ANHEUSER-BUSCH COMPANIES, INC. (Form: 10-K, Received: 02/29/2008 10:02:17)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  For the Fiscal Year Ended December 31, 2007
                                                      or
o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  For the transition period from                     to                    

Commission File Number 1-7823

ANHEUSER-BUSCH COMPANIES, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE                                                43-1162835
(State or Other Jurisdiction of                                                (I.R.S. Employer
Incorporation or Organization)                                                Identification No.)
 
ONE BUSCH PLACE, ST. LOUIS, MISSOURI                                                63118
(Address of Principal Executive Offices)                                                (Zip Code)

Registrant’s telephone number, including area code: 314-577-2000


Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class                                                                                                                                  Name of Each Exchange
on Which Registered
Common Stock—$1 par value                                                          New York Stock Exchange
6½% Debentures Due January 1, 2028                                                          New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None


      Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ü No     

      Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes      No ü

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ü No     

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ü

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large Accelerated Filer  x                      Accelerated Filer  o                      Non-Accelerated Filer  o

      Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes      No ü

      As of June 29, 2007, the aggregate market value of the voting stock held by non-affiliates of the registrant was $38,762,495,444.

      Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

$1 Par Value Common Stock 715,144,414 shares as of February 15, 2008

DOCUMENTS INCORPORATED BY REFERENCE

    Portions of Annual Report to Shareholders for the Year Ended December 31, 2007            PART I and PART II
    Portions of Definitive Proxy Statement for Annual Meeting of Stockholders on April 23, 2008            PART III

      Available on the Web at www.anheuser-busch.com



ANHEUSER-BUSCH COMPANIES, INC.

TABLE OF CONTENTS

  Page
    PART I        2
    Item 1. Business        2
        U.S. Beer       2
        U.S. Beer Operations       5
        International Beer       6
        Packaging       8
        Family Entertainment       8
        Other       8
        Sources and Availability of Raw Materials       8
        Energy Matters       9
        Brand Names and Trademarks       9
        Research and Development       9
        Environmental Protection       9
        Environmental Packaging Laws and Regulations       10
        Number of Employees       10
        Available Information       10
    Item 1A. Risk Factors        10
    Item 1B. Unresolved Staff Comments        13
    Item 2. Properties        13
    Item 3. Legal Proceedings        14
    Item 4. Submission of Matters to a Vote of Security Holders        15
                Executive Officers of the Registrant        15
    PART II        17
    Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities        17
    Item 6. Selected Financial Data        17
    Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations        17
    Item 7A. Quantitative and Qualitative Disclosures About Market Risk        17
    Item 8. Financial Statements and Supplementary Data        17
    Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure        17
    Item 9A. Controls and Procedures        18
    Item 9B. Other Information        18
    PART III        18
    Item 10. Directors, Executive Officers and Corporate Governance of the Registrant        18
    Item 11. Executive Compensation        18
    Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters        18
    Item 13. Certain Relationships and Related Transactions, and Director Independence        19
    Item 14. Principal Accountant Fees and Services        19
    PART IV        19
    Item 15. Exhibits and Financial Statement Schedules        19
        15(a)(1) Financial Statements       19
        15(a)(2) Financial Statement Schedule       19
        15(a)(3) Exhibits       19
    Signatures        23

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PART  I

Item 1.   Business

      Anheuser-Busch Companies, Inc. (the “Company” or “Anheuser-Busch”) is a Delaware corporation that was organized in 1979 as the holding company of Anheuser-Busch, Incorporated (“ABI”), a Missouri corporation whose origins date back to 1875. In addition to ABI, which is the nation’s leading brewer of beer, the Company also has subsidiaries that conduct various other business operations. The Company’s operations are comprised of the following principal business segments: domestic beer, international beer, packaging, and entertainment. In 2007, domestic beer contributed 75% and 64%, international beer contributed 7% and 26%, packaging contributed 10% and 4%, and entertainment contributed 8% and 6% to net sales and net income, respectively. For this calculation, net sales and expenses exclude corporate items as detailed in the Company’s business segments disclosure. The Company believes this measure is the most appropriate as it allows the business segments contributions to add to 100%. Approximately 93% of the Company’s net sales and 74% of net income is generated in the United States. Financial information with respect to the Company’s business segments appears in Note 13, “Business Segments,” on pages 62-63 of the 2007 Annual Report to Shareholders, which Note hereby is incorporated by reference.

      U.S. beer volume was 104.4 million barrels in 2007 as compared with 102.3 million barrels in 2006. U.S. beer volume represents produced Anheuser-Busch brands, import brands and acquired brands shipped to U.S. wholesalers. Worldwide sales of the Company’s beer brands aggregated 128.4 million barrels in 2007 as compared with 125.0 million barrels in 2006. Worldwide beer volume is comprised of U.S. and international volume. International volume represents 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. Total brands volume includes worldwide Anheuser-Busch brand volume combined with the Company’s ownership percentage share of the volume of its equity partners. Total brands volume was 161.6 million barrels and 156.6 million barrels in 2007 and 2006, respectively.

U.S. Beer

      The Company’s principal product is beer, produced and distributed by its subsidiary, ABI, in a variety of containers primarily under the brand names described below. During 2007, ABI discontinued Anheuser-Busch Lager, Natty Up, BACARDI Silver, BACARDI Silver Big Apple, Peels Blueberry Pomegranate, Peels Spiced Apple, Peels Strawberry Passion Fruit, Peels Cranberry Peach, Peels Spiced Apple, Spykes Banana, Spykes Blue Raspberry, Spykes Grape, Spykes Hot Chocolate, Spykes Peach, Spykes Melon, Spykes Lime, and Spykes Mango.

Budweiser Family

      Budweiser, Bud Light, Budweiser Select, and Bud Ice are distributed and sold on a nationwide basis. Bud Ice Light and Bud Dry are sold in 44 states.

      Budweiser, Bud Light, Budweiser Select, and Bud Ice are sold in both draught and packaged form. Bud Ice Light and Bud Dry are sold in packaged form.

Michelob Family

      Michelob, Michelob Light, Michelob ULTRA, Michelob ULTRA Amber and Michelob Amber Bock are distributed and sold on a nationwide basis. Michelob ULTRA Lime Cactus, Michelob ULTRA Tuscan Orange Grapefruit, and Michelob ULTRA Pomegranate Raspberry (all introduced in 2007) are sold in 49 states. Additionally, Michelob Pale Ale and Michelob Porter are sold in 49 states. Michelob Marzen is sold in 46 states, Michelob Bavarian-Style Wheat in 45 states, Michelob Honey Lager in 44 states, and Michelob Golden Draft and Michelob Golden Draft Light in 8 states.

      Michelob, Michelob Light, Michelob ULTRA, Michelob ULTRA Amber, Michelob Golden Draft, Michelob Golden Draft Light and Michelob Amber Bock are sold in both draught and packaged form.

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Michelob ULTRA Lime Cactus, Michelob ULTRA Tuscan Orange Grapefruit, Michelob ULTRA Pomegranate Raspberry, Michelob Honey Lager, Michelob Marzen, Michelob Porter and Michelob Bavarian-Style Wheat are sold in packaged form. Michelob Pale Ale is sold in sampler packs only.

Busch Family

      Busch and Busch Light are sold in 49 states. Busch Ice is sold in 40 states.

      Busch and Busch Light are sold in both draught and packaged form. Busch Ice is sold only in packaged form.

Natural Family

      Natural Light and Natural Ice are sold on a nationwide basis in both draught and packaged form.

Specialty Beers

      Bud Extra (formerly known as B E ) is sold in 49 states only in packaged form.

      Bare Knuckle Stout is sold on a nationwide basis in draught form.

      American Red is sold in 29 states only in draught form under a variety of custom names.

      ZiegenBock is sold in one state in both draught and packaged form.

      Land Shark Lager is sold in 50 states only in packaged form.

      Redbridge is sold nationwide only in packaged form.

      Stone Mill Pale Ale is sold on a nationwide basis in both draught and packaged form.

      Chelada Bud (introduced in 2007) and Chelada Bud Light (introduced in 2007) are sold in 50 states. Chelada Bud and Chelada Bud Light are only sold in packaged form.

      In 2007, the Company began distributing Ray Hill American Pilsner (owned by Hill Brewing Co.) in 6 states in packaged form only.

      Rolling Rock and Rock Green Light are sold on a nationwide basis in both draught and packaged form.

      The Company periodically develops and sells holiday, seasonal, occasional and local beers.

Nonalcohol Brews

      O’Doul’s and O’Doul’s Amber are distributed and sold on a nationwide basis. Busch NA is sold in 47 states.

      O’Doul’s and O’Doul’s Amber are sold in both draught and packaged form. Busch NA is sold only in packaged form.

Malt Liquors

      King Cobra is sold in 45 states, Hurricane High Gravity in 49 states, Hurricane Malt Liquor in 33 states and Hurricane Ice in 4 states.

      King Cobra, Hurricane High Gravity, Hurricane Malt Liquor and Hurricane Ice are sold only in packaged form.

Specialty Malt Beverages

      BACARDI Silver Watermelon, BACARDI Silver Strawberry, BACARDI Silver Raz, BACARDI Silver Mojito (introduced in 2007), BACARDI Silver Mojito Pomegranate (introduced in 2007) and Tilt are distributed and sold on a nationwide basis. BACARDI Silver O 3 and Tequiza are sold in 49 states. BACARDI Silver Peach is sold in 47 states. Tilt Green is sold in 42 states. Intensitea Lemon (introduced in 2007) is sold in 14

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states, Intensitea Raspberry (introduced in 2007) in 13 states, and Intensitea Peach (introduced in 2007) in 11 states. Wild Blue is sold in 3 states.

      BACARDI Silver Raz and BACARDI Silver Mojito are sold in both draught and packaged form. BACARDI Silver O 3 , BACARDI Silver Watermelon, BACARDI Silver Strawberry, BACARDI Silver Peach, BACARDI Silver Mojito, BACARDI Silver Mojito Pomegranate, Tilt, Tilt Green, Tequiza, Intensitea Lemon, Intensitea Raspberry, Intensitea Peach and Wild Blue are sold only in packaged form.

Alliance Partner Products

       Coastal Brands

      ABI owns a 49% equity interest in Maryland-based Fordham Brewing Co. Through this alliance, ABI is the master distributor of Coastal Brewing Brands in 4 states.

       Redhook Ale and Widmer Brothers

      In 2007, Seattle-based Redhook Ale Brewery, Inc. and Portland-based Widmer Brothers Brewing Company announced that they will merge to form Craft Brewers Alliance, Inc. The new company will maintain the brands of both companies. The Company owns a 33.1% equity interest in Seattle-based Redhook Ale Brewery, Inc. Through this alliance, Redhook products are distributed exclusively by ABI wholesalers in 49 states. The Company owns a 39.6% interest in Portland-based Widmer Brothers Brewing Company. Widmer products are distributed exclusively by ABI wholesalers in 49 states. Widmer has ownership interests in Hawaii-based Kona Brewing Company and Illinois-based Goose Island Brewing Company and their products Kona and Goose Island, respectively, are distributed exclusively by ABI wholesalers in 17 and 14 states, respectively. The Company will have a 36.4% interest in Craft Brewers Alliance, Inc.

Joint Venture Agreements

       Kirin

      The Company brews, markets and sells Kirin-Ichiban and Kirin Light through a license agreement with Kirin Brewing Company, Ltd. of Japan for sale in the United States.

      Kirin-Ichiban is sold in 50 states and Kirin Light in 41 states.

      Kirin-Ichiban is sold in both draught and packaged form. Kirin Light is sold only in packaged form.

Energy Drinks

      The Company has energy drinks, “180”, “180 Orange”, “180 Blue”, “180 Red” (introduced in 2007), “180 Blue Low Calorie” (introduced in 2007) and “180 Orange Low Calorie” (introduced in 2007) in the energy drink category. 180, 180 Orange and 180 Blue are sold on a nationwide basis, 180 Red is sold in 49 states, and 180 Blue Low Calorie and 180 Orange Low Calorie in 40 states. All 180 brands are available in packaged form only with the exception of 180 which is in test in draught form.

      The Company distributes Hansen energy drinks, including Monster Energy, Lost Energy and Rumba (energy juice). In 2007, the Company signed an agreement to market and sell Monster Energy energy drinks to on-premise retailers.

Other

      The Company’s subsidiary, Long Tail Libations Inc., currently has a liqueur product, Jekyll & Hyde, available in packaged form in 81 test markets in 17 states.

      The Company distributes Ku Soju (a Korean liquor manufactured by Ku Soju, Inc.) in packaged form in 39 test markets in 2 states.

      The Company began distributing Blue Coat Gin (owned by Philadelphia Distilling, LLC) in packaged form in 2 test markets in 2007.

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      The Company began distributing Vermont Spirits Vodka (owned by Duncan Spirits, Inc.) in packaged form in 9 test markets in 2007.

      The Company began distributing Margaritaville Tequilla (owned by Margaritaville Spirits) in packaged form in 11 test markets in 3 states in 2007.

      The Company distributes Icelandic Glacial Spring Water (owned by Icelandic Water Holdings) in packaged form in 20 states.

      The Company began marketing and distributing Borba Skin Balance Waters (owned by Borba) in packaged form in 4 states in 2007.

Imports

      The Company, through an import alliance with Royal Grolsch N.V., imports certain of the Grolsch traditional European brands into the U.S. Grolsch Lager is sold in 49 states, Grolsch Amber in 45 states, Grolsch Light in 44 states and Grolsch Blonde in 43 states. Grolsch Lager is sold in both draught and packaged form. Grolsch Amber, Grolsch Light and Grolsch Blonde are sold only in packaged form.

      The Company imports Harbin Lager (manufactured by the Company in China) and Tiger Lager (flagship brand of Asia Pacific Breweries) into the U.S. Harbin Lager is sold in 48 states only in packaged form. Tiger Lager is sold in 49 states only in packaged form.

      In early 2007, the Company became the U.S. importer of Czechvar Premium Czech Lager brewed by Budejovicky Budvar (BBNP) in Ceske Budejovice, Czech Republic. Czechvar is sold in 40 states in draught and packaged form.

      In 2007, the Company became the exclusive U.S. importer of a number of the premium European brands of InBev nv/sa (a Belgium brewery company), including Stella Artois, Beck’s, Bass Pale Ale, Hoegaarden, Leffe and other select InBev brands. Stella Artois, Beck’s and Bass Pale Ale are available nationwide in draught and packaged form. Hoegaarden is available in 49 states in draught and packaged form. Leffe Blonde is available in 40 states in draught and packaged form and Leffe Brown is available on draught in 32 states.

U.S. Beer Operations

      ABI has developed a system of twelve breweries, strategically located across the country, to economically serve its distribution system. (See Item 2 of Part I—Properties.) Ongoing modernization programs at the Company’s breweries are part of ABI’s overall strategic initiatives.

      During 2007, other than the import brands, approximately 94% of the beer sold by ABI, measured in barrels, reached retail channels through more than 600 independent wholesalers. The Company has a formal, written distribution agreement (the Equity Agreement) with each of these wholesalers. Each Equity Agreement generally specifies the territory in which the wholesaler is permitted to sell the Company’s products, the brands that the wholesaler is permitted to sell, performance standards applicable to the wholesaler, procedures to be followed by the wholesaler in connection with the sale of the distribution rights, and circumstances upon which the distribution rights may be terminated. By wholesaler use of controlled environment warehouses and stringent inventory monitoring policies, the quality and freshness of the product are protected, thus providing ABI a significant competitive advantage. ABI utilizes its regional vice-presidents, sales directors, key account and regional sales managers, as well as certain other sales personnel, to provide strategic sales planning and merchandising assistance to its wholesalers. In addition, ABI provides national and local media advertising, point-of-sale advertising, and sales promotion programs to promote its brands, and complements national brand strategies with geographic marketing teams focused on delivering relevant programming addressing local interests and opportunities. The remainder of ABI’s U.S. beer sales in 2007 were made through 13 branches that perform similar sales, merchandising, and delivery services as the independent wholesalers in their respective areas; these branches are owned and operated by the Company or direct or indirect subsidiaries of the Company. ABI’s peak selling periods are the second and third quarters.

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      The Company’s import brands are distributed through a combination of the Company’s wholesalers as well as non-equity wholesalers under new or preexisting arrangements in place at the time the Company began importing such brand.

      Another wholly-owned subsidiary, Wholesaler Equity Development Corporation, shares equity positions with qualified partners in independent beer wholesalerships and is currently invested in 5 wholesalerships.

      There are more than 100 companies engaged in the highly competitive brewing industry in the United States. ABI’s beers are distributed and sold in competition with other nationally distributed beers, with locally and regionally distributed beers, and with other imported beers. Although the methods of competition in the industry vary widely, in part due to differences in applicable state laws, the principal methods of competition are product quality, taste and freshness, packaging, price, advertising (including television, radio, sponsorships, billboards, stadium signs, and print media), point-of-sale materials, and service to retail customers. ABI’s beers compete in different price categories. Although all brands compete against the total market, the Company’s Budweiser family of beers along with Michelob Golden Draft and Michelob Golden Draft Light compete primarily with premium priced beers. The Company’s Busch and Natural family of beers compete with the value priced beers. The Company’s malt liquor products compete against other brands in the malt liquor segment. Michelob, Michelob Light, Michelob Amber Bock, Michelob Honey Lager, Michelob ULTRA, Michelob ULTRA Amber, Michelob Marzen, Michelob Pale Ale, Kirin Light, Kirin-Ichiban, Tequiza, ZiegenBock Amber, the BACARDI Silver products, American Red, Bare Knuckle Stout, Bud Extra, Land Shark Lager, Redbridge, Stone Mill Pale Ale, and the Tilt, Rolling Rock, Wild Blue, Redhook and Widmer products as well as the Company’s beer import products compete primarily in the above-premium-priced beer segment of the malt beverage market. O’Doul’s and O’Doul’s Amber (premium priced) and Busch NA (value priced) compete in the non-alcohol malt beverage category. Since 1957, ABI has led the United States brewing industry in total sales volume. In 2007, its sales exceeded those of its nearest competitor by more than 60 million barrels. ABI’s U.S. market share for 2007 was approximately 48.5%. Major competitors in the United States brewing industry during 2007 included SABMiller, Molson Coors Brewing Company, Grupo Modelo, S.A.B. de C.V., and Heineken. In addition to competing with the other brewers’ brands, the Company’s beer brands must also compete in the marketplace with other types of alcohol beverage choices available to consumers.

International Beer

      International beer volume was 24.0 million barrels in 2007, compared with 22.7 million barrels in 2006. Anheuser-Busch International, Inc. (“ABII”), a wholly-owned subsidiary of the Company, oversees the marketing and sale of Budweiser and other brands outside the U.S., operates breweries in the United Kingdom (U.K.) and China, negotiates and administers license and contract brewing agreements on behalf of ABI with various foreign brewers, and negotiates and manages equity investments in foreign brewing partners.

      Through Anheuser-Busch Europe Limited (“ABEL”), an indirect, wholly-owned subsidiary of the Company, certain ABI beer brands are marketed, distributed, and sold in more than thirty countries. In the U.K., ABEL sells Budweiser, Bud Ice, Michelob, and Michelob ULTRA brands to selected on-premise accounts, brewers, wholesalers, and directly to off-premise accounts. Budweiser, Bud Ice, and Michelob ULTRA are brewed and packaged at the Stag Brewery near London, England which is owned by ABEL. Harbin 1900 and Estrella Damm are imported into the U.K. by ABEL.

      In China, the Company has a 97% equity interest in the Budweiser Wuhan International Brewing Company Limited (BWIB), a joint venture that owns and operates a brewery in Wuhan.

      The Company also owns 100% of Harbin Brewery Group Limited. Harbin Brewery Group has thirteen breweries in northeast China. Harbin Brewery Group owns 100% of the entities operating ten of the breweries and a majority interest in the remaining three breweries.

      The Company also operates two sales companies in China, the Budweiser (China) Sales Company, Ltd., and the Harbin Beer Sales Company, Ltd., both indirect wholly-owned subsidiaries (“The China Sales Companies”). BWIB, Harbin Brewing Group and the China Sales Companies are responsible for the production, marketing and distribution of the Company’s products in China. They currently sell Budweiser, Bud Ice,

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Bud Ultra, Bud Genuine Draft, Harbin Ice, Harbin 1900 and various other Harbin brands. During 2007 the Budweiser (China) Sales Company, Ltd., began importing Grupo Modelo’s Corona brand.

      During 2007 Anheuser-Busch International, Inc. announced plans to build a new brewery in Foshan in the Guangdong province with a scheduled completion date in late 2008.

      In Canada, Budweiser, Bud Light, Busch and Busch Light are brewed and sold through a license agreement with Labatt Brewing Co. In Japan, Budweiser is brewed and sold through a license agreement with Kirin Brewery Company, Limited. A licensing agreement allows Guinness Ireland Limited to brew and sell Budweiser in the Republic of Ireland and Northern Ireland and Bud Light in the Republic of Ireland. Budweiser is also brewed under license and sold by brewers in Italy (Heineken Italia SpA), Spain (Sociedad Anonima Damm), Korea (Oriental Brewery Co., Ltd.), Russia (Heineken) and Panama (Heineken). The Company owns a 7.9% stake in a subsidiary in Argentina of Compañía Cervecerías Unidas S.A. (“CCU”), the leading Chilean brewer, that brews and distributes Budweiser under license in Argentina and distributes Budweiser in Chile and Uruguay.

      In Mexico, Budweiser, Bud Light, O’Doul’s and the 180 energy drink are imported and distributed by a wholly-owned subsidiary of Grupo Modelo (Cervezas Internacionales).

      The Company also sells in over 60 other countries by exporting various brands including Budweiser and Bud Light from Company breweries in the U.S., U.K. and China and from its license partners’ breweries in Argentina, Italy and Spain.

      The Company has a strategic investment agreement with Tsingtao Brewery Company Limited, the second largest brewer in China, and producer of the Tsingtao brand. The Company has a 27% economic stake and a 20% voting stake in Tsingtao.

      In 2007 the Anheuser-Busch International, Inc. and Crown Beers agreed to a 50/50 joint venture to brew, market and distribute Budweiser and other brands in India. The joint venture operates under the name Crown Beers India Ltd., and includes a new 500,000 hectoliter brewery in the Southern city of Hyderabad.

