<PAGE>
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 January 26, 1994
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 Nine Months Ended January 26, 1994 Commission File Number 1-3385
H. J. HEINZ COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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)
</TABLE>
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 February 23, 1994, was 251,743,151 shares.
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
January 26, 1994 January 27, 1993*
---------------- -----------------
FY 1994 FY 1993
(Unaudited)
(In Thousands, Except
per Share Amounts)
<S> <C> <C>
Sales.................................................................... $ 5,101,250 $ 5,069,712
Cost of products sold.................................................... 3,161,123 3,114,734
---------------- -----------------
Gross profit............................................................. 1,940,127 1,954,978
Selling, general and administrative expenses............................. 1,199,141 1,148,904
Gain on sale of confectionery and specialty rice businesses.............. 127,001 --
---------------- -----------------
Operating income......................................................... 867,987 806,074
Interest income.......................................................... 25,455 21,567
Interest expense......................................................... 111,884 107,046
Other expense, net....................................................... 23,439 23,219
---------------- -----------------
Income before income taxes............................................... 758,119 697,376
Provision for income taxes............................................... 284,248 237,108
---------------- -----------------
Income before cumulative effect of
accounting change...................................................... 473,871 460,268
Cumulative effect of FAS No. 106 adoption................................ -- (133,630)
---------------- -----------------
Net income............................................................... $ 473,871 $ 326,638
================ =================
Income per share:
Income before cumulative effect of
accounting change...................................................... $ 1.84 $ 1.77
Cumulative effect of FAS No. 106 adoption................................ -- (.51)
---------------- -----------------
Net income per share..................................................... $ 1.84 $ 1.26
================ =================
Cash dividends per share................................................. $ .96 $ .87
================ =================
Average shares outstanding............................................... 257,527 259,685
================ =================
</TABLE>
*Fiscal 1993 results have been restated to reflect the adoption of FAS No. 106.
See Notes to Consolidated Financial Statements.
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2
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H. J. HEINZ COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
January 26, 1994 January 27, 1993
---------------- ----------------
FY 1994 FY 1993
(Unaudited)
(In Thousands, Except
per Share Amounts)
<S> <C> <C>
Sales..................................................................... $ 1,710,209 $ 1,766,712
Cost of products sold..................................................... 1,039,063 1,065,531
---------------- ----------------
Gross profit.............................................................. 671,146 701,181
Selling, general and administrative expenses.............................. 423,804 415,805
---------------- ----------------
Operating income.......................................................... 247,342 285,376
Interest income........................................................... 10,487 7,589
Interest expense.......................................................... 37,138 43,330
Other expense, net........................................................ 5,459 2,343
---------------- ----------------
Income before income taxes................................................ 215,232 247,292
Provision for income taxes................................................ 86,665 84,980
---------------- ----------------
Net income................................................................ $ 128,567 $ 162,312
================ ================
Net income per share...................................................... $ .50 $ .62
================ ================
Cash dividends per share.................................................. $ .33 $ .30
================ ================
Average shares outstanding................................................ 257,527 259,685
================ ================
</TABLE>
See Notes to Consolidated Financial Statements.
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3
<PAGE>
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 26, 1994 April 28, 1993*
---------------- ---------------
FY 1994 FY 1993
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................................. $ 130,260 $ 68,432
Short-term investments, at cost which approximates market.................. 41,718 155,872
Receivables, net........................................................... 745,507 978,935
Inventories................................................................ 1,241,023 1,185,428
Prepaid expenses and other current assets.................................. 254,824 234,744
---------------- --------------
Total current assets.................................................. 2,413,332 2,623,411
---------------- --------------
Property, plant and equipment.............................................. 3,398,898 3,328,351
Less accumulated depreciation.............................................. 1,240,647 1,166,140
---------------- --------------
Total property, plant and equipment, net.............................. 2,158,251 2,162,211
---------------- --------------
Investments, advances and other assets..................................... 627,745 665,073
Goodwill, net.............................................................. 997,954 1,013,051
Other intangibles, net..................................................... 342,261 357,575
---------------- --------------
Total other noncurrent assets......................................... 1,967,960 2,035,699
---------------- --------------
Total assets.......................................................... $ 6,539,543 $ 6,821,321
================ ==============
</TABLE>
*Summarized from audited fiscal year 1993 balance sheet.
