10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the Fiscal Year Ended December 31, 2005
	or
o	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 Its Charter)

DELAWARE	43-1162835
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
ONE BUSCH PLACE, ST. LOUIS, MISSOURI	63118
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 314-577-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock—$1 par value	New York Stock Exchange
6½% Debentures Due January 1, 2028	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

      Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ü No     

      Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes      No ü

      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 ü 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. [ü]

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2.) Yes ü No     

      Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes      No ü

      As of June 30, 2005, the aggregate market value of the voting stock held by non-affiliates of the registrant was $35,239,758,613.

      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 776,361,447 shares as of March 1, 2006

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Annual Report to Shareholders for the Year Ended December 31, 2005	PART I, PART II, and PART IV
Portions of Definitive Proxy Statement for Annual Meeting of Stockholders on April 26, 2006	PART III

      Available on the Web at www.anheuser-busch.com

ANHEUSER-BUSCH COMPANIES, INC.

TABLE OF CONTENTS

	Page
PART I	2
Item 1. Business	2
Domestic Beer	2
Domestic Beer Operations	4
International Beer	5
Packaging	6
Family Entertainment	7
Other	7
Sources and Availability of Raw Materials	7
Energy Matters	8
Brand Names and Trademarks	8
Research and Development	8
Environmental Protection	8
Environmental Packaging Laws and Regulations	9
Number of Employees	9
Available Information	9
Item 1A. Risk Factors	9
Item 1B. Unresolved Staff Comments	12
Item 2. Properties	12
Item 3. Legal Proceedings	13
Item 4. Submission of Matters to a Vote of Security Holders	13
Executive Officers of the Registrant	13
PART II	15
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6. Selected Financial Data	15
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	15
Item 8. Financial Statements and Supplementary Data	15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	15
Item 9A. Controls and Procedures	15
Item 9B. Other Information	16
PART III	16
Item 10. Directors and Executive Officers of the Registrant	16
Item 11. Executive Compensation	16
Item 12. Security Ownership of Certain Beneficial Owners and Management	16
Item 13. Certain Relationships and Related Transactions	16
Item 14. Principal Accounting Fees and Services	16
PART IV	17
Item 15. Exhibits, Financial Statement Schedules	17
15(a)(1) Financial Statements	17
15(a)(2) Financial Statement Schedule	17
15(a)(3) Exhibits	17
Signatures	20

1

PART  I

Item 1.  Business

      Anheuser-Busch Companies, Inc. (the “Company” or “Anheuser-Busch”) 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 nation’s leading 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 principal business segments: domestic beer, international beer, packaging, and entertainment. In 2005, domestic beer contributed 75.8% and 68.4%, international beer contributed 6.4% and 22.7%, packaging contributed 10.4% and 3.6%, and entertainment contributed 7.4% and 5.3% to net sales and net income, respectively. For this calculation, net sales and expenses exclude corporate items as detailed in the C ompany’s business segments disclosure. The Company believes this measure is the most appropriate as it allows the business segments contributions to add to 100%. Approximately 94% of the Company’s net sales and 77% of net income is generated in the United States. Financial information with respect to the Company’s business segments appears in Note 15, “Business Segments,” on pages 60-61 of the 2005 Annual Report to Shareholders, which Note hereby is incorporated by reference.

      Domestic beer volume was 101.1 million barrels in 2005 as compared with 103.0 million barrels in 2004. Domestic volume represents Anheuser-Busch brands produced and shipped within the United States including Puerto Rico and the Caribbean. Worldwide sales of the Company’s beer brands aggregated 121.9 million barrels in 2005 as compared with 116.8 million barrels in 2004. Worldwide beer volume is comprised of domestic and international volume. 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 brands volume includes worldwide Anheuser-Busch brand volume combined with the Company’s ownership percentage share of the volume of its international equity partners. Total brands volume was 148.3 million barrels and 136.1 million barrels in 2005 and 2004 , respectively.

Domestic Beer

      The Company’s principal product is beer, produced and distributed by its subsidiary, ABI, in a variety of containers primarily under the brand names described below. During 2005, ABI discontinued BACARDI Silver Limon, BACARDI Silver Low Carb Green Apple, BACARDI Silver Low Carb Black Cherry, “Doc’s” Hard Lemon and Michelob Hefeweizen.

Budweiser Family

      Budweiser, Budweiser Select, Bud Light and Bud Ice are distributed and sold on a nationwide basis. Bud Ice Light is sold in 47 states and Bud Dry in 44 states.

      Budweiser, Budweiser Select, Bud Light, Bud Ice and Bud Ice Light are sold in both draught and packaged form. Bud Dry is sold only in packaged form.

Michelob Family

      Michelob, Michelob Light, Michelob ULTRA and Michelob Amber Bock are distributed and sold on a nationwide basis. Michelob Marzen, Michelob Pale Ale and Michelob Pumpkin Spice Ale are sold in 48 states, Michelob Honey Lager in 45 states, Michelob Golden Draft and Michelob Golden Draft Light in 8 states and Michelob ULTRA Amber (introduced in 2005) in 7 states.

      Michelob, Michelob Light, Michelob ULTRA, Michelob ULTRA Amber, Michelob Golden Draft, Michelob Golden Draft Light and Michelob Amber Bock are sold in both draught and packaged form. Michelob Honey Lager is sold only in packaged form. Michelob Marzen, Michelob Pale Ale and Michelob Pumpkin Spice Ale are sold in sampler packs only.

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Busch Family

      Busch and Busch Light are distributed and sold on a nationwide basis. Busch Ice is sold in 26 states.

      Busch and Busch Light are sold in both draught and packaged form. Busch Ice is sold only in packaged form.

Natural Family

      Natural Light and Natural Ice are distributed and sold on a nationwide basis in both draught and packaged form. Natty Up (introduced in 2005) is sold in 5 states only in packaged form.

Specialty Beers

      B^E is distributed and sold on a nationwide basis only in packaged form.

      Anheuser World Lager is sold in 48 states in both draught and packaged form.

      Bare Knuckle Stout is sold in 37 states only in draught form.

      American Red is sold in 21 states only in draught form.

      BISTRO is sold in 2 states in packaged form.

      ZiegenBock Amber and ZiegenBock Light are sold in one state in both draught and packaged form.

      The Company periodically develops holiday, seasonal, occasional and local beers.

Nonalcohol Brews

      O’Doul’s and O’Doul’s Amber are distributed and sold on a nationwide basis. Busch NA is sold in 46 states.

      O’Doul’s and O’Doul’s Amber are sold in both draught and packaged form. Busch NA is sold only in packaged form.

Malt Liquors

      King Cobra is sold in 45 states, Hurricane High Gravity (introduced in 2005) in 36 states, Hurricane Malt in 33 states and Hurricane Ice in 4 states.

      King Cobra, Hurricane High Gravity, Hurricane Malt and Hurricane Ice are sold only in packaged form.

Specialty Malt Beverages

      BACARDI Silver Watermelon, BACARDI Silver Big Apple, BACARDI Silver Strawberry and Tilt (all introduced in 2005) as well as BACARDI Silver Raz, BACARDI Silver O³ and BACARDI Silver are distributed and sold on a nationwide basis. Tequiza is sold in 49 states. Peels Blueberry Pomegranate, Peels Cranberry Peach, Peels Pear Lemon, Peels Strawberry, 9th Street Lime Cactus, 9th Street Pomegranate Raspberry, 9th Street Blood Orange and Wild Blue (all introduced in 2005) are sold in 3 states.

      BACARDI Silver Raz, BACARDI Silver O³ and BACARDI Silver are sold in both draught and packaged form. BACARDI Silver Watermelon, BACARDI Silver Big Apple, BACARDI Silver Strawberry, Tilt, Tequiza, Peels Blueberry Pomegranate, Peels Cranberry Peach, Peels Pear Lemon, Peels Strawberry, 9th Street Lime Cactus, 9th Street Pomegranate Raspberry, 9th Street Blood Orange and Wild Blue are sold only in packaged form.

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Alliance Partner Products

Redhook Ale

      ABI owns a 33.7% equity interest in Seattle-based Redhook Ale Brewery, Inc. Through this alliance, Redhook products are distributed exclusively by ABI wholesalers in all U.S. markets.

Widmer Brothers

      ABI owns a 39.5% interest in Portland-based Widmer Brothers Brewing Company. Widmer products are distributed exclusively by ABI wholesalers in 47 states.

Joint Venture Agreements

Kirin

      The Company brews Kirin-Ichiban and Kirin Light through a joint venture agreement with Kirin Brewing Company, Ltd. of Japan for sale in the United States.

      Kirin-Ichiban is sold in 45 states and Kirin Light in 39 states.

      Kirin-Ichiban is sold in both draught and packaged form. Kirin Light is sold only in packaged form.

Domestic Beer Operations

      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.

      During 2005, approximately 94% of the beer sold by ABI, measured in barrels, reached retail channels through more than 570 independent wholesalers. The Company has a formal, written distribution agreement (the Equity Agreement) with each of its wholesalers. Each Equity Agreement generally specifies the territory in which the wholesaler is permitted to sell the Company’s products, the brands that the wholesaler is permitted to sell, performance standards applicable to the wholesaler, procedures to be followed by the wholesaler in connection with the sale of the distribution rights, and circumstances upon which the distribution rights may be terminated. By wholesaler use of controlled environment warehouses and stringent inventory monitoring policies, the quality and freshness of the product are protected, thus providing ABI a significant competitive advantage. ABI utilizes its regional vice-presidents, sales directors, key account and regional sales managers, as well as certain other sales personnel, to provide strategic sales 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 promote its brands, and complements national brand strategies with geographic marketing teams focused on delivering relevant programming addressing local interests and opportunities. The remainder of ABI’s domestic beer sales in 2005 were made through 13 branches that perform similar sales, merchandising, and delivery services as the independent 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.

      Another wholly-owned subsidiary, Wholesaler Equity Development Corporation, shares equity positions with qualified partners in independent beer wholesalerships and is currently invested in 2 wholesalerships.

      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. ABI’s beers compete in different price categories. Although all brands compete against the total market, the Company’s Budweiser family of beers along with Michelob Golden Draft and Michelob Golden Draft Light compete primarily with premium priced beers. The Company’s Busch and Natural family of beers compete with the value

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priced beers. The Company’s malt liquor products compete against other brands in the malt liquor segment. Michelob, Michelob Light, Michelob Amber Bock, Michelob Honey Lager, Michelob ULTRA, Michelob ULTRA Amber, Michelob Marzen, Michelob Pale Ale, Michelob Pumpkin Spice Ale, Kirin Light, Kirin-Ichiban, Tequiza, ZiegenBock Amber, ZiegenBock Light, the BACARDI Silver products, B^E, Anheuser Red, Anheuser World Lager, Bare Knuckle Stout, Bistro, the Peels, 9th Street and Wild Blue products, the Redhook products, and the Widmer beer products compete primarily in the above-premium-priced beer segment of the malt beverage market. O’Doul’s and O’Doul’s Amber (premium priced) and Busch NA (value priced) compete in the non-alcohol malt beverage category. Since 1957, ABI has led the United States brewing industry in total sales volume. In 2005, its sales exceeded those of its nearest competitor by more than 60 million barrels. ABI’s domestic market share (excluding exports) for 2005 was approximately 49%. Major competitors in the United States brewing industry during 2005 included SABMiller, Molson Coors Brewing Company, Grupo Modelo, S.A. de C.V., and Heineken. In addition to competing with the other brewers’ brands, the Company’s beer brands must also compete in the marketplace with other types of alcohol beverage choices available to consumers.

Energy Drinks

      The Company has energy drinks, “180” and “180 X3” in the alternative beverage segment. 180 and 180 X3 are distributed and sold on a nationwide basis and are available in packaged form. The Company also has an enhanced water beverage drink, “180 Sport,” in the alternative beverage segment. 180 Sport is distributed and sold in two flavors in 4 states and is available in packaged form.

Other

      The Company’s subsidiary, Long Tail Libations Inc., currently has a liqueur product, Jekyll & Hyde, in nine test markets available in packaged form. The Company also has a malt-based product, Spykes, which contains caffeine, gingseng and guarana. It currently is sold in four flavors in eight states and is available in packaged form.

International Beer

      International beer volume was 20.8 million barrels in 2005, compared with 13.8 million barrels in 2004. 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. ABII also handles the marketing and sale of Harbin and other brands owned by Harbin Brewery Group.

      Through Anheuser-Busch Europe Limited (“ABEL”), an indirect, wholly-owned subsidiary of the Company, certain ABI beer brands are marketed, distributed, and sold in more than thirty countries. In the U.K., ABEL sells Budweiser, Bud Ice, Michelob, Michelob ULTRA, and Anheuser World Lager brands to selected on-premise accounts, brewers, wholesalers, and directly to off-premise accounts. Budweiser, Bud Ice, Michelob, and Michelob ULTRA are brewed and packaged at the Stag Brewery near London, England which is managed and operated by ABEL. Anheuser World Lager and B^E are imported into the U.K. by ABEL.

      In Canada, Budweiser, Bud Light, Busch and Busch Light are brewed and sold through a license agreement with Labatt Brewing Co. and in Japan, Budweiser is brewed and sold through a license agreement with Kirin Brewery Company, Limited. O’Doul’s is imported into Canada. Budweiser is also brewed under license and sold by brewers in the Republic of Ireland and Northern Ireland (Guinness Ireland Limited), Italy (Heineken Italia SpA), Spain (Sociedad Anonima Damm), and Korea (Oriental Brewery Co., Ltd.). In Mexico, Budweiser, Bud Light, O’Doul’s and the 180 energy drink are imported and distributed by a wholly-owned subsidiary of Grupo Modelo (Cervezas Internacionales). The Company has an agreement with Brasseries Kronenbourg for sale and distribution of Bud in France. The Company owns a 7.9% stake in a subsidiary in Argentina of Compañía Cervecerías Unidas S.A. (“CCU”), the leading Chilean brewer, that brews and distributes Budweiser under license in Argentina and distributes Budweiser in Chile and Uruguay.

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      In China, the Company has a 97% equity interest in the Budweiser Wuhan International Brewing Company Limited, a joint venture that owns and operates a brewery in Wuhan.

      The Company owns 100% of Harbin Brewery Group Limited, the fifth largest brewer in China. Harbin Brewery Group has thirteen breweries in northeast China. Harbin Brewery Group owns 100% of the entities operating seven of the breweries and a majority interest in the remaining six breweries. (See Item 2 of Part I—Properties.)

      The Company has a strategic investment agreement with Tsingtao Brewery Company Limited, the largest brewer in China, and producer of the Tsingtao brand. Under the agreement, in 2003 and 2004, the Company invested $182 million in three Tsingtao convertible bonds. The investment in bonds, combined with an existing 4.5% stake in Tsingtao common stock, brought Anheuser-Busch’s total investment to $211 million. In 2003, the Company converted the first bond, which increased the Company’s economic and voting stake in Tsingtao from 4.5% to 9.9%. In April 2005, the Company converted its two remaining Tsingtao convertible bonds into Series H common shares, thereby increasing the Company’s economic stake in Tsingtao from 9.9% to 27%, and its voting stake from 9.9% to 20%.

      In 1993, the Company purchased a 17.7% direct and indirect equity interest in Grupo Modelo’s operating subsidiary, Diblo S.A. de C.V., for $477 million. As noted in Note 2, “International Equity Investments,” on pages 50 and 51 of the 2005 Annual Report to Shareholders, which Note is hereby incorporated by reference, Diblo is the operating subsidiary of Grupo Modelo, Mexico’s largest brewer and accordingly, operates in Mexico and is a brewer. The Company increased its direct and indirect equity ownership in Diblo in 1997 to 37% for an additional $605 million and completed the purchase of an additional 13.25% of Diblo for $557 million in 1998, bringing the Company’s total investment to $1.6 billion. The Company now owns a 35.12% direct interest in Grupo Modelo and a 23.25% direct interest in Diblo, providing the Company with, directly and indirectly, a 50.2% interest in Diblo. However, the Company does not have voting or other effective control of either Grupo Modelo or Diblo.

      Competition for international beer operations differs significantly depending upon the specific country involved. For 2005, no single foreign country or region accounted for more than 3.0% of consolidated revenues or 2.3% of consolidated income before income taxes. The Company’s primary foreign markets for beer sales are China, the United Kingdom, Canada, Mexico and Ireland. In each international market, the Company competes against a mix of national, regional, local, and imported beer brands. In China, competition is primarily from numerous national and regional brands. There is no dominant competitor in China. In the United Kingdom, the top four competitors—Scottish & Newcastle, Coors Brewers, InBev, and Carlsberg-Tetley—have combined market share of nearly 77%, with Scottish & Newcastle having a share of approximately 24%. The Company’s share is 3%. In Ireland, the market leader is the Company’s lice nse brewing partner, Guinness Ireland, with a market share of 64% including a share of 14% related to the Company’s products. In Canada, the top two competitors, of similar size, are the Molson Coors Brewing Company and the Company’s license brewing partner, Labatt Brewing. Their combined market share is more than 82%, including a share of 14% related to the Company’s products.

      Net income for the International Beer Segment also includes the Company’s ownership percentage of the net income of Grupo Modelo. Modelo’s principal competitor in Mexico is FEMSA S.A. de C.V., with the two companies having respective market shares of 56% and 44%. Although Anheuser-Busch does not significantly compete in the Mexican beer market, a significant change in Modelo’s business could have a material effect on the Company’s reported net income and earnings per share.

Packaging

      The Company’s packaging operations are handled through the following wholly-owned subsidiaries of the Company: Metal Container Corporation (MCC), which manufactures beverage cans at eight plants and beverage can lids at three plants for sale to ABI and U.S. soft drink customers (See Item 2 of Part 1—Properties); Anheuser-Busch Recycling Corporation, which buys and sells used aluminum beverage containers from its corporate office in Sunset Hills, Missouri and recycles aluminum containers at its plant in Hayward, California; Precision Printing and Packaging, Inc., which manufactures pressure sensitive, metalized, plastic and paper

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labels at its plant in Clarksville, Tennessee; and Eagle Packaging, Inc., which manufactures crown and closure liner materials for ABI at its plant in Bridgeton, Missouri.

      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.

      The packaging industry is highly competitive. MCC’s share of the U.S. aluminum beverage can market for 2005 was approximately 26%. MCC’s competitors include Ball Corporation, Rexam Corporation, and Crown Holdings. In addition, the can industry faces competition from other beverage containers, such as glass and plastic bottles.

Family Entertainment

      The Company is active in the family entertainment industry, 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) and 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 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.

      In 2005, the Company sold its 13.3% equity interest in Port Aventura, S.A., a theme park near Barcelona, Spain.

      The Company is the third largest theme park operator in the United States. It faces competition in the family entertainment industry from other theme and amusement parks, public zoos, public parks, and other family entertainment events and attractions. Major competitors in the theme park industry during 2005 include Walt Disney Co., Six Flags Parks, and Universal Studios Theme Parks. No reliable national market share information is available for the theme park industry.

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 its wholly-owned subsidiary, Manufacturers Railway Co., the Company owns and operates a transportation service business.

Sources and Availability of Raw Materials

      The Company’s wholly-owned subsidiary, Busch Agricultural Resources, Inc. (“BARI”), operates rice milling facilities in Jonesboro, Arkansas and Woodland, California; twelve grain elevators in the western and midwestern United States; barley seed processing plants in Fairfield, Montana, Idaho Falls, Idaho, and Powell, Wyoming; and a barley research facility in Ft. Collins, Colorado. 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 a barley purchasing office in Winnipeg, Canada.

      The products manufactured by the Company require a large volume of various agricultural products, including hops, barley malt, rice, and corn grits for beer, and rice and barley for the rice milling and malting operations of Busch Agricultural Resources, Inc. The Company fulfills its commodities requirements through purchases from various sources, including purchases from its subsidiaries, through contractual arrangements and on the open market. The Company believes that adequate supplies of the aforementioned agricultural

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products are available at the present time, but cannot predict future availability or market prices of such products and materials. The above referenced commodities 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 and trade.

      The Company uses water in brewing its beer. The Company generally satisfies its requirements for water from municipal water systems and privately owned wells.

      The Company also requires aluminum cansheet for the manufacture of cans and lids. The cansheet market experiences price volatility due to the supply and demand balance for both aluminum ingot and sheet fabrication. The Company manages its aluminum supply and cost using various methods including long-term purchase contracts and hedging techniques. The Company believes that an adequate supply of aluminum is available at the present time, but cannot predict future availability or market prices.

Energy Matters

      The Company uses natural gas, fuel oil, and coal as its primary fuel materials. The Company believes that adequate supplies of fuel and electricity are available at the present time, but cannot predict future availability or market prices. Where economically feasible, the Company has alternate fuel capability which helps ensure continued operation of essential processes.

      The energy commodity markets have experienced and, the Company expects, will continue to experience significant price volatility. The Company manages its energy costs using various methods including supply contracts, hedging techniques, and fuel switching.

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. The Company owns rights to its principal brand names and trademarks in perpetuity.

Research and Development

      The Company is involved in a number of research activities relating to the development of new products or services or the improvement of existing products or services. The dollar amounts expended by the Company during the past three years on such research activities and the number of employees engaged full time therein during such period, however, are not considered to be material in relation to the total business of the Company.

Environmental Protection

      All of the Company’s 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 innovative and cost effective 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 facilitated lower cost operating systems while reducing the impact to air, water, and land.

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Environmental Packaging Laws and Regulations

      The states of California, Connecticut, Delaware, Hawaii, 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. While such laws have not had a significant effect on ABI’s market share, they have resulted in significantly higher beer prices over and above the cost of the deposit in those states that have adopted container deposit laws as well as had an adverse impact on beer industry growth in those states. The Company considers deposit laws 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 might require the Company to incur significant capital expenditures to comply as some proposed container deposit laws would require th e use of returnable, reusable bottles. As a result, the Company would be required to acquire equipment to receive, sort, inspect and clean bottles.

Number of Employees

      As of December 31, 2005, the Company had approximately 31,485 full-time employees worldwide. Within the United States approximately 8,266 employees were represented by the International Brotherhood of Teamsters. The labor agreement between ABI and the Teamsters, which represents the majority of the domestic brewery workers, expires February 28, 2009. Approximately 10,000 international employees of the Company are members of other worker organizations (the vast majority of which are not subject to collective bargaining agreements).

      The Company considers its employee relations to be good.

Available Information

      The Company maintains a website on the World Wide Web at www.anheuser-busch.com. The Company makes available, free of charge, on its website its annual reports on Forms 10-K, quarterly reports on Forms 10-Q, current reports on Forms 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. The Company’s reports filed with, or furnished to, the SEC are also available on the SEC’s website at www.sec.gov.

Item 1A.  Risk Factors

      Anheuser-Busch makes forward-looking statements in its filings with the Securities and Exchange Commission and in other oral or written communications. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from those indicated (both favorably and unfavorably). These risks and uncertainties include (but are not limited to) the risks described below. Anheuser-Busch undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Increased competitive pressures may reduce revenues or increase costs.

      Anheuser-Busch faces competition in each business from alternative providers of the products we offer. For example:

• The domestic beer business competes with other domestic and international brewers as well as with producers of other types of alcohol beverages;



• The international beer business competes with a mix of national, regional, local and international brewers, depending on the country;



• The packaging business competes with other producers of beverage cans and beverage lids as well as producers of other types of beverage containers;



• The family entertainment business competes with the operators of other theme and amusement parks, public zoos, public parks and other family events and attractions.

9

      Competition may divert consumers and customers from the Anheuser-Busch products. In order to respond to competition, Anheuser-Busch may need to change the prices of products or incur additional costs to introduce new packages or products. Innovation faces inherent risks, and the new products we introduce may not be successful.

Changes in consumer tastes and preferences could reduce demand for the Anheuser-Busch products.

      The success of Anheuser-Busch depends on satisfying consumer tastes and preferences with our beverage products, our container products and our theme park offerings. Consumer preferences can change in unpredictable ways, and consumers may begin to prefer the products of competitors. In order to respond to changes in consumer preferences, Anheuser-Busch may need to increase and enhance the marketing of existing products, change the pricing of existing products or introduce new products and services. Each response might affect financial results.

Increases in raw material and commodity prices could increase operating costs.

      The Anheuser-Busch malt beverage products require various agricultural products. Anheuser-Busch also uses aluminum cansheet to manufacture beverage cans and lids, glass bottles as containers for malt beverages and natural gas, fuel oil and coal as primary fuel materials. Raw materials and commodities are subject to price volatility caused by market fluctuations, including the quality and availability of supply, weather, currency fluctuations, trade agreements among producing and consuming nations, consumer demand and changes in governmental programs. To some extent, derivative financial instruments and supply agreements can protect against increases in materials and commodities costs, but they do not provide complete protection over the longer term. Anheuser-Busch might be able to raise prices to offset increases in costs, but price increases can reduce sales volumes. If Anheuser-Busch is not able to increase prices to offset co st increases or if price increases reduce sales volumes, financial results would be adversely affected.

Anheuser-Busch is subject to risks associated with international operations.

      Anheuser-Busch has significant international operations and the profitable expansion of the international business is a long term goal. Anheuser-Busch has equity investments in brewers in China and Mexico, owns breweries in China and the United Kingdom and sells malt beverages globally. Although Anheuser-Busch does not significantly compete in the Mexican beer market, a significant change in Modelo’s business could have a material effect on the Company’s reported net income and earnings per share.

      The international operations are subject to the inherent risks of international business, such as:

• Political and economic changes;



• Changes in the relations between the United States and foreign countries;



• Actions of foreign or United States governmental authority affecting trade and foreign investment;



• Regulations on repatriation of funds;



• Foreign currency exchange restrictions;



• Interpretation and application of local laws and regulations;



• Enforceability of intellectual property and contract rights;



• Local labor conditions and regulations.

The loss of key personnel could adversely affect operations and financial results.

      The ability of Anheuser-Busch to meet strategic and financial goals will depend to a significant extent on the continued contributions of the senior management team. Future success will also depend in large part on the ability to identify, attract and retain other highly qualified managerial, sales and marketing and technical personnel. Anheuser-Busch may not succeed in retaining senior management or other key personnel. The loss

10

of senior management or other key personnel or the inability to identify, attract and retain qualified personnel in the future could make it difficult to manage the business and could adversely affect operations and financial results.

An increase in beer excise taxes or other taxes could adversely affect financial results.

      Anheuser-Busch is affected by federal, foreign, state and local income and other taxes, particularly beer excise taxes which are levied both by the federal, foreign and state governments. Proposals are made from time to time to increase beer excise taxes in a variety of states. In addition, Anheuser-Busch is subject to periodic audits and examinations by the Internal Revenue Service and other foreign, state and local taxing authorities. An increase in taxes or an adverse determination by a taxing authority could adversely affect financial results.

Governmental regulation could affect our operations or increase costs.

      All of the Anheuser-Busch businesses are subject to governmental regulation. The Anheuser-Busch domestic beer business and its wholesalers are especially subject to extensive regulation at the federal, state and local levels. Permits, licenses and approvals necessary to the domestic beer business are required from the Alcohol and Tobacco Tax and Trade Bureau of the United States Treasury Department, state alcohol beverage regulatory agencies in the states in which we sell or produce products and local authorities in some jurisdictions in which we sell products. Compliance with these laws and regulations can be costly.

      Anheuser-Busch may be subject to claims that we have not complied with existing laws and regulations, which could result in fines and penalties. Anheuser-Busch is routinely subject to new or modified laws and regulations with which we must comply in order to avoid fines and other penalties and which may affect operations. From time to time, new laws and regulations are proposed that would affect operations, affect the distribution of the Anheuser-Busch products by its wholesalers, or increase expenses.

Anheuser-Busch is subject to litigation directed at the alcohol beverage industry and other litigation.

      Anheuser-Busch and many other brewers and distilled spirits manufacturers have been sued in several courts regarding advertising practices and underage consumption. The suits allege that the defendants marketed products to underage consumers. The suits purport to be class actions and seek unspecified money damages and equitable remedies. We believe we have meritorious defenses and will defend ourselves vigorously in these actions.

