SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 29, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------------- ---------------
FOR THE SIX MONTHS ENDED OCTOBER 29, 1997 COMMISSION FILE NUMBER 1-3385
H. J. HEINZ COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0542520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 GRANT STREET, PITTSBURGH, PENNSYLVANIA 15219
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 412-456-5700
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 requirements for the past 90 days. Yes X No
--- ---
The number of shares of the Registrant's Common Stock, par value $.25 per
share, outstanding as of December 1, 1997, was 365,469,863 shares.
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Six Months Six Months
Ended Ended
October 29, 1997 October 30, 1996
---------------- ----------------
FY 1998 FY 1997
(Unaudited)
(In Thousands, Except
per Share Amounts)
Sales................... $4,497,352 $4,602,818
Cost of products sold... 2,817,617 2,959,675
---------- ----------
Gross profit............ 1,679,735 1,643,143
Selling, general and
administrative
expenses............... 856,741 942,109
---------- ----------
Operating income........ 822,994 701,034
Interest income......... 15,542 20,377
Interest expense........ 126,108 133,985
Other expense, net...... 13,788 20,681
---------- ----------
Income before income
taxes.................. 698,640 566,745
Provision for income
taxes.................. 266,473 209,695
---------- ----------
Net income.............. $ 432,167 $ 357,050
========== ==========
Net income per share.... $ 1.16 $ .95
========== ==========
Cash dividends per
share.................. $ .60 1/2 $ .55 1/2
========== ==========
Average shares for
earnings per share..... 373,732 374,500
========== ==========
See Notes to Condensed Consolidated Financial Statements.
------------
2
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Three Months
Ended Ended
October 29, 1997 October 30, 1996
---------------- ----------------
FY 1998 FY 1997
(Unaudited)
(In Thousands, Except
per Share Amounts)
Sales................... $2,264,082 $2,394,058
Cost of products sold... 1,409,414 1,546,554
---------- ----------
Gross profit............ 854,668 847,504
Selling, general and
administrative
expenses............... 498,891 494,746
---------- ----------
Operating income........ 355,777 352,758
Interest income......... 7,636 9,947
Interest expense........ 62,797 68,141
Other expense, net...... 7,290 12,787
---------- ----------
Income before income
taxes.................. 293,326 281,777
Provision for income
taxes.................. 104,460 104,257
---------- ----------
Net income.............. $ 188,866 $ 177,520
========== ==========
Net income per share.... $ .51 $ .47
========== ==========
Cash dividends per
share.................. $ .31 1/2 $ .29
========== ==========
Average shares for
earnings per share..... 373,732 374,500
========== ==========
See Notes to Condensed Consolidated Financial Statements.
------------
3
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 29, 1997 April 30, 1997*
---------------- ---------------
FY 1998 FY 1997
(Unaudited)
(Thousands of Dollars)
Assets
Current Assets:
Cash and cash equivalents..................... $ 178,980 $ 156,986
Short-term investments, at cost which
approximates market.......................... 42,246 31,451
Receivables, net.............................. 1,070,948 1,118,874
Inventories................................... 1,555,231 1,432,511
Prepaid expenses and other current assets..... 239,068 273,284
---------- ----------
Total current assets........................ 3,086,473 3,013,106
---------- ----------
Property, plant and equipment................. 4,183,217 4,380,598
Less accumulated depreciation................. 1,819,255 1,901,378
---------- ----------
Total property, plant and equipment, net.... 2,363,962 2,479,220
---------- ----------
Goodwill, net................................. 1,785,483 1,803,552
Other intangibles, net........................ 633,917 627,096
Other non-current assets...................... 513,828 514,813
---------- ----------
Total other non-current assets.............. 2,933,228 2,945,461
---------- ----------
Total assets................................ $8,383,663 $8,437,787
========== ==========
*Summarized from audited fiscal year 1997 balance sheet.
See Notes to Condensed Consolidated Financial Statements.