See Notes to Consolidated Financial Statements.
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4
<PAGE>
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 26, 1994 April 28, 1993*
---------------- ---------------
FY 1994 FY 1993
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt............................................................ $ 755,427 $ 1,570,462
Portion of long-term debt due within one year.............................. 12,944 33,893
Accounts payable........................................................... 414,291 533,835
Salaries and wages......................................................... 63,768 76,624
Accrued marketing.......................................................... 55,619 112,277
Other accrued liabilities.................................................. 273,092 301,301
Restructuring reserves..................................................... 93,856 179,328
Income taxes............................................................... 139,463 58,623
---------------- --------------
Total current liabilities............................................. 1,808,460 2,866,343
---------------- --------------
Long-term debt............................................................. 1,744,937 1,009,381
Deferred income taxes...................................................... 206,589 195,128
Non-pension postretirement benefits........................................ 222,084 221,684
Other liabilities.......................................................... 191,947 207,789
---------------- --------------
Total long-term debt and other liabilities............................ 2,365,557 1,633,982
---------------- --------------
Shareholders' Equity:
Capital stock.............................................................. 72,259 72,288
Additional capital......................................................... 168,107 170,308
Retained earnings.......................................................... 3,587,146 3,356,399
Cumulative translation adjustments......................................... (293,428) (193,407)
---------------- --------------
3,534,084 3,405,588
Less:
Treasury shares at cost (35,239,113 shares at January 26, 1994 and
33,036,049 shares at April 28, 1993).................................. 1,134,874 1,046,905
Unearned compensation relating to the ESOP............................... 33,684 37,687
---------------- --------------
Total shareholders' equity............................................ 2,365,526 2,320,996
---------------- --------------
Total liabilities and shareholders' equity............................ $ 6,539,543 $ 6,821,321
=============== ===============
</TABLE>
*Summarized from audited fiscal year 1993 balance sheet.
See Notes to Consolidated Financial Statements.
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5
<PAGE>
H. J. HEINZ COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
January 26, 1994 January 27, 1993
---------------- ----------------
FY 1994 FY 1993
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
Cash Provided by Operating Activities.................................... $ 445,631 $ 50,716
---------------- ----------------
Cash Flows from Investing Activities:
Capital expenditures................................................ (195,102) (315,621)
Acquisitions, net of cash acquired.................................. (97,575) (354,131)
Proceeds from divestitures.......................................... 255,574 800
Purchases of short-term investments................................. (252,832) (146,680)
Sales and maturities of short-term investments...................... 336,271 159,344
Investment in tax benefits, net..................................... 2,092 (30,986)
Other items, net.................................................... 3,252 (15,565)
---------------- ----------------
Cash provided by (used for) investing activities............... 51,680 (702,839)
---------------- ----------------
Cash Flows from Financing Activities:
Proceeds from long-term debt........................................ 976 974,262
Payments on long-term debt.......................................... (23,543) (30,857)
(Payments) proceeds from short-term debt, net....................... (56,438) 22,612
Dividends........................................................... (243,124) (220,599)
Purchases of treasury stock......................................... (110,651) (113,167)
Exercise of stock options........................................... 16,455 63,699
Tax benefit from stock options exercised............................ 3,495 13,336
Other items, net.................................................... 3,522 2,668
---------------- ----------------
Cash (used for) provided by financing activities............... (409,308) 711,954
---------------- ----------------
Effect of exchange rate changes on cash and cash equivalents............. (26,175) (22,315)
---------------- ----------------
Net increase in cash and cash equivalents................................ 61,828 37,516
Cash and cash equivalents at beginning of year........................... 68,432 92,707
---------------- ----------------
Cash and cash equivalents at end of period............................... $ 130,260 $ 130,223
================ ================
</TABLE>
See Notes to Consolidated Financial Statements.
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6
<PAGE>
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 28, 1993
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.
(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:
<TABLE>
<CAPTION>
January 26, 1994 April 28, 1993
---------------- --------------
<S> <C> <C>
(Thousands of Dollars)
Finished goods and work-in-process.................................... $ 928,364 $ 874,912
Packaging material and ingredients.................................... 312,659 310,516
---------------- -------------
$ 1,241,023 $ 1,185,428
================ =============
</TABLE>
(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. See Note 5 to the Consolidated Financial Statements
on Page 33 of the company's 1993 Annual Report to Shareholders.
