Anheuser-Busch Companies Reports Record Sales and Earnings for First Quarter 1999.ST. LOUIS, Mo.--(BUSINESS WIRE)--April 28, 1999-- Led by strong beer sales volume, Anheuser-Busch Companies (NYSE NYSE See: New York Stock Exchange :BUD) achieved a 22 percent increase in earnings per share for the first quarter 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, at the company's annual meeting of shareholders at SeaWorld
SeaWorld is a chain of marine mammal parks in the United States, with operations in Orlando, Florida, San Diego, California, San Antonio, Texas, and previously Aurora, in Orlando, Florida The city of Orlando is a major city in central Florida and is the county seat of Orange County, Florida. According to the 2000 census, the city population was 185,951. A 2006 U.S. . "Our strong beer volume and revenue momentum experienced in the fourth quarter 1998 continued in the first quarter 1999," said Mr. Busch. Domestic sales-to-retailers beer volume in the first quarter grew approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4.5 percent, while domestic revenue per barrel barrel: see English units of measurement. increased over 2 percent versus the comparable period last year. "This excellent sales volume and revenue performance is the result of Anheuser-Busch's total marketing effort which includes highly effective and award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" brand advertising, outstanding retail sales execution by the best wholesaler network in the industry and a continued focus on brand and market specific revenue enhancement revenue enhancement An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits. strategies that provide us with maximum competitive flexibility," Mr. Busch stated. "Sales-to-retailers were also helped by the roll out of our new brand, Tequiza Tequiza is a beer manufactured by Anheuser-Busch. The beer is marketed with the tagline "Beer with Blue Agave Nectar and the Natural Flavor of Lime."[1]. It is a fruit beer inspired by Mexican beer, which make it somewhat similar to Miller Brewing Company's , Miller Chill. , during the quarter." "First quarter domestic beer sales-to-wholesalers were up 7.9 percent, increasing more than sales-to-retailers due to the planned wholesaler inventory build, which is the company's standard contingency contingency n. an event that might not occur. whenever there is no signed labor contract," said Mr. Busch. "Accordingly, first quarter 1999 results are not indicative indicative: see mood. of our expectations for the full year." The company's beer volume is summarized in the following table: -0-
Beer Volume (millions of barrels)
First Quarter 1999 versus 1998
1999 1998 Barrels %
Domestic 23.2 21.5 Up 1.7 Up 7.9%
International 1.3 1.3 Up .04 Up 2.9%
Worldwide A-B Brands 24.5 22.8 Up 1.7 Up 7.6%
Int'l Equity Partner Brands 3.3 2.3 Up 1.0 Up 43.0%
Total Brands 27.8 25.1 Up 2.7 Up 10.9%
Earnings per share in the first quarter 1999 were $.66, up 22.2 percent compared to the first quarter 1998. This increase reflects the higher domestic beer sales volume, increased revenue per barrel and increased equity earnings from the company's Modelo investment, partially offset by increased marketing, distribution and administrative expenses. The rate of earnings per share growth in the first quarter benefited from the company's planned wholesaler inventory build. The company expects double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. earnings per share growth for the full year, but at levels below the first quarter results.
