in 1999, increasing over 1998 amounts by 4.3% and 4.5%, respectively. These increases are primarily due to higher domestic beer volume and higher revenue per barrel. Gross and net sales include pass-through finished goods delivery costs reimbursed by customers of $191.2 million. The difference between gross and net sales for 1999 is beer excise taxes of $2.02 billion. Domestic revenue per barrel grew nearly 3% in 1999 compared to 1998. Domestic beer shipments-to-wholesalers grew to 95.7 million barrels in 1999, an increase of 3.0 million barrels or 3.2% over 1998. Each of the company's core brand families contributed to domestic volume growth. Wholesaler sales-to-retailers grew 3.3% for full year 1999. Worldwide Anheuser-Busch beer brands shipments grew to 102.9 million barrels for 1999, up 3.1% compared to 1998, the first time in history a company has sold over 100 million barrels of its beer brands in a single year. Total Brands sales volume in 1999 was 118.0 million barrels, up 6.3% over 1998. The company's domestic market share (excluding exports) for 1999 was 47.5%, an increase of 0.7 percentage points over 1998 market share of 46.8%. International beer volume (excluding foreign equity investment volume) was up 1.2% for the year 1999 compared to 1998, to 7.2 million barrels. The increase was due primarily to gains in the Americas, Ireland and Continental Europe, partially offset by weakness in Asia (principally in Japan), and lower sales in the United Kingdom. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 37 5 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION COST OF PRODUCTS AND SERVICES The company continuously strives to drive costs out of its system. Brewery modernizations have yielded long-term savings through reduced beer packaging and shipping costs and reduced maintenance and equipment replacement costs. The company's focused production methods and Wholesaler Support Centers concentrate small-volume brand and package production at three breweries to create production efficiencies, reduce costs and enhance responsiveness to changing consumer brand and package preferences. The company also works to reduce distribution costs through better systemwide coordination with its network of independent wholesalers. Cost of products and services includes pass-through finished goods delivery costs reimbursed by customers of $266.8 million in 2001, $237.6 million in 2000 and $191.2 million in 1999. Cost of products and services was $7.95 billion for 2001, an increase of 1.5%, compared to 2000. The increase in cost of products and services is principally due to higher domestic beer volume, higher energy costs and increased packaging material costs, including the impact of start-up costs related to the company's bottle manufacturing operation in Houston, Texas. Gross profit as a percentage of net sales was 38.4% for 2001, an increase of 100 basis points compared to 2000, principally reflecting higher domestic beer margins. Cost of products and services was $7.83 billion for 2000, an increase of 5.2%, compared to 1999. The increase in cost of products and services is principally due to higher domestic beer volume, and increased costs at the company's entertainment, can manufacturing and commodity aluminum recycling businesses. Gross profit as a percentage of net sales was 37.4% for 2000, even compared to 1999. Cost of products and services was $7.45 billion in 1999, an increase of 2.0%, vs. 1998. The increase in the cost of products and services in 1999 is primarily due to higher domestic beer volume and higher costs at the company's packaging operations. Gross profit as a percentage of net sales for 1999 was 37.4%, an increase of 150 basis points vs. 1998. MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES Marketing, distribution and administrative expenses for 2001 were $2.26 billion, an increase of 3.7% vs. 2000. The increase in these expenses in 2001 is principally due to higher domestic beer marketing costs, higher distribution costs related to the acquisition of a wholesaler in California, and higher administrative costs. Marketing, distribution and administrative expenses for 2000 were $2.17 billion, an increase of 1.3% vs. 1999. The increase is due to higher marketing expenses for the domestic beer segment, higher one-time marketing costs for the entertainment segment related to the opening of the Discovery Cove park and higher general and administrative costs, significantly offset by lower international beer marketing expenses in Japan due to converting the company's joint venture to an exclusive licensing agreement. Marketing, distribution and administrative expenses for 1999 were $2.15 billion, an increase of 9.7% compared with 1998. The increase is primarily attributable to higher domestic marketing and sales promotion spending in support of the Bud Family, increased spending on consumer awareness and education programs and higher general and administrative costs. OPERATING INCOME Operating income represents the measure of the company's financial performance before net interest cost, other non-operating items and equity income. Operating income increased 9.2% vs. 2000, reflecting higher revenue per barrel and increased domestic beer sales volume, along with improved results for international beer, packaging and entertainment operations. Operating profit for international beer increased 76% for 2001 due to continued strong volume gains in China and Canada. The company's operations in the United Kingdom and Ireland also contributed to the profit increase. [OPERATING INCOME (1997-2001) -- GRAPH] 38 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 6 Operating profits for the packaging segment were up 6% for the year, reflecting reduced manufacturing costs partially offset by lower soft drink can pricing and the impact of start-up costs related to the company's bottle manufacturing operation in Houston, Texas. This comparison excludes an unfavorable adjustment related to the company's label manufacturing business in 2000. Reported operating profits for the packaging segment increased 22% in 2001. Entertainment segment operating profits for the year increased 14% vs. the prior year primarily due to increased attendance, increased in-park spending and a full year of Discovery Cove operations in 2001 vs. a partial year in 2000. These results exclude the impact of SeaWorld Cleveland operating results and related gain on the sale of the park. Reported operating profits for the entertainment segment (including SeaWorld Cleveland) increased 29%. Operating income in 2000 was $2.49 billion, an increase of 8.4% compared to 1999, primarily due to the domestic beer company's strong revenue per barrel and volume performance as well as improved results from international beer operations. The international beer segment's net income in 2000 increased 52% compared to 1999, due to a strong performance by Grupo Modelo and improved international operating results. International beer operating profits in 2000, excluding Modelo, improved compared to 1999 on volume gains in China and, due to the conversion of the company's joint venture into a licensing agreement, lower operating costs in Japan. Packaging segment operating profits were down 41% for 2000 compared to 1999, reflecting lower conversion pricing on Metal Container's beer and soft drink can sales and a $14 million adjustment related to prior year accounting errors at the company's label manufacturing business in Clarksville, Tenn. Excluding the label manufacturing adjustment, operating profits for the packaging segment were down 32% for the year. Entertainment segment operating results, excluding start-up costs associated with Discovery Cove, which began operations in July 2000, were up 7.6% for 2000 due primarily to strong attendance in the Florida market. Reported operating profits for the entertainment segment increased 2.3% for the year. Operating income for 1999 was $2.30 billion, an increase of $177 million, or 8.3%, compared to 1998. The increase in operating income for the year is primarily due to strong domestic beer performance driven by higher domestic beer sales volume and revenue per barrel. Net income for Anheuser-Busch's international beer segment was up 59% in 1999 due to Modelo's strong performance and Anheuser-Busch's increased ownership level in Modelo resulting from the purchase of an additional 13.25% equity interest in September 1998. However, international beer operating results, which exclude Modelo, declined for the year to a loss of $19.5 million, including one-time costs associated with the termination of a production joint venture in Brazil, the impact of a bottle recall in Europe and the conversion of the joint venture in Japan into a license agreement. Performance of the company's packaging operations in 1999 was level with 1998. Theme park operating results for 1999 were up slightly from the prior year, excluding start-up costs for Discovery Cove. Including Discovery Cove, reported operating results for the entertainment segment declined 4% vs. prior year. NET INTEREST COST Net interest cost (interest expense less interest income) was $360.1 million for 2001, $347.1 million for 2000 and $303.5 million for 1999, representing increases of 3.7%, 14.4%, and 6.2%, respectively, compared to prior years. These increases primarily result from higher average outstanding debt balances compared to prior years. The impact of a higher debt balance was partially offset by lower interest rates throughout 2001 and 1999. Average interest rates increased in 2000. See the Liquidity and Cash Flows section of this discussion for additional information. INTEREST CAPITALIZED Interest capitalized was $26.9 million in 2001, $33.3 million in 2000 and $18.2 million in 1999. The amount of interest capitalized fluctuates depending on construction-in-progress balances, which are impacted by the timing of capital spending and project completion dates. OTHER INCOME/EXPENSE, NET Other income/expense, net includes earnings from the company's limited partner basis investments in beer wholesalers, in addition to other items of a nonoperating nature that do not have a material impact on the company's consolidated results of operations, either individually or in total. The company had net other expense of $12.2 million in 2001, $1.0 million in 2000 and $9.4 million in 1999. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 39 7 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION EQUITY INCOME, NET OF TAX Equity income, net of tax, increased 20%, to $240.1 million for 2001, compared with 2000 equity income of $200 million. Equity income in 2000 represents a 27% increase compared to 1999 equity income of $157.5 million, which increased 85% compared to 1998. These increases are primarily based on Grupo Modelo's strong underlying pricing and volume performance. The increase in equity income in 1999 vs. 1998 was favorably impacted by Anheuser-Busch's increased ownership level throughout 1999 and the adverse impact of hyperinflation accounting for the Mexican peso in 1998. NET INCOME The company earned net income of $1.7 billion in 2001, an increase of 9.9% over $1.55 billion in 2000. Net income for 2000 increased $149.4 million, or 10.7%, vs. 1999 net income of $1.40 billion, which increased 13.7%, vs. 1998. The company's effective tax rate was 38.4% in 2001 compared to 38.0% in 2000 and 1999. The increase in 2001 is primarily due to the write-off of goodwill associated with the sale of SeaWorld Cleveland. DILUTED EARNINGS PER SHARE Diluted earnings per share were $1.89 for 2001, an increase of 11.8% vs. 2000 earnings per share of $1.69. Diluted earnings per share for 2000 represent an increase of 15% over 1999 earnings per share of $1.47, which had increased $.20, or 16.2%, compared to 1998. Diluted earnings per share benefit from the company's ongoing share repurchase program. The company repurchased 28.2 million common shares in both 2001 and 2000, and 37.8 million in 1999. See Note 7 for a complete summary of common stock activity. [DILUTED EARNINGS PER SHARE (1997-2001) -- GRAPH] 1 BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE. EMPLOYEE-RELATED COSTS Employee-related costs totaled $1.98 billion in 2001, an increase of 3.6%, vs. 2000 costs of $1.92 billion. Employee-related costs for 2000 increased 2.0%, vs. 1999 costs of $1.88 billion, which increased 2.2% compared to 1998. The changes in employee-related costs reflect normal increases in salaries, wages and benefit levels. Salaries and wages comprise the majority of employee-related costs and totaled $1.61 billion in 2001, an increase of 1.8% vs. 2000. Salaries and wages totaled $1.58 billion in 2000, an increase of 2.6%, compared to 1999 costs of $1.54 billion, which increased 1.4% vs. 1998. The remainder of employee-related costs consists of pension, life insurance, health care benefits and payroll taxes. The company had 23,432 full-time employees in 2001. Full-time employees numbered 23,725 and 23,645 in 2000 and 1999, respectively. [EMPLOYEE-RELATED COSTS (1997-2001) -- GRAPH] TAXES In addition to income taxes, the company is significantly impacted by other federal, state and local taxes, including beer excise taxes. Taxes applicable to 2001 operations (not including the many indirect taxes included in materials and services purchased) totaled $3.2 billion, an increase of 3.9% vs. total taxes in 2000 of $3.1 billion, and highlight the burden of taxation on the company and the brewing industry in general. Taxes in 2000 increased 2.7% compared to 1999 total taxes of $3.0 billion, which increased 3.9% compared to 1998. 40 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 8 LIQUIDITY AND CAPITAL RESOURCES Anheuser-Busch's strong financial profile allows it to pursue its growth strategies while providing substantial direct returns to shareholders. Accordingly, the company has established well-defined priorities for its operating cash flow: * Reinvest in core businesses to achieve profitable growth. To enhance shareholder value, the company will continue to make investments to improve efficiency and capacity in its existing operations, and intends to make selected equity investments in leading international brewers in higher growth markets. * Make substantial cash payments directly to shareholders through consistent dividend growth and the repurchase of common shares. The company has paid cash dividends in each of the last 68 years, and has repurchased approximately 3% of outstanding shares annually for over 10 years. Anheuser-Busch manages its cash flow to total debt ratio to maintain its strong Single A credit ratings of A1 and A+, from Moody's and Standard and Poor's, respectively. The company considers its ratio of cash flow to total debt to be a key measure of ongoing liquidity, and targets a ratio in the 30% to 40% range. The company uses its share repurchase program to manage its leverage position. The cash flow to total debt ratio was 38.5% in 2001, 41.6% in 2000 and 41.8% in 1999. [OPERATING CASH FLOW (1997-2001 -- BEFORE CHANGE IN WORKING CAPITAL) -- GRAPH] SOURCES AND USES OF CASH The company's primary sources of liquidity are cash provided from operations and financing activities. Principal uses of cash are capital expenditures, share repurchases, dividends and business investments. The company uses debt financing to lower its overall cost of capital, thereby increasing the company's return on equity. Information on the company's consolidated cash flows (categorized by operating activities, financing activities and investing activities) for the years 2001, 2000 and 1999 is presented in the Consolidated Statement of Cash Flows and Note 11. Cash flow from operating activities is projected to exceed the company's funding requirements for anticipated capital expenditures. However, the combination of capital spending, dividend payments and share repurchases, plus possible additional investments in international brewers, are likely to require external financing. The nature, extent and timing of external financing will vary depending upon the company's evaluation of existing market conditions and other economic factors. [RATIO OF CASH FLOW TO TOTAL DEBT (1997-2001) -- GRAPH] The company typically operates at a working capital deficit as it manages its cash flows. The company had working capital deficits of $181.9 million, $127.8 million and $350.4 million at Dec. 31, 2001, 2000 and 1999, respectively. The company's fixed charge coverage ratio was 7.0X, 6.7X and 6.9X for the years ended Dec. 31, 2001, 2000 and 1999, respectively. The company's 9% debentures due 2009 and the ESOP debt guarantee that ends in 2004 (both of which are included in debt on the consolidated balance sheet) contain repayment acceleration clauses that are triggered by a decline in credit rating below investment grade. In the case of the 9% debentures, the downgrade must coincide with certain other events. The total outstanding balance at Dec. 31, 2001 for this debt is $482.2 million. Anheuser-Busch considers the likelihood of a credit rating downgrade below investment grade to be low. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 41 9 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION Certain equity accounting method beer wholesalers have long-term debt obligations totaling $23.6 million as of Dec. 31, 2001 that are not reflected on Anheuser-Busch's balance sheet. The debt is non-recourse to, and is not guaranteed by, the company. The company occasionally provides small-scale loan guarantees for beer wholesalers to assist them in obtaining long-term bank financing. The duration of these guarantees varies. At Dec. 31, 2001, total outstanding guarantees were $2 million. CAPITAL EXPENDITURES During the next five years, the company will continue capital expenditure programs designed to take advantage of growth and productivity improvement opportunities for its beer, packaging and entertainment operations. The company has a formal and intensive review procedure for the authorization of capital expenditures. The most important financial measure of acceptability of a discretionary capital project is its projected discounted cash flow return on investment exceeding the company's cost of capital. Total capital expenditures amounted to $1.0 billion in 2001 and $1.1 billion in 2000. Capital expenditures over the past five years totaled $5.0 billion. The company expects capital expenditures in 2002 of $900 to $950 million and is projecting capital spending during the five-year period 2002 -- 2006 of approximately $4.5 billion. [CAPITAL EXPENDITURES/DEPRECIATION & AMORTIZATION (1997-2001) -- GRAPH] SHARE REPURCHASE See Note 7 for a discussion of share repurchase activity. DIVIDENDS Cash dividends paid to shareholders were $614.1 million in 2001 and $571.0 million in 2000. Dividends are paid in the months of March, June, September and December of each year. In the third quarter 2001, effective with the September dividend, the Board of Directors increased the quarterly dividend rate by 9.1%, from $.165 to $.18 per share. This increased annual dividends per share to $.69 in 2001, a 9.5% increase compared with $.63 per share in 2000. In 2000, dividends were $.15 per share for the first two quarters and $.165 per share for the last two quarters. [NET INCOME/DIVIDENDS (1997-2001) -- GRAPH] 1 BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE. FINANCING ACTIVITIES The company utilizes Securities and Exchange Commission "shelf" registration statements to provide flexibility and efficiency when obtaining long-term financing. At Dec. 31, 2001, a total of $550 million of debt was available for issuance under an existing registration. The company's net debt balance increased a total of $621.2 million in 2001, compared to a total increase of $239.8 million in 2000. Debt issuances were $1.24 billion and $803.9 million in 2001 and 2000, respectively. Issued debt consisted primarily of fixed interest rate debentures, long-term notes and medium-term notes. 42 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 10 Debt reductions were $616.1 million and $564.1 million in 2001 and 2000, respectively. Reductions in both years included commercial paper, medium-term notes and the ESOP debt guarantee. Also, long-term notes and dollar/yen dual-currency notes matured in 2001. In addition to long-term debt financing, the company has access to the short-term capital market through the issuance of commercial paper and potential utilization of a $2 billion revolving bank credit agreement that expires June 2005. The credit agreement provides the company with an immediate and continuing source of liquidity. No borrowings have been made under the credit agreement since its inception. See Note 4 for additional information regarding the company's debt portfolio. COMMON STOCK At Dec. 31, 2001, registered common stock shareholders numbered 57,347 compared with 58,614 at the end of 2000. See Note 7 for a summary of common stock activity. PRICE RANGE OF COMMON STOCK The company's common stock is listed on the New York Stock Exchange under the symbol "BUD." The following table summarizes 2001 and 2000 quarterly high and low closing prices for BUD. The closing price of the company's common stock at Dec. 31, 2001 and 2000 was $45.21 and $45.50, respectively. The book value of each common share of stock at Dec. 31, 2001 was $4.62, compared to $4.57 at Dec. 31, 2000. - ------------------------------------------------------------------------------ PRICE RANGE OF ANHEUSER-BUSCH COMMON STOCK (BUD) - ------------------------------------------------------------------------------
2001 2000 QUARTER HIGH LOW HIGH LOW First 46.46 38.50 38.06 27.47 Second 46.45 38.88 40.66 32.69 Third 44.49 39.75 44.31 38.13 Fourth 46.51 39.70 49.81 39.63 - ------------------------------------------------------------------------------
KEY ACCOUNTING POLICIES Outlined below are accounting polices Anheuser-Busch believes are key to a full understanding of the company's operations and financial results. All the company's accounting policies are in compliance with U.S. generally accepted accounting principles (GAAP). Revenue Recognition -- Revenue is recognized when title transfers or ------------------- services are rendered to unaffiliated customers. The company's primary revenue source is domestic beer operations. For malt beverage products shipped to independent wholesalers, title transfers when product is shipped from the company's breweries. The company does not recognize any revenue when independent wholesalers sell products to retail customers. For company-owned wholesalers, title transfers when products are delivered to retail customers. For aluminum cans, title transfers on receipt of cans. For theme parks, revenue is recognized when a customer visits a park location. Equity Method Accounting -- Anheuser-Busch generally applies the equity ------------------------ method of accounting to 20% - 50%-owned investments. Equity accounting involves recognizing the company's pro rata share of the earnings of investee companies in the Income Statement when reported by those companies. Cash is received and recognized only when distributed by the investee company. As an equity investor, Anheuser-Busch does not control the amount and timing of cash distributions by investees. In 2001, Anheuser-Busch recognized equity income of $240.1 million and received cash distributions from investees of $25.8 million. Derivatives -- The company's use of derivative financial instruments is ----------- limited to hedges of either firm commitments or anticipated transactions that expose Anheuser-Busch to price fluctuations in the ordinary course of business. Company policy expressly prohibits trading or speculating with derivatives. Accordingly, all the company's derivative holdings are designated as hedges and qualify for hedge accounting under FAS 133, "Accounting for Derivatives and Related Hedging Activity." Advertising and Promotional Costs -- Advertising and promotional --------------------------------- activities are important elements of Anheuser-Busch's strategy and represent significant annual expenditures by the company. The company either expenses these costs as incurred, or accumulates and expenses them the first time the advertisement is shown. The company recognized $722 million in advertising and promotional expenses in 2001. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 43 11 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION RISK MANAGEMENT Anheuser-Busch is exposed to foreign currency exchange, interest rate and commodity price risks. These exposures primarily relate to beer sales to foreign customers, purchases from foreign suppliers, royalty receipts from foreign license and contract brewers, acquisition of raw materials from both domestic and foreign suppliers, and changes in interest rates. The company utilizes derivative financial instruments, including forward exchange contracts, futures contracts, swaps and purchased options and collars to manage certain of these exposures. Anheuser-Busch has well-established policies and procedures governing the use of derivatives. The company hedges only firm commitments or anticipated transactions in the ordinary course of business and corporate policy prohibits the use of derivatives for speculation, including the sale of freestanding instruments. The company neither holds nor issues financial instruments for trading purposes. Specific hedging strategies depend on several factors, including the magnitude and volatility of the exposure, cost and availability of appropriate hedging instruments, the anticipated time horizon, commodity basis exposure, opportunity cost, and the nature of the underlying hedged item. The company's overall risk management goal is to strike a balance between managing its exposure to market volatility while obtaining the most favorable transaction costs possible. Derivatives are either exchange-traded instruments that are highly liquid, or over-the-counter instruments transacted with highly-rated financial institutions. No credit loss is anticipated, as the counterparties to over-the-counter instruments generally have long-term credit ratings from Moody's or Standard & Poor's no lower than A1 or A+, respectively. Additionally, counterparty fair value positions favorable to Anheuser-Busch and in excess of certain thresholds are collateralized with cash, U.S. Treasury securities or letters of credit. Anheuser-Busch has reciprocal collateralization responsibilities for fair value positions unfavorable to the company and in excess of certain thresholds. At Dec. 31, 2001, the company held zero counterparty collateral and had none outstanding. No collateral was received or provided during the year. The company monitors the effectiveness of its hedging structures, based either on cash offset between changes in the value of the underlying hedged exposure and changes in the fair value of the derivative, or by ongoing correlation between the price of the underlying hedged exposure and the pricing upon which the derivative is based. The fair value of derivatives is the amount the company would pay or receive when terminating any contracts. Following is a sensitivity analysis indicating potential unfavorable changes in the fair value of the company's derivative holdings under certain market movements discussed below. The company uses value-at-risk (VAR) analysis for foreign currency and interest rate exposures, and sensitivity analysis for commodity price exposures. VAR forecasts fair value changes using a statistical model (Monte Carlo simulation method) that incorporates historical correlations among various currencies and interest rates. The VAR model assumes the company could liquidate its currency and interest rate positions in a single day (one-day holding period). The volatility figures provided represent the maximum one-day loss the company could experience on each portfolio for 19 out of every 20 trading days (95% confidence level), based on history. The sensitivity analysis for commodities reflects the impact of a hypothetical 10% adverse change in the market price for the company's underlying commodities. - ------------------------------------------------------------------------------ ESTIMATED FAIR VALUE VOLATILITY AT DEC. 31, 2001 (IN MILLIONS) - ------------------------------------------------------------------------------ Foreign Currency Risk (VAR): Forwards, Options $1.8 Interest Rate Risk (VAR): Swaps $1.2 Commodity Price Risk (Sensitivity): Futures, Swaps, Options $41.4 - ------------------------------------------------------------------------------
44 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 12 The volatility of foreign currencies, interest rates and commodity prices is dependent on many factors that cannot be forecasted with accuracy. Therefore, changes in fair value over time could differ substantially from the illustration. Additionally, the preceding derivatives volatility analysis ignores changes in the value of the underlying hedged transactions. Because the company does not hold or trade derivatives for speculation or profit, it seeks to establish only highly effective hedging relationships and therefore expects offsetting impacts between changes in derivative values and changes in the pricing of the underlying hedged transactions. The company adopted FAS 133, "Accounting for Derivative Instruments and Hedging Activity" on Jan. 1, 2001. FAS 133 requires all derivatives to be reported on the balance sheet at fair value, with changes in fair value recognized either in earnings or equity, depending on the nature of the underlying transaction and how effective the derivative is at offsetting price movements in the underlying exposure. All of the company's existing derivative positions qualified for hedge accounting under FAS 133, and the impact of adoption was not material. The company made no substantive changes to its risk management strategy as a result of adopting FAS 133. See Notes 1 and 3 for information regarding derivatives accounting policies and the company's derivatives portfolio. SIGNIFICANT NON-U.S. EQUITY INVESTMENTS GRUPO MODELO From 1993 to 1998, the company accumulated a 50.2% direct and indirect equity interest in Diblo, S.A. de C.V., the operating subsidiary of Grupo Modelo, S.A. de C.V., Mexico's largest brewer and producer of the Corona brand. Anheuser-Busch's total initial investment in Modelo was $1.6 billion. Anheuser-Busch does not have voting or other effective control of either Grupo Modelo or Diblo and, accordingly, the company accounts for its investment on the equity basis. The company has applied the equity method of accounting since its ownership first exceeded 20% in May 1997. The economic benefit of the company's Modelo investment can be measured in two ways -- Anheuser-Busch's share in the earnings of Modelo (equity income) and the excess of the fair value of the investment over its cost. The excess of fair value over the company's cost, based on Grupo Modelo's closing stock price on the Mexican stock exchange at Dec. 31, 2001, was $3.1 billion. Although this amount is appropriately not reflected in the company's income statement or balance sheet, it represents economic value to Anheuser-Busch and its shareholders. CCU During the first quarter of 2001, the company purchased a 20% equity interest in Compania Cervecerias Unidas S.A. (CCU), the largest brewer in Chile, for $321 million. Anheuser-Busch has partnered with CCU in Argentina for six years through the company's equity ownership in CCU-Argentina, a CCU subsidiary that is licensed to brew Budweiser for Argentina, Chile, Brazil and other Latin American markets. The investment in CCU is consistent with Anheuser-Busch's strategy to expand the company's presence in Latin America. Also see Note 2. OTHER MATTERS RELATED PARTY TRANSACTIONS The company does not engage in any material transactions with its officers, directors, or companies affiliated with its directors. All related party transactions are conducted on an arm's length basis, with terms and conditions equivalent to those that would be available in transactions with unrelated parties. Also see the Anheuser-Busch Proxy Statement for a discussion of certain related party transactions. STATUS OF TEAMSTERS LABOR CONTRACT In May 2001, the company and the Teamsters reached agreement on a new labor agreement covering Teamster-represented employees at all of the company's domestic U.S. breweries through February 2004. The terms of the agreement are essentially the same as those unilaterally implemented by the company in September 1998 upon reaching impasse in negotiations, except an additional year was added to the term of the contract. The contract includes wage and benefit increases, as well as provisions to support productivity improvement, promote workplace flexibility, reduce absenteeism, improve the grievance procedure and institute a more effective drug-testing program. Additionally, Anheuser-Busch has reaffirmed its commitment to keep all 12 of its U.S. breweries open during the life of the contract, barring an unforseen event, providing its employees with unprecedented job security. