Edgar Filing: ANHEUSER BUSCH COMPANIES INC

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2002

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)

314-577-2000
(Registrant's telephone number, including area code)

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 [X] No [ ]

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

$1 Par Value Common Stock - 876,505,708 shares as of March 31, 2002

CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)

March 31, Dec. 31,
------------------------
(In millions) 2002 2001
------------------------------------------------------------------

Assets
Current Assets:
Cash and marketable securities......... $ 177.7 $ 162.6
Accounts and notes receivable.......... 779.9 620.9
Inventories:
Raw materials and supplies........... 330.3 352.4
Work in progress..................... 89.5 79.8
Finished goods....................... 231.9 159.6
Total inventories.................. 651.7 591.8
Other current assets................. 177.4 175.1
------------------------
Total current assets............... 1,786.7 1,550.4

Investments in affiliated companies...... 2,939.3 2,855.0
Other assets............................. 1,150.9 1,149.5
Plant and equipment, net................. 8,339.7 8,390.0
------------------------
Total Assets......................... $14,216.6 $13,944.9
========================
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable....................... $ 851.9 $ 945.0
Accrued salaries, wages and benefits... 215.1 255.8
Accrued taxes.......................... 353.2 161.1
Other current liabilities.............. 419.7 374.6
------------------------
Total current liabilities............ 1,839.9 1,736.5
------------------------
Postretirement benefits.................. 481.6 482.9
------------------------
Debt..................................... 6,006.0 5,983.9
------------------------
Deferred income taxes.................... 1,389.7 1,367.2
------------------------
Other long-term liabilities.............. 320.7 312.9
------------------------
Shareholders Equity:
Common stock, $1.00 par value,
1.6 billion shares authorized........ 1,449.6 1,445.2
Capital in excess of par value......... 925.6 810.2
Retained earnings...................... 11,556.2 11,258.2
Treasury stock, at cost................ (9,337.3) (8,981.6)
Accumulated other comprehensive income. (325.1) (338.3)
ESOP debt guarantee.................... (90.3) (132.2)
------------------------
Total Shareholders Equity............ 4,178.7 4,061.5
------------------------
Commitments and Contingencies............ -- --
------------------------
Total Liabilities and Shareholders
Equity............................... $14,216.6 $13,944.9
========================

See accompanying Notes to Consolidated Financial Statements on
pages 5 through 10.

CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS

Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)

Three Months
Ended March 31,
----------------------
(In millions, except per share data) 2002 2001
--------------------------------------------------------------------------

Sales........................................... $ 3,637.4 $ 3,537.3
Less excise taxes............................. (500.8) (493.1)
-------------------------
Net sales....................................... 3,136.6 3,044.2
Cost of products and services................. (1,914.6) (1,926.9)
-------------------------
Gross profit.................................... 1,222.0 1,117.3
Marketing, distribution and administrative
expenses.................................... (517.0) (479.9)
Gain on sale of SeaWorld Cleveland............ --- 17.8
-------------------------
Operating income................................ 705.0 655.2
Interest expense.............................. (89.6) (91.6)
Interest capitalized.......................... 4.3 7.2
Interest income............................... 0.1 0.2
Other expense, net............................ (0.9) (3.5)
-------------------------
Income before income taxes...................... 618.9 567.5
Provision for income taxes.................... (259.9) (227.5)
Equity income, net of tax....................... 97.1 54.4
-------------------------
Net income.................................... 456.1 394.4
Retained earnings, beginning of period.......... 11,258.2 10,164.4
Common stock dividends (per share: 2002-$.18;
2001-$.165)................................. (158.1) (148.2)
-------------------------
Retained earnings, end of period............. $11,556.2 $10,410.6
=========================
Basic earnings per share........................ $ .52 $ .44
=========================
Diluted earnings per share...................... $ .51 $ .43
=========================

CONSOLIDATED STATEMENT OF CASH FLOWS

Anheuser-Busch Companies, Inc., and Subsidiaries (Unaudited)

Three months
ended March 31,
-------------------
(In millions) 2002 2001
-----------------------------------------------------------------------------