      Anheuser-Busch is now, and may in the future be, a party to other legal proceedings and claims, and significant damages may be asserted against us. Given the inherent uncertainty of litigation, it is possible that Anheuser-Busch might incur liabilities as a consequence of the proceedings and claims.

Anheuser-Busch may make acquisitions, investments and joint venture arrangements, which are risky.

      Anheuser-Busch has in the past and may in the future make acquisitions of, investments in, and joint venture arrangements with international brewers to increase international beer profits. We cannot be assured that the acquisitions, investments and joint venture arrangements will achieve the expected benefits. Also, our ability to increase international beer profits by this method will depend on the availability of suitable candidates at an acceptable price and our ability to compete effectively for these candidates.

The Anheuser-Busch businesses are subject to a number of other miscellaneous risks that may adversely affect financial results.

      Other miscellaneous risks include:

• Changes in global and domestic economies, including slow growth rate, rise in interest rates, changes in currency exchange rates, rise in cost of commodities, inflation, unemployment and weakening consumer confidence which could reduce demand for the Anheuser-Busch products, affect the businesses of the international brewers in which we have made investments or increase costs, including borrowing costs;

11

• Natural disasters, such as hurricanes, which may result in shortages of raw materials and commodities and reduction in tourism and attendance at the Anheuser-Busch theme parks;



• Unusual weather conditions which could affect domestic beer consumption, attendance at the Anheuser-Busch theme parks, raw material availability, or natural gas prices;



• Continued threat of terrorist acts and war, which may result in heightened security and higher costs for imports and exports, reduced tourism and attendance at the Anheuser-Busch theme parks and contraction of the United States and worldwide economies;



• Changes in the Anheuser-Busch share price which could affect the share repurchase program.

Item 1B.  Unresolved Staff Comments

      None.

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 to purchase and modify 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 o perated at approximately 90.2% of capacity in 2005; during portions of the peak selling periods (second and third quarters), they operated at close to 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. With its acquisition of Harbin Brewery Group, the Company now has thirteen breweries in northeast China. There are two breweries located in Harbin and one in each of Hailun, Yongji County (Jilin Province), Hegang, Changchun, Mudanjiang, Jiamusi, Daqing, Jinzhou, Tangshan, Shenyang, and Yanji.

      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, California; can lid manufacturing plants in Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside, California; a label plant in Clarksville, Tennessee; 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 wholly-owned 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 336 acres, the Williamsburg facility is 323 acres, the San Diego facility is 166 acres, the Orlando facility is 247 acres, and the San Antonio facility is 316 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, the brewery in Wuhan, China, and certain of the breweries owned by Harbin Brewery Group, 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 & Newcastle. 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 considers its buildings, improvements, and equipment to be well maintained and in

12

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

      In 2005, the Company and its outside insurance companies settled all claims associated with previously disclosed lawsuits filed by Maris Distributing Company. Additional information is contained in Note 13, “Contingencies,” on page 60 of the 2005 Annual Report to Shareholders, which Note hereby is incorporated by reference.

      In 2004, the Company was served with a complaint brought by two individuals seeking to bring a class action on behalf of all California residents who, while they were under 21 years of age, purchased alcohol beverages manufactured by the Company and another defendant during the last four years. The suit sought disgorgement of unspecified profits earned by the Company in the past and other unspecified damages and equitable relief. By order dated January 28, 2005, the California state court granted the defendants judgment on the pleadings and dismissed the case in its entirety. The plaintiffs in that action have appealed.

      Additionally, the Company has been served with similar complaints in putative class action lawsuits in Michigan, Ohio, Wisconsin and West Virginia. In these suits, which name a large number of other brewers and distillers, the parents of illegal underage drinkers are suing to recover the sums that their offspring purportedly spent illegally buying alcohol from persons or entities other than the defendants. The claims asserted against the Company vary depending on the suit, but include negligence, unjust enrichment, violation of the state’s Sales Practice Act or other statutory provisions, nuisance, fraudulent concealment and civil conspiracy. The suit filed in Michigan includes a claim under the Michigan Consumer Protection Act. Each suit seeks money damages, punitive damages and injunctive and equitable relief, including so-called disgorgement of profits allegedly attributable to illegal underage drinking. The Company removed the Ohio case to federal court in the Northern District of Ohio in June 2004, removed the West Virginia case to federal court in the Northern District of West Virginia in May 2005 and removed the Michigan case to federal court in the Eastern District of Michigan in July 2005. The Company filed motions to dismiss the Ohio and Wisconsin cases, and the Ohio federal court and the Wisconsin state court dismissed the entire cases with prejudice. A motion to dismiss is pending in Michigan. Similar actions were filed by the same law firm in New York and Florida, but the Company was not served in either case, and the Florida case has been voluntarily dismissed by the plaintiffs.

      The Company believes that it has strong legal and factual defenses to these class actions and intends to defend itself vigorously.

      The Company is not a party to any other pending or threatened litigation, the outcome of which could be expected to have a material adverse effect upon its financial condition, its results of operations or cash flows.

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, 2005.

EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

      PATRICK T. STOKES (age 63) is presently President and Chief Executive Officer and a Director of the Company and has served in such capacities since 2002, 2002, and 2000, respectively. He previously served as Senior Executive Vice President (2000-2002) of the Company. He is also presently Chairman and Chief Executive Officer of the Company’s subsidiary, Anheuser-Busch, Incorporated (ABI), and has served in such capacities since 2002 and 2000, respectively, and Chairman of the Board of the Company’s subsidiary, Anheuser-Busch International, Inc., and has served in such capacity since 1999. He previously served as President of ABI (1990-2002).

      AUGUST A. BUSCH III (age 68) is presently Chairman of the Board and a Director of the Company and has served in such capacities since 1977 and 1963, respectively. He previously served as President of the

13

Company (1974-2002) and Chief Executive Officer (1975-2002). He also serves as Executive Vice President of the Company’s subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 2002, and had previously served as its Chairman of the Board (1979-2002) and also as its Chief Executive Officer (1979-2000).

      W. RANDOLPH BAKER (age 59) is presently Vice President and Chief Financial Officer of the Company and has served in such capacity since 1996.

      JOHN E. JACOB (age 71) is presently Executive Vice President-Global Communications and a Director of the Company and has served in such capacities since 2002 and 1990, respectively. He previously served as the Company’s Executive Vice President and Chief Communications Officer (1994-2002). He also serves as Executive Vice President of the Company’s subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 2002.

      THOMAS W. SANTEL (age 47) is presently Vice President-Corporate Development of the Company and has served in such capacity since 1996.

      STEPHEN J. BURROWS (age 54) is presently Vice President-International Operations of the Company and has served in such capacity since 1999. 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.

      AUGUST A. BUSCH IV (age 41) is presently Vice President and Group Executive of the Company and has served in such capacity since 2000. He is also presently President of the Company’s subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 2002 and had previously served as its Group Vice President-Marketing and Wholesale Operations (2000-2002).

      MARK T. BOBAK (age 46) is presently Group Vice President and Chief Legal Officer and has served in that capacity since 2004. He had previously served as Vice President-Corporate Human Resources (2000-2004).

      JOSEPH P. SELLINGER (age 59) 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 is also Chairman, Chief Executive Officer and President of the Company’s direct subsidiary, Glass Container Corporation (doing business as Longhorn Glass Corporation), and has served in such capacities since 2001.

      DOUGLAS J. MUHLEMAN (age 51) is presently Group Vice President-Brewing Operations and Technology of the Company’s subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 2001 and had previously served as its Vice President-Brewing (1996-2001).

      FRANCINE I. KATZ (age 47) is presently Vice President-Communications and Consumer Affairs of the Company and has served in such capacity since 2004. She previously served as its Vice President-Corporate Communications (2002-2004) and Vice President-Consumer Affairs (1999-2002).

      KEITH M. KASEN (age 62) is presently Chairman of the Board and President of the Company’s subsidiary, Busch Entertainment Corporation, and has served in such capacities since 2003. He previously served as Executive Vice President and General Manager of the SeaWorld theme parks in Orlando, Florida (2000-2003).

      JOSEPH P. CASTELLANO (age 52) is presently Vice President-Corporate Human Resources of the Company and has served in such capacity since 2004. He previously served as Vice President-Retail Marketing (2001-2004) and Vice President-Wholesale Operations (1994-2001) of the Company’s subsidiary, Anheuser-Busch, Incorporated.

      JAMES F. HOFFMEISTER (age 61) is presently Group Vice President-Procurement, Logistics and Agricultural Resources of the Company’s subsidiary, Anheuser-Busch, Incorporated (ABI) and has served in such capacity since 2004. He previously served as Vice President-Administration (1990-2004) of ABI.

14

      MICHAEL J. OWENS (age 51) is presently Vice President-Marketing of the Company’s subsidiary, Anheuser-Busch, Incorporated (ABI) and has served in such capacity since January 2006. He previously served as Vice President-Sales and Marketing (2004-2005), Vice President-Sales (2001-2004) and Vice President-Geographic Marketing (1997-2001) of ABI.

      ANTHONY T. PONTURO (age 53) is presently Vice President-Global Media and Sports Marketing of the Company’s subsidiary, Anheuser-Busch, Incorporated and has served in such capacity since 1998.

      JOHN F. KELLY (age 49) is presently Vice President and Controller of the Company and has served in such capacity since 1996.

      MARLENE V. COULIS (age 44) is presently Vice President-Brand Management of the Company’s subsidiary, Anheuser-Busch, Incorporated (ABI) and has served in such capacity since August 2005. She previously served as Vice President-Research and Customer Satisfaction (March 2005-August 2005), Vice President-Geographic Marketing (April 2004-March 2005), Director-New Products (2001-2004) and Brand Manager (1997-2001) of ABI.

PART  II

      The information required by Items 5 (except as set forth below), 6, 7, 7A, and 8 of this Part II are hereby incorporated by reference from pages 26 through 65 of the Company’s 2005 Annual Report to Shareholders.

Item 5.  Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

      Following are the Company’s common stock purchases during the fourth quarter 2005 (shares in millions):

	Shares		Avg. Price per Share
Shares Remaining Authorized Under Disclosed Repurchase Programs at September 30, 2005		31.4
Less Shares Repurchased:
October		—	N/A
November		—	N/A
December		—	N/A
Total Shares Repurchased		—	N/A
Shares Remaining Authorized Under Disclosed Repurchase Programs at December 31, 2005		31.4

      All shares are repurchased under authorization by the Company’s Board of Directors. The Board authorized the current program to repurchase 100 million shares in March 2003. There is no prescribed termination date for this program. The figures shown include shares delivered to the Company to exercise stock options.

Item 6.  Selected Financial Data

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Item 8.  Financial Statements and Supplementary Data

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None.

Item 9A.  Controls and Procedures.

      It is the responsibility of the chief executive officer and chief financial officer to ensure the Company maintains disclosure controls and procedures designed to provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is

15

identified and communicated to senior management on a timely basis. The Company’s disclosure controls and procedures include mandatory communication of material subsidiary events, automated accounting processing and reporting, management review of monthly and quarterly results, periodic subsidiary business reviews, an established system of internal controls and rotating internal control reviews by the Company’s internal auditors.

      The chief executive officer and chief financial officer evaluated the Company’s disclosure controls and procedures as of the end of the year ended December 31, 2005 and have concluded that they are effective as of December 31, 2005 in providing reasonable assurance that such information is identified and communicated on a timely basis. Additionally, there were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

      Management’s Report on Internal Control Over Financial Reporting appears on page 40 of the 2005 Annual Report to Shareholders, which is incorporated by reference. The Report of the Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting appears on page 41 of the 2005 Annual Report to Shareholders, which is incorporated by reference.

Item 9B.  Other Information.

      None.

PART  III

Item 10.  Directors and Executive Officers of the Registrant

      A portion of the information required by this Item with respect to Directors is hereby incorporated by reference from pages 7 through 9, 13 and pages 27 and 28 of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 26, 2006. The information required by this Item with respect to Executive Officers is presented on pages 13 through 15 of this Form 10-K.

Item 11.  Executive Compensation

      The information required by this Item is hereby incorporated by reference from pages 11 and 12 and pages 19 through 26 of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 26, 2006.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

      A portion of the information required by this Item pursuant to Item 403 of Regulation S-K is hereby incorporated by reference from pages 10 and 11 of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 26, 2006.

      The information required pursuant to Item 201(d) of Regulation S-K is hereby incorporated by reference from page 26 of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 26, 2006.

Item 13.  Certain Relationships and Related Transactions

      The information required by this Item is hereby incorporated by reference from pages 27 and 28 of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 26, 2006.

Item 14.  Principal Accounting Fees and Services

      The information required by this Item is hereby incorporated by reference from page 19 of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 26, 2006.

16

PART  IV

Item 15.  Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this report:

1.	Financial Statements:	Page
	Report of Independent Registered Public Accounting Firm	41*
	Consolidated Balance Sheet at December 31, 2005 and 2004	42*
	Consolidated Statement of Income for the three years ended December 31, 2005	43*
	Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 2005	44*
	Consolidated Statement of Cash Flows for the three years ended December 31, 2005	45*
	Notes to Consolidated Financial Statements and Supplementary Information	46-65*

      *Incorporated herein by reference from the indicated pages of the 2005 Annual Report to Shareholders.

2.	Financial Statement Schedule:
	Report of Independent Registered Public Accounting Firm on Financial Statement Schedule for the three years ended December 31, 2005	F-1
	Schedule II—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, 2004).
	Exhibit 3.2      —	By-Laws of the Company (As amended and restated September 24, 2003) (Incorporated by reference to Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 2003).
	Exhibit 4.1      —	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).
	Exhibit 4.2      —	Indenture dated as of July 1, 2001 between the Company and The Chase Manhattan Bank, as Trustee (Incorporated by reference to Exhibit 4.4 to the Form 10-K for the fiscal year ended December 31, 2002).
		Other indentures are not required to be filed, but the Company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request.
	Exhibit 4.3      —	Credit Agreement dated as of September 30, 2005 among the Company and JP Morgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to Exhibit 4 to Form 10-Q for the quarter ended September 30, 2005).
	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, 2004).*

17

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 the Form 10-K for the fiscal year ended December 31, 2004).*
Exhibit 10.3    —	Anheuser-Busch Companies, Inc. Stock Plan for Non-Employee Directors as amended and restated (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 23, 2003).*
Exhibit 10.4    —	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 10.4 to Form 10-K for the fiscal year ended December 31, 2002).*
Exhibit 10.5    —	Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan (Incorporated by reference to Appendix C to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 27, 2005).*
Exhibit 10.6    —	Anheuser-Busch Companies, Inc. Excess Benefit Plan amended and restated as of March 1, 2000 (Incorporated by reference to Exhibit 10.6 to the Form 10-K for the fiscal year ended December 31, 2004).*
Exhibit 10.7    —	Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan amended and restated as of March 1, 2003 (Incorporated by reference to Exhibit 10.8 to Form 10-K for the fiscal year ended December 31, 2002).*
Exhibit 10.8    —	Anheuser-Busch Executive Deferred Compensation Plan amended and restated as of January 1, 2002 (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 2002).*
Exhibit 10.9    —	First Amendment to the Anheuser-Busch Executive Deferred Compensation Plan amended and restated as of January 1, 2002.*
Exhibit 10.10  —	Anheuser-Busch 401(k) Restoration Plan amended and restated as of March 1, 2000 (Incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 2004).*
Exhibit 10.11  —	First Amendment to the Anheuser-Busch 401(k) Restoration Plan amended and restated as of March 1, 2000.*
Exhibit 10.12  —	Form of Indemnification Agreement with Directors and Executive Officers (Incorporated by reference to Exhibit 10.12 to the Form 10-K for the fiscal year ended December 31, 2004).*
Exhibit 10.13  —	Anheuser-Busch Officer Bonus Plan as amended on April 26, 2000 and April 27, 2005 (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 27, 2005).*
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 10.14 to Form 10-K for the fiscal year ended December 31, 2004).
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 10.15 to Form 10-K for the fiscal year ended December 31, 2004).
Exhibit 10.16  —	Form of Indemnification Agreement between Anheuser-Busch, Incorporated and certain Executive Officers of the Company (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year ended December 31, 2002).*

18

Exhibit 10.17  —	Consulting Agreement between Anheuser-Busch Companies, Inc. and a former executive officer of the Company (Incorporated by reference to Exhibit 10.17 to Form 10-K for the fiscal year ended December 31, 2004).*
Exhibit 10.18  —	2006 Officer Bonus Program.*
Exhibit 10.19  —	Summary of Compensation arrangements with Executive Officers of the Company.*
Exhibit 10.20  —	Summary of Compensation arrangements with Non-Employee Directors of the Company.*
Exhibit 10.21  —	Form of Restricted Stock Award Cover Sheet and Standard Restricted Stock Agreement under the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan (Incorporated by reference to Exhibit 10.21 to Form 8-K dated November 22, 2005).*
Exhibit 10.22  —	Form of Incentive Stock Option Cover Sheet and Standard Incentive Stock Option Agreement under the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan for executive officers of Anheuser-Busch Companies, Inc. (Incorporated by reference to Exhibit 10.22 to Form 8-K dated November 23, 2005).*
Exhibit 10.23  —	Form of Non-Qualified Stock Option Cover Sheet and Standard Non-Qualified Stock Option Agreement under the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan for executive officers of Anheuser-Busch Companies, Inc. (Incorporated by reference to Exhibit 10.23 to Form 8-K dated November 23, 2005).*
Exhibit 12      —	Ratio of Earnings to Fixed Charges.
Exhibit 13      —	Pages 26 through 65 of the Anheuser-Busch Companies, Inc. 2005 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 14      —	Code of Business Ethics and Conduct (Incorporated by reference to Exhibit 14 to Form 10-K for the fiscal year ended December 31, 2003).
Exhibit 21      —	Subsidiaries of the Company.
Exhibit 23      —	Consent of Independent Registered Public Accounting Firm.
Exhibit 24      —	Power of Attorney.
Exhibit 31.1   —	Certification of Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act.
Exhibit 31.2   —	Certification of Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act.
Exhibit 32.1   —	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2   —	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*A management contract or compensatory plan or arrangement required to be filed by Item 15(c) of this report.

19

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/ W. Randolph Baker
	W. Randolph Baker                      Vice President and Chief Financial Officer

Date: March 9, 2006

      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.

Principal Executive Officer:
      Patrick T. Stokes*
      President and Chief Executive Officer

Principal Financial Officer:
      W. Randolph Baker
      Vice President and Chief Financial Officer

Principal Accounting Officer:
      John F. Kelly*
      Vice President and Controller

                                /s/ W. Randolph Baker

(W. Randolph Baker, as attorney-in-fact and on his
own behalf as Principal Financial Officer)

Date: March 9, 2006

Directors:
Patrick T. Stokes* August A. Busch III* Carlos Fernandez G.* James J. Forese* John E. Jacob* James R. Jones* Charles F. Knight* Vernon R. Loucks, Jr.*	Vilma S. Martinez* William Porter Payne* Joyce M. Roché* Henry Hugh Shelton* Andrew C. Taylor* Douglas A. Warner III* Edward E. Whitacre, Jr.
* by power of attorney

20

ANHEUSER-BUSCH COMPANIES, INC.

INDEX TO FINANCIAL STATEMENT SCHEDULE

	Page
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule	F-1
Financial Statement Schedule for the Years 2005, 2004 and 2003:
Valuation and Qualifying Accounts and Reserves (Schedule II)	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.

21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of Anheuser-Busch Companies, Inc.

Our audits of the consolidated financial statements, of management’s assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated February 22, 2006 appearing in the 2005 Annual Report to Shareholders of Anheuser-Busch Companies, Inc. (which report, consolidated financial statements and assessment are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP

St. Louis, MO
February 22, 2006

F-1

ANHEUSER-BUSCH COMPANIES, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(In Millions)

		2005			2004			2003
Reserve for doubtful accounts:
Balance at beginning of period	$	12.5		$	6.6		$	5.6
Additions charged to costs and expenses		3.8			0.5			1.6
Additions (recoveries of uncollectible accounts previously written off), including Harbin acquisition in 2004		3.6			6.3			0.2
Reductions (uncollectible accounts written off)		(4.6	)		(0.9	)		(0.8	)
Balance at end of period	$	15.3		$	12.5		$	6.6
Deferred income tax asset valuation allowance:
Balance at beginning of period	$	32.2		$	19.9		$	10.9
Additions charged to costs and expenses, including Harbin acquisition in 2004		20.2			27.4			14.6
Addition due to litigation settlement		27.4			—			—
Reductions from utilizations and expirations		(12.8	)		(15.1	)		(5.6	)
Balance at end of period	$	67.0		$	32.2		$	19.9

F-2

EX-10.9

EXHIBIT 10.9

FIRST AMENDMENT TO ANHEUSER-BUSCH EXECUTIVE DEFERRED

COMPENSATION PLAN

(Amended and Restated as of January 1, 2002)

In accordance with the provisions of Article IX of the Anheuser-Busch Executive Deferred Compensation Plan (the “Plan”), the Plan is hereby amended as follows:

The following new Section 3.05 is hereby inserted immediately following Section 3.04, effective December 1, 2005.

3.05. Optional Cancellation of 2005 Deferrals. Notwithstanding anything herein to the contrary, a Participant shall have the right to cancel all or part of the Participant’s prior election to defer his or her Base Salary for the Year commencing January 1, 2005 in accordance with the Company’s direction (which direction shall include the requirement that the election to cancel be made on or before December 31, 2005). If the Participant exercises this right to cancel, the Company shall distribute (prior to January 1, 2006) the applicable Deferral Amount cancelled pursuant to this Section 3.05 and any related hypothetical investment credited to his or her Account as of November 30, 2005 (subject to appropriate withholding of taxes). Such election to cancel and resulting distribution under this Section 3.05 shall be made in conformance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), Internal Revenue Service Notice 2005-1, and proposed Treasury Regulations issued under Section 409A.

IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. has executed this First Amendment this 13 day of December, 2005.

ANHEUSER-BUSCH COMPANIES, INC.

By: /s/ W. Randolph Baker            
     W. Randolph Baker
     Chief Financial Officer

EX-10.11

EXHIBIT 10.11

FIRST AMENDMENT TO ANHEUSER-BUSCH 401(k)

RESTORATION PLAN

(Amended and Restated as of March 1, 2000)

In accordance with the provisions of Article XII of the Anheuser-Busch 401(k) Restoration Plan (the “Plan”), the Plan is hereby amended as follows:

1.	The following new Section 2.19 is hereby inserted immediately following Section 2.18, effective December 1, 2005:
	2.19.         “Special Assignment Employee.”
	A person considered to be an employee of any Participating Employer for payroll purposes but for whom employment with the Participating Employer is deemed to have terminated pursuant to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and proposed Treasury Regulations issued under Section 409A.
2.	Section 7.1 is hereby amended to read as follows, effective December 10, 2004:
	7.1.           Election of Hypothetical Investments.
	Prior to becoming a Participant, each Participant must (and at such times as the Company may thereafter allow, each Participant may) select the combination of Investment Funds in which he or she wishes hypothetically to invest, subject to the following limitations:

(a)	The portion of each Participant’s Account which is attributable to Company Contributions, including earnings thereon, shall be hypothetically.
(b)	At least 50% of the portion of each Participant’s Account which is attributable to Personal Salary Deferral Contributions, including earnings thereon, shall be hypothetically invested in the Company Stock Fund in accordance with the rules and regulations of the Regular 401(k) Plan.
(c)	Notwithstanding (b) above, no part of the value of a Reporting Person’s Account which is attributable to Personal Salary Deferral Contributions shall be hypothetically invested in the Company Stock Fund at any time.

(d)

A Participant’s elections respecting hypothetical investment of future deferrals and hypothetical investment of the Participant's existing Account shall be made separately and independently in accordance with the rules and regulations of the Regular 401(k) Plan.

(e)

If a Participant dies before distribution of the Participant’s entire Account is complete, the Participant's Beneficiary shall have the right to make the elections reserved to the Participant in the foregoing subsections of this Section 7.1 from the date the Employee Stock Plans Department of the Company receives written notice of the Participant's death through the date of final distribution; provided: (i) if a deceased Participant has two or more Beneficiaries, the Beneficiaries shall have the right to make such elections with respect to the portions of the Participant’s Account to which they are respectively entitled; and (ii) if the Beneficiary is a minor or otherwise legally incompetent, a parent or legal guardian of the Beneficiary, as the case may be, shall exercise such right on behalf of the Beneficiary.

3.	The following new Section 13.14 is hereby inserted immediately following Section 13.13, effective December 1, 2005:
	13.14.       Special Assignment Employees.

(a)	In order to operate the Plan in good faith compliance with the applicable provisions of Section 409A, an election made by a Special Assignment Employee to make Personal Salary Deferral Contributions with respect to 2005 Compensation shall be immediately terminated (the “Terminated Election”).
(b)	Notwithstanding anything herein to the contrary, the Company Contributions related to the Terminated Election and hypothetical investments thereon shall vest and become non-forfeitable as of the effective date of this Amendment.
(c)	The portion of the Account attributable to the Personal Salary Deferral Contributions made with respect to the Terminated Election, related Company Contributions, and hypothetical investments credited thereon in accordance with Article VII, shall be

2

	distributed to the Participant on or before December 31, 2005 (subject to appropriate withholding of taxes).
(d)	All election terminations and corresponding Account distributions shall be made in conformance with Section 409A, Internal Revenue Service Notice 2005-1, and proposed Treasury Regulations issued under Section 409A.

IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. has executed this First Amendment this 13 day of December, 2005.

ANHEUSER-BUSCH COMPANIES, INC.

By: /s/ W. Randolph Baker            
     W. Randolph Baker
     Chief Financial Officer

3

EX-10.18

Exhibit 10.18

2006 OFFICER BONUS PROGRAM

UNDER THE

ANHEUSER-BUSCH OFFICER BONUS PLAN

The Compensation Committee (the “Committee”) of the Board of Directors of Anheuser-Busch Companies, Inc. (the “Company”) hereby establishes the 2006 Officer Bonus Program (the “Program”) in accordance with the Anheuser-Busch Officer Bonus Plan (the “Plan”), the terms of which are incorporated herein by reference, as follows:

Section 1.PERFORMANCE PERIOD. The calendar year 2006 (“2006”) shall constitute the Performance Period for the purpose of determining Bonuses payable to Participants in the Program.

Section 2.PARTICIPANTS AND DESIGNATED COVERED EMPLOYEES. The officers of the Company listed on Schedule A attached hereto are hereby designated as Participants in the Program. The first nine Participants listed on Schedule A (“Designated Covered Employees”) are those the Committee believes may be or become covered employees as that term is defined by Section 162(m) of the Code (“Covered Employees”).

Section 3.PERFORMANCE GOAL. The performance goal for 2006 (the “Performance Goal”) shall be met if Pretax Income for 2006 equals or exceeds xx percent of Pretax Income for 2005. No Bonus shall be paid to Designated Covered Employees under the Program if the Performance Goal is not satisfied. For purposes of this Program, “Pretax Income” shall be deemed to mean the amount of the Company’s consolidated earnings before income taxes, adjusted as follows:

(a)	increased or decreased to eliminate the effect of any normalization adjustment made in calculating consolidated earnings before income taxes as disclosed in the Company’s quarterly earnings releases in accordance with S.E.C. Regulation 6 on non-GAAP financial information, and/or any accounting principle change required or allowed by GAAP that is not retroactively applied to prior years. (If the accounting change is retroactively applied to the prior year, there is no adjustment for the accounting change.);
(b)	increased by the amount of bonus expense, whether or not under the Program, which is reflected in the Company’s consolidated earnings before income taxes;
(c)	increased for the impact on pretax income of interest expense attributable to the Company’s ownership in Grupo Modelo, S.A. de C.V. and Tsingtao Brewery Company, Ltd.; and
(d)	increased for the impact on pretax income of interest expense attributable to the Company’s equity ownership in any additional company acquired in 2006 and accounted for under the equity method of accounting under GAAP.