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 45 13 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION SEAWORLD CLEVELAND In February 2001, the company sold its SeaWorld Cleveland adventure park to Six Flags, Inc. for $110 million in cash, and recognized a pretax gain of $17.8 million in the first quarter 2001. The sale did not include killer whales, dolphins or any rights to the SeaWorld name. The sale had only an insignificant ($.005 per share after-tax) impact on earnings per share growth in 2001. Anheuser-Busch continues to operate and support its remaining U.S. theme parks. STOCK SPLIT The company distributed a two-for-one stock split on Sept. 18, 2000. All historical share and per share information in the Annual Report has been restated to reflect the impact of the stock split. ENVIRONMENTAL ISSUES The company is strongly committed to environmental protection. Its Environmental Management System provides specific guidance for how the environment must be factored into business decisions and mandates special consideration of environmental issues in conjunction with other business issues when any of the company's facilities or business units plan capital projects or changes in processes. Anheuser-Busch also encourages its suppliers to adopt similar environmental management practices and policies. The company is subject to federal, state and local environmental protection laws and regulations and is operating within such laws or is taking action aimed at assuring compliance with such laws and regulations. Compliance with these laws and regulations is not expected to materially affect the company's competitive position. It is the opinion of management that potential costs, either individually or in the aggregate, related to any Environmental Protection Agency designated cleanup sites for which Anheuser-Busch has been identified as a Potentially Responsible Party will not materially affect the company's financial position, results of operations, or liquidity. 46 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 14 MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Anheuser-Busch Companies is responsible for the preparation and presentation of the financial statements and other financial information included in this annual report. Management is also responsible for the reasonableness of estimates and judgments inherent in the preparation of the financial statements. These statements are prepared in accordance with accounting principles generally accepted in the United States. It is management's responsibility to ensure the company maintains accounting and reporting systems, supported by a system of internal accounting controls, designed to provide reasonable assurance as to the integrity of the underlying financial records and the protection of assets. These systems include written policies and procedures, selection and training of qualified personnel, organizational segregation of duties and a program of internal reviews and appropriate follow-up. Management believes the company's systems are adequate to provide reasonable assurances that assets are safeguarded against loss from unauthorized use or disposition and financial records are reliable for preparing financial statements. During 2001, the company's internal auditors, in conjunction with PricewaterhouseCoopers LLP, the company's independent accountants, performed a comprehensive review of the adequacy of the company's internal accounting control system. Based on that comprehensive review, it is management's opinion that the company has an effective system of internal accounting control. The Board of Directors is responsible for ensuring the independence and qualifications of Audit Committee members under applicable New York Stock Exchange guidelines. The Audit Committee of the Board of Directors, which consists of five non-management directors, oversees the company's financial reporting and internal control systems, recommends selection of the company's independent accountants to the Board of Directors and meets with management, the independent accountants and internal auditors to review auditing and financial reporting matters. The Committee held five meetings during 2001. The Audit Committee report for 2001 can be found in the company's Proxy Statement. PricewaterhouseCoopers LLP is responsible for conducting an independent examination of the company's financial statements in accordance with auditing standards generally accepted in the United States, and expressing an opinion as to whether the financial statements fairly present the company's financial position, operating results, cash flows and changes in shareholders equity. REPORT OF INDEPENDENT ACCOUNTANTS 800 Market Street St. Louis, MO 63101 [PRICEWATERHOUSECOOPERS LOGO] February 5, 2002 To the Shareholders and Board of Directors of Anheuser-Busch Companies, Inc. We have audited the accompanying Consolidated Balance Sheet of Anheuser-Busch Companies, Inc. and its subsidiaries as of Dec. 31, 2001 and 2000, and the related Consolidated Statements of Income, Changes in Shareholders Equity and Cash Flows for each of the three years in the period ended Dec. 31, 2001. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the Consolidated Financial Statements audited by us present fairly, in all material respects, the financial position of Anheuser-Busch Companies, Inc. and its subsidiaries at Dec. 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended Dec. 31, 2001, in conformity with accounting principles generally accepted in the United States of America. /s/PricewaterhouseCoopers LLP ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 47 15 C O N S O L I D A T E D B A L A N C E S H E E T Anheuser-Busch Companies and Subsidiaries
- ------------------------------------------------------------------------------------------------------------ YEAR ENDED DEC. 31 (IN MILLIONS) 2001 2000 - ------------------------------------------------------------------------------------------------------------ ASSETS Current Assets: Cash $ 162.6 $ 159.9 Accounts and notes receivable 620.9 600.4 Inventories: Raw materials and supplies 352.4 347.3 Work in process 79.8 82.9 Finished goods 159.6 178.1 Total inventories 591.8 608.3 Other current assets 175.1 179.3 ----------------------------------- Total current assets 1,550.4 1,547.9 Investments in affiliated companies 2,772.1 2,207.4 Other assets 1,149.5 1,073.6 Plant and equipment, net 8,390.0 8,243.8 ----------------------------------- TOTAL ASSETS $13,862.0 $13,072.7 =================================== LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities: Accounts payable $ 945.0 $ 940.8 Accrued salaries, wages and benefits 255.8 276.4 Accrued taxes 156.8 127.4 Other current liabilities 374.7 331.1 ----------------------------------- Total current liabilities 1,732.3 1,675.7 ----------------------------------- Postretirement benefits 482.9 492.7 ----------------------------------- Debt 5,983.9 5,362.7 ----------------------------------- Deferred income taxes 1,288.6 1,372.9 ----------------------------------- Other long-term liabilities 312.8 39.8 ----------------------------------- Shareholders Equity: Common stock, $1.00 par value, authorized 1.6 billion shares 1,445.2 1,441.5 Capital in excess of par value 810.2 725.3 Retained earnings 11,258.2 10,164.4 Treasury stock, at cost (8,981.6) (7,817.8) Accumulated other comprehensive income (338.3) (212.3) ESOP debt guarantee (132.2) (172.2) ----------------------------------- Total Shareholders Equity 4,061.5 4,128.9 ----------------------------------- Commitments and contingencies -- -- ----------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $13,862.0 $13,072.7 =================================== The Notes on pages 52-63 of this report are an integral component of the company's Consolidated Financial Statements.
48 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 16 C O N S O L I D A T E D S T A T E M E N T O F I N C O M E Anheuser-Busch Companies and Subsidiaries
- ----------------------------------------------------------------------------------------------------------------- YEAR ENDED DEC. 31 (IN MILLIONS, EXCEPT PER SHARE) 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------- Sales $14,973.0 $14,534.2 $13,914.5 Excise taxes (2,061.5) (2,034.8) (2,019.6) ---------------------------------------------- Net sales 12,911.5 12,499.4 11,894.9 Cost of products and services (7,950.4) (7,829.9) (7,445.6) ---------------------------------------------- Gross profit 4,961.1 4,669.5 4,449.3 Marketing, distribution and administrative expenses (2,255.9) (2,174.8) (2,147.0) Gain on sale of SeaWorld Cleveland 17.8 -- -- ---------------------------------------------- Operating income 2,723.0 2,494.7 2,302.3 Interest expense (361.2) (348.2) (307.8) Interest capitalized 26.9 33.3 18.2 Interest income 1.1 1.1 4.3 Other expense, net (12.2) (1.0) (9.4) ---------------------------------------------- Income before income taxes 2,377.6 2,179.9 2,007.6 Provision for income taxes (913.2) (828.3) (762.9) Equity income, net of tax 240.1 200.0 157.5 ---------------------------------------------- Net income $ 1,704.5 $ 1,551.6 $ 1,402.2 ============================================== Earnings per share: Basic $ 1.91 $ 1.71 $ 1.49 ============================================== Diluted $ 1.89 $ 1.69 $ 1.47 ============================================== The Notes on pages 52-63 of this report are an integral component of the company's Consolidated Financial Statements.
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 49 17 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N S H A R E H O L D E R S E Q U I T Y Anheuser-Busch Companies and Subsidiaries
- ----------------------------------------------------------------------------------------------------------------- YEAR ENDED DEC. 31 (IN MILLIONS, EXCEPT PER SHARE) 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------- COMMON STOCK Balance, beginning of period $ 1,441.5 $ 716.1 $ 712.7 Shares issued under stock plans 3.7 6.4 3.4 Two-for-one stock split -- 719.0 -- ---------------------------------------------- Balance, end of period $ 1,445.2 $ 1,441.5 $ 716.1 ============================================== CAPITAL IN EXCESS OF PAR VALUE Balance, beginning of period $725.3 $ 1,241.0 $ 1,117.5 Shares issued under stock plans 84.9 203.3 123.5 Two-for-one stock split -- (719.0) -- ---------------------------------------------- Balance, end of period $810.2 $ 725.3 $ 1,241.0 ============================================== RETAINED EARNINGS Balance, beginning of period $10,164.4 $ 9,181.2 $ 8,320.7 Net income 1,704.5 1,551.6 1,402.2 Common dividends paid (per share: 2001 -- $.69; 2000 - $.63; 1999 - $.58) (614.1) (571.0) (544.7) Shares issued under stock plans 3.4 2.6 3.0 ---------------------------------------------- Balance, end of period $11,258.2 $10,164.4 $ 9,181.2 ============================================== TREASURY STOCK Balance, beginning of period $(7,817.8) $(6,831.3) $(5,482.1) Treasury stock acquired (1,163.8) (986.5) (1,349.2) ---------------------------------------------- Balance, end of period $(8,981.6) $(7,817.8) $(6,831.3) ============================================== ESOP DEBT GUARANTEE Balance, beginning of period $ (172.2) $ (210.5) $ (247.2) Annual debt service 40.0 38.3 36.7 ---------------------------------------------- Balance, end of period $ (132.2) $ (172.2) $ (210.5) ============================================== ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of period $ (212.3) $ (175.0) $ (205.6) Foreign currency translation gains/(losses) 44.5 (37.3) 30.6 Deferred hedging gains/(losses) (38.9) -- -- Minimum pension obligation (131.6) -- -- ---------------------------------------------- Balance, end of period $ (338.3) $ (212.3) $ (175.0) ============================================== TOTAL SHAREHOLDERS EQUITY $ 4,061.5 $ 4,128.9 $ 3,921.5 ============================================== COMPREHENSIVE INCOME Net income $ 1,704.5 $ 1,551.6 $ 1,402.2 Foreign currency translation gains/(losses) 44.5 (37.3) 30.6 Deferred hedging gains/(losses) (38.9) -- -- Minimum pension obligation adjustment (131.6) -- -- ---------------------------------------------- TOTAL COMPREHENSIVE INCOME $ 1,578.5 $ 1,514.3 $ 1,432.8 ============================================== The Notes on pages 52-63 of this report are an integral component of the company's Consolidated Financial Statements.
50 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 18 C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S Anheuser-Busch Companies and Subsidiaries
- ----------------------------------------------------------------------------------------------------------------- YEAR ENDED DEC. 31 (IN MILLIONS) 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income $ 1,704.5 $ 1,551.6 $ 1,402.2 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 834.5 803.5 777.0 Deferred income taxes (18.9) 28.7 40.3 Gain on sale of SeaWorld Cleveland (17.8) -- -- Undistributed earnings of affiliated companies (223.5) (185.2) (155.5) Other, net 25.0 31.4 77.6 ---------------------------------------------- Operating cash flow before change in working capital 2,303.8 2,230.0 2,141.6 Decrease/(increase) in working capital 56.8 27.5 (5.8) ---------------------------------------------- Cash provided by operating activities 2,360.6 2,257.5 2,135.8 ---------------------------------------------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (1,022.0) (1,074.5) (865.3) New business acquisitions (370.4) (42.9) (7.0) Proceeds from sale of business 110.0 -- 59.6 ---------------------------------------------- Cash used for investing activities (1,282.4) (1,117.4) (812.7) ---------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES: Increase in debt 1,213.4 803.9 973.4 Decrease in debt (572.8) (514.0) (553.7) Dividends paid to shareholders (614.1) (571.0) (544.7) Acquisition of treasury stock (1,163.8) (986.5) (1,349.2) Shares issued under stock plans 61.8 135.3 78.4 ---------------------------------------------- Cash used for financing activities (1,075.5) (1,132.3) (1,395.8) ---------------------------------------------- Net increase/(decrease) in cash during the year 2.7 7.8 (72.7) Cash, beginning of year 159.9 152.1 224.8 ---------------------------------------------- Cash, end of year $ 162.6 $ 159.9 $ 152.1 ============================================== The Notes on pages 52-63 of this report are an integral component of the company's Consolidated Financial Statements.