------------
4
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 29, 1997 April 30, 1997*
---------------- ---------------
FY 1998 FY 1997
(Unaudited)
(Thousands of Dollars)
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term debt............................... $ 448,729 $ 589,893
Portion of long-term debt due within one year. 320,233 573,549
Accounts payable.............................. 915,999 865,154
Salaries and wages............................ 74,556 64,836
Accrued marketing............................. 165,696 164,354
Accrued restructuring costs................... 155,397 210,804
Other accrued liabilities..................... 352,626 315,662
Income taxes.................................. 207,030 96,163
---------- ----------
Total current liabilities................... 2,640,266 2,880,415
---------- ----------
Long-term debt................................ 2,457,043 2,283,993
Deferred income taxes......................... 253,586 265,409
Non-pension postretirement benefits........... 210,151 211,500
Other......................................... 386,778 356,049
---------- ----------
Total long-term debt and other liabilities.. 3,307,558 3,116,951
---------- ----------
Shareholders' Equity:
Capital stock................................. 107,991 108,015
Additional capital............................ 204,366 175,811
Retained earnings............................. 4,251,260 4,041,285
Cumulative translation adjustments............ (257,227) (210,864)
---------- ----------
4,306,390 4,114,247
Less:
Treasury shares at cost (65,696,859 shares
at October 29, 1997 and 63,912,463 shares
at April 30, 1997).......................... 1,827,745 1,629,501
Unfunded pension obligation.................. 26,465 26,962
Unearned compensation relating to the ESOP... 16,341 17,363
---------- ----------
Total shareholders' equity.................. 2,435,839 2,440,421
---------- ----------
Total liabilities and shareholders' equity.. $8,383,663 $8,437,787
========== ==========
*Summarized from audited fiscal year 1997 balance sheet.
See Notes to Condensed Consolidated Financial Statements.
------------
5
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
October 29, 1997 October 30, 1996
---------------- ----------------
FY 1998 FY 1997
(Unaudited)
(Thousands of Dollars)
Cash Provided by Operating Activities........ $ 397,160 $ 211,796
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures....................... (171,830) (193,938)
Acquisitions, net of cash acquired......... (117,939) (119,539)
Proceeds from sale of Ore-Ida frozen
foodservice foods business................ 490,739 --
Purchases of short-term investments........ (448,509) (628,707)
Sales and maturities of short-term
investments............................... 453,926 639,207
Other items, net........................... 23,559 21,523
--------- ---------
Cash provided by (used for) investing
activities.............................. 229,946 (281,454)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from long-term debt............... -- 36,907
Payments on long-term debt................. (252,876) (91,577)
Proceeds from short-term debt, net......... 35,430 430,515
Dividends.................................. (222,192) (203,700)
Purchases of treasury stock................ (316,721) (155,494)
Exercise of stock options.................. 114,366 66,775
Other items, net........................... 40,894 16,906
--------- ---------
Cash (used for) provided by financing
activities.............................. (601,099) 100,332
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents............................. (4,013) 3,292
--------- ---------
Net increase in cash and cash equivalents.... 21,994 33,966
Cash and cash equivalents at beginning of
year......................................... 156,986 90,064
--------- ---------
Cash and cash equivalents at end of period... $ 178,980 $ 124,030
========= =========
See Notes to Condensed Consolidated Financial Statements.
------------
6
H. J. HEINZ COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The Management's Discussion and Analysis of Financial Condition and
Results of Operations which follows these notes contains additional
information on the results of operations and the financial position of the
company. Those comments should be read in conjunction with these notes.
The company's annual report on Form 10-K for the fiscal year ended April
30, 1997 includes additional information about the company, its
operations, and its financial position, and should be read in conjunction
with this quarterly report on Form 10-Q.
(2) The results for the interim periods are not necessarily indicative of the
results to be expected for the full fiscal year due to the seasonal nature
of the company's business. Certain prior year amounts have been
reclassified in order to conform with the fiscal 1998 presentation.