Section 4.BONUS POOL. The aggregate amount of Bonuses which may be paid to Participants in the Program shall equal .638% of Pretax Income for 2006 (the “Bonus Pool”).

Section 5.BONUS FORMULA. The percentage of the Bonus Pool that each Designated Covered Employee shall receive under the Program and the percentage of the Bonus Pool that the remaining Participants shall receive under the Program (the “Bonus Formula”) shall be as set forth on Schedule A attached hereto, subject to the Committee’s exercise of Committee Discretion as defined in Section 6 below.

Section 6.COMMITTEE DISCRETION. The Committee shall have the discretion to establish the amount of any Bonus payable to any Participant other than a Designated Covered Employee, except that the total amount of Bonuses paid under the Program may not exceed the Bonus Pool established in Section 4; the Committee may reduce but may not increase the amount of any Bonuses payable to Designated Covered Employees to reflect individual performance and/or unanticipated factors (in either case, “Committee Discretion”).

Section 7.DESIGNATED COVERED EMPLOYEE MAXIMUM. Notwithstanding satisfaction of the Performance Goal, no Designated Covered Employee may receive a Bonus under the Program which exceeds the lesser of (i) $6 million or (ii) the per-covered employee limit in effect under Section 7 of the Plan on the date of payment.

Section 8.PAYMENT OF BONUSES. After the end of 2006, the Committee shall certify in writing whether the Performance Goal has been satisfied and the amount of the Bonus payable to each Designated Covered Employee for 2006, if any. All or part of the Bonuses payable to Participants who are not Designated Covered Employees may be paid prior to the end of 2006 on an estimated basis, subject to adjustment in the discretion of the Committee. All or part of the Bonuses payable to Designated Covered Employees may be paid prior to the end of 2006 only if such payment will not result in Bonuses paid to Covered Employees failing to constitute qualified performance-based compensation under Section 162(m) of the Code (e.g., if regulations or rulings allow earlier payment on an estimated basis subject to adjustment). Subject to the foregoing, the timing of payment of Bonuses to all Participants shall be within the sole discretion of the Committee. The Company shall withhold from any Bonuses all taxes required to be withheld by any federal, state or local government.

Section 9.LIMITATION ON RESTRICTIONS. Notwithstanding anything to the contrary herein, in the event a Designated Covered Employee is determined at the end of the Performance Period not to be a Covered Employee, and to the extent application of this Section 9 does not cause such Designated Covered Employee to be a Covered Employee,

2

(a)	such Designated Covered Employee may receive a Bonus notwithstanding failure to satisfy the Performance Goal, and
(b)	Committee Discretion may be exercised to increase the amount of such Designated Covered Employee’s Bonus above the amount which would be paid pursuant to the Bonus Formula.

Section 10. TERMINATION OF EMPLOYMENT. No Bonus shall be paid under the Program to any Participant who is not an employee of the Company as of the last day of 2006, except that the Committee shall have the discretion to pay a Bonus to any Participant whose employment terminates by reason of death, disability, retirement, resignation or in other circumstances in which payment of a Bonus would be in furtherance of the best interests of the Company.

Section 11.CHANGE IN CONTROL. Upon a Change in Control (as that term is defined in the Plan from time to time) notwithstanding anything else to the contrary herein:

(a)	if the Change in Control takes place after 2006, all Bonuses for 2006 shall be immediately payable in cash,
(b)	if the Change in Control takes place during 2006, (i) the Performance Goal shall be deemed to have been met if Pretax Income through the end of the month preceding the month in which the Change in Control occurs (“Prechange Pretax Income”) equals or exceeds eighty-five percent of Pretax Income for the comparable period in 2005, (ii) the Change in Control Bonus Formula (as defined below) shall be applied to Prechange Pretax Income, (iii) all Bonuses so calculated shall be immediately payable in cash, and (iv) unless expressly terminated, this Program shall continue in effect throughout the remainder of 2006 with the amount of any Bonuses payable at the end of 2006 reduced by the amount of any Bonuses paid upon the Change in Control,
(c)	the Committee shall not have the ability to exercise Committee Discretion to reduce the amount payable to any Participant below the formula amount, and
(d)	the provisions of this Section 11 may not be amended in any manner without the written consent of all Participants.

3

For purposes of determining the amounts of Bonuses payable to Participants under Sections 11 (a) and (b) above, (i) each Participant who was a participant in the 2004 Officer Bonus Program under the Anheuser-Busch Officer Bonus Plan shall be entitled to receive a share of the Bonus Pool which is equivalent to that Participant’s share of all bonuses actually paid under the 2004 Program, (ii) each Participant who did not participate in the 2004 Program shall be entitled to receive a share of the Bonus Pool which is equivalent to the share of all bonuses actually paid under the 2004 Program paid to the individual (or the average paid to individuals) in the most closely comparable position to that of such Participant (based on salary level), (iii) the shares so computed shall be adjusted on a pro rata basis so that the amount of Bonuses payable under this Section 11 shall equal 100% of the applicable Bonus Pool (the “Change in Control Bonus Formula”). If any Participant is employed by the Company for less than the entire period with respect to which Bonuses under this Section 11 are calculated, such Participant shall only be entitled to receive a Bonus in an amount calculated as set forth above times the number of days such Participant was employed by the Company in such period divided by the total number of days in such period. If by reason of this Section 11 an excise or other special tax (“Excise Tax”) is imposed on any payment under the Plan (a “Required Payment”), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment, except that the total amount paid to any Designated Covered Employee shall not exceed the maximum set forth in Section 7 unless exceeding such maximum, or a provision allowing bonuses to exceed such maximum, would not jeopardize qualification of all Bonuses under the Program to Covered Employees as qualified performance-based compensation under Section 162(m) of the Code.

Section 12.INTERPRETATION. It is intended that the Program shall in all respects be subject to and governed by the provisions of the Plan and, except to the extent Bonuses are paid on an accelerated basis pursuant to a Change in Control as defined in the Plan, that all Bonuses paid to Covered Employees shall constitute qualified performance-based compensation under Section 162(m) of the Code. The terms of this Program shall in all respects be so interpreted and construed as to be consistent with this intention.

Section 13. ADJUSTMENTS. If any of the following events occurs during the Performance Period:

(a)	any reorganization, merger, consolidation or other corporate change having a similar effect, to the extent it is tax-free for federal income tax purposes,
(b)	any spin-off or other corporate change having a similar effect,

4

(c)	any contribution of operating assets previously accounted for by the consolidation method of accounting to an entity that is accounted for by the equity or cost methods of accounting, or
(d)	any distribution to stockholders generally other than a normal dividend

and such event affects Pretax Income and has an impact on the achievement of the Performance Goal or a material impact on the size of the Bonus Pool (herein “Corporate Change”):

(x)

for purposes of determining whether the Performance Goal has been met, 2005 Pretax Income shall be deemed to equal (i) actual Pretax Income for 2005 times a ratio the numerator of which is the number of days in the Performance Period prior to the Corporate Change and the denominator of which is 365, plus (ii) restated or pro-forma Pretax Income for 2005 times a ratio the numerator of which is the number of days in the Performance Period beginning with the date of the Corporate Change and the denominator of which is 365;

(y)

the size of the Bonus Pool shall be equal to (i) actual Pretax Income for the portion of the Performance Period ending the day before the Corporate Change occurs times the Bonus Pool percentage set forth in Section 4 (.638%), plus (ii) actual Pretax Income for the portion of the Performance Period beginning the day of the Corporate Change times that percentage which if multiplied by restated or pro-forma Pretax Income for 2005 would equal .638% of actual Pretax Income for 2005.

Section 14.AMENDMENTS. The Committee may amend this Program unilaterally if the Committee determines that amendment is necessary to assure that Bonuses paid to Covered Employees under this Program constitute qualified performance-based compensation under Section 162(m) of the Code. The Committee also may amend this Program unilaterally in any way if the Committee determines that such amendment (i) is not contrary to the terms of the Plan, (ii) does not require shareholder approval, and (iii) would not jeopardize qualification of Bonuses to Covered Employees under the Program as performance-based compensation under Section 162(m) of the Code.

Section 15.NO RIGHT TO EMPLOYMENT. Nothing in this Program or the Plan shall confer upon any Participant any right or expectation to continue in the employ of his or her employer or the Company, or to interfere in any manner with the absolute right of the employer or the Company to change or terminate the Participant’s employment at any time for any reason.

5

EX-10.19

Exhibit 10.19

SUMMARY OF COMPENSATION OF EXECUTIVE OFFICERS

Anheuser-Busch Companies, Inc. (the “Company”) does not have employment agreements with any of its executive officers. The following is a description of executive officer compensation.

On November 23, 2005, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved the annual base salaries effective January 1, 2006, of the Company’s executive officers after review of performance and competitive market data. The following table sets forth the 2006 base salary of the Company’s Named Executive Officers (which officers were determined by reference to the Proxy Statement for the Company’s 2006 Annual Meeting of Stockholders, dated March 9, 2006). The 2006 base salaries are the same as the 2005 base salaries for these executives.

Name and Position	2006 Base Salary
Patrick T. Stokes President and Chief Executive Officer		$	1,526,745
August A. Busch III Chairman of the Board		$	600,000
August A. Busch IV Vice President and Group Executive		$	950,000
W. Randolph Baker Vice President and Chief Financial Officer		$	615,000
Douglas J. Muhleman Group Vice President, Brewing, Operations and Technology, Anheuser-Busch, Incorporated		$	574,750

No bonus payments were made to the Company’s Named Executive Officers for 2005. Information regarding 2006 bonuses is contained in the Company’s Form 8-K filed with the Securities and Exchange Commission on February 22, 2006.

Also on November 23, 2005, the Committee approved grants of ten year incentive and non-qualified stock option awards to approximately 2,800 officers and management employees of the Company and its subsidiaries and affiliates eligible to receive such awards under the Company’s 1998 Incentive Stock Plan including the Named Executive Officers for 2005. In addition, the Committee approved performance-vesting restricted stock awards to Executive Officers of the Company including the Named Executive Officers for 2005 and service-vesting restricted stock awards to approximately 2,800 officers and management employees of the Company and its subsidiaries and affiliates eligible to receive such awards under the 1998 Incentive Stock Plan. All such awards of restricted stock were effective January 1, 2006. The 1998 Incentive Stock Plan, as amended, is attached as Appendix C to the Proxy Statement for the Company’s 2005 Annual Meeting of Stockholders, dated March 10, 2005.

Information concerning the stock option awards to the Company’s Named Executive Officers is contained in Form 8-K dated November 23, 2005, and filed by the Company with the Securities & Exchange Commission on November 29, 2005. Performance-vesting restricted stock awards made to the Company’s Named Executive Officers are set forth below:

Name and Position	Restricted Stock Awards
Patrick T. Stokes President and Chief Executive Officer		42,915
August A. Busch III Chairman of the Board		21,363
August A. Busch IV Vice President and Group Executive		22,698
W. Randolph Baker Vice President and Chief Financial Officer		9,508
Douglas J. Muhleman Group Vice President, Brewing, Operations and Technology, Anheuser-Busch, Incorporated		8,886

The Company has provided additional information regarding compensation awarded to Named Executive Officers in respect of and during the year ended December 31, 2005, in the Proxy Statement for the Company’s 2006 Annual Meeting of Stockholders dated March 9, 2006, which has been filed with the Securities and Exchange Commission.

EX-10.20

Exhibit 10.20

SUMMARY OF COMPENSATION OF NON-EMPLOYEE DIRECTORS OF

ANHEUSER-BUSCH COMPANIES, INC.

Each non-employee director of Anheuser-Busch Companies, Inc. (the “Company”) is entitled to:

1. An annual retainer of $60,000, which such director may elect to receive in stock, cash or a combination of stock and cash under the Anheuser-Busch Companies, Inc. Non-Employee Director Elective Stock Acquisition Plan amended and restated as of March 1, 2000;

2. A fee of $2,000 per meeting for each meeting of the Board or any committee of the Board or other scheduled meeting of the directors of the Company at which less than a quorum is present;

3. An annual fee of $60,000 less any board service fees that the director is paid by an affiliate company for service as a representative of the Company’s Board of Directors on the Board of an affiliated company;

4. An annual fee of $10,000 for serving as the chair of the Compensation, Conflict of Interest, Corporate Governance, Finance, and Pension Committees of the Board; and

5. An annual fee of $15,000 for serving as the chair of the Audit Committee of the Board.

Under the Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors, amended and restated as of March 1, 2000, each such director may elect to defer payment of part or all of their directors’ fees.

The Company pays for the travel and accommodation expenses of such director (and spouse when requested by the Company) to attend meetings or corporate functions; the Company will also pay the taxes related to such payments. Such travel is by Company aircraft if available. As part of their continuing education, such directors are encouraged to visit Company facilities and the Company pays their expenses related to such visits. The Company reimburses such directors for their expenses incurred in attending director education courses. The Company provides each such director group term life insurance coverage of $50,000.

Under the Anheuser-Busch Companies, Inc. Stock Plan for Non-Employee Directors as amended and restated, each such director receives an annual grant of options to purchase 5,000 shares of the Company’s common stock (or 5,000 stock appreciation rights if a director is unable to own the Company’s common stock due to possible conflicts with state alcoholic beverage control laws).

Subject to stockholder approval (at the Company’s Annual Meeting of Stockholders to be held April 26, 2006) of the 2006 Restricted Stock Plan for Non-Employee Directors, each such director will receive an annual award of 500 shares of Restricted Stock (or 500 shares of Restricted Stock units if a director is unable to own the Company’s common stock due to possible conflicts with state alcoholic beverage control laws).

The directors are eligible to participate in the Anheuser-Busch Foundation Matching Gift Program. The maximum gift total for a participant in this Program is $10,000 in any calendar year.

EX-12

Exhibit 12

ANHEUSER-BUSCH COMPANIES, INC.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the Company’s ratio of earnings to fixed charges, on a consolidated basis for the periods indicated ($ in millions):

	2005		2004		2003		2002		2001
Earnings
Consolidated pretax income	$	2,191.5	$	2,999.4	$	2,824.3	$	2,623.6	$	2,377.6
Dividends received from equity investees		210.1		179.0		169.2		46.7		25.8
Net interest capitalized		8.3		7.7		3.3		10.8		1.0
Fixed charges		502.3		471.1		442.6		406.8		402.8
Adjusted earnings	$	2,912.2	$	3,657.2	$	3,439.4	$	3,087.9	$	2,807.2
Fixed Charges
Interest expense	$	454.5	$	426.9	$	401.5	$	368.7	$	361.2
Interest portion of rent expense 1/		42.5		38.9		36.3		34.1		37.9
Amortization of deferred debt issuance costs		5.3		5.3		4.8		4.0
Total fixed charges	$	502.3	$	471.1	$	442.6	$	406.8	$	402.8
Ratio of Earnings to Fixed Charges		5.8X		7.8X		7.8X		7.6X		7.0X

1/Calculated as one-third of total rents paid.

EX-13

Exhibit 13

ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

Management’s Discussion and Analysis of Operations

and Financial Condition

This discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and cash flows of Anheuser-Busch Companies, Inc., for the three-year period ended December 31, 2005. This discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements included in this annual report.

Objectives

Anheuser-Busch remains focused on its three core objectives designed to enhance long-term shareholder value:

▪ Increasing domestic beer segment volume and per barrel profitability which, when combined with market share growth, will provide the basis for earnings per share growth and improvement in return on capital employed.

▪ Increasing international beer segment profit growth. Anheuser-Busch has made significant marketing investments to build recognition of its Budweiser brands outside the United States and owns and operates breweries in China, including Harbin Brewery Group, and in the United Kingdom. The company also has a 50% equity position in Grupo Modelo, Mexico’s largest brewer and producer of the Corona brand, and a 27% equity position in Tsingtao, the largest brewer in China and producer of the Tsingtao brand.

▪ Continued growth in pretax profit and free cash flow from the packaging and entertainment segments. 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 and commitment to quality and social responsibility to 21 million visitors annually.

Comparison of Operating Results

Anheuser-Busch had a challenging year in its domestic beer business and as a result, the company’s net sales and diluted earnings per share results were disappointing. Consolidated net sales increased 0.7% for the full year 2005, while reported diluted earnings per share declined 15.2%. However, as the company moves into 2006, it is encouraged with its progress to enhance domestic beer volume and market share growth, including introduction of new products and packaging, increased domestic marketing initiatives, stepped-up on-premise sales activities and tactical price promotions. Due to these efforts, wholesaler sales-to-retailers (selling day adjusted) were up 0.8% in the second half of 2005 and were up 1.8% from Labor Day through the end of 2005. Additionally, IRI data shows Anheuser-Busch increased its market share in supermarkets in the second half of the year. The company is pleased with this progress and anticipates sales and earnings growth in 2006 using the following basis of comparison for 2005.

2005 Diluted
Earnings Per Share
Excluding one-time items (see page 32)	$2.43
Pro forma stock compensation expense (see page 47)	(.12	)
Excluding one-time items and including stock compensation expense	$2.31

Comparisons of key operating results for the last three years are summarized in the following tables. Results shown below include the impact of one-time items in both 2005 and 2004 that make direct comparisons between those years, and also between 2004 and 2003, difficult. The one-time items in 2005 are the settlement of litigation involving a domestic beer wholesaler, settlement of certain tax matters in Chile related to the sale of the company’s investment in Compañía Cervecerías Unidas S.A. (CCU), income tax reform legislation in the state of Ohio and a gain on the sale of the company’s interest in the Port Aventura theme park in Spain. In 2004 the company recorded one-time gains related to the sale of commodity hedges and the sale of the company’s equity investment in CCU, plus a deferred income tax benefit related to the company’s Grupo Modelo equity investment from a reduction in Mexican corporate income tax rates. Excluding these one-time items, which the company believes better illustrates underlying 2005 and 2004 results, diluted earnings per share decreased 11% in 2005 versus 2004, and increased 10.1% in 2004 versus 2003. See complete discussion and quantitative analysis on pages 30 through 32.

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	2005		2004			2005 vs. 2004
Gross sales	$	17,254	$	17,160	(up)	$	94		(up)	0.5	%
Net sales	$	15,036	$	14,934	(up)	$	102		(up)	0.7	%
Income before income taxes	$	2,192	$	2,999	(down)	$	(807	)	(down)	(26.9	)%
Equity income, net of tax	$	498	$	404	(up)	$	94		(up)	23.3	%
Net income	$	1,839	$	2,240	(down)	$	(401	)	(down)	(17.9	)%
Diluted earnings per share	$	2.35	$	2.77	(down)	$	(.42	)	(down)	(15.2	)%
		2004		2003			2004 vs. 2003
Gross sales	$	17,160	$	16,320	(up)	$	840		(up)	5.1	%
Net sales	$	14,934	$	14,147	(up)	$	787		(up)	5.6	%
Income before income taxes	$	2,999	$	2,824	(up)	$	175		(up)	6.2	%
Equity income, net of tax	$	404	$	345	(up)	$	59		(up)	17.2	%
Net income	$	2,240	$	2,076	(up)	$	164		(up)	7.9	%
Diluted earnings per share	$	2.77	$	2.48	(up)	$	.29		(up)	11.7	%
		2003		2002			2003 vs. 2002
Gross sales	$	16,320	$	15,687	(up)	$	633		(up)	4.0	%
Net sales	$	14,147	$	13,566	(up)	$	581		(up)	4.3	%
Income before income taxes	$	2,824	$	2,624	(up)	$	200		(up)	7.7	%
Equity income, net of tax	$	345	$	352	(down)	$	(7	)	(down)	(1.9	)%
Net income	$	2,076	$	1,934	(up)	$	142		(up)	7.4	%
Diluted earnings per share	$	2.48	$	2.20	(up)	$	.28		(up)	12.7	%

SALES

Revenue per barrel reflects the net average sales price the company obtains from wholesaler customers for its products. The higher the net revenue per barrel, the greater the company’s gross profit dollars and gross profit margin, with revenue per barrel increases having nearly twice the impact on profits as comparable percentage increases in beer volume. Revenue per barrel is calculated as net sales generated by the company’s domestic beer operations on barrels of beer sold, determined on a U.S. GAAP basis, divided by the volume of beer shipped from the company’s breweries.

Anheuser-Busch strives to obtain price increases that are slightly less than increases in the U.S. Consumer Price Index (CPI) over time. On a constant dollar basis, beer is more affordable today than it was 10 years ago, and the company believes this long-term pricing strategy allows for continuing future moderate price increases. The company also believes that significant excise tax increases, although not expected, could disrupt the current industry pricing environment because tax increases could trigger retail beer price increases significantly in excess of the CPI. The cost of such increases would be borne directly by consumers.

Anheuser-Busch reports domestic beer sales volume based on beer sales to the company’s network of independent wholesalers. Higher beer sales-to-wholesalers volume will increase gross profit dollars and potentially increase gross profit margin. Wholesaler sales-to-retailers volume is a leading indicator of demand for the company’s products at the retail level. Higher wholesaler sales-to-retailers require increased beer sales-to-wholesalers to meet ongoing demand.

WORLDWIDE BEER VOLUME

The company’s reported beer volume for the three years ended December 31, 2005, is summarized in the following table (millions of barrels).

	2005	2004		Change
Domestic	101.1	103.0	(down)	(1.8	)%
International	20.8	13.8	(up)	50.8	%
Worldwide A-B brands	121.9	116.8	(up)	4.4	%
International equity partner brands	26.4	19.3	(up)	36.6	%
Total brands	148.3	136.1	(up)	9.0	%
	2004	2003		Change
Domestic	103.0	102.6	(up)	0.4	%
International	13.8	8.4	(up)	64.8	%
Worldwide A-B brands	116.8	111.0	(up)	5.3	%
International equity partner brands	19.3	18.8	(up)	2.7	%
Total brands	136.1	129.8	(up)	4.9	%
	2003	2002		Change
Domestic	102.6	101.8	(up)	0.8	%
International	8.4	8.0	(up)	5.0	%
Worldwide A-B brands	111.0	109.8	(up)	1.1	%
International equity partner brands	18.8	18.1	(up)	4.0	%
Total brands	129.8	127.9	(up)	1.5	%

Worldwide Anheuser-Busch beer volume is composed of domestic volume and international volume. Domestic beer volume represents the company’s brands produced and shipped within the United States. International beer volume consists of brands produced overseas by company-owned operations in China and the United Kingdom and under various license and contract-brewing agreements, plus exports from the company’s U.S. breweries to markets around the world. International equity partners volume represents the company’s ownership percentage share of volume in its foreign equity partners Grupo Modelo and Tsingtao reported on a one-month-lag basis, and also includes Anheuser-Busch’s pro rata share in the beer volume of CCU for 2004 and 2003.

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ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

Total brands combines worldwide Anheuser-Busch brands volume with international equity partners volume.

SALES - 2005 VS. 2004

Gross and net sales increased slightly in 2005, to $17.3 billion and $15.0 billion, respectively. The difference between gross and net sales represents beer excise taxes of $2.2 billion. For the year, gross sales increased $94 million, or 0.5%, and net sales improved $102 million, or 0.7%, on sales improvement in international beer, packaging and entertainment operations, partially offset by lower domestic beer sales. The company has led the U.S. brewing industry in sales volume and market share since 1957.

International beer sales were up $123 million, or 15.2% due primarily to higher beer volume in China (including Harbin), Canada and Mexico. Commodity-based packaging operations sales were up $116 million, or 8.3% on higher aluminum prices and increased volume. Entertainment segment sales increased $96 million, or 9.7% from higher attendance, increased pricing and increased in-park spending. Domestic beer segment net sales decreased 2.5%, or $285 million. $206 million of the decrease is due to a 1.8% decline in beer sales volume, while $79 million stems from slightly lower revenue per barrel, which decreased 0.5% for the year. The domestic beer business is currently implementing previously announced revenue enhancement initiatives. The combination of moderate price increases and discount reductions will cover the majority of the company’s domestic volume. As in the past, pricing initiatives are tailored to specific markets, brands and packages.

Domestic beer sales-to-wholesalers declined 1.8% while wholesaler sales-to-retailers increased 0.2% (selling day adjusted). Sales-to-retailers results have been led by the Budweiser Family, particularly from the February introduction of Budweiser Select. Wholesaler inventories were reduced significantly during 2005, ending the year over two days lower than the end of 2004.

The company’s estimated domestic market share (excluding exports) for 2005 was 48.8%, compared with 2004 market share of 49.6%. Domestic market share is based on estimated U.S. beer industry shipment volume using information provided by the Beer Institute and import data from the U.S. Department of Commerce. Anheuser-Busch’s shipment-based market share performance was adversely impacted by the company’s wholesaler inventory reduction. As noted, the company gained market share at the consumer level in supermarkets in the second half of 2005, according to IRI data.

International beer volume increased 50.8%, or 7.0 million barrels for 2005 due primarily to increased volume for China Budweiser operations, Canada and Mexico, and the impact of the Harbin Brewery acquisition in mid-2004. International volume excluding the impact of Harbin increased 324,000 barrels, or 3.8% for the year. The increase in international beer volume drove a worldwide Anheuser-Busch brands volume increase of 4.4% for 2005, to 121.9 million barrels. Equity partners’ brands volume grew 7.1 million barrels, or 36.6% in 2005 due to Modelo volume growth and the addition of Tsingtao equity volume beginning in May 2005, partially offset by the loss of volume from the sale of CCU in the fourth quarter 2004. Total brands volume was up 9.0%, to 148.3 million barrels for the full year 2005.

SALES - 2004 VS. 2003

Anheuser-Busch generated gross and net sales of $17.2 billion and $14.9 billion, respectively, in 2004. Beer excise taxes totaled $2.2 billion. Gross sales for the year increased $840 million, or 5.1%, and net sales improved $787 million, or 5.6%. These increases were driven primarily by a 3% increase in domestic beer segment sales, due to 2.5% higher revenue per barrel and higher volume. The increase in revenue per barrel generated $323 million in net sales improvement and beer volume gains contributed $42 million of the increase. The gross margin impact of the increase in domestic beer revenue per barrel was offset by the impact of higher sales and costs from the company’s commodity-based can manufacturing and aluminum recycling operations.

International beer segment sales increased $173 million due to volume gains in Canada, China, and the United Kingdom and the impact of Harbin in the second half of the year. Packaging segment sales increased $172 million primarily due to higher soft drink can volume and pricing, and increased recycling operations sales. Entertainment segment sales were up $65 million due to higher admissions pricing and increased in-park spending. Entertainment sales were adversely impacted by hurricanes in Florida in the second half of the year.

Domestic beer sales-to-wholesalers increased 0.4% in 2004, to 103.0 million barrels. This increase was led by the growth of Michelob ULTRA and Bud Light. Wholesaler sales-to-retailers declined 0.3% versus 2003. Both sales-to-retailers and sales-to-wholesalers were adversely impacted during 2004 by abnormally wet weather in many markets, especially during the key summer selling season. This was coupled with a general slowdown in consumer spending during the year, particularly among lower-income consumers. The company’s domestic market share (excluding exports) for the full year 2004 was 49.6%, compared to 2003 market share of 49.7%.

International beer volume increased 5.4 million barrels, or 65%, to 13.8 million barrels in 2004 due to volume growth in Canada, China and the United Kingdom, and the addition of Harbin volume. Excluding 5.2 million barrels of Harbin volume, international volume grew 3.2% for the year. The growth in international volume drove the 5.3% increase in worldwide volume, to 116.8 million barrels. International equity partner volume grew to 19.3 million barrels, 2.7% versus 2003, as a result of Grupo Modelo volume improve-

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ment partially offset by the impact of the CCU sale in November. Total brands volume increased 4.9% for the year versus 2003.