Cash flow from operating activities:
Net income......................................... $ 456.1 $ 394.4
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization.................. 207.1 203.3
Deferred income taxes.......................... 22.5 12.4
Gain on sale of SeaWorld Cleveland............. -- (17.8)
Undistributed earnings of affiliated companies. (94.1) (54.4)
Other, net..................................... 67.2 1.9
------------------
Operating cash flow before change in working
capital.......................................... 658.8 539.8
Increase in working capital.................... (97.2) (57.8)
------------------
Cash provided by operating activities.............. 561.6 482.0
------------------
Cash flow from investing activities:
Capital expenditures............................... (181.7) (306.0)
New business acquisitions.......................... -- (366.2)
Proceeds from sale of SeaWorld Cleveland........... -- 110.0
------------------
Cash used for investing activities................. (181.7) (562.2)
------------------
Cash flow from financing activities:
Increase in long-term debt......................... 72.6 706.8
Decrease in long-term debt......................... (0.8) (214.9)
Dividends paid to shareholders..................... (158.1) (148.2)
Acquisition of treasury stock...................... (355.7) (295.0)
Shares issued under stock plans.................... 77.2 16.0
------------------
Cash (used for)/provided by financing activities... (364.8) 64.7
------------------
Net increase/(decrease) in cash during the period.... 15.1 (15.5)
Cash beginning of period............................. 162.6 159.9
------------------
Cash, end of period.................................. $ 177.7 $ 144.4
==================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Unaudited Financial Statements
------------------------------
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles and
applicable SEC guidelines pertaining to interim financial
information, and include all adjustments necessary for a fair
presentation. These statements should be read in conjunction with
the Consolidated Financial Statements and Notes included in the
Company's Annual Report to Shareholders for the year ended
December 31, 2001.

2. Business Segments Information
-----------------------------

Three Months Ended March 31, (in millions)

-------------------------------------------------------------------------------------------------------
Domestic Beer Int'l Beer Packaging Entertain. Other Corp. & Elims. Consol.
------------------------------------------------------------------------------------------------------------------------------

2002

Gross Sales $3,027.6 144.0 469.6 125.8 17.4 (147.0) $3,637.4
Net Sales:
- Intersegment - - $209.3 - 4.3 (213.6) $-
- External $2,548.2 122.6 260.3 125.8 13.1 66.6 $3,136.6
Income Before
Income Taxes $736.0 16.7 30.7 (14.5) (1.4) (148.6) $618.9
Equity Income,
Net of Tax - $97.1 - - - - $97.1

Net Income $456.3 107.5 19.0 (9.0) (0.9) (116.8) $456.1
------------------------------------------------------------------------------------------------------------------------------

2001
COMPARABLE BASIS*

Gross Sales $2,897.1 134.1 494.7 127.7 18.9 (135.2) $3,537.3
Net Sales:
- Intersegment - - $194.8 - 4.0 (198.8) $-
- External $2,423.6 114.5 299.9 127.7 14.9 63.6 $3,044.2
Income Before
Income Taxes $673.6 10.7 26.2 0.2 (1.4) (137.9) $571.4
Equity Income,
Net of Tax - $58.8 - - - - $58.8

Net Income $417.7 65.5 16.3 (5.4) (0.9) (90.5) $402.7
------------------------------------------------------------------------------------------------------------------------------

*Excludes goodwill amortization.

2001 REPORTED

Gross Sales $2,897.1 134.1 494.7 127.7 18.9 (135.2) $3,537.3
Net Sales:
- Intersegment - - $194.8 - 4.0 (198.8) $-
- External $2,423.6 114.5 299.9 127.7 14.9 63.6 $3,044.2
Income Before
Income Taxes $672.6 10.4 26.0 (2.5) (1.4) (137.6) $567.5
Equity Income,
Net of Tax - $54.4 - - - - $54.4

Net Income $417.1 60.9 16.1 (7.1) (0.9) (91.7) $394.4
------------------------------------------------------------------------------------------------------------------------------

3. Earnings Per Share
------------------
Earnings per share are computed by dividing net income by weighted
average common shares outstanding for the period. The difference
between basic and diluted weighted average common shares is due to
stock option shares. There were no adjustments to net income for any
period shown. Weighted average common shares outstanding for the
quarters ended March 31, were (millions of shares):

2002 2001
------ ------

Basic weighted average shares
outstanding 878.5 898.6

Diluted weighted average shares
outstanding 891.4 910.4
-----------------------------------------------------------------------------------

4. Comprehensive Income
--------------------
Comprehensive income for the three months ended March 31, follows
(in millions):