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 51 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES This summary of the significant accounting principles and policies of Anheuser-Busch Companies, Inc. and its subsidiaries is presented to assist in evaluating the company's consolidated financial statements. These principles and policies conform to U.S. generally accepted accounting principles. The company makes certain estimates during the preparation of financial statements which impact the reported amounts of some assets and liabilities at the date of the financial statements and the reported amounts of some expenses during the period. All estimates are made in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates. REVENUE RECOGNITION The company's revenue recognition practices are in compliance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." The company recognizes revenue only when title transfers or services have been rendered to unaffiliated customers. For malt beverages shipped to independent wholesalers, title transfers on shipment of product from the company's breweries. For company-owned wholesalers, title transfers when products are delivered to retail customers. For cans and lids, title transfers on customer receipt. The company's beer and packaging operations do not engage in consignment sales. Entertainment operations recognize revenue when customers actually visit a park location. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the company and all its subsidiaries. The company consolidates all majority-owned and controlled subsidiaries, accounts for investments below the 20% level under the cost method, and applies the equity method of accounting for investments between 20% and 50%. All significant intercompany transactions have been eliminated. Minority interests in consolidated subsidiaries are not material. CASH Cash includes cash in banks, demand deposits and investments in short-term marketable securities with initial maturities of 90 days or less. G00DWILL The company amortizes goodwill on a straight-line basis for a period of 40 years. Effective Jan. 1, 2002, the company adopted FAS No. 142, "Goodwill and Other Intangible Assets," and ceased the amortization of existing goodwill. Additionally, goodwill generated by future acquisitions will be recognized as an asset and will not be amortized. See Note 14 for additional information. FOREIGN CURRENCY TRANSLATION Financial statements of foreign operations where the local currency is the functional currency are translated using period-end exchange rates for assets and liabilities, and weighted average exchange rates during the period for results of operations. Translation adjustments are reported as a separate component of other comprehensive income within shareholders equity. Exchange rate adjustments related to foreign currency transactions are recognized in income as incurred. INVENTORIES AND PRODUCTION COSTS Inventories are valued at the lower of cost or market. Cost was determined under the last-in, first-out method (LIFO) for approximately 75% of total inventories at Dec. 31, 2001 and 2000. Average cost valuation is used for the remainder. Had average cost (which approximates replacement cost) been used for all inventories at Dec. 31, 2001 and 2000, total inventories would have been $83.1 million and $89.9 million higher, respectively. DELIVERY COSTS Pass-through finished goods delivery costs reimbursed by customers are reported in sales, while the cost is included as an expense in cost of products and services. Delivery costs for company-owned beer wholesalers are included in marketing, distribution and administrative expenses. FIXED ASSETS Fixed assets are carried at cost less accumulated depreciation and include expenditures for new facilities as well as those that increase the useful lives of existing facilities. The cost of routine maintenance, repairs and minor renewals is expensed as incurred. When fixed assets are retired or otherwise disposed, the net carrying amount is eliminated, with any gain or loss on disposition recognized in earnings at that time. Depreciation is recognized using the straight-line method based on the following weighted average useful lives: buildings, 25 years; production machinery and equipment, 15 years; furniture and fixtures, 10 years; computer equipment, 3 years. ADVERTISING AND PROMOTIONAL COSTS Advertising and promotional costs are either expensed as incurred, or accumulated and expensed the first time the advertisement is shown. Advertising and promotional expenses were $722.3 million, $728.3 million and $721.8 million in 2001, 2000 and 1999, respectively. 52 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 20 INCOME TAXES The provision for income taxes is based on income and expense amounts as reported in the consolidated statement of income. The company utilizes certain elements of federal, state and foreign income tax laws and regulations to reduce current taxes payable. Deferred income taxes are recognized for the effect of temporary differences between financial reporting and tax filing in accordance with the requirements of FAS No. 109, "Accounting for Income Taxes." See Note 10 for additional information. DERIVATIVES Anheuser-Busch uses derivative instruments to mitigate the company's exposure to volatility in commodity prices, interest rates and foreign currency exchange rates. Company policy prohibits holding or trading derivatives strictly for profit. All derivatives held by the company are therefore designated as hedges with an expectation they will be highly effective in offsetting underlying exposures. Derivative positions are liquidated whenever an underlying transaction is no longer expected to occur, with related gains or losses recognized in earnings on liquidation. Option premiums paid are initially recorded as assets and subsequently adjusted to fair value in equity each period. The effective portion of changes in fair value is deferred in equity (accumulated other comprehensive income) until the underlying transaction occurs. With the exception of interest rate swaps, derivatives generally have initial terms of less than three years, and all currently hedged transactions are expected to occur within the next three years. On Jan. 1, 2001, the company adopted FAS No. 133, "Accounting for Derivative Instruments and Hedging Activity." Under FAS 133, all derivatives are recorded on the balance sheet at fair value. Changes in fair value are recognized either in earnings or equity, depending on the nature of the underlying exposure being hedged and how effective the derivative is at offsetting a price movement in the underlying exposure. Amounts receivable from, or owed to, derivatives counterparties are included in current assets and current liabilities, respectively. Gains and losses from changes in derivatives fair values that are effective in offsetting underlying exposures are either deferred in shareholders equity until the underlying transaction occurs, or recognized in earnings concurrently with the change in value of the underlying exposure. Gains and losses that are not effective at offsetting price movements are recognized in earnings immediately, and are not material. All of the company's derivative positions qualified for hedge accounting on adoption of FAS 133, therefore the impact of adoption was not material. Foreign currency and interest rate hedges are classified primarily as fair value hedges, while commodity price hedges are principally cash flow hedges. The company made no substantive changes to its risk management approach as a result of adopting FAS 133. See Note 3 for additional information. RESEARCH AND DEVELOPMENT COSTS AND START-UP COSTS Research and development costs and plant start-up costs are expensed as incurred, and are not material for any year presented. COMPUTER SYSTEMS DEVELOPMENT COSTS The company capitalizes computer systems development costs that meet established criteria, and amortizes those costs to expense on a straight-line basis over five years. Systems development costs not meeting the proper criteria for capitalization, including systems reengineering costs, are expensed as incurred. STOCK-BASED COMPENSATION The company accounts for employee stock options in accordance with APB 25, "Accounting for Stock Issued to Employees." Under APB 25, the company recognizes no compensation expense related to employee stock options, since options are always granted at a price equal to the market price on the day of grant. See Note 5 for additional information on the company's stock options plus pro forma disclosures required by FAS 123, "Accounting for Stock-Based Compensation." COMMON STOCK SPLIT All share and per share amounts have been adjusted to reflect the two-for-one stock split distributed Sept. 18, 2000. 2. INTERNATIONAL EQUITY INVESTMENTS GRUPO MODELO From 1993 to 1998, Anheuser-Busch accumulated a 50.2% direct and indirect equity interest in Diblo, S.A. de C.V. (Diblo), the operating subsidiary of Grupo Modelo, S.A. de C.V. (Modelo), Mexico's largest brewer and producer of the Corona brand, for a total cost of $1.6 billion. The company holds 10 of 21 positions on Modelo's Board of Directors, with the Controlling Shareholders holding the other 11 positions. Anheuser-Busch therefore does not have voting or other effective control of either Diblo or Modelo and therefore accounts for its investments using the equity method. Included in the carrying amount of the Modelo investment is goodwill of $622.4 million and $586.7 million, respectively, at Dec. 31, 2001 and 2000 which was being amortized over 40 years. Effective with the adoption of FAS 142 on Jan. 1, 2002, the company ceased amortization of Modelo-related goodwill. Dividends received from Grupo Modelo in 2001 totaled $13.5 million, compared to $23.9 million in 2000 and $2.9 million in 1999. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 53 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Summary financial information for Grupo Modelo as of, and for the two years ended Dec. 31, is presented in the following table (in millions). The amounts shown represent 100% of Grupo Modelo's consolidated operating results and financial position based on U.S. generally accepted accounting principles, and include the impact of Anheuser-Busch's purchase accounting adjustments.
2001 2000 Cash $ 865.4 $ 705.2 Other current assets 771.7 670.0 Noncurrent assets 4,104.7 3,610.5 Current liabilities 341.7 310.7 Noncurrent liabilities 641.2 557.3 Gross sales 3,571.5 3,129.9 Net sales 3,334.2 2,919.1 Gross profit 1,787.5 1,577.4 Minority interest 32.0 46.3 Net income 486.8 405.0 - ---------------------------------------------------------------------
OTHER INTERNATIONAL EQUITY INVESTMENTS During 2001, the company purchased a 20% equity interest in Compania Cervecerias Unidas S.A. (CCU), the largest brewer in Chile, for $321 million. CCU imports and distributes Budweiser in Chile. Anheuser-Busch has Board of Directors' representation (including the Audit Committee) and the ability to exercise significant influence. As such, the company accounts for the CCU investment using the equity method. From 1996 to 1999, Anheuser-Busch accumulated a 10.8% direct equity interest in the Argentine subsidiary of CCU (CCU-Argentina) for a total cost of $23.9 million, with options expiring in December 2002 to increase its direct investment to 20%. CCU-Argentina brews Budweiser under license for sale in Argentina, Chile, Brazil and other Latin American markets. The CCU-Argentina investment was accounted for on the cost basis through 2000. The 20% acquisition of CCU in 2001 increased Anheuser-Busch's direct and indirect interest in CCU-Argentina to 28.6%, and the company therefore began using the equity method of accounting in 2001. The difference between income recognized on the cost basis for CCU-Argentina and what would have been recognized had equity accounting been applied in prior years is immaterial. The company received dividends of $12.3 million from CCU in 2001. Included in the carrying amount of the CCU investments is goodwill of $115.8 million. The company ceased amortization of CCU-related goodwill on adoption of FAS 142 in January 2002. The earnings impact due to the unpegging of the Argentine peso from its 1:1 exchange position relative to the U.S. dollar was recorded in 2001 and had an immaterial impact on equity income. From April 1996 to July 1999, the company owned a 5% equity stake in the principal operating subsidiary of the Brazilian brewer Antarctica. Anheuser-Busch exercised its rights under the investment agreement and sold its ownership position back to Antarctica at original cost in 1999 with no earnings impact on the company. Simultaneously, the company discontinued a production and distribution joint venture with Antarctica, and now exports Budweiser to Brazil. Effective January 2000, the company converted its joint venture operation in Japan into an exclusive license agreement with Kirin Brewing Company, Ltd. for the production and sale of Budweiser in Japan. The pretax cost of converting to the license agreement was approximately $9 million, primarily for severance benefits, and is included in 1999 operating results. 3. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS DERIVATIVES The following table summarizes the notional transaction amounts and fair values for the company's outstanding derivatives, by risk category and instrument type, at Dec. 31, 2001 and 2000 (in millions). Because the company hedges only with derivatives that have high correlation with the underlying transaction pricing, changes in derivatives fair values and the underlying pricing are expected to largely offset. Bracketed figures indicate current settlement of the derivatives contract would result in a net loss to Anheuser-Busch, but do not reflect the impact of the underlying hedged transaction.
