ST. LOUIS, July 23 /PRNewswire-FirstCall/ -- Anheuser-Busch Cos. Inc.
(NYSE: BUD) today reported that second quarter 2008 net sales increased 4.6
percent and diluted earnings per share (excluding a one-time item in 2007)
increased 9.2 percent (1). For the first six months of 2008, net sales
increased 5.3 percent and diluted earnings per share (excluding the one-time
item) improved 7.1 percent (1).
'Anheuser-Busch achieved solid sales and earnings per share growth for the
quarter and first half of the year,' said August A. Busch IV, president and
chief executive officer of the company. 'U.S. beer shipments and wholesaler
sales-to-retailers increased in the quarter over last year, led by the
successful launch of Bud Light Lime and improved performance of other core
brands. According to IRI supermarket data, Anheuser-Busch has gained 1.0
share points at the consumer level during the last four weeks. We are
encouraged by the success of our marketing and selling initiatives, and are
optimistic concerning the outlook for the remaining summer selling season.'
The U.S. beer pricing environment remained favorable through the important
Memorial Day and Fourth of July holidays, as expected. The company plans to
implement price increases on the majority of its U.S. beer volume in September
and October. These pricing initiatives will cover approximately 85 percent of
the company's domestic volume and will be tailored to selected markets, brands
and packages. Overall, the company expects to achieve revenue per barrel(2)
growth of 4 percent for 2008, including favorable brand mix.
'The company's new Strategic Plan expands and accelerates our cost
reduction and operating efficiency initiatives generated by our Blue Ocean
project, as well as our planned price increases. These initiatives, combined
with our increased marketing and selling efforts, are all contributing to our
very strong outlook for profit growth,' said Mr. Busch IV.
BEER SALES RESULTS
The company's reported beer volume for the second quarter and first six
months of 2008 is summarized in the following table:
Reported Beer Volume (millions of barrels) for Periods Ended June 30
Second Quarter First Six Months
Versus 2007 Versus 2007
2008 Barrels % 2008 Barrels %
U.S. 27.6 Up 0.1 Up 0.5% 53.4 Up 0.2 Up 0.4%
International 6.2 Up 0.3 Up 4.8% 11.6 Up 0.5 Up 4.0%
Worldwide A-B
Brands 33.8 Up 0.4 Up 1.2% 65.0 Up 0.7 Up 1.1%
Equity Partner Brands 9.3 Up 0.2 Up 2.1% 16.6 Up 0.8 Up 5.2%
Total Brands 43.1 Up 0.6 Up 1.4% 81.6 Up 1.5 Up 1.9%
U.S. beer shipments-to-wholesalers increased 0.5 percent for the second
quarter. Sales-to-retailers for the quarter increased 0.4 percent despite the
timing of the Fourth of July holiday that adversely impacted the comparison
with second quarter 2007 results. Sales-to-retailers for the second quarter
plus first week of July, which eliminates the holiday timing distortion, were
up 1.9 percent over the comparable period last year.
For the first six months of 2008, shipments-to-wholesalers increased 0.4
percent, and sales-to-retailers decreased 0.1 percent with import brands
contributing 0.2 basis points of growth to shipments and 0.4 basis points to
sales-to-retailers. The Fourth of July timing also adversely impacted year-
to-date sales-to-retailers although to a lesser degree than in the quarter.
Wholesaler inventories for Anheuser-Busch produced brands at the end of the
second quarter were essentially level compared with inventories at the end of
the second quarter 2007.
The company's estimated U.S. beer market share for the first six months of
2008 was 48.8 percent compared to prior year market share of 48.9 percent.
Market share is based on estimated U.S. beer industry shipment volume using
information provided by the Beer Institute and the U.S. Department of
Commerce.
International volume, consisting of Anheuser-Busch brands produced
overseas by company-owned breweries and under license and contract brewing
agreements, plus exports from the company's U.S. breweries, increased 4.8
percent for the second quarter and 4.0 percent for the first six months of
2008. These increases are primarily due to increased volume in China, Canada
and Argentina, partially offset by lower volume in the United Kingdom and
Ireland.
Worldwide Anheuser-Busch brands volume, comprised of domestic volume and
international volume, increased 1.2 percent for the second quarter and 1.1
percent for the first six months of 2008 to 33.8 million and 65.0 million
barrels, respectively.