SALES — 2003 VS. 2002

The company reported gross sales of $16.3 billion and net sales of $14.1 billion in 2003, representing increases of 4%, or $633 million, and 4.3%, or $581 million, respectively, compared with 2002. Beer excise taxes were $2.2 billion. Both increases were principally due to a $410 million, or 3.9% increase in domestic beer segment net sales, resulting from 3.1% higher domestic revenue per barrel and a 0.8% increase in beer volume. The increase in revenue per barrel generated $324 million in net sales improvement; beer volume gains contributed $86 million of the increase. The growth in domestic revenue per barrel enhanced both gross and operating profit margins. Consumers trading up to the super-premium Michelob family enhanced the company’s revenue per barrel results.

In addition to domestic beer sales increases, international beer net sales increased $55 million, primarily due to volume growth in China and Canada. Packaging segment sales increased $30 million due to higher can pricing. Entertainment sales increased $65 million on increased ticket prices, higher in-park spending, and slightly higher attendance in 2003.

Domestic beer sales-to-wholesalers volume increased 0.8%, to 102.6 million barrels for 2003. These results are due to Michelob ULTRA and increased Bud Light sales. Wholesaler sales-to-retailers volume was up 0.9% for the year. The company’s domestic market share (excluding exports) for the full year 2003 was approximately 49.7%, compared with 49.0% for 2002. Worldwide Anheuser-Busch beer sales volume increased 1.1% for the year to 111.0 million barrels and total volume increased 1.5%, to 129.8 million barrels. International Anheuser-Busch brand beer volume for the year was up 5% versus 2002, to 8.4 million barrels, principally due to increased volume in China.

COST OF SALES

The company continuously strives to reduce costs throughout its manufacturing and distribution systems. Brewery modernizations have yielded long-term savings through reduced beer packaging and shipping costs and reduced maintenance costs. The company’s focused production methods and wholesaler support distribution 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 for its products through better systemwide coordination with its network of independent wholesalers.

The cost of sales was $9.6 billion for 2005, an increase of $597 million, or 6.6% compared to 2004. This increase is attributable to higher costs for all of the company’s major business segments, including higher aluminum and other packaging materials expense and increased energy costs for domestic beer; incremental production costs for international beer associated with higher beer volume and the timing of the Harbin acquisition; increased aluminum, energy and other manufacturing costs for the commodity-based packaging segment; and higher park operating expenses in entertainment operations. Gross profit as a percentage of net sales decreased 360 basis points versus 2004, to 36.3%. This decline is primarily due to the decrease in domestic beer sales volume combined with increases in domestic beer production costs per barrel significantly exceeding revenue per barrel.

Cost of sales was $9.0 billion for 2004, an increase of $533 million, or 6.3%, compared with 2003. The increase was due to higher costs for all of the company’s major business segments. Domestic beer costs were higher due to increased costs for brewing and packaging materials, costs associated with increased beer volume, and higher utility costs. International beer experienced higher costs associated with increased beer volume plus the impact of incremental cost of sales associated with the Harbin acquisition. Packaging operations experienced higher aluminum costs and entertainment operations incurred higher park operating expenses, including hurricane cleanup costs in the second half of the year. Consolidated gross profit margin decreased 40 basis points, to 39.9%, due primarily to a 20 basis point gross margin increase from domestic beer operations being more than offset by higher sales and costs from the company’s commodity-based can manufacturing and aluminum recycling operations.

Cost of sales was $8.4 billion in 2003, an increase of $318 million, or 3.9%, compared with 2002. The increase was due to higher costs in the domestic beer segment, attributable to costs associated with higher beer sales volume, higher production costs primarily resulting from increased brewing and packaging materials, and higher utilities costs. Cost of sales for international beer operations increased due to costs associated with increased beer volume, while theme park and packaging operations and the company’s commodity recycling business all experienced increased cost of sales. Gross profit as a percentage of net sales was 40.3% for the year, an increase of 20 basis points versus 2002.

MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES

Advertising and promotional activities for its beer brands and theme park operations are important elements of Anheuser-Busch’s strategy and represent significant annual expenditures. The company employs a variety of national, regional and local media outlets in its promotional efforts, including television, radio, the Internet, print and outdoor advertising and event sponsorships.

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Marketing, distribution and administrative expenses for 2005 were $2.7 billion, an increase of $140 million, or 5.4% compared with 2004. The increase is the result of higher marketing and selling costs for both domestic and international beer operations and increased entertainment marketing costs, partially offset by reduced general and administrative expenses. Domestic beer marketing costs were up primarily for the Budweiser Family, including the national introduction of Budweiser Select, and in support of the company’s beer volume and market share growth initiatives. International beer marketing increased primarily due to the Harbin acquisition. Higher domestic beer distribution costs were largely the result of increased fuel costs while international distribution costs increased due to Harbin and higher costs in the United Kingdom.

Marketing, distribution and administrative expenses were $2.6 billion in 2004, an increase of $92 million, or 3.7%, compared with 2003. The increase was principally due to increased international beer marketing and distribution costs, higher entertainment advertising costs, increased marketing costs associated with the Olympics, higher domestic beer distribution costs from owning an additional wholesale operation, and higher corporate expenses due primarily to higher employee benefits costs.

Marketing, distribution and administrative expenses for 2003 were $2.5 billion, an increase of $43 million, or 1.7%, compared with 2002. This increase was principally due to marketing costs for Michelob ULTRA, increased company-owned wholesale beer distribution costs, higher international beer marketing costs in Europe and China, and increased theme park advertising costs. Partially offsetting these increases were lower domestic beer segment legal costs and reduced administrative expenses for the entertainment segment.

Operating results for 2005 also include a one-time $105 million pretax litigation settlement ($.12 per share), which occurred in the third quarter and is reported as a separate line item in the consolidated income statement. See Notes 7 and 13 and page 32 of this Discussion for additional information. The settlement expense is classified as a corporate item for business segment reporting.

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 of $2.6 billion income decreased $740 million, or 22% in 2005 versus 2004. Operating margin for 2005 was 17.4%, a decline of 510 basis points due primarily to reduced domestic beer sales volume, lower revenue per barrel and higher operating costs, including the one-time litigation settlement.

Operating income was $3.4 billion in 2004 and $3.2 billion in 2003, representing increases versus the prior years of $162 million, or 5.1% in 2004, and $219 million, or 7.4% in 2003. Operating margins were 22.5% and 22.6% for 2004 and 2003, respectively. The decline in operating margin in 2004 was primarily due to higher sales and offsetting costs in commodity-based aluminum can manufacturing and recycling operations. Operating margin was up 60 basis points in 2003 versus prior year due to higher domestic beer margins and improved operating results from all other business segments.

INTEREST EXPENSE LESS INTEREST INCOME

Interest expense less interest income was $452.1 million for 2005, $422.2 million for 2004, and $399.8 million for 2003, representing increases of 7.1%, 5.6% and 8.8%, respectively, compared with prior years. These increases primarily result from higher average outstanding debt balances compared with prior years. In addition, 2005 includes the impact of slightly higher average interest rates which increased in the latter half of the year. See the Liquidity and Financial Condition section of this Discussion for additional information regarding the company’s leverage philosophy and specific changes in the company’s debt portfolio.

INTEREST CAPITALIZED

Interest capitalized as part of the cost basis of capital projects was $19.9 million in 2005, $21.9 million in 2004, and $24.4 million in 2003. The amount of interest capitalized fluctuates depending on construction-in-progress balances, which are impacted by the amount and timing of capital spending, the timing of project completion dates, and by market interest rates.

OTHER INCOME, NET

Other income, net includes earnings from the company’s limited partnership equity investments in beer wholesalers, in addition to other items of a non-operating nature that do not have a material impact on the company’s consolidated results of operations, either individually or in total. The company had consolidated net other income of $2.7 million in 2005, $38.7 million in 2004, and $0.4 million in 2003.

Other income for 2005 includes a $15.4 million pretax gain from the sale of the company’s 13% stake in the Port Aventura theme park in Spain. The theme park sale gain is partially offset by expenses incurred to call the company’s 7.25% and 7.00% U.S. dollar debentures due 2015 and 2025, respectively. These transactions are all classified as corporate items for business segments reporting.

Other income for 2004 includes a one-time pretax gain of $19.5 million from the sale of commodity derivatives that were originally placed for future years using estimates of conversion costs to be included in the renewal of supply contracts. These costs were reduced during negotiations, resulting in significant hedge ineffectiveness in compliance

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ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

with FAS 133. The company sold the hedges per company policy and realized the ineffective portion of the gain, which is reported in the corporate segment. Also in 2004, the company recorded a $13.4 million pretax gain on the sale of its investment in CCU, which is recognized in the international beer segment. In addition, the company sold interests in two domestic beer wholesaler partnerships in 2004 and recorded a $19.1 million pretax gain, which is included in domestic beer results.

In 2003, the company recognized a $6 million gain from the sale of a company-owned beer wholesalership, and also incurred offsetting amounts related to expenses associated with a call of higher interest debt and a gain from the receipt of proceeds from an insurance company.

INCOME BEFORE INCOME TAXES

2005 VS. 2004

Reported income before income taxes decreased 27% versus 2004, primarily reflecting lower profits in domestic beer, international beer and packaging operations, partially offset by improved results from entertainment operations. Income before income taxes includes the impact of the one-time gains in both 2004 and 2005 plus the 2005 litigation settlement. Excluding these items from both years to enhance comparability, income before income taxes decreased 23% (see page 32).

Domestic beer pretax income decreased $603 million, or 18% due to lower beer sales volume, reduced revenue per barrel and higher costs. Higher costs resulted from commodity cost pressures for aluminum, glass and energy, plus costs for new packaging initiatives such as applied plastic labels and aluminum bottles. Pretax income for international beer decreased $44 million, or 34% for the full year primarily due to lower profits in China and the United Kingdom and the impact of the CCU sale gain in 2004, partially offset by improved results in Canada. Excluding the CCU sale gain, pretax income for international beer decreased 26%, as shown in the following table.

	2005		2004			Change
International beer pretax income	$	86.5	$	130.9			(33.9	)%
Less: Gain on sale of CCU		—		(13.4	)
International beer pretax excluding CCU gain	$	86.5	$	117.5			(26.4	)%

Packaging segment pretax profits were down $22 million, or 14% during 2005 due to higher energy and materials costs for can and glass manufacturing operations and lower profits for the company’s aluminum recycling and label manufacturing operations. Entertainment segment pretax results improved $33 million, or 19% due to increased attendance, admissions pricing and in-park spending, partially offset by higher park operating expenses. Results in 2004 were adversely impacted by a series of hurricanes in Florida.

2004 VS. 2003

Reported income before income taxes for 2004 was $3.0 billion, an increase of $175 million, or 6.2%, versus 2003. This increase reflects improved results for all of the company’s operating segments. Excluding one-time items in 2004, income before income taxes increased 5% versus 2003 (see page 32).

Pretax income for the domestic beer segment was up $159 million for the full year, reflecting increased beer volume and higher revenue per barrel, partially offset by higher costs. International beer segment pretax income improved $40 million for 2004, primarily due to volume and profit growth in China, Canada, and the United Kingdom; the impact of Harbin in the second half of the year; and the gain on the sale of CCU. Packaging segment pretax profits were up $8 million for the year primarily due to higher soft drink can volume and pricing and improved results from the company’s aluminum recycling operations. Entertainment segment pretax income increased $10 million compared with the full year 2003, primarily due to higher admissions pricing and increased in-park spending, partially offset by hurricane impacts.

2003 VS. 2002

Income before income taxes of $2.8 billion in 2003 represented an increase of $200 million, or 7.7%, versus 2002. The increase for 2003 is primarily due to increased domestic beer segment pretax results, along with improved profit contribution from all of the company’s remaining business segments. Domestic beer segment pretax income was up $199 million, reflecting higher revenue per barrel and increased beer volume. International beer segment pretax income increased $15 million, primarily due to volume and profit growth in China. Packaging segment pretax profits were up $2 million in 2003, while entertainment segment income before income taxes increased $10 million compared with 2002, primarily due to higher admissions pricing and increased in-park spending.

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EQUITY INCOME, NET OF TAX

Equity income was $498.1 million in 2005, an increase of $94 million, or 23% for year, reflecting the benefit of Grupo Modelo volume growth, lower Mexican income taxes and the impact of including Tsingtao equity income, partially offset by the reduction in equity income due to the sale of the company’s investment in CCU and the one-time $18 million deferred income tax benefit in 2004 from a reduction in Mexican corporate income tax rates. The tax benefit in 2004 was partially offset by $8 million of incremental U.S. deferred income taxes in the consolidated income tax provision. Excluding the Mexican tax benefit from 2004 results, equity income for full year 2005 increased 29% (see adjacent table).

Equity income was $404.1 million for 2004, up $59 million, or 17.2%, versus 2003 due to the benefit of price increases and volume growth from Grupo Modelo and the $18 million Mexican income tax benefit, net of U.S. deferred taxes. Equity income results for 2003 included a $5.5 million one-time after-tax benefit representing Anheuser-Busch’s equity share of a gain on the sale of a brewery by CCU. Excluding the Mexican tax rate benefit from 2004, equity income would have increased 11.9% (see adjacent table).

Equity income of $344.9 million in 2003 decreased $7 million versus 2002, primarily due to a combination of lower export volume growth, Modelo not raising prices, and a weaker peso in 2003 compared with higher than normal 2002 equity income results which included a $17 million one-time deferred income tax benefit partially offset by a $6.5 million charge related to a brewery restructuring. The 2002 Modelo deferred tax benefit was largely offset by higher U.S. deferred income taxes included in the consolidated U.S. income tax provision. As noted, equity earnings for 2003 benefited from the after-tax gain on the sale of a brewery by CCU.

NET INCOME AND DILUTED EARNINGS PER SHARE

Anheuser-Busch generated net income of $1.8 billion in 2005, a decrease of $401 million, or 17.9% compared with the full year 2004, while reported diluted earnings per share of $2.35 decreased 15.2%, or $.42. Excluding the one-time items previously discussed, net income and diluted earnings per share decreased by 13.8% and 11%, respectively, versus 2004 as shown in the adjacent table. Net income of $2.2 billion for 2004 was an increase versus 2003 of $164 million, or 7.9%. Diluted earnings per share were $2.77, an increase of 11.7%, or $.29 compared with 2003 results. Excluding the 2004 one-time items from the comparison with 2003, net income increased 6.1% and diluted earnings per share decreased by 13.8% and 11%, respectively, versus 2004 as shown in the adjacent table. Net income of $2.2 billion for 2004 was an increase versus 2003 of $164 million, or 7.9%. Diluted earnings per share were $2.77, an increase of 11.7%, or $.29 compared with 2003 results. Excluding the 2004 one-time items from the comparison with 2003, net income increased 6.1% and diluted earnings per share increased 10.1% (see adjacent table). The company earned net income of $2.1 billion in 2003, an increase of $142 million, or 7.4%, over 2002. Earnings per share were $2.48 in 2003, an increase of $.28, or 12.7% compared with 2002. Diluted earnings per share for all years benefit from the company’s ongoing share repurchase program.

The following table is provided to make direct comparisons easier between 2005 and 2004, and between 2004 and 2003 by excluding one-time items. The company believes excluding one-time items better illustrates underlying results (in millions, except per share).

	Income Before Income Taxes			Provision For Income Taxes				Equity Income			Net Income		Earnings Per Share
2005
Reported		$	2,191.5		$	(850.4	)	$	498.1		$	1,839.2		$	2.35
Gain on sale of Spanish theme park			(15.4	)		(3.5	)		—			(18.9	)		(.024	)
Favorable Chile income tax settlement on CCU sale			—			(6.8	)		—			(6.8	)		(.009	)
Deferred income tax benefit from Ohio tax legislation			—			(7.2	)		—			(7.2	)		(.009	)
Litigation settlement			105.0			(12.6	)		—			92.4			.118
Excluding one-time items		$	2,281.1		$	(880.5	)	$	498.1		$	1,898.7		$	2.43
Percentage Change - 2005 vs. 2004
Reported			(26.9	)%					23.3	%		(17.9	)%		(15.2	)%
Excluding one-time items			(23.1	)%					29.0	%		(13.8	)%		(11.0	)%
2004
Reported			2,999.4			(1,163.2	)		404.1			2,240.3			2.77
Commodity hedge gain			(19.5	)		7.4			—			(12.1	)		(.015	)
Gain on sale of CCU			(13.4	)		(1.3	)		—			(14.7	)		(.018	)
Benefit from Mexican tax rate reduction			—			8.0			(18.0	)		(10.0	)		(.012	)
Excluding one-time items		$	2,966.5		$	(1,149.1	)	$	386.1		$	2,203.5		$	2.73
Percentage Change - 2004 vs. 2003
Reported			6.2	%					17.2	%		7.9	%		11.7	%
Excluding one-time items			5.0	%					11.9	%		6.1	%		10.1	%

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ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

INCOME TAXES

Anheuser-Busch’s 2005 effective income tax rate of 38.8% was level with the rate in 2004. The effective tax rate for 2005 includes one-time favorable impacts of $3.5 million related to the sale of the Spanish theme park, $6.8 million for the settlement of certain CCU tax matters and $7.2 million from tax reform legislation enacted in Ohio, plus ongoing benefits from the American Jobs Creation Act. These favorable impacts were essentially offset by the limited income tax benefit from the litigation settlement. The company recognized a limited benefit for the settlement due to not currently having sufficient capital gains available to allow full deductibility of the loss. See Note 7 and page 32 for additional information.

The 2004 effective tax rate of 38.8% increased 10 basis points versus the 2003 rate of 38.7%. The rate for 2004 includes the impact of $8 million of incremental U.S. deferred income taxes provided to partially offset the Mexican corporate income tax rate reduction previously discussed. The effective rate for 2003 decreased 100 basis points versus the 2002 rate. This decrease resulted from a more favorable foreign tax credit position in 2003, and an unusually high effective rate in 2002 due to increased U.S. deferred taxes incurred to offset the benefit of a Mexican income tax rate reduction.

EMPLOYEE-RELATED COSTS

Employee-related costs were $2.5 billion in 2005, an increase of 4.2% versus 2004 costs. Employee-related costs totaled $2.4 billion in 2004, an increase of 7.5% versus 2003 costs of $2.2 billion, which had increased 6.0% versus 2002. The changes in employee-related costs primarily reflect increases in salaries, wages and benefits expense, including the impact of Harbin in 2004. Salaries and wages comprise the majority of employee-related costs and totaled $1.8 billion in both 2005 and 2004, and $1.7 billion in 2003, representing increases versus prior year of 0.3%, 4.0%, and 2.8%, respectively. The remainder of employee-related costs consists primarily of pension, life insurance and health care benefits, and payroll taxes.

The company had 31,485 full-time employees at December 31, 2005. Full-time employees numbered 31,435 and 23,316 at the end of 2004 and 2003, respectively. The increase from 2003 to 2004 was primarily due to the Harbin acquisition.

OTHER TAXES

In addition to income taxes, the company is significantly impacted by other federal, state and local taxes, most notably beer excise taxes. Tax expense related to 2005 operations, not including the many indirect taxes included in materials and services purchased, totaled $3.3 billion, a decrease of 8.1% versus total taxes in 2004 of $3.6 billion. The decrease in 2005 reflects lower beer excise taxes and lower income taxes. Tax expense in 2004 increased 3.2% compared with total taxes of $3.5 billion in 2003. These figures highlight the significant tax burden on the company and the entire brewing industry.

Proposals to increase excise taxes on beer are addressed by the company and the brewing industry every year. Anheuser-Busch understands that spending cuts or temporary tax increases may be necessary for states to address budget concerns; however, the company believes that states should accomplish this objective in the most efficient and least harmful way possible. The company does not believe excise taxes, which are regressive and primarily burden working men and women, are the solution. To ensure its views on this important matter are known, company and industry representatives meet proactively on an ongoing basis with legislators and administration officials from various states to present arguments against increases in beer excise taxes.

RETURN ON CAPITAL EMPLOYED

Value for shareholders is created when companies earn rates of return in excess of their cost of capital. Anheuser-Busch views the rate of return on capital employed to be an important performance measure because it gauges how efficiently the company is deploying its capital assets. Also, increases in the rate are often considered by the investment community

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to be a strong driver of stock price, especially in conjunction with earnings per share growth.

The company’s rate of return on capital employed was 14.7% in 2005 compared to 18.4% in both 2004 and 2003. Return on capital employed is computed as net income for the year plus after-tax net interest (interest expense less interest capitalized), divided by average net investment. Net investment is defined as total assets less nondebt current liabilities. The return on capital employed ratio measures after-tax performance; therefore net interest cost is tax-effected in the computation for consistency. For 2005, 2004 and 2003, after-tax net interest expense was $269 million, $251 million and $234 million, respectively, calculated as pretax net interest expense of $435 million, $405 million and $377 million, respectively, less income taxes applied at an assumed 38% rate.

Liquidity and Financial Condition

Anheuser-Busch’s strong financial position allows it to pursue its growth strategies while also providing substantial returns to shareholders. Accordingly, the company has established the following priorities for its available cash:

▪ Reinvest in core businesses to achieve profitable growth. To enhance shareholder value, the company will continue to make investments to improve efficiency and add capacity as needed in its existing operations, and intends to make selected investments in higher-growth international beer markets.

▪ Make substantial payments to shareholders through consistent dividend growth and the repurchase of common shares. Anheuser-Busch has paid cash dividends each year since 1933 and intends to increase dividends per share in line with the company’s long-term expected diluted earnings per share growth. The company has an ongoing common share repurchase program.

The company considers its ratio of cash flow to total debt to be one of the most important indicators of ongoing leverage, and currently targets a ratio in the 30% to 40% range in order to maintain its strong credit ratings of A1 and A+, from Moody’s and Standard & Poor’s, respectively. Based on its specific financial position and risk tolerance, Anheuser-Busch believes a strong Single A rating strikes the best balance between a low cost-of-capital and maintaining adequate financial flexibility. The company’s ratio of cash flow to total debt was 33.6% in 2005, 37.7% in 2004, and 40.3% in 2003.

SOURCES AND USES OF CASH

The company’s primary source of liquidity is cash provided by operations. Principal uses of cash are capital expenditures, share repurchases, dividends, and business investments. Information on the company’s cash flows, by category, is presented in the consolidated statement of cash flows.

Cash generated by each of the company’s business segments is projected to exceed funding requirements for that segment’s anticipated capital expenditures. Corporate spending on share repurchases and dividend payments, plus possible additional investments in international brewers, may require external financing as the company maintains its target cash flow to total debt ratio. The use of debt financing lowers the company’s overall cost of capital and the nature, extent and timing of external financing will vary depending on the company’s evaluation of existing market conditions and other economic factors. The company uses its share repurchase program to manage its leverage position, and typically operates at a working capital deficit as it manages its cash flows. The company had working capital deficits of $224 million, $151 million, and $227 million at December 31, 2005, 2004, and 2003, respectively.

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OFF-BALANCE-SHEET OBLIGATIONS, COMMITMENTS AND CONTINGENCIES

Anheuser-Busch has a long history of paying dividends and expects to continue paying dividends each year. The company also has an active share repurchase program and anticipates continued share repurchase in the future. However, Anheuser-Busch has no commitments or obligations related to dividends, or for the repurchase or pledging of shares. The company has cash commitments in the normal course of business, including operating leases. The company has no off-balance-sheet obligations specifically structured to provide earnings or tax benefits, or to avoid recognition or disclosure of assets or liabilities.

The 9% debentures due 2009 (included in debt on the consolidated balance sheet) permit holders to require repayment of the debt prior to its maturity after a decline in the company’s credit rating below investment grade. The credit downgrade must be preceded by a change in control. The total outstanding balance for this debt at December 31, 2005, is $350 million. The 5.35% notes due 2023 permit beneficiaries of deceased note owners to require repayment of the debt at any time prior to maturity, subject to an annual limit of $25,000 per decedent and a cap on aggregate redemptions of $3.6 million per year. The company redeemed $1.8 million of these notes in 2005 and $1.9 million in 2004.

The company’s fixed charge coverage ratio was 5.8X for the year ended December 31, 2005, and 7.8X for the years ended December 31, 2004 and 2003.

The company’s future cash commitments are shown below, as of December 31, 2005 (in millions).

	2006		2007 and 2008		2009 and 2010		2011 and Thereafter		Total
Capital expenditures	$	106	$	5	$	—	$	—	$	111
Operating leases		45		61		49		393		548
Brewing and packaging materials		301		232		237		416		1,186
Unfunded benefits payments		61		192		123		338		714
Interest payments		407		785		711		4,254		6,157
Maturities of long-term debt		247		300		747		6,678		7,972
	$	1,167	$	1,575	$	1,867	$	12,079	$	16,688

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, with the most important financial measure of acceptability for a discretionary capital project being whether its projected discounted cash flow return on investment exceeds the company’s cost of capital.

Capital expenditures were $1.1 billion in both 2005 and 2004, $993 million in 2003 and totaled $5.1 billion over the past five years. The company expects capital expenditures of approximately $900 million in 2006 and is projecting capital spending during the five-year period 2006 - 2010 of $4.5 billion. See Note 15 for information on capital expenditures by business segment.

 

SHARE REPURCHASE

The company spent $620 million, $1.7 billion, and $2.0 billion to repurchase 12.9 million, 33.2 million and 39.4 million Anheuser-Busch common shares in 2005, 2004, and 2003, respectively. Anheuser-Busch uses its share repurchase program to balance its capital structure as the company manages its cash flow to total debt ratio. All shares are repurchased under authorization of the Board of Directors. The company has historically repurchased significantly more shares each year than it has issued under stock option plans, with average net annual repurchases of 2.5% of outstanding shares for over 10 years. See Note 12 for details of common stock activity.

DIVIDENDS

Dividends are paid in the months of March, June, September and December of each year. Cash dividends paid to shareholders were $800.8 million in 2005, $742.8 million in 2004, and $685.4 million in 2003. In the third quarter of 2005, effective with the September dividend, the board of directors increased the quarterly dividend rate from $.245 to $.27 per share. This increased annual dividends to $1.03 per share, a 10.8% increase compared with $.93 per share in 2004. The dividend rate in 2004 reflected an increase of 12.0% compared with the rate of $.83 per share in 2003. Quarterly dividends per share for the first and second halves of the year, respectively, were $.245 and $.27 for 2005, $.22 and $.245 for 2004, and $.195 and $.22 for 2003.

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ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

PENSION CONTRIBUTIONS

The company made total contributions to its pension plans of $56 million, $245 million and $131 million, respectively, in calendar years 2005, 2004 and 2003. See Note 5 for additional information.

FINANCING ACTIVITIES

The company uses Securities and Exchange Commission (SEC) shelf registration statements to provide flexibility and efficiency when obtaining long-term financing. At December 31, 2005, a total of $1.65 billion of SEC registered debt was available for issuance. The company’s debt balance decreased a total of $306.5 million in 2005, compared with an increase of $993.2 million in 2004. Details of debt increases and decreases follow.

Increases in Debt

	Amount		Interest Rate
Description	(in millions)		(fixed unless noted)
2005
U.S. Dollar Notes	$	100.0		5.49%
United Kingdom Brewery Lease		52.9		6.25%
Other		2.1		Various
	$	155.0
2004
U.S. Dollar Notes	$	800.0		$550.0 at 5.0%; $250.0 at 4.7%
Commercial Paper, net		637.8		1.40% wtd. avg., floating
Chinese Renminbi-Denominated Bank Loans		118.4		4.7% to 8.35%
Industrial Revenue Bonds		1.0		5.875%
Other, net		6.5		Various
	$	1,563.7

Decreases in Debt

	Amount		Interest Rate
Description	(in millions)		(fixed unless noted)
2005
U.S. Dollar Debentures	$	350.0		$200.0 at 7.0% and
				$150.0 at 7.25%
Commercial Paper		61.6		3.31% wtd. avg., floating
Chinese Renminbi-Denominated Bank Loans		37.8		5.41% wtd. avg.
U.S. Dollar Notes		1.8		5.35%
Other		10.3		Various
	$	461.5
2004
Euro Notes	$	251.0		$200.0 at 6.5%; $51.0 at 4.6%
U.S. Dollar Notes		251.9		$250.0 at 7.1%; $1.9 at 5.35%
ESOP Note		46.3		8.25%
Chinese Renminbi-Denominated Bank Loans		4.8		5.57% wtd. avg.
Other, net		16.5		Various
	$	570.5

In addition to long-term debt, Anheuser-Busch issues commercial paper as a source of short-term financing. Commercial paper activity is supported by the company’s committed $2 billion bank revolving credit agreement that expires in 2010. This standby credit agreement, which has never been used, provides Anheuser-Busch with an immediate and continuing source of liquidity.