      The Company owns a 35.12% direct interest in Grupo Modelo, S.A.B. de C.V., Mexico’s largest brewer, and a 23.25% direct interest in Diblo S.A. de C.V., Grupo Modelo’s operating subsidiary, providing the Company with, directly and indirectly, a 50.2% interest in Diblo. However, the Company does not have voting or other control of either Grupo Modelo or Diblo. Additional information is contained in Note 2, “International Equity Investments,” on page 50 of the 2007 Annual Report to Shareholders, which note is hereby incorporated by reference.

      Competition for international beer operations differs significantly depending upon the specific country involved. For 2007 no single foreign country accounted for more than 3.6% of consolidated revenues or 2.6% of consolidated income before income taxes. The Company’s primary foreign markets for beer sales are China, the United Kingdom, Canada, Mexico and Ireland. In each international market, the Company competes against a mix of national, regional, local, and imported beer brands. In China, competition is primarily from numerous national and regional brands. There is no dominant competitor in China. In the United Kingdom, the top four competitors—Scottish & Newcastle, Molson Coors Brewers, InBev UK, and Carlsberg UK—have combined market share of nearly 76%, with Scottish & Newcastle having a share of approximately 25%. The Company’s share is 3%. In Ireland, the market leader is the Company’s license brewing partner, Guinness Ireland, with a market share of 58% including a share of 13% related to the Company’s products. In Canada, the top two competitors, of similar size, are the Molson Coors Brewing Company and the Company’s license brewing partner, Labatt Brewing. Their combined market share is more than 82%, including a share of 16% related to the Company’s products.

      Net income for the International Beer Segment also includes the Company’s ownership percentage of the net income of Grupo Modelo. Modelo’s principal competitor in Mexico is FEMSA S.A.B. de C.V., with the two companies having respective market shares of 56% and 44%. Although Anheuser-Busch does not significantly compete in the Mexican beer market, a significant change in Modelo’s business could have a material effect on the Company’s reported net income and earnings per share.

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Packaging

      The Company’s packaging operations are handled through the following wholly-owned subsidiaries of the Company: Metal Container Corporation (MCC), which manufactures beverage cans at eight plants and beverage can lids at three plants for sale to ABI and U.S. soft drink customers (See Item 2 of Part 1—Properties); Anheuser-Busch Recycling Corporation, which buys and sells used aluminum beverage containers from its corporate office in Sunset Hills, Missouri and recycles aluminum and plastic containers at its plant in Hayward, California; Precision Printing and Packaging, Inc., which manufactures pressure sensitive, metalized, plastic and paper labels at its plant in Clarksville, Tennessee; and Eagle Packaging, Inc., which manufactures crown and closure liner materials for ABI at its plant in Bridgeton, Missouri.

      Through a wholly-owned limited partnership, Longhorn Glass Manufacturing, L.P., the Company owns and operates a glass manufacturing plant in Jacinto City, Texas, which manufactures glass bottles for the Company’s nearby Houston brewery.

      The packaging industry is highly competitive. MCC’s share of the U.S. aluminum beverage can market for 2007 was approximately 25%. MCC’s competitors include Ball Corporation, Rexam Corporation, and Crown Holdings. In addition, the can industry faces competition from other beverage containers, such as glass and plastic bottles.

Family Entertainment

      The Company is active in the family entertainment industry, primarily through its wholly-owned subsidiary, Busch Entertainment Corporation (“BEC”), which currently owns, directly and through subsidiaries, nine theme parks. A tenth park in Orlando (Aquatica) is scheduled to open in March 2008.

      BEC operates Busch Gardens theme parks in Tampa, Florida and Williamsburg, Virginia, and SeaWorld theme parks in Orlando, Florida, San Antonio, Texas, and San Diego, California. BEC operates water park attractions in Tampa, Florida (Adventure Island) and Williamsburg, Virginia (Water Country, U.S.A.), and Langhorne, Pennsylvania (Sesame Place), as well as Discovery Cove in Orlando, Florida, a reservations-only attraction offering interaction with marine animals. Due to the seasonality of the theme park business, BEC experiences higher revenues and earnings in the second and third quarters than in the first and fourth quarters.

      The Company is the second largest theme park operator in the United States. It faces competition in the family entertainment industry from other theme and amusement parks, public zoos, public parks, and other family entertainment events and attractions. Major competitors in the theme park industry during 2007 include Walt Disney Co., Six Flags Parks, Cedar Fair Parks, and Universal Studios Theme Parks. No reliable national market share information is available for the theme park industry.

Other

      Through its wholly-owned subsidiary, Busch Properties, Inc. (“BPI”), the Company is engaged in the business of real estate development. BPI also owns and operates The Kingsmill Resort and Conference Center in Williamsburg, Virginia.

      Through its wholly-owned subsidiary, Manufacturers Railway Co., the Company owns and operates a transportation service business.

Sources and Availability of Raw Materials

      Busch Agricultural Resources, L.L.C. (“BARL”), owned and operated by ABI, operates rice milling facilities in Jonesboro, Arkansas and Woodland, California; eight grain elevators in the western and midwestern United States; barley seed processing plants in Fairfield, Montana, Idaho Falls, Idaho, and Powell, Wyoming; and a barley research facility in Ft. Collins, Colorado. BARL also owns and operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho. Through other entities owned by BARL, ABI operates land application farms in Jacksonville, Florida and Fort Collins, Colorado; hop farms in Bonners Ferry, Idaho and Huell, Germany; and a barley purchasing office in Winnipeg, Canada.

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      The products manufactured by the Company require a large volume of various agricultural products, including hops, barley malt, rice, and corn grits for beer, and rice and barley for the rice milling and malting operations of BARL. The Company fulfills its commodities requirements through purchases from various sources, including purchases from its subsidiaries, through contractual arrangements and on the open market. The Company believes that adequate supplies of the aforementioned agricultural products are available at the present time, but cannot predict future availability or market prices of such products and materials. The above referenced commodities have experienced and will continue to experience price fluctuations. The price and supply of raw materials will be determined by, among other factors, the level of crop production both in the U.S. and around the world, weather conditions, export demand, and government regulations and legislation affecting agriculture and trade.

      The Company uses water in brewing its beer. The Company generally satisfies its requirements for water from municipal water systems and privately owned wells.

      The Company also requires aluminum cansheet for the manufacture of cans and lids. The cansheet market experiences price volatility due to the supply and demand balance for both aluminum ingot and sheet fabrication. The Company manages its aluminum supply and cost using various methods including long-term purchase contracts and hedging techniques. The Company believes that an adequate supply of aluminum is available at the present time, but cannot predict future availability or market prices.

Energy Matters

      The Company uses natural gas, fuel oil, and coal as its primary fuel materials. The Company believes that adequate supplies of fuel and electricity are available at the present time, but cannot predict future availability or market prices. Where economically feasible, the Company has alternate fuel capability which helps ensure continued operation of essential processes.

      The energy commodity markets have experienced and, the Company expects, will continue to experience significant price volatility. The Company manages its energy costs using various methods including supply contracts, hedging techniques, and fuel switching.

Brand Names and Trademarks

      Some of the Company’s major brand names used in its principal business segments are mentioned in the discussion above. The Company regards consumer recognition of and loyalty to all of its brand names and trademarks as extremely important to the long-term success of its principal business segments. The Company owns rights to its principal brand names and trademarks in perpetuity.

Research and Development

      The Company is involved in a number of research activities relating to the development of new products or services or the improvement of existing products or services. The dollar amounts expended by the Company during the past three years on such research activities and the number of employees engaged full time therein during such period, however, are not considered to be material in relation to the total business of the Company.

Environmental Protection

      All of the Company’s facilities are subject to federal, state, and local environmental protection laws and regulations, and the Company is operating within existing laws and regulations or is taking action aimed at assuring compliance therewith. Various proactive strategies are utilized to help assure this compliance. Compliance with such laws and regulations is not expected to materially affect the Company’s capital expenditures, earnings, or competitive position. The Company has devoted considerable effort to research, development, and engineering of innovative and cost effective systems to minimize effects on the environment from its operating facilities.

      These projects, coupled with the Company’s Environmental Management System and an overall Company emphasis on pollution prevention and resource conservation initiatives, are improving efficiencies and creating

9


saleable by-products from residuals. They have generally facilitated lower cost operating systems while reducing the impact to air, water, and land.

Environmental Packaging Laws and Regulations

      The states of California, Connecticut, Delaware, Hawaii, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont have adopted certain restrictive packaging laws and regulations for beverages that require deposits on packages. ABI continues to do business in these states. While such laws have not had a significant effect on ABI’s market share, they have resulted in significantly higher beer prices over and above the cost of the deposit in those states that have adopted container deposit laws as well as had an adverse impact on beer industry growth in those states. The Company considers deposit laws to be inflationary, costly, and inefficient for recycling packaging materials. Congress and a number of additional states continue to consider similar legislation, the adoption of which would impose higher operating costs on the Company while depressing sales volume. Higher operating costs result from the need to maintain separate inventories of packaging materials for deposit states and non-deposit states and from ensuing loss of packaging flexibility.

Number of Employees

      As of December 31, 2007, the Company had approximately 30,849 full-time employees worldwide. Within the United States approximately 8,072 employees were represented by the International Brotherhood of Teamsters. The labor agreement between ABI and the Teamsters, which represents the majority of the domestic brewery workers, expires February 28, 2009. Approximately 7,788 international employees of the Company are members of other worker organizations (the vast majority of which are not subject to collective bargaining agreements).

      The Company considers its employee relations to be good.

Available Information

      The Company maintains a website on the World Wide Web at www.anheuser-busch.com. The Company makes available, free of charge, on its website its annual reports on Forms 10-K, quarterly reports on Forms 10-Q, current reports on Forms 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. The Company’s reports filed with, or furnished to, the SEC are also available on the SEC’s website at www.sec.gov.

Item 1A.   Risk Factors

      Anheuser-Busch makes forward-looking statements in its filings with the Securities and Exchange Commission and in other oral or written communications. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from those indicated (both favorably and unfavorably). These risks and uncertainties include (but are not limited to) the risks described below. Anheuser-Busch undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Increased competitive pressures may reduce revenues or increase costs.

      Anheuser-Busch faces competition in each business from alternative providers of the products we offer. For example:

  • The U.S. beer business competes with other domestic and international brewers as well as with producers of other types of alcohol beverages;
     
  • The international beer business competes with a mix of national, regional, local and international brewers, depending on the country;

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  • The packaging business competes with other producers of beverage cans and beverage lids as well as producers of other types of beverage containers;
     
  • The family entertainment business competes with the operators of other theme and amusement parks, public zoos, public parks and other family events and attractions.

      Competition may divert consumers and customers from the Anheuser-Busch products. In order to respond to or anticipate competition, Anheuser-Busch may need to change the prices of products or incur additional costs to introduce new packages or products. Innovation faces inherent risks, and the new products we introduce may not be successful.

Changes in consumer tastes and preferences could reduce demand for the Anheuser-Busch products.

      The success of Anheuser-Busch depends on satisfying consumer tastes and preferences with our beverage products, our container products and our theme park offerings. Consumer preferences can change in unpredictable ways, and consumers may begin to prefer the products of competitors or may generally reduce their demand for products in the category. Failure by Anheuser-Busch to anticipate changes in consumer preferences might affect financial results and loss in market share. In order to respond to or anticipate changes in consumer preferences, Anheuser-Busch may need to increase and enhance the marketing of existing products, change the pricing of existing products or introduce new products and services. Each response might affect financial results.

Increases in raw material and commodity prices could increase operating costs.

      The Anheuser-Busch malt beverage products require various agricultural products. Anheuser-Busch also uses aluminum cansheet to manufacture beverage cans and lids, glass bottles as containers for malt beverages and natural gas, fuel oil and coal as primary fuel materials. Raw materials and commodities are subject to price volatility caused by market fluctuations, including the quality and availability of supply, weather, currency fluctuations, trade agreements among producing and consuming nations, consumer demand and changes in governmental programs. To some extent, derivative financial instruments and supply agreements can protect against increases in materials and commodities costs, but they do not provide complete protection over the longer term. Anheuser-Busch might be able to raise prices to offset increases in costs, but price increases can reduce sales volumes. If Anheuser-Busch is not able to increase prices to offset cost increases or if price increases reduce sales volumes, financial results would be adversely affected.

An inability to reduce costs could affect profitability.

      Anheuser-Busch’s future success and earnings growth depend in part on its ability to be efficient in producing, advertising and selling of our products and services. Anheuser-Busch has a number of initiatives to improve operational efficiency. Failure to generate significant cost savings and margin improvement through these initiatives could adversely affect profitability and the ability of Anheuser-Busch to achieve its financial goals.

Anheuser-Busch is subject to risks associated with international operations.

      Anheuser-Busch has significant international operations and the profitable expansion of the international business is a long term goal. Anheuser-Busch has equity investments in brewers in China and Mexico, owns breweries in China and the United Kingdom and sells malt beverages globally. Although Anheuser-Busch does not significantly compete in the Mexican beer market, a significant change in Modelo’s business could have a material effect on the Company’s reported net income and earnings per share.

      The international operations are subject to the inherent risks of international business, such as:

  • Political and economic changes;
     
  • Changes in the relations between the United States and foreign countries;
     
  • Actions of foreign or United States governmental authority affecting trade and foreign investment;
     

11


  • Regulations on repatriation of funds;
     
  • Foreign currency exchange restrictions;
     
  • Interpretation and application of local laws and regulations;
     
  • Enforceability of intellectual property and contract rights;
     
  • Local labor conditions and regulations.

An increase in beer excise taxes or other taxes could adversely affect financial results.

      Anheuser-Busch is affected by federal, foreign, state and local income and other taxes, particularly beer excise taxes which are levied both by the federal, foreign and state governments. Proposals are made from time to time to increase beer excise taxes in a variety of states. In addition, Anheuser-Busch is subject to periodic audits and examinations by the Internal Revenue Service and other foreign, state and local taxing authorities. An increase in taxes or an adverse determination by a taxing authority could adversely affect financial results.

The consolidation of retailers may adversely affect Anheuser-Busch.

      The retail industry in the United States and in other countries in which Anheuser-Busch operates continues to consolidate. Large retailers may seek to improve profitability and sales by reducing the prices or increasing the promotional activities for Anheuser-Busch products. Although retailers purchase products not from Anheuser-Busch, but from its wholesalers (including in a limited number of markets, the Anheuser-Busch wholesaler operations), the efforts of retailers could result in reduced profitability for the beer industry as a whole and indirectly adversely affect our financial results.

Governmental regulation could affect our operations or increase costs.

      All of the Anheuser-Busch businesses are subject to governmental regulation. The Anheuser-Busch U.S. beer business and its wholesalers are especially subject to extensive regulation at the federal, state and local levels. Permits, licenses and approvals necessary to the U.S. beer business are required from the Alcohol and Tobacco Tax and Trade Bureau of the United States Treasury Department, state alcohol beverage regulatory agencies in the states in which we sell or produce products and local authorities in some jurisdictions in which we sell products. Compliance with these laws and regulations can be costly.

      Anheuser-Busch may be subject to claims that we have not complied with existing laws and regulations, which could result in fines and penalties. Anheuser-Busch is routinely subject to new or modified laws and regulations with which we must comply in order to avoid fines and other penalties and which may affect operations. From time to time, new laws and regulations are proposed that would affect operations, affect the distribution of the Anheuser-Busch products by its wholesalers, or increase expenses.

Anheuser-Busch is subject to litigation.

      Recently, the advertising practices of Anheuser-Busch and many other brewers and distilled spirits manufacturers have been subject to litigation which has now ended. Anheuser-Busch is now, and may in the future be, a party to other legal proceedings and claims, and significant damages may be asserted against us. Given the inherent uncertainty of litigation, it is possible that Anheuser-Busch might incur liabilities as a consequence of the proceedings and claims brought against it.

Anheuser-Busch may make acquisitions, investments and joint venture and similar arrangements, which are risky.

      Anheuser-Busch has in the past and may in the future desire to make acquisitions of, investments in, and joint venture and similar arrangements with other companies to increase shareholder value. These transactions cannot occur unless we can identify suitable candidates and agree on terms with them. After completion of a transaction, we may be required to integrate acquired businesses or operations into our existing operations. An

12


inability to successfully complete transactions or successfully integrate acquired operations may affect our profitability.

The loss of an important supplier could adversely affect operations and financial results.

      For certain packaging supplies, raw materials and commodities, we rely on a small number of important suppliers. If these suppliers became unable to continue to meet our requirements, and we could not develop alternative sources of supply, our operations and financial results could be adversely affected.

Anheuser-Busch relies on its wholesalers.

      In the United States, Anheuser-Busch sells substantially all of its beer to independent wholesalers for distribution to retailers and ultimately consumers. In 2007, Anheuser-Busch was appointed as the United States importer for a number of the premium European brands of InBev. Many of the wholesalers of these brands have not traditionally been wholesalers for Anheuser-Busch. As independent companies, wholesalers make their own business decisions that may not always align themselves with our interests. If the Anheuser-Busch wholesalers do not effectively distribute our products, our financial results could be adversely affected.

If Anheuser-Busch is unable to maintain the image and reputation of its products and services, operations and financial results may suffer.

      Anheuser-Busch’s success depends on our ability to maintain and increase the image and reputation of our existing products and to develop a favorable image and reputation for new products. The image and reputation of our products may be reduced in the future; concerns about product quality, even when unfounded, could tarnish the image and reputation of our products. Restoring the image and reputation of our products may be costly and may not be possible.

The Anheuser-Busch businesses are subject to a number of other miscellaneous risks that may adversely affect financial results.

      Other miscellaneous risks include:

  • Changes in global and domestic economies, including slow growth rate, rise in interest rates, changes in currency exchange rates, rise in cost of commodities, inflation, unemployment and weakening consumer confidence which could reduce demand for the Anheuser-Busch products, affect the businesses of the international brewers in which we have made investments or increase costs, including borrowing costs;
     
  • Natural disasters, such as hurricanes, which may result in shortages of raw materials and commodities and reduction in tourism and attendance at the Anheuser-Busch theme parks;
     
  • Unusual weather conditions which could affect domestic beer consumption, attendance at the Anheuser-Busch theme parks, raw material availability, or natural gas prices;
     
  • Continued threat of terrorist acts and war, which may result in heightened security and higher costs for imports and exports, reduced tourism and attendance at the Anheuser-Busch theme parks and contraction of the United States and worldwide economies;
     
  • Changes in the Anheuser-Busch share price which could affect the share repurchase program.

Item 1B.   Unresolved Staff Comments

      None.

Item 2.   Properties

      ABI has twelve breweries in operation at the present time, located in St. Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield, California; Jacksonville, Florida; Houston, Texas; Columbus, Ohio; Merrimack, New Hampshire; Williamsburg, Virginia; Baldwinsville, New York; Fort Collins, Colorado; and Cartersville, Georgia. Title to the Baldwinsville, New York brewery is held by the Onondaga County Industrial

13


Development Agency (“OCIDA”) pursuant to a Sale and Agency Agreement with ABI, which enabled OCIDA to issue tax exempt pollution control and industrial development revenue notes and bonds to finance a portion of the cost to purchase and modify the brewery. The brewery is not pledged or mortgaged to secure any of the notes or bonds, and the Sale and Agency Agreement with OCIDA gives ABI the unconditional right to require at any time that title to the brewery be transferred to ABI. ABI’s breweries operated at approximately 93.7% of capacity in 2007; during portions of the peak selling periods (second and third quarters), the breweries operated at a rate closer to maximum capacity.

      The Company also owns a 97% equity interest in a joint venture that owns and operates a brewery in Wuhan, China and a 50% equity interest in a joint venture that owns and operates a brewery in Hyderabad, India. The Company also owns the Stag Brewery near London, England. With its acquisition of Harbin Brewery Group, the Company now has thirteen breweries in northeast China. There are two breweries located in Harbin and one in each of Hailun, Yongji County (Jilin Province), Hegang, Changchun, Mudanjiang, Jiamusi, Daqing, Jinzhou, Tangshan, Shenyang, and Yanji. During 2007 Anheuser-Busch International, Inc. announced plans to build a new brewery in Foshan in the Guangdong province with a scheduled completion date in late 2008.

      ABI, through wholly-owned entities, operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho; rice mills in Jonesboro, Arkansas and Woodland, California; and, hop farms in Bonners Ferry, Idaho and Huell, Germany. The Company, through wholly-owned subsidiaries, operates can manufacturing plants in Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado, Newburgh, New York, Ft. Atkinson, Wisconsin, Rome, Georgia, and Mira Loma, California; can lid manufacturing plants in Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside, California; a label plant in Clarksville, Tennessee; a crown and closure liner material plant in Bridgeton, Missouri; and an aluminum and plastic recycling plant in Hayward, California. The Company operates a glass manufacturing plant in Jacinto City, Texas.

      BEC operates its principal family entertainment facilities in Tampa, Florida; Williamsburg, Virginia; San Diego, California; Orlando, Florida; and San Antonio, Texas. The Tampa facility is 336 acres, the Williamsburg facility is 323 acres, the San Diego facility is 166 acres, the Orlando facility is 247 acres, and the San Antonio facility is 316 acres.

      Except for the Baldwinsville brewery, the can manufacturing plants in Newburgh, New York, the SeaWorld park in San Diego, California, the brewery in Wuhan, China, and certain of the breweries owned by Harbin Brewery Group, all of the Company’s principal properties are owned in fee. The lease for the land used by the SeaWorld park in San Diego, California expires in 2048. In 1995, the joint venture that operates the brewery in Wuhan was granted the right to use the property for a period of 50 years from the appropriate governmental authorities. The Company considers its buildings, improvements, and equipment to be well maintained and in good condition, irrespective of dates of initial construction, and adequate to meet the operating demands placed upon them. The production capacity of each of the manufacturing facilities is adequate for current needs and, except as described above, substantially all of each facility’s capacity is utilized.

Item 3.   Legal Proceedings

      The Company had been served with complaints in putative class action lawsuits in California, Michigan, Ohio, West Virginia and Wisconsin. These suits had named a large number of other brewers and distillers and sought to blame minors’ intentional violations of state alcohol laws on lawful product advertising, generally asserting theories of consumer fraud, unjust enrichment and public nuisance. These class actions had been instituted by the parents of illegal underage drinkers to obtain the sums that underage people purportedly spent illegally buying alcohol from persons or entities other than the defendants. The California case was dismissed in 2005, and in August 2006 the plaintiffs in that case voluntarily discontinued their appeal, thus ending the suit. The Michigan, Ohio, West Virginia and Wisconsin cases were dismissed in 2006. In July 2007, the U.S. Court of Appeals for the Sixth Circuit effectively affirmed the dismissal of the Michigan and Ohio actions for plaintiffs’ failure to plead an injury to themselves and causation. In November 2007, the plaintiffs voluntarily discontinued all appeals, thus ending all illegal underage drinking litigation pending against the Company.

