Anheuser-Busch Announces Record Sales and Earnings, Spin-Off of Campbell Taggart; Highlights of Anheuser-Busch Companies; Second Quarter Earnings Release.--(BUSINESS WIRE)--July 26, 1995-- Anheuser-Busch achieved record sales, earnings and market share in the second quarter, and in the first six months of the year. The company outperformed the brewing brewing: see beer. industry as a whole, which experienced sales declines during the first six months. Anheuser- Busch Busch , Adolf Georg Wilhelm 1891-1952. German-born Swiss violinist and conductor best known for his work as leader of the Busch Quartet, an internationally acclaimed chamber group formed in 1919. was the only major brewer to achieve increased sales and market share for the second quarter and first half of the year. Anheuser-Busch to spin off Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. Taggart
baking Process of cooking by dry heat, especially in an oven. Baked products include bread, cookies, pies, and pastries. industries. Campbell Taggart is the nation's second-largest producer of fresh-baked goods. The general brewing industry downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. has affected Anheuser-Busch's sales expectations, causing it to revise its volume and earnings per share growth estimates for the year. The company is undertaking a variety of actions, in addition to the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of Campbell Taggart, to enhance competitiveness and achieve its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. earnings per share growth objective. ST. LOUIS, Mo.--Anheuser-Busch Companies today announced the spin-off of Campbell Taggart, Inc., as a means of increasing the competitiveness of both companies. "Both the brewing and baking industries are going through times of rapid change," said August A. Busch III, chairman and president of Anheuser-Busch Companies. "To maximize our performance, we must focus management's attention on the opportunities available to us in each of those competitive arenas. Spinning off Campbell Taggart will enable us to achieve that focus." Under the spin-off, each Anheuser-Busch shareholder will receive a pro-rata Pro-rata Used to describe a proportionate allocation. Notes: For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share they own. See also: Dividend share of voting common stock of Campbell Taggart in a special dividend. Campbell Taggart will become a separately traded, publicly held company. "By spinning off from Anheuser-Busch, we will become a more flexible competitor in a rapidly changing industry that places a premium on flexibility," said Barry Barry, Welsh Barri, town (1991 pop. 45,053) and port, Vale of Glamorgan, S Wales, on the Bristol Channel. Once a major coal-exporting port, its more diversified export products include cement, flour, and steel products. H. Beracha, chairman and chief executive of Campbell Taggart. "We anticipate that this strategy will enable us to achieve significant earnings growth, and accelerate our progress toward becoming the standard of excellence in our industry." The spin-off, which is expected to be completed in the first half of 1996, is subject to a ruling by the Internal Revenue Service that it can be accomplished on a tax-free tax-free adj. Not subject to taxation; tax-exempt. tax-free Adjective not needing to have tax paid on it: a tax-free lump sum Adj. 1. basis. When it becomes effective, the spin-off will require Anheuser-Busch to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state prior period financial statements to report the operating results of Campbell Taggart as a "discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. ." There will be no reported gain or loss on the spin-off transaction. "We are confident that the Campbell Taggart management team will be successful," Mr. Busch said. "By taking this action now, when we believe Campbell Taggart is poised for significant growth, we will enable our shareholders to gain maximum benefit from its success as an independent company." Record Sales, Earnings and Beer Volume For Second Quarter and First Half of 1995 Anheuser-Busch Companies achieved record sales and earnings for the second quarter and first six months of 1995, and also reported record beer sales volume and market share for the period. This performance was achieved despite an estimated .2 percent decline in brewing industry sales for the first six months of 1995. The company's international brewing, packaging and theme park operations achieved double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" growth in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . However, these results were partially offset by the underperformance of Eagle Snacks and the St. Louis National Baseball Club (Cardinals). Second Quarter 1995 Financial Results Key financial results for the second quarter of 1995 compared to the second quarter of 1994 are summarized below:
