Anheuser-Busch Announces Record Sales and Earnings for the Third Quarter and Nine Months of 1999.ST. LOUIS, Mo.--(BUSINESS WIRE)--Oct. 27, 1999-- Led by the continuing strong performance from its domestic beer business, Anheuser-Busch Companies, Inc. achieved record sales and earnings for the third quarter and nine months ended September September: see month. 30, 1999, it was announced today by August A. 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. III, Chairman of the Board and President. Earnings per share for the third quarter and nine months were up 15.5 percent and 16.1 percent, respectively, compared to last year. "Domestic beer industry fundamentals are the best we have seen in this decade," stated Mr. Busch. "Improving demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. , high capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. and an improved pricing environment are creating opportunities for margin enhancement and earnings growth. We expect our favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. earnings per share growth momentum to continue in the fourth quarter, and are increasingly confident of achieving full-year 1999 earnings per share growth in the mid-teens, consistent with third quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. results. Furthermore, the combination of favorable domestic beer pricing and volume trends provides a positive outlook for achieving our double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. earnings per share growth objective in 2000," said Mr. Busch. Domestic revenue per barrel grew approximately 3 percent in the third quarter 1999, and is up over 2.5 percent for the nine months, compared to the same periods last year. Strong revenue per barrel growth in the third quarter reflects the company's focus on domestic beer profit margin growth. Domestic beer shipments grew 3.6 percent for the nine months, consistent with nine month sales-to-retailer growth. Domestic beer shipments for the third quarter were up 1.2 percent compared to third quarter 1998. Third quarter shipments were below the third quarter sales-to-retailer growth of 2.1 percent as the company reduced wholesaler inventories to further enhance product freshness. The company continues to expect full-year 1999 beer shipments to increase more than 3 percent over 1998 shipments. Beer volume is summarized in the following table: -0-
Reported Beer Volume (millions of barrels)
Third Quarter Nine Months Ended Sept. 30
vs. 1998 vs. 1998
1999 Barrels % 1999 Barrels %
Domestic 25.6 Up 0.3 Up 1.2% 73.5 Up 2.5 Up 3.6%
International 1.9 Up 0.1 Up 3.3% 5.2 Up 0.1 Up 1.5%
Worldwide -
A-B Brands 27.5 Up 0.4 Up 1.4% 78.7 Up 2.6 Up 3.5%
Int'l Equity
Partner Brands 4.0 Up 1.1 Up 37.8% 11.6 Up 3.7 Up 47.1%
Total Brands 31.5 Up 1.5 Up 4.9% 90.3 Up 6.3 Up 7.6%
Earnings per share were $.97 for the third quarter 1999 and $2.53 for the nine months of 1999, increases of 15.5 percent and 16.1 percent, respectively, vs. comparable 1998 periods. Earnings growth is primarily due to increased domestic beer sales volume, higher domestic revenue per barrel and increased earnings from the company's equity investment in Grupo Modelo Grupo Modelo is a large brewery in Mexico. It maintains a large part of the Mexican beer export market and produces top-selling imported beer in the United Kingdom, United States and Canada. . At the beginning of October October: see month. the company implemented the first stage of its planned revenue enhancement revenue enhancement An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits. strategy for 2000. Selected price increases and discount reductions have been put into effect in markets covering approximately 40 percent of the company's domestic volume, based on a market-by-market assessment of competitive conditions. Although in the early stages, preliminary results are encouraging. THIRD QUARTER 1999 FINANCIAL RESULTS Key operating results for the third quarter of 1999 compared to 1998 are summarized below. -0-
Third Quarter (in millions, except per share)
1999 1998 1999 vs. 1998
$ %
Gross Sales $3,765 $3,651 Up $114 Up 3.1%
Net Sales $3,222 $3,122 Up $100 Up 3.2%
Operating Income $742 $692 Up $50 Up 7.2%
Equity Income, Net of Tax $45 $20 Up $25 Up 126.5%
Net Income $462 $408 Up $54 Up 13.0%
Diluted Earnings per Share $.97 $.84 Up $.13 Up 15.5%