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      On September 19, 2006, one of the Company’s cansheet suppliers, Novelis Corporation (“Novelis”), instituted a lawsuit seeking relief from continued performance of its obligations under its cansheet supply agreement with the Company. This action is being heard in federal court in the Northern District of Ohio. The Company believes that the assertions of Novelis are without merit, intends to vigorously defend its rights under the cansheet supply agreement and expects to prevail in the litigation.

      The Company is not a party to any other pending or threatened litigation, the outcome of which could be expected to have a material adverse effect upon its financial condition, results of operations or cash flows.

Item 4.   Submission of Matters to a Vote of Security Holders

      There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 2007.

EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

      AUGUST A. BUSCH IV (age 43) is presently President and Chief Executive and a Director of the Company and has served as President and Chief Executive Officer since December 1, 2006 and as a Director since September 2006. He previously served as Vice President and Group Executive of the Company (2000-November 30, 2006). He is also presently Chairman of the Board (since December 2006) and President (since 2002) of the Company’s subsidiary, Anheuser-Busch, Incorporated.

      W. RANDOLPH BAKER (age 61) is presently Vice President and Chief Financial Officer of the Company and has served in such capacity since 1996.

      THOMAS W. SANTEL (age 49) is presently Vice President-Corporate Planning and International Operations of the Company and has served in such capacity since April 2007. He is also presently President and Chief Executive Officer of the Company’s subsidiary, Anheuser-Busch International, Inc. and has served in such capacity since April 2007. He previously served as Vice President-Corporate Development of the Company (1996-2007).

      STEPHEN J. BURROWS (age 55) is presently Executive Vice President-Asian Operations of the Company’s subsidiary, Anheuser-Busch International, Inc. and has served in such capacity since April 2007. He previously served as Vice President-International Operations of the Company (1999-2007) and Chief Executive Officer (1999-2007) and President (1994-2007) of the Company’s subsidiary, Anheuser-Busch International, Inc.

      DOUGLAS J. MUHLEMAN (age 53) is presently Group Vice President-Brewing Operations and Technology of the Company’s subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 2001. He also serves as Chairman of the Company’s subsidiary, Anheuser-Busch Packaging, Inc. (since December 2006) and Chairman, Chief Executive Officer and President of Busch Agricultural Resources, L.L.C., owned and operated by Anheuser-Busch, Incorporated, (since December 2006).

      FRANCINE I. KATZ (age 49) is presently Vice President-Communications and Consumer Affairs of the Company’s subsidiary, Anheuser-Busch Incorporated and has served in such capacity since October 2007. She previously served as the Company’s Vice President-Communications and Consumer Affairs (2004-September 2007), Vice President-Corporate Communications (2002-2004) and Vice President-Consumer Affairs (1999-2002).

      KEITH M. KASEN (age 64) is presently Chairman of the Board and Chief Executive Officer of the Company’s subsidiary, Busch Entertainment Corporation, and has served as Chairman since 2003 and Chief Executive since December 1, 2007. He previously also served as President (2003-November 2007) of Busch Entertainment Corporation.

      JOSEPH P. CASTELLANO (age 54) is presently Vice President and Chief Information Officer of the Company’s subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since March 2007. He previously served as Vice President-Corporate Human Resources of the Company (2004-March 2007) and as Vice President-Retail Marketing (2001-2004) of the Company’s subsidiary, Anheuser-Busch, Incorporated.

15


      MICHAEL J. OWENS (age 53) is presently Vice President-Business Operations of the Company’s subsidiary, Anheuser-Busch, Incorporated and has served in such capacity since October 2007. He previously served as Vice President-Marketing (2006-September 2007), Vice President-Sales and Marketing (2004-2005) and Vice President-Sales (2001-2004) of Anheuser-Busch, Incorporated.

      ANTHONY T. PONTURO (age 55) is presently Vice President-Global Media and Sports Marketing of the Company’s subsidiary, Anheuser-Busch, Incorporated and has served in such capacity since 1998.

      JOHN F. KELLY (age 51) is presently Vice President and Controller of the Company and has served in such capacity since 1996.

      MARLENE V. COULIS (age 46) is presently Vice President-Consumer Strategy and Innovation of the Company’s subsidiary, Anheuser-Busch, Incorporated and has served in such capacity since October 2007. She previously served as Vice President-Brand Management (August 2005-September 2007), Vice President-Research and Customer Satisfaction (March 2005-August 2005), Vice President-Geographic Marketing (April 2004-March 2005) and Director-New Products (2001-2004) of Anheuser-Busch, Incorporated.

      DAVID A. PEACOCK (age 39) is presently Vice President-Marketing of the Company’s subsidiary, Anheuser-Busch, Incorporated and has served in such capacity since October 2007. He previously served as Vice President-Business Operations (December 2006-September 2007), Vice President-Business and Finance Operations (June 2006-November 2006), Vice President-Administration (July 2004-2006) and Director of Operations-President’s Office (2002-2004) of Anheuser-Busch, Incorporated.

      ROBERT C. LACHKY (age 54) is presently Executive Vice President-Global Industry Development and Creative Development of the Company’s subsidiary, Anheuser-Busch, Incorporated and has served in such capacity since October 2007. He previously served as Executive Vice President-Global Industry Development (August 2005-September 2007) and Vice President-Brand Management (2001-July 2005) of ABI.

      MICHAEL S. HARDING (age 56) is presently Chief Executive Officer and President of the Company’s direct subsidiary, Anheuser-Busch Packaging Group, Inc., and Chairman and Chief Executive Officer of the Company’s direct subsidiaries, Anheuser-Busch Recycling Corporation, Metal Container Corporation, Eagle Packaging, Inc., Precision Printing and Packaging, Inc. and Glass Container Corporation (doing business as Longhorn Glass Corporation), and has served in all such capacities since December 2006. He previously served as Vice President-Operations of the Company’s subsidiary, Anheuser-Busch, Incorporated (2001-2006).

      JOHN T. FARRELL (age 61) is presently Vice President-Corporate Human Resources and has served in such capacity since March 2007. He previously served as Vice President-Employee Benefits of the Company (1996-March 2007).

      GARY L. RUTLEDGE (age 53) is presently Vice President-Legal and Government Affairs and has served in that capacity since January 1, 2008. He previously served as Vice President-Corporate Labor Relations of the Company (2001-2007).

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PART  II

      The information required by Items 5 (except as set forth below), 6, 7, 7A, and 8 of this Part II are hereby incorporated by reference from pages 26 through 65 of the Company’s 2007 Annual Report to Shareholders.

Item 5.   Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

      Following are the Company’s common stock purchases during the fourth quarter of 2007 (shares in millions). All shares are repurchased under Board of Directors authorization. The Board’s most recent authorization, to purchase 100 million shares, occurred in December 2006. There is no prescribed termination date for this program. The figures shown include shares delivered to the Company to exercise stock options.

    Shares

  Avg. Price
per Share

    Shares Remaining Authorized Under Disclosed Repurchase Programs at September 30, 2007              76.3          
        
         
    Less Shares Repurchased:                
    October              2.7        $ 51.45  
    November              7.5        $ 50.46  
    December              4.8        $ 53.00  
        
         
        Total Shares Repurchased              15.0          
        
         
    Shares Remaining Authorized Under Disclosed Repurchase Programs at December 31, 2007              61.3          
        
         

Item 6.   Selected Financial Data

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

Item 8.   Financial Statements and Supplementary Data

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None.

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Item 9A.   Controls and Procedures.

      It is the responsibility of the chief executive officer and chief financial officer to ensure the Company maintains disclosure controls and procedures designed to provide reasonable assurance that material information, both financial and non-financial, and other information required under the securities laws to be disclosed is identified and communicated to senior management on a timely basis. The Company’s disclosure controls and procedures include mandatory communication of material subsidiary events, automated accounting processing and reporting, management review of monthly and quarterly results, periodic subsidiary business reviews, an established system of internal controls and rotating internal control reviews by the Company’s internal auditors.

      The chief executive officer and chief financial officer evaluated the Company’s disclosure controls and procedures as of the end of the year ended December 31, 2007 and have concluded that they are effective as of December 31, 2007 in providing reasonable assurance that such information is identified and communicated on a timely basis. Additionally, there were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

      Management’s Report on Internal Control Over Financial Reporting appears on page 41 of the 2007 Annual Report to Shareholders, which is incorporated by reference. The Report of the Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting appears on page 42 of the 2007 Annual Report to Shareholders, which is incorporated by reference.

Item 9B.   Other Information.

      None.

PART  III

Item 10.   Directors, Executive Officers and Corporate Governance

      The information required by this Item is hereby incorporated by reference from the sections entitled “Information Concerning the Election of Directors,” “Additional Information Concerning the Board of Directors of the Company,” “Audit Committee,” “Certain Business Relationships and Transactions,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Code of Business Conduct and Ethics” of the Company’s Proxy Statement for the Annual Meeting of Stockholders on April 23, 2008 (the “2008 Proxy”) and on pages 15 through 16 of this Form 10-K.

Item 11.   Executive Compensation

      The information required by this Item is hereby incorporated by reference from the sections entitled “Director Compensation,” “Executive Compensation” (entire section including all sections thereunder beginning with “Compensation Discussion and Analysis Report” through “Equity Compensation Plans”), “Compensation Committee Interlocks and Insider Participation,” and “Report of the Compensation Committee” of the 2008 Proxy.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

      The information required by this Item hereby is incorporated by reference from the sections entitled “Stock Ownership by Directors and Executive Officers” and “Equity Compensation Plans” of the 2008 Proxy.

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Item 13.   Certain Relationships and Related Transactions, and Director Independence

      The information required by this Item is hereby incorporated by reference from the sections entitled “Additional Information Concerning the Board of Directors of the Company,” “Committees of the Board” and “Certain Business Relationships and Transactions” of the 2008 Proxy.

Item 14.   Principal Accountant Fees and Services

      The information required by this Item is hereby incorporated by reference from the section entitled “Fees Paid to PricewaterhouseCoopers” of the 2008 Proxy.

PART  IV

Item 15.   Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

       1.         Financial Statements:    Page

                 Report of Independent Registered Public Accounting Firm      42*  
 
                 Consolidated Balance Sheet at December 31, 2007 and 2006      43*  
 
                 Consolidated Statement of Income for the three years ended December 31, 2007      44*  
 
                 Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 2007      45*  
 
                 Consolidated Statement of Cash Flows for the three years ended December 31, 2007      46*  
 
                 Notes to Consolidated Financial Statements and Supplementary Information    47-63*
 
                 *2007 Annual Report to Shareholders    
                
       2.         Financial Statement Schedule:    
 
                 Report of Independent Registered Public Accounting Firm on Financial Statement Schedule for the three years ended
   December 31, 2007
   F-1
 
                 Schedule II—Valuation and Qualifying Accounts and Reserves    F-2
                
       3.         Exhibits:    
 
                        Exhibit 3.1      — Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 2004).
 
                        Exhibit 3.2      — Certificate of Amendment of Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 10-Q for the quarterly period ended March 31, 2006).
 
                        Exhibit 3.3      — By-Laws of the Company (As amended and restated on February 27, 2008).
 
                        Exhibit 4.1      — Indenture dated as of August 1, 1995 between the Company and The Chase Manhattan Bank, as Trustee (Incorporated by reference to Exhibit 4.1 in the Form S-3 of the Company, Registration Statement No. 33-60885).

19


                        Exhibit 4.2      — Indenture dated as of July 1, 2001 between the Company and The Chase Manhattan Bank, as Trustee (Incorporated by reference to Exhibit 4.4 to the Form 10-K for the fiscal year ended December 31, 2002).
 
Other indentures are not required to be filed, but the Company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request.
 
                        Exhibit 4.3      — Credit Agreement dated as of September 30, 2005 among the Company and JP Morgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to Exhibit 4 to Form 10-Q for the quarter ended September 30, 2005).
 
                        Exhibit 10.1      — Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (Amended and Restated as of March 1, 2000) (Incorporated by reference to Exhibit 10.1 to Form 10-K for the fiscal year ended December 31, 2004).*
 
                        Exhibit 10.2      — Anheuser-Busch Companies, Inc. Non-Employee Director Elective Stock Acquisition Plan (Amended and Restated as of March 1, 2000) (Incorporated by reference to Exhibit 10.2 to the Form 10-K for the fiscal year ended December 31, 2004).*
 
                        Exhibit 10.3      — Anheuser-Busch Companies, Inc. Stock Plan for Non-Employee Directors (Restated to reflect a 2-for-1 stock split effective September 18, 2000 and amendments effective February 28, 2001 and October 23, 2002) (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 23, 2003).*
 
                        Exhibit 10.4      — Anheuser-Busch Companies, Inc. 1989 Incentive Stock Plan (As amended December 20, 1989, December 19, 1990, December 15, 1993, December 20, 1995, and November 26, 1997) (Incorporated by reference to Exhibit 10.4 to Form 10-K for the fiscal year ended December 31, 2002).*
 
                        Exhibit 10.5      — Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan as amended on September 27, 2006 (Incorporated by reference to Exhibit 10.5 to Form 10-Q for the quarterly period ended September 30, 2006).*
 
                        Exhibit 10.6      — Anheuser-Busch Companies, Inc. 2007 Equity and Incentive Plan (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 25, 2007.)*
 
                        Exhibit 10.7      — Anheuser-Busch Companies, Inc. Excess Benefit Plan (Amended and Restated as of March 1, 2000) (Incorporated by reference to Exhibit 10.6 to the Form 10-K for the fiscal year ended December 31, 2004).*
 
                        Exhibit 10.8      — Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan (Amended and Restated as of March 1, 2003) (Incorporated by reference to Exhibit 10.8 to Form 10-K for the fiscal year ended December 31, 2002).*
 
                        Exhibit 10.9      — First Amendment of Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan (Amended and Restated as of March 1, 2003).
 
                        Exhibit 10.10      — Anheuser-Busch Executive Deferred Compensation Plan (Amended and Restated as of January 1, 2002) (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 2002).*
 
                        Exhibit 10.11      — First Amendment to the Anheuser-Busch Executive Deferred Compensation Plan (Amended and Restated as of January 1, 2002) (Incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended December 31, 2005).*

20


                        Exhibit 10.12      — Anheuser-Busch 401(k) Restoration Plan (Amended and Restated as of March 1, 2000) (Incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 2004).*
 
                        Exhibit 10.13      — First Amendment to the Anheuser-Busch 401(k) Restoration Plan (Amended and Restated as of March 1, 2000) (Incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 2005).*
 
                        Exhibit 10.14      — Form of Indemnification Agreement with Directors and Executive Officers (Incorporated by reference to Exhibit 10.12 to the Form 10-K for the fiscal year ended December 31, 2004).*
 
                        Exhibit 10.15      — Anheuser-Busch Officer Bonus Plan as amended on April 26, 2000 and April 27, 2005 (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 27, 2005).*
 
                        Exhibit 10.16      — Investment Agreement By and Among Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc. and Anheuser-Busch International Holdings, Inc. and Grupo Modelo, S.A.B. de C.V., Diblo, S.A. de C.V. and certain shareholders thereof, dated as of June 16, 1993 (Incorporated by reference to Exhibit 10.14 to Form 10-K for the fiscal year ended December 31, 2004).
 
                        Exhibit 10.17      — Letter agreement between Anheuser-Busch Companies, Inc. and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement filed as Exhibit 10.16 of this report (Incorporated by reference to Exhibit 10.15 to Form 10-K for the fiscal year ended December 31, 2004).
 
                        Exhibit 10.18      — Second Amendment to Investment Agreement By and Among Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc. and Anheuser-Busch International Holdings, Inc. and Grupo Modelo, S.A.B. de C.V., Diblo, S.A. de C.V., and certain shareholders thereof (Incorporated by reference to Exhibit 10.17 to Form 10-K for the fiscal year ended December 31, 2006).
 
                        Exhibit 10.19      — Form of Indemnification Agreement between Anheuser-Busch, Incorporated and an Executive Officer of the Company (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year ended December 31, 2002).*
 
                        Exhibit 10.20      — 2008 Officer Bonus Program.*
 
                        Exhibit 10.21      — Summary of compensation arrangements with Executive Officers of the Company.*
 
                        Exhibit 10.22      — Summary of compensation arrangements with Non-Employee Directors of the Company (Incorporated by reference to Exhibit 10.21 to Form 10-Q for the period ended September 30, 2007).*
 
                        Exhibit 10.23      — Form of Incentive Stock Option Cover Sheet and Standard Incentive Stock Option Agreement under the Anheuser-Busch Companies, Inc. 2007 Equity and Incentive Plan for executive officers of Anheuser-Busch Companies, Inc. (Incorporated by reference to Exhibit 10.23 to Form 8-K dated November 28, 2007).*
 
                        Exhibit 10.24      — Form of Non-Qualified Stock Option Cover Sheet and Standard Non-Qualified Stock Option Agreement under the Anheuser-Busch Companies, Inc. 2007 Equity and Incentive Plan for executive officers of Anheuser-Busch Companies, Inc. (Incorporated by reference to Exhibit 10.24 to Form 8-K dated November 28, 2007).*
 
                        Exhibit 10.25      — Independent Consulting Agreement with a Former Executive Officer of the Company (Incorporated by reference to Exhibit 10.24 to Form 8-K dated November 21, 2006).*

21


                        Exhibit 10.26      — Independent Consulting Agreement with a Former Executive Officer of the Company (Incorporated by reference to Exhibit 10.25 to Form 8-K dated November 21, 2006).*
 
                        Exhibit 10.27      — Confidential Agreement and General Release with a Former Executive of the Company (Incorporated by reference to Exhibit 10.27 to Form 10-K for the fiscal year ended December 31, 2006).*
 
                        Exhibit 10.28      — Letter to a Former Executive of the Company (Incorporated by reference to Exhibit 10.28 to Form 10-K for the fiscal year ended December 31, 2006).*
 
                        Exhibit 10.29      — Consulting and Non-Disclosure Agreement and General Release with Former Executive Officer of the Company (Incorporated by reference to Exhibit 10.30 to Form 10-K for the fiscal year ended December 31, 2006)*
 
                        Exhibit 10.30      — Confidential Agreement and General Release with a Former Executive of the Company.*
 
                        Exhibit 10.31      — Summary of Executive Tax and Financial Consulting Program for Executive Officers of the Company (Incorporated by reference to Exhibit 10.24 to Form 10-Q for the quarterly period ended September 30, 2006).*
 
                        Exhibit 10.32      — Anheuser-Busch Companies, Inc. 2006 Restricted Stock Plan for Non-Employee Directors (Incorporated by reference to Appendix B to the Definitive Proxy Statement for Annual Meeting of Stockholders on April 26, 2006).*
 
                        Exhibit 10.33      — Form of Notice of Award and Information Memorandum under Anheuser-Busch Companies, Inc. 2006 Restricted Plan for Non-Employee Directors (Incorporated by reference to Exhibit 10.32 to the Form 10-Q for the quarterly period ended March 31, 2007).*
 
                        Exhibit 10.34      — Form of Notice of Award and Information Memorandum under Anheuser-Busch Companies, Inc. 2006 Restricted Stock Plan for Non-Employee Director who is a citizen of Mexico (Incorporated by reference to Exhibit 10.33 to the Form 10-Q for the quarterly period ended March 31, 2007).*
 
                        Exhibit 10.35     — Anheuser-Busch Companies, Inc. Related Person Transactions Policy (Incorporated by reference to Exhibit 10.34 to Form 10-K for the fiscal year ended December 31, 2006).
 
                        Exhibit 12     — Ratio of Earnings to Fixed Charges.
 
                        Exhibit 13               — Pages 26 through 65 of the Anheuser-Busch Companies, Inc. 2007 Annual Report to Shareholders, a copy of which is furnished for the information of the Securities and Exchange Commission. Portions of the Annual Report not incorporated herein by reference are not deemed “filed” with the Commission.
 
                        Exhibit 14            — Code of Business Ethics and Conduct (Incorporated by reference to Exhibit 14 to Form 10-K for the fiscal year ended December 31, 2003).
 
                        Exhibit 21      — Subsidiaries of the Company.
 
                        Exhibit 23      — Consent of Independent Registered Public Accounting Firm.
 
                        Exhibit 24      — Power of Attorney.
 
                        Exhibit 31.1      — Certification of Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act.
 
                        Exhibit 31.2      — Certification of Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act.
 
                        Exhibit 32.1      — Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
                        Exhibit 32.2      — Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



*A management contract or compensatory plan or arrangement required to be filed by Item 15(c) of this report.

22


SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

      ANHEUSER-BUSCH COMPANIES, INC.    
                          (Registrant)
   
  By               /s/    W . R ANDOLPH B AKER               
W. Randolph Baker
Vice President and Chief Financial Officer

Date: February 29, 2008

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Principal Executive Officer:
      August A. Busch IV*
      President and Chief Executive Officer

Principal Financial Officer:
      W. Randolph Baker
      Vice President and Chief Financial Officer

Principal Accounting Officer:
      John F. Kelly*
      Vice President and Controller

   
                     /s/    W . R ANDOLPH B AKER                    
(W. Randolph Baker, as attorney-in-fact and on his
own behalf as Principal Financial Officer)

Date: February 29, 2008

Directors:


August A. Busch IV*                    
Patrick T. Stokes*
August A. Busch III*
Carlos Fernandez G.*
James J. Forese*
John E. Jacob*
James R. Jones*
Charles F. Knight*
Vernon R. Loucks, Jr.*
Vilma S. Martinez*
William Porter Payne*
Joyce M. Roché*
Henry Hugh Shelton*
Andrew C. Taylor*
Douglas A. Warner III*
Edward E. Whitacre, Jr.*


* by power of attorney

23


ANHEUSER-BUSCH COMPANIES, INC.

INDEX TO FINANCIAL STATEMENT SCHEDULE

         Page

                       Report of Independent Registered Public Accounting Firm on Financial Statement Schedule     
 
     F-1
                       Financial Statement Schedule for the Years 2007, 2006 and 2005:
 
   
                           Valuation and Qualifying Accounts and Reserves (Schedule II)            F-2

      All other Financial Statement Schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements and Notes.

24


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of Anheuser-Busch Companies, Inc.

Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February 27, 2008 appearing in the 2007 Annual Report to Shareholders of Anheuser-Busch Companies, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of Schedule II - Valuation and Qualifying Accounts and Reserves included in this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

St. Louis, MO
February 27, 2008

F-1


ANHEUSER-BUSCH COMPANIES, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(In Millions)

             2007

               2006

               2005

   
Deferred income tax asset valuation allowance:                          
  Balance at beginning of period                 $ 47.4              $ 67.0              $ 32.2    
  Additions charged to expense, including litigation settlement in 2005                  13.6                18.5                47.6    
  Reductions from utilizations, primarily litigation settlement in 2006                  (11.0 )              (38.1 )              (12.8 )  
            
              
              
   
  Balance at end of period                 $ 50.0              $ 47.4              $ 67.0    
            
              
              
   

F-2

 

Exhibit 3.3









BYLAWS



OF



ANHEUSER-BUSCH COMPANIES, INC.

(As Amended and Restated February 27, 2008)





INCORPORATED UNDER THE LAWS OF DELAWARE





 
 

 




TABLE OF CONTENTS
BYLAWS
OF
ANHEUSER-BUSCH COMPANIES, INC.
 
   
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LOCATION AND OFFICES
 
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BYLAWS
OF
ANHEUSER-BUSCH COMPANIES, INC.
(AS AMENDED AND RESTATED FEBRUARY 27, 2008)
ARTICLE I: LOCATION AND OFFICES
Principal Office.
SECTION 1:1. The principal office of the corporation shall be at such place as the Board of Directors may from time to time determine, but until a change is effected such principal office shall be at One Busch Place, in the City of St. Louis, Missouri.
Other Offices.
SECTION 1:2. The corporation may also have other offices, in such places (within or without the State of Delaware) as the Board of Directors may from time to time determine.
ARTICLE II: STOCKHOLDERS
Annual Meeting.
SECTION 2:1. An annual meeting of the stockholders of the corporation shall be held at 10:00 o'clock a.m. on the fourth Wednesday in April of each year if not a legal holiday, and if a legal holiday then on the next succeeding day not a legal holiday. The purpose of the meeting shall be to elect directors and to transact such other business as properly may be brought before the meeting. If the corporation shall fail to hold said meeting for the election of directors on the date aforesaid, the Board of Directors shall cause the election to be held by the stockholders as soon thereafter as convenient.
Business to be Conducted at Annual Meeting.

SECTION 2:2.1 At an annual meeting of stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors (or any duly organized committee thereof), or (iii) by any stockholder of the corporation who is a stockholder of record on the date of giving of the notice provided for in this Bylaw and on the record date for the determination of stockholders entitled to vote at such meeting and who has complied with the notice procedures set forth in this Bylaw.

SECTION 2:2.2 In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice in proper written form to the Secretary which notice is not withdrawn by such stockholder at or prior to such annual meeting.

SECTION 2:2.3 To be timely, a stockholder's notice to the Secretary must be delivered or mailed to and received by the Secretary at the principal executive offices of the corporation, not less than ninety days nor more than one hundred twenty days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the meeting is changed by more than thirty days from such anniversary date, notice by the stockholder must be received not later than the close of business on the tenth day following the earlier of the day on which notice of the date of the annual meeting was mailed or public disclosure was made.


SECTION 2:2.4 To be in proper written form, such stockholder's notice must set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business to be brought before the annual meeting and the reasons for conducting such business at such meeting; (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class and the number of shares of the corporation's stock which are beneficially owned by the stockholder, and the beneficial owner, if any, on whose behalf the proposal is made; (iv) any material interest of the stockholder, and of the beneficial owner, if any, on whose behalf the proposal is made, in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
1

 
 

 

SECTION 2:2.5 Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Bylaw. The chairman of the meeting may, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this Bylaw; and if the chairman should so determine, the chairman shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the   “ Exchange Act ), and the rules and regulations thereunder with respect to the matters set forth in this Bylaw.
Special Meetings.
SECTION 2:3.1 At any time the Chief Executive Officer may, and either the Chief Executive Officer or the Secretary at the written request of any five members of the Board of Directors shall, issue a call for a special meeting of the stockholders. Such call shall state the purpose or purposes of the meeting.

SECTION 2:3.2  A special meeting of stockholders shall be called by the Board of Directors upon written request ( Request ) to the Secretary of record holders of at least 25% of the outstanding common stock of the corporation.

(a)  The Request for a special meeting of stockholders shall be signed by each stockholder of record, or duly authorized agent, requesting the special meeting and must set forth:  (i) a statement of the specific purpose of the meeting and the matters proposed to be acted on at the meeting and any material interest in such business of the stockholders requesting the meeting (or of the  beneficial owners, if any, on whose behalf the Request is made); (ii) the name and address of each such stockholder as they appear on the corporation s stock ledger; and (iii) the number of shares of the corporation s common stock owned of record and beneficially by each such stockholder (or beneficial owners, if any, on whose behalf the Request is made).  A stockholder executing the Request may revoke its request at any time by written revocation delivered to the Secretary, any such revocation shall be effective when received and such stockholder shall be deemed not to have joined in the Request.  

(b)  A special meeting so requested by stockholders shall be held at the date, time and place as may be fixed by the Board of Directors, but not later than 90 days after receipt of the Request.

(c)  Notwithstanding the foregoing, the Board of Directors need not call a special meeting of stockholders, if (i) the Board of Directors has already called or calls an annual meeting of stockholders and the purpose of the annual meeting includes the purpose specified in the Request or (ii) the purpose specified in the Request  is not the election of directors and the corporation held an annual or special meeting of stockholders during the 12 months preceding  receipt of the Request, the purposes of which  meeting included the purpose specified in the Request.

SECTION 2:3.3 Only such business may be considered at a special meeting of stockholders as has been stated in the corporation s notice for such meeting.
Place of Meetings.
SECTION 2:4. All meetings of the stockholders shall be held at the principal office of the corporation, or at such other place, within or without the State of Delaware, as may be determined by the Board of Directors and stated in the notice of the meeting.
Notice of Meetings.
SECTION 2:5. Written notice of each meeting of the stockholders stating the place, date, and hour of the meeting, and, in case of a special meeting or where otherwise required by statute, the purpose or purposes for which the meeting is called, shall be delivered by mail not less than ten nor more than sixty days before the date of the meeting, by or at the direction of the person calling the meeting, to each stockholder entitled to vote at such meeting. The notice of a stockholders' meeting shall be deemed to be delivered when deposited in the United States mail with postage prepaid, addressed to each stockholder at such stockholder's address as it appears on the records of the corporation.

2

 
 

 

Quorum and Voting.

SECTION 2:6.1 The holders of a majority of the outstanding shares (exclusive of treasury stock) entitled to vote at any meeting of the stockholders, when present in person or by proxy, shall constitute a quorum for the transaction of business, except as otherwise provided by statute, the Certificate of Incorporation, or these Bylaws; but in the absence of such a quorum the holders of a majority of the shares represented at the meeting shall have the right successively to adjourn the meeting to a specified date. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

SECTION 2:6.2 The absence from any meeting of the number of shares required by statute, the Certificate of Incorporation or these Bylaws for action upon one matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if the number of shares required in respect of such other matters shall be present.

SECTION 2:6.3 When a quorum is present at any meeting of the stockholders, the vote of the holders (present in person or represented by proxy) of a majority of the shares of stock which are actually voted (and have the power to vote) on any proposition or question properly brought to a vote at such meeting shall decide any such proposition or question, unless the proposition or question is one upon which by express provision of statute or of the Certificate of Incorporation, or of these Bylaws, a different vote is required, in which case such express provision shall govern and establish the number of votes required to determine such proposition or question.
Voting; Proxy.

SECTION 2:7.1 Whenever the law requires or the chairman orders that a vote be taken by ballot, each stockholder entitled to vote on a particular question at a meeting of stockholders, pursuant to law or the Certificate of Incorporation, shall be entitled to one vote for each share of voting stock held by such stockholder. The date for determining the stockholders entitled to vote at a meeting of the stockholders shall be determined pursuant to Section 6:9.

SECTION 2:7.2 Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent in writing without a meeting may authorize another person or persons to act for such stockholder by proxy; but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally.
Voting by Fiduciaries, Pledgee and Pledgors.

SECTION 2:8. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee or the pledgee's proxy may represent such stock and vote thereon.
3

 
 

 


If shares or other securities having voting power stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:

(a) If only one votes, that person's act binds all;
(b) If more than one vote, the act of the majority so voting binds all;
(c) If more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or any person voting the shares, or a beneficiary, if any, may apply to the Court of Chancery or such other court as may have jurisdiction to appoint an additional person to act with the persons so voting the shares, which shall then be voted as determined by a majority of such persons and the person appointed by the Court. If the instrument so filed shows that any such tenancy is held in unequal interest, a majority or even-split for the purpose of this subsection shall be a majority or even-split in interest.
Nomination of Directors.

SECTION 2:9.1 Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the corporation, except as may be otherwise provided in the Certificate of Incorporation of the corporation with respect to the right of holders of preferred stock of the corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of the corporation who is a stockholder of record on the date of the giving of the notice provided for in this Bylaw and on the record date for the determination of stockholders entitled to vote at such meeting and who complies with the notice procedures set forth in this Bylaw.

SECTION 2:9.2 In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the corporation.

SECTION 2:9.3 To be timely, a stockholder's notice to the Secretary must be delivered or mailed to and received by the Secretary at the principal executive offices of the corporation (i) in the case of an annual meeting, not less than ninety days nor more than one hundred twenty days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever occurs first, and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever occurs first.
  
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SECTION 2:9.4 To be in proper written form, a stockholder's notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and the number of shares of capital stock of the corporation which are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice or the beneficial owner on whose behalf the nomination is made, (A) the name and address of such stockholder as they appear on the corporation's books, (B) the class or series and the number of shares of capital stock of the corporation beneficially owned by such stockholder or beneficial owner, (C) a description of all arrangements or understandings between such stockholder or beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder or beneficial owner, (D) a representation that such stockholder or beneficial owner intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

SECTION 2:9.5 No person shall be eligible for election as a director of the corporation, at any annual meeting of stockholders or at any special meeting of stockholders called for the purpose of electing directors, unless nominated in accordance with the procedures set forth in this Bylaw. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
List of Stockholders.

SECTION 2:10. The Secretary shall prepare and make, or cause to be made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation.  In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation.  In addition, the list shall be produced and kept at the time and place of the meeting during the whole time thereof and subject to the inspection of any stockholder who may be present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this Bylaw or the books of the corporation, or to vote in person or by proxy at any meeting of the stockholders.
Appointment of Inspectors of Election and Resolution of Questions Concerning Right to Vote.

SECTION 2:11. The Board of Directors, in advance of the meeting of stockholders or, if it does not act, the chairman of the meeting, shall appoint not less than two persons who are not directors to serve as inspectors of election. It shall be their duty to receive and canvass the votes for election of directors and on any proposal voted on by ballot and to certify the results to the chairman. In all cases where the right to vote upon any share of the corporation shall be questioned, it shall be the duty of the inspectors to examine the stock ledger of the corporation as evidence of the shares held, and all shares that appear
 
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standing thereon in the name of any person or persons may be voted upon by such person or persons. Each inspector of election before entering upon the duties of such office shall take and subscribe the following oath before an officer authorized by law to administer oaths:   “ I do solemnly swear that I will execute the duties of an inspector of the election now to be held with strict impartiality and according to the best of my ability.
ARTICLE III: DIRECTORS
General Powers.

SECTION 3:1. The Board of Directors shall control and manage the business and property of the corporation. The Board may exercise all such powers of the corporation and do all lawful acts and things as are not by law, the Certificate of Incorporation, or these Bylaws directed or required to be exercised or done by the stockholders or some particular officer of the corporation.
Number and Qualifications.

SECTION 3:2. The number of directors shall be determined from time to time by resolution of the Board of Directors in accordance with the terms of Article FIFTH of the Certificate of Incorporation. From and after the first public distribution of the Common Stock of the corporation, each director shall be a stockholder of the corporation, except in such specific case or cases as shall be otherwise authorized by the Board of Directors upon a showing of reasonable cause therefor.
Election.

SECTION 3:3. The directors who are to be elected at the annual meeting of the stockholders shall be elected by ballot by the holders of shares entitled to vote.
Place of Meetings.

SECTION 3:4. The place where meetings of the Board of Directors are held shall be as follows:

(a) The annual meeting shall be held in the city of the principal office of the corporation in Missouri, provided that in the event the annual meeting of shareholders is held in a metropolitan area other than St. Louis, Missouri, the annual meeting of the Board of Directors shall be held in the metropolitan area where the annual meeting of stockholders is held.

(b) Regular meetings shall be held at such place within the City or County of St. Louis, Missouri as may be prescribed in the call, provided that any regular meeting may be held elsewhere, either within or without the State of Delaware, pursuant to resolution of the Board of Directors or pursuant to the call of the Chief Executive Officer acting with the consent of a majority of the directors.

(c) Special meetings shall be held at such place as may be prescribed in the notice, provided that if a special meeting is held on less than three days' notice, it shall be held at the principal office of the corporation unless all directors agree upon a different location.
  
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(d) Members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participating in the meeting in this manner shall constitute presence in person at such meeting.
Regular Meetings.

SECTION 3:5. Regular meetings shall be held at such place or places, on such date or dates, and at such times as shall be established by the Board of Directors. A notice of each regular meeting shall not be required, except any meeting at which an amendment to or repeal of these Bylaws is to be considered.
Special Meetings.

SECTION 3:6. Special meetings of the Board of Directors may be held at the call of the Chief Executive Officer or five members of the Board at such time as may be prescribed in the call of the meeting. The purpose of the special meeting need not be stated in the notice of the meeting. Notice of a special meeting may be given by any one or more of the following methods and the method used need not be the same for each director being notified:

   
(a) Written notice sent by mail at least three days prior to the meeting;

   
(b) Personal service at least twenty-four (24) hours prior to the date of the meeting;

   
(c) Telegraphic notice at least twenty-four (24) hours prior to the date of the meeting, said notice to be sent as a straight full-rate telegram;

   
(d) Telephonic notice at least twenty-four (24) hours prior to the date of the meeting.

   
(e) Facsimile transmission at least twenty-four (24) hours prior to the date of the meeting.
     
   
(f) E-mail notice at least twenty-four (24) hours prior to the date of the meeting.



SECTION 3:7. A majority of the persons serving as directors of the corporation at the time of a meeting of the Board of Directors shall constitute a quorum for the transaction of any business by the Board at such meeting. At any meeting of the Board, no action shall be taken (except adjournment, in the manner provided below) until after a quorum has been established.

The act of a majority of directors who are present at a meeting at which a quorum previously has been established (or at any adjournment of such meeting, provided that a quorum previously shall have been established at such adjourned meeting) shall be the act of the Board of Directors, regardless of whether or not a quorum is present at the time such action is taken. In determining the number of directors who are present at the time any such action is taken (for the purpose of establishing the number of votes required to take action on any proposition or question submitted to the Board), any director who is in attendance at such meeting but who, for just cause, is disqualified to vote on such proposition or question, shall not be considered as being present at the time of such action.

In the event a quorum cannot be established at the beginning of a meeting, a majority of the directors present at the meeting, or the director, if there be only one person, or the Secretary of the corporation, if there be no director present, may adjourn the meeting from time to time until a quorum be present. Only such notice of such adjournment need be given as the Board may from time to time prescribe.
  
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Waiver of Notice.

SECTION 3:8. Any notice which is required by law or by the Certificate of Incorporation or by these Bylaws to be given to any director may be waived in writing, signed by such director, or by electronic transmission by such director, whether before or after the time stated therein. Attendance of a director at any meeting shall constitute waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.
Consent.

SECTION 3:9. Any action required or permitted to be taken at any meeting of the Board of Directors (or of any committee thereof) may be taken without a meeting if all members of the Board (or committee) consent thereto in writing, or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Board (or committee).
Notice to Members of the Board of Directors.

SECTION 3:10. Each member of the Board of Directors shall file with the Secretary of the corporation an address to which mail or telegraphic notices shall be sent, a telephone number to which a telephonic or facsimile notice may be transmitted, and an e-mail address to which an e-mail notice may be transmitted. A notice mailed, telegraphed, telephoned or transmitted by facsimile or e-mail in accordance with the instructions provided by the director shall be deemed sufficient notice. Such address, telephone number or e-mail address may be changed at any time and from time to time by a director by giving written notice of such change to the Secretary. Failure on the part of any director to keep an address, telephone number and e-mail address on file with the Secretary shall automatically constitute a waiver of notice of any regular or special meeting of the Board which might be held during the period of time that such address, telephone number and e-mail address are not on file with the Secretary. A notice shall be deemed to be mailed when deposited in the United States mail, postage prepaid. A notice shall be deemed to be telegraphed when the notice is delivered to the transmitter of the telegram and either payment or provision for payment is made by the corporation. Notice shall be deemed to be given by telephone if the notice is transmitted over the telephone to some person (whether or not such person is the director) answering the telephone at the number which the director has placed on file with the Secretary. Notice shall be deemed to be given by facsimile transmission when sent to the telephone number which the director has placed on file with the Secretary.  Notice shall be deemed to be given by e-mail transmission when sent to the e-mail address which the director has placed on file with the Secretary.
Chairman of the Board.

SECTION 3:11. The Board of Directors shall elect one of its members to be Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors at which the Chairman is present. In the Chairman's absence, the Vice Chairman (if any) shall preside. In the absence of the Chairman and the Vice Chairman, the Board shall select a chairman of the meeting from among the directors present. The Chairman of the Board shall have such other powers, responsibilities, and duties as may be assigned by the Board of Directors.
ARTICLE IV: COMMITTEES
Executive Committee--Appointment and Tenure.

SECTION 4:1. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate three or more directors, including the Chief Executive Officer, to constitute an Executive Committee, provided that a majority of said committee shall at all times be made up of members of the
 
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Board who are neither officers nor employees of the corporation and who shall serve at the pleasure of the Board. In the case of the death, resignation or removal of any member of the Executive Committee or in case any such member shall cease to be a member of the Board, the vacancy shall be filled by the Board. The Board shall designate the chairman of the Executive Committee.
Executive Committee--Powers.

SECTION 4:2. The Executive Committee, to the extent provided in the resolution of the Board of Directors appointing such committee or in any subsequent resolution, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it, but shall not have the power or authority with respect to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the corporation; nor shall the Executive Committee have the power or authority to declare a dividend or to authorize the issuance of stock; but the designation of such Executive Committee and the delegation of authority thereto shall not operate to relieve the Board, or any member thereof, of any responsibility imposed upon it or them by the provisions of the Delaware General Corporation Law, as amended.
Executive Committee--Notice of Meetings.

SECTION 4:3. A meeting of the Executive Committee may be held on call by the Chief Executive Officer or on the call of any three of the other members of the Committee. Meetings of the Executive Committee may be held, upon notice as short as twenty-four (24) hours, at such place or places as shall be determined by resolution of the Committee, or in the absence of a resolution of the Executive Committee with respect thereto, at such place or places as may be determined by the Chief Executive Officer. If notice is given at least three days prior to the meeting of the Committee, notice may be given in any of the ways set forth in Section 3:6, dealing with special meetings of the Board of Directors. If less than three days' notice is given, notice shall not be given by mail but shall be given by one of the other methods described in Section 3:6. With respect to any such notice, all the provisions of Section 3:10 shall be equally applicable in the case of notice of an Executive Committee meeting as they are in the case of a notice of a meeting of the Board of Directors. Meetings of the Executive Committee shall be held at such place either within or without the States of Missouri or Delaware as may be designated by a resolution of the Board; or in the absence of such resolution, at such place within the metropolitan St. Louis, Missouri area as may be designated in the notice. Any such notice may be waived in the same manner provided in Section 3:8 with respect to waiver of notice of a directors' meeting.
Executive Committee--Quorum and Powers of Majority.

SECTION 4:4. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business at any meeting of the Executive Committee. Unless otherwise provided by the Board of Directors, a majority of the members of the Executive Committee shall constitute a quorum, and the acts of a majority of the members present at a meeting at which a quorum is present shall be the acts of the Executive Committee.
Executive Committee--Reporting.

SECTION 4:5. At each regular meeting of the Board of Directors all actions taken by the Executive Committee since the last prior meeting of the Board shall be reported, and the Board shall take such action to approve or rescind such action of the Executive Committee as the Board may deem appropriate,
 
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but no rescission of such action shall affect any rights which have attached pursuant to such Executive Committee action.

If no regular meeting of the Board is scheduled within seven days after the date of a meeting of the Executive Committee, then no later than five days after such meeting of the Executive Committee, the minutes thereof (even though they may not as yet have been approved by the Executive Committee) shall be deposited in the mail by the Secretary addressed to each member of the Board at the address on file with the Secretary pursuant to the provisions of Section 3:10, provided that if any member of the Board shall have failed to place an address on file with the Secretary, such member shall be deemed to have waived the right to receive a copy of the minutes of the Executive Committee meeting.
Other Committees.

SECTION 4.6. Other Committees may be established, and their members appointed, from time to time by the Board of Directors. Such other committees shall have such purpose(s) and such power(s) as the Board by resolution may confer. Unless otherwise provided by the Board, a majority of the members of such other Committee shall constitute a quorum, and the acts of a majority of the members present at a meeting at which a quorum is present shall be the act of such other Committee.

ARTICLE V: OFFICERS
Appointment.

SECTION 5:1. The Board of Directors shall appoint a Chief Executive Officer, a President, one or more Vice Presidents, a Controller, a Secretary, a Treasurer, and such other officers as the Board may from time to time deem necessary or appropriate. Any number of offices may be held by the same person. The Board of Directors may appoint a Vice Chairman of the Board, but the person holding that position shall not be considered an officer of the corporation.
Tenure.

SECTION 5:2. Officers appointed by the Board of Directors shall hold their respective offices for the term of one year and until their respective successors shall have been duly appointed and qualified; provided, however, that any officer appointed by the Board may be removed by the Board with or without a hearing and with or without cause whenever in its judgment the best interests of the corporation will be served thereby.
Chief Executive Officer.

SECTION 5:3. The Chief Executive Officer shall have general supervision and control over all the business and property of the corporation and shall be responsible at all times to the Board of Directors and the Executive Committee. The Chief Executive Officer shall also preside at all meetings of the stockholders. In the event the Chief Executive Officer shall fail or for any reason be unable to serve as such, the Board of Directors shall promptly act to fill such vacancy.
  
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President.

SECTION 5:4. The President shall have such powers, responsibilities and duties as shall be assigned by the Board of Directors or the Chief Executive Officer.
Other Officers.