On August 10, 1993, The Omnibus Budget Reconciliation Act of 1993 was
enacted. Of most significance to the company are the increase in the U.S.
federal statutory tax rate from 34% to 35% and the new provision allowing
the tax deductibility of certain acquired intangibles. The tax law changes
will not have a material effect on the results of operations of the
company.
(6) On September 15, 1993, the company sold its confectionery business of Heinz
Italia S.p.A. to Hershey Foods Corporation for approximately $133 million.
The divestiture includes brand names, inventory and fixed assets. On August
20, 1993, the company sold its Near East specialty rice business to Golden
Grain Company, a subsidiary of The Quaker Oats Company for approximately
$80 million. The sale included trademarks, inventory and fixed assets,
including the Leominster, Massachusetts plant, where Near East products are
produced. The pretax gain on the divestitures totaled $127.0 million or
$0.24 per share. On May 18, 1993, the company sold its Chico-San rice cake
business to The Quaker Oats Company for approximately $39 million. The sale
included brand names, inventory and Chico-San's Gridley, California plant.
This divestiture did not have a material impact on the company's results of
operations. Pro forma results of the company, assuming all of the above
divestitures had been made at the beginning of each period presented, would
not be materially different from the results reported.
(7) On September 7, 1993, the company replaced its line of credit agreements
supporting domestic commercial paper. The new line of credit agreements
total $1.5 billion, of which $750 million expire in September 1994, at
which time it is anticipated that a new one year facility will be
established. The remaining $750 million expire in August 1996. As a result,
$750 million of the
7
<PAGE>
H. J. HEINZ COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)
total $1.1 billion domestic commercial paper outstanding is classified as
long-term debt at January 26, 1994. Fiscal year 1993 domestic line of
credit agreements of $1.2 billion have been terminated. At fiscal year end
1993 total domestic commercial paper outstanding of $1.2 billion was
classified as short-term debt.
(8) On July 1, 1993, the company purchased both the Moore's and Domani product
lines from the Clorox Company of Oakland, California for approximately $90
million. The Moore's product range includes coated frozen foods,
specifically breaded onion rings, breaded cheeses and vegetables. Domani
offers frozen pasta, including manicotti, shells, tortellini, ravioli and
lasagna. The acquisition strengthens the company's presence in the
foodservice industry. The acquisition has been accounted for as a purchase
and, accordingly, the assets and liabilities have been recorded at their
fair market values as of the date of the acquisition. Pro forma results of
the company, assuming this acquisition had been made at the beginning of
each period presented, would not be materially different from the results
reported.
(9) On October 7, 1992, the company purchased Wattie's Limited of Auckland, New
Zealand from Goodman Fielder Wattie Limited of Sydney, Australia for
approximately $300 million. The purchase price includes cash paid to
Goodman Fielder Wattie Limited and other direct costs of the acquisition.
The acquisition has been accounted for as a purchase and, accordingly, the
purchase price was allocated to assets and liabilities based on the
estimated fair value as of the date of the acquisition. The operating
results have been included in the consolidated operating results from the
date of the acquisition forward. Wattie's Limited produces a broad range of
grocery products, most of which hold leading market shares in New Zealand
and which are also exported to Australia and Asia. See Note 2 to the
Consolidated Financial Statements on page 32 of the company's 1993 Annual
Report to Shareholders.
(10) In 1993, the company adopted Statement of Financial Accounting Standards
(FAS) No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." FAS No. 106 requires that the accrual method of accounting
for postretirement benefits other than pensions be used and the accrual
period be based on the period that the employees render the services
necessary to earn their postretirement benefits. Effective April 30, 1992,
the company elected to recognize immediately the accumulated postretirement
benefit obligation for active and retired employees resulting in an
after-tax cumulative charge of $133.6 million (net of income tax benefit of
$85.4 million), or $0.51 per share. As a result, the nine months 1993
results were restated. This charge has no effect on consolidated cash
flows. See Note 11 to the Consolidated Financial Statements on page 39 of
the company's 1993 Annual Report to Shareholders.
