<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended April 27, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 1-3385
H. J. HEINZ COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0542520
(State of Incorporation) (I.R.S. Employer Identification No.)
600 Grant Street, Pittsburgh, Pennsylvania 15219
(Address of principal executive offices) (Zip Code)
412-456-5700
(Registrant's telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, par value $.25 per share New York Stock Exchange;
Pacific Stock Exchange
Third Cumulative Preferred Stock,
$1.70 First Series, par value $10 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of June 30, 1994, the aggregate market value of the Registrant's voting
stock held by non-affiliates of the Registrant was approximately $7,322,326,211.
The number of shares of the Registrant's Common Stock, par value $.25 per
share, outstanding as of June 30, 1994, was 247,983,070 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the fiscal year
ended April 27, 1994, are incorporated into Part I, Item 1; Part II, Items 5, 7
and 8; and Part IV, Item 14.
Portions of Registrant's Proxy Statement for the 1994 Annual Meeting of
Shareholders are incorporated into Part III, Items 10, 11, 12 and 13.
<PAGE>
PART I
Item 1. Business.
H. J. Heinz Company was incorporated in Pennsylvania on July 27, 1900. In
1905 it succeeded to the business of a partnership operating under the same name
which had developed from a food business founded in 1869 at Sharpsburg,
Pennsylvania by Henry J. Heinz. H. J. Heinz Company and its consolidated
subsidiaries (collectively, the "Company" or the "Registrant" unless the context
indicates otherwise) manufacture and market an extensive line of processed food
products throughout the world. The Company's products include ketchup, tuna and
other seafood products, pet food, baby food, frozen potato products,
lower-calorie products (frozen entrees, frozen desserts, frozen breakfasts,
dairy and other products), soup (canned and frozen), sauces/pastes, beans,
condiments and pickles, coated products, pasta, bakery products, frozen pizza
and pizza components, chicken, vegetables (frozen and canned), ice cream and ice
cream novelties, edible oils, vinegar, margarine/shortening, juices and other
processed food products. The Company operates principally in one segment of
business--processed food products--which represents more than 90% of
consolidated sales. The Company also operates and franchises weight control
classes and operates other related programs and activities. The Company intends
to continue to engage principally in the business of manufacturing and marketing
processed food products and the ingredients for food products.
The Company's products are manufactured and packaged to provide safe,
stable, wholesome foods which are used directly by consumers and foodservice and
institutional customers. Many products are prepared from recipes developed in
the Company's research laboratories and experimental kitchens. Ingredients are
carefully selected, washed, trimmed, inspected and passed on to modern factory
kitchens where they are processed, after which the finished product is filled
automatically into containers of glass, metal, plastic, paper or fiberboard
which are then closed, processed, labeled and cased for market. Finished
products are processed by sterilization, chilling, freezing, pickling, drying,
baking or extruding. Certain finished products and seasonal raw materials are
aseptically packed into sterile containers after in-line sterilization.
The Company has three classes of similar products, each of which has
accounted for 10% or more of consolidated sales in one or more of the prior
three fiscal years listed below. The following table shows sales, as a
percentage of consolidated sales, for each of these classes of similar products
for each of the last three fiscal years.
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Ketchup, sauces and other condiments.................................. 19% 18% 19%
Tuna and other seafood products....................................... 10 10 10
Baby food............................................................. 9 10 10
All other classes of products, none of which accounts
for 10% or more of consolidated sales............................... 62 62 61
--- --- ---
100% 100% 100%
</TABLE>
The Company manufactures its products from a wide variety of raw foods.
Pre-season contracts are made with farmers for a substantial portion of raw
materials such as tomatoes, cucumbers, potatoes, onions and some other fruits
and vegetables. Dairy products, meat, sugar, spices, flour and other fruits and
vegetables are purchased on the open market.
Tuna is obtained through direct negotiations with tuna vessel owners,
negotiated contracts directly with the owners or through the owners'
cooperatives and by bid-and-ask transactions. In some instances, in order to
insure the continued availability of adequate supplies of tuna, the Company
assists, directly or indirectly, in financing the acquisition and operation of
fishing vessels. The provision of such assistance is not expected to affect
materially the operations of the Company. The Company also engages in the tuna
fishing business through wholly and partially owned subsidiaries.
The Marine Mammal Protection Act of 1972, as amended (the "Act"), and
regulations thereunder (the "Regulations") regulate the incidental taking of
dolphin in the course of fishing for yellowfin tuna in the eastern tropical
Pacific Ocean, where a portion of the Company's light-meat tuna is caught. In
1990, the Company voluntarily adopted a worldwide policy of refusal to purchase
tuna caught in the eastern tropical
2
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Pacific Ocean through the intentional encirclement of dolphin by purse seine
nets and reaffirmed its policy of not purchasing tuna caught anywhere using gill
nets or drift nets. Also in 1990, the Dolphin Protection Consumer Information
Act (the "Dolphin Information Act") was enacted which regulates the labeling of
tuna products as "dolphin safe" and bans the importation of tuna caught using
high seas drift nets. "Dolphin Safe" labels appear on the Company's StarKist
tuna products in grocery stores throughout the United States. The Act was
amended in 1992 to further regulate tuna fishing methods which involve marine
mammals. Compliance with the Act, the Regulations, the Dolphin Information Act,
the Company's voluntary policy, and the 1992 amendments has not had, and is not
expected to have, a material adverse effect on the Company's operations.
In recent years, the supply of raw tuna has been variable causing a
fluctuation in raw fish prices; however, such variation in supply has not
affected materially, nor is it expected to affect materially, the Company's
operations.
The Company has participated in the development of certain of its food
processing equipment, some of which is patented. The Company regards these
patents as important but does not consider any one or group of them to be
materially important to its business as a whole.
The Company's products are widely distributed around the world. Many of the
Company's products are marketed under the "Heinz" trademark, principally in the
United States, Canada, the United Kingdom, other western European countries,
Australia, Venezuela, Japan, the People's Republic of China, the Republic of
Korea and Thailand. Other important trademarks include "Star-Kist" for tuna
products, "9-Lives", "Amore" and "Kozy Kitten" for cat foods, "Ore-Ida" for
frozen potato and onion products, "Skippy Premium", "Recipe", "Reward" and
"Vets" for dog food, "Jerky Treats" and "Meaty Bones" for dog snacks, "Bagel
Bites" for pizza snack products, "Moore's" for coated vegetables and "Domani"
for frozen pasta products, all of which are marketed in the United States. "Chef
Francisco" is used for frozen soups and "Omstead" is used for frozen vegetables,
frozen coated products and frozen fish products, both of which are marketed in
the United States and Canada. "Plasmon", "Nipiol" and "Dieterba" are used for
baby food products, "Misura" for dietetic products for adults, "Ortobuono" for
pickled vegetables and fruit in syrup, "Mare D'Oro" for seafood and "Mr. Foody"
for table and kitchen sauces, all of which are mainly marketed in Italy. "Petit
Navire" is used for tuna and mackerel products, "Marie Elisabeth" for sardines
and tuna and "Orlando" and "Guloso" for tomato products, all of which are
marketed in various European countries. "Wattie's" is used for various grocery
products and frozen foods, "Tip Top" for ice cream and frozen desserts and
"Tegel" for poultry products, all of which are marketed in New Zealand,
Australia and the Asia/Pacific region. "Weight Watchers" is used in numerous
countries in conjunction with owned and franchised weight control classes,
programs, related activities and certain food products. The Company also markets
certain products under other trademarks and brand names and under private
labels.