(3) In the opinion of management, all adjustments, which are of a normal and
recurring nature, necessary for a fair statement of the results of
operations of these interim periods have been included.
(4) The composition of inventories at the balance sheet dates was as follows:
October 29, 1997 April 30, 1997
---------------- --------------
(Thousands of Dollars)
Finished goods and work-in-process.......... $1,193,514 $1,040,104
Packaging material and ingredients.......... 361,717 392,407
---------- ----------
$1,555,231 $1,432,511
========== ==========
(5) The provision for income taxes consists of provisions for federal, state,
U.S. possessions and foreign income taxes. The company operates in an
international environment with significant operations in various locations
outside the United States. Accordingly, the consolidated income tax rate
is a composite rate reflecting the earnings in the various locations and
the applicable tax rates.
(6) On June 30, 1997, the company completed the sale of its Ore-Ida frozen
foodservice foods business to McCain Foods Limited of New Brunswick,
Canada. The transaction resulted in a pretax gain of approximately $96.6
million ($0.14 per share), and was recorded as an offset to selling,
general and administrative expenses. The transaction included the sale of
the company's Ore-Ida appetizer, pasta and potato foodservice business and
five of the Ore-Ida plants that manufacture the products. The Ore-Ida
frozen foodservice foods business contributed approximately $525 million
in net sales for fiscal 1997. This sale was an essential part of Project
Millennia as it will allow the company to focus its efforts on the Ore-Ida
retail frozen potato and pasta business, and on the frozen retail snacks
business. The sale is not expected to have an adverse impact on the
company's results of operations.
(7) On June 30, 1997, the company acquired John West Foods Limited from
Unilever. John West Foods Limited, with annual sales of more than $250
million, is the leading brand of canned tuna and fish in the United
Kingdom. Based in Liverpool, John West Foods Limited sells its canned fish
products throughout Continental Europe and in a number of other
international markets. (John West operations in Australia, New Zealand and
South Africa were not included in the transaction.)
On July 21, 1997, the company announced that it had acquired a majority
interest in a joint venture with Tiger Oats Limited of Johannesburg, South
Africa. The new company will be known as Pet Products (Pty) Limited with
its headquarters in Cape Town. Pet Products will manufacture and market pet
food brands formerly owned exclusively by Tiger Oats. These brands include
Dogmor, Husky, Pamper and Catmor.
7
On August 28, 1997, the company acquired a majority interest in one of
Poland's leading food processors, Pudliszki S.A. Pudliszki is the largest
ketchup producer in Poland and also markets tomato concentrate, canned
vegetables and cooking sauces.
During the current year the company also made other acquisitions, primarily
in Australasia.
All of the above acquisitions have been accounted for as purchases and,
accordingly, the respective purchase prices have been allocated on a
preliminary basis to the respective assets and liabilities based on their
estimated fair values as of the dates of the acquisitions. Operating
results of these acquisitions have been included in the Consolidated
Statement of Income from the dates of the acquisitions.
Pro forma results of the company, assuming all of the above transactions
had been made at the beginning of each period presented, would not be
materially different from the results reported.
(8) The company's $2.30 billion credit agreement, which expires in September
2001, supports its domestic commercial paper program. At October 29, 1997,
the company had $1.53 billion of domestic commercial paper outstanding,
all of which has been classified as long-term debt due to the long-term
nature of the credit agreement. As of April 30, 1997, the company had
$1.35 billion of domestic commercial paper outstanding and classified as
long-term debt.
(9) On September 10, 1997, the company's board of directors raised the
quarterly dividend on the company's common stock to $0.31 1/2 per share
from $0.29 per share, for an indicated annual rate of $1.26 per share.
(10) On September 10, 1997, the company's board of directors authorized the
repurchase of additional shares of its common stock, par value $0.25 per
share. As of October 29, 1997, there is authorization to repurchase up to
14.7 million shares.
