Anheuser-Busch Cos., Inc. Reports Record Sales and Earnings for the Third Quarter and Nine Months of 2003.Business Editors ST. LOUIS--(BUSINESS WIRE)--Oct. 22, 2003 Achieves 20th Consecutive Quarter of Double-Digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. 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 NYSE See: New York Stock Exchange :BUD) achieved record sales and earnings for the third quarter and nine months of 2003, it was announced today by Patrick Stokes Patrick T Stokes is the former president and CEO of Anheuser-Busch Companies, Inc. He is now chairman of the Board of Directors of the Anheuser-Busch Companies, Inc. Leadership at Anheuser-Busch In 1990, Stokes became president of Anheuser-Busch, Inc. , 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 fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. and our market share performance has been strong," said Stokes Stokes , William 1804-1878. British physician. Known especially for his studies of diseases of the chest and heart, he expanded on the observations of John Cheyne in describing the breathing irregularity now known as Cheyne-Stokes respiration. . Domestic revenue per barrel barrel: see English units of measurement. 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 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". family. Domestic revenue per barrel growth has driven improvements in profit margins and return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). . For the nine months of 2003, gross margin increased 30 basis points to 41.7 percent, while operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: 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 July: see month. , wholesaler sales-to-retailers exceeded 10 million barrels - the first time this benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. 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 October: see month. 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 revenue enhancement An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits. 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 Year-to-date (YTD) The period beginning at the start of the calendar year up to the current 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 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. , 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 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 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 attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk 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 September: see month. 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 CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT today. The company will broadcast the conference call live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . 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 af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. net interest (interest expense less interest capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. ) divided by average net investment. Net investment is defined as total assets less non-debt current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. . For 2003, after-tax net interest expense was $231 million, calculated as pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern 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 $345 less income taxes applied using a 38 percent tax rate. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding the company's expectations concerning its future operations, earnings and prospects. On the date the statements are made, the statements represent the company's expectations, but the company's expectations concerning its future operations, earnings and prospects may change. The company disclaims any obligation to update any of these statements. The company's expectations involve significant risks and uncertainties and are based upon many assumptions that the company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Accordingly, there can be no assurances that the company's expectations and the forward-looking statements will be correct. Further information on factors that could affect the company's future operations, earnings and prospects is included in the company's Forms 10-Q and 10-K.
Anheuser-Busch Companies, Inc.
Consolidated Statement of Income (Unaudited
($ 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
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