Although crops constituting some of the Company's raw food ingredients are
harvested on a seasonal basis, most of the Company's products are produced
throughout the year. Seasonal factors inherent in the business have always
influenced the quarterly sales and net income of the Company. Consequently,
comparisons between quarters have always been more meaningful when made between
the same quarters of different years.
The products of the Company are sold under highly competitive conditions,
with many large and small competitors. The Company regards its principal
competition to be other manufacturers of processed foods, including branded,
retail products, foodservice products and private label products, that compete
with the Company for consumer preference, distribution, shelf space and
merchandising support. Product quality and consumer value are important areas of
competition. The Company's Weight Watchers International, Inc. subsidiary also
competes with a wide variety of weight control programs.
The Company's products are sold through its own sales force and through
independent brokers and agents to chain, wholesale, cooperative and independent
grocery accounts, to foodservice distributors and to institutions, including
hotels, restaurants and certain government agencies. The Company is not
dependent on any single customer or a few customers for a material part of its
sales.
Compliance with the provisions of national, state and local environmental
laws and regulations has not had a material effect upon the capital
expenditures, earnings or competitive position of the Company. The Company's
estimated capital expenditures for environmental control facilities for the
remainder of fiscal
3
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year 1995 and the succeeding fiscal year are not material and will not
materially affect either the earnings or competitive position of the Company.
The Company's factories are subject to inspections by various governmental
agencies, and its products must comply with the applicable laws, including food
and drug laws, of the jurisdictions in which they are manufactured and marketed.
The Company employed, on a full-time basis as of April 27, 1994,
approximately 35,700 persons around the world.
Financial segment information by major geographic area for the most recent
three fiscal years is set forth on page 38 of the Company's Annual Report to
Shareholders for the fiscal year ended April 27, 1994. Such information is
incorporated herein by reference.
Income from international operations is subject to fluctuation in currency
values, export and import restrictions, foreign ownership restrictions, economic
controls and other factors. From time to time exchange restrictions imposed by
various countries have restricted the transfer of funds between countries and
between the Company and its subsidiaries. To date such exchange restrictions
have not had a material adverse effect on the Company's international
operations.
Item 2. Properties.
The Company has 44 food processing plants in the United States and its
possessions, of which 39 are owned and five are leased, as well as 44 food
processing plants in foreign countries, of which 39 are owned and five are
leased, including six in Canada, six in New Zealand, four in Australia, four in
the United Kingdom, three in Italy, three in Spain, two in Greece, two in
Portugal, two in Zimbabwe, two in Botswana, one in France, one in Ireland, one
in The Netherlands, one in Venezuela, one in Japan, one in the People's Republic
of China, one in Ghana, one in the Republic of Korea, one in Thailand and one in
Ecuador. The Company also leases one can-making factory in the United States.
The Company and certain of its subsidiaries also own or lease office space,
warehouses and research facilities. The Company's food processing plants and
principal properties are in good condition and are satisfactory for the purposes
for which they are being utilized.
Item 3. Legal Proceedings.
On December 31, 1992, a food wholesale distributor filed suit in Federal
District Court in Newark, New Jersey against the Company and its two principal
competitors in the United States baby food industry. Subsequent to that date,
several similar lawsuits have been filed in the same court. The complaints, each
of which seeks an injunction and unspecified treble money damages, allege a
conspiracy to fix, maintain and stabilize the prices of baby food. All of the
above actions have been consolidated and styled In Re Baby Food Antitrust
Litigation, No. 92-5495 (NHP) and are pending in the Federal District Court in
Newark, New Jersey. In September 1993, the court authorized class certification
providing that the case will proceed as a class action. In addition, an action
has been filed in state court in San Francisco under California state law
against the Company and its two principal competitors. An action filed in
Alabama state court relating to the same matters has been stayed pending a
decision in the New Jersey case. The plaintiffs in the California and Alabama
actions seek to represent a class of indirect purchasers of baby food in the
respective states. The Company believes all of the suits are without merit and
will defend itself vigorously against them.
On June 29, 1994, pursuant to an agreement with the United States Attorney
for the District of Oregon, which was approved by the Federal District Court in
Oregon, the Federal District Court imposed a $1,000,000 fine on the Company's
Ore-Ida Foods, Inc. subsidiary ("Ore-Ida") and placed Ore-Ida on probation for
three years. The agreement permits Ore-Ida to invest $750,000 of the fine in
additional wastewater treatment processes. The agreement concerns violations of
Ore-Ida's NPDES permit at its Ontario, Oregon plant during a period from March
1988 through March 1990 which were reported previously in the Company's Annual
Report on Form 10-K for the fiscal year ended April 28, 1993.
Item 4. Submission of Matters to a Vote of Security Holders
The Company has not submitted any matters to a vote of security holders
since the last annual meeting of shareholders on September 8, 1993.
4
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Executive Officers of the Registrant
The following is a list of the names and ages of all of the executive
officers of the Company indicating all positions and offices with the Company
held by each such person and each such person's principal occupations or
employment during the past five years. All the executive officers have been
elected to serve until the next annual election of officers or until their
successors are elected, or until their earlier resignation or removal. The
annual election of officers is scheduled to occur on September 13, 1994.
<TABLE>
<CAPTION>
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 13, 1994) Employment During Past Five Years
---- ------------------- ---------------------------------
<S> <C> <C>
Anthony J. F. O'Reilly 58 Chairman of the Board since March 11, 1987 and President and Chief
Executive Officer since July 1, 1979.
Joseph J. Bogdanovich 82 Vice Chairman of the Board since September 7, 1988; also in charge
of Heinz Japan Ltd. since June 20, 1973 and Chairman of the Board
of Star-Kist Foods, Inc.
David W. Sculley 48 Senior Vice President in charge of Weight Watchers International,
Inc. since June 1, 1989, Weight Watchers Food Company since July
1, 1991, and Heinz Bakery Products Division and Ore-Ida Foods,
Inc. since January 1, 1992; from June 1, 1989 to December 31,
1991, in charge of H. J. Heinz Company of Canada Ltd.; also until
January 31, 1992, in charge of Heinz companies in Africa,
Australia, the People's Republic of China, the Republic of Korea
and Thailand.
Lawrence J. McCabe 59 Senior Vice President-General Counsel since June 12, 1991; Vice
President-General Counsel from October 1, 1990 to June 11, 1991;
Vice President-Associate General Counsel from July 1, 1982 through
September 30, 1990.
David R. Williams 51 Senior Vice President-Finance and Chief Financial Officer since
August 1, 1992; Vice President-Finance and Chief Financial Officer
from February, 1, 1992 to July 31, 1992; Vice President and
Corporate Controller from August 1, 1988 until January 31, 1992.
Luigi Ribolla 57 Senior Vice President in charge of all Heinz affiliates in Europe,
Cairo Foods Industries SAE in Egypt and Heinz development
activities in Russia, Eastern Europe, the Middle East and North
Africa since August 1, 1992; Director of Heinz Mediterranean Area
from 1988 to July 31, 1992.
William R. Johnson 45 Senior Vice President in charge of Star-Kist Foods, Inc. and Heinz
operations in the Asia Pacific area since September 8, 1993;
President and Chief Executive Officer of Star-Kist Foods, Inc.
since May 1, 1992 and President and Chief Executive Officer of
Heinz Pet Products Company since November 1, 1988.
William C. Springer 54 Senior Vice President in charge of Heinz North America, Heinz
Service Company and Heinz operations in Latin America since
September 8, 1993; President of Heinz North America since June 1,
1992 and President and Chief Executive Officer of Heinz U.S.A.