2002 2001
------- -------

Net income $ 456.1 $ 394.4

Foreign currency translation
adjustment (14.7) 11.3

Deferred hedging gains/(losses) 27.9 (14.2)
------- -------

Comprehensive income $ 469.3 $ 391.5
======= =======
-----------------------------------------------------------------------------------

The components of accumulated other comprehensive income as of
March 31, 2002 and December 31, 2001, follow (in millions):

March 31, December 31,
2002 2001
--------- ------------

Foreign currency translation
adjustment $ (182.5) $ (167.8)

Minimum pension obligation (131.6) (131.6)

Deferred hedging gains/(losses) (11.0) (38.9)
-------- --------
Total accumulated other
comprehensive income $ (325.1) $ (338.3)
======== ========

--------------------------------------------------------------------------------------------

5. Finished Product Delivery Costs
-------------------------------
In the fourth quarter of 2001, the company changed its presentation
of pass-through finished product delivery costs reimbursed by
customers. These items were previously offset for zero impact
within cost of products and services. The company now presents
these items separately as sales and cost of products and services.
This change has a minor impact on revenue and profit margins
growth, and has no impact on gross profit, operating income, net
income, earnings per share or cash flow. For comparability, prior
period information has been recast to conform to this presentation.

6. U.S. Income Taxes On Equity Income
----------------------------------
In the first quarter 2002, the company began presenting U.S. income
taxes relating to foreign equity investment dividends in the
consolidated income tax provision. The company previously presented
these taxes in equity income. This change in presentation has no
impact on net income, earnings per share or cash flow. For
comparability, prior year information has been recast to conform
to the 2002 presentation.

7. Adoption Of Goodwill Accounting Standard
----------------------------------------
Effective January 1, 2002, Anheuser-Busch adopted FAS 142,
"Goodwill and Other Intangible Assets," and ceased goodwill
amortization as of January 1, 2002, in accordance with the
Standard. The company has completed the required transitional
goodwill impairment analysis for FAS 142 adoption purposes and
found no impaired goodwill.

Following is a summary of goodwill by segment at December 31, 2001
and March 31, 2002:

----------------------------------------------------------------------------------
Domestic Int'l
Beer Beer Packaging Entertainment Consol.
----------------------------------------------------------------------------------------------------------------------

Goodwill Balance at
December 31, 2001 $158.6 788.1 21.9 288.3 $1,256.9

Recharacterization (1) $(139.6) (11.8) -- -- $(151.4)

Currency Translation Adjustment -- $(7.5) -- -- $(7.5)
----------------------------------------------------------------------------------

Goodwill Balance at
March 31, 2002 $19.0 768.8 21.9 288.3 $1,098.0

----------------------------------------------------------------------------------------------------------------------

(1) Domestic beer consists of indefinite lived product distribution
rights relating to exclusive beer distribution territories.
International beer consists of finite lived distribution rights
totaling $19.3 million partially offset by miscellaneous intangible
assets now being reported as goodwill. Product distribution rights
are now being reported as a discrete asset category.

The impact of goodwill amortization on first quarter 2001 net
income and diluted earnings per share was $8.3 million and $.01,
respectively. Had goodwill amortization ceased on January 1, 2001,
first quarter 2001 net income would have been $402.7 million, and
diluted earnings per share would have been $.44. The company
continues to amortize intangible assets that have finite lives.

8. Derivatives
-----------
On January 1, 2001, the company adopted FAS No. 133, "Accounting
for Derivative Instruments and Hedging Activity." Under FAS 133,
all derivatives are recorded on the balance sheet at fair value,
with changes in fair value recorded either in earnings or equity
depending on the nature of the underlying hedged exposure and how
effective the derivative is at offsetting price movements in the
underlying exposure. All of the company's derivative positions
qualified for hedge accounting on adoption of FAS 133, and the
impact of adoption was not material.

Gains and losses due to commodity hedge ineffectiveness are
recognized as a component of cost of goods sold in the Consolidated
Income Statement. Gains or losses from hedge ineffectiveness
recognized in the first quarter 2002 and 2001 were not material for
any of the company's hedges.

Deferred gains and losses currently included in accumulated other
comprehensive income in shareholders equity will be recognized in
cost of goods sold when the underlying transactions occur -
generally over the next 12 to 18 months. No gains or losses were
recorded in the first quarter due to underlying transactions not
occurring as anticipated.