(11) In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share,"
effective for financial statements issued for periods ending after
December 15, 1997. The new standard specifies the computation,
presentation and disclosure requirements for earnings per share for
entities with publicly held common stock. Since early adoption of the
standard is prohibited, pro forma earnings per share amounts computed
using the new standard are presented below.
Six Months Ended
---------------------------------
October 29, 1997 October 30, 1996
---------------- ----------------
As presented.............................. $1.16 $0.95
Pro forma:
Basic earnings per share................ $1.18 $0.97
Diluted earnings per share.............. $1.16 $0.95
Three Months Ended
---------------------------------
October 29, 1997 October 30, 1996
---------------- ----------------
As presented.............................. $0.51 $0.47
Pro forma:
Basic earnings per share................ $0.52 $0.48
Diluted earnings per share.............. $0.51 $0.47
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
SIX MONTHS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996
H. J. Heinz Company announced its largest-ever reorganization plan in the
fourth quarter of Fiscal 1997. This reorganization and restructuring program
("Project Millennia") is designed to strengthen the company's six core
businesses and improve the company's profitability and global growth.
On June 30, 1997, the company completed the sale of its Ore-Ida frozen
foodservice foods business to McCain Foods Limited. The transaction resulted
in a pretax gain of approximately $96.6 million ($0.14 per share), and was
recorded as an offset to selling, general and administrative expenses. This
sale was an essential part of Project Millennia as it will allow the company
to focus its efforts on the Ore-Ida retail frozen potato and pasta business,
and on the frozen retail snacks business. In addition, the company has
announced the closure or sale of 19 plants worldwide, with another 6 to be
announced.
During the first six months of Fiscal 1998, the company incurred non-
recurring costs related to the ongoing implementation of Project Millennia of
$31.0 million pretax ($0.05 per share). These non-recurring costs consist
primarily of relocation, training, consulting and start-up costs. In the
second half of the fiscal year, the company expects additional non-recurring
costs associated with the implementation of Project Millennia of between $0.06
and $0.09 per share.
RESULTS OF OPERATIONS
For the six months ended October 29, 1997, sales decreased $105.5 million,
or 2.3%, to $4,497.4 million from $4,602.8 million recorded in the same period
a year ago. The sales decrease resulted from divestitures of 5.8% and the
unfavorable effect of foreign exchange translation rates of 2.0%; partially
offset by acquisitions of 3.4%, price of 1.7% and volume gains of 0.4%.
Domestic operations provided 53.2% of the current period's net sales compared
to 56.2% in the same period last year.
During the first six months of Fiscal 1998, the company acquired John West
Foods Limited in Europe, a majority interest in Pudliszki S.A., one of
Poland's top food processors, and other smaller acquisitions. Fiscal 1997
acquisitions impacting the period to period sales dollar comparison include
substantially all of the pet food businesses of Martin Feed Mills Limited in
Canada, the canned beans and pasta business of Nestle Canada, Inc. and other
acquisitions, primarily in Australasia. The sales impact of these acquisitions
was more than offset by divestitures, primarily the Ore-Ida frozen foodservice
foods business and the New Zealand ice cream business.
Price increases recorded in Heinz ketchup, pet food, infant food, tuna and
condiments were offset partially by price decreases in frozen entrees and
bakery products.
Volume increases recorded in bakery products, sauces and pastes, weight loss
classroom activities, soups and retail frozen potatoes were partially offset
by volume declines in Heinz ketchup, dog food, infant food and frozen entrees.
Gross profit increased $36.6 million to $1,679.7 million from $1,643.1
million a year ago. The ratio of gross profit to sales increased to 37.3% from
35.7%. Excluding the impact of non-recurring costs related to the ongoing
implementation of Project Millennia, gross profit would have increased $47.4
million to $1,690.5 million, and the gross profit percentage would have
increased to 37.6%. The current year's gross profit and gross profit ratio
were favorably impacted by price increases and reduced trade allowances which
resulted from the discontinuance of inefficient end-of-quarter trade
promotions, cost savings resulting from Project Millennia and a favorable
product mix.