SECTION 5:5. Subject to the ultimate authority of the Board of Directors, all other officers of the corporation shall have such powers, responsibilities and duties as shall be assigned to them from time to time by the Chief Executive Officer.

ARTICLE VI: CAPITAL STOCK AND DIVIDENDS
Shares of the Corporation

SECTION 6:1. The shares of the corporation may be represented by certificates or may be issued in uncertificated form. The issuance of shares in uncertificated form shall not affect shares already represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the Chairman or Vice Chairman of the Board of Directors or by the President or a Vice-President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, representing the number of shares in certificate form. The signatures of any such officers thereon may be facsimiles. The seal of the corporation shall be impressed, by original or by facsimile, printed or engraved, on all such certificates. The certificate shall also be signed by the transfer agent and a registrar and the signature of either the transfer agent or the registrar may also be facsimile, engraved or printed. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if such officer, transfer agent, or registrar had not ceased to be such officer, transfer agent, or registrar at the date of its issue.
Stock Records.

SECTION 6:2. The corporation or a transfer agent shall keep stock books in which shall be recorded the number of shares issued, the names of the owners of the shares, the number owned by them respectively, and the transfer of such shares with the date of transfer.
 
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Transfers.

SECTION 6:3. Transfers of stock shall be made only on the stock transfer records of the corporation and, in the case of shares represented by a certificate or certificates only upon surrender of the certificate or certificates being transferred which certificate shall be properly endorsed for transfer or accompanied by a duly executed stock power. Whenever a certificate is endorsed by or accompanied by a stock power executed by someone other than the person or persons named in the certificate, evidence of authority to transfer shall also be submitted with the certificate. All certificates surrendered to the corporation for transfer shall be cancelled.
 
Regulations Governing Issuance and Transfers of Shares.

SECTION 6:4. The Board of Directors shall have the power and authority to make all such rules and regulations as it shall deem expedient concerning the issue, transfer and registration of shares of stock of the corporation.
Transfer Agents and Registrars.

SECTION 6:5. Transfer agents and registrars for the corporation's stock shall be banks, trust companies or other financial institutions located within or without the State of Delaware as shall be appointed by the Board of Directors. The Board shall also define the authority of such transfer agents and registrars.
Lost or Destroyed Certificates.
SECTION 6:6. Where a certificate for shares of the corporation has been lost or destroyed, the Board of Directors may authorize the issuance of a new certificate or uncertificated shares in lieu thereof upon satisfactory proof of such loss or destruction, and upon the giving of an open penalty bond with surety satisfactory to the corporation's General Counsel and Treasurer, to protect the corporation or any person injured by the issuance of the new certificate or uncertificated shares in lieu thereof from any liability or expense which it or they may incur by reason of the original certificate's remaining outstanding, and upon payment of the corporation's reasonable costs incident thereto.  
 
Fractions of Shares.

SECTION 6:7. The corporation shall not issue fractions of a share. It shall, however, (1) arrange for the disposition of fractional interests by those entitled thereto, or (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered or bearer form which shall entitle the holder to receive a full certificated or uncertificated share upon the surrender of such scrip or warrants aggregating a full share. Scrip or warrants shall not, unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, or to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board may impose.
  
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Determination of Stockholders.

SECTION 6:8. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware or these Bylaws.
Record Date.

SECTION 6:9.1 In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.   A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 6:9.2 In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors.  If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of the stockholders are recorded.  Delivery made to the corporation s registered office shall be by hand or by certified or registered mail, return receipt requested.  If no record date has been fixed by the Board of Directors, and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

SECTION 6:9.3 In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than sixty days prior to such action.  If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

ARTICLE VII: MISCELLANEOUS
Voting Shares in Other Corporations.

SECTION 7:1. The corporation may vote any and all shares of stock and other securities having voting rights which may at any time and from time to time be held by it in any other corporation or corporations and such vote may be cast either in person or by proxy by such officer of the corporation as the Board of Directors may appoint or, in default of such appointment, the Chief Executive Officer, the President or a Vice President.
 
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SECTION 7:2. All checks, bills, notes, drafts, vouchers, warehouse receipts, bonds, mortgages, contracts, registration certificates and all other papers and documents of the corporation shall be signed or endorsed for the corporation by such of its officers, other employees and agents as the Board of Directors may from time to time determine, or in the absence of such determination, by the Chief Executive Officer, the President or a Vice President, provided that instruments requiring execution with the formality of deeds shall be signed by the Chief Executive Officer, the President or a Vice President and impressed with the Seal of the corporation, duly attested by the Secretary or an Assistant Secretary.
Corporate Seal.

SECTION 7:3. The Board of Directors shall provide a suitable seal, containing the name of the corporation, which seal shall be in the custody of the Secretary of the corporation, and may provide for one or more duplicates thereof to be kept in the custody of such other officer of the corporation as the Board may prescribe.
Amendments.

SECTION 7:4. These Bylaws may be amended or repealed, or new Bylaws may be adopted (a) by the affirmative vote of a majority of the shares issued and outstanding and entitled to vote at any annual or special meeting of stockholders, or (b) by the affirmative vote of the majority of the Board of Directors at any regular or special meeting; provided that the notice of such meeting of stockholders or directors, whether regular or special, shall specify as one of the purposes thereof the making of such amendment or repeal, and provided further that any amendment of the Bylaws made by the Board may be further amended or repealed by the stockholders.
Books and Records.

SECTION 7:5. Except as the Board of Directors may from time to time direct or as may be required by law, the corporation shall keep its books and records at its principal office.


SECTION 7:6. For purposes of these Bylaws, "electronic transmission" shall have the meaning as set forth in Section 232 of the Delaware General Corporation Law, as amended.

 



 
Exhibit 10.9
 
 
FIRST AMENDMENT OF ANHEUSER-BUSCH COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Amended and Restated as of March 1, 2003)
 
 
In accordance with the provisions of Section 20 of the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan (the "Plan") and the resolution adopted by the Compensation Committee of the Board of Directors of Anheuser-Busch Companies, Inc. on September 25, 2007, the Plan is amended in the manner set forth below.
 
Section 1(h) of the Plan is hereby amended to read as follows, effective for Participants who terminate employment on or after September 26, 2007:
 
      (h)      "Eligible Earnings" means, for any calendar year, the sum of the employee's annual base salary as of January 1 of such year plus the bonus earned during the prior calendar year. For purposes of computing benefits under this Plan, the Eligible Earnings to be used shall be the highest of the Eligible Earnings in the calendar year of termination or any of the four preceding calendar years. Eligible Earnings shall recognize any compensation deferred under the Executive Deferred Compensation Plan and treat such compensation as if it were not deferred. Notwithstanding anything in Section 3(c) or 3(d) to the contrary, the amount of the bonus for a calendar year includible in eligible earnings used in the benefit calculation for a Participant who terminates employment as a current or former Strategy Committee member shall be limited to two times the competitive market median bonus for that year for the position held by the Participant at that time, as determined by the Company's Executive Compensation Department and reviewed with the Compensation Committee of the Board.
 
IN WITNESS WHEREOF , Anheuser-Busch Companies , Inc. caused this instrument to be executed by its duly authorized officer on this 18th day of October, 2007, effective as of the date specified herein.
 
 
  ANHEUSER -BUSCH COMPANIES, INC.
   
  By :  
  W. Randolph Baker
  Chief Financial Officer
 

 
Exhibit 10.20


2008 OFFICER BONUS PROGRAM
UNDER THE
ANHEUSER-BUSCH OFFICER BONUS PLAN


The Compensation Committee (the "Committee") of the Board of Directors of Anheuser-Busch Companies, Inc. (the "Company") hereby establishes the 2008 Officer Bonus Program (the "Program") in accordance with the Anheuser-Busch Officer Bonus Plan (the "Plan"), the terms of which are incorporated herein by reference, as follows:

Section 1. PERFORMANCE PERIOD.   The calendar year 2008 ("2008") shall constitute the Performance Period for the purpose of determining bonuses payable (“Bonuses”) to Participants in the Program.

Section 2. PARTICIPANTS AND DESIGNATED COVERED EMPLOYEES.   The officers of the Company listed on Schedule A attached hereto are hereby designated as Participants in the Program.  The first nine Participants listed on Schedule A ("Designated Covered Employees") are those the Committee believes may be or become covered employees (“Covered Employees”) as that term is defined by Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").  The Committee in its discretion may designate other officers as Participants in the Program.

Section 3. PERFORMANCE GOAL.   The performance goal for 2008 (the "Performance Goal") shall be met if Adjusted Pretax Earnings for 2008 equals or exceeds 75% of Adjusted Pretax Earnings for 2007.  Subject to Section 9, no Bonus shall be paid to Designated Covered Employees under the Program if the Performance Goal is not satisfied.  For purposes of this Program, "Adjusted Pretax Earnings" shall be deemed to mean the amount of the Company's consolidated income before income taxes, determined by the Company on the same basis on which its annual financial statements are calculated, adjusted as follows:

 
(a)
increased or decreased to eliminate the effect of any normalization adjustment made in calculating consolidated income before income taxes as disclosed in the Company’s quarterly reports or annual report in accordance with S.E.C. Regulation G on non-GAAP financial information, and/or any accounting principle change required or allowed by GAAP that is not retrospectively applied to prior years. (If the accounting change is retroactively applied to the prior year, there is no adjustment for the accounting change.);

 
(b)
increased by the amount of bonus expense, whether or not under the Program, which is reflected in the Company's consolidated income before income taxes;

 
(c)
increased for the impact on income before income taxes of interest expense attributable to the Company's ownership in Grupo Modelo, S.A.B. de C.V. and Tsingtao Brewery Company, Ltd.;

 
 

 
 
(d)
increased for the impact on income before income taxes of interest expense attributable to the Company’s equity ownership in any additional company acquired in 2008 and accounted for under the equity method of accounting under GAAP;
 
 
(e)
increased for the impact on income before income taxes of interest expense attributable to the Company’s repurchase of Company stock; and
 
 
(f)
increased or decreased for the impact on income before income taxes of any acquisition made by the Company during 2008 and increased for the impact of interest expense attributable to such acquisition.

Section 4. BONUS POOL.   If the Performance Goal is achieved, the maximum amount of Bonuses which may be paid to Participants in the Program shall equal 1.5% of Adjusted Pretax Earnings for 2008 (the "Bonus Pool").

Section 5. BONUS FORMULA.   Subject to the attainment of the Performance Goal, and the provisions of this Program, the maximum amount of the Bonus that each Designated Covered Employee shall be eligible to receive under the Program and the amount of the Bonus that the remaining Participants shall be eligible to receive under the Program shall be the amount (the “Eligible Amount”) corresponding to the percentage of the Bonus Pool set forth in Schedule A attached hereto.  The actual amount of Bonuses to which Participants are entitled (the "Bonus Formula") shall be determined as follows:   (i) a portion shall be based on a formula (the “Bonus Formula Component”) reflecting actual operating profit for 2008 relative to budgeted operating profit for 2008, as set forth on Schedule B attached hereto, and (ii) the remaining portion shall be based upon such measures, if any, that the Committee in its discretion shall employ; provided , however , that , in no event shall the aggregate Bonuses granted to a Designated Covered Employee exceed such Designated Covered Employee’s Eligible Amount.  Individual bonus targets will be established for each Participant prior to the commencement of the Performance Period.

Section 6. COMMITTEE DISCRETION.   Subject to Section 5, the Committee shall have the discretion to establish the amount of any Bonus payable to any Participant other than a Designated Covered Employee, except that the total amount of Bonuses paid under the Program may not exceed the Bonus Pool established in Section 4.

Section 7. DESIGNATED COVERED  EMPLOYEE  MAXIMUM. Notwithstanding satisfaction of the Performance Goal, no Designated Covered Employee may receive aggregate Bonuses under the Program which exceeds $6 million.

Section 8. PAYMENT OF BONUSES.   After the end of 2008, the Committee shall certify in writing whether the Performance Goal has been satisfied and the amount of the Bonus payable to each Designated Covered Employee for 2008, if any.  All or part of the Bonuses payable to Participants who are not Designated Covered Employees may be paid prior to the end of 2008 on an estimated basis, subject to adjustment in the discretion of the Committee.  All or part of the Bonuses payable to Designated Covered Employees may be paid prior to the end of 2008 only if such payment will not result in

 
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Bonuses paid to Covered Employees failing to constitute qualified performance-based compensation under Section 162(m) of the Code ( e.g . , if regulations or rulings allow earlier payment on an estimated basis subject to adjustment).  Subject to the foregoing, the timing of payment of Bonuses to all Participants shall be within the sole discretion of the Committee; provided, however, that all payments of the Bonuses hereunder shall be made on or before March 15, 2009.  The Company shall withhold from any Bonuses all taxes required to be withheld by any federal, state or local government.

Section 9. LIMITATION ON RESTRICTIONS.   Notwithstanding anything to the contrary herein, in the event a Designated Covered Employee is determined at the end of the Performance Period not to be a Covered Employee, and to the extent application of this Section 9 does not cause such Designated Covered Employee to be a Covered Employee, then:

 
(a)
such Designated Covered Employee may receive a Bonus notwithstanding failure to satisfy the Performance Goal, and

 
(b)
Committee Discretion may be exercised to increase the amount of such Designated Covered Employee's Bonus above the amount which would be paid pursuant to the Bonus Formula.

Section 10. TERMINATION OF EMPLOYMENT/COMMENCEMENT OF PARTICIPATION.   No Bonus shall be paid under the Program to any Participant who is not an employee of the Company as of the last day of 2008, except that the Committee shall have the discretion to pay a Bonus to any Participant whose employment terminates by reason of death, disability, retirement, resignation or in other circumstances in which payment of a Bonus would, as determined by the Committee, be in furtherance of the best interests of the Company.  Officers who are designated as Participants after the adoption of the Program, may receive a Bonus based upon the entire Performance Period.  Participants that are demoted or transferred out of the Program will not be eligible to receive a Bonus pursuant to the Program.

Section 11. CHANGE IN CONTROL.   Upon a Change in Control notwithstanding anything else to the contrary herein:

 
(a)
if the Change in Control takes place after December 31, 2008, all Bonuses  for all Participants for 2008 shall be immediately payable in cash (subject to any election previously made by a Participant to defer receipt of such Bonus),

 
(b)
if the Change in Control takes place during 2008, (i) the Performance Goal shall be deemed to have been met if Adjusted Pretax Earnings through the end of the month preceding the month in which the Change in Control occurs ("Prechange Adjusted Pretax Earnings") equals or exceeds 75% of Adjusted Pretax Earnings for the comparable period in 2007, (ii) the Change in Control Bonus Formula (as defined below) shall be applied to Prechange Adjusted Pretax Earnings, (iii) all Bonuses so calculated shall be immediately payable in cash to each Participant upon the date of the

 
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Change of Control (subject to any election previously made by a Participant to defer receipt of such Bonus), and (iv) unless expressly terminated, this Program shall continue in effect throughout the remainder of 2008 with the amount of any Bonuses payable at the end of 2008 reduced by the amount of any Bonuses paid upon the Change in Control,

 
(c)
the Committee shall not have the ability to exercise Committee Discretion to reduce the amount payable to any Participant below the formula amount, and

 
(d)
the provisions of this Section 11 may not be amended in any manner with respect to any Participant without the written consent of such Participant.

For purposes of determining the amounts of Bonuses payable to Participants under Sections 11 (a) and (b) above, (i) each Participant who was a participant in the 2007 Officer Bonus Program under the Anheuser-Busch Officer Bonus Plan shall be entitled to receive a share of the Bonus Pool which is equivalent to that Participant's share of all bonuses actually paid under the 2007 Program, (ii) each Participant who did not participate in the 2007 Program shall be entitled to receive a share of the Bonus Pool which is equivalent to the share of all bonuses actually paid under the 2007 Program paid to the individual (or the average paid to individuals) in the most closely comparable position to that of such Participant (based on salary level), (iii) the shares so computed shall be adjusted on a pro rata basis so that the amount of Bonuses payable under this Section 11 shall equal 100% of the applicable Bonus Pool (the "Change in Control Bonus Formula").  If any Participant is employed by the Company for less than the entire period with respect to which Bonuses under this Section 11 are calculated, such Participant shall only be entitled to receive a Bonus in an amount calculated as set forth above times the number of days such Participant was employed by the Company in such period divided by the total number of days in such period.  If by reason of this Section 11 an excise   tax ("Excise Tax") is imposed pursuant to Section 4999 of the Code on any payment under the Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment, except that the total amount paid to any Designated Covered Employee shall not exceed the maximum set forth in Section 7 unless exceeding such maximum, or a provision allowing bonuses to exceed such maximum, would not jeopardize qualification of all Bonuses under the Program to Covered Employees as qualified performance-based compensation under Section 162(m) of the Code.

Section 12. INTERPRETATION.   It is intended that the Program shall in all respects be subject to and governed by the provisions of the Plan and, except to the extent Bonuses are paid on an accelerated basis pursuant to a Change in Control as defined in the Plan, that all Bonuses paid to Covered Employees shall constitute qualified performance-based compensation under Section 162(m) of the Code.  The terms of this Program shall in all respects be so interpreted and construed as to be consistent with this intention.  If any provision of the Program conflicts in any manner with the Plan, the terms of the Plan shall control.  Terms used herein shall have the meanings assigned to them in the Plan, unless otherwise indicated.

 
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Section 13. ADJUSTMENTS.   If any of the following events occurs during the Performance Period:

 
(a)
any reorganization, merger, consolidation or other corporate change having a similar effect, to the extent it is tax-free for federal income tax purposes,

 
(b)
any spin-off, sale of a business unit, or other corporate change having a similar effect,

 
(c)
any contribution of operating assets previously accounted for by the consolidation method of accounting to an entity that is accounted for by the equity or cost methods of accounting, or

 
(d)
any distribution to stockholders generally other than a normal dividend

and such event affects consolidated income before income taxes and has an impact on the achievement of the Performance Goal or a material impact on the size of the Bonus Pool (herein "Corporate Change"):

 
(x)
for purposes of determining whether the Performance Goal has been met, 2007 Adjusted Pretax Earnings shall be deemed to equal (i) actual Adjusted Pretax Earnings for 2007 times a ratio the numerator of which is the number of days in the Performance Period prior to the Corporate Change and the denominator of which is 365, plus (ii) restated or pro-forma Adjusted Pretax Earnings for 2007 (calculated on the assumption that the Corporate Change occurred on January 1, 2007)  times a ratio, the numerator of which is the number of days in the Performance Period beginning with the date of the Corporate Change and the denominator of which is 365;

 
(y)
the size of the Bonus Pool shall be equal to (i) actual Adjusted Pretax Earnings  for the portion of the Performance Period ending the day before the Corporate Change occurs times 1.0%, plus (ii) actual Adjusted Pretax Earnings for the portion of the Performance Period beginning the day of the Corporate Change times a fraction, the numerator of which is actual Adjusted Pretax Earnings for 2007 and the denominator of which is restated or pro-forma Adjusted Pretax Earnings for 2007 calculated on the assumption that the Corporate Change occurred on January 1, 2007, times 1%.

Section 14. AMENDMENTS.   The Committee may amend this Program unilaterally if the Committee determines that amendment is necessary to assure that Bonuses paid to Covered Employees under this Program constitute qualified performance-based compensation under Section 162(m) of the Code.  The Committee also may amend this Program unilaterally in any way if the Committee determines that such amendment (i) is not contrary to the terms of the Plan, (ii) does not require shareholder approval, and (iii) would not jeopardize qualification of Bonuses to Covered

 
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Employees under the Program as performance-based compensation under Section 162(m) of the Code.

Section 15. NO RIGHT TO EMPLOYMENT.   Nothing in this Program or the Plan shall confer upon any Participant any right or expectation to continue in the employ of his or her employer or the Company, or to interfere in any manner with the absolute right of the employer or the Company to change or terminate the Participant's employment at any time for any reason.

 
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           Exhibit 10.21


SUMMARY OF COMPENSATION OF EXECUTIVE OFFICERS


Anheuser-Busch Companies, Inc. (the “Company”) does not have employment agreements with any of its executive officers.  The following is a description of executive officer compensation.

On November 28, 2007, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved the annual base salaries effective January 1, 2008, of the Company’s executive officers after review of performance and competitive market data.  The following table sets forth the 2008 base salary of the Company’s Named Executive Officers (which officers were determined by reference to the Proxy Statement for the Company’s 2008 Annual Meeting of Stockholders, dated March 10, 2008).

 
 
Name and Position
 
 
2008 Annual
Base Salary
 
 
August A. Busch IV
President and Chief Executive Officer
  $ 1,380,000  
           
 
W. Randolph Baker
Vice President and Chief Financial Officer
  $ 678,038  
           
 
Mark T. Bobak (¹)
Group Vice President and Chief Legal Officer
 
$           NA
 
           
 
Douglas J. Muhleman
Group Vice President, Brewing, Operations and Technology
Anheuser-Busch, Incorporated
  $ 633,663  
           
 
Michael J. Owens
Vice President – Business Operations
Anheuser-Busch, Incorporated
  $ 553,500  


(¹) Mark Bobak resigned from the Company effective December 31, 2007.

Information regarding 2007 bonus payments is contained in the Company’s Form 8-K filed with the Securities and Exchange Commission on February 1, 2008.  Information regarding 2008 bonuses is contained in Exhibit 10.20 to this Form 10-K  for the fiscal year ended December 31, 2007, filed with the Securities and Exchange Commission on February 29, 2008.

 
 

 


Also on November 28, 2007, the Committee approved grants of ten year incentive and non-qualified stock option awards to approximately 3,000 officers and management employees of the Company and its subsidiaries and affiliates eligible to receive such awards under the Company’s 2007 Equity and Incentive Plan including the Named Executive Officers for 2007.  The 2007 Equity and Incentive Plan is attached as Appendix B to the Proxy Statement for the Company’s 2007 Annual Meeting of Stockholders, dated March 12, 2007.

Information concerning the stock option awards to the Company’s Named Executive Officers is contained in Form 8-K dated November 27, 2007, and filed by the Company with the Securities & Exchange Commission on November 30, 2007.

The Company will provide additional information regarding compensation awarded to Named Executive Officers in respect of and during the year ended December 31, 2007, in the Proxy Statement for the Company’s 2008 Annual Meeting of Stockholders expected to be dated March 10, 2008, which is expected to be filed with the Securities and Exchange Commission on March 10, 2008.
 