9. Sale Of SeaWorld Cleveland
--------------------------
In the first quarter of 2001, the company sold its SeaWorld
Cleveland theme park to Six Flags, Inc. for $110 million, and
recognized a $17.8 million pretax gain ($.005 per share, after-tax)
which is shown as a separate line item in the consolidated
statement of income. The company did not sell or grant license to
the SeaWorld name.

10. Acquisition Of CCU
------------------
During the first quarter 2001, the company purchased a 20% equity
interest in Compania Cervecerias Unidas S.A. (CCU), the largest
brewer in Chile, for $321 million. The company has Board of
Directors representation and the ability to exercise significant
influence. As such, the company accounts for the CCU investment
using the equity method. As a result of the investment in CCU,
Anheuser-Busch now owns a 28.6% direct and indirect interest in
CCU's subsidiary, CCU-Argentina, and applies the equity method of
accounting for that investment as well.

11. Contingencies
-------------

In January 1997, Maris Distributing Company, Inc., a former
Anheuser-Busch wholesaler in Florida, initiated litigation against
the company alleging breach of contract and 12 other claims.
Anheuser-Busch terminated its distribution agreement with Maris
Distributing in March 1997. During the course of litigation, nine
claims were resolved in favor of Anheuser-Busch. In August 2001, a
jury rendered a verdict against the company in the amount of $50
million on two remaining claims. The Court subsequently awarded
plaintiffs an additional $22.6 million in accumulated interest on
the jury award that continues to accrue.

Anheuser-Busch continues to believe it acted appropriately in
terminating the distribution agreement of Maris Distributing. Both
Maris and the company have appealed. Anheuser-Busch is vigorously
contesting the judgment and the ultimate outcome cannot presently
be predicted.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND
FINANCIAL CONDITION

INTRODUCTION
------------

This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and liquidity/cash flows
of Anheuser-Busch Companies, Inc. for the first quarter ended March 31,
2002, compared to the first quarter ended March 31, 2001, and the year ended
December 31, 2001. This discussion should be read in conjunction with the
Consolidated Financial Statements and Notes included in the company's Annual
Report to Shareholders for the year ended December 31, 2001.

This discussion contains forward-looking statements regarding the
company's expectations concerning its future operations, earnings and
prospects. On the date the forward-looking statements are made, the
statements represent the company's expectations, but such expectations may
change. These expectations involve risks and uncertainties (both favorable
and unfavorable) and are based on many assumptions that the company believes
to be reasonable, but such assumptions may ultimately prove to be inaccurate
or incomplete, in whole or in part. Accordingly, there can be no assurances
that the company's expectations and forward-looking statements will be
correct. Important factors that could cause actual results to differ
(favorably or unfavorably) from the expectations stated in this discussion
include, among others, changes in the pricing environment for the company's
products; changes in U.S. demand for malt beverage products; changes in
consumer preference for the company's malt beverage products; regulatory or
legislative changes; changes in the nature or quantity of litigation against
the company or the industries in which the company participates; changes in
raw materials prices; changes in interest rates; changes in foreign currency
exchange rates; changes in attendance and consumer spending patterns for the
company's theme park operations; changes in demand for aluminum beverage
containers; changes in the company's international beer business or in the
beer business of the company's international equity partners; and the effect
of stock market conditions on the company's share repurchase program.
Anheuser-Busch disclaims any obligation to update any of these
forward-looking statements. If the company determines to update any
forward-looking statement, it will do so publicly. No private statements by
the company or its personnel should be interpreted as updating
forward-looking statements.

FIRST QUARTER 2002 FINANCIAL RESULTS
------------------------------------

Led by continued strong growth in domestic beer operations and
enhanced growth from the international beer segment, Anheuser-Busch achieved
record first quarter sales and earnings. First quarter earnings per share
increased 15.9% versus the same period last year on a comparable basis,
which excludes goodwill amortization from both periods.

The company continues to deliver consistent, dependable earnings
growth and has now achieved fourteen consecutive quarters of solid
double-digit earnings per share growth. Strong growth in domestic revenue
per barrel drove significantly enhanced profit margins. Gross profit margin
improved 220 basis points and operating profit margin increased 90 basis
points in the quarter. Return on capital employed increased 60 basis points
over the past twelve months versus the similar prior period.

