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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14A-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Soliciting Materials Pursuant to Section 240.14a-12 |
Anheuser-Busch Companies, Inc.
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On
July 2, 2008, Anheuser-Busch, Incorporated posted on a website accessible by its
employees and its wholesalers and distributed to its wholesalers by a
private broadcast satellite network a video presentation by David A. Peacock, its Vice
President-Marketing. A transcript of the presentation is attached.
Anheuser-Busch Companies, Inc. (the Company) and its directors and certain executive
officers may be deemed to be participants in the solicitation of consent revocations from
stockholders in connection with a consent solicitation by InBev nv/sa to remove and replace the
Board of Directors of the Company (the Consent Solicitation). The Company plans to file a
consent revocation statement with the Securities and Exchange Commission (the SEC) in connection
with the solicitation of written consents in connection with the Consent Solicitation (the Consent
Revocation Statement). Information regarding the names of the Companys directors and executive
officers and their respective interests in the Company by security holdings or otherwise is set
forth in the Companys proxy statement relating to the 2008 annual meeting of stockholders, which
may be obtained free of charge at the SECs website at http://www.sec.gov and the Companys website
at http://www.anheuser-busch.com. Additional information regarding the interests of such potential
participants will be included in the Consent Revocation Statement and other relevant documents to
be filed with the SEC in connection with the Consent Solicitation.
Promptly after filing its definitive Consent Revocation Statement with the SEC, the Company
will mail the definitive Consent Revocation Statement and a form of WHITE consent revocation card
to each stockholder entitled to deliver a written consent in connection with the Consent
Solicitation. WE URGE INVESTORS TO READ THE CONSENT REVOCATION STATEMENT (INCLUDING ANY
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able
to obtain, free of charge, copies of the Consent Revocation Statement and any other documents filed
by the Company with the SEC in connection with the Consent Solicitation at the SECs website at
http://www.sec.gov, at the Companys website at http://www.anheuser-busch.com or by contacting
Morrow & Co., LLC at (800) 662-5200.
Forward-looking Statements
This filing contains forward-looking statements regarding the companys expectations
concerning its future operations, earnings and prospects. On the date the forward-looking
statements are made, the statements represent the companys expectations, but the companys
expectations concerning its future operations, earnings and prospects may change. The companys
expectations involve risks and uncertainties (both favorable and unfavorable) and are based on many
assumptions that the company believes to be reasonable, but such assumptions may ultimately prove
to be inaccurate or incomplete, in whole or in part.
Accordingly, there can be no assurances that the companys expectations and the
forward-looking statements will be correct. Important factors that could cause actual results to
differ (favorably or unfavorably) from the expectations stated in this release include, among
others, changes in the pricing environment for the companys products; changes in U.S. demand for
malt beverage products, including changes in U.S. demand for other alcohol beverages; changes in
consumer preference for the companys malt beverage products; changes in the distribution for the
companys malt beverage products; changes in the cost of marketing the companys malt beverage
products; regulatory or legislative changes, including changes in beer excise taxes at either the
federal or state level and changes in income taxes; changes in the litigation to which the company
is a party; changes in raw materials prices; changes in packaging materials costs; changes in
energy costs; changes in the financial condition of the companys suppliers; changes in interest
rates; changes in foreign currency exchange rates; unusual weather conditions that could impact
beer consumption in the U.S.; changes in attendance and consumer spending patterns for the
companys theme park operations; changes in demand for aluminum beverage containers; changes in the
companys international beer business or in the beer business of the companys international equity
partners; changes in the economies of the countries in which the company, its international beer
business or its international equity partners operate; future acquisitions or divestitures by the
company, including effects on its credit rating; changes resulting from transactions among the
companys global or domestic competitors; and the effect of stock market conditions on the
companys share repurchase program. Anheuser-Busch disclaims any obligation to update or revise
any of these forward-looking statements. Additional risk factors concerning the company can be
found in the companys most recent Form 10-K.
Transcript of video presentation by David A. Peacock
Vice President-Marketing, Anheuser-Busch, Incorporated
The last few weeks have been interesting times here at Anheuser-Busch as our board was assessing
the merits of InBevs proposal. Our Board of Directors found the proposal too low compared to
other transactions and compared to the value created by our own strategic plan.
We thoroughly reviewed numerous analysis with our board and with independent advisers and at the
end, the value was just too low.
