Anheuser-Busch To Increase Profitability Through Increased Efficiency, Restructuring.

ST. LOUIS--(BUSINESS WIRE)--Oct. 25, 1995--In a series of moves to enhance shareholder value, Anheuser-Busch Companies, Inc., announced today that it will sell its snack food and baseball subsidiaries, close its high cost Tampa, Fla., brewery, and enhance system profitability by reducing wholesaler inventory levels throughout the United States.

"We are focusing on what we know best -- providing consumers with the highest quality beer and entertainment at affordable prices," August A. Busch III, chairman and president, said.

He added that the actions announced today complete a package of moves undertaken in 1995 to enhance shareholder value, complementing the decision earlier this year to spinoff Campbell Taggart, the company's baking subsidiary.

"At the end of this process, our company will consist of very profitable, mutually supportive and growth-oriented operations in domestic and international brewing, family entertainment and beverage container manufacturing," Busch said.

"This is the best way to provide value for our shareholders," he added.

Closing the Tampa brewery, the highest-cost plant in the Anheuser-Busch system, will result in a $150 million one-time book write-off in the fourth quarter of 1995, but will result in $33 million a year in operational cost savings.

"We have received serious expressions of interest from qualified parties in the purchase of Eagle Snacks," Busch said. This transaction will result in a substantial write-off in the fourth quarter. The book value of Eagle Snacks is $240 million.

By adjusting wholesaler inventories, Anheuser-Busch will reduce its costs, and those of its independent wholesalers, by a total of $12 million a year. This step will require a one-time, 1.1 million barrel reduction in shipments from the company's breweries during the last quarter of the current year. Therefore, it is expected to reduce operating profits by approximately $71 million in 1995. The inventory adjustment will not affect market share or sales to retailers.

The company will realize a gain on the sale of the St. Louis Cardinals upon completion of that transaction.

When coupled with the spinoff of Campbell Taggart, these moves will improve the company's cash position by more than $200 million.

"Based on the success of our core businesses, we are able to undertake these important moves from a position of strength," Mr. Busch said.

"Anheuser-Busch, Inc., our domestic brewing operation, has set industry sales volume records for the first nine months of 1995, led by our high-value/higher-margin Budweiser and Michelob families," he added. "We are continuing to expand our global operations, and profits for Anheuser-Busch International are up double digits for the year. Busch Gardens and Sea World are in the midst of another record year, both in terms of the number of guests visiting our theme parks and profitability. Finally, our beverage container operation continues to be profitable, and is the lowest cost producer in the industry."

Eagle Snacks

Anheuser-Busch established Eagles Snacks, Inc., in 1979. The St. Louis-based subsidiary is now the nation's second largest snack food producer with a market share of 6.5 percent. It achieved nearly double-digit sales gains in 1994, but has not been profitable and will lose $25 million in 1995. The company produces and distributes a high quality, full line of potato chips, tortilla chips, pretzels and nuts under the Eagle brand name. It also produces and distributes Cape Cod potato chips and popcorn.

"It will require an infusion of capital for Eagle to reach its full potential, and we have decided those funds can better be deployed in support of our core businesses," Busch said. "This complements our decision three months ago to spinoff our Campbell Taggart subsidiary, and takes us completely out of the food business."

Eagle Snacks has 1,650 employees, and production facilities in five cities.

"The quality of our snack foods is second to none, and our production facilities are among the best in the industry," Busch said. "Thus, we have several options open to us as we prepare to exit this business."

Sale of The Cardinals

"It is our objective to keep the Cardinals in St. Louis, and we will remain a sponsor of Major League Baseball both nationally and in our headquarters city," Mr. Busch said. "But in order to focus on our core businesses, we have decided to sell the club.

"The question we had to ask ourselves is whether our corporate objectives, which are highly focused on producing value for Anheuser- Busch shareholders through the continued growth of our domestic and international beer operations, our family entertainment subsidiary, and our can manufacturing company, are consistent with the needs of the baseball team. Similarly, does continued ownership of the club divert significant management efforts away from the needs of our core businesses?" he added. "We concluded that it was in the best interests of everyone -- including the Cardinals and the fans -- to seek a new owner."

Sale of the club will include Busch Memorial Stadium and several nearby parking garages owned by the company's Civic Center Corp. subsidiary in downtown St. Louis.

"This package will provide the team's future owner with additional sources of revenue through parking fees, and will contribute to our objective of keeping the Cardinals in St. Louis," Busch added.

Anheuser-Busch acquired the Cardinals in 1953 to prevent the team from moving from St. Louis. Since then, the team has been one of the most successful in baseball, winning the World Series in 1964, 1967 and 1982, and winning National League Pennants in 1964, 1967, 1968, 1982, 1985 and 1987.

In 1995, the team will lose $12 million.