A discussion of financial highlights for the third quarter 1999 follows: -- Gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. increased $114 million, or 3.1 percent, and 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 increased $100 million, or 3.2 percent, compared to the same period in 1998. These increases are due to increased domestic revenue per barrel combined with higher domestic beer volume. -- 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 $50 million, or 7.2 percent, over the comparable period last year. The increase in operating income is primarily due to the combination of increased domestic volume and revenue per barrel, partially offset by increased marketing expense and a decline in operating results from international beer and packaging operations. -- Equity income, net of tax, increased $25 million for the third quarter 1999. The increase in equity income reflects Modelo's strong underlying operating results as well as Anheuser-Busch's 50.2 percent ownership of Modelo in 1999 vs. 37 percent ownership in the third quarter 1998. -- Net income for the third quarter 1999 increased $54 million, or 13.0 percent, over the comparable period in 1998. -- 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 were $.97, an increase of $.13, or 15.5 percent, compared to the third quarter 1998. Earnings per share growth continues to benefit from fewer shares outstanding due to 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. NINE MONTHS OF 1999 FINANCIAL HIGHLIGHTS Key operating results for the nine months of 1999 compared to 1998 are summarized below: -0-
Nine Months Ended Sept. 30
(in millions, except per share)
1999 1998 1999 vs. 1998
$ %
Gross Sales $10,523 $10,124 Up $399 Up 3.9%
Net Sales $ 8,988 $ 8,636 Up $352 Up 4.1%
Operating Income $ 1,973 $ 1,819 Up $154 Up 8.4%
Equity Income, Net of Tax $ 125 $ 59 Up $66 Up 111.2%
Net Income $ 1,212 $ 1,065 Up $147 Up 13.8%
Diluted Earnings per Share $ 2.53 $ 2.18 Up $.35 Up 16.1%
A discussion of financial highlights for the nine months of 1999 follows: -- Gross sales increased $399 million, or 3.9 percent, and net sales increased $352 million, or 4.1 percent. The primary factors responsible for these increases were higher domestic beer sales volume and increased domestic revenue per barrel, partially offset by lower international beer sales, lower sales prices by the company's commodity-based aluminum recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. operations and lower theme park revenues due to lower attendance. -- Operating income grew $154 million, or 8.4 percent, vs. the comparable period in 1998. This increase is primarily due to strong domestic beer performance driven by higher beer volume and increased revenue per barrel, partially offset by higher marketing expense. Performance of the company's packaging operations improved for the nine months, while operating results from theme parks and international beer operations declined. -- Equity income, net of tax, increased $66 million compared to the nine months of 1998. The increase is due to Modelo's strong underlying operating performance and the company's larger equity stake in Modelo. -- Net income increased $147 million, or 13.8 percent, for the nine months of 1999. -- Diluted earnings per share increased $.35, or 16.1 percent. Earnings per share for the nine months benefited from the company's ongoing share repurchase program. The company has repurchased approximately 14 million shares through the nine months of 1999. BEER SALES RESULTS Worldwide Beer Volume Worldwide Anheuser-Busch beer brand shipments grew 1.4 percent to 27.5 million barrels in the third quarter and were 78.7 million barrels for the nine months of 1999, up 3.5 percent, compared to similar periods last year. Worldwide beer volume is comprised of domestic and international Anheuser-Busch branded sales volume. Domestic volume represents Anheuser-Busch beer produced and shipped within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . International volume represents exports from the company's U.S. breweries See for an up to date listing of all the breweries detailed on Wikipedia, sorted into regions. Africa
Asia