FIRST QUARTER 1999 FINANCIAL RESULTS
Key operating results for the first quarter 1999 versus 1998 are
summarized below:
(in millions, except per share)
First Quarter 1999 versus 1998
1999 1998 $ %
Gross Sales $3,157 $2,951 Up $206 Up 7.0%
Excise Taxes $472 $444 Up $28 Up 6.4%
Net Sales $2,685 $2,507 Up $178 Up 7.1%
Operating Income $536 $468 Up $68 Up 14.6%
Equity Income, Net of Tax $31 $19 Up $12 Up 63.5%
Net Income $319 $265 Up $54 Up 20.3%
Diluted Earnings per Share $.66 $.54 Up $.12 Up 22.2%
A discussion of financial highlights for the first quarter 1999 follows: o 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 $206 million, or 7.0 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 $178 million, or 7.1 percent, compared to the first quarter 1998. The increases in both gross and net sales were primarily due to higher domestic beer sales volume combined with increased revenue per barrel. o 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 $68 million, or 14.6 percent versus the first quarter 1998, reflecting higher domestic beer sales volume and increased revenue per barrel, partially offset by lower operating results from international beer operations and higher marketing, distribution and administrative expenses. Operating results from international beer operations (excluding Modelo) were lower in the first quarter 1999 compared to 1998 primarily due to continuing weak economic conditions in Asia, and a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the United Kingdom. The decline in international beer operations was more than offset by the increase in equity earnings from Modelo. The increase in marketing, distribution and administrative expenses in the first quarter 1999 compared to the prior year is due primarily to higher overall marketing spending and increased distribution costs distribution costs distribute npl → Vertriebskosten pl associated with the significant increase in domestic beer volume. Marketing, distribution and administrative expenses for the full year 1999 are expected to increase approximately 5 percent compared to 1998. o Equity income, net of tax, increased $12 million, to $31 million, for the first quarter 1999, due to the increased ownership in Grupo Modelo and the strong underlying volume and earnings results of Modelo's operations. o Net income increased $54 million, or 20.3 percent, for the first quarter versus the same period last year. o 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 $.66, an increase of $.12, or 22.2 percent, compared to the first quarter 1998. BEER SALES RESULTS Worldwide Beer Volume Worldwide Anheuser-Busch beer sales volume for the first quarter 1999 rose 7.6 percent, to 24.5 million barrels, versus first quarter 1998. Worldwide beer volume is comprised of domestic volume and international 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 volume, which combines equity volume (representing the company's share of its foreign equity partners' volume) with worldwide volume, was 27.8 million barrels in the first quarter 1999, up 2.7 million barrels, or 10.9 percent over first quarter 1998. Total volume includes Anheuser-Busch's 50 percent ownership in Modelo in the first quarter 1999 compared to a 37 percent ownership in the first quarter 1998. Domestic Beer Volume Anheuser-Busch reported domestic beer shipments of 23.2 million barrels, an increase of 1.7 million barrels, or 7.9 percent for the first quarter 1999 compared to the first quarter 1998. The increase in beer shipments reflects strong underlying sales-to-retailer trends, led by Bud Family sales, the planned increase in wholesaler inventories and the roll out of Tequiza. Beer Market Share The company's domestic market share (excluding exports) for the first quarter 1999 was 48.1 percent, an increase of 1.5 percentage points over 1998 market share of 46.6 percent. Including exports, the company's share of U. S. shipments was 47.9 percent versus 46.5 percent for the first quarter 1998. Domestic market share and share of U. S. shipments are determined based on industry sales estimates provided by the Beer Institute and were influenced by the company's inventory build. International Beer International Anheuser-Busch beer volume for the first quarter 1999 was 1.3 million barrels, an increase of 38,000 barrels, or 2.9 percent, compared to the first quarter 1998. International beer volume reflects strong results in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. offset by continued weakness in Asia and a slowdown in the United Kingdom. OTHER MATTERS Labor Negotiations Teamsters-represented employees are working under the terms of the company's final contract offer which was implemented September September: see month. 21, 1998, and have not voted on the contract offer since July July: see month. 1998. Although the company does not expect a work stoppage stoppage - /sto'p*j/ Extreme lossage that renders something (usually something vital) completely unusable. "The recent system stoppage was caused by a fried transformer." it remains fully prepared to operate its breweries if one occurs. The company's implemented final offer includes an 11.5 percent pay increase over the five year life of the contract and enhanced pension benefits. Also included in the offer are provisions to support productivity improvement, promote workplace flexibility, reduce absenteeism ab·sen·tee·ism n. 1. Habitual failure to appear, especially for work or other regular duty. 2. The rate of occurrence of habitual absence from work or duty. , improve the grievance procedure A term used in Labor Law to describe an orderly, established way of dealing with problems between employers and employees. Through the grievance procedure system, workers' complaints are usually communicated through their union to management for consideration by the employer. and institute a more effective drug-testing program. Annual Shareholder Meeting Comments Speaking to shareholders at the company's annual meeting at SeaWorld in Orlando, Florida, Mr. Busch stated: "As we move into 2000 and beyond, I believe Anheuser-Busch is in a strong position to continue its tradition of leadership. We hold a commanding position in the consolidating U.S. marketplace and are laying the groundwork to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the 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. potential of the global market. We have the financial strength and management team to shape the future of the brewing industry. We are committed to enhancing shareholder value and generating superior shareholder returns. Given these strengths, I am confident that Anheuser-Busch will continue to prosper this year and in the years to come." This release contains statements regarding the company's expectations concerning its future operations, earnings and prospects. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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.