Division since May 1, 1989.
</TABLE>
J. Wray Connolly, formerly Senior Vice President and a director, retired
from the Company on December 1, 1993.
5
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Information relating to the Company's common stock is set forth on page 37
under the caption "Stock Market Information" and on page 52 in Note 12,
"Quarterly Results (Unaudited)," of the Company's Annual Report to Shareholders
for the fiscal year ended April 27, 1994. Such information is incorporated
herein by reference.
Item 6. Selected Financial Data.
The following table presents selected consolidated financial data for the
Company and its subsidiaries for each of the five fiscal years 1990 through
1994. All amounts are in thousands except per share data.
<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------------------------------
April 27, April 28, April 29, May 1, May 2,
1994 1993 1992 1991 1990
(52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sales............................................ $ 7,046,738 $ 7,103,374 $ 6,581,867 $ 6,647,118 $ 6,085,687
Interest expense................................. 149,243 146,491 134,948 137,592 108,542
Income before cumulative
effect of accounting change.................... 602,944 529,943 638,295 567,999 504,451
Net income....................................... 602,944 396,313 638,295 567,999 504,451
Income before cumulative effect of accounting
change per common share........................ 2.35 2.04 2.40 2.13 1.90
Net income per common share...................... 2.35 1.53 2.40 2.13 1.90
Short-term debt and current portion
of long-term debt.............................. 439,701 1,604,355 1,724,095 509,757 381,379
Long-term debt, exclusive of
current portion................................ 1,727,002 1,009,381 178,388 716,937 875,228
Total assets..................................... 6,381,146 6,821,321 5,931,901 4,935,382 4,487,451
Cash dividends per common share.................. 1.29 1.17 1.05 .93 .81
</TABLE>
Results recorded in 1994 include gains from the sale of the confectionery
business of Heinz Italy and the sale of Heinz U.S.A.'s Near East specialty rice
business. See Note 3 to the Consolidated Financial Statements on page 45 of the
Company's Annual Report to Shareholders for the fiscal year ended April 27,
1994.
During 1993, the Company adopted the provisions of FAS No. 106 and elected
immediate recognition of the cumulative effect. See Note 11 to the Consolidated
Financial Statements on page 51 of the Company's Annual Report to Shareholders
for the fiscal year ended April 27, 1994.
Net income and net income per share for 1993 and 1992 include restructuring
charges. See Note 4 to the Consolidated Financial Statements on page 45 of the
Company's Annual Report to Shareholders for the fiscal year ended April 27,
1994.
Results recorded in 1992 also include a gain on the sale of The Hubinger
Company. See Note 3 to the Consolidated Financial Statements on page 45 of the
Company's Annual Report to Shareholders for the fiscal year ended April 27,
1994.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
This information is set forth in the Management's Discussion and Analysis
section on pages 32 through 37 of the Company's Annual Report to Shareholders
for the fiscal year ended April 27, 1994. Such information is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Balance Sheets of the Company and its subsidiaries as of
April 27, 1994 and April 28, 1993 and the related Consolidated Statements of
Income, Retained Earnings and Cash Flows for the fiscal years ended April 27,
1994, April 28, 1993 and April 29, 1992, together with the related Notes to
Consolidated Financial Statements, included in the Company's Annual Report to
Shareholders for the fiscal year ended April 27, 1994, are incorporated herein
by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There is nothing to be reported under this item.
6
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Information relating to the Directors of the Company is set forth under the
captions "Information Regarding Nominees for Election of Directors" and
"Additional Information--Director and Officer Securities Reports" in the
Company's definitive Proxy Statement in connection with the Annual Meeting of
Shareholders to be held September 13, 1994. Such information is incorporated
herein by reference. Information relating to the executive officers of the
Company is set forth under the caption "Executive Officers of the Registrant" in
Part I above.
Item 11. Executive Compensation.
Information relating to executive compensation is set forth under the
caption "Executive Compensation" in the Company's definitive Proxy Statement in
connection with its Annual Meeting of Shareholders to be held September 13,
1994. Such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information relating to the ownership of equity securities of the Company
by certain beneficial owners and management is set forth under the captions
"Security Ownership of Certain Beneficial Owners" and "Security Ownership of
Management" in the Company's definitive Proxy Statement in connection with its
Annual Meeting of Shareholders to be held September 13, 1994. Such information
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information relating to certain relationships with a beneficial shareholder
and certain related transactions is set forth under the caption "Additional
Information--Transactions with Beneficial Shareholders" in the Company's
definitive Proxy Statement in connection with its Annual Meeting of Shareholders
to be held September 13, 1994. Such information is incorporated herein by
reference.
7
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) The following financial statements and report included in the
Company's Annual Report to Shareholders for the fiscal year ended
April 27, 1994 are incorporated herein by reference:
Consolidated Balance Sheets as of April 27, 1994 and April 28, 1993
Consolidated Statements of Income for the fiscal years ended April
27, 1994, April 28, 1993 and April 29, 1992
Consolidated Statements of Retained Earnings for the fiscal years
ended April 27, 1994, April 28, 1993 and April 29, 1992
Consolidated Statements of Cash Flows for the fiscal years ended
April 27, 1994, April 28, 1993 and April 29, 1992
Notes to Consolidated Financial Statements
Independent Accountants' Report of Coopers & Lybrand dated June 14,
1994, on the Company's consolidated financial statements for the
fiscal years ended April 27, 1994, April 28, 1993 and April 29, 1992
(2) The following report and schedules are filed herewith as a part
hereof:
Independent Accountants' Report of Coopers & Lybrand dated June 14,
1994, on the Company's consolidated financial statement schedules
filed as a part hereof for the fiscal years ended April 27, 1994,
April 28, 1993 and April 29, 1992 and related consent dated July 25,
1994.
Schedules II, V, VI, VIII, IX and X for the three fiscal years ended
April 27, 1994, April 28, 1993 and April 29, 1992 and VII as of
April 27, 1994:
<TABLE>
<CAPTION>
Schedule
number Schedule title
------ --------------
<C> <S>
II Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees
Other than Related Parties
V Property, Plant and Equipment
VI Accumulated Depreciation of Property, Plant and Equipment
VII Guarantees of Securities of Other Issuers
VIII Valuation and Qualifying Accounts and Reserves
IX Short-Term Borrowings
X Supplementary Income Statement Information
</TABLE>
All other schedules are omitted because they are not applicable or
the required information is included herein or is shown in the
consolidated financial statements or notes thereto incorporated
herein by reference.
(3) Exhibits required to be filed by Item 601 of Regulation S-K are
listed below and are filed as a part hereof. 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.
3(i) The Company's Articles of Amendment dated July 13, 1994,
amending and restating the Company's amended and restated
Articles of Incorporation in their entirety.
3(ii) The Company's By-Laws, as amended effective July 6, 1990
are incorporated by reference to Exhibit 3(c) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 2, 1990.
4. Except as set forth below, there are no instruments with
respect to long-term debt of the Company that involve
indebtedness or securities authorized thereunder
exceeding 10 percent of the total assets of the Company
and its subsidiaries on a consolidated basis. The
Company agrees to file a copy of any instrument or
agreement defining the rights of holders of long-term
debt of the Company upon request of the Securities and
Exchange Commission.