2001 2000 NOTIONAL FAIR Notional Fair AMOUNT VALUE Amount Value --------------------------------------------------------- Foreign Currency: Forwards $ 66.5 $ 0.2 $ 71.0 $(2.8) Options 116.5 2.0 96.7 2.1 --------------------------------------------------------- 183.0 2.2 167.7 (0.7) --------------------------------------------------------- Interest Rate: Swaps 601.0 11.1 762.8 13.0 --------------------------------------------------------- Commodity Price: Swaps 154.4 (1.5) 216.0 1.7 Futures/forwards 61.8 (8.4) 53.6 4.0 Options 352.4 12.1 489.8 35.8 --------------------------------------------------------- 568.6 2.2 759.4 41.5 --------------------------------------------------------- Total outstanding derivatives $1,352.6 $15.5 $1,689.9 $53.8 ========================================================= - -----------------------------------------------------------------------------------------
54 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 22 Derivatives gains or losses recognized in earnings in 2001 due to hedge ineffectiveness were not material. During 2001, the company recognized $12.2 million in gains and $29.2 million in losses previously recorded in accumulated other comprehensive income into earnings when the underlying hedged transactions occurred. Included in accumulated other comprehensive income at Dec. 31, 2001 are deferred gains of $0.3 million and deferred losses of $39.2 million. Deferred losses include $18.4 million of unrecognized option premium expense. The company expects the majority of deferred gains and losses to be recognized in earnings in 2002 because the majority of the related underlying transactions are expected to occur in 2002. However the amounts eventually recognized may differ from those as of Dec. 31, 2001, as many of the company's derivative positions are not yet settled, and therefore remain subject to ongoing market price fluctuations. Anheuser-Busch's primary foreign currency exposures are to transactions and investments denominated in British pounds sterling, euros, Mexican, Chilean and Argentine pesos, Canadian dollars, and Chinese renminbi. For commodity derivatives, the company is a net user of raw materials indicating additional quantities must be purchased to meet production requirements. CONCENTRATION OF CREDIT RISK The company does not have a material concentration of credit risk. NONDERIVATIVE FINANCIAL INSTRUMENTS Nonderivative financial instruments included in the balance sheet are cash, accounts and notes receivable, accounts payable and long-term debt. Accounts and notes receivable include allowances for doubtful accounts of $7.7 million and $8.2 million, at Dec. 31, 2001 and 2000, respectively. The fair value of long-term debt, estimated based on future cash flows discounted at interest rates currently available to the company for debt with similar maturities and characteristics, was $6.3 billion and $5.5 billion at Dec. 31, 2001 and 2000, respectively. 4. DEBT The company uses Securities and Exchange Commission shelf registrations to maintain debt issuance flexibility and currently has $550 million in registered debt available for issuance. Gains or losses on debt redemptions (either individually or in the aggregate) were not material for any year presented. The fixed interest rates on the company's EuroNotes, 4.1% yen/dollar notes and 5.6% U.S. dollar notes (total notional value of $401 million in 2001 and $362.8 million in 2000), were swapped to LIBOR-based floating rates when issued. The weighted average effective interest rates for this debt were 4.15% and 6.29% in 2001 and 2000, respectively. Year-end rates were 2.06% and 6.55%, respectively. The weighted average interest rates on commercial paper during 2001 and 2000 were 4.39% and 6.2%, respectively. In October 1999, the company lowered the effective interest rate on its $200 million 6.9% notes to 6.44% via a dual-swap arrangement. In January 2001, the swap counterparty exercised its option to terminate the fixed-to-floating portion of the swap structure, and the company in turn called the 6.9% Notes. There was no earnings impact to the company from either the counterparty action or calling the Notes. The floating-to-fixed portion of the swap, at 6.44%, remains as a hedge of commercial paper interest rates. The company has in place a single, committed revolving credit agreement totaling $2 billion, expiring in June 2005, which supports the company's commercial paper program. At Dec. 31, 2001 and 2000, the company had no outstanding borrowings under the agreement. Annual fees under the agreement were $1.2 million in 2001, $0.9 million in 2000 and $0.6 million in 1999. Commercial paper borrowings classified as long-term are supported on a long-term basis by the $2 billion revolving credit agreement. Commercial paper borrowings in excess of $2 billion would be classified as short-term. The expected aggregate maturities on long-term debt are $17 million, $200 million, $251 million, $300 million and $420 million, respectively, for each of the years ending Dec. 31, 2002 through 2006. These maturities do not include future maturities of the ESOP debt guaranteed by the company or commercial paper. Debt at Dec. 31, consisted of the following (in millions):
2001 2000 U.S. dollar notes due 2002 to 2012, interest rates from 5.125% to 7.5% $2,100.0 $2,000.0 U.S. dollar debentures due 2009 to 2041, interest rates from 6.0% to 9.0% 2,300.0 1,750.0 EuroNotes due 2004 to 2006, interest rates from 4.51% to 6.5% 351.0 200.0 Medium-term notes: Due 2010, interest rate 5.625% 200.0 -- Due 2001, interest rate 7.44% -- 7.5 Commercial paper, interest rates of 2.30% and 6.72%, respectively, at year-end 600.2 767.2 Industrial revenue bonds, weighted average interest rates of 6.03% and 6.28%, respectively 261.3 252.3 ESOP note guarantee due 2004, interest rate 8.25% 132.2 172.2 Japanese yen/U.S. dollar notes, due 2001, interest rate 4.1% -- 162.8 Miscellaneous items 53.1 62.5 Unamortized debt discounts (13.9) (11.8) ------------------------------- Total debt $5,983.9 $5,362.7 ===============================
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 55 23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. STOCK OPTION PLANS Under terms of the company's stock option plans, officers, certain other employees and nonemployee directors may be granted options to purchase the company's common stock at a price equal to the market price on the date the option is granted. Options generally vest over three years and have a maximum term of 10 years. At Dec. 31, 2001, 2000 and 1999, a total of 97 million, 70 million and 80 million shares, respectively, were designated for future issuance of common stock under existing stock option plans. The company's stock option plans provide for accelerated exercisability on the occurrence of certain events relating to a change in control, merger, sale of substantially all company assets or complete liquidation of the company. The income tax benefit related to the exercise of employee stock options (a reduction of current taxes payable) was $26.7 million, $74.4 million and $48.5 million for the years ended Dec. 31, 2001, 2000 and 1999, respectively. Presented below is a summary of stock option activity for the years shown:
Options Wtd. Avg. Options Wtd. Avg. Outstanding Exercise Price Exercisable Exercise Price - ----------------------------------------------------------------------------------- BALANCE, DEC. 31, 1998 53,083,642 $19.49 33,424,410 $15.89 Granted 10,591,292 37.88 Exercised (7,016,416) 13.55 Cancelled (87,968) 26.60 ------------ BALANCE, DEC. 31, 1999 56,570,550 $23.66 36,166,954 $18.69 Granted 13,005,810 48.68 Exercised (10,153,146) 15.99 Cancelled (252,140) 32.32 ------------ BALANCE, DEC. 31, 2000 59,171,074 $30.44 36,151,446 $22.53 Granted 13,895,238 42.95 Exercised (3,986,476) 18.29 Cancelled (180,803) 44.39 ------------ BALANCE, DEC. 31, 2001 68,899,033 $33.63 44,100,568 $27.71 - -----------------------------------------------------------------------------------
The following table provides additional information for options outstanding and exercisable at Dec. 31, 2001:
OPTIONS OUTSTANDING - ------------------------------------------------------------------------------ Range of Wtd. Avg. Wtd. Avg. Prices Number Remaining Life Exercise Price ------ ------ -------------- -------------- $10-19 8,186,343 3 yrs $14.76 20-29 23,646,766 6 yrs 24.63 30-39 10,454,319 8 yrs 37.83 40-49 26,611,605 9 yrs 45.77 ---------- $10-49 68,899,033 $33.63 - ------------------------------------------------------------------------------
OPTIONS EXERCISABLE - ---------------------------------------------------------------------- Range of Wtd. Avg. Prices Number Exercise Price ------ ------ -------------- $10-19 8,186,343 $14.76 20-29 23,646,766 24.63 30-39 7,280,197 37.85 40-49 4,987,262 48.74 ---------- $10-49 44,100,568 $27.71 - ----------------------------------------------------------------------
PRO FORMA FAIR VALUE DISCLOSURES Had employee compensation expense been recognized based on the fair value of the stock options on the grant date under the methodology prescribed by FAS 123, the company's net income and diluted earnings per share for the three years ended Dec. 31, would have been impacted as shown in the following table (in millions, except per share).
2001 2000 1999 Reported net income $1,704.5 $1,551.6 $1,402.2 Pro forma net income 1,635.9 1,508.8 1,373.3 Reported diluted earnings per share 1.89 1.69 1.47 Pro forma diluted earnings per share 1.81 1.64 1.44 - ------------------------------------------------------------------------------
The fair value of stock options granted, which is hypothetically amortized to compensation expense over the vesting period in determining the pro forma impact noted above, has been estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
2001 2000 1999 Expected life of option 7 yrs. 5 yrs. 5 yrs. Risk-free interest rate 4.9% 5.7% 6.2% Expected volatility of Anheuser-Busch stock 24% 22% 18% Expected dividend yield on Anheuser-Busch stock 1.7% 1.4% 1.6% - -----------------------------------------------------------------------------
56 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 24 The weighted average fair value of options granted during 2001, 2000 and 1999 determined using the Black-Scholes model is as follows (in millions, except per option):
2001 2000 1999 Fair value of each option granted $12.76 $13.14 $9.38 Total number of options granted 13.9 13.0 10.6 ---------------------------------------- Total fair value of all options granted $177.4 $170.8 $99.4 ======================================== - -----------------------------------------------------------------------------
For FAS 123 disclosure purposes, the weighted average fair value of stock options granted is required to be based on a theoretical option-pricing model such as the Black-Scholes method. In actuality, because the company's employee stock options are not traded on an exchange, employees can receive no value nor derive any benefit from holding stock options under these plans without an increase in the market price of Anheuser-Busch stock. Such an increase in stock price benefits all stockholders commensurately. 6. EMPLOYEE STOCK OWNERSHIP PLANS In 1989, the company added Employee Stock Ownership Plans (ESOPs) to its existing Deferred Income Stock Purchase and Savings Plans (401(k) plans). Most regular employees are eligible for participation in the ESOPs. The ESOPs initially borrowed $500 million for a term of 15 years at an interest rate of 8.25% and used the proceeds to buy approximately 45.4 million shares of common stock from the company at market price. The ESOP debt is guaranteed by the company and the shares are being allocated to participants over the 15-year period as contributions are made to the plans. The ESOPs purchased an additional .4 million shares from the company using proceeds from the sale of spin-off-related Earthgrains shares in 1996. Of the 45.8 million total shares purchased, 39.4 million shares have been allocated to plan participants through Dec. 31, 2001. ESOP cash contributions and income or expense recorded during the year are determined by several factors, including the market price of Anheuser-Busch common stock, number of shares allocated to participants, debt service requirements, dividends on unallocated shares and the company's matching contribution. Over the 15-year life of the ESOPs, total expense recognized will equal total cash contributions made by the company for ESOP debt service. ESOP income or expense is allocated to operating expense and interest expense based on the ratio of principal and interest payments on the underlying ESOP debt. Total ESOP income or expense for the three years ended Dec. 31, is presented below (in millions):
2001 2000 1999 Operating (income)/expense $5.2 $(1.2) $1.7 Interest (income)/expense 1.0 (.9) .9 -------------------------------------- Total ESOP (income)/expense $6.2 $(2.1) $2.6 ====================================== - ---------------------------------------------------------------------------
Cash contributions are made to the ESOPs in March and September to correspond with debt service requirements. A summary of cash contributions and dividends on unallocated ESOP shares for the three years ended Dec. 31, is presented below (in millions):
2001 2000 1999 Cash contributions $1.3 $ -- $2.5 Dividends 5.2 6.5 7.8 - ---------------------------------------------------------------------------
7. PREFERRED AND COMMON STOCK COMMON STOCK ACTIVITY Common stock activity for the three years ended Dec. 31, is summarized below (in millions of shares):
2001 2000 1999 Common Stock: Beginning common stock 1,441.5 1,432.2 1,425.4 Shares issued under stock plans 3.7 9.3 6.8 ------------------------------------------ Common stock 1,445.2 1,441.5 1,432.2 ------------------------------------------ Treasury Stock: Beginning treasury stock (537.9) (510.0) (472.2) Treasury stock acquired (28.2) (28.2) (37.8) Treasury stock issued -- .3 -- ------------------------------------------ Cumulative treasury stock (566.1) (537.9) (510.0) ------------------------------------------ Net Common Stock Outstanding 879.1 903.6 922.2 ========================================== - -----------------------------------------------------------------------------
STOCK REPURCHASE PROGRAMS The Board of Directors has approved various resolutions authorizing the company to purchase shares of its common stock, in order to return cash to shareholders and to meet the requirements of the company's various stock purchase and incentive plans. At Dec. 31, 2001, approximately 57 million shares remained available for repurchase under a February 2000 authorization totaling 100 million total shares. The company repurchased 28.2 million shares of common stock in 2001 and 2000, and 37.8 million common shares in 1999, for $1,163.8 million, $986.5 million and $1,349.2 million, respectively. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 57 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STOCKHOLDER RIGHTS PLAN The Board of Directors adopted in 1985, and extended in 1994, a Stockholder Rights Plan that would permit shareholders to purchase common stock at prices substantially below market value under certain change- in-control scenarios. PREFERRED STOCK At Dec. 31, 2001 and 2000, 40 million shares of $1.00 par value preferred stock were authorized and unissued. 8. RETIREMENT BENEFITS PENSION PLANS The company has pension plans covering substantially all of its regular employees. Total pension expense for the three years ended Dec. 31, is presented below (in millions). Contributions to multi-employer plans in which the company and its subsidiaries participate are determined in accordance with the provisions of negotiated labor contracts and are based on employee hours or weeks worked. Pension expense recognized for multi-employer and defined contribution plans equals cash contributions for all years shown.