Total beer volume, which combines equity volume (representing the company's share of its foreign equity partners' volume) with worldwide Anheuser-Busch brand volume, was 31.5 million barrels, up 4.9 percent, in the third quarter and 90.3 million barrels, up 7.6 percent, for the nine months of 1999. Domestic Beer Volume Anheuser-Busch domestic beer shipments were 73.5 million barrels, up 3.6 percent for the nine months of 1999. Sales-to-retailers grew 3.4 percent for the nine months of 1999, with combined Budweiser and Bud Light sales-to-retailers up almost 3 percent during the period. Beer Market Share The company's domestic market share (excluding exports) for the nine months of 1999 was 47.2 percent, an increase of 0.9 percentage points over 1998 market share of 46.3 percent. Including exports, the company's share of U.S. shipments was 47.0 percent vs. 46.1 percent for the nine months of 1998. Domestic market share and share of U.S. shipments are determined based on industry sales estimates provided by the Beer Institute. The company's market share is higher than previously reported reflecting the Beer Institute's recent revisions to their industry sales estimates. International Beer International beer volume (excluding Modelo) was up 3.3 percent for the third quarter and up 1.5 percent for the nine months of 1999, to 1.9 million barrels and 5.2 million barrels, respectively. The year-to-date increases were due primarily to solid gains in the Americas A·mer·i·cas , the See America. , Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. and Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. , partially offset by continued weakness in Asia and somewhat slower sales in the United Kingdom. In August, the company recalled twist-off bottles in several European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. countries as a quality assurance measure. The recall stemmed stemmed adj. 1. Having the stems removed. 2. Provided with a stem or a specific type of stem. Often used in combination: stemmed goblets; long-stemmed roses. from problems with the bottle manufacturing process. There were no quality issues with the beer itself. In September, Anheuser-Busch and its Brazilian partner, Antarctica Antarctica (ăntärk`tĭkə, –är`tĭkə), the fifth largest continent, c.5,500,000 sq mi (14,245,000 sq km), asymmetrically centered on the South Pole and almost entirely within the Antarctic Circle. , announced a joint decision not to apply to CADE, Brazil's antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. commission, for continued production of Budweiser by Antarctica. Instead, Anheuser-Busch will convert its Brazilian production agreement to an export arrangement and begin exporting Budweiser to Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. once the current inventories are depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d . Although profits for Anheuser-Busch's international beer segment (including Modelo) were up significantly, international beer 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. (excluding Modelo) declined for the nine months of 1999 compared to the same period last year. International beer operations (excluding Modelo) are expected to report a full-year operating loss 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 1999 in the range of $10 - $20 million, including termination of the Budweiser production joint venture in Brazil and the impact of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs related to the bottle recall in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .Labor Negotiations The company's 12 U.S. breweries, staffed largely by employees represented by the Teamsters Teamsters large, powerful union of U. S. truckers. [Am. Hist.: NCE, 2703] See : Labor , continue to operate under the terms of a final contract offer implemented by the company in September, 1998. On August 7, 1999, Anheuser-Busch employees represented by the Teamsters approved a new 5-year national contract offer. However, because local contract offers have only been approved at six breweries, there is no signed contract. Both the company and the union had stipulated that until there was agreement on all local and national matters, there was no agreement. Packaging Operations Anheuser-Busch's Packaging Operations has entered into a preliminary agreement to form a joint venture with Consumers Packaging Inc. The joint venture will reopen re·o·pen