Anheuser-Busch Cos., Inc.
Anheuser-Busch Cos., Inc. Reports Record
Sales and Earnings for the Third Quarter and Nine Months of 2003
Achieves 20th Consecutive Quarter of Double-Digit EPS
Growth with 12.7 Percent Increase in the Third Quarter 2003
With strong profit growth from all of its operating segments in
the third quarter, Anheuser-Busch Cos., Inc., (NYSE:BUD) achieved
record sales and earnings for the third quarter and nine months of
2003, it was announced today by Patrick Stokes, president and chief
executive officer. Third quarter and nine months earnings per share
increased 12.7 percent and 12.8 percent, respectively, vs. the same
2002 periods.
"Anheuser-Busch achieved its 20th consecutive quarter of solid
double-digit earnings per share growth. The beer pricing environment
remains favorable and our market share performance has been strong,"
said Stokes.
Domestic revenue per barrel grew 3.5 percent and 3.3 percent in
the third quarter and nine months of 2003, respectively, vs. the same
periods in 2002. These significant increases in revenue per barrel
were enhanced by consumers trading up to our super premium Michelob
family.
Domestic revenue per barrel growth has driven improvements in
profit margins and return on capital employed. For the nine months of
2003, gross margin increased 30 basis points to 41.7 percent, while
operating margin increased 60 basis points to 25.2 percent. Return on
capital employed improved to 18.6 percent, an increase of 100 basis
points over the past 12 months.
Domestic beer sales-to-wholesalers volume increased 0.7 percent
for the third quarter of 2003 vs. the third quarter 2002 and 0.9
percent for the nine months of 2003. The company anticipates full-year
beer shipments volume to be up just under 1 percent.
The company's reported beer volume is summarized in the following
table:
Beer Volume (millions of barrels)
Third Quarter Nine Months Ended September 30
vs. 2002 vs. 2002
2003 Barrels Percent 2003 Barrels Percent
Domestic 27.5 Up 0.2 Up 0.7% 79.3 Up 0.7 Up 0.9%
International 2.3 Up 0.2 Up 11.0% 6.2 Up 0.3 Up 4.3%
Worldwide A-B
Brands 29.8 Up 0.4 Up 1.5% 85.5 Up 1.0 Up 1.1%
Int'l Equity
Partner Brands 4.9 Up 0.3 Up 6.4% 14.3 Up 0.4 Up 2.8%
Total Brands 34.7 Up 0.7 Up 2.1% 99.8 Up 1.4 Up 1.4%
Wholesaler sales-to-retailers volume rebounded in the third
quarter. In July, wholesaler sales-to-retailers exceeded 10 million
barrels - the first time this benchmark has been achieved for a single
month. Overall, sales-to-retailers were up 1.3 percent for the third
quarter 2003 and were up 0.7 percent for the nine months vs. similar
2002 periods.
Consistent with the company's practice of implementing moderate
annual price increases in two phases, Anheuser-Busch initiated pricing
actions in October 2003. Selected price increases and discount
reductions have been put into effect in markets representing almost 40
percent of the company's domestic volume. These revenue enhancement
initiatives are again being tailored to specific markets, brands and
packages and early results are encouraging.
"During the nine months of this year Anheuser-Busch increased
revenue per barrel and margins while also increasing market share,
which in turn has generated strong, dependable growth in earnings per
share and return on capital," said Stokes. "We continue to expect full
year 2003 earnings per share growth in the 12 percent to 13 percent
range, consistent with year-to-date results. In addition, we remain
confident in our ability to consistently achieve our minimum
double-digit earnings per share growth objective over the long-term,
and have established a 12 percent earnings per share growth target in
2004."