Second Quarter Ended June 30,
($ In Millions, Except
Per Share) 1995 vs. 1994
1995 1994 $ %
Gross Sales $3,739 $3,609 Up $130 Up 3.6%
Net Sales 3,292 3,169 Up 123 Up 3.9
Operating Income 590 577 Up 13 Up 2.3
Pre-tax Income 542 531 Up 11 Up 2.1
Net Income 329 323 Up 6 Up 2.0
Fully-diluted Earnings
Per Share 1.26 1.20 Up .06 Up 5.0
Highlights for the second quarter of the year were as follows: Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight rose $123 million, a 3.9 percent increase compared to the second quarter of 1994. The sales increase was driven primarily by higher domestic and international beer sales and higher sales by the company's packaging and entertainment subsidiaries. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased $13 million, or 2.3 percent, in the quarter, primarily as a result of beer and packaging performance. Net income grew $6 million, or 2.0 percent. Earnings per share, on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, rose $.06, or 5.0 percent, to $1.26 per share, compared with $1.20 per share for the second quarter of 1994. Earnings per share growth continues to benefit from the company's ongoing share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, which has reduced the number of shares outstanding. Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of assume conversion of the company's convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. and elimination of related after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. interest expense. First Six Months 1995 Financial Results Key financial results for the first six months of 1995 as compared to 1994 are summarized below:
Six Months Quarter Ended June 30,
($ In Millions, Except
Per Share) 1995 vs. 1994
1995 1994 $ %
Gross Sales $6,883 $6,624 Up $259 Up 3.9% Net Sales 6,049 5,797 Up 252 Up 4.3 Operating Income 998 961 Up 37 Up 3.8 Pre-tax Income 898 869 Up 29 Up 3.4 Net Income 545 527 Up 18 Up 3.5 Fully-diluted Earnings Per Share 2.09 1.96 Up .13 Up 6.6 Highlights for the first six months of 1995 were as follows: Net sales increased $252 million, or 4.3 percent, for the first six months of 1995, reflecting stronger sales trends for established core premium beer brands and higher sales by the company's international brewing, packaging and entertainment subsidiaries. Operating income rose $37 million, or 3.8 percent, compared to the same period of 1994 due to the performance of the company's beer, packaging and theme park operations, offset partially by the underperformance of Eagle Snacks and the St. Louis National Baseball Club (Cardinals). Net income grew $18 million, or 3.5 percent. Fully diluted earnings per share increased $.13, or 6.6 percent, compared to the comparable period in 1994. Earnings per share for the first six months also benefited from the company's ongoing share repurchase program. Beer Volume and Market Share Anheuser-Busch, Inc., the company's domestic brewing subsidiary, reported record second quarter sales-to-wholesalers of 23.5 million barrels, an increase of 139,000 barrels, or .6 percent, over the 23.4 million barrels sold during the second quarter of 1994. Sales-to- wholesalers for the first six months of 1995 were also a record 43.9 million barrels compared to 43.6 million barrels during the first six months of 1994, an increase of .6 percent. Core company premium brands (comprised of Budweiser, Bud Light, Michelob Michelob is the trade name of a family of beers produced by the Anheuser-Busch brewery. It takes its name from a speciality beer developed by Adolphus Busch in 1896 as a "draught beer for connoisseurs". and Michelob Light) increased their market share by 1.0 percentage point. International beer volume increased during the period, led by expanding sales in England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. and Ireland. For the first six months of 1995, Anheuser-Busch beer volume sales-to-wholesalers accounted for 43.8 percent of total U.S. brewing industry sales (including imports and exports), as estimated from information provided by the Beer Institute. This compares to a market share of 43.5 percent for the same period last year, an increase of .3 market share points. This performance is particularly significant when compared to the performance of other major brewers This is a list of member brewers of the Brewers Association. Numbered