9
Operating income increased $122.0 million, or 17.4%, to $823.0 million from
$701.0 million for the same period last year. Excluding the impact of the gain
on the sale of the Ore-Ida frozen foodservice foods business and non-recurring
costs related to the ongoing implementation of Project Millennia, operating
income would have increased $56.4 million to $757.4 million. The increase in
operating income, excluding the effects of these non-recurring items, is
primarily due to the increase in gross profit as SG&A expenses were relatively
flat period to period.
Interest expense decreased $7.9 million to $126.1 million from $134.0
million in the comparable period a year ago as the impact of higher average
interest rates was more than offset by lower average borrowings.
The effective tax rate for the first six months of Fiscal 1998 was 38.1%
compared to 37.0% for the same period a year ago. The current period effective
rate reflects the benefit of a recent reduction in the income tax rate in the
United Kingdom, partially offset by a significantly higher tax rate associated
with the sale of the Ore-Ida frozen foodservice foods business. Excluding the
impact of the Ore-Ida foodservice sale, the effective tax rate through six
months is 37.0%.
Net income for the first six months was $432.2 million compared to $357.1
million for the same period last year, and earnings per share was $1.16
compared to $0.95 a year ago. Excluding the impact of the gain on the sale of
the Ore-Ida frozen foodservice foods business and non-recurring costs related
to the ongoing implementation of Project Millennia, net income would have
increased 11.6% to $398.6 million, and earnings per share would have increased
12.6% to $1.07 per share.
THREE MONTHS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996
RESULTS OF OPERATIONS
For the three months ended October 29, 1997, sales decreased $130.0 million,
or 5.4%, to $2,264.1 million from $2,394.1 million recorded in the same period
a year ago. The sales decrease resulted from the impact of divestitures of
7.3%, the unfavorable effect of foreign exchange translation rates of 2.6% and
sales volume declines of 0.4%; partially offset by acquisitions which
contributed 3.9% to sales and price of 1.0%. Domestic operations provided
52.3% of the current period's net sales compared to 56.8% in the same period
last year.
Acquisitions impacting the quarter to quarter sales dollar comparison
included John West Foods Limited in Europe, substantially all of the pet food
businesses of Martin Feed Mills Limited in Canada, the canned beans and pasta
business of Nestle Canada, Inc., a majority interest in Pudliszki S.A., one of
Poland's top food processors and other acquisitions, primarily in Australasia.
The sales impact of these acquisitions was more than offset by divestitures,
primarily the Ore-Ida frozen foodservice foods business and the New Zealand
ice cream business.
Volume decreases occurred in Heinz ketchup, dog food and infant food, and
were partially offset by volume increases in weight loss classroom activities,
sauces and pastes, cat food and bakery products.
Price increases noted in Heinz ketchup and infant food were partially offset
by a decrease in frozen entrees.
Gross profit increased $7.2 million to $854.7 million from $847.5 million a
year ago. The ratio of gross profit to sales increased to 37.7% from 35.4%.
Excluding the impact of non-recurring costs related to the ongoing
implementation of Project Millennia, gross profit would have increased $17.0
million to $864.5 million, and the gross profit percentage would have
increased to 38.2%. The current quarter's gross profit and gross profit ratio
were favorably impacted by price increases and reduced trade allowances which
resulted from the discontinuance of inefficient end-of-quarter trade
promotions, cost savings resulting from Project Millennia and a favorable
product mix.
10
Operating income increased to $355.8 million from $352.8 million for the
same period last year. Excluding non-recurring costs related to the ongoing
implementation of Project Millennia of $19.5 million pre-tax, operating income
for the second quarter would have increased 6.4% to $375.2 million. The
increase in operating income, excluding these non-recurring costs, is
primarily due to the increase in gross profit as SG&A expenses were relatively
flat quarter to quarter.