Net income for the international beer segment increased, led by the
strong performance of the company's equity partner Grupo Modelo, Mexico's
largest brewer, and significant increases in volume and profit on the sale
of Anheuser-Busch brands overseas.

Anheuser-Busch's continuing success reflects the company's ability
to capitalize on favorable domestic beer industry fundamentals for pricing
and volume and the increasing profitability of its international beer
segment. With favorable year-to-date results, Anheuser-Busch is raising its
earnings per share growth target for 2002 to 13%. In addition, the company
remains confident in its ability to consistently achieve double-digit
earnings per share growth over the long-term, with a 12% average annualized
target through 2004.

RESULTS OF OPERATIONS
---------------------

Effective in the first quarter 2002, the company ceased amortizing
goodwill in accordance with FAS No. 142, "Goodwill and Other Intangible
Assets." The impact of goodwill amortization on first quarter 2001 net
income and diluted earnings per share was $8.3 million and $.01,
respectively. Had goodwill amortization ceased on January 1, 2001, first
quarter 2001 net income would have been $402.7 million and diluted earnings
per share would have been $.44.

Key operating results for the first quarter 2002 versus 2001 are
summarized below:

---------------------------------------------------------------------------------------------------------
($ in millions, except per share)
--------------------------------------------------------------
% Growth
First Quarter 2002 versus 2001
------------------------- ----------------------------
2001 Comparable
2002 Reported Reported Basis *
------ -------- -------- ----------

Gross Sales $3,637 $3,537 Up 2.8% Up 2.8%
Net Sales $3,137 $3,044 Up 3.0% Up 3.0%
Operating Income $705 $655 Up 7.6% Up 7.1%
Equity Income, Net of Tax $97 $54 Up 78.6% Up 65.1%
Net Income $456 $394 Up 15.6% Up 13.2%
Diluted Earnings per Share $.51 $.43 Up 18.6% Up 15.9%
---------------------------------------------------------------------------------------------------------

* Excludes goodwill amortization in 2001.

A discussion of financial highlights for the first quarter 2002
follows. This discussion is based on 2001 results reported on a comparable
basis, excluding the impact of goodwill amortization.

Anheuser-Busch achieved gross sales of $3.6 billion during the
first quarter 2002, an increase of 2.8% over first quarter 2001 gross sales.
Net sales were $3.1 billion, an increase of 3.0%, compared to the first
quarter 2001. The difference between gross and net sales reflects beer
excise taxes paid by the company on its products.

The increases in both gross and net sales were primarily due to a
5.1% increase in domestic beer segment sales and higher international beer
sales, partially offset by lower revenue from the company's recycling and
entertainment operations.

Domestic revenue per barrel grew 3.8% in the first quarter 2002
versus first quarter 2001. This growth reflects the continued favorable
pricing environment and the introduction of Bacardi Silver. Revenue per
barrel has now increased by 2% or more for fourteen consecutive quarters,
including increases of over 2.5% for the last seven quarters.

The company's beer volume is summarized in the following table:

---------------------------------------------------------------------------------------------------------
Beer Volume (millions of barrels)
---------------------------------------------------------------------------------------------------------

First Quarter 2002 versus 2001
-------------------- -----------------------
2002 2001 Barrels %
---- ---- ------- --------

Domestic 24.6 24.3 Up 0.34 Up 1.4%
International 1.7 1.5 Up 0.11 Up 7.1%
---- ---- ------- --------
Worldwide A-B Brands 26.3 25.8 Up 0.45 Up 1.7%
Int'l Equity Partner Brands 4.4 4.0 Up 0.46 Up 11.6%
---- ---- ------- --------
Total Brands 30.7 29.8 Up 0.91 Up 3.1%
==== ==== ======= ========
---------------------------------------------------------------------------------------------------------

Domestic beer sales-to-wholesalers increased 1.4%, to 24.6 million
barrels for the first quarter of 2002 versus the first quarter 2001.
Wholesaler sales-to-retailers volume was up 2.1% in the first quarter versus
2001 on a comparable selling day adjusted basis. These increases were led by
Bud Family sales.

Wholesaler inventories were nearly one day lower at the end of the
first quarter 2002 compared to the same time last year. The company's
domestic market share (excluding exports) for the first quarter 2002 was
49.5%, compared to 2001 market share of 49.7%. Domestic market share is
determined based on an estimated beer industry sales increase of 1.9%, using
information provided by the Beer Institute and the U.S. Department of
Commerce.