Commercial paper borrowings generally fluctuate in conjunction with the seasonality of operations and the timing of long-term debt issuance, with the company experiencing its strongest cash flows in the second and third quarters of the year, and relatively lower cash flows in the first and fourth quarters. Peak commercial paper borrowings of $1.6 billion and $1.2 billion occurred in April 2005 and October 2004, respectively. Lowest commercial paper borrowings were $515 million in September 2005 and $254 million in June 2004. Average outstanding commercial paper balances were $1.1 billion during 2005 and $756 million during 2004.

COMMON STOCK

At December 31, 2005, registered common stock shareholders numbered 53,573 compared with 54,654 at the end of 2004. The company’s common stock is listed on the New York Stock Exchange under the symbol BUD. The closing price of the company’s common stock at December 31, 2005 and 2004 was $42.96 and $50.73, respectively. Comparative 2005 and 2004 high and low quarterly closing prices for BUD are provided in the following table.

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Price Range of Anheuser-Busch Common Stock (BUD)

	2005		2004
	High	Low	High	Low
First quarter	$50.52	$47.26	$54.01	$49.94
Second quarter	$48.10	$45.10	$54.22	$50.52
Third quarter	$46.48	$43.04	$54.29	$49.45
Fourth quarter	$44.70	$40.57	$51.07	$49.83

Critical Accounting Policies

The SEC defines a critical accounting policy as a policy for which there is a choice among alternatives available under U.S. generally accepted accounting principles (GAAP), and for which choosing a legitimate alternative would yield materially different results. Outlined below are the accounting policies that 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. GAAP.

REVENUE RECOGNITION

The company’s revenue recognition policies are simple, straightforward and comply 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, based on negotiated arrangements and normal industry practices. As such, alternative recognition and accounting methods are not available to the company.

EQUITY METHOD ACCOUNTING

Anheuser-Busch applies the equity method of accounting whenever it can exert significant influence on an investee company, typically 20% to 50% owned investments. Equity accounting involves recognizing the company’s pro rata share of the net earnings of investee companies in the income statement. Cash is received and recognized (as a reduction of the company’s investment, not equity income) only when distributed by the investee company. As an equity investor, Anheuser-Busch does not control the amount or timing of cash distributions by investees. The company provides deferred income taxes on equity earnings in excess of dividends received. In 2005, the company had equity income of $498.1 million and received cash distributions from investees of $210.1 million. In 2004, Anheuser-Busch recognized equity income of $404.1 million and received cash distributions from investees of $179.0 million. In 2003, equity income was $344.9 million and cash received was $169.2 million. Consolidation of the company’s equity investees would not be appropriate because Anheuser-Busch does not have effective control of these entities. Therefore, alternative accounting methods are not available. See Note 2 for additional information.

DERIVATIVES

The company’s use of derivative financial instruments is limited to highly correlated hedges of either firm commitments or anticipated transactions that expose Anheuser-Busch to cash flow or fair value fluctuations in the ordinary course of business. Company policy expressly prohibits active 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.” Since company policy is to only use derivatives that will qualify for hedge accounting under FAS 133, the accounting alternative to using hedge accounting would be to voluntarily forgo using hedge accounting, which could introduce volatility into the company’s quarterly and annual earnings based on the changes in the market values of the derivatives.

ADVERTISING AND PROMOTIONAL COSTS

Advertising and promotional activities are a key element of the company’s strategy, and represent significant annual costs incurred by the company. Advertising production costs are accumulated and expensed the first time the advertisement is shown, while advertising media costs are expensed as incurred. Both of these approaches are acceptable under GAAP and the company applies each consistently, based on the nature of the spending. Applying either method exclusively would not materially alter the timing of expense recognition.

Sales promotion costs are recognized as a reduction of net sales when incurred, as required by GAAP. There are no alternative accounting methods available.

POSTRETIREMENT PENSION, HEALTH CARE AND INSURANCE BENEFITS

Anheuser-Busch provides pension plans covering substantially all of its regular employees. The accounting for the majority of these plans under FAS 87, “Employer’s Accounting for Pensions,” requires that the company use three key assumptions when computing estimated annual pension expense. These assumptions are the long-term rate of return on plan assets, the discount rate applied to the projected pension benefit obligation, and the long-term growth rate for salaries.

Of the three key assumptions, only the discount rate is determined by observable market pricing, and it is based on the interest rate derived from matching future pension benefit payments with expected cash flows from high-quality, long-term corporate debt for the same periods. The discount rate used to value the company’s pension obligation at any year-end is used for expense calculations the next year — e.g., the December 31, 2005 rate is being used for 2006 expense calculations. For the rates of return on plan assets and salary growth, the company uses estimates based on experience as well as future expectations. Due to the long-term nature of pension liabilities, Anheuser-Busch attempts to choose rates for these

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assumptions that will have long-term applicability. See Note 5 for information on the impact of a 1% change in key pension assumptions.

Anheuser-Busch provides health care and insurance coverage for most of its retirees after they achieve certain age and years of service requirements. Under FAS 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” the company is required to estimate the discount rate and future health care cost inflation rate in order to determine annual retiree health care and insurance expense and value the related postretirement benefit liability on the balance sheet. Similar to pensions, the discount rate is determined by observable market pricing, and it is based on the interest rate derived from matching future postretirement benefits payments with expected cash flows from high-quality, long-term corporate debt for the same periods. Health care inflation rates are recommended by the company’s actuarial consultants each year. See Note 5 for information on the impact of a 1% change in the assumed discount rate and health care inflation rate.

Risk Management

Through its operations and investments, Anheuser-Busch is exposed to foreign currency exchange, interest rate, and commodity price risks. These exposures primarily relate to beer sales to foreign customers, foreign currency denominated capital purchases, royalty receipts from foreign license and contract brewers, acquisition of raw materials from both domestic and foreign suppliers, dividends from equity investments and changes in interest rates. In addition to long-term supply agreements, the company uses derivative financial instruments, including forward exchange contracts, futures contracts, swaps, and purchased options and collars, to manage certain of these exposures. The company has been impacted by certain changes in underlying market conditions during 2005, particularly upward cost pressure for commodities such as energy and aluminum. There have been no significant changes in Anheuser-Busch’s philosophy and approach for managing these exposures, or in the types of derivative instruments used to hedge the company’s risks.

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 used depend on several factors, including the magnitude and volatility of the exposure, the cost and availability of appropriate hedging instruments, the anticipated time horizon, the commodity basis exposure, the 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 exposures to market volatility while obtaining the most favorable transaction costs possible. 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 measuring the 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 if terminating any contracts.

Counterparty default risk is considered low because derivatives are either exchange-traded instruments with frequent margin position requirements that are highly liquid, or over-the-counter instruments transacted with highly rated financial institutions. Additionally, bilateral collateral posting arrangements are in place with all over-the-counter derivatives counterparties. Counterparties are required to post collateral to Anheuser-Busch when they reach specified unfavorable fair-value thresholds, which are based on their credit ratings from Moody’s and Standard & Poor’s, respectively, as follows (in millions).

Counterparties rated at least A2 or A	$30
Counterparties rated A3 and A-	$15
Counterparties rated below A3 or A-	$0

The same collateral posting thresholds apply to Anheuser-Busch and its credit ratings, if the fair value position is unfavorable to the company. All collateral is cash, U.S. Treasury securities, or letters of credit. At December 31, 2005, the company held zero counterparty collateral and had zero collateral outstanding. Given the composition of the company’s derivatives portfolio, current market prices for derivatives held and the company’s credit rating, material funding needs arising from the company’s collateral arrangements are not expected.

Following is a summary of potential unfavorable changes in the fair value of the company’s derivative holdings under certain market movements during the last two years (in millions).

	2005		2004
Foreign Currency Risk — Forwards and Options	$	1.0	$	0.4
Interest Rate Risk — Interest Rate Swaps	$	0.3	$	0.2
Commodity Price Risk — Futures, Swaps and Options	$	10.2	$	9.3

The company uses value-at-risk (VAR) analysis for foreign currency and interest rate derivatives exposures, and sensitivity analysis for commodity price exposures. VAR forecasts fair value changes using a Monte Carlo statistical simulation model that incorporates historical correlations among various currencies and interest rates. The VAR model assumes that the company could liquidate its currency and interest rate positions in a single day (one-day holding period). The

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volatility figures provided represent the maximum one-day loss the company could experience on each portfolio at a 95% confidence level, based on market history and current conditions. Sensitivity analysis reflects the impact of a hypothetical 10% adverse change in the market price for the company’s underlying price exposures.

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. Also, the preceding derivatives volatility analyses ignore changes in the value of the underlying hedged transactions, although the company expects offsetting impacts between changes in derivative values and changes in the pricing of the underlying hedged transactions. The average daily change in fair value for interest rate swaps in 2005 was $100,000, with a computed one-day high of $1.6 million and a one-day low of zero. The average daily change in fair value for foreign exchange derivatives in 2005 was $50,000, with a computed one-day high of $200,000 and a one-day low of zero. Average daily changes for foreign exchange derivatives are computed as the monthly variance in fair value divided by the number of business days in the month.

Anheuser-Busch’s exposure to interest rate volatility related to its outstanding debt is low, because the company predominantly issues fixed-rate debt. At December 31, 2005, fixed-rate debt with an approximate average maturity of 13 years represented 83% of the company’s outstanding debt. Assuming the percentage of floating-rate debt at year-end remains constant in 2006, and including the impact of existing fixed-to-floating interest rate swaps, an immediate 100 basis points (1.0 percentage point) increase in interest rates would result in incremental interest expense of approximately $14 million over the course of the full year.

Other Matters

FAIR VALUE OF MODELO INVESTMENT

The economic benefit of the company’s Modelo investment can be measured in two ways: through equity income, which represents Anheuser-Busch’s pro rata share in the net earnings of Modelo, and by the excess of the fair market 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 (Bolsa) at December 31, 2005, was $6.0 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.

WHOLESALER ACQUISITION

In October 2003, the company purchased the assets of a beer wholesale operation in Pomona, Calif. for $84 million in Anheuser-Busch common stock and cash. Included in the purchase were cash and other working capital of $22 million, fixed and other long-term assets of $21 million, and product distribution rights of $41 million. See Note 10 for additional information.

CERTIFICATIONS AND GOVERNANCE

The company has included the required CEO and CFO certifications regarding the quality of the company’s public disclosure as exhibits to its 2005 annual report on Form 10-K filed with the SEC. Also, a CEO certification regarding the company’s compliance with corporate governance listing standards has been submitted to the New York Stock Exchange, as required by its listing rules. Available on the company’s Web site, www.anheuser-busch.com, are charters for all standing committees of the board of directors (including audit, compensation and corporate governance); codes of business conduct for directors, officers and employees; and Anheuser-Busch’s corporate governance guidelines.

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 federal or state 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.

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Management’s Responsibility for Financial Statements and

Management’s Report on Internal Control Over Financial Reporting

Management’s Responsibility for Financial Statements

The company’s financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States. The management of Anheuser-Busch is responsible for the preparation and presentation of the financial statements and other financial information included in this annual report, including the reasonableness of estimates and judgments inherent in the preparation of the financial statements.

The board of directors is responsible for ensuring the independence and qualifications of audit committee members under applicable New York Stock Exchange and U.S. Securities and Exchange Commission standards. The audit committee consists of five nonmanagement directors and oversees the company’s financial reporting and internal controls system and meets with management, the independent auditors and the internal auditors periodically to review auditing and financial reporting matters. The audit committee is solely responsible for the selection and retention of the company’s independent auditors, subject to shareholder approval. The audit committee held five meetings during 2005 and its report for 2005 can be found in the company’s proxy statement.

In addition to the audits of the company’s internal control over financial reporting and management’s assessment of internal control over financial reporting, PricewaterhouseCoopers LLP, an independent registered public accounting firm, is also responsible for auditing the company’s financial statements in accordance with the standards of the Public Company Accounting Oversight Board, and expressing an opinion as to whether the financial statements fairly present, in all material respects, the company’s financial position, operating results, cash flows, and changes in shareholders equity.

Management’s Report on Internal Control Over Financial Reporting

It is also management’s responsibility to establish and maintain adequate internal control over financial reporting, as such term is defined by the U.S. Securities and Exchange Commission. Under the supervision and with the participation of management, including the chief executive officer and chief financial officer, the company conducted an assessment of the effectiveness of its internal control over financial reporting based on the framework set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the company’s financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Based on the company’s evaluation under the COSO framework, Anheuser-Busch management concluded that the company’s internal control over financial reporting was effective as of December 31, 2005. The company’s internal control over financial reporting, and management’s assessment of the effectiveness of the company’s internal control over financial reporting as of December 31, 2005, have both been audited by PricewaterhouseCoopers LLP, as stated in its report.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Anheuser-Busch Companies, Inc.

We have completed integrated audits of Anheuser-Busch Companies, Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions on Anheuser-Busch Companies, Inc’s 2005, 2004 and 2003 consolidated financial statements and on its internal control over financial reporting as of December 31, 2005, based on our audits, are presented below.

Consolidated Financial Statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in shareholders equity and cash flows present fairly, in all material respects, the financial position of Anheuser-Busch Companies, Inc. and its subsidiaries (the “Company”) at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal Control Over Financial Reporting

Also, in our opinion, management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

St. Louis, MO

February 22, 2006

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Consolidated Balance Sheet

Year Ended December 31 (in millions, except per share)	2005			2004
Assets
Current Assets:
Cash	$	225.8		$	228.1
Accounts receivable		681.4			696.1
Inventories		654.5			690.3
Other current assets		197.0			203.9
Total current assets		1,758.7			1,818.4
Investments in affiliated companies		3,448.2			3,150.2
Plant and equipment, net		9,041.6			8,847.4
Intangible assets, including goodwill of $1,034.5 and $984.1, respectively		1,232.6			1,191.9
Other assets		1,073.9			1,165.5
Total Assets	$	16,555.0		$	16,173.4
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable	$	1,249.5		$	1,194.8
Accrued salaries, wages and benefits		250.9			291.4
Accrued taxes		156.7			152.9
Accrued interest		123.7			125.2
Other current liabilities		201.8			204.7
Total current liabilities		1,982.6			1,969.0
Postretirement benefits		444.3			454.2
Debt		7,972.1			8,278.6
Deferred income taxes		1,682.4			1,727.2
Other long-term liabilities		1,130.3			1,076.3
Shareholders Equity:
Common stock, $1.00 par value, authorized 1.6 billion shares		1,468.6			1,463.0
Capital in excess of par value		1,601.8			1,425.3
Retained earnings		16,445.6			15,407.2
Treasury stock, at cost		(15,258.9	)		(14,638.5	)
Accumulated nonowner changes in shareholders equity		(913.8	)		(988.9	)
Total Shareholders Equity		3,343.3			2,668.1
Commitments and contingencies		—			—
Total Liabilities and Shareholders Equity	$	16,555.0		$	16,173.4

The footnotes on pages 46 - 61 of this report are an integral component of the company’s consolidated financial statements.

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Consolidated Statement of Income

Year Ended December 31 (in millions, except per share)	2005			2004			2003
Gross sales	$	17,253.5		$	17,160.2		$	16,320.2
Excise taxes		(2,217.8	)		(2,226.0	)		(2,173.5	)
Net sales		15,035.7			14,934.2			14,146.7
Cost of sales		(9,579.5	)		(8,982.5	)		(8,449.1	)
Gross profit		5,456.2			5,951.7			5,697.6
Marketing, distribution and administrative expenses		(2,730.2	)		(2,590.7	)		(2,498.3	)
Litigation settlement		(105.0	)		—			—
Operating income		2,621.0			3,361.0			3,199.3
Interest expense		(454.5	)		(426.9	)		(401.5	)
Interest capitalized		19.9			21.9			24.4
Interest income		2.4			4.7			1.7
Other income, net		2.7			38.7			0.4
Income before income taxes		2,191.5			2,999.4			2,824.3
Provision for income taxes		(850.4	)		(1,163.2	)		(1,093.3	)
Equity income, net of tax		498.1			404.1			344.9
Net income	$	1,839.2		$	2,240.3		$	2,075.9
Earnings per share:
Basic	$	2.37		$	2.80		$	2.51
Diluted	$	2.35		$	2.77		$	2.48

The footnotes on pages 46 - 61 of this report are an integral component of the company’s consolidated financial statements.

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Consolidated Statement of Changes in Shareholders Equity

Year Ended December 31 (in millions, except per share)	2005			2004			2003
Common Stock, $1.00 Par Value
Balance, beginning of period	$	1,463.0		$	1,457.9		$	1,453.4
Shares issued under stock plans		5.6			5.1			4.5
Balance, end of period	$	1,468.6		$	1,463.0		$	1,457.9
Capital in Excess of Par Value
Balance, beginning of period	$	1,425.3		$	1,194.0		$	1,024.5
Shares issued under stock plans		176.5			157.3			125.4
Shares issued for acquisition		—			—			44.1
Grupo Modelo capital transaction		—			74.0			—
Balance, end of period	$	1,601.8		$	1,425.3		$	1,194.0
Retained Earnings
Balance, beginning of period	$	15,407.2		$	13,935.4		$	12,544.0
Net income		1,839.2			2,240.3			2,075.9
Common dividends paid (per share: 2005, $1.03; 2004, $.93; 2003, $.83)		(800.8	)		(742.8	)		(685.4	)
Deferred income tax adjustment		—			(25.9	)		—
Shares issued under stock plans		—			0.2			0.9
Balance, end of period	$	16,445.6		$	15,407.2		$	13,935.4
Treasury Stock
Balance, beginning of period	$	(14,638.5	)	$	(12,939.0	)	$	(11,008.6	)
Treasury stock acquired		(620.4	)		(1,699.5	)		(1,958.9	)
Treasury stock issued for acquisition		—			—			28.5
Balance, end of period	$	(15,258.9	)	$	(14,638.5	)	$	(12,939.0	)
Accumulated Nonowner Changes in Shareholders Equity
Balance, beginning of period	$	(988.9	)	$	(890.3	)	$	(870.7	)
Foreign currency translation gains/(losses)		184.5			102.9			(229.8	)
Deferred hedging gains/(losses)		(1.1	)		(61.1	)		65.7
Deferred securities valuation gains/(losses)		(95.6	)		(76.4	)		169.3
Minimum pension liability		(12.7	)		(64.0	)		(24.8	)
Total nonowner changes in shareholders equity, net of tax		75.1			(98.6	)		(19.6	)
Balance, end of period	$	(913.8	)	$	(988.9	)	$	(890.3	)
ESOP Debt Guarantee
Balance, beginning of period		—		$	(46.3	)	$	(90.3	)
Annual debt service		—			46.3			44.0
Balance, end of period		—		$	—		$	(46.3	)
Total Shareholders Equity	$	3,343.3		$	2,668.1		$	2,711.7
Net Income and Nonowner Changes in Shareholders Equity
Net income	$	1,839.2		$	2,240.3		$	2,075.9
Total nonowner changes in shareholders equity, net of tax		75.1			(98.6	)		(19.6	)
Combined Net Income and Nonowner Changes in Shareholders Equity	$	1,914.3		$	2,141.7		$	2,056.3

The footnotes on pages 46 - 61 of this report are an integral component of the company’s consolidated financial statements.

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Consolidated Statement of Cash Flows

Year Ended December 31 (in millions)	2005			2004			2003
Cash Flow from Operating Activities:
Net income	$	1,839.2		$	2,240.3		$	2,075.9
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		979.0			932.7			877.2
Deferred income taxes		0.2			187.1			129.5
Gain on sale of business		(15.4	)		(13.4	)		—
Undistributed earnings of affiliated companies		(288.0	)		(225.1	)		(175.7	)
Other, net		162.5			0.3			31.4
Operating cash flow before changes in working capital		2,677.5			3,121.9			2,938.3
(Increase)/Decrease in working capital		50.3			(181.6	)		32.6
Cash provided by operating activities		2,727.8			2,940.3			2,970.9
Cash Flow from Investing Activities:
Capital expenditures		(1,136.7	)		(1,089.6	)		(993.0	)
New business acquisitions		—			(727.9	)		(156.9	)
Proceeds from sale of business		48.3			302.5			—
Cash used for investing activities		(1,088.4	)		(1,515.0	)		(1,149.9	)
Cash Flow from Financing Activities:
Increase in debt		100.0			1,443.8			1,389.0
Decrease in debt		(456.0	)		(510.6	)		(652.1	)
Dividends paid to shareholders		(800.8	)		(742.8	)		(685.4	)
Acquisition of treasury stock		(620.4	)		(1,699.5	)		(1,958.9	)
Shares issued under stock plans		135.5			120.8			88.6
Cash used for financing activities		(1,641.7	)		(1,388.3	)		(1,818.8	)
Net increase in cash during the year		(2.3	)		37.0			2.2
Cash, beginning of year		228.1			191.1			188.9
Cash, end of year	$	225.8		$	228.1		$	191.1

The footnotes on pages 46 - 61 of this report are an integral component of the company’s consolidated financial statements.

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ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

ACCOUNTING PRINCIPLES AND POLICIES

This summary of the significant accounting principles and policies of Anheuser-Busch Companies, Inc., and its subsidiaries is provided to assist in evaluating the company’s consolidated financial statements. These principles and policies conform to U.S. generally accepted accounting principles. The company is required to make certain estimates in preparing the financial statements that impact the reported amounts of certain assets, liabilities, revenues and expenses. All estimates are based on the company’s best information at the time and are in conformity with U.S. generally accepted accounting principles. Actual results could differ from the estimates, and any such differences are recognized when incurred.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the company and all its subsidiaries. The company consolidates all majority-owned and controlled subsidiaries, uses the equity method of accounting for investments in which the company is able to exercise significant influence, and uses the cost method for all other equity investments. All significant intercompany transactions are eliminated. Minority interests in the company’s consolidated China subsidiaries are not material.

FOREIGN CURRENCY

Financial statements of foreign subsidiaries where the local currency is the functional currency are translated into U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates during the period for revenues and expenses. Cumulative translation adjustments associated with net assets are reported in nonowner changes in equity and are not recognized in the income statement until the investment is sold.

Exchange rate gains or losses related to foreign currency transactions are recognized in the income statement as incurred, in the same financial statement caption as the underlying transaction, and are not material for any year shown.

REVENUE RECOGNITION

The company’s revenue recognition practices comply with Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements.” The company recognizes revenue only when legal title transfers or services have been rendered to unaffiliated customers. For malt beverages shipped domestically to independent wholesalers, title transfers on shipment of product from the company’s breweries. For company-owned beer wholesalers, title transfers when products are delivered to retail customers. The company does not recognize any revenue when independent wholesalers sell the company’s products to retail customers. For international beer operations and sales of cans and lids, title transfers on customer receipt. Entertainment operations recognize revenue when customers actually visit a park location, rather than when advance or season tickets are sold.

DELIVERY COSTS

Pass-through finished goods delivery costs reimbursed by customers are reported in sales, with an offsetting expense included in cost of sales.

Delivery costs incurred by company-owned beer wholesalers are included in marketing, distribution and administrative expenses. These costs are considered marketing related because in addition to product delivery, drivers provide substantial marketing and other customer service functions to retailers including product display, shelf space management, distribution of promotional materials, draught line cleaning and product rotation.

ADVERTISING AND PROMOTIONAL COSTS

Advertising production costs are deferred and expensed the first time the advertisement is shown. Advertising media costs are expensed as incurred. Advertising costs are recognized in marketing, distribution and administrative expenses and totaled $849.8 million in 2005 and $806.7 million in both 2004 and 2003. Sales promotion costs are recognized as a reduction of net sales when incurred, and totaled $716.7 million in 2005, $535.7 million in 2004, and $511.8 million in 2003.

FINANCIAL DERIVATIVES

Anheuser-Busch uses financial derivatives to mitigate the company’s exposure to volatility in commodity prices, interest rates, and foreign currency exchange rates. The company hedges only exposures in the ordinary course of business and company policy prohibits holding or trading derivatives for profit.

The company accounts for its derivatives in accordance with FAS No. 133, “Accounting for Derivative Instruments and Hedging Activity,” which requires all derivatives to be carried on the balance sheet at fair value and meet certain documentary and analytical requirements to qualify for hedge accounting treatment. Hedge accounting creates the potential for an income statement match between the changes in fair values of derivatives and the changes in cost or values of the

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ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

associated underlying transactions. By policy, derivatives held by the company must be designated as hedges of specific exposures at inception, with an expectation that changes in the fair value will essentially offset the change in cost or value for the underlying exposure. All of the company’s derivatives qualify for hedge accounting under FAS 133. Liquidation of derivative positions is required whenever it is subsequently determined that an underlying transaction will not occur, with the gains or losses recognized in the income statement on liquidation. The fair values of derivatives are determined from market observation or dealer quotation. Commodities derivatives currently outstanding at December 31, 2005, all have initial terms of one year or less and the associated underlying transactions are expected to occur within that timeframe.

Option premiums paid to counterparties are initially recorded as assets and subsequently adjusted to fair value each period, with the effective portion of the change in fair value reported in nonowner changes in equity until the underlying transaction occurs. Amounts receivable from counterparties (unrealized hedge gains) or owed to counterparties (unrealized hedge losses) are included in current assets and current liabilities, respectively.

See Note 3 for additional information on underlying hedge categories, notional and fair values of derivatives, types and classifications of derivatives used, and gains and losses from hedging activity.

STOCK-BASED COMPENSATION

The company accounts for employee stock options in accordance with FAS 123, “Accounting for Stock-Based Compensation.” Under FAS 123, the company elects to recognize no compensation expense related to employee stock options, since options are always granted with an exercise price equal to the market price of the company’s stock on the day of grant. See Note 6 for information regarding shares granted, outstanding and exercisable under the company’s stock compensation plans.

Because of its election to not recognize compensation expense for stock options, the company makes pro forma disclosures of net income and diluted earnings per share as if compensation expense had been recognized, based on the fair value of stock options on the grant date. Had employee compensation expense been recognized based on the fair value methodology prescribed by FAS 123, the company’s net income and earnings per share for the three years ended December 31 would have been impacted as shown in the following table (in millions, except per share).

Because the company’s employee stock options are not traded on an exchange, the fair value disclosed is required to be based on a theoretical option-pricing model. 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 shareholders.

	2005			2004			2003
Reported net income	$	1,839.2		$	2,240.3		$	2,075.9
Pro forma stock option expense		(94.8	)		(121.6	)		(113.4	)
Adjusted net income	$	1,744.4		$	2,118.7		$	1,962.5
Reported basic earnings per share	$	2.37		$	2.80		$	2.51
Pro forma stock option expense		(.13	)		(.15	)		(.14	)
Adjusted basic earnings per share	$	2.24		$	2.65		$	2.37
Reported diluted earnings per share	$	2.35		$	2.77		$	2.48
Pro forma stock option expense		(.12	)		(.15	)		(.14	)
Adjusted diluted earnings per share	$	2.23		$	2.62		$	2.34

The fair value of stock options granted, which is hypothetically recognized in compensation expense over the vesting period to determine the pro forma earnings impact illustrated above, has been estimated on the date of grant using a binomial (lattice method) option-pricing model for 2005 and 2004 and the Black-Scholes option-pricing model for 2003. In 2005, the company began recognizing the entire fair value associated with non-forfeitable stock options in its pro forma stock compensation expense calculation as of the grant date. This means approximately 60% of total stock options expense will be recognized in the fourth quarter each year, with the remaining stock option expense associated with forfeitable options recognized ratably over the three-year option vesting period.