Total brands volume, which combines worldwide Anheuser-Busch brand volume
with equity partner volume (representing the company's share of its equity
partners' volume on a one-month lag basis) was 43.1 million barrels in the
second quarter 2008, up 0.6 million barrels, or 1.4 percent. Total brands
volume was up 1.9 percent, to 81.6 million barrels for the first six months of
2008.
Equity partner brands volume grew 2.1 percent and 5.2 percent,
respectively, for the second quarter and first six months of 2008 due to
Modelo and Tsingtao volume growth.
SECOND QUARTER 2008 FINANCIAL RESULTS
Key operating results and a discussion of financial highlights for the
second quarter 2008 versus 2007 follow.
($ in millions, except per share)
Second Quarter 2008 vs. 2007
2008 2007 $ %
Gross Sales $5,336 $5,126 Up $210 Up 4.1%
Net Sales $4,721 $4,515 Up $206 Up 4.6%
Income Before Income
Taxes $816 $797 Up $19 Up 2.4%
Equity Income $167 $195 Dn $28 Dn 14.2%
Net Income $689 $677 Up $12 Up 1.8%
Diluted Earnings per
Share $.95 $.88 Up $.07 Up 8.0%
-- Net sales increased 4.6 percent driven by sales increases from U.S.
beer, international beer and entertainment operations. U.S. beer
segment sales increased 4.5 percent due primarily to 0.5 percent
higher beer sales volume, and a 3.2 percent increase in revenue per
barrel (2) resulting from price increases late last year and in the
first quarter 2008 and favorable brand mix. International beer sales
were up 17 percent primarily on higher sales in China and Canada and
entertainment revenues increased 4 percent primarily due to increased
attendance. Packaging segment sales declined 3 percent due to lower
can manufacturing revenues.
-- The comparability of income before income taxes is impacted by the
company's sale of the remaining interest in its Spanish theme park
investment during the second quarter 2007. The sale resulted in a $16
million pretax gain ($.01 per share) on the disposition which is
reported as a corporate item for business segment reporting purposes.
Excluding this gain to better portray underlying results, income
before income taxes increased 4.5 percent (1) in the second quarter
2008 due to improved results for U.S. and international beer,
partially offset by lower results for packaging and entertainment
operations. Reported pretax income was up 2.4 percent for the second
quarter 2008.
Pretax profits for U.S. beer increased $18 million due to increased
revenue per barrel and higher beer sales volume, partially offset by
higher production and distribution costs and increased marketing
spending.
International beer pretax income was up $18 million versus prior year,
primarily on improved results in the United Kingdom, Canada and China.
Packaging segment pretax profits declined $6 million on lower earnings
from can manufacturing and recycling operations.
Entertainment segment pretax income declined $8 million primarily due
to the timing of the Easter holiday, which occurred in the first
quarter this year versus the second quarter in 2007.
-- Equity income decreased $28 million reflecting higher materials and
operating costs at Grupo Modelo partially offset by volume growth and
higher pricing. In the second quarter 2007 equity income for Modelo
included a $12 million benefit from the return of an advertising fund
that was part of a prior import beer contract. Tsingtao equity results
include a $7 million charge due to higher Chinese income tax rates
mandated by the government retroactively for 2007.
-- The effective tax rate for the second quarter 2008 declined 350 basis
points, to 36.0 percent compared with prior year due to lower taxes on
foreign earnings and tax benefits related to the exercise of employee
incentive stock options.
-- Net income and earnings per share in the second quarter of 2007 also
include the impact of the gain on sale of the company's remaining
equity stake in its Spanish theme park investment. Excluding this one-
time item, underlying second quarter 2008 net income and diluted
earnings per share increased 3.3 percent and 9.2 percent,
respectively, versus 2007 (1). On a reported basis, net income
increased 1.8 percent and diluted earnings per share increased 8.0
percent, to $.95.
FIRST SIX MONTHS OF 2008 FINANCIAL RESULTS
Key operating results and a discussion of financial highlights for the
first six months of 2008 versus 2007 follow.
($ in millions, except per share)
First Six Months 2008 vs. 2007
2008 2007 $ %
Gross Sales $9,991 $9,532 Up $459 Up 4.8%
Net Sales $8,821 $8,374 Up $447 Up 5.3%
Income Before Income
Taxes $1,451 $1,393 Up $58 Up 4.2%
Equity Income $293 $354 Dn $61 Dn 17.3%
Net Income $1,200 $1,195 Up $5 Up 0.5%
Diluted Earnings per
Share $1.65 $1.55 Up $.10 Up 6.5%
-- Net sales increased 5.3 percent on increased sales from all business
segments. U.S. beer segment sales were up 4 percent on increased
volume and higher revenue per barrel. U.S. beer volume was up 0.4
percent while revenue per barrel (2) was up 2.7 percent primarily due
to price increases on a majority of the company's U.S. volume in late
2007 and in the first quarter of 2008. International beer net sales
increased 18 percent primarily on higher sales in China and Canada.
