BUDFF Anheuser Busch Inbev SA NV (PK)

NOTES TO FINANCIAL STATEMENTS

December 31, 2016 And 2015

The following description of the Anheuser-Busch 401(k) Savings and Retirement Plan (the Plan) is provided for general informational purposes only. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan covering all eligible employees of Anheuser-Busch Companies, LLC (the Company) and certain subsidiaries of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

Plan Administration

The Plan’s named fiduciaries are the Company, as Plan Sponsor and Plan Administrator, and Vanguard Fiduciary Trust Company, as Trustee. As Plan Sponsor, the Company has the right to amend or terminate the Plan and designate the Plan’s named fiduciaries. The Trustee has the authority to invest, manage and control the assets of the trust in accordance with the provisions of the Plan and the trust agreement.

Eligibility

The Plan permits immediate participation in the Plan for employees of a participating employer, except for hourly employees classified as part-time, seasonal and temporary who are required to complete one year of service, during which the employee works 1,000 hours, to become eligible for participation in the Plan. Participation by eligible employees is voluntary.

Contributions

A participant may contribute from 1% to 50% of base pay through payroll deductions for before-tax contributions and/or after-tax contributions, subject to limitations as set forth in the Plan Document and by the Internal Revenue Code (the Code). Contribution rates for certain highly compensated employees may be limited to satisfy nondiscrimination provisions of the Code.

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

Participants who are at least age 50 may also make before-tax and Roth after-tax catch-up contributions to the Plan on an unmatched basis, subject to limitations as set forth by the Code.

The Company contributes a matching cash contribution amount to certain participants, up to a certain percentage of base pay contributed by a participant to the Plan. The Company also makes an annual nonelective contribution to certain participants of certain participating employers or collective bargaining units who are employed as of December 31, or who have terminated employment at age 55 or later, or due to death or disability.

Vesting

Participants are immediately vested in their voluntary contributions and rollover contributions, plus investment earnings.

Company contributions vest upon completion of three years of vesting service. Company contributions also vest upon termination of employment by reason of death, permanent disability, entry into military service, layoff exceeding 12 months, termination of employment for any reason after reaching age 60.

Forfeitures

Forfeitures result from a participant’s termination of employment and account distribution before the participant is 100% vested in Company contributions. Forfeited nonvested amounts are used to reduce future Company contributions and were approximately $1,165,000 during the year ended December 31, 2016. There was no unused forfeiture balance as of December 31, 2016 or 2015.

Payment Of Benefits

The Plan permits in-service withdrawals subject to certain restrictions. Distributions for terminations are made in lump sums and are comprised of the market value of participants’ contributions and vested Company contributions.

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

Notes Receivable From Participants

A participant may borrow from vested account balances, subject to certain conditions. The minimum loan amount is $1,000; the maximum amount is the lesser of $50,000 less the highest outstanding loan balance under the Plan during the one-year period ending on the day before the loan is made, or 50% of the vested account balance. A participant may have no more than two loans outstanding at any time. The interest rate for the life of the loan is set quarterly at the prime rate plus 1% as of the beginning of the quarter. The term of a loan for the purchase of a principal residence may be up to ten years; the term of a loan for any other reason may not exceed five years.

Plan Expenses

All administrative expenses incurred are charged to participant accounts.

Plan participants are charged for asset management fees based on fund balances. Asset management fees are accrued daily by the Trustee based on participant balances in each fund and are offset against Investment Income.

Plan Termination

The Company intends to continue the Plan. However, the Company may at any time and for any reason, subject to the provisions of ERISA, suspend or terminate the Plan provided that such action does not adversely affect the rights of any participant under the Plan. Such termination would result in the immediate and full vesting of each participant’s account balance. The Trustee would then retain the assets until otherwise distributable under the Plan.

Basis Of Accounting

The accompanying financial statements have been prepared using the accrual method of accounting with the exception of benefit payments, which are recorded when paid.