The fair values of options granted during 2005, 2004 and 2003 determined using either the binomial or Black-Scholes model as noted above, are as follows (in millions, except per option). 

	2005		2004		2003
Fair value of each option granted	$	8.81	$	10.49	$	13.58
Total number of options granted		11.4		14.1		14.4
Total fair value of options granted	$	100.4	$	147.9	$	195.6

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The binomial option-pricing model was selected for the valuation of 2005 and 2004 options because it accommodates several inputs in order to take into account multiple option exercise patterns, and essentially computes an overall value based on a weighting of each distinct pattern. Anheuser-Busch therefore believes the binomial model is a better measure of stock option value than Black-Scholes. The assumptions used in applying the company’s option pricing models follow. For illustrative purposes, the expected life, risk-free rate, and fair value per option shown above are weighted averages derived from the distinct exercise patterns.

	2005	2004	2003
Expected life of option	5.5 yrs.	5.5 yrs.	7 yrs.
Risk-free interest rate	4.4%	3.7%	4.0%
Expected volatility of Anheuser-Busch stock	21%	22%	22%
Expected dividend yield on Anheuser-Busch stock	2.5%	1.8%	1.7%

In December 2004, the Financial Accounting Standards Board issued a revised and renamed standard regarding stock compensation — FAS 123R, “Share-Based Payment.” The revised standard, which is effective for Anheuser-Busch in the first quarter of 2006, eliminates the disclosure-only election under FAS 123 and requires the recognition of compensation expense for stock options and all other forms of equity compensation generally based on the fair value of the instruments on the date of grant. In order to enhance comparability among all years presented and to provide the fullest understanding of the impact that expensing stock options has on the company, Anheuser-Busch will retrospectively apply the new standard to prior period results on adoption. As required by FAS 123R, retrospective results will include the net income and earnings per share impacts previously disclosed under FAS 123 pro forma reporting requirements. The company estimates that the impact on 2006 earnings per share from expensing stock compensation will be comparable to the pro forma impact disclosed for 2005. For financial reporting purposes, stock compensation expense will be included in either cost of sales or marketing, distribution and administrative expenses, depending on where the recipient’s cash compensation is reported, and will be classified as a corporate item for segment reporting.

INCOME TAXES

The provision for income taxes is based on the income and expense amounts reported in the consolidated statement of income. The company utilizes federal, state and foreign income tax laws and regulations to reduce current cash 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 7 for additional information on the company’s provision for income taxes, deferred income tax assets and liabilities, and effective tax rate.

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.

CASH

Cash includes cash in banks, demand deposits, and investments in short-term marketable securities with original maturities of 90 days or less.

INVENTORIES

Inventories are valued at the lower of cost or market. The company uses the last-in, first-out method (LIFO) valuation approach to determine cost primarily for domestic production inventories, and uses average cost valuation primarily for international production and retail merchandise inventories. LIFO was used for 72% and 71% of total inventories at December 31, 2005 and 2004, respectively. Had average cost been used for all inventories at December 31, 2005 and 2004, the value of total inventories would have been $126.6 million and $126.0 million higher, respectively.

Following are the components of the company’s inventories as of December 31 (in millions).

		2005		2004
Raw materials and supplies	$	386.9	$	405.0
Work in process		93.5		80.0
Finished goods		174.1		205.3
Total inventories	$	654.5	$	690.3

INTANGIBLE ASSETS

Anheuser-Busch’s intangible assets consist of trademarks, beer distribution rights, and goodwill. Trademarks and beer distribution rights meeting criteria for separate recognition as specified by FAS 142, “Goodwill and Other Intangible Assets,” are recognized in distinct asset categories. Trademarks include purchased trademarks, brand names, logos, slogans, or other recognizable symbols associated with the company’s products. Trademarks are not amortized because they have indefinite lives. Domestic beer distribution rights are associated with company-owned beer wholesale operations and represent the exclusive legal right to sell the company’s products in defined geographic areas. The carrying values of these rights have 

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indefinite lives and are not amortized, primarily due to the company’s intent to operate its wholesalerships in perpetuity and the lives not being contractually or statutorily limited. International distribution rights relate to operations in the United Kingdom and China and are being amortized over their respective useful lives. The company’s distribution rights in the United Kingdom are contractually limited to 32 years and expire in 2029. Distribution rights in China are being amortized over seven years, through 2011, based on independent valuation appraisal and normal practice in China. The company analyzes its trademarks and product distribution rights for potential impairment annually, based on projected future cash flows and observation of independent beer wholesaler exchange transactions.

The company recognizes the excess of the cost of acquired businesses over the fair value of the net assets purchased as goodwill. Goodwill related to consolidated businesses is included in intangible assets on the balance sheet. Goodwill associated with the company’s equity investments (primarily Grupo Modelo, and CCU prior to its sale in late 2004) is included in investments in affiliated companies. Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, with ongoing recoverability based on applicable operating unit performance, consideration of significant events or changes in the overall business environment and comparable market transactions.

Anheuser-Busch performs impairment analyses at the business unit level for consolidated goodwill and at the investee level for equity-method goodwill. Impairment testing for consolidated goodwill is a two-step process. The first step is a comparison of the fair value of the business, determined using future cash flow analysis and/or comparable market transactions, to its recorded amount on the balance sheet. If the recorded amount exceeds the fair value, the second step quantifies any impairment write-down by comparing the current implied value of goodwill to the recorded goodwill balance. Recoverability testing for equity investment goodwill is based on impairment analysis of the entire equity investment, using a combination of future cash flow analysis and consideration of pertinent business and economic factors. A review of intangible assets completed in the fourth quarter of 2005 found no impairment. See Note 4 for additional information on changes in the balances of intangible assets.

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. Computer systems development costs not meeting the proper criteria for capitalization, including reengineering costs, are expensed as incurred.

PLANT AND EQUIPMENT

Fixed assets are carried at original cost less accumulated depreciation, and include expenditures for new facilities as well as expenditures that increase the useful lives of existing facilities. The cost of routine maintenance, repairs, and minor renewals is expensed as incurred. Depreciation expense 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. When fixed assets are retired or sold, the book value is eliminated and any gain or loss on disposition is recognized in cost of sales. The components of plant and equipment as of December 31 are summarized below (in millions).

		2005			2004
Land	$	282.5		$	278.9
Buildings		4,970.4			4,750.6
Machinery and equipment		12,552.9			11,907.4
Construction in progress		403.1			475.6
Plant and equipment, at cost		18,208.9			17,412.5
Accumulated depreciation		(9,167.3	)		(8,565.1	)
Plant and equipment, net	$	9,041.6		$	8,847.4

VALUATION OF SECURITIES

For investments accounted for under the cost basis, Anheuser-Busch applies FAS 115, “Accounting for Certain Investments in Debt and Equity Securities.” Under FAS 115, the company classifies its investments as “available for sale” and adjusts the carrying values of those securities to fair market value each period. Market valuation gains or losses are deferred in nonowner changes in equity and are not recognized in the income statement until the investment is sold.

ISSUANCE OF STOCK BY EQUITY INVESTEES

The company has elected to treat issuances or repurchases of common stock by equity investees as equity transactions per SEC Staff Accounting Bulletin No. 52, and therefore recognizes no gain or loss when shares are issued or repurchased.

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2. International Equity Investments

GRUPO MODELO

Anheuser-Busch owns a 35.12% direct interest in Grupo Modelo, S.A. de C.V. (Modelo), Mexico’s largest brewer and producer of the Corona brand, and a 23.25% direct interest in Modelo’s operating subsidiary Diblo, S.A. de C.V. (Diblo). The company’s direct investments in Modelo and Diblo give Anheuser-Busch an effective (direct and indirect) 50.2% equity interest in Diblo. Anheuser-Busch holds nine of 19 positions on Modelo’s board of directors (with the Controlling Shareholders Trust holding the other 10 positions) and also has membership on the audit committee. Anheuser-Busch does not have voting or other effective control of either Diblo or Modelo and consequently accounts for its investments using the equity method. The total cost of the company’s investments was $1.6 billion.

The carrying amount of the Modelo investment was $3,148.3 million and $2,686.2 million, respectively, at December 31, 2005 and 2004. Included in the carrying amount of the Modelo investment is goodwill of $558.0 million and $525.1 million, respectively, at December 31, 2005 and 2004. Changes in goodwill during 2005 and 2004 are due to changes in exchange rates between the U.S. dollar and Mexican peso.

Dividends received from Grupo Modelo in 2005 totaled $203.6 million, compared to $170.2 million in 2004 and $118.3 million in 2003. Dividends are paid based on a free-cash-flow distribution formula in accordance with the Investment Agreement between the companies and are recorded as a reduction in the carrying value of the company’s investment. During third quarter 2004, Modelo received a $251.0 million capital infusion into certain subsidiaries in exchange for equity in those subsidiaries. Anheuser-Busch recognized its after-tax share of the capital infusion as an equity transaction and reported an $85.4 million increase in its Grupo Modelo investment and a $74.0 million increase in capital in excess of par value, net of deferred income taxes of $11.4 million.

Summary financial information for Grupo Modelo as of and for the two years ended December 31 is presented in the following table (in millions). The amounts represent 100% of Grupo Modelo’s consolidated operating results and financial position based on U.S. generally accepted accounting principles on a one-month lag basis, and include the impact of Anheuser-Busch’s purchase accounting adjustments.

		2005		2004		2003
Cash and marketable securities	$	1,640.5	$	1,419.6	$	1,044.7
Other current assets	$	933.3	$	719.4	$	744.7
Noncurrent assets	$	4,592.8	$	4,041.3	$	3,700.1
Current liabilities	$	407.1	$	406.0	$	382.1
Noncurrent liabilities	$	411.3	$	356.9	$	330.4
Gross sales	$	4,734.0	$	4,220.8	$	3,909.0
Net sales	$	4,399.0	$	3,862.6	$	3,594.6
Gross profit	$	2,315.1	$	2,092.3	$	1,959.1
Minority interest	$	1.3	$	3.5	$	4.6
Net income	$	966.8	$	788.1	$	651.0

TSINGTAO

In April 2003, the company announced a strategic alliance with Tsingtao Brewery Company, Ltd., the largest brewer in China, and producer of the Tsingtao brand. Under the alliance agreement, in 2003 and 2004 Anheuser-Busch invested $182 million in three mandatorily convertible bonds which required conversion into Tsingtao equity within seven years. The investment in the bonds, combined with an existing 4.5% stake in Tsingtao common stock, brought Anheuser-Busch’s total investment to $211 million. The first bond was converted in July 2003, which increased the company’s economic and voting stake in Tsingtao from 4.5% to 9.9%. Anheuser-Busch accounted for its investment on the cost basis through April 2005, when the company converted the two remaining convertible bonds into Tsingtao Series H common shares. The April 2005 conversion increased Anheuser-Busch’s economic ownership in Tsingtao from 9.9% to 27%, and its voting stake from 9.9% to 20%. Local government authorities hold the proxy voting rights for the 7% difference between the company’s voting and economic stakes. The increased economic stake allows Anheuser-Busch to nominate an additional director, giving the company two of eleven board seats and representation on related committees. Because of the increased share and voting ownership and board representation, Anheuser-Busch believes it has the ability to exercise significant influence and therefore began applying the equity method of accounting for Tsingtao in May 2005, on a one-month lag basis.

In the fourth quarter 2003, the company loaned Tsingtao $15 million for a term of five years at an annual interest rate of 1%. The loan provided Tsingtao with funding to reacquire minority interests in three of its brewery subsidiaries.

The carrying value of the company’s Tsingtao investment was $224.8 million at December 31, 2005. Dividends received from Tsingtao totaled $6.5 million in 2005.

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CCU

In 2001, the company purchased a 20% equity interest in Compañía Cervecerías Unidas S.A. (CCU), the largest brewer in Chile, for $321 million which it accounted for using the equity method. The CCU investment indirectly increased Anheuser-Busch’s ownership interest in a previously held investment in the Argentine subsidiary of CCU to 28.6%, and the company also began applying equity accounting for that investment at that time. Dividends received from CCU totaled $8.8 million in 2004 and $50.9 million in 2003. In November 2004, Anheuser-Busch sold its 20% equity stake in CCU and recognized a pretax gain of $13.4 million, which is reported in the income statement in other income and included in international beer for business segment reporting. Due to favorable Chilean tax circumstances, the after-tax gain on the CCU sale was $14.7 million, or $.018 per share. Subsequent to the sale of CCU, the company changed the accounting for its investment in CCU-Argentina back to the cost basis because Anheuser-Busch can no longer exercise significant influence. The company’s relationship with CCU to produce and distribute Budweiser in Chile and Argentina continues.

3. Derivatives and Other Financial Instruments

DERIVATIVES

Under FAS 133, derivatives are classified as fair value, cash flow or net investment hedges (foreign currency denominated), depending on the nature of the underlying exposure. The company’s interest rate hedges are fair value hedges, while commodity cost hedges and most foreign currency denominated hedges are classified as cash flow hedges. Hedged commodity exposures are short, meaning the company must acquire additional quantities to meet its operating needs, and include aluminum, rice, corn and natural gas. Anheuser-Busch’s primary foreign currency exposures result from transactions and investments denominated in Mexican pesos, Chinese renminbi, Canadian dollars, British pounds sterling, and euros. These exposures are long, meaning the company has or generates sufficient quantities of these currencies.

Fair value hedges are accounted for by recognizing the changes in fair values for both the derivative and the underlying hedged exposure in earnings each period. For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in cost or value of the underlying exposure is deferred in nonowner changes in shareholders equity, and later reclassified into earnings to match the impact of the underlying transaction when it occurs. Net investment hedges are accounted for in the foreign currency translation account in nonowner changes in shareholders equity. Regardless of classification, a 100% effective hedge will result in zero net earnings impact while the derivative is outstanding. To the extent that any hedge is ineffective at offsetting cost or value changes in the underlying exposure, there could be a net earnings impact. Gains and losses from the ineffective portion of a hedge are recognized in the income statement immediately.

Following are the notional transaction amounts and fair values for the company’s outstanding derivatives, summarized by risk category and instrument type, at December 31 (in millions, with brackets indicating a deferred loss position). Because the company hedges only with derivatives that have high correlation with the underlying transaction cost or value, changes in derivatives fair values and the underlying cost are expected to essentially offset.

	2005					2004
		Notional		Fair			Notional		Fair
		Amount		Value			Amount		Value
Foreign currency:
Forwards	$	115.2	$	(2.1	)	$	114.7	$	0.7
Options		277.2		7.6			151.0		3.8
Total foreign currency		392.4		5.5			265.7		4.5
Interest rate:
Swaps		250.0		0.2			150.0		5.6
Commodity price:
Swaps		26.2		(3.8	)		22.0		(2.9	)
Futures and forwards		82.0		(1.9	)		14.6		(0.9	)
Options		—		—			58.3		2.4
Total commodity price		108.2		(5.7	)		94.9		(1.4	)
Total outstanding derivatives	$	750.6	$	—		$	510.6	$	8.7

The table below shows derivatives gains and losses deferred in nonowner changes in shareholders equity as of December 31, 2005, 2004 and 2003 (in millions). The amounts shown for 2004 and 2003 were subsequently recognized in earnings as the hedged transactions took place, mostly in the next year. The gains and losses deferred as of December 31, 2005 are generally expected to be recognized in 2006 as the underlying transactions occur. However, the amounts ultimately recognized may differ, favorably or unfavorably, from those shown because some of the company’s derivative positions are not yet settled and therefore remain subject to ongoing market price fluctuations. Included in the figures below are deferred option premium costs of $4.4 million, $6.5 million and $26.2 million at the end of 2005, 2004, and 2003, respectively.

		2005			2004			2003
Deferred gains	$	2.6		$	2.8		$	86.0
Deferred losses		(6.4	)		(4.9	)		(26.2	)
Net deferred gains/(losses)	$	(3.8	)	$	(2.1	)	$	59.8

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Following are derivative gains and losses recognized in earnings during the years shown. As noted, effective gains and losses had been deferred over time and recognized simultaneously with the impact of the underlying transactions. The ineffective gains and losses were recognized immediately when it was evident they did not precisely offset changes in the underlying transactions. The ineffective gain for 2004 includes $19.5 million reported in other income related to the sale of commodity hedges that had been in place for future years. The hedges were originally placed using cost estimates which were subsequently lowered during contract renewal negotiations, resulting in significant hedge ineffectiveness in accordance with FAS 133. The company sold these hedges per policy and immediately recognized the ineffective portion of the gain.

		2005			2004			2003
Effective gains	$	20.1		$	65.7		$	14.4
Effective losses		(8.1	)		(15.3	)		(16.2	)
Net effective gains/(losses)	$	12.0		$	50.4		$	(1.8	)
Net ineffective gains	$	0.2		$	26.5		$	1.3

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 receivable, accounts payable, and long-term debt. Accounts receivable include allowances for doubtful accounts of $15.3 million and $12.5 million, at December 31, 2005 and 2004, respectively. The fair value of long-term debt, excluding commercial paper, and estimated based on future cash flows discounted at interest rates currently available to the company for debt with similar maturities and characteristics, was $8.3 billion and $7.7 billion at December 31, 2005 and 2004, respectively.

4. Intangible Assets

The following table shows the activity in goodwill, beer distribution rights and trademarks during the three years ended December 31 (in millions).

							Beer
							Distribution
		Trademarks		Goodwill			Rights
Balance at Dec. 31, 2002	$	—	$	1,025.4		$	173.7
Domestic beer wholesaler acquisition		—		—			47.3
Domestic beer wholesaler disposition		—		—			(1.0	)
Amortization of international distribution rights		—		—			(0.8	)
Foreign currency translation		—		(35.5	)		2.1
Balance at Dec. 31, 2003		—		989.9			221.3
Domestic beer wholesaler acquisition		—		21.2			10.6
Disposition of domestic beer wholesaler equity investment		—		—			(40.1	)
Harbin acquisition		44.4		613.8			15.4
CCU disposition		—		(126.0	)		—
Amortization of international distribution rights		—		—			(1.8	)
Foreign currency translation		—		10.3			1.5
Balance at Dec. 31, 2004		44.4		1,509.2			206.9
Domestic beer wholesaler disposition		—		—			(5.6	)
Disposition of domestic beer wholesaler equity investment		—		—			(20.9	)
Harbin purchase accounting adjustments		—		34.3			—
Amortization of international distribution rights		—		—			(3.1	)
Foreign currency translation		1.1		49.0			(2.0	)
Balance at Dec. 31, 2005	$	45.5	$	1,592.5		$	175.3

The international beer distribution rights have a combined gross cost of $45.5 million and a remaining unamortized balance of $32.0 million at December 31, 2005. The company expects amortization expense of approximately $3.1 million per year related to international distribution rights over the next five years.

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5. Retirement Benefits

PENSION PLANS

The company sponsors pension plans for its employees. Total pension expense for the three years ended December 31 is presented in the following table (in millions). Contributions to multiemployer plans in which the company and its subsidiaries participate are determined in accordance with the provisions of negotiated labor contracts, based on employee hours or weeks worked. Pension expense recognized for multiemployer and defined contribution plans equals cash contributions for all years shown.

		2005		2004		2003
Single-employer defined benefit plans	$	156.4	$	118.6	$	73.7
Multiemployer plans		16.8		16.8		16.8
Defined contribution plans		19.1		18.9		18.4
Total pension expense	$	192.3	$	154.3	$	108.9

Net annual pension expense for single-employer defined benefit plans was composed of the following for the three years ended December 31 (in millions).

		2005			2004			2003
Service cost (benefits earned during the year)	$	94.2		$	86.6		$	74.7
Interest cost on projected benefit obligation		168.3			159.2			151.9
Assumed return on plan assets		(194.9	)		(189.2	)		(188.9	)
Amortization of prior service cost
and net actuarial losses		88.8			62.0			36.0
Net annual pension expense	$	156.4		$	118.6		$	73.7

The key actuarial assumptions used in determining the annual pension expense and funded status for single-employer defined benefit plans for the three years ended December 31 follow. The measurement date for the company’s pension accounting is October 1.

	2005	2004	2003
Annual expense:
Discount rate	6.0%	6.25%	6.75%
Long-term rate of return on plan assets	8.5%	8.5%	8.5%
Wtd. avg. rate of compensation increase	4.25%	4.25%	4.25%
Funded status:
Discount rate	5.5%	6.0%	6.25%
Wtd. avg. rate of compensation increase	4.0%	4.25%	4.25%

For informational purposes, following is a summary of the potential impact on 2006 annual pension expense of a hypothetical 1% change in actuarial assumptions (in millions). Brackets indicate annual pension expense would be reduced. Modification of these assumptions does not impact the company’s pension funding requirements.

			Impact of			Impact of
Assumption	2005 Rate		1% Increase			1% Decrease
Long-term asset return	8.5%	$	(23.2	)	$	23.2
Discount rate	6.0%	$	(43.4	)	$	58.5
Salary growth rate	4.25%	$	21.5		$	(19.2	)

The following table provides a reconciliation between the funded status of single-employer defined benefit plans and the prepaid pension asset on the balance sheet for the two years ended December 31 (in millions). Unrecognized actuarial losses represent changes in the estimated projected benefit obligations (primarily due to changes in assumed discount rates) which have not yet been recognized in the balance sheet or income statement. The impact of these actuarial changes is amortized into net annual pension expense over the remaining service period for active employees, which is approximately ten years for each of the years shown.

		2005			2004
Funded status — plan assets (less than)
projected benefit obligation	$	(880.0	)	$	(705.9	)
Unrecognized net actuarial loss		1,136.2			1,087.3
Unamortized prior service cost		131.1			146.4
Prepaid pension asset	$	387.3		$	527.8

The following tables present changes in the projected benefit obligation, changes in the fair value of plan assets, and a comparison of plan assets and the accumulated benefit obligation for single-employer defined benefit plans for the two years ended December 31 (in millions). The projected benefit obligation is the actuarial net present value of all benefits related to employee service rendered to date, including assumptions of future annual compensation increases to the extent appropriate. The accumulated benefit obligation is the actuarial present value of benefits for services rendered to date, with no consideration of future compensation.  

		2005			2004
Projected benefit obligation, beginning of year	$	2,894.0		$	2,575.6
Service cost		94.2			86.6
Interest cost		168.3			159.2
Plan amendments		6.7			56.1
Actuarial loss		205.8			183.4
Foreign currency translation		(6.6	)		4.1
Benefits paid		(172.5	)		(171.0	)
Projected benefit obligation, end of year	$	3,189.9		$	2,894.0

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		2005			2004
Fair value of plan assets, beginning of year	$	2,188.1		$	1,935.1
Actual return on plan assets		282.4			211.8
Employer contributions		15.8			172.7
Foreign currency translation		(3.9	)		2.2
Benefits paid		(172.5	)		(171.0	)
Fair value of plan assets, end of year	$	2,309.9		$	2,150.8

		2005			2004
Plans with accumulated benefit obligation
in excess of assets:
Accumulated benefit obligation	$	(2,890.9	)	$	(2,622.0	)
Plan assets		2,309.9			2,150.8
Accumulated benefit obligation
exceeding assets	$	(581.0	)	$	(471.2	)

Required funding for the company’s defined benefit pension plans is determined in accordance with guidelines set forth in the federal Employee Retirement Income Security Act (ERISA). Additional contributions to enhance the funded status of pension plans can be made at the company’s discretion. The company plans to make required pension contributions totaling $58 million for all plans throughout 2006, and provided additional discretionary pension funding of $214 million in January 2006. Anheuser-Busch made accelerated pension contributions of $187 million and $75 million in 2004 and 2003, respectively. Projections indicated that Anheuser-Busch would have been required to contribute these amounts in future years, but the company chose to make the contributions early in order to enhance the funded status of the plans.

Recognition of a minimum pension liability in nonowner changes in equity is necessary whenever the accumulated pension benefit obligation exceeds plan assets. Recording a minimum pension liability has no impact on annual pension expense or funding requirements. Summarized in the following table are the components of the company’s minimum pension liability for the two years ended December 31 (in millions).

		2005			2004
Minimum pension liability — domestic plans	$	(968.4	)	$	(961.7	)
Minimum pension liability — equity investments		(39.2	)		(42.4	)
Intangible asset — unrecognized prior service costs		132.6			150.8
Deferred income taxes		345.3			336.3
Net minimum pension liability	$	(529.7	)	$	(517.0	)

Following is information regarding the allocation of the company’s pension plan assets as of December 31, 2005 and 2004, target allocation for 2006, and weighted average expected long-term rates of return by asset category.  

	Percentage of	Percentage of	Target Asset	Wtd. Avg. Expected
	Plan Assets at	Plan Assets at	Allocation for	Long-Term
Asset Category	Dec. 31, 2004	Dec. 31, 2005	2006	Rate of Return
Equity securities	69%	70%	69%	10.0%
Debt securities	27%	26%	27%	5.0%
Real estate	4%	4%	4%	7.0%
Total	100%	100%	100%	8.5%

Asset allocations are intended to achieve a total asset return target over the long term, with an acceptable level of risk in the shorter term. Risk is measured in terms of likely volatility of annual investment returns, pension expense, and funding requirements. Expected returns, risk, and correlation among asset classes are based on historical data and investment advisor input. As noted, annual pension expense includes assumptions regarding the rate of return on plan assets. The assumed rate of return is consistent with Anheuser-Busch’s long-term investment return objective, which enables the company to provide competitive and secure employee retirement pension benefits. The company strives to balance expected long-term returns and short-term volatility of pension plan assets. Favorable or unfavorable differences between the assumed and actual returns on plan assets are generally recognized in periodic pension expense over the subsequent five years. The actual rate of return on plan assets net of investment manager fees was 14%, 12% and 18% for 2005, 2004 and 2003, respectively.

The company assumes prudent levels of risk to meet overall pension investment goals. Risk levels are managed through formal and written investment guidelines. Portfolio risk is managed by having well-defined long-term strategic asset allocation targets. The company avoids tactical asset allocation and market timing and has established disciplined rebalancing policies to ensure asset allocations remain close to targets. The company’s asset allocations are designed to provide broad market diversification, which reduces exposure to individual companies, industries and sectors of the market. With the exception of the U.S. government and its agencies, investment exposure to any single entity is limited to a maximum 5% of any single fund. Pension assets do not include any direct investment in Anheuser-Busch debt or equity securities.

Derivatives use is permitted by investment funds to hedge exposure to foreign currency denominated stocks and securitize cash in investment portfolios where appropriate to achieve overall investment policy objectives. By policy, derivatives used

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must be simple structures with high liquidity and be either exchange-traded or executed with high credit rated counterparties. Leveraged transactions, short selling, illiquid derivative instruments, and margin transactions are prohibited.

POSTRETIREMENT HEALTH CARE AND INSURANCE BENEFITS

The company provides certain health care and life insurance benefits to eligible retired employees. Through December 31, 2005, participants were required to have at least 10 years of service after the age of 45 to become eligible for any retiree health care benefits. Effective January 1, 2006, participants must have at least 10 years of continuous service after reaching age 48 to become eligible. Employees become eligible for full retiree health care benefits after achieving specific age and total years of service requirements, based on hire date.

Net periodic postretirement benefits expense for company health care and life insurance plans was comprised of the following for the three years ended December 31 (in millions). During 2004, Anheuser-Busch began recognizing the estimated impact of the Medicare Prescription Drug Improvement and Modernization Act, which provides federal payments to sponsors of retiree health care plans, such as Anheuser-Busch. On adoption of the Act, the company made a one-time $40.1 million reduction to its accumulated postretirement benefits obligation which is accounted for as an actuarial gain and amortized over the remaining service life of participating employees, approximately 9 years. Additionally, applying the Act has reduced annual retiree health care expense by approximately $7 million.