Interest expense decreased $5.3 million to $62.8 million from $68.1 million
in the second quarter a year ago as the impact of higher average interest
rates was more than offset by lower average borrowings.
The effective tax rate for the second quarter was 35.6% compared to 37.0%
for the same period a year ago. The decrease in the effective tax rate for the
current quarter reflects the benefit of a recent reduction in the income tax
rate in the United Kingdom.
Net income for the current quarter was $188.9 million compared to $177.5
million for the same quarter last year, and earnings per share was $0.51
compared to $0.47, an increase of 8.5%. Excluding the impact of non-recurring
costs related to the ongoing implementation of Project Millennia, net income
would have increased 13.4% to $201.3 million, and earnings per share would
have increased 14.9% to $0.54 per share.
LIQUIDITY AND FINANCIAL POSITION
Cash provided by operating activities totaled $397.2 million for the six
month period ended October 29, 1997 compared to $211.8 million last year.
Cash provided by investing activities totaled $229.9 million compared to
requiring $281.5 million last year. Cash provided by divestitures in the
current period totaled $490.7 million, due to the sale of the Ore-Ida frozen
foodservice food business. Acquisitions in the current period required $117.9
million, due mainly to the purchases of John West Limited in Europe, a
majority interest in Pudliszki S.A. of Poland, a majority interest in a pet
food joint venture with Tiger Oats Limited of Johannesburg, South Africa and
other acquisitions, primarily in Australasia. Acquisitions in the prior year's
comparable period totaled $119.5 million, due mainly to the purchases of
substantially all of the pet food businesses of Martin Feed Mills Limited in
Canada and Southern Country Foods Ltd. in Australia. Purchases of property,
plant and equipment totaled $171.8 million in the current period compared to
$193.9 million a year ago.
In the current period, $601.1 million was applied to financing activities
while financing activities provided $100.3 million a year ago. Treasury stock
purchases totaled $316.7 million (7.0 million shares) versus $155.5 million
(4.8 million shares) in the prior year's first six months. Payments on long-
term debt totaled $252.9 million for the current period compared to $91.6
million last year. Dividend payments totaled $222.2 million compared to $203.7
million a year ago. Proceeds from long-term debt provided $36.9 million in the
prior period. Stock options exercised provided $114.4 million in the current
period versus $66.8 million in the prior year's comparable period. Net
proceeds from short-term debt provided $35.4 million in the current period
versus $430.5 million in the prior year's comparable period.
The company's $2.30 billion credit agreement, which expires in September
2001, supports its domestic commercial paper program. As of October 29, 1997,
the company had $1.53 billion of domestic commercial paper outstanding, all of
which has been classified as long-term debt due to the long-term nature of the
credit agreement. As of April 30, 1997, the company had $1.35 billion of
domestic commercial paper outstanding and classified as long-term debt. The
company continues to evaluate long-term financing vehicles in order to reduce
short-term variable interest rate debt.
On September 10, 1997, the company's board of directors raised the quarterly
dividend on the company's common stock to $0.31 1/2 per share from $0.29 per
share, for an indicated annual rate of $1.26 per share. On December 2, 1997,
the company's board of directors declared the quarterly dividend
11
on the company's common stock of $0.31 1/2 per share payable on January 10,
1998 to shareholders of record at the close of business on December 19, 1997.
On September 10, 1997, the company's board of directors authorized the
repurchase of additional shares of its common stock, par value $0.25 per
share. As of October 29, 1997, there is authorization to repurchase up to 14.7
million shares. In the second half of the fiscal year, the company expects to
spend approximately $275 million on share repurchases, net of proceeds from
stock options exercised.
The company's financial position continues to remain strong, enabling it to
meet cash requirements for operations, capital expansion programs and
dividends to shareholders.