(11) During the third quarter of fiscal year 1994, the company approved the
phase out of the company's contribution toward the payment of medical
benefits for U.S. salaried and non-union hourly employees who retire on or
after May 1, 1994. This plan curtailment did not materially impact the
results of operations or financial position of the company.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
NINE MONTHS ENDED JANUARY 26, 1994 AND JANUARY 27, 1993
For the nine months ended January 26, 1994, sales were $5,101.3 million, up
$31.6 million or 1% from the same period last year. Contributing to the growth
in sales were price increases (2%), volume increases (2%) and acquisitions, net
of divestitures (2%). Offsetting these increases was the continued adverse
impact of the strengthening U.S. dollar against most currencies, primarily the
Italian Lira and the Pound Sterling, which reduced sales by 5%.
Acquisitions included the purchase of Wattie's Limited of New Zealand (see
Note 9 to the Condensed Consolidated Financial Statements) and the Moore's and
Domani product lines in the United States (see Note 8 to the Condensed
Consolidated Financial Statements). Divestitures included the sale of the
confectionery business of Heinz Italy, the sale of the Near East specialty rice
business and the sale of the Chico-San rice cake business (see Note 6 to the
Condensed Consolidated Financial Statements).
Price increases were noted in several of the company's core products both
domestically and overseas.
Volume gains occurred in various Heinz Pet Products brands, Heinz baby food
and foodservice products. Volume declines occurred in Weight Watchers brand
products, Weight Watchers meeting operations and StarKist tuna.
Gross profit decreased $14.8 million or 0.8% and the ratio of gross profit
declined to 38.0% from 38.6% for the same period last year. The decline in the
ratio was the result of: a disappointing performance in the company's Weight
Watchers businesses (both meetings and foods) which were impacted by the Los
Angeles earthquake, one of the worst winters in many years in the U.S. and
declining classroom attendance, principally in the U.S.; a change in product
mix; a change in profit mix resulting from recent acquisitions and divestitures;
and the unfavorable impact of the strengthening dollar against most currencies.
These factors were partially offset by a reduction in costs associated with the
restructuring charges taken in the fourth quarter last year.
Operating income increased $61.9 million or 7.7% and the ratio of operating
income to net sales increased to 17.0% from 15.9%. The results included a $127.0
million gain from the sale of the confectionery business of Heinz Italy and the
sale of the specialty rice business. Excluding these gains, operating income
declined $65.1 million and the operating margin declined to 14.5% from 15.9%.
The decline in the margin was the result of a reduced gross profit margin
described above and a 13% increase in marketing expense focused principally on
most of the company's major brands. Operating income benefited from the
company's restructuring program announced last fiscal year. Restructuring
activities that have already taken place and are providing benefits include: a
30% reduction in headcount at the company's Australian operations; the closing
of a pet food plant in Pascagoula, Mississippi; the realignment of certain pet
food operations; the downsizing and consolidation of StarKist Seafood
headquarters functions with that of Heinz Pet Products in Newport, Kentucky; the
realignment of Ore-Ida's Ontario, Oregon factory; the restructuring of the
administration of the Weight Watchers International classroom operations; the
downsizing of administrative functions at the company's Italian operations; a
reduction in manufacturing headcount at the company's United Kingdom operations
and the consolidation of sales service functions into Heinz Service Company.
Additional activities that have been recently announced that are expected to
benefit future results include the realignment of production between Canada and
the United States resulting in a reduction in headcount of 200 people and a
reorganization of the administrative functions at the company's United Kingdom
operations.
Net income for the period was $473.9 million compared to $326.6 million
last year and net income per share (EPS) was $1.84 compared to $1.26. Fiscal
1993 net income and EPS were restated to reflect
9
<PAGE>
the cumulative effect of the adoption of FAS No. 106 ($133.6 million or $0.51
per share). The effective tax rate was 37.5% compared to 34.0% for the same
period last year. The fiscal 1994 effective rate includes: the impact of recent
changes in U.S. tax law that increased the U.S. statutory rate from 34% to 35%
and provided for the deductibility of certain purchased intangibles; tax loss
carryforward benefits; and a statutory rate reduction in Australia from 39% to
33%. The fiscal 1993 effective rate included the effect of an increase in the
statutory rate in Italy which increased the net benefits to be derived from the
revaluation of certain assets in that country and tax loss carryforward
benefits.