Many of you wholesalers look at EBITDA multiples, which is the total value of your business divided
by your earnings before interest, taxes, depreciation and amortization. Companies like ours also
look at that measure. And when you look at what InBev was offering or claiming to offer at 12
times, it was too low. They were rounding up from our 2007 actual multiple of 11 1/2 times. If you
project forward to 2008 the multiple was actually 10 1/2 times.
When you compare that multiple to other beer transactions and to other transactions of leading
consumer product companies with iconic brands, you can see that at the end of the day it was just
too low.
Beyond that our board of directors spent a lot of time in a lot of meetings assessing this offer
and you have to understand that this board is comprised of some of the greatest business leaders in
the United States today. People who have run companies like AT&T, J.P. Morgan, Ikon Office
Solutions, Baxter Pharmaceuticals and Enterprise Rent-a-Car.
They spent rigorous time with independent advisors and with management to make their assessment.
They considered everything about our company, our iconic brands Budweiser, one of the worlds most
valuable consumer brands and Bud Light, the worlds largest selling beer. Our 50 share position in
the United States, the worlds most profitable beer market by far. The portfolio of leading
brands, not just the Bud family but the Mich family. Our sub-premium portfolio, which leads that
category. And most importantly, our high focused world class distribution system.
They considered the equity investments we have and strategic partnerships with companies like Group
Modelo where weve been able to participate in the growth of the Mexican beer market, again, one of
the worlds most profitable beer markets and at least internationally, benefit from their iconic
brand Corona.
We also have an equity position in Tsingtao, which has become a very successful company in China as
the leading premium brewer in that market, which is the fastest growing beer market in the world.
Our own business in China has benefited from the partnership with Tsingtao as we deliver good
profits and strong growth. And were expanding the Budweiser brand to more than 100 markets even as
we speak.
Budweiser beyond just China and Mexico is sold in 80 countries around the world. So when we talk
about global presence, Budweiser truly is a global brand and is one of the most revered American
brands worldwide.
So at Anheuser-Busch, what our board came to the conclusion on is that our business is built on
brands. We have investments and partnerships to provide an environment for enhanced brand growth
globally. We have innovation that helps grow our top line here in the United States.
Now lets talk a little bit about what weve done in the past year and a half or so to improve our
long term outlook. Weve broadened our portfolio, bringing in popular imported brands, craft
brands in our alliance brand portfolio, as well as launching new products like Bud Light Lime,
Land Shark, Chelada and Shock Top. We transformed our selling system, reorganizing the five regions
with their very independent business units with very good people running them.
Weve got a major consumer segmentation project that weve talked to you about in great detail that
has helped us better understand what messages we need behind our cores brands and just how we can
expand our core brands using a mega brand strategy. Bud Light Lime is an example of this in a
successful way.
Weve also increased our media plan and focused it more in programming that we know resonates with
our consumers. Our media spending is up 15% in 2008 with a lot of that increase occurring this
summer when people are buying beer most.
Now how are all these initiatives paying off right now? Well, if we look at our second quarter to
date we see our total sales to retailers are up 8/10 of a percent. The A-B produced STRs are up
6/10 of a percent. IRI volume share is up 8/10 of a point and IRI dollar share is up over a share
point. These are remarkable results that are a testament to the team that is Anheuser-Busch and our
distributors.
We talked about how important innovation is here in the United States and Bud Light Lime is a great
example of this, achieving almost a share point and a half in our industry and well on its way to
two full share points, even at a higher price than Bud Light.
But thats not our only success story. Land Shark and Bud and Bud Light Chelada represent almost
half a share point in IRI accounts with pricing that is 70% greater than Bud Light. And weve got
an exciting new product in Budweiser American Ale coming this October
Now we continue to see commodity cost pressures in our business and theyre impacting all major
food and beverage companies. Theres also unprecedented diesel fuel prices that is impacting you
the wholesaler. So weve got pricing plans for this fall with 95% of our price actions occurring in
September and October, over 85% our volume. We project, and we told analysts that we would see 4%
or greater revenue per barrel growth this year and next year when you take our price increases,
discount reduction and favorable mix from our successful higher margin new products. This is very
important for all of us because it helps you with your fuel costs and some of your personnel costs
and it certainly helps us with our commodity cost pressures.
We always talk about the three Cs when it comes to pricing; consumer, cost, competition.