OTHER MATTERS
On December 2, 1997, following the recommendation of the Chairman and Chief
Executive Officer Anthony J. F. O'Reilly, to the Management Development and
Compensation Committee of outside directors, the board of directors of the
company announced the appointment of William R. Johnson as president and chief
executive officer, effective April 30, 1998, the beginning of the company's
financial year. Dr. O'Reilly has agreed to remain as non-executive chairman of
the company through the annual meeting of shareholders in September 2000.
12
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See the description of legal proceedings set forth under this caption in the
company's Quarterly Report on Form 10-Q for the three months ended July 30,
1997.
ITEM 2. CHANGES IN SECURITIES
Nothing to report under this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Nothing to report under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of H. J. Heinz Company was held in
Pittsburgh, Pennsylvania on September 10, 1997. The following individuals were
elected as directors for a one-year term expiring in September 1998:
Shares
Director Shares for Withheld
-------- ---------- --------
A. J. F. O'Reilly 318,625,447 6,388,905
W. P. Snyder III 318,831,139 6,183,213
J. J. Bogdanovich 318,095,104 6,919,248
H. J. Schmidt 318,804,925 6,209,427
A. Lippert 319,109,389 5,904,963
E. B. Sheldon 318,991,851 6,022,501
R. M. Cyert 318,944,398 6,069,954
S. C. Johnson 319,453,810 5,560,542
D. R. Keough 319,311,228 5,703,124
S. D. Wiley 318,767,533 6,246,819
L. J. McCabe 319,055,291 5,959,061
D. R. Williams 319,056,625 5,957,727
L. Ribolla 318,995,386 6,018,966
N. F. Brady 318,808,593 6,205,759
W. R. Johnson 319,037,552 5,976,800
W. C. Springer 318,978,965 6,035,387
E. E. Holiday 319,425,598 5,588,754
*T. S. Foley 318,284,440 6,729,912
P. F. Renne 318,984,305 6,030,047
- --------
* Mr. Foley resigned from the Board of Directors effective November 6, 1997 to
become the United States Ambassador to Japan.
Shareholders also acted upon the following proposal at the Annual Meeting:
Elected Coopers & Lybrand L.L.P. the company's independent accountants for
the fiscal year ending April 29, 1998. Votes totaled 322,879,487 for; 740,848
against; and 1,394,018 abstentions.
ITEM 5. OTHER INFORMATION
See Note 7 to the Condensed Consolidated Financial Statements in Part I--
Item 1 of this Quarterly Report on Form 10-Q and "Other Matters" in Part I--
Item 2 of this Quarterly Report on Form 10-Q.
This report contains certain forward-looking statements which are based on
management's current views and assumptions regarding future events and
financial performance. Reference should be made
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to the section "Forward-Looking Statements" in Item 1 of the registrant's
Annual Report on Form 10-K for the fiscal year ended April 30, 1997 for a
description of the important factors that could cause actual results to differ
materially from those discussed herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be furnished by Item 601 of Regulation S-K are
listed below and are filed as part hereof. The Registrant has omitted
certain exhibits in accordance with Item 601(b)(4)(iii)(A) of Regulation
S-K. The Registrant agrees to furnish such documents to the Commission upon
request. Documents not designated as being incorporated herein by reference
are filed herewith. The paragraph numbers correspond to the exhibit numbers
designated in Item 601 of Regulation S-K.
10. Employment Agreement between H. J. Heinz Company and
Daniel J. O'Neill.
11. Computation of net income per share.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended October 29, 1997.
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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.
H. J. HEINZ COMPANY
(Registrant)
Date: December 12, 1997 /s/ Paul F. Renne
By...................................
Paul F. Renne
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: December 12, 1997 /s/ Edward J. McMenamin
By...................................
Edward J. McMenamin
Vice President and Corporate
Controller
(Principal Accounting Officer)
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