8
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(a) Form of Indenture between the Company and The First
National Bank of Chicago dated as of July 15, 1992,
is incorporated herein by reference to Exhibits 4(a)
and 4(c) to the Company's Registration Statement on
Form S-3 (Reg. No. 33-46680) and the supplements to
such Indenture are incorporated herein by reference
to the Company's Form 8-Ks dated September 21, 1992,
October 29, 1992 and January 27, 1993 relating to
the Company's $250,000,000 5-1/2% Notes due 1997,
$300,000,000 6-3/4% Notes due 1999 and $200,000,000
6-7/8% Notes due 2003, respectively.
10(a) Permit No. 408 (lease) granted by the City of Los Angeles
to Star-Kist Foods, Inc. dated September 6, 1979 for
premises located at Terminal Island, California is
incorporated herein by reference to Exhibit 10(e) to the
Company's Annual Report on Form 10-K for the fiscal year
ended April 29, 1981.
(b) Lease of Land in American Samoa, dated as of September
17, 1983, by and between the American Samoa Government
and Star-Kist Samoa, Inc. is incorporated herein by
reference to Exhibit 10(m) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 2, 1984.
(c) Management contracts and compensatory plans:
(i) Management Incentive Plan, as amended, is
incorporated herein by reference to Exhibit
10(a) to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1986
(ii) Long-Term Incentive Plan for senior executives,
as amended, is incorporated herein by reference
to Appendix B to the Company's Definitive Proxy
Statement dated August 3, 1990
(iii) 1986 Deferred Compensation Program for H. J.
Heinz Company and affiliated companies is
incorporated herein by reference to Exhibit
10(p) to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1986
(iv) Executive Employment Agreement dated as of
March 14, 1990 between the Company and A. J. F.
O'Reilly is incorporated herein by reference
to Exhibit 10(k) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 2,
1990
(v) H. J. Heinz Company's 1982 Stock Option Plan,
as amended, is incorporated herein by reference
to Exhibit 10(m) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 2,
1990
(vi) H. J. Heinz Company's 1984 Stock Option Plan,
as amended, is incorporated herein by reference
to Exhibit 10(n) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 2,
1990
(vii) H. J. Heinz Company's 1987 Stock Option Plan,
as amended, is incorporated herein by reference
to Exhibit 10(o) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 2,
1990
(viii) H. J. Heinz Company's 1990 Stock Option Plan is
incorporated herein by reference to Appendix A
to the Company's Definitive Proxy Statement
dated August 3, 1990
(ix) H. J. Heinz Company Supplemental Executive
Retirement Plan, as amended, is incorporated by
reference to Exhibit 10(c)(ix) to the Company's
Annual Report on Form 10-K for the fiscal year
ended April 28, 1993
(x) H. J. Heinz Company Executive Deferred
Compensation Plan
11. Computation of net income per share.
13. Pages 32 through 54 of the H. J. Heinz Company Annual
Report to Shareholders for the fiscal year ended April 27,
1994, portions of which are incorporated herein by
reference. Those portions of the Annual Report to
Shareholders that are not incorporated herein by reference
shall not be deemed to be filed as a part of this Report.
21. Subsidiaries of the Registrant
9
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23. The following Exhibit is filed by incorporation by
reference to Item 14(a)(2) of this Report:
(a) Consent of Coopers & Lybrand.
24. Powers-of-attorney of the Company's directors.
Copies of the exhibits listed above will be furnished upon request
to holders or beneficial holders of any class of the Company's
stock, subject to payment in advance of the cost of reproducing the
exhibits requested.
(b) There have been no reports filed on Form 8-K during the last
fiscal quarter of the period covered by this Report.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on July 26, 1994.
H. J. HEINZ COMPANY
(Registrant)
/s/ DAVID R. WILLIAMS
By....................................................
David R. Williams
Senior Vice President-Finance
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on July 26, 1994.
Signature Capacity
--------- --------
/s/ ANTHONY J. F. O'REILLY
......................................... Chairman of the Board,
Anthony J. F. O'Reilly President and Chief Executive Officer
(Principal Executive Officer)
/s/ DAVID R. WILLIAMS
......................................... Senior Vice President-Finance
David R. Williams and Chief Financial Officer
(Principal Financial Officer)
/s/ TRACY E. QUINN
......................................... Corporate Controller
Tracy E. Quinn (Principal Accounting Officer)
Anthony J. F. O'Reilly Director
Joseph J. Bogdanovich Director
Nicholas F. Brady Director
Richard M. Cyert Director
Edith E. Holiday Director
Samuel C. Johnson Director
William R. Johnson Director
Donald R. Keough Director /s/ LAWRENCE J. McCABE
Albert Lippert Director By..............................
Lawrence J. McCabe Director Lawrence J. McCabe
Luigi Ribolla Director Director and Attorney-in-Fact
Herman J. Schmidt Director
David W. Sculley Director
Eleanor B. Sheldon Director
William P. Snyder III Director
William C. Springer Director
S. Donald Wiley Director
David R. Williams Director
11
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
The Shareholders
H. J. Heinz Company:
Our report on the consolidated financial statements of H. J. Heinz Company
and subsidiaries has been incorporated by reference in this Annual Report on
Form 10-K from the Company's Annual Report to Shareholders for the fiscal year
ended April 27, 1994 and appears on page 54 therein. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedules listed in Item 14(a) of this Annual Report on Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND
Pittsburgh, PA
June 14, 1994
------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of H. J. Heinz Company on Form S-8 (Registration Nos. 2-51719, 2-45120, 2-79306,
33-00390, 33-19639, 33-32563, 33-42015 and 33-44540) of our reports dated June
14, 1994, on our audits of the consolidated financial statements and financial
statement schedules of H. J. Heinz Company and subsidiaries as of April 27, 1994
and April 28, 1993 and for the fiscal years ended April 27, 1994, April 28, 1993
and April 29, 1992, which reports are included or incorporated by reference in
this Annual Report on Form 10-K.
COOPERS & LYBRAND
Pittsburgh, PA
July 25, 1994
12
<PAGE>
Schedule II
H. J. Heinz Company and Subsidiaries
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTORS AND EMPLOYEES OTHER THAN RELATED PARTIES
Fiscal Years Ended April 27, 1994, April 28, 1993 and April 29, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Deductions
--------------------
Balance at Amounts Balance at end of period
beginning Amounts written Translation ------------------------
Description of period Additions collected off adjustment Current Not Current
----------- --------- --------- --------- --- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal year ended
April 27, 1994:
J. Crawshaw(1)............... $615 $ 78 $ 61 $ -- $ (42) $590 $ --
R.F. Brady(2)................ 195 14 -- -- -- -- 209
T. Ward(3)................... 225 51 8 -- -- -- 268
D.E.I. Smyth(4).............. -- 600 600 -- -- -- --
N. Fielke(5)................. -- 354 -- -- -- 354 --
Fiscal year ended
April 28, 1993:
J. Crawshaw(1)............... $683 $ -- $ 24 $ -- $ (44) $615 $ --
R.F. Brady(2)................ 165 37 -- -- (7) -- 195
T. Ward(3)................... 173 64 6 -- (6) -- 225
Fiscal year ended
April 29, 1992:
J. Crawshaw(1)............... $ 87 $620 $ -- $ -- $ (24) $683 $ --
R.F. Brady(2)................ 94 77 -- -- (6) -- 165
T. Ward(3)................... 134 45 -- -- (6) -- 173
</TABLE>
NOTES:
(1) Represents an unsecured non-interest bearing demand note related to the
purchase of a residence. The loan is expected to be repaid upon the sale of
the employee's previous residence.
(2) Represents a loan secured by certain employee benefit plan balances
carrying an interest rate tied to the current Australian Fringe Benefit
Rate (currently 7.25% per annum). The loan is related to the purchase of a
residence and is payable upon the employee's termination from the Company.