Packaging segment sales were up 2 percent due to higher recycling
revenues and entertainment sales increased 9 percent primarily from
higher attendance and increased ticket pricing.
-- Excluding the impact of the gain on disposal of the Spanish theme park
interest in 2007, income before income taxes increased 5.4 percent due
primarily to higher profits for U.S. beer, international beer and
entertainment operations, partially offset by lower packaging segment
results. On a reported basis, pretax income increased 4.2 percent.
Income before income taxes for U.S. beer increased $35 million,
reflecting higher volume and pricing, partially offset by increased
marketing expense for trademark brands.
International beer pretax income was up $37 million, primarily due to
increased profits in the United Kingdom, China and Canada.
Packaging segment pretax income decreased $10 million primarily due to
lower earnings from recycling operations and strong performance in the
prior year.
Entertainment segment pretax results improved $5 million primarily
from increased attendance and higher ticket pricing, partially offset
by higher operating expenses.
-- Equity income decreased $61 million for the first half of 2008,
primarily due to a combination of higher materials and operating costs
for Grupo Modelo partially offset by higher beer volume. Additionally,
equity income for the first six months of 2007 included a $29 million
benefit from the return of an advertising fund that was part of
Modelo's former beer import contract.
-- The effective tax rate for the first half of 2008 declined 220 basis
points, to 37.5 percent compared with the prior year primarily due to
the same factors that impacted the second quarter effective tax rate,
as previously discussed.
-- Excluding the impact of the gain on disposal of the Spanish theme park
interest in 2007, net income in the first six months of 2008 increased
1.3 percent and diluted earnings per share were up 7.1 percent versus
prior year. Earnings per share continue to benefit from the company's
ongoing share repurchase program. The company repurchased over 13
million shares through June 2008. Reported net income increased 0.5
percent and diluted earnings per share increased 6.5 percent, to
$1.65.
Other Matters
Anheuser-Busch will conduct a conference call with investors to discuss
second quarter earnings results at 11:00 a.m. CDT today. The company will
broadcast the conference call live via the Internet. For details visit the
company's site on the Internet at http://www.anheuser-busch.com.
Notes
1. Reconciliation of Comparative Second Quarter and First Six Months
Results
($ in millions,
except per
share) Income
Before Provision Diluted
Income for Income Net Earnings Effective
Taxes Taxes Income Per Share Tax Rate
Second Quarter
2008
Reported $816.4 ($294.2) $689.2 $.95 36.0%
2007
Reported $796.9 ($314.6) $677.0 $0.88 39.5%
Gain on Sale
of Spanish
Theme Park (16.0) 6.1 (9.9) (0.01)
Excluding One-
Time Item $780.9 ($308.5) $667.1 $0.87 39.5%
Percentage Change
- 2008 vs. 2007
Reported 2.4% 1.8% 8.0% (350) points
Excluding One-
Time Item 4.5% 3.3% 9.2% (350) points
--------------------------------------------------------------------------
First Six Months
2008
Reported $1,451.2 ($544.1) $1,200.1 $1.65 37.5%
2007
Reported $1,393.1 ($552.7) $1,194.5 $1.55 39.7%
Gain on Sale
of Spanish
Theme Park (16.0) 6.1 (9.9) (0.01)
Excluding One-
Time Item $1,377.1 ($546.6) $1,184.6 $1.54 39.7%
Percentage Change
- 2008 vs. 2007
Reported 4.2% 0.5% 6.5% (220) points
Excluding One-
Time Item 5.4% 1.3% 7.1% (220) points
2. Domestic revenue per barrel is calculated as net sales generated by
the company's U.S. beer operations on barrels of beer sold, determined
on a U.S. GAAP basis, divided by the volume of beer shipped to U.S.
wholesalers.