tr. & intr.v. re·o·pened, re·o·pen·ing, re·o·pens 1. To open or be opened again: Officials reopened the airport after the snow was cleared. Schools reopen in September. a glass bottle manufacturing plant in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , to supply bottles to the Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; brewery A brewery can be a building or place that produces beer, or a business (brewing company) whose trade is the production and sale of beer. Breweries can take up multiple city blocks, or be a collection of equipment in a homebrewer's kitchen. under a 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. , cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. supply contract. Anheuser-Busch will invest approximately $50 million for a 49% ownership position. The agreement is subject to negotiation of a definitive joint-venture contract. This release contains statements regarding the company's expectations concerning its future operations, earnings and prospects. These statements are forward-looking and involve significant risks and uncertainties, and accordingly, no assurances can be given that such expectations will be correct. These expectations are based upon many assumptions that the company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Further information on factors that could affect the company's future operations and earnings is included in the company's Forms 10-Q and 10-K. -0-
Comparative Statement of Earnings
Third Quarter and Nine Months Ended September 30, 1999 and 1998
(In Millions, Except Per Share)
Third Quarter Year-to-Date
1999 1998 1999 1998
Gross Sales $3,765.2 $3,651.1 $10,523.2 $10,123.9
Excise Taxes (542.9) (529.1) (1,535.0) (1,488.1)
Net Sales 3,222.3 3,122.0 8,988.2 8,635.8
Cost of Products &
Services (1,905.5) (1,895.6) (5,482.1) (5,397.8)
Marketing, Distribution
and Administrative
Expenses (575.2) (534.5) (1,533.3) (1,418.6)
Operating Income 741.6 691.9 1,972.8 1,819.4
Interest Expense (76.3) (70.7) (231.3) (218.4)
Interest Capitalized 4.2 2.6 11.7 19.7
Interest Income 1.7 1.3 3.5 4.4
Other Income/(Expense), Net 0.2 1.1 (4.1) (3.0)
Income Before Income Taxes 671.4 626.2 1,752.6 1,622.1
Income Taxes (255.2) (237.9) (666.0) (616.6)
Equity Income, Net of Tax 45.3 20.0 125.0 59.2
Net Income $461.5 $408.3 $1,211.6 $1,064.7
Basic Earnings Per Share $.99 $.85 $2.57 $2.20
Diluted Earnings Per Share $.97 $.84 $2.53 $2.18
Capital Expenditures $209.6 $159.7 $610.4 $603.8
Depreciation and
Amortization $193.1 $188.3 $571.6 $548.4
Weighted Average Shares:
Basic 467.2 480.0 471.4 483.6
Diluted 474.4 485.1 478.9 488.4
Business Segments
Third Quarter Ended September 30, 1999
($ in Millions)
Domestic Int'l Packaging Entertain. Other Corporate Consol.
Beer Beer & Elims.
1999
Gross Sales
$2,914.3 209.1 523.7 306.5 33.5 (221.9) $3,765.2
Net Sales:
- Intersegment
- - $216.1 - 5.8 (221.9) $ -
- External
$2,410.8 169.7 307.6 306.5 27.7 - $3,222.3
Income Before
Income Taxes
$634.6 (4.4) 47.4 104.9 5.7 (116.8) $671.4
Equity Income,
Net of Tax - $45.3 - - - - $45.3
Net Income $393.5 42.6 29.4 65.0 3.5 (72.5) $461.5
1998
Gross Sales
$2,810.8 203.6 489.8 311.5 40.1 (204.7) 3,651.1
Net Sales:
- Intersegment
- - $197.2 - 7.5 (204.7) $ -
- External
$2,312.2 173.1 292.6 311.5 32.6 - $3,122.0
Income Before
Income Taxes
$574.9 4.0 48.9 104.1 3.7 (109.4) $626.2
Equity Income,
Net of Tax - $20.0 - - - - $20.0
Net Income
$356.4 22.5 30.3 64.5 2.3 (67.7) $408.3
Business Segments
Nine Months Ended September 30, 1999
($ in Millions)
Domestic Int'l Packaging Entertain. Other Corporate Consol.
Beer Beer & Elims.
1999
Gross Sales
$8,394.9 550.5 1,473.7 646.1 91.6 (633.6) $10,523.2
Net Sales:
- Intersegment
- - $613.0 - 20.6 (633.6) $ -
- External
$6,954.2 456.2 860.7 646.1 71.0 - $8,988.2
Income Before
Income Taxes
$1,840.8 - 120.1 138.9 11.0 (358.2) $1,752.6
Equity Income,
Net of Tax
-$125.0 - - - - $125.0
Net Income
$1,141.3 125.0 74.5 86.1 6.8 (222.1) $1,211.6
1998
Gross Sales
$7,938.0 581.8 1,417.5 653.3 106.7 (573.4) $10,123.9
Net Sales:
- Intersegment
- - $551.4 - 22.0 (573.4) $ -
- External
$6,543.8 487.9 866.1 653.3 84.7 - $8,635.8
Income Before
Income Taxes
$1,643.3 12.9 115.0 144.1 6.7 (299.9) $1,622.1
Equity Income,
Net of Tax
- $59.2 - - - - 59.2
Net Income
$1,018.8 67.2 71.3 89.3 4.2 (186.1) $1,064.7
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