Exhibit 10.30
CONSULTING AND NON-DISCLOSURE AGREEMENT
AND GENERAL RELEASE

            ANHEUSER-BUSCH COMPANIES, INC., a Delaware corporation with its principal offices at One Busch Place, St. Louis, Missouri, 63118, its affiliates, subsidiaries, divisions, successors and assigns, and their directors, officers, employees and agents, both in their official and individual capacities (all of whom are collectively referred to throughout this Consulting and Non-Disclosure Agreement and General Release as “Anheuser-Busch”), and MARK T. BOBAK (“Bobak”), residing in St. Louis, Missouri, mutually desire to enter into this Consulting and Non-Disclosure Agreement and General Release (“Agreement”) and agree as follows:

1.          Termination of Employment
 
            Bobak agrees to terminate employment with Anheuser-Busch on December 31, 2007, (“Termination Date”) in order to allow him to return to the private practice of law.

2.          Consulting Payments
 
            Anheuser-Busch agrees that during the period from the Termination Date through December 31, 2012 (the “Consulting Period”), so long as Bobak fulfills any assigned duties and complies with all Anheuser-Busch policies and the provisions of this Agreement:
 
            A.            Bobak will be paid a consulting fee of $52,884 per month. All consulting payments shall be payable in semi-monthly installments on the 15 th and last day of each month, less applicable withholding.  In the event that Bobak dies prior to December 31, 2012, Anheuser-Busch agrees to pay any remaining consulting payments due under this Agreement to Bobak’s spouse unless otherwise directed in writing by Bobak.
 
            B.           Bobak agrees to devote the time necessary to complete any projects assigned to him by the Chief Executive Officer or his designee. Anheuser-Busch will provide reasonable advance notice to Bobak of any work assignments, and will take into consideration Bobak’s other commitments.  Bobak also agrees that he will fully



cooperate with any request made by Anheuser-Busch relating to or arising out of corporate transactions, labor relations, government affairs, litigation or any other matter that Bobak worked on, learned of, or became familiar with during his employment with Anheuser-Busch.  Bobak will work from his personal residence or office and will not be provided with a company office or reserved parking spot.  Bobak may retain his Blackberry/cell phone, computer, home fax machine, and company e-mail address for purposes of performing services contemplated by this Agreement.  Such items will be returned upon request by Anheuser-Busch.  Subject to the provisions of this Agreement and provided there is no interference with Bobak’s efforts as requested by Anheuser-Busch, Bobak may provide services to other employers at any time after the Termination Date.  Bobak agrees to provide to the Chief Executive Officer a report of all projects and assignments that he is working on for Anheuser-Busch on a quarterly basis.
 
           C.             Anheuser-Busch will reimburse Bobak, pursuant to company expense reimbursement guidelines, for all ordinary, necessary and reasonable business expenses incurred by Bobak while conducting assignments for Anheuser-Busch at the direction of the Chief Executive Officer or his designee.
 
            D.             Except as otherwise provided in this Agreement, Bobak agrees to return all Anheuser-Busch property (including, but not limited to, company documents and records, whether in electronic or paper format, and all copies thereof, computers, cell phones, blackberries, fax machines, pagers, security badge and credit cards) on or before the Termination Date.
 
           E.             Anheuser-Busch will continue to provide Bobak and his eligible dependents with health care benefits as described herein (“Health Benefits”).  Until Bobak reaches the age of 58, he and his eligible dependents will continue to participate in the Group Insurance Plan for Certain Employees of Anheuser-Busch Companies, Inc. and its Subsidiaries (“Group Insurance Plan”), except that his benefits under the Group Insurance Plan will be limited to insured medical, dental, vision and prescription drug benefits (“Health Benefits”) that are materially similar to the health benefits provided from time to time to Anheuser-Busch full-time salaried employees, and subject to the same benefit limits, co-payments, premium payments and deductibles.  Upon Bobak

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reaching age 58, he and his eligible dependents will participate in the Group Insurance Plan for Certain Retirees of Anheuser-Busch (Retiree Insurance Plan), except that the Health Benefits will be limited to those that are materially similar to the health benefits provided from time to time to Anheuser-Busch retirees and subject to the same benefits limits, co-payments, premium payments and deductibles.  The selection of insurance carriers to provide the Health Benefits shall be in the sole discretion of Anheuser-Busch Companies, Inc.  The Health Benefits provided to Bobak during the Consulting Period shall, for purposes of coordination of benefits, be secondary to any subsequent benefit coverage(s) for which Bobak, his spouse and eligible dependents become eligible as a result of Bobak becoming an employee for any other employer.  Bobak agrees that in the event he obtains new employment during the Consulting Period, he shall notify the Anheuser-Busch Companies, Inc. Vice President, Corporate Human Resources, in writing within 30 days after he first becomes eligible for any health benefit coverage through any subsequent employer(s) and will provide Anheuser-Busch with a copy of the summary plan descriptions for such coverage(s).
 
            F.           Except as otherwise specifically provided herein, during the Consulting Period Bobak will not be eligible for any benefits from Anheuser-Busch Companies, Inc., or any of its subsidiaries, including, but not limited to, the following:
 
 
i)
long-term disability insurance coverage;
 
 
ii)
short-term disability coverage;
 
 
iii)
life insurance or retiree life insurance;
 
 
iv)
paid sick days;
 
 
v)
health care and/or dependent care spending account benefits;
 
 
vi)
legal assistance benefits;
 
 
vii)
country club membership;
 
 
viii)
monthly beer tickets and/or other complimentary beer; and
 
 
ix)
access to, or use of, the executive dining room, fitness center or barber shop.
 
            G.           Subject to review by the Compensation Committee of the audited financial statements and its certification that the performance goal set forth in the 2007 Officer

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Bonus Program has been met, Bobak shall receive a bonus for 2007 in the amount of $600,000 no later than March 1, 2008.
 
            H.           Notwithstanding Bobak’s termination of employment, unvested stock option grants made to Bobak  in 2005, 2006, and 2007 shall not terminate and shall vest and become exercisable in accordance with their original schedule; vested stock option grants made to Bobak prior to 2005 shall not terminate and shall remain exercisable for a period of five years following termination of employment (or, if shorter, for their stated terms); vested stock option grants made to Bobak in 2005 and afterwards shall not terminate and shall remain exercisable for their stated terms; and restricted stock grants made to Bobak shall not terminate and shall vest in accordance with their original terms, but only to the extent that the performance goals related to such grants are achieved.  All such grants shall otherwise remain subject to the terms of the applicable plans and agreements under which they were granted.
 
            I.            Bobak shall be eligible for incentive payments for 2008 and 2009 based on the successful completion of certain key initiatives and the attainment of certain key objectives in the Legal and Industry and Government Affairs Departments, as determined by the Chief Executive Officer of Anheuser-Busch in his sole discretion.

3.           Separation Benefits
 
           A.             Bobak agrees that upon his Termination Date, he will not be entitled to any severance benefits or any retiree life insurance benefits under any benefit plan of Anheuser-Busch Companies, Inc., or any of its subsidiaries.
 
            B.            After his Termination Date, Bobak will be entitled to elect distribution of his benefits from the Anheuser-Busch Salaried Employees’ Pension Plan (“SEPP”) and the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan (“401(k) Plan”) pursuant to the terms of those plans.  Bobak understands that processing of benefits from the SEPP or the 401(k) Plan will not begin until he notifies the SEPP or 401(k) Plan Administrator in writing that he wants to receive a distribution of benefits from the respective plan. Bobak shall become vested in his accrued benefit under the Anheuser-Busch Supplemental Executive Retirement Plan (“SERP”) on the Termination Date, and shall receive his distribution under the SERP as a lump sum payment in the amount of

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$1,304,118 on or about the first regularly scheduled business day after January 1, 2013.  Bobak will also receive a lump sum payment of $1,095,882 on or about the first regularly scheduled business day after January 1, 2013 as payment of additional pension benefits he would have accrued had he remained employed throughout the Consulting Period.

4.            No Admission of Liability
 
            Bobak acknowledges and agrees that he would not receive all the payments and benefits specified in this Agreement except for his execution of this Agreement and his fulfillment of its terms.  Neither the making of this Agreement, nor anything contained in it, shall in any way be construed or considered to be an admission by Anheuser-Busch of noncompliance with any law or of any other wrongdoing.

5.            Release of Liability
 
            A.              Except for any violation of the terms of this Agreement by Anheuser-Busch, Bobak, of his own free will, voluntarily releases and forever discharges Anheuser-Busch from all actions, causes of action, claims, debts, charges, complaints, contracts (whether oral or written, express or implied from any source) and promises of any kind, in law or equity, whether known or unknown, which Bobak, his heirs, executors, administrators, successors and assigns (referred to collectively throughout this Agreement as “Bobak”) may have from all time in the past to the effective date of this Agreement, including, but not limited to, all matters or claims relating to or arising out of Bobak’s employment by Anheuser-Busch and the cessation of his employment and including, but not limited to, any violation of:
 
 
(1)
Title VII of the Civil Rights Act , as amended;
 
 
(2)
Sections 1981 through 1988 of Title 42 of the United States Code;
 
 
(3)
the Employee Retirement Income Security Act , as amended;
 
 
(4)
the Health Insurance Portability and Accountability Act ;
 
 
(5)
the Family and Medical Leave Act ;
 
 
(6)
the Age Discrimination in Employment Act , as amended;
 
 
(7)
the Americans with Disabilities Act ;

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(8)
the Missouri Human Rights Act ;
 
 
(9)
the Sarbanes-Oxley Act of 2002 ;
 
 
(10)
any other local, state or federal law, regulation or ordinance and/or public policy, contract, tort or common law having any bearing on the terms and conditions and/or cessation of his employment with Anheuser-Busch.
 
            Except as otherwise provided in this Agreement, this release shall not apply to any claim for benefits that may be due to Bobak or his eligible dependents under any Anheuser-Busch employee benefit plan in which Bobak or his eligible dependents are or were participants.
 
 B.            Bobak warrants that he has not caused or permitted to be filed on his behalf any charge, complaint, or action before any federal, state or local administrative agency or court against Anheuser-Busch. In the event that any such claim is asserted in the future, Bobak agrees that this Agreement will act as a complete bar to his re-employment or to his recovery of any amount from Anheuser-Busch resulting, directly or indirectly, from any lawsuit, remedy, charge or complaint whether brought privately by him or by anyone else, including any federal, state or local agency, whether or not on his behalf or at his request.

6.            Confidentiality
 
            A.             As a result of his employment with Anheuser-Busch, Bobak has gained valuable confidential information and trade secrets relevant to Anheuser-Busch’s business operations including its information technology.  In light of the highly competitive nature of the industry in which Anheuser-Busch’s business is conducted, Bobak understands and agrees that he will keep in strict secrecy and confidence, and is specifically prohibited from disclosing, any and all unique, confidential and/or proprietary information and material belonging or relating to Anheuser-Busch that is not a matter of common knowledge or otherwise generally available to the public including, but not limited to, business, financial, trade, sales, technical or technological information, or corporate sales and marketing strategies, to any entity that competes with Anheuser-Busch.  In addition, Bobak agrees that he will not use any such confidential information,

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materials or trade secrets for the benefit of any of Anheuser-Busch’s competitors and/or against the best interests of Anheuser-Busch.
 
            B.              Bobak agrees that he will make no public statements and take no public action that disparages or is detrimental to Anheuser-Busch (including without limitation, its directors, officers and employees), or would otherwise cause or contribute to Anheuser-Busch being held in disrepute by the general public, customers or employees.  Anheuser-Busch Companies, Inc. (including, without limitation, its directors and officers) agrees that it will take no official public action that is intended to disparage or be detrimental to Bobak.  Anheuser-Busch also agrees to provide a mutually agreed-upon letter of reference to Bobak, and to provide a copy of such letter in response to any inquiry to the office of the Anheuser-Busch Companies, Inc. Vice President, Corporate Human Resources, from a prospective employer regarding Bobak’s employment by Anheuser-Busch.
 
            C.              Bobak agrees that he has obligations under the Missouri Rules of Professional Conduct, that those obligations will survive the termination of his employment, and that nothing herein shall be deemed to abridge, impair or waive such obligations.

7.            Restrictive Covenants
 
            A.              Except as specifically provided in subparagraph 7B below, or as otherwise agreed to in writing by Anheuser-Busch, and upon such terms and conditions as Anheuser-Busch may impose, from the date of the Agreement until December 31, 2012, Bobak shall not, anywhere in the world, engage, directly or indirectly, in any activity for, or on behalf of, any business or organization that manufactures, sells or distributes alcohol beverages and/or no-alcohol malt beverages, that promotes or encourages any restrictions on, or regulation of, the use, distribution or marketing of alcohol beverages, or that otherwise competes with any current business activity of Anheuser-Busch, either alone, as a member of a partnership or association, as an officer, director, employee, consultant, lobbyist or representative of or to any corporation, industry trade association, not-for-profit organization, or other business entity, or as an investor in, or

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beneficial owner of 1% or more of any security of any class of any corporation, or 1% or more of any equity interest of any unincorporated enterprise.
 
            B.              Notwithstanding the strict prohibitions in paragraph 7A above, Bobak may submit a request for approval in writing to the Anheuser-Busch Companies, Inc. Vice President, Corporate Human Resources, if he wishes to provide services of any kind described in paragraph 7A above.  Such written request will be considered by Anheuser-Busch which shall determine, in its sole discretion, whether such request should be granted.
 
C.              Bobak further agrees that he shall not solicit, recruit, or otherwise make contact with or respond to any contact from any employee of Anheuser-Busch, anywhere in the world, for the purpose of engaging or hiring or obtaining, directly or indirectly, the employee’s services by or for another partnership, firm, company or organization.

8.           Enforceability and Choice of Law
 
            A.              Bobak and Anheuser-Busch agree that in the event either party breaches any provision of this Agreement, the sole remedy of the other party is the enforcement of the terms of this Agreement.
 
            B.              Bobak agrees that if he violates any provision of paragraph 6 or 7, or in the event that an arbitrator or court of competent jurisdiction rules that the restrictive covenants in paragraph 7 are not enforceable (either circumstance will be referred to in this paragraph as an “Event”), he shall forfeit, as of the date of the Event, all remaining consulting payments described in paragraph 2A, eligibility for Health Benefits described in paragraph 2E, any unpaid bonus described in paragraph 2G, any unexercised stock option grants and unvested restricted stock grants described in paragraph 2H, the discretionary incentive payments described in paragraph 2I and any remaining payments described in the last two sentences of paragraph 3B.  In the event that Anheuser-Busch believes that Bobak is in violation of paragraph 6 or 7 of this Agreement, Anheuser-Busch shall give Bobak written notice of such violation, and Bobak shall be provided with a reasonable opportunity to cure such violation, discontinue such conduct, or present documented evidence establishing that the activity

8


or employment does not constitute a violation of this Agreement, prior to Anheuser-Busch availing itself of its remedies under this paragraph 8.  Anheuser-Busch will have the right, at any time, to request that Bobak certify that he is in compliance with paragraphs 6 and 7, and Bobak’s failure to certify compliance as requested will be deemed to be an Event as defined in this paragraph 8, a material violation, and a material breach of this Agreement.  Bobak understands and agrees that any breach of the provisions of paragraphs 6 or 7 of this Agreement shall constitute a material breach of this Agreement and that Anheuser-Busch, in addition to its right to terminate the Agreement, shall be entitled to injunctive and other equitable relief to prevent the threatened or continued breach of this Agreement.
 
             C.             Except as otherwise provided in subparagraph 8B above, should Bobak challenge any provision of this Agreement and such provision be declared illegal or unenforceable by any arbitrator or court of competent jurisdiction and cannot be modified to be enforceable, such provision will immediately become void, leaving the remainder of this Agreement in effect.  However, if any portion of the general release (paragraph 5) is ruled to be unenforceable as a result of such challenge, Bobak agrees that Anheuser-Busch will be entitled to a set-off against any subsequent judgment or award made to Bobak in the amount of all compensation paid to him by Anheuser-Busch under this Agreement.
 
            D.              The parties have read and fully considered the Agreement and mutually desire to enter into this Agreement.  The terms of this Agreement are the product of mutual negotiation and compromise between Bobak and Anheuser-Busch.  Having elected to execute this Agreement, to fulfill the promises and receive the benefits set forth herein, Bobak freely and knowingly, and after due consideration, enters into this Agreement intending to waive, settle, and release all claims he has against Anheuser-Busch as the effective date of this Agreement.
 
            E.             It is the parties’ intent and expectation that the insured medical, dental, vision and prescription drug benefits (“Exempt Benefits”) provided to Bobak under the terms of this Agreement are exempt from the application of Internal Revenue Code Section 409A (“Section 409A”) and all regulations and other guidance issued thereunder.  In the event that new regulations, interpretations or other legal guidance

9


change that assessment, the parties intend that appropriate adjustments will be made to cause the Exempt Benefits to be exempt or, if that is not possible, to cause the Exempt Benefits to comply with Section 409A.  It is also the parties’ intent and expectation that all forms of compensation provided by this Agreement that are subject to the application of Section 409A (“Nonexempt Benefits”) will fully comply with Section 409A, and in the event that new regulations, interpretations or other legal guidance change that assessment, the parties intend that appropriate adjustments will be made to cause the Nonexempt Benefits to comply with Section 409A.

9.            Miscellaneous
 
            A.              This Agreement constitutes a Summary of Material Modifications (SMM) that supplements the Eligibility and Administrative Rules Booklet summary plan description previously distributed to Bobak.  As an SMM, this Agreement provides Bobak with information about the Group Insurance Plan for Certain Employees of Anheuser-Busch Companies, Inc. and its Subsidiaries that is in addition to that contained in Bobak’s Eligibility and Administrative Rules Booklet summary plan description and prior SMMs.
 
            B.              Bobak acknowledges that he has been advised by Anheuser-Busch that there may be substantial federal and state income tax consequences for Bobak as a result of entering into this Agreement, and that he should seek professional tax and legal advice before doing so.  Bobak further acknowledges that he has not been provided with any advice on the tax effects of this Agreement by Anheuser-Busch or any of its employees or agents.
 
            C.              Anheuser-Busch and Bobak agree that all disputes between the parties relating to or arising out of:  (a) this Agreement; (b) Bobak’s employment with Anheuser-Busch; and/or (c) the cessation of Bobak’s employment with Anheuser-Busch must be resolved through the Anheuser-Busch Dispute Resolution Program, which includes final and binding arbitration of covered claims.  Bobak acknowledges that he has previously signed a “Mutual Agreement to Arbitrate Claims,” the terms of which are incorporated into this Agreement by this reference and remain binding on the parties.  An executed copy of the Mutual Agreement to Arbitrate Claims is attached hereto.  Notwithstanding

10


anything to the contrary contained herein, Anheuser-Busch shall be entitled to seek enforcement of the provisions of paragraphs 6 and 7 in a court of competent jurisdiction.


10.          Notices
 
            Unless otherwise provided, all notices, requests, consents and other communications required or permitted under this Agreement must be in writing and must be hand-delivered or mailed, addressed as follows, or to such other address as may be provided by the respective parties to this Agreement:
 
            If to Anheuser-Busch:
 
                     Anheuser-Busch Companies, Inc.
                     One Busch Place
                     St. Louis, MO 63118
                     Attn.:  Vice President, Corporate Human Resources

            If to Mr. Bobak:
                     Mr. Mark T. Bobak
                           At his address on record with Anheuser-Busch

11.         The validity of this Agreement shall be governed by and construed according to the law of the State of Missouri.  This Agreement and the exhibits thereto constitute the entire and exclusive agreement between Bobak and Anheuser-Busch with respect to Bobak’s employment status and any rights and duties owed by Anheuser-Busch to Bobak and, except as otherwise provided in this Agreement, it supersedes all previous or contemporaneous negotiations, commitments, agreements, statements, representations, or promises, oral or written.  This Agreement may not be modified except in a writing signed by both parties.

12.         BOBAK STATES THAT HE HAS CAREFULLY READ THIS “CONSULTING AND NON-DISCLOSURE AGREEMENT AND GENERAL RELEASE,” THAT HE KNOWS AND UNDERSTANDS ITS CONTENTS AND THAT HE IS ENTERING INTO THIS AGREEMENT AS HIS OWN FREE ACT AND DEED.  BOBAK FURTHER REPRESENTS AND AGREES THAT:

 
·
HE HAS BEEN ADVISED BY ANHEUSER-BUSCH TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT;

11

 
 
·
HE FULLY UNDERSTANDS THAT HIS EXECUTION OF THIS AGREEMENT CONSTITUTES A FULL AND FINAL RELEASE OF ALL CLAIMS HE MAY HAVE AGAINST ANHEUSER-BUSCH AS OF THE EFFECTIVE DATE OF THE AGREEMENT WITH FINAL AND BINDING EFFECT;
 
 
·
HE HAS BEEN GIVEN AT LEAST 21 DAYS TO CONSIDER THIS AGREEMENT;

 
·
FOR A PERIOD OF 7 DAYS FROM THE DATE HE SIGNS THIS AGREEMENT, BOBAK MAY REVOKE THIS AGREEMENT BY NOTIFYING ANHEUSER-BUSCH IN WRITING OF HIS INTENT TO DO SO; AND

 
·
THIS AGREEMENT WILL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED.

THIS AGREEMENT IS SUBJECT TO A BINDING ARBITRATION AGREEMENT, WHICH MAY BE ENFORCED BY THE PARTIES.

The parties to this Consulting and Non-Disclosure Agreement and General Release now voluntarily and knowingly execute this Agreement.

ANHEUSER-BUSCH COMPANIES, INC.,
 
 
By:     / s/ John T. Farrell                                              Date:      12 /10/07                   
         Vice President, Corporate Human Resources



  /s/ Mark T. Bobak                                                      Date:      12 /10/07                   
MARK T. BOBAK

 
 
12

 


Exhibit 12


ANHEUSER-BUSCH COMPANIES, INC.

RATIO OF EARNINGS TO FIXED CHARGES


The following table sets forth the Company’s ratio of earnings to fixed charges, on a consolidated basis for the periods indicated ($ in millions):


 
2007
2006
2005
2004
2003
Earnings
         
Consolidated pretax income
$2,422.7
$2,276.9
$2,057.4
$2,812.1
$2,643.9
Dividends received from equity investees
413.3
247.0
210.1
179.0
169.2
Net interest capitalized
10.7
10.8
8.3
7.7
3.3
Fixed charges
530.3
498.5
502.3
471.1
442.6
Adjusted earnings
$3,377.0
$3,033.2
$2,778.1
$3,469.9
$3,259.0
           
Fixed Charges
         
Interest expense
$484.4
$451.3
$454.5
$426.9
$401.5
Interest portion of rent expense 1 /
40.3
41.9
42.5
38.9
36.3
Amortization of deferred debt issuance
costs
5.6
5.3
5.3
5.3
4.8
Total fixed charges
$530.3
$498.5
$502.3
$471.1
$442.6
           
Ratio of Earnings to Fixed Charges
6.4X
6.1X
5.5X
7.4X
7.4X



1 /
Calculated as one-third of total rents paid.