This release contains forward-looking statements regarding the company's
expectations concerning its future operations, earnings and prospects. On the
date the forward-looking 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's expectations
involve risks and uncertainties (both favorable and unfavorable) and are based
on 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. Important
factors that could cause actual results to differ (favorably or unfavorably)
from the expectations stated in this release include, among others, changes in
the pricing environment for the company's products; changes in U.S. demand for
malt beverage products, including changes in U.S. demand for other alcohol
beverages; changes in consumer preference for the company's malt beverage
products; changes in the distribution for the company's malt beverage
products; changes in the cost of marketing the company's malt beverage
products; regulatory or legislative changes, including changes in beer excise
taxes at either the federal or state level and changes in income taxes;
changes in the litigation to which the company is a party; changes in raw
materials prices; changes in packaging materials costs; changes in energy
costs; changes in the financial condition of the company's suppliers; changes
in interest rates; changes in foreign currency exchange rates; unusual weather
conditions that could impact beer consumption in the U.S.; changes in
attendance and consumer spending patterns for the company's theme park
operations; changes in demand for aluminum beverage containers; changes in the
company's international beer business or in the beer business of the company's
international equity partners; changes in the economies of the countries in
which the company, its international beer business or its international equity
partners operate; future acquisitions or divestitures by the company,
including effects on its credit rating; changes resulting from transactions
among the company's global or domestic competitors; and the effect of stock
market conditions on the company's share repurchase program. Anheuser-Busch
disclaims any obligation to update or revise any of these forward-looking
statements. Additional risk factors concerning the company can be found in
the company's most recent Form 10-K.
Anheuser-Busch Companies, Inc.
Comparative Consolidated Statement of Earnings (Unaudited)
(In Millions, Except Per Share)
Second Quarter Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
Gross sales $5,336.1 $5,126.2 $9,990.8 $9,531.8
Excise taxes (614.7) (610.8) (1,170.2) (1,158.0)
Net Sales 4,721.4 4,515.4 8,820.6 8,373.8
Cost of sales (2,998.4) (2,857.9) (5,628.5) (5,332.6)
Gross profit 1,723.0 1,657.5 3,192.1 3,041.2
Marketing,
distribution
and administrative
expenses (793.2) (756.2) (1,499.5) (1,421.9)
Operating income 929.8 901.3 1,692.6 1,619.3
Interest expense (121.6) (119.7) (250.7) (239.6)
Interest capitalized 4.1 4.2 9.0 7.7
Interest income 1.2 1.5 2.3 2.0
Other income/(expense),
net 2.9 9.6 (2.0) 3.7
Income before income
taxes 816.4 796.9 1,451.2 1,393.1
Provision for income
taxes (294.2) (314.6) (544.1) (552.7)
Equity income, net of
tax 167.0 194.7 293.0 354.1
Net income $689.2 $677.0 $1,200.1 $1,194.5
Basic earnings per share $.96 $.90 $1.68 $1.57
Diluted earnings per
share $.95 $.88 $1.65 $1.55
Weighted Average Shares
Outstanding
Basic 714.2 754.8 715.4 759.2
Diluted 727.1 765.1 725.8 770.3
Anheuser-Busch Companies, Inc.
Business Segments (Unaudited)
Second Quarter Ended June 30
(In Millions)
Intern-
U.S. ational Corporate
Beer Beer Packaging Entertainment & Elims Consolidated
2008
Gross
Sales $3,893.1 402.6 726.7 416.4 (102.7) $5,336.1
Net Sales:
- Inter-
segment $0.9 -- 245.6 -- (246.5) $--
- Exte-
rnal $3,346.3 333.8 481.1 416.4 143.8 $4,721.4
Income
Before
Income
Taxes $809.2 48.1 49.5 106.4 (196.8) $816.4
Equity
Income $(0.7) 167.7 -- -- -- $167.0
Net
Income $501.0 197.5 30.7 66.0 (106.0) $689.2
2007
Gross
Sales $3,741.9 356.5 744.9 400.6 (117.7) $5,126.2
Net Sales:
- Inter-
segment $0.9 0.2 249.7 - (250.8) $-
- Exte-
rnal $3,200.9 285.6 495.2 400.6 133.1 $4,515.4
Income
Before
Income
Taxes $791.7 30.0 55.0 113.9 (193.7) $796.9
Equity
Income $1.5 193.2 - - - $194.7
Net
Income $492.3 211.8 34.1 70.6 (131.8) $677.0
In 2008, the company changed reporting responsibility for beer sales in
the Caribbean region from U.S. Beer to International Beer and also reassigned
certain administrative and technology support costs between Corporate and U.S.
Beer. Segment results for 2007 have been updated to conform to the revised
reporting conventions.
Anheuser-Busch Companies, Inc.