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

Use Of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of additions to and deductions from net assets during the reporting period. Actual results could differ from those estimates.

Investments Valuation And Income Recognition

Investments are reported at fair market value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for further discussion of fair value measurements.

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Net appreciation in fair value of investments includes the Plan’s gains and losses on investments bought and sold, as well as held during the year.

Notes Receivable From Participants

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Delinquent notes receivable from participants are recorded as a distribution based upon the terms of the Plan Document.

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

Recent Accounting Pronouncement

In May 2015, the FASB issued Accounting Standards Update (ASU) 2015-07, Fair Value Measurement (Topic 820) - Disclosures For Investments in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent) . ASU 2015-07 removes the requirement to include within the fair value hierarchy leveling table those investments that measure fair value using the practical expedient available for investments that calculate a net asset value (NAV) per share. Instead, an entity would be required to include those investments as a reconciling item so that the total fair value amount of investments in the disclosure is consistent with the fair value investment balance on the statement of net assets available for benefits. Even though these investments are removed from the fair value hierarchy, plans should provide or disclose the total amount of investments measured using the NAV per share (or its equivalent) practical expedient in order to permit reconciliation of the fair value of investments included in the fair value hierarchy to the line items presented in the statement of net assets available for benefits. Management has elected to adopt ASU 2015-07 for the year ended December 31, 2016 and has been applied retrospectively.

There were no impacts on the statement of net assets available for benefits or the statement of changes in net assets available for benefits as of or for the years ended December 31, 2016 or 2015.

The Plan follows current accounting guidance , which provides a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for investments measured at fair value:

Registered Investment Companies

Valued at the daily closing price as reported by the fund. Registered investment companies held by the Plan are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily NAV and to transact at that price. The registered investment companies held by the Plan are deemed to be actively traded.

Collective Trust Funds

Valued at NAV based on the market value of the underlying investment assets divided by the number of units outstanding at the end of the Plan year. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. Participant transactions (purchased and sales) may occur daily.

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

A-B InBev Company ADR Fund

Plan investments include the A-B InBev Company ADR Fund (the ADR Fund), an employer securities fund. Participant investments that are directed to the ADR Fund are used to purchase Anheuser-Busch InBev American Depositary Receipts (ADRs), which represent the right to receive shares of Anheuser-Busch InBev common stock.    Anheuser-Busch InBev ADRs are publicly traded in U.S. dollars on the New York Stock Exchange. Shares of Anheuser-Busch InBev common stock are publicly traded on the Euronext exchange.

The fair value of the Plan’s interest in the ADR Fund is based on quoted market prices on the last day of the Plan year.

The methods described above may produce fair value calculations that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth, by level within the fair value hierarchy, the Plan’s investments measured at fair value on a recurring basis as of December 31, 2016:

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Fair Value Of Investments In Entities That Use NAV

The following table summarizes investments measured at fair value based on NAV per share as of December 31, 2016 and 2015:

There have been no changes in valuation methodologies as of December 31, 2016 or 2015.

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ANHEUSER-BUSCH 401(k)

    SAVINGS AND RETIREMENT PLAN

Notes To Financial Statements (Continued)

The Plan received a favorable determination letter from the Internal Revenue Service (IRS) dated May 11, 2017, indicating that the Plan qualifies under the applicable provisions of Section 401 of the Code, and is therefore exempt from federal income taxes. The Plan has been amended since the date of the determination letter. The Plan Administrator believes that the Plan has continued to be designed and operated in compliance with the applicable requirements of the Code.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS or other applicable taxing authorities. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for Plan years prior to 2013.

Plan investments include registered investment companies and units of collective trust funds managed by the Plan’s Trustee. In addition, the Plan holds an investment in Company ADRs. Therefore, these transactions qualify as allowable party-in-interest transactions.

Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term could materially affect the amounts reported in the statement of net assets available for benefits.

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