THIRD QUARTER 2003 FINANCIAL RESULTS
Key operating results for the third quarter 2003 vs. 2002 are
summarized below:
Third Quarter Ended September 30
($ in millions, except per share)
2003 vs. 2002
2003 2002 $ %
Gross Sales $4,466 $4,273 Up $193 Up 4.5%
Net Sales $3,881 $3,706 Up $175 Up 4.7%
Income Before Income Taxes $939 $882 Up $57 Up 6.4%
Equity Income $87 $82 Up $5 Up 6.6%
Net Income $664 $622 Up $42 Up 6.8%
Diluted Earnings per Share $.80 $.71 Up $.09 Up 12.7%
A discussion of financial highlights for the third quarter 2003
follows:
-- Net sales increased 4.7 percent compared to the third quarter
2002, with a 4 percent increase in domestic beer segment net
sales plus higher international beer, packaging and
entertainment segment sales.
-- Income before income taxes increased 6.4 percent vs. the third
quarter 2002, with good growth for all the company's business
segments.
Pretax income for the domestic beer segment was up 6 percent
for the quarter, reflecting higher revenue per barrel and
increased beer sales volume.
International beer segment pretax income increased 18 percent
primarily due to higher volume and profits in China.
Packaging segment pretax profits were up 11 percent in the
third quarter 2003, primarily due to improved operating
profits from the company's can manufacturing operations.
Entertainment segment pretax results were up almost 8 percent
compared to the third quarter 2002, due to improved
attendance, higher admissions pricing and increased in-park
spending.
-- Equity income increased 6.6 percent vs. the third quarter
2002, due to higher Modelo earnings and improved CCU results.
Third quarter 2002 Modelo equity income includes a one-time
$6.5 million after tax charge resulting from the restructuring
of its brewery operations.
-- Net income increased 6.8 percent vs. third quarter 2002 and
diluted earnings per share were $.80, an increase of 12.7
percent compared to the third quarter 2002. Earnings per share
continue to benefit from the company's ongoing share
repurchase program. The company repurchased over 12 million
shares in the third quarter and 35 million shares through the
first nine months of 2003.
NINE MONTHS OF 2003 FINANCIAL HIGHLIGHTS
Key operating results for the nine months of 2003 compared to 2002
are summarized below:
Nine Months Ended September 30
($ in millions, except per share)
2003 vs. 2002
2003 2002 $ %
Gross Sales $12,600 $12,092 Up $508 Up 4.2%
Net Sales $10,931 $10,469 Up $462 Up 4.4%
Income Before Income Taxes $2,470 $2,312 Up $158 Up 6.8%
Equity Income $268 $277 Dn $9 Dn 3.4%
Net Income $1,782 $1,665 Up $117 Up 7.0%
Diluted Earnings per Share $2.12 $1.88 Up $.24 Up 12.8%
A discussion of financial highlights for the nine months of 2003
follows:
-- Net sales increased 4.4 percent compared to the nine months of
2002. This increase reflects a 4 percent increase in domestic
beer segment net sales and increased sales for the
international beer, packaging and entertainment segments.
-- Income before income taxes increased 6.8 percent vs. the nine
months of 2002, due to increased domestic beer segment pretax
income, along with improved profit contribution from the
international beer and packaging segments.
Domestic beer segment pretax income was up 7 percent,
reflecting higher revenue per barrel and increased beer
volume.
International beer segment pretax income increased 8 percent,
primarily due to volume and profit growth in China and the
United Kingdom.
Packaging segment pretax profits were up 9 percent for the
nine months of 2003, primarily due to improved profits in
the company's can manufacturing operations, plus improved
results from bottle and label operations.
Entertainment segment operating profits for the nine months
declined 1 percent compared to last year, primarily due to
lower attendance and higher park operating costs partially
offset by higher admissions pricing and increased in-park
spending.
-- Equity income decreased $9 million vs. the nine months of
2002, primarily due to the $17 million one-time deferred
income tax benefit included in 2002 Modelo equity income,
partially offset by a $6.5 million charge in 2002 related to
the brewery operation restructuring. The tax benefit, which
resulted from lower Mexican income tax rates enacted in the
first quarter of 2002, was largely offset by higher U.S.
deferred taxes included in the 2002 consolidated income tax
provision. Equity income growth from Modelo for 2003 was also
dampened by lower export volume growth and a weaker peso.