Business Segments (Unaudited)
Six Months Ended June 30
(In Millions)
Intern-
U.S. ational Corporate
Beer Beer Packaging Entertainment & Elims Consolidated
2008
Gross
Sales $7,467.8 740.4 1,371.2 638.0 (226.6) $9,990.8
Net
Sales:
- Inter-
segment $1.7 0.1 487.6 -- (489.4) $--
- Exte-
rnal $6,412.2 624.0 883.6 638.0 262.8 $8,820.6
Income
Before
Income
Taxes $1,584.7 85.6 89.4 100.3 (408.8) $1,451.2
Equity
Income $(1.1) 294.1 -- -- -- $293.0
Net
Income $981.4 347.2 55.4 62.2 (246.1) $1,200.1
2007
Gross
Sales $7,199.3 642.1 1,349.4 585.6 (244.6) $9,531.8
Net
Sales:
- Inter-
segment $1.7 0.5 481.7 - (483.9) $-
- Exte-
rnal $6,154.2 527.0 867.7 585.6 239.3 $8,373.8
Income
Before
Income
Taxes $1,549.7 49.1 99.5 95.4 (400.6) $1,393.1
Equity
Income $1.6 352.5 - - - $354.1
Net
Income $962.4 382.9 61.7 59.1 (271.6) $1,194.5
In 2008, the company changed reporting responsibility for beer sales in
the Caribbean region from U.S. Beer to International Beer and also reassigned
certain administrative and technology support costs between Corporate and U.S.
Beer. Segment results for 2007 have been updated to conform to the revised
reporting conventions.
Anheuser-Busch Companies, Inc.
Consolidated Balance Sheet (Unaudited)
(In Millions)
June 30, December 31,
2008 2007
Assets
Current Assets:
Cash $252.8 $283.2
Accounts receivable 1,252.3 805.2
Inventories 711.3 723.5
Other current assets 281.9 212.6
Total current assets 2,498.3 2,024.5
Investments in affiliated companies 4,138.4 4,019.5
Plant and equipment, net 8,742.7 8,833.5
Intangible assets, including goodwill
of $1,174.4 and $1,134.6 1,587.3 1,547.9
Other assets 746.0 729.6
Total Assets $17,712.7 $17,155.0
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $1,620.4 $1,464.5
Accrued salaries, wages and benefits 333.4 374.3
Accrued taxes 168.5 106.2
Accrued interest 143.8 136.4
Other current liabilities 350.8 222.4
Total current liabilities 2,616.9 2,303.8
Retirement benefits 882.3 1,002.5
Debt 8,483.2 9,140.3
Deferred income taxes 1,365.8 1,314.6
Other long-term liabilities 260.5 242.2
Shareholders Equity:
Common stock 1,495.0 1,482.5
Capital in excess of par value 3,944.6 3,382.1
Retained earnings 18,652.7 17,923.9
Treasury stock, at cost (19,401.9) (18,714.7)
Accumulated non-owner changes in equity (586.4) (922.2)
Total Shareholders Equity 4,104.0 3,151.6
Commitments and contingencies -- --
Total Liabilities and Shareholders Equity $17,712.7 $17,155.0
Anheuser-Busch Companies, Inc.
Consolidated Statement of Cash Flows (Unaudited)
(In Millions)
Six Months
Ended June 30,
2008 2007
Cash flow from operating activities:
Net income $1,200.1 $1,194.5
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 505.5 494.2
Decrease in deferred income taxes (16.3) (39.2)
Stock-based compensation expense 30.9 31.3
Undistributed earnings of affiliated
companies 128.4 49.0
Gain on sale of business -- (16.0)
Other, net (82.0) 16.8
Operating cash flow before the
change in working capital 1,766.6 1,730.6
Increase in working capital (150.7) (117.5)
Cash provided by operating activities 1,615.9 1,613.1
Cash flow from investing activities:
Capital expenditures (357.0) (346.2)
Acquisitions (49.0) (84.6)
Proceeds from sale of business 37.0 16.2
Cash used for investing activities (369.0) (414.6)
Cash flow from financing activities:
Increase in debt 3.5 333.2
Decrease in debt (665.9) (71.5)
Dividends paid to shareholders (471.3) (448.1)
Acquisition of treasury stock (695.3) (1,131.4)
Shares issued under stock plans 551.7 203.2
Cash used for financing activities (1,277.3) (1,114.6)
Net increase / (decrease) in cash during the
period (30.4) 83.9
Cash, beginning of period 283.2 219.2
Cash, end of period $252.8 $303.1
SOURCE Anheuser-Busch Cos. Inc.