(3) Represents a loan secured by certain employee benefit plan balances
carrying an interest rate tied to the current Australian Fringe Benefit
Rate (currently 7.25% per annum). The loan is related to the purchase of a
residence and is payable upon the employee's termination from the Company.
(4) Represents a non-interest bearing loan secured by real property, which was
related to the purchase of a residence. The loan was repaid in full during
fiscal 1994.
(5) Represents an unsecured interest bearing loan related to the purchase of a
residence which is due in September 1994. The interest rate is tied to the
current Australian Fringe Benefit Rate (currently 7.25% per annum).
<PAGE>
Schedule V
H. J. Heinz Company and Subsidiaries
PROPERTY, PLANT AND EQUIPMENT
Fiscal Years Ended April 27, 1994, April 28, 1993 and April 29, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Balance at Other Balance at
beginning Additions Translation changes end of
Classification of period at cost Retirements adjustment add (deduct) period
-------------- --------- ------- ----------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Fiscal year ended
April 27, 1994:
Land.......................... $ 51,438 $ 268 $ 351 $ (290) $ (264)(1) $ 50,801
Buildings and leasehold
improvements................ 732,488 31,260 5,641 (12,961) (54,663)(1) 690,483
Equipment, furniture
and other................... 2,544,425 243,524 41,298 (56,529) 11,534(1) 2,701,656
---------- -------- ------- -------- -------- ----------
$3,328,351 $275,052 $47,290 $ (69,780) $(43,393) $3,442,940
========== ======== ======= ========= ======== ==========
Fiscal year ended
April 28, 1993:
Land.......................... $ 44,988 $ 451 $ 1,384 $ (648) $ 8,031(2) $ 51,438
Buildings and leasehold
improvements................ 655,323 83,531 6,698 (23,119) 23,451(2) 732,488
Equipment, furniture
and other................... 2,279,471 346,731 50,469 (101,592) 70,284(2) 2,544,425
---------- -------- ------- --------- -------- ----------
$2,979,782 $430,713 $58,551 $(125,359) $101,766 $3,328,351
========== ======== ======= ========= ======== ==========
Fiscal year ended
April 29, 1992:
Land.......................... $ 39,918 $ 1,455 $ 100 $ (815) $ 4,530(3) $ 44,988
Buildings and leasehold
improvements................ 529,041 114,115 3,846 966 15,047(3) 655,323
Equipment, furniture
and other................... 2,195,511 215,573 65,977 15,508 (81,144)(3) 2,279,471
---------- -------- ------- --------- -------- ----------
$2,764,470 $331,143 $69,923 $ 15,659 $(61,567) $2,979,782
========== ======== ======= ========= ======== ==========
</TABLE>
NOTES:
(1) Includes opening balances of acquisitions, primarily the assets of the Food
Service Products Company (Moore's and Domani), and transfers among
accounts. Additionally, includes balances of divested businesses, the Near
East specialty rice business, the confectionery business of Heinz Italy,
the Chico-San rice cake business and certain other small businesses, and
includes amortization charged to income of $6,359 for buildings and
leasehold improvements and $2,505 for equipment, furniture and other.
(2) Includes opening balances of acquisitions, including assets of Wattie's
Limited, Canadian Pizza Company, Sonrissa and Arimpex. Additionally,
includes balances of divested company, BMJ Foods - P.R. - Inc. and includes
amortization charged to income of $5,823 for buildings and leasehold
improvements and $2,348 for equipment, furniture and other.
(3) Includes opening balances of acquisitions, including assets of JLFoods,
Continental Delights, Inc., Escalon Packers, Inc., Sausville Foods, Inc.
and certain Weight Watchers franchises. Additionally, includes balances of
divested companies, The Hubinger Company and Somycel, S.A. and includes
amortization charged to income of $5,902 for buildings and leasehold
improvements and $2,723 for equipment, furniture and other.
For financial reporting purposes, depreciation is primarily provided on the
straight-line method over the estimated useful lives of the assets, not
exceeding 50 years.
<PAGE>
Schedule VI
H. J. Heinz Company and Subsidiaries
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
Fiscal Years Ended April 27, 1994, April 28, 1993 and April 29, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions Other
Balance at charged to changes Balance at
beginning costs and Translation add end of
Description of period expenses Retirements adjustment (deduct) period
----------- --------- -------- ----------- ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Fiscal year ended
April 27, 1994:
Buildings..................... $ 167,822 $ 16,930 $ 581 $ (2,972) $ (4,686)(1) $ 176,513
Equipment, furniture
and other................... 998,318 174,145 30,874 (21,198) (21,691)(1) 1,098,700
---------- -------- ------- -------- --------- ----------
$1,166,140 $191,075 $31,455 $(24,170) $(26,377) $1,275,213
========== ======== ======= ======== ======== ==========
Fiscal year ended
April 28, 1993:
Buildings..................... $ 158,872 $ 15,626 $ 2,090 $ (4,787) $ 201 (1) $ 167,822
Equipment, furniture
and other................... 908,801 161,630 34,739 (37,183) (191)(1) 998,318
---------- -------- ------- --------- --------- ----------
$1,067,673 $177,256 $36,829 $(41,970) $ 10 $1,166,140
========== ======== ======= ======== ========= ==========
Fiscal year ended
April 29, 1992:
Buildings..................... $ 155,340 $ 14,512 $ 1,096 $ 432 $ (10,316)(1) $ 158,872
Equipment, furniture
and other................... 886,389 146,973 35,417 3,159 (92,303)(1) 908,801
---------- -------- ------- ---------- --------- ----------
$1,041,729 $161,485 $36,513 $ 3,591 $(102,619) $1,067,673
========== ======== ======= ========== ========= ==========
</TABLE>
NOTES:
(1) Includes divestitures.
<PAGE>
Schedule VII
H. J. Heinz Company and Subsidiaries
GUARANTEES OF SECURITIES OF OTHER ISSUERS
April 27, 1994
(Thousands of Dollars)
<TABLE>
<CAPTION>
Name of issuer of
securities guaranteed Title of issue Total amount
by person for of each class guaranteed
which statement of securities and Nature of
is filed guaranteed outstanding(1) guarantee
-------- ---------- -------------- ---------
<S> <C> <C> <C>
Guarantees by Registrant and certain
of its consolidated subsidiaries of:
Unconsolidated subsidiaries (2) Mortgages and loans $ 1,212 Principal
and
interest
Equity interests Bank loans 2,522
Other entities (3) Mortgages and
promissory notes 21,561
-------
$25,295
=======
</TABLE>
NOTES:
(1) The Registrant does not own any of the securities guaranteed, nor are any
such securities held in the treasury of the issuer of such securities.
There are no defaults by issuer of securities guaranteed in principal,
interest, sinking fund or redemption provisions, or payment of dividends.
(2) Interest on the guarantees of unconsolidated subsidiaries and other
entities is at varying rates.
(3) The securities issued by other entities and guaranteed by the Registrant
include $12.8 million of secured promissory notes of Nu-BMJ Inc., which
Nu-BMJ Inc. issued in connection with its purchase of the Registrant's BMJ
Foods subsidiary.