 
EXHIBIT 13
 
 
ANHEUSER-BUSCH COMPANIES, INC.                                                              26                                                                      2007 ANNUAL REPORT
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS
AND FINANCIAL CONDITION
 
This discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of Anheuser-Busch Companies, Inc., for the three-year period ended December 31, 2007. This discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements included in this annual report.
 
Objectives
 
Anheuser-Busch remains focused on its three core objectives designed to enhance long-term shareholder value:
 
Increasing U.S. beer segment volume and per barrel profitability, which will provide the basis for earnings per share growth and improvement in return on capital employed.
 
Increasing international beer segment profit growth. Anheuser-Busch has made significant marketing investments to build recognition of its Budweiser brands outside the United States and owns and operates breweries in China, including Harbin Brewery Group, and in the United Kingdom. The company also has a 50% equity position in Grupo Modelo, Mexico’s largest brewer and producer of the Corona brand, and a 27% equity position in Tsingtao, one of the largest brewers in China and producer of the Tsingtao brand.
 
Continued growth in pretax profits and free cash flow from the packaging and entertainment segments. Packaging operations provide significant efficiencies, cost savings and quality assurance for U.S. beer operations. Entertainment operations enhance the company’s corporate image by showcasing Anheuser-Busch’s heritage, values and commitment to quality and social responsibility to more than 20 million visitors each year.
 
Comparison of Operating Results
 
Anheuser-Busch achieved significant results in 2007, generating strong earnings growth and broadening its beer portfolio to enhance the company’s participation in the high-end segment. Revenue per barrel performance was solid and the company managed cost pressures effectively. International beer profits for the year for Anheuser-Busch-owned operations as well as those of the company’s equity partners increased significantly, while both the packaging and entertainment segments contributed strong earnings growth. The company also achieved significant increases in operating cash flow, return on capital and cash returned to shareholders.
 
Comparisons of key operating results for 2007, 2006 and 2005 are summarized in the following tables. In the first quarter 2006, Anheuser-Busch adopted FAS 123R, Share-Based Payment, which requires expense recognition for stock options and all other forms of equity compensation, based on the fair value of the instruments on the date of grant. To enhance the comparability of all periods presented and provide the fullest understanding of the impact that expensing stock compensation has on the company’s financial results, Anheuser-Busch elected to apply the modified retrospective method of adopting FAS 123R and therefore recast operating results from prior years to incorporate the impact of pro forma stock compensation expense related to those years that had been previously disclosed, but not recognized under accounting standards applicable at that time. For financial reporting purposes, stock compensation expense is included in cost of sales and marketing, distribution and administrative expenses, depending on where the recipient’s cash compensation is reported. Stock compensation expense is classified as a corporate item for segment reporting and was $.13, $.11 and $.12 per diluted share for 2007, 2006 and 2005, respectively.
 
Operating results and comparisons to prior years include the impact of various nonrecurring transactions in each year that make direct comparisons of underlying operations between years difficult. The company has therefore normalized certain results within this discussion to facilitate comparison. In 2007, Anheuser-Busch recorded gains on the sale of the company’s remaining interest in the Port Aventura theme park in Spain and on the sale of certain beer distribution rights in southern California, and also incurred its pro rata share of a charge by Grupo Modelo for restructuring of Modelo’s domestic distribution system and C-store closings. In 2006, the company recorded a one-time deferred income tax benefit resulting from tax legislation in Texas. The normalization items in 2005 are settlement of litigation involving a U.S. beer wholesaler, the favorable impact of settling certain tax matters in Chile related to the sale of the company’s former investment in Compa ñ í a Cervecer í as Unidas S.A. (CCU), a deferred income tax benefit from tax legislation in Ohio and a pretax gain plus a tax benefit on the sale of a portion of the company’s Spanish theme park investment. Excluding these normalization items, diluted earnings per share increased 10.3% in 2007, 9.1% in 2006 and decreased 10.5% in 2005. The company believes excluding certain normalization items from its analysis of operating results provides a more accurate basis of comparison among years by eliminating potential distortion of the company’s underlying performance trends, both favorable and unfavorable. This is the same basis of comparison used by Anheuser-Busch management and the Board of Directors to evaluate the company’s operations. See additional discussion and quantitative analysis on pages 30 through 33.

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ANHEUSER-BUSCH COMPANIES, INC.                                                              27                                                                      2007 ANNUAL REPORT
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Following are comparative summaries of key operating results for 2007, 2006 and 2005 (in millions, except per share).
 
   
2007
   
2006
   
2007 vs. 2006
Gross sales
  $ 18,989     $ 17,958    ▲ $ 1,031      ▲ 5.7 %
Net sales
  $ 16,686     $ 15,717    ▲ $ 969      ▲ 6.2 %
Income before income taxes
  $ 2,423     $ 2,277    ▲ $ 146      ▲ 6.4 %
Equity income, net of tax
  $ 662     $ 589    ▲ $ 73      ▲ 12.5 %
Net income
  $ 2,115     $ 1,965    ▲ $ 150      ▲ 7.6 %
Diluted earnings per share
  $ 2.79     $ 2.53    ▲ $ .26      ▲ 10.3 %
 
 
 
2006
   
2005
   
2006 vs. 2005
 
Gross sales
  $ 17,958     $ 17,254    ▲ $ 704      ▲ 4.1 %
Net sales
  $ 15,717     $ 15,036    ▲ $ 681      ▲ 4.5 %
Income before income taxes
  $ 2,277     $ 2,057    ▲ $ 220      ▲ 10.7 %
Equity income, net of tax
  $ 589     $ 498    ▲ $ 91      ▲ 18.2 %
Net income
  $ 1,965     $ 1,744    ▲ $ 221      ▲ 12.7 %
Diluted earnings per share
  $ 2.53     $ 2.23    ▲ $ .30      ▲ 13.5 %
 
 
 
2005
   
2004
   
2005 vs. 2004
Gross sales
  $ 17,254     $ 17,160    ▲ $ 94      ▲ 0.5 %
Net sales
  $ 15,036     $ 14,934    ▲ $ 102      ▲ 0.7 %
Income before income taxes
  $ 2,057     $ 2,812    ▼ $ 755      ▼ 26.8 %
Equity income, net of tax
  $ 498     $ 404    ▲ $ 94      ▲ 23.3 %
Net income
  $ 1,744     $ 2,119    ▼ $ 375      ▼ 17.7 %
Diluted earnings per share
  $ 2.23     $ 2.62    ▼ $ . 39      ▼ 14.9 %
 
SALES
Revenue per barrel reflects the net average sales price the company obtains from wholesaler customers for its products. Generally, the higher the net revenue per barrel, the greater the company’s gross profit dollars and gross profit margin, with revenue per barrel increases having nearly one and a half times the impact on profits as comparable percentage increases in beer volume. 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. Anheuser-Busch strives to obtain long-term revenue per barrel increases that are slightly above increases in the U.S. Consumer Price Index (CPI). On a constant dollar basis, beer is more affordable today than it was 10 years ago, and the company believes this long-term revenue per barrel strategy allows for continuing future moderate price increases. The company also believes that significant excise tax increases, although not expected, could disrupt the current industry pricing environment because tax increases could trigger retail beer price increases significantly in excess of the CPI. Such price increases would be borne directly by consumers.
 
The company has led the U.S. brewing industry in sales volume and market share since 1957. Anheuser-Busch reports U.S. beer sales volume based on beer sales to the company’s network of independent wholesalers. Higher beer sales-to-wholesalers volume will increase gross profit dollars and potentially increase gross profit margin. Wholesaler sales-to-retailers volume reflects demand for the company’s products at the retail level. Higher sales-to-retailers require increased beer sales-to-wholesalers to meet ongoing demand.
 
WORLDWIDE BEER VOLUME
The company’s reported beer volume for the three years ended December 31, 2007, is summarized in the following table (in millions of barrels).
 
   
2007
   
2006
   
Change
U.S.
    104.4       102.3      ▲ 2.0 %
International
    24.0       22.7      ▲ 5.8 %
Worldwide Anheuser-Busch brands
    128.4       125.0      ▲ 2.7 %
Equity partner brands
    33.2       31.6      ▲ 4.9 %
Total brands
    161.6       156.6      ▲ 3.2 %
 
   
2006
   
2005
   
Change
U.S.
    102.3       101.1      ▲ 1.2 %
International
    22.7       20.8      ▲ 9.3 %
Worldwide Anheuser-Busch brands
    125.0       121.9      ▲ 2.6 %
Equity partner brands
    31.6       26.4      ▲ 19.7 %
Total brands
    156.6       148.3      ▲ 5.6 %
 
   
2005
   
2004
   
Change
U.S.
    101.1       103.0      ▼ 1.8 %
International
    20.8       13.8      ▲ 50.8 %
Worldwide Anheuser-Busch brands
    121.9       116.8      ▲ 4.4 %
Equity partner brands
    26.4       19.3      ▲ 36.6 %
Total brands
    148.3       136.1      ▲ 9.0 %
 
Worldwide Anheuser-Busch beer volume is composed of U.S. beer volume plus international volume. U.S. beer volume represents beer shipped to wholesalers within the United States, which includes both the company’s domestically produced brands and imported brands. International beer volume consists of Anheuser-Busch brands produced overseas by company-owned breweries in China and the United Kingdom and under various license and contract-brewing agreements, plus exports from the company’s U.S. breweries. Equity partner brands volume represents the company’s ownership percentage share of volume in its equity partners reported on a one-month-lag basis. Total brands combine worldwide Anheuser-Busch brands volume with equity partner brands.

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ANHEUSER-BUSCH COMPANIES, INC.                                                              28                                                                      2007 ANNUAL REPORT
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SALES – 2007 VS. 2006
Anheuser-Busch reported gross sales in 2007 of $19.0 billion, an increase versus the prior year of $1.0 billion, or 5.7%. Net sales were $16.7 billion, up $969 million, or 6.2% compared to 2006. The difference between gross and net sales is beer excise taxes of $2.3 billion. The improvement in net sales is due to contributions from all of the company’s operating segments. U.S. beer sales increased $718 million, or 6% on increased revenue per barrel and higher beer shipments. International beer sales were up $99 million, or 10% primarily due to volume increases. Packaging segment net sales improved $35 million, or 2% due to higher can manufacturing and aluminum recycling revenues. Entertainment sales increased $94 million, or 8% from increased attendance and higher ticket pricing and in-park spending.
 
U.S. beer revenue per barrel increased 3% as a result of successful price increases and favorable brand mix, contributing $373 million of the increase in segment net sales. Beer shipment volume increases of 2% provided $242 million in net sales improvement for the year, while non-beer revenues added $103 million. Wholesaler sales-to-retailers grew 1.3% in 2007. The company’s acquired and import brands contributed 170 and 160 basis points of growth to shipments and sales-to-retailers, respectively. Wholesaler inventories for company-produced brands at the end of 2007 were approximately the same as at the end of 2006. U.S. beer industry volume was strong in 2007 for the second year in a row, up approximately 1.4%. The company’s estimated U.S. beer market share for 2007 was 48.5% compared to prior year market share of 48.2%. 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 increased 5.8% for the year, primarily due to increased volume in China, Canada and Mexico, partially offset by lower volume in the United Kingdom. Worldwide Anheuser-Busch brands volume increased 2.7% for the year to 128 million barrels. Equity partner brands volume grew 4.9% on Tsingtao and Modelo volume growth. Total brands volume was up 3.2%, to 162 million barrels for 2007.
 
SALES – 2006 VS. 2005
The company reported gross sales of $18.0 billion and net sales of $15.7 billion in 2006. Gross sales improved $704 million, or 4%, and net sales were up $681 million, or 4.5%. The difference between gross and net sales is due to beer excise taxes of $2.2   billion. Sales increases for the year were driven by improvement in all operating segments. U.S. beer net sales increased 3%, or $308 million on higher beer sales volume and increased revenue per barrel. International beer segment net sales grew 7%, or $65 million, primarily on volume increases. Packaging segment net sales increased 10%, or $153 million, on higher recycling sales. Entertainment sales increased 9%, or $94 million primarily from increased attendance and higher in-park spending.
 
U.S. beer revenue per barrel was up 1.4% due to the successful implementation of price increases and discount reductions on a majority of the company’s U.S. beer volume. Revenue per barrel contributed $197   million to the segment increase in net sales, including the impact of acquired and import brands. The 1.2% increase in U.S. beer volume added $111 million to the increase in segment net sales. Wholesalers’ sales-to-retailers increased 1.1% for the year. Acquired and import brands contributing 0.5 points of growth to both beer volume and sales-to-retailers. Wholesaler beer inventory levels at the end of 2006 were more than 1.5 days below 2005 year-end levels. U.S. beer industry volume was up approximately 2% in 2006. The company’s estimated U.S. market share for the full year was 48.2%, compared with 2005 market share of 48.7%. The company’s 2006 shipment-based market share comparisons were adversely impacted by the reduction in wholesaler inventories.  
 
International beer volume was up 9.3%, or 1.9 million barrels, on volume growth in China, Canada and Mexico, partially offset by declines in the United Kingdom and Ireland. Worldwide Anheuser-Busch brands volume was up 2.6%, or 3.1 million barrels, to 125.0   million barrels. Equity partner brands volume grew 19.7% for the year, to 31.6 million barrels due to Modelo and Tsingtao volume growth. The company began equity accounting for Tsingtao in May 2005. Total brands volume was up 5.6%, to 156.6 million barrels for the year.

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ANHEUSER-BUSCH COMPANIES, INC.                                                              29                                                                      2007 ANNUAL REPORT
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SALES – 2005 VS. 2004
Gross and net sales increased slightly in 2005, to $17.3 billion and $15.0 billion, respectively. Beer excise taxes totaled $2.2   billion. For the year, gross sales increased $94 million, or 0.5%, and net sales improved $102 million, or 1% on sales improvement in international beer, packaging and entertainment operations, partially offset by lower U.S. beer sales. International beer sales were up $123 million, or 15% due primarily to higher beer volume in China, Canada and Mexico. Packaging operations sales were up $116 million, or 8% on higher aluminum prices and increased volume. Entertainment sales increased $96 million, or 10% from higher attendance, increased pricing and increased in-park spending. U.S. beer segment net sales decreased 2.5%, or $285 million, with $206 million of the decrease due to a 1.8% decline in beer sales volume, and $79 million stemming from a 0.5% decrease in revenue per barrel for the year.
 
U.S. beer sales-to-wholesalers declined 1.8% while wholesaler sales-to-retailers increased 0.2% (selling day adjusted). Sales-to-retailers results were led by the introduction of Budweiser Select. Wholesaler inventories were reduced significantly during 2005, ending   the year more than two days lower than the end of 2004. The company’s estimated U.S. beer market share for 2005 was 48.7%, compared with 2004 market share of 49.6%. Anheuser-Busch’s market share was adversely impacted by the reduction in wholesaler inventories.
 
International beer volume increased 50.8%, or 7.0 million barrels in 2005 due primarily to increased volume in China, Canada and Mexico, and the impact of the Harbin Brewery acquisition in mid-2004. International volume excluding the impact of Harbin increased 324,000 barrels, or 3.8% for the year. The increase in international beer volume drove a worldwide Anheuser-Busch brands volume increase of 4.4% for 2005, to 121.9 million barrels. Equity partner brands volume grew 7.1 million barrels, or 36.6% in 2005 due to Modelo volume growth and the addition of Tsingtao equity volume beginning in May 2005, partially offset by the loss of volume from the sale of CCU in the fourth quarter 2004. Total brands volume was up 9%, to 148.3 million barrels for the full year 2005.
 
COST OF SALES
The company continuously strives to reduce costs throughout its manufacturing and distribution systems. Brewery modernizations have yielded long-term savings through reduced beer packaging and shipping costs and reduced maintenance costs. The company’s focused production methods and wholesaler support distribution centers concentrate small-volume brand and package production at three of the company’s 12 breweries to create production efficiencies, reduce costs and enhance responsiveness to changing consumer brand and package preferences. The company also works to reduce distribution costs for its products through better systemwide coordination with its network of independent wholesalers.
 
Cost of sales was $10.8 billion for 2007, an increase of $671   million, or 7%. This increase was primarily attributable to incremental costs associated with higher U.S. and international beer volumes, overall higher costs for brewing and packaging materials, higher plant operating costs in U.S beer and packaging operations and higher labor and operating costs for entertainment operations, partially offset by lower energy costs. Incremental costs for 2007 associated with increased U.S. and international beer volume were $318 million and $41 million, respectively. Gross profit as a percentage of net sales was 35.1%, down 20 basis points versus 2006.  
 
For 2006, cost of sales increased $559 million, or 6% to $10.2   billion. The increase in cost of sales is attributable to higher costs for all the company’s segments, including costs associated with higher beer volume worldwide; increased packaging materials and plant operating costs for U.S. beer; higher energy costs for all operations; increased aluminum costs for recycling operations; and higher park operating costs for entertainment operations. Incremental costs associated with increased beer volume were $75 million for U.S. beer and $48 million for international operations. Gross profit as percentage of net sales was down 80 basis points for the year, to 35.3% due primarily to lower gross margins for U.S. and international beer and for recycling operations.
 
Cost of sales was $9.6 billion for 2005, an increase of $586   million, or 6.5%. This increase was attributable to higher costs for all of the company’s major business segments, including higher aluminum and other packaging materials expense and increased energy costs for U.S. beer; incremental production costs for international beer associated with higher beer volume and the timing of the Harbin acquisition; increased aluminum, energy and other manufacturing costs for the packaging segment; and higher park operating expenses in entertainment operations. Gross profit as a percentage of net sales decreased 350 basis points, to 36.1%, due primarily to the decreases in U.S. beer sales volume and revenue per barrel combined with increases in U.S. beer production costs.

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ANHEUSER-BUSCH COMPANIES, INC.                                                              30                                                                      2007 ANNUAL REPORT
.................................................................................................................................................................................................................
 

 
MARKETING, DISTRIBUTION
AND ADMINISTRATIVE EXPENSES
Advertising and promotional activities for its beer brands and theme park operations are important elements of Anheuser-Busch’s strategy and represent significant annual expenditures. The company employs a variety of national, regional and local media outlets in its promotional efforts, including television, radio, the Internet, print and outdoor advertising and event sponsorships.
 
Marketing, distribution and administrative expenses for 2007 were $3.0 billion, an increase of $150 million, or 5%. The increase is the result of higher U.S. beer marketing costs, including incremental marketing and selling expense for the company’s new import beer portfolio, increased marketing costs for entertainment operations and higher delivery costs for company-owned beer wholesalerships and for international beer operations. Administrative expenses in 2007 include asset disposition gains and a FAS 88 settlement   charge.
 
Marketing, distribution and administrative expenses were $2.8 billion for 2006, a decrease of $5 million due to lower marketing expenses for U.S. beer mostly offset by higher marketing costs for international beer in China and for entertainment operations, and increased general and administrative costs. The company also experienced slightly favorable distribution costs for company-owned beer wholesale operations due to having one less location.
 
Marketing, distribution and administrative expenses for 2005 were $2.8 billion, an increase of $97 million, or 3.5%. The increase is the result of higher marketing and selling costs for both U.S. beer and international beer operations and increased entertainment marketing costs, partially offset by reduced general and administrative expenses.   U.S. beer marketing costs were up primarily for the national introduction of Budweiser Select, and to support the beer volume and market share growth initiatives. International beer marketing increased primarily due to the Harbin acquisition. Higher U.S. beer distribution costs were largely the result of increased fuel costs, while international distribution costs increased due to Harbin and higher costs in the United Kingdom.
 
OPERATING INCOME
Operating income represents the measure of the company’s financial performance before net interest cost, other nonoperating items and equity income. Operating income for 2007 includes the $26.5 million gain from the sale of certain beer distribution rights in southern California, which is shown as a separate line item in the consolidated income statement and is reported as part of the U.S. beer segment. Additionally, 2005 operating results include the one-time $105 million litigation settlement cost which is reported as a separate line item in the income statement and classified as a corporate item for segment reporting.
 
Anheuser-Busch reported operating income of $2.9 billion in 2007, up $174 million, or 6% on improved results from all business segments, including the U.S. beer distribution rights gain. Operating margin was 17.3%, level versus prior year. Excluding the distribution rights gain, operating income was up 5%, while operating margin declined 10 basis points as shown below.
 
             2007   2006
  Change
 
Reported operating margin
    17.3 %   17 .3 %
—   pts.
 
Gain on sale of distribution rights
    (0.1 )    
(0.1) pts.
 
Excluding gain on sale of rights
 
17.2
%   17 .3 %
(0.1) pts.
 
 
The company generated operating income of $2.7 billion in 2006, an increase of $233 million, or 9% due to increased profits in U.S. beer and entertainment operations and the 2005 litigation settlement. Operating margin for the year was up 80 basis points to 17.3%. Excluding the litigation settlement, operating income was up 5% and operating margin improved 10 basis points, as shown below.
 
   
  2006
2005
Change
 
Reported operating margin
    17.3 %   16.5 %
0.8 pts.
 
Impact of litigation settlement
        0.7  
(0.7) pts.
 
Excluding litigation settlement
 
17.3
%   17.2 %
0.1 pts.
 
 
Operating income of $2.5 billion in 2005 decreased $687 million, or 22% on lower profits in U.S. beer, international beer and packaging operations and the impact of the litigation settlement, partially offset by improved results from entertainment operations. Operating margin for 2005 was 16.5%, a decline of 480 basis points due primarily to reduced U.S. beer sales volume, lower revenue per barrel and higher operating costs, plus the litigation settlement. Excluding the litigation settlement, operating margin decreased 410 basis points, as shown below.
 
   
  2005
 
2004
Change   
Reported operating margin
    16.5 %   21.3 %
(4.8) pts.
 
Impact of litigation settlement
    0.7      
0.7  pts.
 
Excluding litigation settlement
 
17.2
%   21.3 %
  (4.1) pts.
 