		2005			2004			2003
Service cost	$	25.6		$	22.3		$	19.7
Interest cost on accumulated
postretirement benefits obligation		39.3			34.8			37.9
Amortization of prior service benefit		(11.4	)		(11.4	)		(11.5	)
Amortization of actuarial loss/(gain)		14.1			4.2			2.3
Net periodic postretirement
benefits expense	$	67.6		$	49.9		$	48.4

The following table summarizes the components of postretirement benefits obligations for all company single-employer defined benefit health care and life insurance plans for the two years ended December 31 (in millions). As of December 31, 2005 and 2004, $61.0 million and $46.8 million, respectively, of the company’s total post-retirement benefits liability was classified as current. Unrecognized net actuarial losses represent changes in the estimated accumulated benefits obligation which have not yet been recognized in the balance sheet or income statement. These changes are primarily due to changes in assumed discount rates and unfavorable increases in health care costs. The impact of the changes is amortized into annual postretirement benefits expense over the remaining service life of participating employees. Postretirement benefits obligations are not prefunded, and there are no assets associated with the plans.

		2005			2004
Accumulated postretirement benefits obligation,
beginning of year	$	600.4		$	600.4
Service cost		25.6			22.3
Interest cost		39.3			34.8
Actuarial loss		152.2			3.8
Plan amendments		(99.9	)		—
Benefits paid		(63.3	)		(60.9	)
Accumulated postretirement benefits obligation,
end of year		654.3			600.4
Unrecognized prior service benefits		105.0			16.5
Unrecognized net actuarial losses		(254.0	)		(115.9	)
Total postretirement benefits liability	$	505.3		$	501.0

The key actuarial assumptions used to determine net postretirement benefits expense and the accumulated postretirement benefits obligation for the three years ended December 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 and then remain constant thereafter. The measurement date for the company’s retiree health care accounting is December 31. 

	2005	2004	2003
Discount rate	5.5%	6.0%	6.25%
Initial health care inflation rate	8.9%	9.7%	10.45%
Future health care inflation rate	5.0%	5.0%	5.0%
Year health care trend rate assumed
to become constant	2012	2012	2012

For informational purposes, following is a summary of the potential impact on net periodic postretirement benefits expense and the accrued postretirement benefits liability of a hypothetical 1% change in the assumed health care inflation rate (in millions). Brackets indicate a reduction in expense or liability. 

		1% Increase		1% Decrease
Net periodic postretirement benefits expense	$	7.9	$	(6.9	)
Accrued postretirement benefits liability	$	33.0	$	(38.9	)

ESTIMATED FUTURE RETIREMENT BENEFITS PAYMENTS

Following are retirement benefits expected to be paid in future years, based on employee data and plan assumptions, as of December 31, 2005 (in millions). The amounts shown for pensions include payments related to supplemental executive retirement plans of $4 million, $77 million, $3 million, $4 million and $7 million, for the years 2006 through 2010, respectively, and a total of $58 million for 2011-2015. Payments for supplemental executive retirement and retiree health care are unfunded and therefore constitute future cash commitments of the company.

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Health Care
		Pensions		and Insurance
2006	$	179.4	$	56.5
2007	$	235.3	$	56.4
2008	$	167.7	$	55.9
2009	$	192.2	$	55.6
2010	$	211.5	$	55.8
2011-2015	$	1,252.8	$	279.5

EMPLOYEE STOCK PURCHASE AND SAVINGS PLANS

The company sponsors employee stock purchase and savings plans (401(k) plans), which are voluntary defined contribution plans in which most regular employees are eligible for participation. Under the 401(k) plans, the company makes matching cash contributions for up to 6% of employee pretax savings. The company’s matching contribution percentage is established annually based on a formula that considers both consolidated net income and total employee costs. From 1989 through the first quarter of 2004, the company’s 401(k) expense was favorably impacted by the funding of a portion of the company’s matching obligation through qualified Employee Stock Ownership Plans (ESOPs), which expired in March 2004. Total 401(k) expense was $63.6 million, $50.9 million and $17.0 million for 2005, 2004 and 2003, respectively.

6. Stock-Based Compensation

STOCK OPTIONS

Under the terms of the company’s stock option plans, officers, certain other employees and non-employee 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 December 31, 2005, 2004, and 2003, a total of 121 million, 95 million, and 100 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 (recognized as a reduction of current taxes payable and an increase in paid-in-capital) was $41.6 million for the years ended December 31, 2005 and 2004, and $41.3 million for the year ended December 31, 2003. The income tax benefit is based on the income realized by the employee on the date of exercise.

Following is a summary of stock option activity and pricing for the years shown (options in millions).

				Wtd. Avg.			Wtd. Avg.
	Options			Exercise	Options		Exercise
	Outstanding			Price	Exercisable		Price
Balance, Dec. 31, 2002	74.1		$	38.33	44.0	$	33.09
Granted	14.4		$	52.23
Exercised	(5.0	)	$	22.54
Cancelled	(0.1	)	$	45.15
Balance, Dec. 31, 2003	83.4		$	41.67	55.2	$	37.43
Granted	14.1		$	50.30
Exercised	(5.5	)	$	26.15
Cancelled	(0.2	)	$	48.13
Balance, Dec. 31, 2004	91.8		$	43.93	64.1	$	40.92
Granted	11.4		$	43.83
Exercised	(5.9	)	$	25.48
Cancelled	(0.8	)	$	49.38
Balance, Dec. 31, 2005	96.5		$	45.01	71.5	$	44.06

Non-employee directors may elect to receive their annual retainer in shares of Anheuser-Busch common stock instead of cash. If all non-employee directors eligible to own the company’s common stock elected to receive their 2006 annual retainer in shares, the total number of shares issued would be 16,760, based on the closing price for the company’s common stock at December 31, 2005.

The following table provides additional information regarding options outstanding and options that were exercisable as of December 31, 2005. 

	Options Outstanding			Options Exercisable
Range of		Wtd. Avg.	Wtd. Avg.		Wtd. Avg.
Exercise		Remaining	Exercise		Exercise
Prices	Number	Life	Price	Number	Price
$10-29	10.1	2.2 yrs	$25.90	10.1	$25.90
$30-39	8.1	3.7 yrs	$37.84	8.1	$37.84
$40-49	50.2	6.6 yrs	$46.49	38.8	$47.26
$50-54	28.1	8.2 yrs	$51.29	14.5	$51.60
$10-54	96.5	6.4 yrs	$45.01	71.5	$44.06

RESTRICTED STOCK

In January 2006, the company granted shares of restricted stock to officers and certain other employees. Shares of restricted stock either vest ratably over a three year period (time-based shares), or vest in pre-specified percentages at the end of three years based on total BUD shareholder return performance ranked against the S&P 500 over that period (performance-based shares). The performance-based shares were granted to members of the company’s Strategy Committee. All other employees received time-based shares. The company granted a total of 168,557 performance-based shares and 403,827 time-based shares. In accordance with FAS 123R, compensation expense will be based on the grant date

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fair values of $43.39 per share for time-based shares and $35.58 per share for performance-based shares, and will be recognized over the three year vesting or performance evaluation period, respectively.

7. Income Taxes

Following are the components of the provision for income taxes for the three years ended December 31 (in millions).

		2005			2004		2003
Current tax provision:
Federal	$	712.0		$	772.6	$	813.1
State		129.8			170.0		142.6
Foreign		8.4			33.5		8.1
Total current provision		850.2			976.1		963.8
Deferred tax provision:
Federal		(3.3	)		168.7		112.1
State		(9.0	)		18.4		17.0
Foreign		12.5			—		0.4
Total deferred provision		0.2			187.1		129.5
Total tax provision	$	850.4		$	1,163.2	$	1,093.3

The deferred income tax provision is a non-cash expense and results from temporary differences between financial reporting and income tax filing in the timing of certain income and expense items and in the basis of assets and liabilities. The primary temporary differences relate to depreciation on fixed assets, pension contributions and accrued U.S. taxes on equity income, net of applicable foreign tax credits. Anheuser-Busch operates in multiple legal jurisdictions that subject it to tax audits in the U.S. and various foreign countries. The company believes it has made adequate provisions in all jurisdictions for all years remaining subject to audit.

The company’s deferred income tax liabilities and deferred income tax assets as of December 31, 2005 and 2004, are summarized by category in the following table (in millions). Deferred income tax liabilities result primarily from income tax deductions being received prior to expense recognition for financial reporting purposes. Deferred income tax assets relate primarily to expenses being recognized for financial reporting purposes that are not yet deductible for income tax purposes, and for minimum pension liabilities. Deferred income taxes are not provided on undistributed earnings of consolidated foreign subsidiaries that are considered to be permanently reinvested outside the United States. Cumulative foreign earnings considered permanently reinvested totaled $205.6 million and $187.9 million, respectively, at December 31, 2005 and 2004. 

		2005		2004
Deferred income tax liabilities:
Fixed assets	$	1,839.4	$	1,902.6
Accelerated pension contributions		219.8		221.3
Accrued net U.S. taxes on equity earnings		188.3		162.3
Other		177.9		211.7
Total deferred income tax liabilities		2,425.4		2,497.9
Deferred income tax assets:
Minimum pension obligation		334.3		324.4
Postretirement benefits		206.9		199.7
Spare parts and production supplies		77.0		74.8
Compensation-related obligations		72.2		74.9
Accrued liabilities and other		111.6		152.6
Total deferred income tax assets (1)		802.0		826.4
Net deferred income taxes	$	1,623.4	$	1,671.5

Note 1: Deferred income tax assets of $59.0 million and $55.7 million are classified in other current assets at December 31, 2005 and 2004, respectively.

Valuation allowances of $67.0 million and $32.2 million have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2005 and 2004, respectively. The increase in valuation allowances in 2005 is due to foreign operations and the allowance provided for the capital loss carry forward relating to the third quarter litigation settlement. The company has recorded the litigation settlement on the basis that the entire amount is a capital loss, which is only deductible for income tax purposes to the extent Anheuser-Busch has qualifying capital gains. The company did not have sufficient capital gains available in 2005 or the three prior tax years to allow a current deduction of the full amount. The portion of the loss not deducted in 2005 can be carried forward and applied against future capital gains for up to five years.

A reconciliation between the U.S. federal statutory income tax rate and Anheuser-Busch’s effective income tax rate for the three years ended December 31 is presented below.

	2005		2004		2003
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal benefit	3.6		3.9		3.7
Impact of foreign operations	0.7		0.6		0.7
Other items, net	(0.5	)	(0.7	)	(0.7	)
Effective tax rate	38.8	%	38.8	%	38.7	%

In October 2004, the American Jobs Creation Act was signed into law. The Act provides annual income tax deductions on income from certain domestic manufacturing activities, with increasing deduction levels phased in through 2010. The company recorded an initial income tax benefit under the Act of $22.2 million in 2005, and anticipates receiving increasing on-going future benefits related to qualifying manufacturing activities. The Act also created a one-time opportunity to repatriate income retained by overseas operations at substantially reduced U.S. income tax rates. The company

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elected to not repatriate consolidated income reinvested overseas as these funds are being used to expand local operations. The reduced U.S. income tax rate applied to the Modelo dividends received in 2005.

In 2004, Anheuser-Busch identified a $25.9 million balance sheet reclassification related to the 1996 spin-off of its Campbell Taggart bakery subsidiary. The company increased its deferred income tax liability by $25.9 million and decreased retained earnings by the same amount. The reclassification had no impact on the company’s results of operations, total assets, or cash flows.

8. Debt

The company uses SEC shelf registrations for debt issuance efficiency and flexibility, and currently has $1.65 billion 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 company has the ability and intent to refinance its entire debt portfolio on a long-term basis and therefore classifies all debt as long-term. Debt at December 31 consisted of the following (in millions).

		2005			2004
U.S. dollar notes due 2006 to 2023,
interest rates from 4.375% to 7.5%	$	3,576.2		$	3,478.0
U.S. dollar debentures due 2009 to 2043,
interest rates from 5.95% to 9.0%		2,600.0			2,950.0
Commercial paper, interest rates of 4.39% and 2.18%,
respectively, at year-end		1,102.6			1,164.2
Industrial revenue bonds due 2006 to 2038, interest
rates from 4.6% to 7.4%		271.7			271.8
Medium-term notes due 2010, interest rate 5.625%		200.0			200.0
Chinese renminbi-denominated bank loans due 2006
to 2009, interest rates from 4.7% to 6.7%		75.8			113.6
U.S. dollar EuroNotes due 2006, interest rate 4.51%		100.0			100.0
Miscellaneous items		66.1			23.4
Unamortized debt discounts		(20.3	)		(22.4	)
Total debt	$	7,972.1		$	8,278.6

The fixed interest rates on the company’s 4.51% EuroNotes and 5.60% and 5.49% U.S. dollar notes (total notional value of $250.0 million in 2005 and $150.0 million in 2004) were swapped to LIBOR-based floating rates when issued. The weighted average effective interest rates for this debt during 2005 and 2004 were 3.21% and 1.35%, respectively, while year-end rates were 4.29% and 2.28%, respectively.

The weighted-average interest rates for commercial paper borrowings during 2005, 2004, and 2003 were 3.31%, 1.40%, and 1.08%, respectively. The company has in place a single committed $2 billion revolving credit agreement that expires in October 2010, to support the company’s commercial paper program. The agreement is syndicated among 17 banks, has no financial covenants, and does not designate a material adverse change as a default event or as an event prohibiting a borrowing. Credit rating triggers in the agreement pertain only to annual fees and the interest rate applicable to any potential borrowing, not to the availability of funds. There have been no borrowings under the agreement for any year shown. Annual fees for the agreement were $1.2 million for 2005, 2004 and 2003. Commercial paper borrowings up to $2 billion are classified as long-term, as they are supported on a long-term basis by the revolving credit agreement. Any commercial paper borrowings in excess of $2 billion will be classified as short-term.

9. Harbin Group Acquisition

In July 2004, the company completed the purchase of Harbin Brewery Group, the fifth-largest brewer in China. Anheuser-Busch began including operating results for Harbin in the company’s consolidated results on a one-month-lag basis beginning with the third quarter of 2004.

Anheuser-Busch paid a total of $694 million for one billion outstanding shares representing 100% of Harbin, with the purchase price allocated as shown below (in millions). Adjustments to the initial purchase price allocation resulted from detailed analysis of assets and liabilities at each Harbin Brewery location.

		Preliminary						Final
Description		Allocation			Adjustments			Allocation
Working capital deficit	$	(27.9	)	$	(28.8	)	$	(56.7	)
Property, plant and equipment		173.1			(0.4	)		172.7
Identifiable intangible assets		59.8			—			59.8
Goodwill		613.8			34.3			648.1
Long-term debt assumed		(118.4	)		—			(118.4	)
Net other liabilities		(6.6	)		(5.1	)		(11.7	)
Total purchase price	$	693.8		$	—		$	693.8

An independent appraiser performed the valuation of acquired Harbin assets and liabilities. Identifiable intangible assets consist of trademarks valued at $44.4 million and a wholesaler distribution network valued at $15.4 million. The Harbin debt assumed was a portfolio of small-scale renminbi-denominated loans with a weighted average interest rate of 5.57% and maturities ranging from 2005 through 2009. The majority of this debt was due and settled in 2005. None of the Harbin goodwill is deductible for tax purposes.

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10. Supplemental Cash Flow Information

Accounts payable include $99 million and $111 million of outstanding checks at both December 31, 2005 and 2004. Supplemental cash flows information for the three years ended December 31 is presented in the following table (in millions).

		2005			2004			2003
Cash paid during the year:
Interest, net of interest capitalized	$	436.0		$	390.3		$	369.0
Income taxes	$	814.7		$	962.3		$	952.2
Excise taxes	$	2,217.3		$	2,229.1		$	2,169.4
Noncash investing activity:
Issuance of treasury stock related to wholesaler acquisition (1)	$	—		$	—		$	72.6
Change in working capital:
(Increase)/decrease in current assets:
Accounts receivable	$	14.7		$	(26.7	)	$	(39.0	)
Inventories		35.8			(102.8	)		(23.9	)
Other current assets		6.9			(21.6	)		(60.5	)
Increase/(decrease) in current liabilities:
Accounts payable		54.7			101.1			107.1
Accrued salaries, wages and benefits		(40.5	)		2.5			1.4
Accrued taxes		3.8			(10.2	)		(17.9	)
Accrued interest		(1.5	)		14.8			8.1
Other current liabilities		(2.9	)		3.6			(29.2	)
Derivatives fair value adjustment		(9.8	)		(91.3	)		77.2
Working capital adjustment for acquisition/disposition		(10.9	)		(51.0	)		9.3
Net (increase)/decrease in working capital	$	50.3		$	(181.6	)	$	32.6

Note 1: Recorded as a reduction in treasury stock for the company’s average cost of the shares ($28.5) and an increase in capital in excess of par value for the remainder ($44.1).

11. Accumulated Nonowner Changes In Shareholders Equity

The components of accumulated nonowner changes in shareholders equity as of December 31 are summarized below (in millions).

		2005			2004
Foreign currency translation	$	(382.0	)	$	(566.5	)
Deferred hedging losses		(2.4	)		(1.3	)
Deferred securities valuation gains		0.3			95.9
Minimum pension liability		(529.7	)		(517.0	)
Accumulated nonowner changes
in shareholders equity	$	(913.8	)	$	(988.9	)

Deferred tax assets of $1.4 million and $0.8 million have been recognized for deferred hedging losses as of December 31, 2005 and 2004, respectively, while deferred income tax liabilities of $0.2 million and $54.0 million have been provided for deferred securities valuation gains, respectively. The decline in deferred securities valuation gains is due to conversion of the Tsingtao convertible bonds in 2005. See Note 2 for additional information. See Note 5 for deferred taxes related to minimum pension liabilities. The majority of foreign currency translation losses relate to equity investments (primarily Grupo Modelo) whose operations are reported in Anheuser-Busch’s financial statements on a net-of-tax basis.

12. Preferred and Common Stock

COMMON STOCK ACTIVITY

Common stock activity for the three years ended December 31 is summarized below (shares in millions). 

	2005		2004		2003
Common Stock:
Beginning common stock	1,463.0		1,457.9		1,453.4
Shares issued under stock plans	5.6		5.1		4.5
Common stock	1,468.6		1,463.0		1,457.9
Treasury Stock:
Beginning treasury stock	(678.0	)	(644.8	)	(606.8	)
Treasury stock acquired	(12.9	)	(33.2	)	(39.4	)
Treasury stock issued	—		—		1.4
Cumulative treasury stock	(690.9	)	(678.0	)	(644.8	)
Net common stock outstanding	777.7		785.0		813.1

EARNINGS PER SHARE OF COMMON STOCK

Basic earnings per share are computed by dividing net income by the weighted-average number of shares of common stock outstanding for the year. Diluted earnings per share are computed using the weighted-average number of common shares outstanding, plus an adjustment for the dilutive effect of unexercised in-the-money stock options. A reconciliation between basic and diluted weighted-average common shares outstanding for the three years ended December 31 follows (millions of shares). There were no adjustments to net income for any year shown for purposes of calculating earnings per share.

	2005	2004	2003
Basic weighted average shares outstanding	777.5	798.9	826.2
Weighted average stock option shares	5.1	9.6	10.8
Diluted weighted average shares outstanding	782.6	808.5	837.0

COMMON STOCK REPURCHASE

The board of directors has approved resolutions authorizing the company to repurchase shares of its common stock. At December 31, 2005, approximately 31 million shares remained available for repurchase under a March 2003 board authorization totaling 100 million shares. The company repurchased 12.9 million common shares in 2005, 33.2 million shares in 2004, and 39.4 million shares in 2003, for $620.4 million, $1,699.5 million, and $1,958.9 million, respectively.

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PREFERRED STOCK

At December 31, 2005 and 2004, 40 million shares of $1.00 par value preferred stock were authorized and unissued.

13. Contingencies

In the third quarter 2005, Anheuser-Busch and its outside insurance companies settled all claims associated with previously disclosed lawsuits filed by Maris Distributing Company. As a result of the settlement, the company paid $120 million, resulting in a $105 million pretax charge ($.12 per share) which is reported as a separate line item on a pretax basis in the income statement. The settlement is classified as a corporate item for segment reporting.

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 the 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.

14. Quarterly Financial Data (unaudited)

Following is selected quarterly information for 2005 and 2004 (in millions, except per share).

Year Ended Dec. 31, 2005
		Net		Gross		Net		Earnings Per Share
		Sales		Profit		Income		Basic		Diluted
1st Qtr	$	3,563.7	$	1,336.5	$	512.8	$	.66	$	.65
2nd Qtr		4,018.1		1,542.1		607.0		.78		.78
3rd Qtr		4,088.5		1,574.7		518.2		.67		.66
4th Qtr		3,365.4		1,002.9		201.2		.26		.26
Annual	$	15,035.7	$	5,456.2	$	1,839.2	$	2.37	$	2.35
Year Ended Dec. 31, 2004
		Net		Gross		Net		Earnings Per Share
		Sales		Profit		Income		Basic		Diluted
1st Qtr	$	3,477.0	$	1,403.7	$	549.9	$	.68	$	.67
2nd Qtr		4,010.0		1,678.8		673.5		.84		.83
3rd Qtr		4,080.1		1,718.8		684.4		.86		.85
4th Qtr		3,367.1		1,150.4		332.5		.42		.42
Annual	$	14,934.2	$	5,951.7	$	2,240.3	$	2.80	$	2.77

15. Business Segments

The company categorizes its operations into four business segments: domestic beer, international beer, packaging and entertainment.

The domestic beer segment consists of the company’s U.S. beer manufacturing and company-owned beer wholesale sales 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. Principal foreign markets for sale of the company’s products are China, the United Kingdom, Canada, Mexico and Ireland. The company attributes foreign sales based on the location of the distributor purchasing the product.

The packaging segment is composed 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 external customers in the U.S. soft drink industry.

The entertainment segment consists of the company’s SeaWorld, Busch Gardens and other adventure park operations.

Following is Anheuser-Busch business segment information for 2005, 2004, and 2003 (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. Effective in 2005, the company’s transportation business is included within the domestic beer segment and its real estate business is reported as a corporate item. These businesses previously comprised the “other” segment. Segment results for 2004 and 2003 have been updated to conform to the 2005 reporting convention. The change in composition is not material for any segment or for any period presented.

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		Domestic	International				Corporate &
2005		Beer	Beer	Packaging	Entertainment	Eliminations(1)				Consolidated
Income Statement Information
Gross sales	$	13,067.6	1,165.5	2,383.6	1,084.8		(448.0	)	$	17,253.5
Net sales - intersegment	$	2.7	—	871.1	—		(873.8	)	$	—
Net sales - external	$	11,079.8	932.8	1,512.5	1,084.8		425.8		$	15,035.7
Depreciation and amortization	$	706.6	52.1	83.3	93.9		43.1		$	979.0
Income before income taxes	$	2,675.6	86.5	141.5	205.9		(918.0	)	$	2,191.5
Equity income, net of tax	$	—	498.1	—	—		—		$	498.1
Net income	$	1,658.9	551.7	87.7	127.7		(586.8	)	$	1,839.2
Balance Sheet Information
Total assets	$	8,019.0	5,049.2	764.4	1,400.8		1,321.6		$	16,555.0
Equity method investments	$	—	3,373.1	—	—		—		$	3,373.1
Goodwill	$	21.2	1,261.1	21.9	288.3		—		$	1,592.5
Foreign-located fixed assets	$	—	510.3	—	—		—		$	510.3
Capital expenditures	$	851.7	72.8	55.0	104.2		53.0		$	1,136.7
		Domestic	International				Corporate &
2004 (2)		Beer	Beer	Packaging	Entertainment	Eliminations(1)				Consolidated
Income Statement Information
Gross sales	$	13,388.5	1,015.1	2,276.8	989.3		(509.5	)	$	17,160.2
Net sales - intersegment	$	2.8	—	880.1	—		(882.9	)	$	—
Net sales - external	$	11,364.9	809.9	1,396.7	989.3		373.4		$	14,934.2
Depreciation and amortization	$	680.5	35.0	83.9	91.8		41.5		$	932.7
Income before income taxes	$	3,279.0	130.9	163.9	172.7		(747.1	)	$	2,999.4
Equity income, net of tax		—	404.1	—	—		—		$	404.1
Net income	$	2,033.0	485.3	101.6	107.1		(486.7	)	$	2,240.3
Balance Sheet Information
Total assets	$	7,857.9	4,683.9	800.8	1,378.9		1,451.9		$	16,173.4
Equity method investments	$	—	2,686.2	—	—		—		$	2,686.2
Goodwill	$	21.2	1,177.8	21.9	288.3		—		$	1,509.2
Foreign-located fixed assets	$	—	451.5	—	—		—		$	451.5
Capital expenditures	$	800.0	56.6	56.3	131.9		44.8		$	1,089.6
		Domestic	International				Corporate &
2003 (2)		Beer	Beer	Packaging	Entertainment	Eliminations(1)				Consolidated
Income Statement Information
Gross sales	$	13,017.1	797.0	2,093.6	923.9		(511.4	)	$	16,320.2
Net sales - intersegment	$	3.1	—	869.2	—		(872.3	)	$	—
Net sales - external	$	10,999.7	636.6	1,224.4	923.9		362.1		$	14,146.7
Depreciation and amortization	$	643.0	24.6	79.2	87.3		43.1		$	877.2
Income before income taxes	$	3,119.8	90.8	155.5	162.8		(704.6	)	$	2,824.3
Equity income, net of tax	$	—	344.9	—	—		—		$	344.9
Net income	$	1,934.3	401.2	96.4	100.9		(456.9	)	$	2,075.9
Balance Sheet Information
Total assets	$	7,814.8	3,517.9	782.4	1,341.9		1,232.5		$	14,689.5
Equity method investments	$	—	2,566.6	—	—		—		$	2,566.6
Goodwill	$	—	679.7	21.9	288.3		—		$	989.9
Foreign-located fixed assets	$	—	250.1	—	—		—		$	250.1
Capital expenditures	$	745.7	39.0	42.6	127.9		37.8		$	993.0

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 $340.1 million, $312.0 million, and $298.9 million in 2005, 2004, and 2003, respectively.
Note 2:	In the first quarter 2005, the company began including its transportation business in Domestic Beer and its real estate business in Corporate. These businesses formerly comprised the Other segment. Results shown for 2004 and 2003 have been updated to conform to the 2005 convention.

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Financial Summary — Operations

Year Ended December 31 (in millions, except per share)		2005			2004			2003
Barrels of Anheuser-Busch beer brands sold worldwide		121.9			116.8			111.0
Gross sales	$	17,253.5		$	17,160.2		$	16,320.2
Excise taxes		(2,217.8	)		(2,226.0	)		( 2,173.5	)
Net sales		15,035.7			14,934.2			14,146.7
Cost of sales		(9,579.5	)		(8,982.5	)		(8,449.1	)
Gross profit		5,456.2			5,951.7			5,697.6
Marketing, distribution and administrative expenses		(2,730.2	)		(2,590.7	)		( 2,498.3	)
Litigation settlement		(105.0	)		—			—
Gain on sale of business (1)		—			—			—
Shutdown of Tampa brewery		—			—			—
Operating income		2,621.0			3,361.0			3,199.3
Interest expense		(454.5	)		(426.9	)		(401.5	)
Interest capitalized		19.9			21.9			24.4
Interest income		2.4			4.7			1.7
Other income/(expense), net		2.7			38.7			0.4
Income before income taxes		2,191.5			2,999.4			2,824.3
Provision for income taxes		(850.4	)		(1,163.2	)		( 1,093.3	)
Equity income, net of tax		498.1			404.1			344.9
Income from continuing operations		1,839.2			2,240.3			2,075.9
Income/(loss) from discontinued operations		—			—			—
Income before accounting changes		1,839.2			2,240.3			2,075.9
Cumulative effect of accounting changes (2)		—			—			—
Net income	$	1,839.2		$	2,240.3		$	2,075.9
Basic earnings per share:
Income from continuing operations	$	2.37		$	2.80		$	2.51
Income/(loss) from discontinued operations		—			—			—
Income before accounting changes		2.37			2.80			2.51
Cumulative effect of accounting changes		—			—			—
Net income	$	2.37		$	2.80		$	2.51
Diluted earnings per share:
Income from continuing operations	$	2.35		$	2.77		$	2.48
Income/(loss) from discontinued operations		—			—			—
Income before accounting changes		2.35			2.77			2.48
Cumulative effect of accounting changes		—			—			—
Net income	$	2.35		$	2.77		$	2.48
Weighted average number of common shares:
Basic		777.5			798.9			826.2
Diluted		782.6			808.5			837.0

All share and per share information reflects the two-for-one common stock splits distributed September 18, 2000, and September 12, 1996, and the 1997 adoption of FAS 128, “Earnings per Share.” Information for 1995 has been restated for the divestiture of the food products segment.