<PAGE>
Schedule VIII
H. J. Heinz Company and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Fiscal Years Ended April 27, 1994, April 28, 1993 and April 29, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
-----------------------
Balance at Charged to Charged Balance at
beginning costs and to other end of
Description of period expenses accounts Deductions period
----------- --------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Fiscal year ended April 27, 1994:
Reserves deducted in the balance sheet from the
assets to which
they apply:
Receivables............................... $ 16,299 $ 4,535 $ -- $ 5,427(1) $ 15,407
======== ======== ======= ======= ========
Investments, advances and
other assets............................ $ 20,165 $ -- $ -- $ 324 $ 19,841
======== ======== ======= ======= ========
Goodwill.................................. $115,631 $ 30,275 $ -- $18,198(1) $127,708
======== ======== ======= ======= ========
Other intangibles......................... $ 72,673 $ 17,396 $ -- $ 4,207(1) $ 85,862
======== ======== ======= ======= ========
Deferred tax assets (2)................... $ 85,071 $ 4,655 $ -- $60,838 $ 28,888
======== ======== ======= ======= ========
Fiscal year ended April 28, 1993:
Reserves deducted in the balance sheet from the
assets to which
they apply:
Receivables............................... $ 15,390 $ 4,018 $ 1,976 $ 5,085(1) $ 16,299
======== ======== ======= ======== ========
Investments, advances and
other assets............................ $ 20,554 $ 298 $ -- $ 687 $ 20,165
======== ======== ======= ======== ========
Goodwill.................................. $ 88,892 $ 29,845 $ -- $ 3,106 $115,631
======== ======== ======= ======== ========
Other intangibles......................... $ 63,197 $ 16,382 $ -- $ 6,906(1) $ 72,673
======== ======== ======= ======== ========
Deferred tax assets (3)................... $139,976 $ 5,025 $ -- $ 59,930 $ 85,071
======== ======== ======= ======== ========
Fiscal year ended April 29, 1992:
Reserves deducted in the balance sheet from the
assets to which
they apply:
Receivables............................... $ 11,563 $ 5,345 $ 91 $ 1,609(1) $ 15,390
======== ======== ======= ======== ========
Investments, advances and
other assets............................ $ 25,424 $ 3,945 $ -- $ 8,815(1) $ 20,554
======== ======== ======= ======== ========
Goodwill.................................. $ 67,553 $ 22,992 $ -- $ 1,653(1) $ 88,892
======== ======== ======= ======= ========
Other intangibles......................... $ 44,285 $ 19,052 $ -- $ 140 $ 63,197
======== ======== ======= ======== ========
Deferred tax assets (4)................... $ -- $139,976 $ -- $ -- $139,976
======== ======== ======= ======== ========
</TABLE>
NOTES:
(1) Principally reserves on assets sold, written off or reclassified.
(2) The net change in the valuation allowance for deferred tax assets was a
decrease of $56.2 million. The decrease was primarily due to the
utilization of loss carryforwards ($2.8 million) and recognition of the
realizability of certain other deferred tax assets in future years ($57.3
million). An increase in the valuation allowance related to the deferred
tax asset for loss carryforwards ($4.7 million) partially offset the
decrease. See Note 5 to the Consolidated Financial Statements on pages 45
and 46 of the Company's Annual Report to Shareholders for the fiscal year
ended April 27, 1994.
(3) The net change in the valuation allowance for deferred tax assets was a
decrease of $54.9 million. The decrease was primarily due to the
utilization of loss carryforwards ($5.3 million), amortization of asset
revaluations ($10.7 million) and recognition of the realizability of
certain other deferred tax assets in future years ($41.8 million). An
increase in the valuation allowance related to the deferred tax asset for
loss carryforwards ($5.0 million) partially offset the decrease. See Note 5
to the Consolidated Financial Statements on pages 45 and 46 of the
Company's Annual Report to Shareholders for the fiscal year ended April 27,
1994.
(4) Due to the adoption of FAS No. 109. See Note 5 to the Consolidated
Financial Statements on pages 45 and 46 of the Company's Annual Report to
Shareholders for the fiscal year ended April 27, 1994.
<PAGE>
Schedule IX
H. J. Heinz Company and Subsidiaries
SHORT-TERM BORROWINGS
Fiscal Years Ended April 27, 1994, April 28, 1993 and April 29, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
April 27, April 28, April 29,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Commercial paper.............................................................. $ 257,202 $1,294,705 $1,236,383
Bank and other borrowings..................................................... 159,170 275,757 371,942
---------- ---------- ---------
Short-term borrowings......................................................... $ 416,372 $1,570,462 $1,608,325
========== ========== ==========
Weighted average interest rate at end of period............................... 5.2% 4.3% 5.6%
Maximum amount outstanding during the period (a).............................. $1,506,523 $1,925,266 $1,809,328
Average amount outstanding during the period (b).............................. $1,159,960 $1,915,846 $1,439,186
Weighted average interest rate during the period (c).......................... 4.3% 4.8% 6.8%
</TABLE>
NOTES:
(a) Represents maximum amount outstanding at any month end.
(b) Average borrowings were determined by dividing the sum of the daily
principal balances by 365.
(c) The weighted average interest rate was computed by dividing interest
expense by average short-term borrowings.
<PAGE>
Schedule X
H. J. Heinz Company and Subsidiaries
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Fiscal Years Ended April 27, 1994, April 28, 1993 and April 29, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Charged to Costs and Expenses
-------------------------------
Fiscal Year Ended
--------------------------------
April 27, April 28, April 29,
Item 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs..................................................... $142,944 $129,764 $135,377
======== ======== ========
Advertising (1)............................................................. $741,920 $700,126 $692,314
======== ======== ========
Depreciation and amortization expense....................................... $259,809 $234,935 $211,786
======== ======== ========
</TABLE>
NOTES:
(1) Comprised of media, consumer promotions and cooperative advertising.
<PAGE>
EXHIBIT INDEX
Exhibits required to be filed by Item 601 of Regulation S-K are listed below
and are filed as a part hereof. 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.
Exhibit
- -------
3(i) The Company's Articles of Amendment dated July 13, 1994, amending and
restating the Company's amended and restated Articles of Incorporation
in their entirety.
3(ii) The Company's By-Laws, as amended effective July 6, 1990 are
incorporated by reference to Exhibit 3(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 2, 1990.
4. Except as set forth below, there are no instruments with respect to
long-term debt of the Company that involve indebtedness or securities
authorized thereunder exceeding 10 percent of the total assets of the
Company and its subsidiaries on a consolidated basis. The Company agrees
to file a copy of any instrument or agreement defining the rights of
holders of long-term debt of the Company upon request of the Securities
and Exchange Commission.
(a) Form of Indenture between the Company and The First National Bank of
Chicago dated as of July 15, 1992, is incorporated herein by
reference to Exhibits 4(a) and 4(c) to the Company's Registration
Statement on Form S-3 (Reg. No. 33-46680) and the supplements to
such Indenture are incorporated herein by reference to the
Company's Form 8-Ks dated September 21, 1992, October 29, 1992 and
January 27, 1993 relating to the Company's $250,000,000 5-1/2%
Notes due 1997, $300,000,000 6-3/4% Notes due 1999 and $200,000,000
6-7/8% Notes due 2003, respectively.
10(a) Permit No. 408 (lease) granted by the City of Los Angeles to Star-Kist
Foods, Inc. dated September 6, 1979 for premises located at Terminal
Island, California is incorporated herein by reference to Exhibit 10(e)
to the Company's Annual Report on Form 10-K for the fiscal year ended
April 29, 1981.
(b) Lease of Land in American Samoa, dated as of September 17, 1983, by and
between the American Samoa Government and Star-Kist Samoa, Inc. is
incorporated herein by reference to Exhibit 10(m) to the Company's
Annual Report on Form 10-K for the fiscal year ended May 2, 1984.