The impact of fluctuating exchange rates for the nine months ended January
27, 1994, remained relatively consistent on a line-by-line basis throughout the
Consolidated Statement of Income.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 26, 1994 AND JANUARY 27, 1993
Sales for the three months ended January 26, 1994 totaled $1,710.2 million,
down $56.5 million or 3.2% from $1,766.7 million for the same period last year.
The decline is due to the adverse impact of the stronger U.S. dollar against
most foreign currencies, primarily the Pound Sterling and the Italian Lira, (2%)
and divestitures, net of acquisitions (5%). Volume increases (2%) and price
increases (2%) partially offset the sales decline.
Volume gains occurred in Heinz grocery ketchup, various Heinz Pet Products
brands, foodservice products and Heinz beans. These gains were prtially offset
by volume declines in Weight Watchers businesses (both meetings and foods) and
StarKist tuna. Price increases occurred in many of the company's core products
both domestically and overseas.
Gross profit for the third quarter decreased $30.1 million or 4.3% to
$671.1 million. The ratio of gross profit to sales fell to 39.2% from 39.7% for
the same period last year. The decrease in the gross profit rate was due to a
change in the company's product mix and a disappointing performance in the
company's Weight Watchers businesses (both foods and classes) due to one of the
worst winters in many years in the U.S.; the Los Angeles earthquake; and
declining classroom attendance, principally in the U.S. Classroom attendance was
down approximately 20% for the quarter which also reduced Weight Watchers brand
food sales. These declines were partially offset by a reduction in costs
associated with restructuring charges taken in prior years.
Operating income was $247.3 million, down $38.1 million or 13.3% from
$285.4 million a year ago. The decrease is due to the reduced gross profit
margin described above and the loss of income from the divestiture of certain
businesses during the year (see Note 6 to the Condensed Consolidated Financial
Statements). Also contributing to the decline in operating income was a 19%
increase in marketing expense in the third quarter as a result of additional
marketing support focused principally on most of the company's major brands. The
loss of income from divestitures and the downturn of the Weight Watchers
businesses described above will adversely affect the company's fourth quarter
operating results.
Net interest expense decreased $9.1 million primarily due to a reduction in
net debt resulting from proceeds from recent refinancings, divestitures and a
reduction in working capital.
Net income was $128.6 million compared to $162.3 million for the same
period last year and earnings per share (EPS) was $0.50 compared to $0.62. The
decrease in net income reflected a higher effective tax rate which increased to
40.3% compared to 34.4% in the prior year. The lower effective rate in 1993
resulted from changes in statutory rates in Italy which had the effect of
increasing the net benefits to be derived from the revaluation of certain assets
in that country and tax loss carryforward benefits. The 1994 effective rate was
impacted by the change in the current year U.S. statutory rate from 34% to 35%;
offset partially by a reduction in the Australian statutory tax rate to 33% from
39%.
The impact of fluctuating exchange rates for the three months ended January
26, 1994, remained relatively consistent on a line-by-line item basis throughout
the Consolidated Statement of Income.
10
<PAGE>
LIQUIDITY AND FINANCIAL POSITION
Cash provided by operating activities totaled $445.6 million for the nine
month period ended January 26, 1994, compared to providing $50.7 million for the
same period last year. The increase was primarily the result of a reduction in
working capital associated with lower receivables and a smaller increase in
seasonal inventories this year, partially offset by restructuring expenditures
and an increase in marketing expenditures described above.
Investing activities provided $51.7 million versus requiring $702.8 million
last year. The increase in cash provided by investing activities was primarily
the result of proceeds from divestitures and a reduction in cash used for
acquisitions. Current year divestitures included the Chico-San rice cake
business, the Near East specialty rice business, and the Italian confectionery
business (see Note 6 to the Condensed Consolidated Financial Statements).
Acquisitions included the purchase of the Moore's and Domani product lines (see
Note 8 to the Condensed Consolidated Financial Statements). Prior year net cash
used for investing activities included acquisitions totaling $354.1 million
which includes the purchase of Wattie's Limited (see Note 9 to the Consolidated
Financial Statements); Arimpex, a foodservice distribution company in Italy; and
Weight Watchers franchises in Chicago, Wisconsin and Minnesota. Purchases and
sales/maturities of short-term investments increased from year to year primarily
as a result of the investment of the proceeds from the sale of the Italian
confectionery business in Italian short-term securities. Purchases of property,
plant and equipment totaled $195.1 million in the first nine months compared to
$315.6 million in the same period last year. Fiscal 1994 investments were for
productivity improvements and plant expansions, principally at the company's
Ore-Ida, United Kingdom, Heinz U.S.A., StarKist and Weight Watchers operations.