 
INTEREST EXPENSE LESS INTEREST INCOME
Interest expense less interest income was $480.5 million for 2007, $449.5 million for 2006 and $452.1 million for 2005, representing an increase of 7% in 2007, a decrease of 1% in 2006 and an increase of 7% for 2005. The increase in 2007 is due to higher average debt balances during the year partially offset by slightly lower average interest rates and higher interest income. The 2006 result is due to lower average debt balances throughout the year mostly offset by higher average interest rates. The increase in 2005 is primarily due to higher average outstanding debt balances compared with prior year, plus the impact of slightly higher average interest rates. See the Liquidity and Financial Condition section for additional information regarding the company’s leverage philosophy and specific changes in the company’s debt portfolio.


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ANHEUSER-BUSCH COMPANIES, INC.                                                              31                                                                      2007 ANNUAL REPORT
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INTEREST CAPITALIZED
Interest capitalized as part of the cost basis of capital assets was $17.4 million in 2007, $17.6 million in 2006 and $19.9 million in 2005. The amount of interest capitalized fluctuates depending on construction-in-progress balances, which are impacted by the amount and timing of capital spending, the timing of project completion dates and by market interest rates.
 
OTHER INCOME/(EXPENSE), NET
Other incom e/( expense), net includes items of a nonoperating nature that do not have a material impact on the company’s consolidated results of operations, either individually or in total. Earnings from the company’s equity investments in U.S. beer wholesalers are included in other income in 2005. The company had consolidated net other expense of $8.2 million in 2007 and $10.8 million in 2006, and net other income of $2.7 million in 2005.
 
Other expense in 2007 includes the $16 million pretax gain on the sale of the last portion of the company’s investment in the Port Aventura theme park in Spain, plus expense associated with the early redemption of the company’s 7.125% debentures due 2017. Other income for 2005 includes a $15.4 million pretax gain from the partial sale of the Spanish theme park investment partially offset by expenses incurred to call the company’s 7.25% and 7.00% U.S. dollar debentures due 2015 and 2025, respectively. These transactions are all classified as corporate items for business segment reporting.
 
INCOME BEFORE INCOME TAXES — 2007 VS. 2006
The company reported income before income taxes of $2.4 billion for 2007, an increase of 6%, or $146 million due to improved results from all business segments partially offset by higher net interest expense. Reported income before income taxes includes the previously discussed gains from the sale of beer distribution rights in California and the Port Aventura theme park sale in Spain. Excluding these normalization items, pretax income increased 4.5% (see page 33).
 
Reported U.S. beer pretax income increased $75 million, or 3% on higher revenue per barrel and increased beer volume partially offset by higher production costs and marketing spending, particularly for the company’s import beer portfolio. Excluding the gain on the sale of distribution rights, U.S. beer pretax income increased 2%, as shown below.
 
   
2007
   
2006
   
Change
Reported U.S. Beer pretax income
  $ 2,784.0     $ 2,709.2       2.8 %
Gain on sale of distribution rights
    (26.5 )           (1.0 )%
U.S. Beer pretax excluding gain
  $ 2,757.5     $ 2,709.2       1.8 %
 
International beer pretax income increased $17 million, or 22% due primarily to increased profits in China, Canada and Mexico, partially offset by lower results in the United Kingdom. Packaging segment pretax income increased $31 million, or 22% on improved performance for all packaging businesses, led by higher can manufacturing and recycling profits. Entertainment segment pretax results improved $30 million, or 13% on increased attendance and higher ticket pricing and in-park spending.
 
INCOME BEFORE INCOME TAXES — 2006 VS. 2005
On a reported basis, 2006 income before income taxes increased 11%, or $220 million due to higher profits in U.S. beer and entertainment operations. Pretax income increased 6%, when excluding from 2005 results both the $105 million pretax litigation settlement charge and the $15.4 million pretax gain from the sale of the theme park interest in Spain (see page 33). Income before income taxes for U.S. beer was up 3%, or $83 million on higher volume, increased revenue per barrel and lower marketing costs, partially offset by higher beer production costs. Higher costs are primarily attributable to increased costs for aluminum and other packaging materials and energy. International beer pretax income decreased 11%, or $10 million due to lower earnings in the United Kingdom partially offset by increased profits in China, Canada, Ireland and Mexico. Packaging segment pretax income was up 2.5%, or $4 million primarily due to higher can manufacturing profits. Entertainment segment pretax results improved 13%, or $27 million on increased attendance and in-park spending, partially offset by higher park operating expenses and marketing costs.
 
INCOME BEFORE INCOME TAXES — 2005 VS. 2004
Reported income before income taxes decreased $755 million, or 27% primarily reflecting lower profits in U.S. beer, international beer and packaging operations, partially offset by improved results from entertainment operations. The comparison of income before income taxes includes the impact of the 2005 litigation settlement and in 2004, one-time pretax gains of $19.5 million and $13.4 million from the sale of aluminum commodity hedges and the company’s investment in CCU, respectively. Excluding these normalization items from both years to enhance comparability, income before income taxes decreased 23% (see page 33). U.S. beer pretax income decreased
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ANHEUSER-BUSCH COMPANIES, INC.                                                              32                                                                      2007 ANNUAL REPORT
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$603 million, or 18% due to lower beer sales volume, reduced revenue per barrel and higher manufacturing costs resulting from commodity cost pressures for aluminum, glass and energy, plus costs for new packaging initiatives such as applied plastic labels and aluminum bottles. Pretax income for international beer decreased $44 million, or 34% for the full year primarily due to lower profits in China and the United Kingdom and the impact of the CCU sale gain in 2004, partially offset by improved results in Canada. Excluding the CCU sale gain, pretax income for international beer decreased 26%, as shown in the following table.
 
   
2005
   
2004
   
Change
International beer pretax income
  $ 86.5     $ 130.9       (33.9 )%
Gain on sale of CCU
          (13.4 )     7.5  
International beer pretax excluding
                       
CCU gain
  $ 86.5     $ 117.5       (26.4 )%
 
Packaging segment pretax profits were down $22 million, or 14% during 2005 due to higher energy and materials costs for can and glass manufacturing operations and lower profits for the company’s aluminum recycling and label manufacturing operations. Entertainment segment pretax results improved $33 million, or 19% due to increased attendance and higher admissions pricing and in-park spending, partially offset by higher park operating expenses. Entertainment results in 2004 were adversely impacted by a series of hurricanes in Florida.
 
EQUITY INCOME, NET OF TAX
Equity income of $662 million in 2007 represented an increase of $73 million, or 12.5% versus $589 million in 2006. The increase is primarily due to Grupo Modelo volume increases, benefits from Modelo’s Crown joint venture and a $29 million benefit from the return of advertising funds that were part of prior import contracts. Equity income in 2007 includes the company’s $16 million pro rata share of a charge by Grupo Modelo for the restructuring of Modelo’s domestic distribution system and C-store closings. Excluding this charge, equity income increased 15% in 2007 (see page 33).
 
Equity income for 2006 increased $91 million, or 18% versus prior year primarily due to Grupo Modelo volume increases, pricing growth in Mexico and a lower Mexican income tax rate. Equity income was $498.1 million in 2005, an increase of $94 million, or 23% for the year, reflecting the benefit of Grupo Modelo volume growth, lower Mexican income taxes and the impact of including Tsingtao equity income beginning May 2005, partially offset by the reduction in equity income due to the sale of CCU and a one-time $18 million deferred income tax benefit recognized in 2004 due to a reduction in Mexican corporate income tax rates. The tax benefit in 2004 was partially offset by $8   million of incremental U.S. deferred income taxes in the consolidated income tax provision. Excluding the Mexican income tax benefit from 2004 results, equity income for 2005 increased 29% (see page 33).
 
NET INCOME AND DILUTED EARNINGS PER SHARE
Diluted earnings per share for all years benefited from the company’s ongoing share repurchase program.
 
Reported net income and diluted earnings per share for 2007 were $2.1 billion and $2.79, respectively. Net income increased $150   million, or 8% compared to 2006 while diluted earnings per share increased 10%, or $.26 for the same period. Comparisons of net income and earnings per share for 2007 versus 2006 include the gains from the sales of distribution rights in southern California and the remaining interest in the Spanish theme park and the company’s portion of Modelo’s restructuring charge in 2007, plus a $7.8 million benefit from the reduction of deferred income taxes due to state income tax reform legislation in Texas in 2006. Excluding these normalization items to enhance comparability, net income increased 7.5% and diluted earnings per share increased 10% (see page 33).
 
The company reported 2006 net income of $2.0 billion, a $221   million, or 13% increase versus prior year. Diluted earnings per share increased $.30, or 13.5% to $2.53 for the same period. Comparisons of net income and earnings per share between 2006 and 2005 are impacted by income tax legislation events in both years, as well as the 2005 litigation settlement and pretax gain on the sale of a portion of the Spanish theme park investment. In 2006, Anheuser-Busch recognized the gain from state tax reform legislation in Texas, while in 2005 the company recognized a similar gain of $7.2 million due to tax reform legislation in Ohio, incurred a $3.5 million favorable tax impact from the sale of the Spanish theme park and reported a $6.8 million favorable settlement of certain Chilean taxes associated with the previous sale of the company’s equity stake in CCU. Excluding these normalization items to enhance comparability, net income and diluted earnings per share for 2006 increased 8.5% and 9%, respectively (see page 33).
 
Anheuser-Busch generated net income of $1.7 billion in 2005, a decrease of $374 million, or 18%, while reported diluted earnings per share of $2.23 decreased 15%, or $.39. Excluding all 2005 and 2004 normalization items discussed previously, net income and diluted earnings per share decreased by 13% and 10.5%, respectively, as shown on page 33.
 
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ANHEUSER-BUSCH COMPANIES, INC.                                                              33                                                                      2007 ANNUAL REPORT
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The following summary is provided to make direct comparisons of results easier for 2007, 2006 and 2005 versus prior years by excluding normalization items previously discussed (in millions, except per share). The company believes excluding normalization items better illustrates underlying results by providing a consistent basis of comparison.
 
 
  Income Before Income Taxes
   
Provision For
Income Taxes
   
Equity
Income
   
Net
Income
   
Diluted Earnings
Per Share
 
2007
                             
Reported
  $ 2,422.7     $ (969.8 )   $ 662.4     $ 2,115.3     $ 2.79  
Gain on sale of Spanish theme park
    (16.0 )     6.1             (9.9 )     (.01 )
Gain on sale of distribution rights
    (26.5 )     10.2             (16.3 )     (.02 )
Modelo restructuring
                16.0       16.0       .02  
Excluding normalization items
  $ 2,380.2     $ (953.5 )   $ 678.4     $ 2,105.1     $ 2.78  
                                         
Percentage Change - 2007 vs. 2006
                                       
Reported
    6.4 %             12.5 %     7.6 %     10.3 %
Excluding normalization items
    4.5 %             15.2 %     7.5 %     10.3 %
 
2006
                                       
Reported
  $ 2,276.9     $ (900.5 )   $ 588.8     $ 1,965.2     $ 2.53  
Texas income tax legislation benefit
          (7.8 )           (7.8 )     (.01 )
Excluding normalization item
  $ 2,276.9     $ (908.3 )   $ 588.8     $ 1,957.4     $ 2.52  
 
Percentage Change - 2006 vs. 2005
                                       
Reported
    10.7 %             18.2 %     12.7 %     13.5 %
Excluding normalization items
    6.1 %             18.2 %     8.5 %     9.1 %
 
2005
                                       
Reported
  $ 2,057.4     $ (811.1 )   $ 498.1     $ 1,744.4     $ 2.23  
Gain on sale of Spanish theme park
    (15.4 )     (3.5 )           (18.9 )     (.024 )
CCU sale Chile tax settlement
          (6.8 )           (6.8 )     (.009 )
Ohio income tax legislation benefit
          (7.2 )           (7.2 )     (.009 )
Litigation settlement
    105.0       (12.6 )           92.4       .118  
Excluding normalization items
  $ 2,147.0     $ (841.2 )   $ 498.1     $ 1,803.9     $ 2.31  
 
Percentage Change - 2005 vs. 2004
                                       
Reported
    (26.8 )%             23.3 %     (17.7 )%     (14.9 )%
Excluding normalization items
    (22.7 )%             29.0 %     (13.4 )%     (10.5 )%
 
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ANHEUSER-BUSCH COMPANIES, INC.                                                              34                                                                      2007 ANNUAL REPORT
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INCOME TAXES
The company’s fourth quarter effective income tax rate is typically higher than during the rest of the year due to the granting of incentive stock options for which the company cannot assume a future tax deduction.
 
The company’s effective income tax rate of 40.0% in 2007 represents an increase of 50 basis points versus 2006, primarily due to higher taxes on foreign earnings, a lower benefit from capital loss utilization in 2007 and the one-time deferred tax benefit in 2006 from Texas tax legislation. These increases were partially offset by a higher domestic manufacturing deduction rate. Excluding the gains on the distribution rights and Port Aventura sale, the Modelo restructuring charge and the 2006 Texas tax legislation benefit, the effective tax rate was 40.1%, up 20 basis points versus 2006.
 
Anheuser-Busch’s effective tax rate for 2006 was 39.5%, up 10   basis points for the year, and includes a benefit from partial utilization of the litigation settlement capital loss. Excluding the $7.8   million Texas tax legislation benefit from 2006 the effective rate was 39.9%, an increase of 70 basis points primarily due to higher taxes on foreign earnings. This comparison excludes from 2005 the tax impacts of the limited deductibility of the litigation settlement, the $3.5 million benefit related to the partial sale of the Spanish theme park, the $6.8 million for the settlement of CCU tax matters and the $7.2   million Ohio tax legislation benefit.
 
The 2005 effective income tax rate of 39.4% was up 40 basis points versus 2004. The effective tax rate for 2005 includes the favorable normalization impacts noted above, which were essentially offset by a limited income tax benefit available from the litigation settlement. The tax benefit from the settlement was limited due to not having sufficient capital gains available to allow full deductibility of the loss.
 
EMPLOYEE-RELATED COSTS
Employee-related costs were $2.8 billion in 2007, an increase of $159   million, or 6% versus 2006. These costs totaled $2.7 billion in 2006, an increase of $89 million, or 3.5% versus 2005 costs of $2.6   billion which had increased $45 million versus the prior year. The changes in employee-related costs primarily reflect changes in annual compensation and benefits expense. Annual compensation totaled $2.1 billion in 2007, $2.0 billion in 2006 and $1.9 billion in 2005, representing increases of $126 million in 2007 and $64 million in 2006, and a decrease in 2005 of $47 million. The decrease in 2005 was primarily due to lower bonus payments and lower stock compensation expense. The remainder of employee-related costs consists of pension, health care and life insurance benefits, 401(k) expense and payroll taxes.
 
The company had 30,849 full-time employees at December 31, 2007. Full-time employees numbered 30,183 and 31,485 at the end of 2006 and 2005, respectively.
 
 
OTHER TAXES
In addition to income taxes, the company is significantly impacted by other federal, state and local taxes, most notably beer excise taxes. Taxes related to 2007 operations, not including the many indirect taxes included in materials and services purchased, totaled $3.5 billion, an increase of 3.9% versus total taxes in 2006 of $3.4   billion. The increase in 2007 reflects higher beer excise taxes due to increased beer volume, and increased income taxes due to higher pretax earnings. Tax expense in 2006 increased 3.4% compared with total taxes of $3.3 billion in 2005. These figures highlight the significant tax burden on the company and the entire brewing industry.
 
Proposals to increase excise taxes on beer are addressed by the company and the brewing industry every year. Anheuser-Busch understands that spending cuts or temporary tax increases may be necessary for states to address budget concerns; however, the company believes that states should accomplish this objective in the most efficient and least harmful way possible. The company does not believe excise taxes, which are regressive and primarily burden working men and women, are the solution. To ensure its views on this important matter are known, company and industry representatives meet proactively on an ongoing basis with legislators and administration officials from various states to present arguments against increases in beer excise taxes.
 
RETURN ON CAPITAL EMPLOYED
Value for shareholders is created when companies earn rates of return in excess of their cost of capital. Anheuser-Busch views the rate of return on capital employed to be an important performance measure because it gauges how efficiently the company is deploying its capital assets. Also, increases in the rate are often considered by the investment community to be a strong driver of stock price, especially in conjunction with earnings per share growth.
 

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ANHEUSER-BUSCH COMPANIES, INC.                                                              35                                                                      2007 ANNUAL REPORT
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The company’s rate of return on capital employed was 16.6% in 2007, compared to 15.6% in 2006 and 14% in 2005. Return on capital employed is computed as net income for the year plus after-tax net interest (interest expense less interest capitalized), divided by average net investment. Net investment is defined as total assets less nondebt current liabilities. The return on capital employed ratio measures after-tax performance; therefore net interest cost is tax-effected in the computation for consistency. After-tax net interest expense was $290 million in 2007 and $269 million in both 2006 and 2005, calculated as pretax net interest expense of $467 million, $434   million and $435 million, respectively, less income taxes applied at an assumed 38% rate.
 
Liquidity and Financial Condition
 
Anheuser-Busch’s strong financial position allows it to pursue its growth strategies while also providing substantial returns to shareholders. Accordingly, the company has established the following priorities for its available cash:
 
 
Investing in core businesses to enhance profit growth. This includes capital expenditures in existing operations, and acquisitions and investments to enhance the company’s long-term earnings growth.
 
 ●
Returning cash to shareholders by consistently increasing dividends in line with growth in earnings per share, and share repurchasing, consistent with the company’s leverage target.
 
The company considers its cash flow to total debt ratio to be one of the most important indicators of leverage, and currently targets a ratio between 25% and 30%. Cash flow to total debt is defined as: operating cash flow before the change in working capital, adjusted for pension contributions less service costs; divided by total debt, adjusted to include the funded status of the company’s single-employer defined benefit pension plans. Based on its specific financial position and risk tolerance, Anheuser-Busch believes this leverage target strikes the best balance between a low cost-of-capital and maintaining adequate financial flexibility. The company’s ratio of cash flow to total debt was 31.8% in 2007, 32.7% in 2006 and 29.5% in 2005.
 
SOURCES AND USES OF CASH
The company’s primary source of liquidity is cash provided by operations. Principal uses of cash are capital expenditures, business investments, dividends and share repurchases. Cash generated by each of the company’s business segments is projected to exceed funding requirements for that segment’s anticipated capital expenditures. Corporate spending on share repurchases and dividend payments, plus possible additional acquisitions, may require the net issuance of debt as the company maintains its cash flow to total debt ratio within its target range. The use of debt financing lowers the company’s overall cost of capital and the extent and timing of external financing will vary depending on the company’s evaluation of existing market conditions and other factors. The company uses its share repurchase program to manage its leverage position, and typically operates at a working capital deficit as it manages its cash flows. The company had working capital deficits of $279 million, $417 million and $224   million, at December 31, 2007, 2006 and 2005, respectively.
 
Cash at December 31, 2007 was $283   million, an increase of $64   million versus 2006. Anheuser-Busch generated operating cash flow before the change in working capital of $3.0   billion, an increase of $443   million over 2006 and due primarily to increased earnings, higher Grupo Modelo dividends in 2007, $403   million versus $240   million, and a lower discretionary defined benefit pension contribution in 2007, $85   million compared to $214   million in 2006.
 
OFF-BALANCE-SHEET OBLIGATIONS, COMMITMENTS
AND CONTINGENCIES
Anheuser-Busch has a long history of paying dividends and expects to continue paying dividends each year. The company also has an active share repurchase program and anticipates continued share repurchase in the future. However, Anheuser-Busch has no commitments or obligations related to dividends, or for the repurchase or pledging of shares. The company has cash commitments in the normal course of business, including operating leases. The company has no off-balance-sheet obligations specifically structured to provide earnings or tax benefits, or to avoid recognition or disclosure of assets or liabilities.
 

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ANHEUSER-BUSCH COMPANIES, INC.                                                              36                                                                      2007 ANNUAL REPORT
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The company’s 9% debentures due 2009, 5.5% notes due 2018 and 6.45% debentures due 2037 permit holders to require repayment of the debt prior to its maturity after a decline in the company’s credit rating below investment grade. The credit downgrade must either be preceded by or result from a change in control. The total outstanding balance for this debt at December 31, 2007 is $1.35   billion.
 
The 5.35% notes due 2023 permit beneficiaries of deceased note owners to require repayment of the debt at any time prior to maturity, subject to an annual limit of $25,000 per decedent and a cap on aggregate redemptions of $3.6 million per year. The company redeemed $2.5 million of these notes in 2007 and $2.8   million in 2006.
 
The company’s future cash commitments are shown below, as of December 31, 2007 (in millions).
 
   
2008
   
2009
and
2010
   
2011
and
2012
   
2013
and
Thereafter
   
Total
 
Capital expenditures
  $ 128     $ 82     $     $     $ 210  
Operating leases
    126       62       37       263       488  
Uncertain tax benefits
    12                   99       111  
Brewing and packaging
                                       
materials
    509       490       292       228       1,519  
Unfunded benefits
                                       
payments
    140       146       152       402       840  
Interest payments
    476       871       750       5,216       7,313  
Maturities of
                                       
long-term debt
    305       753       869       7,213       9,140  
Royalty arrangements
    95       196       204       1,689       2,184  
    $ 1,791     $ 2,600     $ 2,304     $ 15,110     $ 21,805  
 
CAPITAL EXPENDITURES
During the next five years, the company will continue capital expenditure programs designed to take advantage of growth and productivity improvement opportunities for its beer, packaging and entertainment operations. The company has a formal and intensive review procedure for the authorization of capital expenditures, with the most important financial measure of acceptability for a discretionary capital project being the degree to which its projected discounted cash flow return on investment exceeds the company’s cost of capital.
 
Capital expenditures were $870   million in 2007, $813   million in 2006 and $1.1 billion in 2005, and totaled $4.9 billion during the past five years. The company expects capital expenditures of approximately $975   million in 2008 and is projecting capital spending during the five-year period 2008 - 2012 of approximately $4.6 billion. See Note 13 for information on capital expenditures by business segment.
 
 

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ANHEUSER-BUSCH COMPANIES, INC.                                                              37                                                                      2007 ANNUAL REPORT
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FINANCING ACTIVITIES
The company’s debt balance increased a total of $1.5 billion in 2007, compared with a decrease of $319 million in 2006. Details of debt increases and decreases for the last two years follow.
 
Changes In Debt
           
Description
  Amount
(in millions)
   
Interest Rate
(fixed unless noted)
             
2007
           
Increases:
           
               
U.S. dollar notes
  $ 817.2       $500.0 at 5.5 %;
              $300.0 at 5.6 %;
              $17.2 at 5.54 %
U.S. dollar debentures
    500.0