2001 2000 1999 Single-employer defined benefit plans $12.1 $ 7.3 $21.1 Multi-employer plans 16.2 15.5 15.7 Defined contribution plans 20.2 18.5 18.3 ----------------------------------------- Total pension expense $48.5 $41.3 $55.1 ========================================= - -----------------------------------------------------------------------------
Net annual pension expense for single-employer defined benefit plans was comprised of the following for the three years ended Dec. 31, (in millions):
2001 2000 1999 Service cost (benefits earned during the year) $ 59.8 $ 59.2 $ 63.2 Interest cost on projected benefit obligation 136.7 125.6 116.7 Assumed return on plan assets (201.6) (185.2) (169.2) Amortization of prior service cost and net actuarial losses 17.2 7.7 10.4 --------------------------------------- Net annual pension expense $ 12.1 $ 7.3 $ 21.1 ======================================= - -----------------------------------------------------------------------------
The key actuarial assumptions used in determining annual pension expense for single-employer defined benefit plans for the three years ended Dec. 31, follow:
2001 2000 1999 Discount rate 7.5% 7.5% 7.0% Long-term rate of return on plan assets 10.0% 10.0% 10.0% Weighted average rate of compensation increase 4.75% 4.75% 4.75% - -----------------------------------------------------------------------------
The following table provides a reconciliation between the funded status of single-employer defined benefit plans and prepaid pension cost for the two years ended Dec. 31 (in millions):
2001 2000 Funded status -- plan assets (less than)/in excess of projected benefit obligation $(216.9) $ 397.1 Unrecognized net actuarial loss/(gain) 313.4 (318.3) Unamortized prior service cost 135.9 145.7 --------------------------- Prepaid pension cost $ 232.4 $ 224.5 =========================== - -----------------------------------------------------------------------------
The following assumptions were used in determining the funded status of the single-employer defined benefit plans as of Dec. 31:
2001 2000 Discount rate 7.25% 7.5% Weighted average rate of compensation increase 4.75% 4.75% - -----------------------------------------------------------------------------
The following tables summarize the changes in projected benefit obligation and the fair value of plan assets for single-employer defined benefit plans during the two years ended Dec. 31 (in millions):
2001 2000 Projected benefit obligation, beginning of year $1,880.0 $1,746.1 Service cost 59.8 59.2 Interest cost 136.7 125.6 Plan amendments (0.2) 10.5 Actuarial loss 101.1 72.8 Benefits paid (126.1) (134.2) --------------------------- Projected benefit obligation, end of year $2,051.3 $1,880.0 =========================== 2001 2000 Fair market value of plan assets, beginning of year $2,277.1 $2,066.5 Actual return on plan assets (339.9) 317.4 Employer contributions 23.3 27.4 Benefits paid (126.1) (134.2) --------------------------- Fair market value of plan assets, end of year $1,834.4 $2,277.1 =========================== - -----------------------------------------------------------------------------
58 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 26 Pension plan assets consist primarily of corporate equity securities and publicly traded bonds. A minimum pension liability adjustment is necessary whenever the actuarial present value of accumulated pension benefits exceeds plan assets. Recording a minimum pension liability adjustment has no impact on the results of operations or cash flow. At December 31, 2001, the company recognized minimum pension obligations of $230.7 million for its domestic pension plans and $36.7 million related to its equity subsidiaries, by recording an intangible asset for unrecognized prior service costs of $56.9 million and a charge to equity (net of deferred taxes of $78.9 million) of $131.6 million. POSTRETIREMENT HEALTH CARE AND INSURANCE BENEFITS The company provides certain health care and life insurance benefits to eligible retired employees. Participants must have 10 years of continuous service after reaching age 45 to become eligible for partial retiree health care benefits. Employees become eligible for full retiree health care benefits after achieving specific age and total years of service requirements. Net periodic postretirement benefits expense for company health care and life insurance plans was comprised of the following for the three years ended Dec. 31 (in millions):
2001 2000 1999 Service cost $ 18.9 $ 16.8 $ 16.8 Interest cost on accumulated postretirement benefits obligation 30.4 27.7 24.0 Amortization of prior service benefit (11.6) (11.6) (11.6) Amortization of actuarial (gains) (5.4) (8.6) (13.0) -------------------------------------- Net periodic postretirement benefits expense $ 32.3 $ 24.3 $ 16.2 ====================================== - -----------------------------------------------------------------------------
The following tables summarize the changes in the accumulated and total postretirement benefit obligations for all company single-employer defined benefit health care and life insurance plans for the two years ended Dec. 31 (in millions):
2001 2000 Accumulated postretirement benefits obligation, beginning of year $400.0 $369.9 Service cost 18.9 16.8 Interest cost 30.4 27.7 Actuarial loss 53.3 17.0 Benefits paid (36.1) (31.4) -------------------------- Accumulated postretirement benefits obligation, end of year $466.5 $400.0 ========================== 2001 2000 Accumulated postretirement benefits obligation $466.5 $400.0 Unrecognized prior service benefits 52.9 64.6 Unrecognized net actuarial gains/(losses) (5.1) 53.6 -------------------------- Total postretirement benefits liability $514.3 $518.2 ========================== - -----------------------------------------------------------------------------
As of Dec. 31, 2001 and 2000, $31.4 million and $25.5 million of the total postretirement benefits liability was classified as current and $482.9 million and $492.7 million was classified as long-term, respectively. Postretirement benefit obligations are not prefunded and there are no assets associated with the plans. The key actuarial assumptions used in determining the accumulated postretirement benefit obligation for the three years ended Dec. 31 are provided in the table below. For actuarial purposes, the initial health care inflation rate is assumed to decline ratably to the future rate over a four-year period beginning in year nine, and then remain stable thereafter. If the assumed health care cost trend rate changed by 1%, the accumulated postretirement benefit obligation as of Dec. 31, 2001 would change by 11.3%, with a corresponding change of 15.5% in net periodic postretirement benefits expense.
2001 2000 1999 Initial health care inflation rate 10.6% 9.1% 9.6% Future health care inflation rate 5.3% 5.4% 5.4% Discount rate 7.75% 8.0% 8.0% - -----------------------------------------------------------------------------
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 59 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. EARNINGS PER SHARE OF COMMON STOCK Earnings per share are computed by dividing net income by weighted average common shares outstanding during the period. Basic earnings per share are computed using an unadjusted weighted average number of shares of common stock. Diluted earnings per share are computed using the weighted average number of shares of common stock, plus an adjustment for in-the-money stock options. A reconciliation between basic and diluted weighted average shares outstanding for the three years ended Dec. 31, follows (millions of shares). There were no adjustments to income available to common shareholders for any year shown.
2001 2000 1999 Basic weighted average shares outstanding 890.1 906.1 939.0 Stock option shares 11.5 13.6 14.7 ------------------------------------ Diluted weighted average shares outstanding 901.6 919.7 953.7 ==================================== - -----------------------------------------------------------------------------
10. INCOME TAXES Following are the components of the provision for income taxes for the three years ended Dec. 31 (in millions):
2001 2000 1999 Current tax provision: Federal $805.3 $698.1 $615.9 State 124.2 102.0 106.3 Foreign 2.6 (.5) .4 ------------------------------------ 932.1 799.6 722.6 ------------------------------------ Deferred tax provision: Federal (15.9) 25.4 32.3 State (2.3) 3.2 4.7 Foreign (.7) .1 3.3 ------------------------------------ (18.9) 28.7 40.3 ------------------------------------ Total tax provision $913.2 $828.3 $762.9 ==================================== - -----------------------------------------------------------------------------
The deferred tax provision results from temporary differences between financial reporting and income tax filing for the basis of assets and liabilities, and in the recognition of income and expense items. The primary temporary differences relate to fixed assets with a tax effect of ($21.3) million in 2001, $14.4 million in 2000 and $19.1 million in 1999. The 2001 deferred tax provision includes the impact of reversing a deferred tax liability due to the sale of SeaWorld Cleveland. The company's deferred tax liabilities and deferred tax assets are summarized below. Deferred tax liabilities result primarily from tax deductions received prior to expense recognition for financial reporting purposes. Deferred tax assets relate primarily to expenses recognized for financial reporting purposes that are not yet deductible for tax purposes.
2001 2000 Deferred tax liabilities: Fixed assets $1,648.3 $1,669.6 Other 264.9 234.1 --------------------------- Total deferred tax liabilities 1,913.2 1,903.7 --------------------------- Deferred tax assets: Postretirement benefits 194.3 195.8 Minimum pension obligation 66.0 -- Spare parts & production supplies 64.0 66.5 Compensation-related obligations 56.3 45.7 Accrued liabilities and other 244.0 222.8 --------------------------- Total deferred tax assets 624.6 530.8 --------------------------- Net deferred tax liabilities $1,288.6 $1,372.9 =========================== - -----------------------------------------------------------------------------
A reconciliation between the U.S. federal statutory tax rate and Anheuser-Busch's effective tax rate for the three years ended Dec. 31 is presented below:
2001 2000 1999 Federal statutory tax rate 35.0% 35.0% 35.0% State taxes, net of federal benefit 3.3 3.2 3.6 Impact of foreign operations .1 .1 .2 Other items, net -- (.3) (.8) ------------------------------------ Effective tax rate 38.4% 38.0% 38.0% ==================================== - -----------------------------------------------------------------------------
60 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 28 11. SUPPLEMENTAL INFORMATION Accounts payable include $92.3 million and $104.2 million, respectively, of outstanding checks at Dec. 31, 2001 and 2000. Supplemental cash flow information for the three years ended Dec. 31 is presented below (in millions):
Cash paid during the year: 2001 2000 1999 Interest, net of interest capitalized $ 313.1 $ 304.7 $ 286.9 Income taxes 889.8 770.8 706.2 Excise taxes 2,052.6 2,042.9 2,016.6 Changes in working capital: (Increase)/decrease in current assets: Accounts receivable $(20.5) $28.6 $(18.9) Inventories 16.5 15.5 (0.4) Other current assets 4.2 16.4 (13.6) Increase/(decrease) in current liabilities: Accounts payable 4.2 8.2 26.9 Accrued salaries, wages and benefits (20.6) 28.0 15.2 Accrued taxes 29.4 (36.8) (29.4) Other current liabilities 43.6 (32.4) 14.4 ---------------------------------------- Net decrease/(increase) in working capital $ 56.8 $ 27.5 $ (5.8) ======================================== - -----------------------------------------------------------------------------
The components of plant and equipment as of Dec. 31 are summarized below (in millions):
2001 2000 Land $ 272.4 $ 260.5 Buildings 4,033.9 3,863.0 Machinery and equipment 10,770.9 10,386.2 Construction in progress 401.1 642.1 ----------------------------- 15,478.3 15,151.8 Accumulated depreciation (7,088.3) (6,908.0) ----------------------------- Net plant and equipment $ 8,390.0 $ 8,243.8 ============================= - -----------------------------------------------------------------------------
The components of other assets as of Dec. 31 are summarized below (in millions):
2001 2000 Investment properties $ 115.0 $ 120.1 Goodwill 411.3 413.9 Deferred charges 623.2 539.6 --------------------------- Total other assets $1,149.5 $1,073.6 =========================== - -----------------------------------------------------------------------------
12. COMMITMENTS AND CONTINGENCIES The company had commitments for capital expenditures of approximately $115 million at Dec. 31, 2001. Obligations under capital and operating leases and inventory purchase contracts are not material. In January 1997, Maris Distributing Company, Inc., a former Anheuser-Busch wholesaler in Florida, initiated litigation against the company alleging breach of contract and 12 other claims. Anheuser-Busch terminated its distribution agreement with Maris Distributing in March 1997. During the course of litigation, nine claims were resolved in favor of Anheuser-Busch. In August 2001, a jury rendered a verdict against the company in the amount of $50 million on two remaining claims. The Court subsequently awarded plaintiffs an additional $22.6 million in accumulated pre-judgment interest on the jury award which continues to accrue. Anheuser-Busch continues to believe it acted appropriately in terminating the distribution agreement of Maris Distributing. Both Maris and the company have appealed. Anheuser-Busch is vigorously contesting the judgment and the ultimate outcome cannot presently be predicted. The company's results for 2001 do not include any expense related to the Maris Distributing judgment or interest. The company and certain of its subsidiaries are involved in additional claims and legal proceedings in which monetary damages and other relief is sought. The company is vigorously contesting these claims, however resolution is not expected to occur quickly, and their ultimate outcome cannot presently be predicted. It is the opinion of management that the ultimate resolution of these claims, legal proceedings and other contingencies, either individually or in the aggregate, will not materially affect the company's financial position, results of operations, or liquidity. ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 61 29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. QUARTERLY FINANCIAL DATA (UNAUDITED)
Net Gross Net Diluted Earnings Sales Profit Income Per Share - ----------------------------------------------------------------------------- YEAR ENDED DEC. 31, 2001 1st Quarter $ 3,044.2 $1,117.3 $ 394.4 $ .43 2nd Quarter 3,452.0 1,371.4 523.7 .58 3rd Quarter 3,522.2 1,462.0 558.6 .62 4th Quarter 2,893.1 1,010.4 227.8 .26 ----------------------------------------------------------- Annual $12,911.5 $4,961.1 $1,704.5 $1.89 =========================================================== - ----------------------------------------------------------------------------- Net Gross Net Diluted Earnings Sales Profit Income Per Share - ----------------------------------------------------------------------------- YEAR ENDED DEC. 31, 2000 1st Quarter $ 2,866.1 $1,032.2 $ 350.3 $ .38 2nd Quarter 3,327.9 1,291.6 477.7 .52 3rd Quarter 3,461.8 1,388.1 514.5 .56 4th Quarter 2,843.6 957.6 209.1 .23 ----------------------------------------------------------- Annual $12,499.4 $4,669.5 $1,551.6 $1.69 =========================================================== - -----------------------------------------------------------------------------
