The Best Beer Company in a Better World - Anheuser-Busch InBev

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76 | Annual Report 2008 Financial Report 7. Other operating income/(expenses) Million euro 2008 2007 Government grants 96 95 License income 28 32 (Additions to)/reversals of provisions 28 25 Net gain on disposal of property, plant and equipment and intangible assets 67 40 Net rental and other operating income 79 71 298 263 Research expenses as incurred 52 20 The government grants relate primarily to fiscal incentives given by certain Brazilian states based on the company’s operations and investments in those states. In 2008, we expensed 52m euro in research, mainly in our Belgian research center, compared to 20m euro in 2007. Part of this was expensed in the area of market research, but the majority is related to innovation in the areas of process optimization especially as it pertains to capacity, new product developments and packaging initiatives. 8. Non-recurring items To better reflect the underlying performance of our business, Profit from operations and Profit, as reported in accordance with IFRS, is adjusted for certain non-recurring items because of their importance, as detailed below. The non-recurring items included in the income statement are as follows : Million euro 2008 2007 Profit from operations before non-recurring items 4 022 3 920 Restructuring (including impairment losses) (331) (43) Fair value adjustments (34) - Business and asset disposal (26) 393 Disputes (14) 24 Profit from operations 3 617 4 294 Non-recurring finance cost (138) - As parts of its plans to effectively integrate Anheuser-Busch, AB InBev communicated on 8 December plans to cut approximately 1 400 US salaried positions in the US beer-related divisions. The company estimates that the aggregate pre-tax expense associated with the reduction will be approximately 154m euro. These costs have been accrued at the time of the announcement in accordance with IAS 37. The 2008 non-recurring restructuring charges further include 123m euro cost which mainly result of organizational alignments and outsourcing of activities in Western Europe, the global headquarters and Asia Pacific. These changes aim to eliminate overlap or duplicated processes and activities across functions and zones taking into account the right match of employee profiles with the new organizational requirements. The one time expenses as a result of the series of decisions will provide us with a lower cost base besides a stronger focus on AB InBev’s core activities, quicker decision-making and improvements to efficiency, service and quality. The 2008 restructuring charges also include an impairment loss of 54m euro related to AB InBev’s plans to implement a new distribution model in France, involving the transfer of a controlling interest in its current integrated distribution network (CaféIn) and entry into a partnership for the distribution of AB InBevs’ beverages. In connection with this reorganization, CaféIn was recognized as an asset held for sale and an impairment loss of 54m euro was recognized per end of December 2008. Fair value adjustments, recognized in the 2008 non-recurring items for a total of (34)m euro, relate to the non-recurring impact of revaluing the inventories of Anheuser-Busch in line with IFRS 3. Business and asset disposal in 2008 resulted in a net loss of 26m euro and is partly related to losses recognized in connection with the above mentioned reorganization in France (7m euro). Next to that, additional losses related to business and asset disposals of previous years were booked in 2008. Profit from operations as at 31 December 2008 was negatively affected by provisions for disputes of 14m euro.
Financial Report Annual Report 2008 | 77 In connection with the combination with Anheuser-Busch, the company recognized a non recurring financial expense of 138m euro per end of 2008. This expense related for 90m euro to the commitment fees for the syndicated senior loan and equity bridge facility and the underwriting and arrangement fees for the equity bridge facility. In addition a 48m euro loss was recognized for ineffectiveness of the hedging on the Anheuser-Busch financing prior to the closing of the acquisition. The sale of Immobrew to Cofinimmo and the disposal of some dormant companies and assets held for sale resulted in a gain before taxes of 393m euro as at December 2007. Further, profit from operations as at 31 December 2007 was positively affected by a net reversal of provisions for disputes of 24m euro. All the above amounts are before income taxes. The 2008 non-recurring items as at 31 December decreased income taxes by (112)m euro, whereas the 2007 non-recurring items as at 31 December increased income taxes by 35m euro. 9. Payroll and related benefits Million euro 2008 2007 Wages and salaries (1 689) (1 432) Social security contributions (325) (320) Other personnel cost (273) (235) Pension expense for defined benefit plans (85) (62) Share-based payment expense (42) (53) Contributions to defined contribution plans (12) (5) (2 426) (2 107) Average number of full time equivalents (FTE) 90 949 88 690 Inclusion of Anheuser-Busch average number of full time equivalents (FTE) (on a full year basis) 28 925 - Total average number of full time equivalents (FTE) 119 874 88 690 The average number of full time equivalents can be split as follows : 2008 2007 AB InBev NV (parent company) 209 375 Anheuser-Busch subsidiaries 28 925 - Other subsidiaries 88 903 86 441 Proportionally consolidated entities 1 837 1 874 Note 5 Segment reporting contains the split of the FTE by geographical segment. 10. Additional information on operating expenses by nature 119 874 88 690 Depreciation, amortization and impairment charges are included in the following line items of the 2008 income statement : Million euro Depreciation and impairment of property, plant and equipment Amortization and impairment of intangible assets Impairment of goodwill Cost of sales 841 2 - Distribution expenses 84 - - Sales and marketing expenses 195 46 - Administrative expenses 79 60 - Other operating (income)/expenses - - 5 Non-recurring items (1) - - 1 198 108 5 The depreciation, amortization and impairment of property, plant and equipment includes a full-cost reallocation of (4)m euro from the aggregate depreciation, amortization and impairment expense to cost of goods sold.
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Our dream is to become The Best Bee
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Anheuser-Busch InBev is a publicly
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50% 40% 30% 20% 10% 04 05 06 07 07
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Global brands Multi-country brands
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The Net Debt to EBITDA ratio not on
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Success in China China is the large
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World-class efficiency World-class
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Business Service Center Excellence
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Fewer bigger bets We know focus wor
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Stella Artois Légère In 2008, we
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One of 2008’s key innovations was
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Chernigivske In the Ukraine, Cherni
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14.3 12.6 2006 2007 2008 Volumes NA
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Contacts Registered office Anheuser
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The Best Beer Company in a Better World - Anheuser-Busch InBev

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