Anheuser-Busch's equity share of CCU earnings for the nine
months benefited by a $5.5 million after tax gain from the
sale of a brewery in Croatia.
-- Anheuser-Busch's effective tax rate declined to 38.7 percent
for the nine months of 2003 vs. 40.0 percent for the nine
months of 2002. The effective tax rate in 2002 was unusually
high due to the U.S. deferred income tax offset to the Mexican
income tax rate benefit included in equity income. In
addition, the effective tax rate in 2003 reflects a more
favorable foreign tax credit position.
-- Net income increased 7 percent vs. the nine months of 2002.
Diluted earnings per share were $2.12, an increase of 12.8
percent compared to 2002.
BEER SALES RESULTS
Worldwide Beer Volume
Worldwide Anheuser-Busch beer sales volume increased 1.5 percent
and 1.1 percent, respectively, for the third quarter and nine months
of 2003 to 29.8 million and 85.5 million barrels. Worldwide beer
volume is comprised of domestic volume and international volume.
Domestic volume represents Anheuser-Busch beer produced and shipped
within the United States. International volume represents exports from
the company's U.S. breweries to markets around the world, plus
Anheuser-Busch brands produced overseas by company-owned breweries and
under license and contract brewing agreements.
Total volume, which combines worldwide Anheuser-Busch brand volume
with equity volume (representing the company's share of its foreign
equity partners' volume), was 34.7 million barrels in the third
quarter 2003, up 700,000 barrels, or 2.1 percent vs. third quarter
2002. Total volume for the nine months increased 1.4 percent, to 99.8
million barrels.
Domestic Beer Volume
Anheuser-Busch reported domestic beer sales-to-wholesalers of 27.5
million barrels in the third quarter 2003 and 79.3 million barrels in
the nine months. This represents increases of 0.7 percent for the
third quarter and 0.9 percent for the nine months, compared to 2002.
The company's domestic market share (excluding exports) for the
nine months of 2003 was 50.1 percent, compared to 48.9 percent for the
same period in 2002. Domestic market share is determined based on
estimated beer industry sales using information provided by the Beer
Institute and the U.S. Department of Commerce.
International Beer Volume
International Anheuser-Busch brand beer volume for the third
quarter was 2.3 million barrels representing an increase of 11 percent
vs. the third quarter 2002. This increase is primarily attributable to
higher beer sales volume in China. For the nine months of 2003,
international Anheuser-Busch brand beer volume was 6.2 million
barrels, up 4.3 percent vs. the comparable 2002 period.
Return on Capital Employed
Return on capital employed(1) for the 12 months ended September
30, 2003, was 18.6 percent, an increase of 100 basis points over the
twelve- month period ended September 30, 2002.
Other Matters
Anheuser-Busch will conduct a conference call with investors to
discuss earnings results for the third quarter and nine months of 2003
at 3 p.m. CDT today. The company will broadcast the conference call
live via the Internet. For details visit the company's site on the
Internet at www.anheuser-busch.com.
(1) Return on capital employed is computed as 12 months of net
income before after-tax net interest (interest expense less interest
capitalized) divided by average net investment. Net investment is
defined as total assets less non-debt current liabilities. For 2003,
after-tax net interest expense was $231 million, calculated as pretax
net interest expense of $372 million less income taxes applied using a
38 percent tax rate. For 2002, after-tax net interest expense was $214
million, calculated as pretax net interest expense of $345 less income
taxes applied using a 38 percent tax rate.
This release contains forward-looking statements regarding the
company's expectations concerning its future operations, earnings and
prospects. On the date the statements are made, the statements
represent the company's expectations, but the company's expectations
concerning its future operations, earnings and prospects may change.