Cost environment is escalating. We believe that environment is going to require competition to
follow and we believe the consumers are seeing higher price increases in other categories than 4%,
so our 4% range should be accepted by consumers.
We expect to see slight gross margin increases in 2008, but in 2009 much greater gross margin
increases as we implement some cost reductions, which Ill get into in a moment. Our operating
margin will improve even more as we leverage GNA efficiencies to drive overall improved operating
performance.
Now, we want to talk about a renewed cost discipline at Anheuser-Busch. Weve effectively managed
cost relative to our US competitors for years. But these high commodity costs require us to look at
our business differently. We now have a goal for our Blue Ocean program which was $500 million. It
is now $1 billion in savings with 75% of it occurring in 2008 and 2009.
Now weve already revised employee incentive programs to more closely align bonuses with operating
performance. And weve enacted a zero overhead growth approach with our staff groups. But were
going to go a lot deeper than that as we look at cost of goods sold and GNA as far as opportunities
to drive savings and efficiency within our business.
We have announced an early retirement program in the third quarter of this year with a target of
reducing our salaried head count 10 to 15%. We currently have over 8500 salaried employees at
Anheuser-Busch, so we expect anywhere from 850 to 1300 positions to be eliminated through this
program. Therell be a one time cost recognized in the fourth quarter for this program in the $300
million dollar range.
And as I said earlier, we also have a zero overhead growth program being implemented across our
staff groups today.
Part of our plan assumes lower capital spending targets. Were going to reduce our capital spending
from our original plans this year by $100 million and next year
by $200 million. And we expect
capital as a percent of sales to average in the 3 1/2 to 4% range going forward. This will
drive significant operating cash flow growth in 2009 versus 2007 and even greater free cash flow
growth for Anheuser-Busch.
Now well also see improved dividends as we project forward. We grow our dividends with earnings.
And as we increase our earnings projections in the next few years, our dividends will grow
likewise.
Were going to also increase our share repurchase as part of our commitment behind this plan. Were
going to commit to buying back shares because we know the moneys going to be there because we are
committed to delivering on this plan.
Were going to move the lower end of our cash flow as a total debt target and we expect share
repurchases in 2008 to be $3 billion and in 2009 to be as much
as $4 billion as we look for efficient
ways to return cash to our shareholders.
Now this will help us lead to Anheuser-Busch beer company growing profits 8% over the next five
years, significantly exceeding our prior guidance of three to 5%.
Share of repurchases, corporate and
other non-beer subsidiaries will add another two to three percentage points to our earnings per
share growth.
We were very, very clear with Wall Street in that we project $3.13 per share in EPS target for 2008
and in 2009 $3.90 per share or up nearly 25% as we realize the
benefit from a favorable revenue
environment and we look to reduce our costs. We also expect double digit per share growth in the
remaining three years of our five year plan built off of $3.90 base.
So in summary, weve undertaken a series of initiatives in the last two years to better position
the company for long term growth. Were starting to see those results today.
The strategic plan is aggressive, but we are very confident we can deliver it or even exceed it.
It is driven by actions that are largely in our control and the assumptions are realistic in areas
where we dont control, like volume delivery. We expect our volume to grow, but we expect our
market share to be flat in our plan. So for those of us in the sales and marketing area or for you,
our distributor partners, we need to exceed the expectations in our plan of flat market share.
We cannot accept flat market share. We have to grow our volume more rapidly than the industry and
we must grow share. If we grow share, we will deliver a performance above the plan we just
presented, a plan that has been widely accepted by Wall Street.
In the end, InBevs proposal significantly undervalues the unique assets of Anheuser-Busch and its
long-term earnings and cash flow projections.
We basically announced a new Anheuser-Busch; one focused on results today and over the long term.
But some things arent going to change at Anheuser-Busch. We will not sacrifice our core tenets.
We will not compromise product quality. We will continue to value our people as they add value
every day in everything they do. We will continue to invest behind our brands and in innovation. We
will continue to behave in a socially and environmentally responsible manner. And we will continue
to build on shareholder value. And this company remains open to any idea or any alternative that
provides full and certain value for our shareholders.
Ladies and gentlemen, this is a unique time for our company and this is a unique time for you, our
distributor partners. We need to all come together and focus on competing in the marketplace every
day as aggressively as possible to exceed the plan that we have laid out and the plan that our
board of directors deemed as providing greater value than the offer made by InBev. Thank you.