Comparative Statement of Earnings
First Quarter Ended March 31, 1999
(In Millions, Except Per Share)
Change Versus 1998
Favorable/
(Unfavorable)
1999 1998 Amount %
Gross Sales $3,157.2 $2,951.2 $206.0 7.0%
Excise Taxes (472.0) (443.7) (28.3) (6.4)
Net Sales 2,685.2 2,507.5 177.7 7.1
Cost of Products and Services (1,712.1) (1,638.8) (73.3) (4.5)
Marketing, Distribution and
Administrative Expenses (436.5) (400.4) (36.1) (9.0)
Operating Income 536.6 468.3 68.3 14.6
Interest Expense (75.8) (75.5) (0.3) (0.5)
Interest Capitalized 3.3 8.7 (5.4) (61.7)
Interest Income 0.9 1.5 (0.6) (40.2)
Other Expense, Net (1.2) (6.1) 4.9 80.9
Income Before Income Taxes 463.8 396.9 66.9 16.8
Provision for Income Taxes (176.3) (151.0) (25.3) (16.7)
Equity Income, Net of Tax 31.6 19.3 12.3 63.5
Net Income $319.1 $265.2 $53.9 20.3%
Basic Earnings Per Share $.67 $.54 $.13 24.1%
Diluted Earnings Per Share $.66 $.54 $.12 22.2%
Increase/
(Decrease)
Capital Expenditures $184.4 $237.4 $(53.0) (22.3)%
Depreciation and Amortization $187.8 $177.5 $10.3 5.8%
Weighted Average Shares:
Basic 476.2 486.7 (10.5) (2.2)%
Diluted 483.5 491.1 (7.6) (1.5)%
Business Segments
First Quarter Ended March 31
($ in Millions)
Domestic Int'l Packa- Enter- Corporate
Beer Beer ing tain. Other & Elims. Consol.
1999
Gross Sales $2,652.7 128.5 435.7 113.9 22.0 (195.6) $3,157.2
Net Sales:
- Intersegment - - $189.9 - 5.7 (195.6) $-
- External $2,200.0 109.2 245.8 113.9 16.3 - $2,685.2
Income Before
Income Taxes $572.2 (7.7) 26.6 (13.6) (0.4) (113.3) $463.8
Equity Income,
Net of Tax - $31.6 - - - - $31.6
Net Income $354.8 26.8 16.5 (8.4) (0.2) (70.4) $319.1
1998
Gross Sales $2,418.3 135.9 428.6 111.3 30.2 (173.1) $2,951.2
Net Sales:
- Intersegment - - $167.0 - 6.1 (173.1) $-
- External $1,994.9 115.6 261.6 111.3 24.1 - $2,507.5
Income Before
Income Taxes $486.3 (6.3) 24.1 (14.6) (0.1) (92.5) $396.9
Equity Income,
Net of Tax - $19.3 - - - - $19.3
Net Income $301.5 15.4 14.9 (9.1) (0.1) (57.4) $265.2
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