In the fourth quarter of 2001, the company changed its presentation of pass-through finished product delivery costs reimbursed by customers. For comparability, information from prior periods has been recast to conform to the current presentation. 14. GOODWILL AND OTHER INTANGIBLE ASSETS Effective Jan. 1, 2002, Anheuser-Busch adopted FAS 142, "Goodwill and Other Intangible Assets." Under FAS 142, goodwill existing as of the adoption date is no longer subject to periodic amortization. The company had unamortized goodwill of $1.3 billion at Jan. 1, 2002 related to its consolidated and equity subsidiaries. The impact of goodwill amortization expense on net income in 2001 was $35.8 million, or $.04 per share. The company has completed the required transitional goodwill impairment analysis for FAS 142 adoption purposes and found no impaired goodwill. Prospectively, goodwill will be reviewed for impairment at least annually, with its ongoing recoverability monitored based on applicable operating unit performance and consideration of significant events or changes in the overall business environment. At Jan. 1, 2002, the company moved $70.5 million of intangible assets from goodwill into distinct intangible asset categories, primarily indefinite lived product distribution rights. Distribution rights reflect amounts paid to third parties to obtain exclusive beer wholesaler territories. The company holds these rights in perpetuity and has demonstrated an ability to exchange them for cash or other assets. Distribution rights comprise the majority of Anheuser-Busch's non-goodwill intangible assets. 15. BUSINESS SEGMENTS The company categorizes its operations into five business segments: Domestic Beer, International Beer, Packaging, Entertainment and Other. The Domestic Beer segment consists of the company's U.S. beer operations including vertically integrated rice, barley and hops operations. The International Beer segment consists of the company's export sales and overseas beer production and marketing operations, which include company-owned operations in China and the United Kingdom, administration of contract and license brewing arrangements and equity investments. The company sells beer in more than 80 countries, with principal markets in Canada, the United Kingdom, Ireland and China. The Packaging segment is comprised of the company's aluminum beverage can and lid manufacturing, aluminum recycling, label printing and glass manufacturing operations. Cans and lids are produced for both the company's domestic beer operations and U.S. soft drink industry customers. The Entertainment segment consists of the company's SeaWorld, Busch Gardens and other adventure park operations. In the first quarter of 2001, the company sold its SeaWorld Cleveland theme park to Six Flags, Inc. for $110 million, and recognized a $17.8 million pretax gain ($.005 per share, after-tax) which is shown as a separate line item in the consolidated statement of income. The company did not sell or grant license to the SeaWorld name. The Other segment is comprised of the company's real estate development, transportation and communications businesses. Summarized on the following page is the company's business segment information for 2001, 2000 and 1999 (in millions). Intersegment sales are fully eliminated in consolidation. No single customer accounted for more than 10% of sales. General corporate expenses, including net interest expense, are not allocated to the operating segments. 62 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 30 - -----------------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. & 2001 Beer Beer Pkg. Enter. Other Elims (1) Consol. - ----------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT INFORMATION: Gross sales $11,935.0 669.8 1,999.8 847.6 108.0 (587.2) $14,973.0 Net sales - intersegment $ -- -- 829.0 -- 25.0 (854.0) $ -- Net sales - external $ 9,988.2 555.1 1,170.8 847.6 83.0 266.8 $12,911.5 Depreciation & amortization $ 585.7 22.2 85.7 93.5 5.4 42.0 $ 834.5 Income before income taxes $ 2,676.4 58.3 107.5 147.4 7.3 (619.3) $ 2,377.6 Equity income, net of tax $ -- 240.1 -- -- -- -- $ 240.1 Net income $ 1,654.6 276.1 66.5 85.6 4.5 (382.8) $ 1,704.5 BALANCE SHEET INFORMATION: Total assets $ 7,607.5 3,026.1 904.6 1,307.3 210.2 806.3 $13,862.0 Equity method investments $ -- 2,540.5 -- -- -- -- $ 2,540.5 Foreign-located fixed assets $ -- 209.6 -- -- -- -- $ 209.6 Capital expenditures $ 710.0 21.5 108.4 88.8 23.2 70.1 $ 1,022.0 - ----------------------------------------------------------------------------------------------------------------------- Domestic Int'l Corp. & 2000 Beer Beer Pkg. Enter. Other Elims (1) Consol. - ----------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT INFORMATION: Gross sales $11,490.5 647.8 2,012.2 837.9 122.8 (577.0) $14,534.2 Net sales - intersegment $ -- -- 788.4 -- 26.2 (814.6) $ -- Net sales - external $ 9,559.5 544.0 1,223.8 837.9 96.6 237.6 $12,499.4 Depreciation & amortization $ 555.0 19.7 87.9 94.3 5.6 41.0 $ 803.5 Income before income taxes $ 2,490.3 33.2 87.8 114.5 15.5 (561.4) $ 2,179.9 Equity income, net of tax $ -- 200.0 -- -- -- -- $ 200.0 Net income $ 1,544.0 220.6 54.4 71.0 9.6 (348.0) $ 1,551.6 BALANCE SHEET INFORMATION: Total assets $ 7,474.3 2,492.3 869.2 1,387.3 206.1 643.5 $13,072.7 Equity method investments $ -- 1,949.3 -- -- -- -- $ 1,949.3 Foreign-located fixed assets $ -- 213.1 -- -- -- -- $ 213.1 Capital expenditures $ 744.7 21.2 125.9 128.6 17.1 37.0 $ 1,074.5 - ----------------------------------------------------------------------------------------------------------------------- Domestic Int'l Corp. & 1999 Beer Beer Pkg. Enter. Other Elims (1) Consol. - ----------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT INFORMATION: Gross sales $10,966.8 763.3 1,941.9 750.5 120.2 (628.2) $13,914.5 Net sales - intersegment $ -- -- 790.7 -- 28.7 (819.4) $ -- Net sales - external $ 9,088.2 622.3 1,151.2 750.5 91.5 191.2 $11,894.9 Depreciation & amortization $ 535.5 20.2 94.6 89.7 6.1 30.9 $ 777.0 Income before income taxes $ 2,268.8 (19.5) 149.8 111.9 12.4 (515.8) $ 2,007.6 Equity income, net of tax $ -- 157.5 -- -- -- -- $ 157.5 Net income $ 1,406.7 145.4 92.9 69.4 7.7 (319.9) $ 1,402.2 BALANCE SHEET INFORMATION: Total assets $ 7,183.9 2,439.6 843.6 1,360.4 197.0 615.9 $12,640.4 Equity method investments $ -- 1,787.9 -- -- -- -- $ 1,787.9 Foreign-located fixed assets $ -- 221.4 -- -- -- -- $ 221.4 Capital expenditures $ 563.2 45.3 49.7 162.6 13.5 31.0 $ 865.3 - ----------------------------------------------------------------------------------------------------------------------- Note 1: Corporate assets principally include cash, marketable securities, deferred charges and certain fixed assets. Eliminations impact only gross and intersegment sales. External net sales reflects the reporting of pass-through delivery costs reimbursed by customers of $266.8 million, $237.6 million and $191.2 million in 2001, 2000 and 1999, respectively.
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 63 31 F I N A N C I A L S U M M A R Y -- O P E R A T I O N S Anheuser-Busch Companies and Subsidiaries
- --------------------------------------------------------------------------------------------------------- (IN MILLIONS, EXCEPT PER SHARE DATA) 2001 2000 1999 - --------------------------------------------------------------------------------------------------------- Barrels of A-B beer brands sold worldwide 107.2 105.6 102.9 ================================================== Gross sales $14,973.0 $14,534.2 $13,914.5 Excise taxes (2,061.5) (2,034.8) (2,019.6) -------------------------------------------------- Net sales 12,911.5 12,499.4 11,894.9 Cost of products and services (7,950.4) (7,829.9) (7,445.6) -------------------------------------------------- Gross profit 4,961.1 4,669.5 4,449.3 Marketing, distribution and administrative expenses (2,255.9) (2,174.8) (2,147.0) Gain on sale of business (1) 17.8 -- -- Shutdown of Tampa brewery -- -- -- Restructuring charge -- -- -- -------------------------------------------------- Operating income 2,723.0 2,494.7 2,302.3 Interest expense (361.2) (348.2) (307.8) Interest capitalized 26.9 33.3 18.2 Interest income 1.1 1.1 4.3 Other income/(expense), net (12.2) (1.0) (9.4) -------------------------------------------------- Income before income taxes 2,377.6 2,179.9 2,007.6 Provision for income taxes (current and deferred) (913.2) (828.3) (762.9) Revaluation of deferred tax liability under FAS 109 -- -- -- Equity income, net of tax 240.1 200.0 157.5 -------------------------------------------------- Income from continuing operations 1,704.5 1,551.6 1,402.2 Income/(loss) from discontinued operations -- -- -- -------------------------------------------------- Income before accounting changes 1,704.5 1,551.6 1,402.2 Cumulative effect of accounting changes -- -- -- -------------------------------------------------- Net income $ 1,704.5 $ 1,551.6 $ 1,402.2 ================================================== Basic Earnings Per Share: Income from continuing operations $ 1.91 $ 1.71 $ 1.49 Income/(loss) from discontinued operations -- -- -- -------------------------------------------------- Income before accounting changes 1.91 1.71 1.49 Cumulative effect of accounting changes -- -- -- -------------------------------------------------- Net income $ 1.91 $ 1.71 $ 1.49 ================================================== Diluted Earnings Per Share: Income from continuing operations $ 1.89 $ 1.69 $ 1.47 Income/(loss) from discontinued operations -- -- -- -------------------------------------------------- Income before accounting changes 1.89 1.69 1.47 Cumulative effect of accounting changes -- -- -- -------------------------------------------------- Net income $ 1.89 $ 1.69 $ 1.47 ================================================== Cash dividends paid on common stock $ 614.1 $ 571.0 $ 544.7 Per share .69 .63 .58 Weighted average number of common shares: Basic 890.1 906.1 939.0 Diluted 901.6 919.7 953.7 - --------------------------------------------------------------------------------------------------------- All share and per share information reflects the two-for-one stock splits effective Sept. 18, 2000 and Sept. 12, 1996 and the 1997 adoption of FAS 128, "Earnings per Share." Gross sales, net sales and cost of products and services for all years reflect the change made in 2001 for the presentation of pass-through finished product delivery costs reimbursed by customers. This change had a minor impact on revenue and profit margin growth, and had no impact on cash flow, operating income, net income and earnings per share. All information has been restated to recognize the 1995 divestiture of the Food Products segment. Note 1: Sale of SeaWorld Cleveland in 2001; Sale of the St. Louis Cardinals in 1996. Note 2: 1997 change in accounting for deferred systems reengineering costs, net of tax benefit of $6.2 million. 1992 change in accounting for income taxes and other postretirement benefits, net of tax benefit of $186.4 million.
64 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 32
- ----------------------------------------------------------------------------------------------------------------------- 1998 1997 1996 1995 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------- 99.8 96.6 95.1 90.9 91.3 89.7 88.9 87.9 ======================================================================================================================= $13,342.5 $12,936.0 $12,721.8 $12,100.1 $11,793.9 $11,232.5 $11,089.7 $10,708.2 (1,962.1) (1,766.2) (1,737.8) (1,664.0) (1,679.7) (1,679.8) (1,668.6) (1,637.9) - ----------------------------------------------------------------------------------------------------------------------- 11,380.4 11,169.8 10,984.0 10,436.1 10,114.2 9,552.7 9,421.1 9,070.3 (7,297.1) (7,200.5) (7,064.9) (6,886.6) (6,581.0) (6,252.8) (6,132.9) (6,029.8) - ----------------------------------------------------------------------------------------------------------------------- 4,083.3 3,969.3 3,919.1 3,549.5 3,533.2 3,299.9 3,288.2 3,040.5 (1,958.0) (1,916.3) (1,890.0) (1,756.6) (1,679.9) (1,612.1) (1,583.7) (1,409.5) -- -- 54.7 -- -- -- -- -- -- -- -- (160.0) -- -- -- -- -- -- -- -- -- (401.3) -- -- - ----------------------------------------------------------------------------------------------------------------------- 2,125.3 2,053.0 2,083.8 (3) 1,632.9 (4) 1,853.3 1,286.5 (5) 1,704.5 1,631.0 (291.5) (261.2) (232.8) (225.9) (219.3) (205.1) (194.6) (234.0) 26.0 42.1 35.5 24.3 21.8 35.2 46.9 45.6 5.8 7.9 9.4 9.9 2.6 3.4 4.4 6.6 (13.0) (9.3) (3.0) 20.5 17.6 21.0 (2.5) 1.3 - ----------------------------------------------------------------------------------------------------------------------- 1,852.6 1,832.5 1,892.9 (3) 1,461.7 (4) 1,676.0 1,141.0 (5) 1,558.7 1,450.5 (704.3) (703.6) (736.8) (575.1) (661.5) (452.6) (594.6) (549.6) -- -- -- -- -- (31.2) -- -- 85.0 50.3 -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------- 1,233.3 1,179.2 1,156.1 (3) 886.6 (4) 1,014.5 657.2 (5) 964.1 900.9 -- -- 33.8 (244.3) 17.6 (62.7) 30.1 38.9 - ----------------------------------------------------------------------------------------------------------------------- 1,233.3 1,179.2 1,189.9 642.3 1,032.1 594.5 994.2 939.8 -- (10.0)(2) -- -- -- -- (76.7)(2) -- - ----------------------------------------------------------------------------------------------------------------------- $ 1,233.3 $ 1,169.2 $ 1,189.9 $ 642.3 $ 1,032.1 $ 594.5 $ 917.5 $ 939.8 ======================================================================================================================= $ 1.28 $ 1.19 $ 1.16 $ .86 $ .96 $ .60 $ .85 $ .79 -- -- .03 (.23) .02 (.05) .02 .03 - ----------------------------------------------------------------------------------------------------------------------- 1.28 1.19 1.19 .63 .98 .55 .87 .82 -- (.01)(2) -- -- -- -- (.06)(2) -- - ----------------------------------------------------------------------------------------------------------------------- $ 1.28 $ 1.18 $ 1.19 $ .63 $ .98 $ .55 $ .81 $ .82 ======================================================================================================================= $ 1.27 $ 1.18 $ 1.14 (3) $ .85 (4) $ .95 $ .60 (5) $ .84 $ .78 -- -- .03 (.23) .02 (.05) .02 .03 - ----------------------------------------------------------------------------------------------------------------------- 1.27 1.18 1.17 .62 .97 .55 .86 .81 -- (.01)(2) -- -- -- -- (.06)(2) -- - ----------------------------------------------------------------------------------------------------------------------- $ 1.27 $ 1.17 $ 1.17 $ .62 $ .97 $ .55 $ .80 $ .81 ======================================================================================================================= $ 521.0 $ 492.6 $ 458.9 $ 429.5 $ 398.8 $ 370.0 $ 338.3 $ 301.1 .54 .50 .46 .42 .38 .34 .30 .26 964.2 985.3 998.2 1,021.7 1,049.2 1,088.7 1,127.3 1,136.0 975.0 999.4 1,021.2 1,048.8 1,076.1 1,117.2 1,163.3 1,171.6 ======================================================================================================================= Note 3: 1996 results include the impact of the gain on the sale of the St. Louis Cardinals. Excluding the Cardinals gain, operating income, pretax income, income from continuing operations and diluted earnings per share would have been $2,029.1 million, $1,838.2 million, $1,122.7 million and $1.10, respectively. Note 4: 1995 results include the impact of the one-time pretax charge of $160 million for the closure of the Tampa brewery, and the $74.5 million pretax impact of the beer wholesaler inventory reduction. Excluding these nonrecurring special items, operating income, pretax income, income from continuing operations and diluted earnings per share would have been $1,867.4 million, $1,696.2 million, $1,032.3 million and $.99, respectively. Note 5: 1993 results include the impact of two nonrecurring special charges. These charges are (1) a restructuring charge ($401.3 million, pretax) and (2) a revaluation of the deferred tax liability due to the 1% increase in federal tax rates ($31.2 million, after-tax). Excluding these nonrecurring special charges, operating income, pretax income, income from continuing operations and diluted earnings per share would have been $1,687.8 million, $1,542.3 million, $935.2 million and $.84, respectively.