The company disclaims any obligation to update any of these
statements. The company's expectations involve significant risks and
uncertainties and are based upon many assumptions that the company
believes to be reasonable, but such assumptions may ultimately prove
to be inaccurate or incomplete, in whole or in part. Accordingly,
there can be no assurances that the company's expectations and the
forward-looking statements will be correct. Further information on
factors that could affect the company's future operations, earnings
and prospects is included in the company's Forms 10-Q and 10-K.
Anheuser-Busch Companies, Inc.
Consolidated Statement of Income (Unaudited
($ in millions, except per share)
Third Quarter Year-to-Date
2003 2002 2003 2002
Gross Sales $4,465.8 $4,272.6 $12,600.0 $12,092.4
Excise Taxes (585.3) (566.4) (1,668.7) (1,623.5)
Net Sales 3,880.5 3,706.2 10,931.3 10,468.9
Cost of Sales (2,204.1) (2,105.2) (6,368.4) (6,139.6)
Marketing,
Distribution and
Administrative
Expenses (648.5) (630.7) (1,812.9) (1,757.3)
Operating Income 1,027.9 970.3 2,750.0 2,572.0
Interest Expense (98.7) (92.7) (299.7) (273.6)
Interest Capitalized 6.9 3.9 17.7 12.9
Interest Income 0.3 0.3 0.6 0.9
Other Income/
(Expense), Net 2.1 (0.2) 1.1 (0.5)
Income Before Income
Taxes 938.5 881.6 2,469.7 2,311.7
Provision for
Income Taxes (361.5) (341.5) (955.7) (924.2)
Equity Income,
Net of Tax 87.3 81.9 267.7 277.1
Net Income $664.3 $622.0 $1,781.7 $1,664.6
Basic Earnings
Per Share $.81 $.72 $2.15 $1.91
Diluted Earnings
Per Share $.80 $.71 $2.12 $1.88
Capital Expenditures $229.4 $204.7 $719.5 $597.3
Depreciation and
Amortization $220.9 $212.4 $649.9 $629.9
Weighted Average Shares:
Basic 819.7 860.4 830.6 870.4
Diluted 830.3 872.6 841.2 883.4
Anheuser-Busch Companies, Inc.
Business Segments (Unaudited
Third Quarter Ended September 30
($ in millions)
Domestic Int'l Pack- Enter- Other Corporate Consol.
Beer Beer aging tain. & Elims.
2003
Gross Sales $3,483.1 216.3 541.9 356.0 20.0 (151.5) $4,465.8
Net Sales:
- Intersegment -- -- $231.4 -- 1.0 (232.4) $--
- External $2,942.0 172.1 310.5 356.0 19.0 80.9 $3,880.5
Income Before
Income Taxes $901.0 29.7 47.2 121.9 (0.1) (161.2) $938.5
Equity Income -- $87.3 -- -- -- -- $87.3
Net Income $558.6 105.7 29.2 75.6 -- (104.8) $664.3
2002
Gross Sales $3,361.5 183.5 541.6 325.9 25.3 (165.2) $4,272.6
Net Sales:
- Intersegment -- -- $237.4 -- 3.6 (241.0) $--
- External $2,825.6 153.0 304.2 325.9 21.7 75.8 $3,706.2
Income Before
Income Taxes $850.7 25.1 42.4 113.2 1.5 (151.3) $881.6
Equity Income -- $81.9 -- -- -- -- $81.9
Net Income $527.5 97.5 26.3 70.2 1.0 (100.5) $622.0
Anheuser-Busch Companies, Inc.
Business Segments (Unaudited)
Nine Months Ended September 30
($ in millions)
Domestic Int'l Pack- Enter- Other Corporate Consol.
Beer Beer aging tain. & Elims.