Financing activities required $409.3 million for the nine months ended
January 26, 1994 compared to providing $712.0 million last year. Cash used for
financing activities in fiscal 1994 was primarily attributable to payment of
dividends, purchases of treasury stock and payments of both long and short-term
debt. Prior year proceeds from financing activities were primarily the result of
an increase in long-term borrowings related to issuances of $750 million of
intermediate-term notes, the proceeds of which were used primarily to repay
outstanding short-term borrowings.
In the current fiscal year the company purchased 3.1 million shares of
common stock at a cost of $110.7 million versus 3.0 million shares at a cost of
$113.2 million for the same period last year. As of January 26, 1994, the
company has purchased approximately 2.6 million shares of stock as part of the
current 10 million share repurchase program that began in June 1993.
On September 7, 1993, the company replaced its line of credit agreements
supporting domestic commercial paper. The new line of credit agreements total
$1.5 billion, of which $750 million expire in September 1994, at which time it
is anticipated that a new one year facility will be established. The remaining
$750 million expire in August 1996. As a result, $750 million of the total $1.1
billion domestic commercial paper outstanding is classified as long-term debt at
January 26, 1994. Fiscal year 1993 domestic line of credit agreements of $1.2
billion have been terminated. At fiscal year end 1993 total domestic commercial
paper outstanding of $1.2 billion was classified as short-term debt.
During the third quarter of fiscal year 1994, the company approved the
phase out of the company's contribution toward the payment of medical benefits
for U.S. salaried and non-union hourly employees who retire on or after May 1,
1994. This plan curtailment did not materially impact the results of operations
or financial position of the company.
On March 9, 1994, the board of directors of the company declared the
quarterly dividend of $0.33 per share to common shareholders of record as of
March 22, 1994, payable April 10, 1994.
The company's financial position continues to remain strong, enabling it to
meet cash requirements for operations, capital expansion programs and dividends
to shareholders.
11
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report under this item.
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
Nothing to report under this item.
ITEM 5. OTHER INFORMATION
On January 18, 1994, the Registrant announced that its board of directors
had elected as a director Edith E. Holiday, 41, former Assistant to the
President and Secretary of the Cabinet in the Bush Administration and former
General Counsel of the U.S. Department of Treasury. This increases board
membership to 18.
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.
11.Computation of net income per share.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended January 26,
1994.
12
<PAGE>
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.
<TABLE>
<S> <C>
H. J. HEINZ COMPANY
(Registrant)
/s/ DAVID R. WILLIAMS
Date: March 14, 1994 By......................................................
David R. Williams
Senior Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer)
/s/ TRACY E. QUINN
Date: March 14, 1994 By......................................................
Tracy E. Quinn
Corporate Controller
(Principal Accounting Officer)
</TABLE>
13
<PAGE>
EXHIBIT 11
H. J. Heinz Company and Subsidiaries
COMPUTATION OF NET INCOME PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------
January 26, January 27,
1994 1993
---- ----
FY 1994 FY 1993
<S> <C> <C>
Primary income per share:
Net income........................................................................ $ 473,871 $ 326,638
Preferred dividends............................................................... 53 59
----------- -----------
Net income applicable to common stock............................................. $ 473,818 $ 326,579
=========== ===========
Average common shares outstanding and common stock equivalents.................... 257,527 259,685
=========== ===========
Net income per share--primary..................................................... $ 1.84 $ 1.26
=========== ===========
Fully diluted income per share:
Net income........................................................................ $ 473,871 $ 326,638
=========== ===========
Average common shares outstanding and common stock equivalents.................... 257,527 259,685
Additional common shares assuming:
Conversion of $1.70 third cumulative preferred stock............................ 377 465
Additional common shares assuming options were exercised
at the period-end market price............................................... 96 621
----------- -----------
Average common shares outstanding and common stock equivalents.................... 258,000 260,771
=========== ===========
Net income per share--fully diluted............................................. $ 1.84 $ 1.25
=========== ===========
</TABLE>
All amounts in thousands except per share amounts.
------------------