Note 1: Sale of SeaWorld Cleveland in 2001; sale of the St. Louis Cardinals in 1996.

Note 2: Change in accounting for deferred systems reengineering costs, net of income tax benefit of $6.2 million.

_____

62

ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

	2002		2001			2000			1999			1998			1997			1996			1995
	109.8			107.2			105.6			102.9			99.8			96.6			95.1			90.9
$	15,686.8		$	14,973.0		$	14,534.2		$	13,914.5		$	13,342.5		$	12,936.0		$	12,721.8		$	12,100.1
	(2,120.4	)		(2,061.5	)		(2,034.8	)		(2,019.6	)		(1,962.1	)		(1,766.2	)		(1,737.8	)		(1,664.0	)
	13,566.4			12,911.5			12,499.4			11,894.9			11,380.4			11,169.8			10,984.0			10,436.1
	(8,131.3	)		(7,950.4	)		(7,829.9	)		(7,445.6	)		(7,297.1	)		(7,200.5	)		(7,064.9	)		(6,886.6	)
	5,435.1			4,961.1			4,669.5			4,449.3			4,083.3			3,969.3			3,919.1			3,549.5
	(2,455.4	)		(2,255.9	)		(2,174.8	)		(2,147.0	)		(1,958.0	)		(1,916.3	)		(1,890.0	)		(1,756.6	)
	—			—			—			—			—			—			—			—
	—			17.8			—			—			—			—			54.7			—
	—			—			—			—			—			—			—			(160.0	)
	2,979.7			2,723.0			2,494.7			2,302.3			2,125.3			2,053.0			2,083.8	(3)		1,632.9	(4)
	(368.7	)		(361.2	)		(348.2	)		(307.8	)		(291.5	)		(261.2	)		(232.8	)		(225.9	)
	17.7			26.9			33.3			18.2			26.0			42.1			35.5			24.3
	1.3			1.1			1.1			4.3			5.8			7.9			9.4			9.9
	(6.4	)		(12.2	)		(1.0	)		(9.4	)		(13.0	)		(9.3	)		(3.0	)		20.5
	2,623.6			2,377.6			2,179.9			2,007.6			1,852.6			1,832.5			1,892.9	(3)		1,461.7	(4)
	(1,041.5	)		(927.5	)		(874.3	)		(784.1	)		(732.2	)		(715.2	)		(736.8	)		575.1	)
	351.7			254.4			246.0			178.7			112.9			61.9			—			—
	1,933.8			1,704.5			1,551.6			1,402.2			1,233.3			1,179.2			1,156.1	(3)		886.6	(4)
	—			—			—			—			—			—			33.8			(244.3	)
	1,933.8			1,704.5			1,551.6			1,402.2			1,233.3			1,179.2			1,189.9			642.3
	—			—			—			—			—			(10.0	)		—			—
$	1,933.8		$	1,704.5		$	1,551.6		$	1,402.2		$	1,233.3		$	1,169.2		$	1,189.9		$	642.3
$	2.23		$	1.91		$	1.71		$	1.49		$	1.28		$	1.19		$	1.16		$	.86
	—			—			—			—			—			—			.03			(.23	)
	2.23			1.91			1.71			1.49			1.28			1.19			1.19			.63
	—			—			—			—			—			(.01	)		—			—
$	2.23		$	1.91		$	1.71		$	1.49		$	1.28		$	1.18		$	1.19		$	.63
$	2.20		$	1.89		$	1.69		$	1.47		$	1.27		$	1.18		$	1.14	(3)	$	.85	(4)
	—			—			—			—			—			—			.03			(.23	)
	2.20			1.89			1.69			1.47			1.27			1.18			1.17			.62
	—			—			—			—			—			(.01	)		—			—
$	2.20		$	1.89		$	1.69		$	1.47		$	1.27		$	1.17		$	1.17		$	.62
	866.0			890.1			906.1			939.0			964.2			985.3			998.2			1,021.7
	878.9			901.6			919.7			953.7			975.0			999.4			1,021.2			1,048.8

Note 3: 1996 results include the impact of the one-time 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 $160.0 million for the closure of the Tampa brewery, and the $74.5 million pretax impact of the beer wholesaler inventory reduction. Excluding these one-time 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.

_____

63

ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

Financial Summary — Balance Sheet and Other Information

Year Ended December 31 (in millions, except per share)		2005			2004			2003
Balance Sheet Information:
Working capital (deficit)	$	(223.9	)	$	(150.6	)	$	(226.9	)
Current ratio		0.9			0.9			0.9
Debt	$	7,972.1		$	8,278.6		$	7,285.4
Shareholders equity	$	3,343.3		$	2,668.1		$	2,711.7
Return on shareholders equity		61.2	%		83.3	%		72.0	%
Book value per share	$	4.30		$	3.40		$	3.33
Total assets	$	16,555.0		$	16,173.4		$	14,689.5
Other Information:
Operating cash flow before changes in working capital	$	2,677.5		$	3,121.9		$	2,938.3
Capital expenditures	$	1,136.7		$	1,089.6		$	993.0
Operating cash flow after capital expenditures (Anheuser-Busch free cash flow)	$	1,591.1		$	1,850.7		$	1,977.9
Common dividends paid	$	800.8		$	742.8		$	685.4
Per share	$	1.03		$	.93		$	.83
Price/earnings ratio		18.3			18.3			21.2
High and low closing price of BUD shares		$50.52-$40.57			$54.29-$49.45			$53.69-$45.92

All share and per share information reflects the two-for-one common stock splits distributed September 18, 2000, and September 12, 1996. Information for 1995 has been restated for the divestiture of the food products segment.

_____

64

ANHEUSER-BUSCH COMPANIES AND SUBSIDIARIES

	2002			2001				2000				1999				1998				1997				1996				1995
$	(283.0	)		$	(186.1	)		$	(127.8	)		$	(350.4	)		$	(89.9	)		$	83.2			$	34.9			$	268.6
	0.8				0.9				0.9				0.8				0.9				1.1				1.0				1.2
$	6,603.2			$	5,983.9			$	5,362.7			$	5,122.9			$	4,718.6			$	4,365.6			$	3,270.9			$	3,270.1
$	3,052.3			$	4,061.5			$	4,128.9			$	3,921.5			$	4,216.0			$	4,041.8			$	4,029.1			$	4,433.9
	54.4	%			41.6	%			38.5	%			34.5	%			29.9	%			29.2	%	(1)		30.0	%	(2)		25.0	%	(3)
$	3.61			$	4.62			$	4.57			$	4.25			$	4.42			$	4.15			$	4.05			$	3.61
$	14,119.5			$	13,944.9			$	13,148.3			$	12,680.5			$	12,504.5			$	11,738.4			$	10,463.6			$	10,590.9
$	2,624.3			$	2,316.0			$	2,230.0			$	2,141.6			$	1,977.2			$	1,839.0			$	1,751.7			$	1,700.5
$	834.7			$	1,022.0			$	1,074.5			$	865.3			$	817.5			$	1,199.3			$	1,084.6			$	952.5
$	1,930.5			$	1,338.6			$	1,183.0			$	1,270.6			$	1,395.9			$	644.4			$	909.2			$	494.5
$	649.5			$	614.1			$	571.0			$	544.7			$	521.0			$	492.6			$	458.9			$	429.5
$	.75			$	.69			$	.63			$	.58			$	.54			$	.50			$	.46			$	.42
	22.0				23.9				26.9				24.1				25.9				18.6		(1)		17.6		(2)		19.6		(3)
$54.97-$44.00			$46.51-$38.50				$49.81-$27.47				$40.81-$32.59				$34.13-$21.72				$23.94-$19.75				$21.44-$16.25				$17-$12.69

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 one-time $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 one-time 1995 items ($160 million pretax charge for closure of the Tampa brewery and $74.5 million pretax 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.

_____

65

EX-21

EXHIBIT 21   

SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC.

NAME OF COMPANY	STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION	DOING BUSINESS UNDER NAME OF
A-B Jade Hong Kong Holding Company, Limited	Hong Kong	A-B Jade Hong Kong Holding Company, Limited
Anheuser-Busch, Incorporated	Missouri	Anheuser-Busch, Incorporated
		CA: Anheuser-Busch Sales of San Diego
		CA: Anheuser-Busch Sales of Stockton
		CA: Anheuser-Busch Sales of Sylmar
		CA: Anheuser-Busch Sales Co.
		CA: Green Valley Brewing Company
		CA: (The) Peels Beverage Company
		CO: Anheuser-Busch Sales Co.
		CO: Anheuser-Busch Sales Co. of Denver
		CO: Anheuser-Busch Sales Company of Denver
		GA: (The) Peels Beverage Company
		MO: Anheuser-Busch Center
		MO: (The) Anheuser-Busch Collectors Club
		MO: Anheuser-Busch Conference and Sports Centre
		MO: Bud Sports
		MO: Grant’s Farm
		MO: Green Valley Brewing Company
		MO: (The) Peels Beverage Company
		MO: Promotional Products Group
		MO: St. Louis Soccer Park
		NY: Blue Dawg Brewing
		NY: (The) Peels Beverage Company
		OH: Anheuser-Busch Sales of Canton
		OK: Anheuser-Busch Sales of Oklahoma
		OK: Anheuser-Busch Sales of Oklahoma - Enid Branch
		OK: Anheuser-Busch Sales of Oklahoma - Perry Branch
		OK: Anheuser-Busch Sales of Oklahoma - Ponca City Branch
		OK: Anheuser-Busch Sales of Oklahoma - Tulsa Branch
		OK: Anheuser-Busch Sales of Oklahoma - Vinita Branch
		OK: Anheuser-Busch Sales of Enid
		OK: Anheuser-Busch Sales of Ponca City
		OK: Anheuser-Busch Sales of Tulsa
		OK: Anheuser-Busch Sales of Stillwater
		OK: Anheuser-Busch Sales of Vinita
		VA: Kingsmill Golf Club
		VA: (The) Peels Beverage Company
Anheuser-Busch Asia, Inc.	Delaware	Anheuser-Busch Asia, Inc.
		China: Anheuser-Busch China
Anheuser-Busch Brasil Holdings Ltda.	Brazil	Anheuser-Busch Brasil Holdings Ltda.
Anheuser-Busch Canada, Inc.	Delaware	Anheuser-Busch Canada, Inc.

Page 2

NAME OF COMPANY	STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION	DOING BUSINESS UNDER NAME OF
Anheuser-Busch Distributors of New York, Inc.	Delaware	NY: Anheuser-Busch Sales and Service of New York
Anheuser-Busch Europe, Inc.	Delaware	Anheuser-Busch Europe, Inc.
Anheuser-Busch Europe Limited	United Kingdom	Anheuser-Busch Europe Limited
Anheuser-Busch Hong Kong Investment Company, Limited	Hong Kong	Anheuser-Busch Hong Kong Investment Company, Limited
Anheuser-Busch Hong Kong Trading Company, Limited	Hong Kong	Anheuser-Busch Hong Kong Trading Company, Limited
Anheuser-Busch Import Investments, Inc.	Delaware	Anheuser-Busch Import Investments, Inc.
Anheuser-Busch International, Inc.	Delaware	Anheuser-Busch International, Inc.
Anheuser-Busch International Holdings, Inc.	Delaware	Anheuser-Busch International Holdings, Inc.
Anheuser-Busch International Holdings, Inc. Chile I Limitada	Chile	Anheuser-Busch International Holdings, Inc. Chile I Limitada
Anheuser-Busch Investments, S.L.	Spain	Anheuser-Busch Investments, S.L.
Anheuser-Busch Latin American Development Corporation	Delaware	Anheuser-Busch Latin American Development Corporation
Anheuser-Busch Mexico, Inc.	Delaware	Anheuser-Busch Mexico, Inc.
Anheuser-Busch Overseas Holdings, L.L.C.	Delaware	Anheuser-Busch Overseas Holdings, L.L.C.
Anheuser-Busch Packaging Group, Inc.	Delaware	Anheuser-Busch Packaging Group, Inc.
		MO: Anheuser-Busch Companies Packaging Group
Anheuser-Busch Recycling Corporation	Ohio	Anheuser-Busch Recycling Corporation
Anheuser-Busch River North Investment Capital Corporation	Delaware	Anheuser-Busch River North Investment Capital Corporation
		IL: River North Distributing Company
Anheuser-Busch Sales of Hawaii, Inc.	Delaware	Anheuser-Busch Sales of Hawaii, Inc.
Anheuser-Busch San Diego Wholesaler Development Corporation	Delaware	Anheuser-Busch San Diego Wholesaler Development Corporation
		CA: Anheuser-Busch Sales of San Diego
Anheuser-Busch Spanish Holdings, Inc.	Delaware	Anheuser-Busch Spanish Holdings, Inc.
Anheuser-Busch Wholesaler Development Corp.	Delaware	Anheuser-Busch Wholesaler Development Corp.
		CA: Anheuser-Busch Sales, Pomona
		CA: Anheuser-Busch Sales, Antelope Valley
Anheuser-Busch Wholesaler Development Corporation III	Delaware	Anheuser-Busch Wholesaler Development Corporation III
Anheuser-Busch Wholesaler Development Corporation IV	Delaware	Anheuser-Busch Wholesaler Development Corporation IV
Anheuser-Busch Wisconsin Investment Capital Corporation	Wisconsin	Anheuser-Busch Wisconsin Investment Capital Corporation
Anheuser-Busch World Trade Ltd.	Delaware	Anheuser-Busch World Trade Ltd.
August A. Busch & Co. of Massachusetts, Inc.	Massachusetts	August A. Busch & Co. of Massachusetts, Inc.
Ballantine Management Limited	British Virgin Islands	Ballantine Management Limited
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.

Page 3

NAME OF COMPANY	STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION	DOING BUSINESS UNDER NAME OF
Budweiser Brasil Ltda.	Brazil	Budweiser Brasil Ltda.
Budweiser (China) Sales Company	China	Budweiser (China) Sales Company
Budweiser Hong Kong Holding Company, Limited	Hong Kong	Budweiser Hong Kong Holding Company, Limited
Budweiser Philippines, Inc.	Delaware	Budweiser Philippines, Inc.
Budweiser Wuhan International Brewing Company Limited	China	Budweiser Wuhan International Brewing Company Limited
Busch Agricultural Resources, Inc.	Delaware	Busch Agricultural Resources, Inc.
		AR: Mill Spring Farms
Busch Agricultural Resources International, Inc.	Delaware	Busch Agricultural Resources International, Inc.
Busch Entertainment Corporation	Delaware	Busch Entertainment Corporation
		PA: Sesame Place
Busch Entertainment Company International, Inc.	Delaware	Busch Entertainment Company International, Inc.
Busch Hong Kong Holding Company, Limited	Hong Kong	Busch Hong Kong Holding Company, Limited
Busch Investment Corporation	Delaware	Busch Investment Corporation
Busch Mechanical Services, Inc.	Delaware	Busch Mechanical Services, Inc.
		GA: Atlanta Transportation Services Company
		MO: Busch Reclamation Services
		MO: Busch Transportation Services, Inc.
		MO: Springfield Railway Services
		TN: Memphis Transportation Services
Busch Media Group, Inc.	Delaware	Busch Media Group, Inc.
Busch Properties, Inc.	Delaware	Busch Properties, Inc.
		VA: Kingsmill Audio Visual Services
		VA: Kingsmill Golf Club
		VA: Kingsmill Inn and Conference Center
Busch Properties of Florida, Inc.	Florida	Busch Properties of Florida, Inc.
Civic Center Corporation	Missouri	Civic Center Corporation
Consolidated Farms, Inc.	Delaware	Consolidated Farms, Inc.
		ID: Elk Mountain Farms, Inc.
Eagle Packaging, Inc.	Delaware	Eagle Packaging, Inc.
Eagle Snacks, Inc.	Delaware	Eagle Snacks, Inc.
		MA: The Cape Cod Company in Hyannis
		MI: Eagle Snacks of Missouri
		NC: Carolina Harvest Company
Extra Lucky Investment Limited	Hong Kong	Extra Lucky Investment Limited
Fung Heng Investment Limited	Hong Kong	Fung Heng Investment Limited
Glass Container Corporation	Delaware	MO/TX: Longhorn Glass Corporation
Global Conduit Holdings Limited	British Virgin Islands	Global Conduit Holdings Limited
Harbin Brewery (Changchun Yinpu) Company Limited	China	Harbin Brewery (Changchun Yinpu) Company Limited
Harbin Brewery Group Limited	Cayman Islands	Harbin Brewery Group Limited
Harbin Brewery Investments Ltd.	British Virgin Islands	Harbin Brewery Investments Ltd.
Harbin Brewing Company Limited	China	Harbin Brewing Company Limited
Harbin Brewing Daqing Xiaoxue Company Limited	Daqing, China	Harbin Brewing Daqing Xiaoxue Company Limited
Harbin Brewing (Hegang) Company Limited	China	Harbin Brewing (Hegang) Company Limited

Page 4

NAME OF COMPANY	STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION	DOING BUSINESS UNDER NAME OF
Harbin Brewing (Hailun) Company Limited	China	Harbin Brewing (Hailun) Company Limited
Harbin Brewing (Jiamusi Jiafeng) Company Limited	China	Harbin Brewing (Jiamusi Jiafeng) Company Limited
Harbin Brewing Jinzhou Company Limited	China	Harbin Brewing Jinzhou Company Limited
Harbin Brewing (Mudanjiang Jingpo) Company Limited	China	Harbin Brewing (Mudanjiang Jingpo) Company Limited
Harbin Brewing (Shenyang) Company Limited	China	Harbin Brewing (Shenyang) Company Limited
Harbin Brewing (Songjiang) Company Limited	China	Harbin Brewing (Songjiang) Company Limited
Harbin Brewing (Tangshan) Company Limited	China	Harbin Brewing (Tangshan) Company Limited
Harbin Brewing (Yanji) Company Limited	Yanji, China	Harbin Brewing (Yanji) Company Limited
HSH of Orlando, Inc.	Florida	HSH of Orlando, Inc.
ILH Company	Florida	ILH Company
Import Brands Alliance, Inc.	Delaware	Import Brands Alliance, Inc.
Jilin Harbin Brewing Company Limited	China	Jilin Harbin Brewing Company Limited
King Victory Investments, Inc.	British Virgin Islands	King Victory Investments, Inc.
Kingsmill Realty, Inc.	Virginia	Kingsmill Realty, Inc.
Langhorne Food Services, Inc.	Delaware	Langhorne Food Services, Inc.
Litchfield Development Corporation	Delaware	Litchfield Development Corporation
Longhorn Glass Manufacturing, L.P.	Delaware	Longhorn Glass Manufacturing, L.P.
		DE: Longhorn Glass Corporation
		MO: Longhorn Glass Corporation
		TX: Longhorn Glass Corporation
Long Tail Libations, Inc.	Delaware	Long Tail Libations, Inc.
		IL: Jekyll & Hyde Spirits
		KS: Jekyll & Hyde Spirits
		MO: Jekyll & Hyde Spirits
		NV: Jekyll & Hyde Spirits
Manufacturers Cartage Company	Missouri	Manufacturers Cartage Company
Manufacturers Railway Company	Missouri	Manufacturers Railway Company
Metal Container Corporation	Delaware	Metal Container Corporation
		CA: MCC Riverside
Metal Container Corporation of California	California	Metal Container Corporation of California
M.R.S. Redevelopment Corporation	Missouri	M.R.S. Redevelopment Corporation
New-Biz Corporation	British Virgin Islands	New-Biz Corporation
Noble Right Limited	British Virgin Islands	Noble Right Limited
Nutri-Turf, Inc.	Delaware	Nutri-Turf, Inc.
Pacific International Rice Mills, Inc.	Delaware	Pacific International Rice Mills, Inc.
PBP, Inc.	Delaware	PBP, Inc.
Pestalozzi Street Insurance Company, Ltd.	Bermuda	Pestalozzi Street Insurance Company, Ltd.
Precision Printing and Packaging, Inc.	Delaware	Precision Printing and Packaging, Inc.
Prestige Full Investment Limited	Hong Kong	Prestige Full Investment Limited
Promociones y Desarrollos Mexico de Mexicali, S. de R. L. de C. V.	Mexico	Promociones y Desarrollos Mexico de Mexicali, S. de R. L. de C. V.
SeaWorld, Inc.	Delaware	SeaWorld, Inc.
		FL: SeaWorld Vacations, Busch Gardens Vacations, Sesame Place Vacations, Water Country USA Vacations, Adventure Island Vacations, Discovery Cove Vacations
		OH: SeaWorld of Ohio
SeaWorld of Florida, Inc.	Florida	SeaWorld of Florida, Inc.
SeaWorld of Texas, Inc.	Delaware	SeaWorld of Texas, Inc.

Page 5

NAME OF COMPANY	STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION	DOING BUSINESS UNDER NAME OF
SeaWorld & Busch Gardens Conservation Fund	Delaware	SeaWorld & Busch Gardens Conversation Fund
SFKBPP, Inc.	Missouri	SFKBPP, Inc.
Somerset Distributions, L.L.C.	Delaware	Somerset Distributions, L.L.C.
		CA: Anheuser-Busch Sales, Beach Cities
Stag Brewing Company Limited	United Kingdom	Stag Brewing Company Limited
		UK: 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 Corporation	Delaware	Wholesaler Equity Development Corporation
Williamsburg Transport, Inc.	Virginia	Williamsburg Transport, Inc.

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Forms S-3 (No. 333-104097 and No. 333-117742) and in the Registration Statements on Forms S-8 (No. 333-113898, No. 333-113897, No. 33-36132, No. 33-53333, No. 333-67027, No. 333-71311, No. 333-88015, No. 333-60216, No. 333-105362, No. 333-124589 and No. 333-132193) of Anheuser-Busch Companies, Inc. of our report dated February 22, 2006 relating to the financial statements, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, 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 22, 2006 relating to the financial statement schedule, which appears in this Form 10-K.

PricewaterhouseCoopers LLP

St. Louis MO

March 9, 2006

EX-24

Exhibit 24   

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of Anheuser-Busch Companies, Inc. (hereinafter referred to as the “Company”) hereby constitutes and appoints Patrick T. Stokes, W. Randolph Baker, John F. Kelly and JoBeth G. Brown, and each of them acting singly, the true and lawful agents and attorneys, or agent and attorney, with full powers of substitution, resubstitution and revocation, for and in the name, place and stead of the undersigned to do any and all things and to execute any and all instruments which said agents and attorneys, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with the 2005 Annual Report on Form 10-K of the Company, including specifically, but without limiting the generality of the foregoing, full power and authority to sign the name of each of the undersigned in the capacities indicated below to the said 2005 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, and to any and all amendments to said 2005 Annual Report on Form 10-K, and each of the undersigned hereby grants to said attorneys and agents, and to each of them singly, full power and authority to do and perform on behalf of the undersigned every act and thing whatsoever necessary or appropriate to be done in the premises as fully as the undersigned could do in person, hereby ratifying and confirming all that said attorneys and agents, or any of them, or the substitutes or substitute of them or of any of them, shall do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has subscribed these presents this 22nd day of February, 2006.

/s/ Patrick T. Stokes	/s/ W. Randolph Baker
(Patrick T. Stokes)	(W. Randolph Baker)
President and Chief Executive Officer and Director	Vice President and Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)
/s/ John F. Kelly	/s/ August A. Busch III
(John F. Kelly)	(August A. Busch III)
Vice President and Controller	Director
(Principal Accounting Officer)
/s/ Carlos Fernandez G.	/s/ James J. Forese
(Carlos Fernandez G.)	(James J. Forese)
Director	Director

/s/ John E. Jacob	/s/ James R. Jones
(John E. Jacob)	(James R. Jones)
Director	Director
/s/ Charles F. Knight	/s/ Vernon R. Loucks, Jr.
(Charles F. Knight)	(Vernon R. Loucks, Jr.)
Director	Director
/s/ Vilma S. Martinez	/s/ William Porter Payne
(Vilma S. Martinez)	(William Porter Payne)
Director	Director
/s/ Joyce M. Roché	/s/ Henry Hugh Shelton
(Joyce M. Roché)	(Henry Hugh Shelton)
Director	Director
/s/ Andrew C. Taylor	/s/ Douglas A. Warner III
(Andrew C. Taylor)	(Douglas A. Warner III)
Director	Director
(Edward E. Whitacre, Jr.)
Director

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Patrick T. Stokes, certify that:

1)   I have reviewed this annual report on Form 10−K of Anheuser−Busch Companies, Inc.;

2)   Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3)   Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4)   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 22, 2006	/s/ Patrick T. Stokes
		Patrick T. Stokes President and Chief Executive Officer Anheuser-Busch Companies, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, W. Randolph Baker, certify that:

1)   I have reviewed this annual report on Form 10−K of Anheuser−Busch Companies, Inc.;

2)   Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3)   Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4)   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 22, 2006	/s/ W. Randolph Baker
		W. Randolph Baker Vice President and Chief Financial Officer Anheuser-Busch Companies, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

ANHEUSER−BUSCH COMPANIES, INC.

FORM 10−K FOR THE YEAR ENDED DECEMBER 31, 2005

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES−OXLEY ACT OF 2002

I am the President and Chief Executive Officer of Anheuser−Busch Companies, Inc., a Delaware corporation (the “Company”). I am delivering this certificate in connection with the Form 10−K of the Company for the year ended December 31, 2005 and filed with the Securities and Exchange Commission (“Form 10−K”).

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes−Oxley Act of 2002, I hereby certify that, to the best of my knowledge, the Form 10−K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10−K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 22, 2006	/s/ Patrick T. Stokes
		Patrick T. Stokes President and Chief Executive Officer Anheuser-Busch Companies, Inc.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

ANHEUSER−BUSCH COMPANIES, INC.

FORM 10−K FOR THE YEAR ENDED DECEMBER 31, 2005

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES−OXLEY ACT OF 2002

I am the Vice President and Chief Financial Officer of Anheuser−Busch Companies, Inc., a Delaware corporation (the “Company”). I am delivering this certificate in connection with the Form 10−K of the Company for the year ended December 31, 2005 and filed with the Securities and Exchange Commission (“Form 10−K”).

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes−Oxley Act of 2002, I hereby certify that, to the best of my knowledge, the Form 10−K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10−K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 22, 2006	/s/ W. Randolph Baker
		W. Randolph Baker Vice President and Chief Financial Officer Anheuser-Busch Companies, Inc.

COVER

March 9, 2006

Securities and Exchange Commission

Judiciary Plaza

450 Fifth St., N.W.

Washington, D.C. 20549

Attention:         Document Control - EDGAR

Subject:   Annual Report of Anheuser-Busch Companies, Inc. for 2005

on Form 10-K, File number 1-7823

Gentleman and Mesdames:

Enclosed herewith for filing under the Securities and Exchange Act of 1934 is the Company’s Report on Form 10-K for the year ended December 31, 2005.

The financial statements in the Anheuser-Busch Companies, Inc. 2005 Annual Report to shareholders (filed as Exhibit 13 of this Form 10-K) do not reflect any changes from the preceding year in any accounting principles or practices or in the method of applying any such principles or practices.

If you have any questions or comments concerning this filing, please call me collect at the following number: (314) 577-2454.

Sincerely,

/s/ Laura H. Reeves

Laura H. Reeves

Assistant Secretary

Anheuser-Busch Companies, Inc.