Worldwide Anheuser-Busch beer sales volume for the first quarter
2002 rose 1.7%, to 26.3 million barrels, versus first quarter 2001.
Worldwide beer volume is comprised of domestic volume and international
volume. Domestic volume represents Anheuser-Busch beer produced and shipped
within the United States. International volume represents exports from the
company's U.S. breweries to markets around the world, plus Anheuser-Busch
brands produced overseas by company-owned breweries and under license and
contract brewing agreements.

Total volume, which combines worldwide Anheuser-Busch brand volume
with equity volume (representing the company's share of its foreign equity
partners' volume) was 30.7 million barrels in the first quarter 2002, up
3.1% over first quarter 2001.

International Anheuser-Busch brand beer volume for the first
quarter 2002 was 1.7 million barrels, an increase of 7.1%, compared to the
first quarter 2001, primarily due to increases in China and the United
Kingdom.

Cost of products and services for the first quarter 2002 was $1.91
billion, a 0.5% decrease compared to the first quarter 2001. The decrease in
cost of products and services is principally due to the impact of lower
worldwide aluminum prices on the company's aluminum recycling business
partially offset by increased costs associated with higher beer volume. Both
revenues and cost of sales for the aluminum recycling business decreased
with the market price of aluminum, resulting in minimal gross profit impact.
Gross profit as a percentage of net sales was 39.0% for the first quarter
2002, up 220 basis points from 36.8% for the first quarter 2001, primarily
due to the impact of higher revenue per barrel.

Marketing, distribution and administrative expenses for the first
quarter 2002 were $517.0 million, an increase of 7.8% compared with first
quarter 2001. The increase in marketing, distribution and administrative
expenses in the first quarter 2002 is due primarily to increased domestic
marketing costs for the Bud Family and the introduction of Bacardi Silver.

Operating income increased 7.1% in 2002 versus the first quarter
2001, reflecting higher revenue per barrel and domestic beer sales volume,
along with improved results for the international beer and packaging segment
operations. Excluding the impact of the $17.8 million gain on the sale of
the SeaWorld Cleveland theme park in the first quarter 2001, operating
income increased 10% in the quarter, and operating profit margin increased
150 basis points.

Packaging segment operating profits were up $4 million in the first
quarter 2002. This increase is primarily due to higher soft drink can prices
and operating profit from the company's bottle manufacturing operation,
which began production in the third quarter 2001.

Entertainment segment operating results for the first quarter 2002
were level compared to the first quarter 2001, excluding the impact of the
SeaWorld Cleveland theme park, which was sold in the first quarter 2001.

Equity income increased 65% versus the first quarter 2001,
reflecting strong underlying volume and earnings growth by Grupo Modelo.
Grupo Modelo equity income includes a $17 million one-time deferred income
tax benefit due to a gradual reduction in Mexican corporate income tax rates
from 35% in 2002 to 32% in 2005. The Mexican government enacted the lower
corporate income tax rates in the first quarter 2002.

The Mexican tax rate benefit is largely offset by increased U.S.
deferred income taxes, which are included in the company's consolidated
income tax provision, resulting in minimal consolidated net income or
earnings per share benefit. Equity income increased 36% excluding the impact
of the tax rate benefit.

Net interest cost (interest expense less interest income) was $89.5
million for the first quarter 2002, a decrease of $1.9 million, or 2.1%
compared to the first quarter 2001. The decrease in net interest cost in
2002 is due to the impact of lower interest rates partially offset by higher
average outstanding debt balances compared to last year. Interest
capitalized decreased $2.9 million, to $4.3 million for the first quarter
2002 compared to the corresponding period in 2001. The decrease is due to
the timing of project in-service dates and lower average interest rates
compared to prior year.

Other income/expense, net includes earnings from the company's
limited partner basis investments in beer wholesalers, in addition to
numerous other 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. For the first quarter of 2002 and 2001, the
company had other expense of $0.9 million and $3.5 million, respectively.

Anheuser-Busch's effective tax rate increased to 42% in 2002 versus
39.8% last year, resulting from the Grupo Modelo deferred tax impact
previously discussed, partially offset by the write-off in 2001 of
non-tax-deductible goodwill associated with the sale of the SeaWorld
Cleveland theme park.