"St. Louis baseball fans are among the most knowledgeable and enthusiastic to be found anywhere," Busch said. "The team has provided them with many exciting moments since we acquired it, and we hope that it will continue to do so far into the future."

He added that as long as Anheuser-Busch owns the team, it will continue to do what is necessary to put a winner on the field. The company will hire the personnel necessary to make the Cardinals competitive in the 1996 season, while moving ahead with plans to refurbish Busch Stadium and replace its artificial playing surface with natural grass.

"Earlier this week, we came to an agreement with Tony La Russa to serve as manager for the Cardinals through 1997," Busch said. "His record is one of the best, and he has been one of Major League Baseball's most sought after professionals."

Tampa Brewery

The company's Tampa brewery opened in 1959 and has an annual capacity of 2.6 million barrels. Its per-barrel costs are the highest in the company's nationwide brewery system.

"Earlier this year, our Cartersville brewery -- the most efficient facility of its kind in the world -- brought three million barrels of expansion capacity on line," Busch said. "As previously announced, Anheuser-Busch will spend $2 billion on a benchmarking program to bring all production facilities as near as possible to the efficiency levels we have achieved at our Cartersville brewery."

As configured after the Tampa closing, the 12-brewery Anheuser- Busch production system is capable of efficiently meeting the company's aggressive national and export growth targets over the next five years.

Recent trends indicate that Anheuser-Busch beer brands have been growing at a rate of 1 percent. Through the first nine months of the year, Anheuser-Busch sold a record 68.1 million barrels of beer, 300,000 barrels more than during the same period of 1994, gaining .3 share points to represent 44.3 percent of the total domestic beer industry. It is the only major brewer to gain market share in 1995. "Importantly, our volume gains have been led by our Budweiser and Michelob families, and we have established a significant position in the growing specialty beer category through the introduction of new products," Busch said. "The outlook for sales growth in our beer operations is very good, and when complemented by the improved efficiency of our brewing network, will provide significant profitability gains."

The Tampa brewery, which employs about 375 hourly and supervisory personnel, will cease production by the end of the year. The company will provide a full severance package to all Tampa employees, including a cash payment, extended full health benefits, assistance in job retraining, and help in seeking new positions in the Tampa area.

"The doubling of the federal excise tax in 1991 ... which substantially raised consumer prices and seriously dampened industry sales ... contributed to our decision to close the Tampa brewery," Busch said. "Had that increase not been imposed, industry growth trends would have allowed us to continue to operate this facility despite the expansions we undertook elsewhere throughout our system." The 17-acre Tampa brewery site will be transferred to the company's Busch Entertainment Corp. subsidiary, which runs the Busch Gardens theme park in Tampa. Potential uses of the brewery site include a major theme park expansion.

"With a large brewery in Jacksonville, two can plants, a turf farm, and with both our Orlando Sea World park and with Busch Gardens- Tampa Bay, Anheuser-Busch remains a major corporate citizen in Florida," Busch said.

Inventory Adjustment to Enhance Efficiency

In a move that will minimize inventory system costs and save the company and its independent distributors $12 million annually, Anheuser-Busch, Inc., will reduce wholesaler inventories by about one- third during the final two months of the year.

"Today's marketplace demands that we take every step to be as efficient as possible," Busch said. "Reducing wholesaler inventories will not only provide significant savings, but will improve production scheduling at our breweries and ensure that we continue to have the freshest beer in the market. Thus, it provides a competitive advantage as well."

Adjusting wholesaler inventories will require a one-time reduction in production levels at the company's breweries in 1995. As a result, total shipments will be down approximately 1.1 million barrels, or 5 percent, in the fourth quarter. For all of 1995, production will be reduced by about 1 percent. However, sales to retailers -- a more accurate measure of consumer demand for Anheuser- Busch beers -- will not be affected and will be at record levels for the year.

A More Focused and More Competitive Company

As a result of the moves announced today, and the spinoff of the company's Campbell Taggart baking subsidiary, Anheuser-Busch will be a more focused and more competitive company, Busch said.

"We plan to achieve three major objectives in coming years. First, we will continue to gain an increased share of the brewing industry margin pool in the United States. To do so, we will capitalize on the quality of our beers, improve our operating efficiency, support the growth of our premium brands, and introduce new products to meet evolving consumer demands," he added.

"Second, we will continue to globalize our beer operations. In today's fast-changing world, that is a demanding task," Busch said. "We will capitalize on the progress we have made to date to increase our participation in the international beer market, which is four- times larger than that of the U.S.

"Finally, Anheuser-Busch will support the growth of its entertainment and packaging subsidiaries.

"Focus on these objectives will permit the company to capitalize on its market leadership and competitive advantages in its core brewing business, enhance profitability through the entertainment of more than 20 million guests annually, and gain efficiencies through the manufacture of beverage containers," Busch added.

CONTACT: James Morice or

Paul Wagman

314/982-1735,

Anheuser-Busch