(c) Management contracts and compensatory plans:
(i) Management Incentive Plan, as amended, is incorporated herein
by reference to Exhibit 10(a) to the Company's Annual Report
on Form 10-K for the fiscal year ended April 30, 1986
(ii) Long-Term Incentive Plan for senior executives, as amended, is
incorporated herein by reference to Appendix B to the Company's
Definitive Proxy Statement dated August 3, 1990
(iii) 1986 Deferred Compensation Program for H. J. Heinz Company and
affiliated companies is incorporated herein by reference to
Exhibit 10(p) to the Company's Annual Report on Form 10-K for
the fiscal year ended April 30, 1986
(iv) Executive Employment Agreement dated as of March 14, 1990
between the Company and A. J. F. O'Reilly is incorporated
herein by reference to Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the fiscal year ended May 2, 1990
(v) H. J. Heinz Company's 1982 Stock Option Plan, as amended, is
incorporated herein by reference to Exhibit 10(m) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 2, 1990
(vi) H. J. Heinz Company's 1984 Stock Option Plan, as amended, is
incorporated herein by reference to Exhibit 10(n) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 2, 1990
(vii) H. J. Heinz Company's 1987 Stock Option Plan, as amended, is
incorporated herein by reference to Exhibit 10(o) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 2, 1990
<PAGE>
Exhibit
- -------
(viii) H. J. Heinz Company's 1990 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company's Definitive
Proxy Statement dated August 3, 1990
(ix) H. J. Heinz Company Supplemental Executive Retirement Plan, as
amended, is incorporated by reference to Exhibit 10(c)(ix) to
the Company's Annual Report on Form 10-K for the fiscal year
ended April 28, 1993
(x) H. J. Heinz Company Executive Deferred Compensation Plan
11. Computation of net income per share.
13. Pages 32 through 54 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended April 27, 1994, portions of which
are incorporated herein by reference. Those portions of the Annual Report
to Shareholders that are not incorporated herein by reference shall not
be deemed to be filed as a part of this Report.
21. Subsidiaries of the Registrant
23. The following Exhibit is filed by incorporation by reference to Item
14(a)(2) of this Report:
(a) Consent of Coopers & Lybrand.
24. Powers-of-attorney of the Company's directors.
<PAGE>
Exhibit 3(i)
ARTICLES OF AMENDMENT
In compliance with the requirements of 15 Pa.C.S. (section)1915 (relating
to articles of amendment), the undersigned business corporation, H. J. HEINZ
COMPANY, desiring to amend its Articles, hereby certifies under its corporate
seal that:
1. The name of the corporation is H. J. HEINZ COMPANY and its current
registered office in the Commonwealth of Pennsylvania is located at 600 Grant
Street, Pittsburgh, Pennsylvania 15219.
2. The corporation was formed under the Act of the General Assembly of the
Commonwealth of Pennsylvania, approved April 29, 1874, as supplemented and
amended, as shown by its Certificate of Incorporation dated the 27th day of
July, 1900 and recorded in the office of the Secretary of the Commonwealth in
Charter Book Volume No. 61, page 212, and in the office of the Recorder of Deeds
in and for the County of Allegheny on the 23rd day of February, 1905 in Charter
Book Volume 37, page 250.
3. The amendment shall be effective upon filing these Articles of Amendment
in the Department of State.
4. The amendment was adopted by the board of directors pursuant to
15 Pa.C.S. (section)1914 (c).
5. The amendment adopted by the corporation, set forth in full, is as
follows:
RESOLVED that the Amended and Restated Articles of Incorporation of H. J.
Heinz Company (hereinafter called the "corporation") be amended and restated in
their entirety so that the same shall read in full as follows:
1. The name of the corporation is H. J. HEINZ COMPANY.
2. The location and post office address of the current registered
office of the corporation in the Commonwealth of Pennsylvania is 600 Grant
Street, Pittsburgh, Pennsylvania 15219.
3. The business of the corporation shall be to manufacture, produce,
buy, sell and generally deal in food and grocery products and goods, wares,
merchandise and personal property of every kind and description and,
without limitation, to engage in, and do any and all lawful act concerning
any or all lawful business for which corporations may be incorporated under
the Business Corporation Law of the Commonwealth of Pennsylvania.
4. The term of its existence is perpetual.
5. The aggregate number of shares which the corporation shall have
authority to issue as of July 13, 1994 shall be 602,238,876 shares, of
which 2,238,876 shares shall be Third Cumulative Preferred Stock of the par
value of $10 per share, issuable in one or more series, and 600,000,000
shares shall be Common Stock of the par value of $.25 per share.
A description of each class of shares which the corporation shall have
authority to issue and a statement of the preferences, qualifications,
limitations, restrictions and the special or relative rights granted to or
imposed upon the shares of each class are as follows:
SECTION I. THIRD CUMULATIVE PREFERRED STOCK
This Section I sets forth a description of the Third Cumulative Preferred
Stock (hereinafter called the "Third Preferred Stock") and a statement of
certain of the voting rights, designations, preferences, privileges,
qualifications, limitations, options and common rights, and of certain of the
special or relative rights granted to or imposed upon the shares of the Third
Preferred Stock, together with a statement of the authority vested in the Board
of Directors of the corporation to establish series and to fix and determine the
variations in the relative rights and preferences as between series, insofar as
they are not fixed by this Section I, and a statement of the rights and
preferences of a series of the Third Preferred Stock designated as the "Third
Cumulative Preferred Stock, $1.70 First Series" established by the Board of
Directors of the corporation pursuant to the aforesaid authority, viz.:
1
<PAGE>
Subsection A. Issuance in Series.
Subparagraph (1). The Third Preferred Stock shall be divided into and from
time to time may be issued in series, and the Board of Directors is hereby
expressly vested with the authority, in the resolution or resolutions providing
for the issue of shares of particular series, before issuance, to fix and
determine:
(a) the distinctive serial designation of such series;
(b) the annual dividend rate for such series, and the date from which
such dividends shall commence to accrue;
(c) the full, limited, multiple, fractional or no voting rights of
such series;
(d) the redemption price or prices for such series, which may consist
of a redemption price or scale of redemption prices applicable only to
redemption for a sinking fund (which term as used herein shall include any
fund or requirement for the periodic retirement of shares) and a different
redemption price or scale of redemption prices applicable to any other
redemption, and the terms and conditions on which shares of such series may
be redeemed;
(e) the sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(f) the amounts payable upon shares of such series in the event of the
voluntary or involuntary liquidation of the corporation; and
(g) the terms and conditions, if any, upon which shares of such series
may be converted and the class or classes or series of shares of the
corporation into which such shares may be converted.
Subparagraph (2). All shares of the Third Preferred Stock shall be of equal
rank with each other, regardless of series, and shall be identical with each
other in all respects except as provided in subparagraph (1) of this Subsection
A.
Subparagraph (3). In case the stated dividends and the amounts payable on
liquidation are not paid in full, the shares of all series of the Third
Preferred Stock shall share ratably in the payment of dividends, including
accruals, if any, in proportion to the sums which would be payable on said
shares if all dividends were declared and paid in full, and in any distribution
of assets other than by way of dividends in accordance with the sums which would
be payable on such distribution if all sums payable were discharged in full.
Subsection B. Dividends on Third Preferred Stock and Junior Stock.