Net income increased 13.2% over first quarter 2001. Diluted
earnings per share were $.51, an increase of 15.9%, compared to the first
quarter 2001. Earnings per share for the first quarter 2001 include a
one-half cent per share benefit from the sale of the SeaWorld Cleveland
theme park.

Earnings per share continue to benefit from the company's ongoing
share repurchase program. The company repurchased almost 7 million shares in
the first quarter 2002.

LIQUIDITY AND FINANCIAL CONDITION
---------------------------------

Cash and marketable securities at March 31, 2002 were $177.7
million, an increase of $15.1 million from the December 31, 2001 balance.
The principal source of the company's cash flow is cash generated by
operations. Net issuance of debt provides additional sources of cash as
necessary. Principal uses of cash are capital

expenditures, business investments, share repurchase and dividends. See the
Consolidated Statement of Cash Flows for detailed information.

The company's net debt balance increased $22.1 million since
December 31, 2001, primarily due to an increase in commercial paper
borrowings partially offset by a reduction in the ESOP debt guarantee.

At March 31, 2002, $672.7 million of outstanding commercial paper
borrowings were classified as long-term since they are maintained on a
long-term basis with on-going support provided by the company's $2 billion
revolving credit agreement.

On May 1, 2002, Anheuser-Busch notified debt holders of its
intention to call $200 million of 6.75% Notes due 2005 at par, effective
June 1, 2002.

Capital expenditures during the first quarter 2002 were $181.7
million, compared to $306.0 million for the first quarter 2001. Full year
2002 capital expenditures are expected to approximate $900 to $950 million.

Risk Management
---------------

The company's derivatives holdings fluctuate during the year based
on normal and recurring changes in purchasing and production activity. Since
December 31, 2001, there have been no significant changes in the company's
interest rate, commodity price and foreign currency exposures, changes in
the types of derivative instruments used to hedge those exposures, or
significant changes in underlying market conditions.

Environmental Matters
---------------------

The company is subject to federal, state and local environmental
protection laws and regulations and is operating within such laws or is
taking action aimed at assuring compliance with such laws and regulations.
Compliance with these laws and regulations is not expected to materially
affect the company's competitive position. None of the Environmental
Protection Agency (EPA) designated clean-up sites for which Anheuser-Busch
has been identified as a Potentially Responsible Party (PRP) would have a
material impact on the company's consolidated financial statements.

PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES

On January 2, 2002 the company issued out of treasury shares a
total of 3,187 shares of the company's common stock ($1 par value) to four
members of the Board of Directors of the company in lieu of cash for all or
a portion of those members 2002 annual retainer fee pursuant to the
company's Non-Employee Director Elective Stock Acquisition Plan.

These transactions were exempt from registration and prospectus
delivery requirements of the Securities Act of 1933 pursuant to Section 4(2)
of the Act.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Shareholders of the company held
April 24, 2002, the following matters were voted upon:

1. Election of John E. Jacob, Charles F. Knight, Joyce M. Roche, Henry
Hugh Shelton and Patrick T. Stokes to serve as Directors of the
company for a term of three years.

FOR WITHHELD
----------- ----------

John E. Jacob 751,235,026 8,785,418
Charles F. Knight 749,490,506 10,529,938
Joyce M. Roche 752,067,176 7,953,268
Henry Hugh Shelton 752,321,661 7,698,783
Patrick T. Stokes 751,946,393 8,074,051

2. Approve the employment of PricewaterhouseCoopers LLP, as
independent accountants, to audit the books and accounts of the
company for 2002.

For 729,764,650
Against 25,202,312
Abstain 5,024,791
Non-Votes 28,691

3. Shareholder proposal concerning Genetically Modified Ingredients.

For 25,068,568
Against 606,344,498
Abstain 38,702,470
Non-Votes 89,904,908

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits
--------

12 - Ratio of Earnings to Fixed Charges

(b) Reports on Form 8-K
-------------------

No reports on Form 8-K were filed during the three month period
ending March 31, 2002.

SIGNATURES

Pursuant to the requirements 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)

/s/ W. Randolph Baker
--------------------------------------------
W. Randolph Baker
Vice President and Chief Financial Officer
(Chief Financial Officer)
May 10, 2002

/s/ John F. Kelly
--------------------------------------------
John F. Kelly
Vice President and Controller
(Chief Accounting Officer)
May 10, 2002