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 65 33 F I N A N C I A L S U M M A R Y -- B A L A N C E S H E E T A N D O T H E R I N F O R M A T I O N Anheuser-Busch Companies and Subsidiaries
- --------------------------------------------------------------------------------------------------------- (IN MILLIONS, EXCEPT PER SHARE AND STATISTICAL DATA) 2001 2000 1999 - --------------------------------------------------------------------------------------------------------- Balance Sheet Information: Working capital (deficit) $ (181.9) $ (127.8) $ (350.4) Current ratio 0.9 0.9 0.8 Debt 5,983.9 5,362.7 5,122.9 Shareholders equity 4,061.5 4,128.9 3,921.5 Return on shareholders equity 41.6% 38.5% 34.5% Debt to total capitalization ratio 59.6% 56.5% 56.6% Book value per share 4.62 4.57 4.25 Total assets 13,862.0 13,072.7 12,640.4 Other Information: Capital expenditures $ 1,022.0 $ 1,074.5 $ 865.3 Price/earnings ratio 23.9 26.9 24.1 Market price range of common stock (high and low closing) 46.51-38.50 49.81-27.47 40.81-32.59 ========================================================================================================= All share and per share information reflects the two-for-one stock splits effective Sept.18, 2000 and Sept. 12, 1996. All information has been restated to recognize the 1995 divestiture of the Food Products segment.
66 ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 34
- ----------------------------------------------------------------------------------------------------------------------- 1998 1997 1996 1995 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------- $ (89.9) $ 83.2 $ 34.9 $ 268.6 $ 57.0 $ (41.3) $ 247.8 $ 107.9 0.9 1.1 1.0 1.2 1.0 1.0 1.2 1.1 4,718.6 4,365.6 3,270.9 3,270.1 3,066.4 3,019.7 2,630.3 2,627.9 4,216.0 4,041.8 4,029.1 4,433.9 4,415.5 4,255.5 4,620.4 4,438.1 29.9% 29.2%(1) 30.0%(2) 25.0%(3) 29.9% 18.8%(4) 27.6%(1) 30.2% 52.8% 51.9% 44.8% 47.1% 47.3% 47.3% 42.0% 43.9% 4.42 4.15 4.05 3.61 3.32 3.35 3.25 2.95 12,484.3 11,727.1 10,463.6 10,590.9 10,547.4 10,267.7 9,954.9 9,642.5 $ 817.5 $ 1,199.3 $ 1,084.6 $ 952.5 $ 662.8 $ 656.3 $ 628.8 $ 625.5 25.9 18.6 (1) 17.6 (2) 19.6 (3) 13.1 22.6 (4) 16.9 (1) 18.9 34.13-21.72 23.94-19.75 21.44-16.25 17-12.69 13.81-11.75 15-11 15.13-13 15.38-9.88 ======================================================================================================================= Note 1: Ratios calculated based on income from continuing operations before the cumulative effect of accounting changes. Note 2: Ratios calculated based on reported income from continuing operations, which includes the $54.7 million pretax gain on the sale of the St. Louis Cardinals. Excluding the Cardinals gain, return on shareholders equity would have been 29.2% and the price/earnings ratio would have been 18.1. Note 3: Ratios calculated based on reported income from continuing operations. Excluding the two nonrecurring 1995 items ($160 million pretax charge for closure of the Tampa brewery and $74.5 million impact of the beer wholesaler inventory reduction), return on shareholders equity would have been 29.1% and the price/earnings ratio would have been 16.8. Note 4: Ratios calculated based on reported income from continuing operations. Excluding the two nonrecurring 1993 charges ($401.3 million pretax restructuring charge and $31.2 million after-tax FAS 109 charge), return on shareholders equity would have been 26.7% and the price/earnings ratio would have been 13.8.
ANHEUSER-BUSCH COMPANIES / 2001 ANNUAL REPORT 67 EX-21 6 eoex21.txt EXHIBIT 21 1 Ex-21 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ----------------------------------------------
STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- ------------- Anheuser-Busch, Incorporated Missouri Anheuser-Busch, Incorporated Anheuser-Busch Asia, Inc. Delaware Anheuser-Busch Asia, Inc. Anheuser-Busch Australia Limited Delaware Anheuser-Busch Australia Limited Anheuser-Busch Brasil Holdings Ltda. Brazil Anheuser-Busch Brasil Holdings Ltda. Anheuser-Busch Canada, Inc. Delaware Anheuser-Busch Canada, Inc. Anheuser-Busch Distributors of Delaware Anheuser-Busch Sales and Service New York, Inc. of New York, Inc. Anheuser-Busch Entertainment Delaware Anheuser-Busch Entertainment Limited Limited Anheuser-Busch Europe, Inc. Delaware Anheuser-Busch Europe, Inc. Anheuser-Busch Europe Limited England Anheuser-Busch Europe Limited Anheuser-Busch Florida Investment Florida Anheuser-Busch Florida Investment Capital Corporation Capital Corporation Anheuser-Busch Import Investments, Delaware Anheuser-Busch Import Investments, Inc. Inc. Anheuser-Busch International, Inc. Delaware Anheuser-Busch International, Inc. Anheuser-Busch International Delaware Anheuser-Busch International Holdings, Inc. Holdings, Inc. Anheuser-Busch International Chile Anheuser-Busch International Holdings, Inc. Chile I Limitada Holdings, Inc. Chile I Limitada Anheuser-Busch International Chile Anheuser-Busch International Holdings, Inc. Chile II Limitada Holdings, Inc. Chile II Limitada Anheuser-Busch Investments, S.L. Barcelona, Spain Anheuser-Busch Investments, S.L. Anheuser-Busch Latin American Delaware Anheuser-Busch Latin American Development Corporation Development Corporation 2 Page 2 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- ------------- Anheuser-Busch Mexico, Inc. Delaware Anheuser-Busch Mexico, Inc. Anheuser-Busch Packaging Delaware Anheuser-Busch Packaging Group, Inc. Group, Inc. Anheuser-Busch Recycling Ohio Anheuser-Busch Recycling Corporation Corporation Anheuser-Busch River North Delaware River North Distributing Company Investment Capital Corporation Anheuser-Busch Sales of Hawaii, Inc. Delaware Anheuser-Busch Sales of Hawaii, Inc. Anheuser-Busch Sales of South Bay, Delaware Anheuser-Busch Sales of South Bay, Inc. Inc. Anheuser-Busch San Diego Delaware Anheuser-Busch San Diego Wholesaler Development Corporation Wholesaler Development Corporation Anheuser-Busch Spanish Holdings, Delaware Anheuser-Busch Spanish Holdings, Inc. Inc. Anheuser-Busch Wholesaler Delaware Anheuser-Busch Wholesaler Development Corp. Development Corp. Anheuser-Busch Wholesaler Delaware Anheuser-Busch Wholesaler Development Corp. III Development Corp. III Anheuser-Busch Wholesaler Delaware Anheuser-Busch Wholesaler Development Corp. IV Development Corp. IV Anheuser-Busch Wisconsin Wisconsin Anheuser-Busch Wisconsin Investment Capital Corporation Investment Capital Corporation Anheuser-Busch World Trade Ltd. Delaware Anheuser-Busch World Trade Ltd. August A. Busch & Co. of Massachusetts August A. Busch & Co. of Massachusetts, Inc. Massachusetts, Inc. 3 Page 3 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- ------------- Bannon Corporation Delaware Bannon Corporation BARI-Canada, Inc. Delaware BARI-Canada, Inc. Bevo Music, Inc. Delaware Bevo Music, Inc. Bow Tie Music, Inc. Delaware Bow Tie Music, Inc. Budweiser Brasil Ltda. Brazil Budweiser Brasil Ltda. Budweiser Philippines, Inc. Delaware Budweiser Philippines, Inc. Budweiser Wuhan International China Budweiser Wuhan International Brewing Company Limited Brewing Company Limited Busch Agricultural Resources, Inc. Delaware Busch Agricultural Resources, Inc. Busch Agricultural Resources Delaware Busch Agricultural Resources International, Inc. International, Inc. Busch Creative Services Corporation Delaware Busch Creative Services Corporation Busch Entertainment Corporation Delaware Busch Entertainment Corporation Busch Foreign Sales Corporation Barbados Busch Foreign Sales Corporation Busch International Sales Delaware Busch International Sales Corporation Corporation Busch Investment Corporation Delaware Busch Investment Corporation Busch Mechanical Services, Inc. Delaware Busch Mechanical Services, Inc. Busch Media Group, Inc. Delaware Busch Media Group, Inc. Busch Properties, Inc. Delaware Busch Properties, Inc. 4 Page 4 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- ------------- Busch Properties of Florida, Inc. Florida Busch Properties of Florida, Inc. Civic Center Corporation Missouri Civic Center Corporation Consolidated Farms, Inc. Delaware Elk Mountain Farms, Inc. Eagle Packaging, Inc. Delaware Eagle Packaging, Inc. Eagle Snacks, Inc. Delaware Eagle Snacks, Inc. Fairfield Transport, Inc. California Fairfield Transport, Inc. Glass Container Corporation Delaware Longhorn Glass Corporation HSH of Orlando, Inc. Florida HSH of Orlando, Inc. ILH Company Florida ILH Company Kingsmill Realty, Inc. Virginia Kingsmill Realty, Inc. Langhorne Food Services, Inc. Delaware Langhorne Food Services, Inc. Litchfield Development Corporation Delaware Litchfield Development Corporation Manufacturers Cartage Company Missouri Manufacturers Cartage Company Manufacturers Railway Company Missouri Manufacturers Railway Company Metal Container Corporation Delaware Metal Container Corporation Metal Container Corporation of California Metal Container Corporation of California California M.R.S. Redevelopment Corporation Missouri M.R.S. Redevelopment Corporation MRS Transport Company Texas MRS Transport Company 5 Page 5 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- ------------- Nutri-Turf, Inc. Delaware Nutri-Turf, Inc. PBP, Inc. Delaware PBP, Inc. Pacific International Rice Mills, Inc. Delaware Pacific International Rice Mills, Inc. Pestalozzi Street Insurance Bermuda Pestalozzi Street Insurance Company, Ltd. Company, Ltd. Precision Printing and Packaging, Inc. Delaware Precision Printing and Packaging, Inc. PSB, Inc. Washington PSB, Inc. Puget Sound Beverages, Inc. Washington Puget Sound Beverages, Inc. SeaWorld, Inc. Delaware SeaWorld, Inc. SeaWorld of Florida, Inc. Florida SeaWorld of Florida, Inc. SeaWorld of Texas, Inc. Delaware SeaWorld of Texas, Inc. SFKBPP, Inc. Missouri SFKBPP, Inc. Stag Brewing Company Limited England Budweiser Stag Brewing Company Limited St. Louis Refrigerator Car Company Delaware St. Louis Refrigerator Car Company Tune Out Music, Inc. Delaware Tune Out Music, Inc. Wholesaler Equity Development Delaware Wholesaler Equity Development Corporation Corporation Williamsburg Transport, Inc. Virginia Williamsburg Transport, Inc.
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