2003
Gross Sales $10,019.4 583.5 1,628.8 762.1 53.3 (447.1) $12,600.0
Net Sales:
- Intersegment -- -- $678.8 -- 3.3 (682.1) $--
- External $8,463.5 470.7 950.0 762.1 50.0 235.0 $10,931.3
Income Before
Income
Taxes $2,576.3 75.8 131.5 167.4 (0.2) (481.1) $2,469.7
Equity Income -- $267.7 -- -- -- -- $267.7
Net Income $1,597.3 314.7 81.5 103.8 (0.1) (315.5) $1,781.7
2002
Gross Sales $9,668.4 527.2 1,587.9 716.7 75.0 (482.8) $12,092.4
Net Sales:
- Intersegment -- -- $682.5 -- 16.8 (699.3) $--
- External $8,132.9 439.2 905.4 716.7 58.2 216.5 $10,468.9
Income Before
Income
Taxes $2,402.5 70.3 121.0 169.6 4.8 (456.5) $2,311.7
Equity Income -- $277.1 -- -- -- -- $277.1
Net Income $1,489.6 320.7 75.0 105.2 3.0 (328.9) $1,664.6
Anheuser-Busch Companies, Inc.
Consolidated Balance Sheet (Unaudited)
($ in millions)
September 30, December 31,
2003 2002
Assets
Current Assets:
Cash $136.4 $188.9
Accounts receivable 843.0 630.4
Inventories:
Raw materials and supplies 270.1 294.1
Work in progress 75.5 82.8
Finished goods 204.9 186.7
Total inventories 550.5 563.6
Other current assets 171.8 121.8
Total current assets 1,701.7 1,504.7
Investments in affiliated companies 2,893.3 2,827.9
Other assets 1,381.0 1,423.0
Plant and equipment, net 8,442.3 8,363.9
Total Assets $14,418.3 $14,119.5
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $1,054.5 $986.6
Accrued salaries, wages and benefits 255.9 287.5
Accrued taxes 363.2 181.0
Other current liabilities 320.7 332.6
Total current liabilities 1,994.3 1,787.7
Postretirement benefits 474.5 474.2
Debt 7,075.2 6,603.2
Deferred income taxes 1,408.4 1,345.1
Other long-term liabilities 858.4 857.0
Shareholders Equity:
Common stock 1,456.5 1,453.4
Capital in excess of par value 1,111.1 1,024.5
Retained earnings 13,819.0 12,544.0
Treasury stock, at cost (12,746.3) (11,008.6)
Accumulated other comprehensive loss (986.5) (870.7)
ESOP debt guarantee (46.3) (90.3)
Total Shareholders Equity 2,607.5 3,052.3
Commitments and contingencies -- --
Total Liabilities and
Shareholders Equity $14,418.3 $14,119.5
Anheuser-Busch Companies, Inc.
Consolidated Statement of Cash Flows (Unaudited)
($ in millions)
Nine Months Ended September 30,
2003 2002
Cash flow from operating activities:
Net Income $1,781.7 $1,664.6
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 649.9 629.9
Deferred income taxes 63.3 69.9
Undistributed earnings of
affiliated companies (107.1) (230.3)
Other, net 68.5 118.2
Operating cash flow before change
in working capital 2,456.3 2,252.3
(Increase)/decrease in working capital (7.2) 63.0
Cash provided by operating activities 2,449.1 2,315.3
Cash flow from investing activities:
Capital expenditures (719.5) (597.3)
Business acquisitions (116.4) (12.7)
Cash used for investing activities (835.9) (610.0)
Cash flow from financing activities:
Increase in long-term debt 929.3 554.9
Decrease in long-term debt (401.9) (467.9)
Dividends paid to shareholders (506.7) (482.9)
Acquisition of treasury stock (1,747.8) (1,487.2)
Issuance of shares under stock plans 61.4 120.8
Cash used for financing activities (1,665.7) (1,762.3)
Net decrease in cash during the period (52.5) (57.0)
Cash, beginning of period 188.9 162.6
Cash, end of period $136.4 $105.6