In addition, the company realized strong performance from its Red Wolf brand which competes in the 6 million barrel specialty segment. Annual sales of Red Wolf are projected to exceed 600,000 barrels in its first year. Selected Subsidiary Operations Campbell Taggart, the company's baking subsidiary, continued to improve its operating profits (excluding the effect of bakery closings) as compared to last year. However, Campbell Taggart's reported earnings are below budgeted expectations due to one-time expenses associated with the closing of high cost, inefficient bakeries. Eagle Snacks, the company's snack food subsidiary, reported an increase in its operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the second quarter and first six months of 1995 as compared to last year. Eagle Snacks' poor financial performance was caused by lower sales volume levels due to increased industry competition and higher marketing expenses associated with a new national advertising campaign. The St. Louis National Baseball Club financial performance for the first half of 1995 has been negatively affected by the delayed season opening and lower game attendance. Beer Volume and Earnings Expectations for 1995 Although Anheuser-Busch continues to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. competitors in its core industry, general industry trends have impacted sales, causing the company to revise its performance estimates for the full year. Beer volume sales-to-wholesalers growth is expected to be in the range of .5 percent, while earnings per share growth is expected to be in line with the growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. experienced in the second quarter and first six months. It is expected that Eagle Snacks will reduce overall Anheuser- Busch earnings for the full year 1995 compared to an original expectation of break-even performance. The St. Louis National Baseball Club is expected to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. a loss for the second straight year. These losses are the result of the players' strike and reduced ticket sales. "This performance is not consistent with our double digit earnings per share growth objective," Mr. Busch said. "The spin-off of Campbell Taggart, which will allow us to devote maximum management focus to our core business, is one step we have taken to improve our competitiveness. Other steps are being taken throughout the corporation to improve our profitability." Beer Price Increases for 1995 and 1996 Beer price increases have traditionally been lower than the rate of inflation. In view of higher raw material and packaging (aluminum) costs, the company will raise prices at closer to the rate of inflation in the future. The company plans to increase prices in four states in September, 1995, representing approximately 16 percent of total volume, and plans price increases on all brands in all remaining states in February, 1996. The company will increase its emphasis on its high quality, premium brands, maximizing the return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. . Extensions of Budweiser's current advertising campaign, which has proven its ability to drive sales in the key contemporary adult segment, will be executed throughout the remainder of the year. Additionally, the company's Bud Ice brand is gaining momentum. Beginning in the fourth quarter of 1995, Bud Ice is expected to provide incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. volume for Anheuser-Busch. Earnings growth will also be generated through the Profitability Enhancement Program that was announced in 1993, and is now providing significant cost savings to the company. The company will also continue to introduce new premium and specialty brands, and is working with its wholesaler network to provide maximum service and profitability to licensed retailers who sell its products to the public. "The local marketplace is evolving faster than at any time in recent memory," Mr. Busch said. "Our ability to adapt and shape these changes, to provide consumers with a diversity of quality products, and to add value to our relationship with wholesalers and retailers, will be key to our continued success."
COMPARATIVE STATEMENT OF EARNINGS
SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(In Millions, Except Per Share)
Second Quarter Year-to-Date
1995 1994 1995 1994
Gross Sales $3,739.1 $3,608.7 $6,882.7 $6,623.9 Excise Taxes (447.0) (439.6) (834.1) (827.2) Net Sales 3,292.1 3,169.1 6,048.6 5,796.7 Cost of Products & Services 2,093.2 2,012.5 3,911.4 3,746.4 Marketing, Distribution and Administrative Expenses 608.9 580.0 1,139.0 1,088.8 Operating Income 590.0 576.6 998.2 961.5 Interest Expense (57.4) (56.0) (114.5) (110.8) Interest Capitalized 5.4 5.2 10.8 9.6 Interest Income 2.9 0.7 4.3 1.4 Other Income/(Expense), Net 1.0 4.1 (0.9) 6.8 Income Before Income Taxes 541.9 530.6 897.9 868.5 Income Taxes 212.8 208.1 352.7 341.5 Net Income $ 329.1 $ 322.5 $ 545.2 $ 527.0 Primary Earnings Per Share $ 1.27 $ 1.21 $ 2.11 $ 1.97 Fully Diluted Earnings Per Share $ 1.26 $ 1.20 $ 2.09 $ 1.96 Capital Expenditures $ 267.8 $ 190.5 $ 473.0 $ 361.1 Depreciation and Amortization $ 158.9 $ 156.5 $ 313.8 $ 312.3 Weighted Average Shares Outstanding-Primary 258.5 265.9 258.8 266.9 Weighted Average Shares Outstanding-Fully Diluted 263.1 270.8 263.5 271.9 CONTACT: Anheuser-Busch, St. Louis Paul Wagman or Barry Murov, 314/982-1700 |
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