The holders of the Third Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors, but only out of funds legally
available for the payment of dividends, cumulative cash dividends at the annual
rate for each particular series theretofore fixed by the Board of Directors as
hereinbefore authorized, and no more, payable quarter-yearly, on the first days
of January, April, July and October in each year, to shareholders of record on
the respective dates, not exceeding forty days preceding such dividend payment
dates, fixed for the purpose by the Board of Directors in advance of payment of
each particular dividend. Such dividends on the Third Preferred Stock shall be
payable before any dividend on any junior stock (which term as used in this
Section I shall mean the Common Stock and any other class of stock of the
corporation hereafter authorized ranking junior to the Third Preferred Stock as
to dividends or assets) shall be paid or set apart for payment. Dividends on
each series of the Third Preferred Stock shall be cumulative from such date as
may be fixed by the Board of Directors prior to the issue thereof. Arrearages in
the payment of dividends shall not bear interest.
So long as any of the Third Preferred Stock remains outstanding, no
dividend whatever shall be paid or declared on any junior stock nor shall any
distribution be made on any junior stock, other than a dividend payable in
junior stock, nor shall any shares of any junior stock be acquired for a
consideration by the corporation:
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(1) unless all dividends on the Third Preferred Stock of all series
for all past quarter-yearly dividend periods shall have been paid and the
full dividends thereon for the then current quarter-yearly dividend period
shall have been paid or shall have been declared and a sum sufficient for
the payment thereof set apart; and
(2) unless, if at any time the corporation is obligated to retire
shares of any series of the Third Preferred Stock pursuant to a sinking
fund, all arrears in respect of each sinking fund for the Third Preferred
Stock of all series shall have been made good.
Subject to the foregoing provisions, and not otherwise, such dividends
(payable in cash, stock or otherwise) as may be determined by the Board of
Directors may be declared and paid on any junior stock from time to time out of
the remaining funds of the corporation legally available for the payment of
dividends, and the Third Preferred Stock shall not be entitled to participate in
any such dividends, whether payable in cash, stock or otherwise.
Subsection C. Redemption.
Subject to the provisions of subparagraph (3) of Subsection E of this
Section I and subject to the provisions of the resolution or resolutions of the
Board of Directors providing for the issue of shares of any particular series,
the corporation, at the option of the Board of Directors, may redeem the whole
or any part of the Third Preferred Stock at any time outstanding, or the whole
or any part of any series thereof, at any time or from time to time, upon notice
duly given as hereinafter specified, at the applicable redemption price or
prices fixed by the Board of Directors as hereinbefore authorized, together with
a sum, in the case of each share so to be redeemed, computed at the annual
dividend rate for the series of which the particular share is a part from and
after the date on which dividends on such share became cumulative to and
including the date fixed for such redemption, less the aggregate of the
dividends theretofore paid thereon, but computed without interest.
Notice of every such redemption of the Third Preferred Stock shall be
published at least once in a newspaper printed in the English language and
customarily published on each business day and of general circulation in the
Borough of Manhattan, The City of New York, New York, and in a similar newspaper
similarly published and of general circulation in the City of Pittsburgh,
Pennsylvania, and in a similar newspaper similarly published and of general
circulation in such other city or cities as may be specified in the resolution
or resolutions of the Board of Directors providing for the issue of shares of
any particular series, such publications to be at least thirty days prior to the
date fixed for such redemption. Notice of every such redemption shall also be
mailed at least thirty days prior to the date fixed for such redemption to the
holders of record of the shares so to be redeemed at their respective addresses
as the same shall appear on the books of the corporation; but no failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceeding for the redemption of any shares so to be redeemed.
In case of redemption of a part only of any series of the Third Preferred
Stock at the time outstanding, the redemption may be either pro rata or by lot.
The Board of Directors shall have full power and authority to prescribe the
manner in which the drawings by lot or the pro rata redemption shall be
conducted and, subject to the provisions herein contained, the terms and
conditions upon which the Third Preferred Stock shall be redeemed from time to
time.
On or at any time before any redemption date, the corporation may deposit
in trust, for the account of the holders of the shares to be redeemed, the
moneys necessary for such redemption with a bank or trust company, to be
designated in the notice of such redemption, in good standing, having capital,
surplus and undivided profits aggregating at least $5,000,000, organized under
the laws of the United States of America or of the State of New York, doing
business in the Borough of Manhattan, The City of New York, New York, or
organized under the laws of the United States of America or of the Commonwealth
of Pennsylvania and doing business in the City of Pittsburgh, Pennsylvania. In
the event such deposit is so made, then, upon the publication, as hereinabove
provided, of the notice of such redemption, or upon the earlier delivery to said
bank or trust company of irrevocable authorization and direction to publish such
notice, all shares with respect to the redemption of which such deposit shall
have been made and such publication
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effected or authorization therefor given shall, whether or not the certificates
for such shares shall have been surrendered for cancellation, be deemed to be no
longer outstanding for any purpose, and all rights with respect to such shares
shall thereupon cease and terminate except the right of the holders of the
certificates for such shares to receive, from and after the time of such
deposit, the amount payable upon the redemption thereof, without interest, and
the right to exercise, on or before the date fixed for redemption, any unexpired
privileges of conversion.
Any funds so deposited by the corporation which shall not be required for
such redemption because of the exercise of any right of conversion or exchange
subsequent to the time of such deposit shall be released or repaid to the
corporation forthwith. Any funds so deposited which are unclaimed at the end of
six years from such redemption date shall be repaid to the corporation, after
which the holders of the shares so called for redemption shall look only to the
corporation for payment thereof, provided, however, that if any unclaimed funds
so repaid to the corporation shall have been paid by it to the Commonwealth of
Pennsylvania under or in lieu of escheat, the holders of the shares so called
for redemption shall thenceforth look only to the said Commonwealth for the
payment thereof.
Subsection D. Amounts Payable on Liquidation or Dissolution.
In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, the holders of the Third
Preferred Stock of each series then outstanding shall be entitled to receive in
cash out of the assets of the corporation, before any distribution or payment
shall be made to the holders of any junior stock, the full preferential amount
or amounts fixed by the Board of Directors for such series as herein authorized,
plus in respect of each such share a sum computed at the annual dividend rate
applicable thereto from and after the date on which dividends on such share
became cumulative to and including the date fixed for such payment, less the
aggregate of dividends theretofore paid thereon, but computed without interest;
provided that if such assets available for the holders of the Third Preferred
Stock of each series then outstanding shall be less than the total amount all
such holders would be so entitled to receive if all such preferential amount or
amounts and dividends were paid in full then the corporation shall, in lieu of
making such payments in full to the holders of the Third Preferred Stock of each
series then outstanding, make payments to the holders of the Third Preferred
Stock of each series then outstanding (in proportion to the respective amounts
which would be payable on account of such liquidation, dissolution or winding up
if all such payments were paid in full) of an aggregate amount equal to such
assets so available. If such payment shall have been made in full to the holders
of the Third Preferred Stock on voluntary or involuntary liquidation,
dissolution or winding up, the remaining assets of the corporation shall be
distributed among the holders of junior stock according to their respective
rights and preferences and in accordance with their respective holdings. For the
purposes of this Subsection D, a consolidation or merger of the corporation with
any other corporation shall not be deemed, as such, to constitute a liquidation,
dissolution or winding up of the corporation, but any reorganization of the
corporation required by any court or administrative body in order to comply with
any provision of law shall be deemed to be an involuntary liquidation,
dissolution or winding up of the corporation unless the preferences,
qualifications, limitations, restrictions and special or relative rights granted
to or imposed upon the Third Preferred Stock are not adversely affected by such
reorganization.
Subsection E. Restrictions on Corporate Action.
The consent of the holders of at least two-thirds of the Third Preferred
Stock (subject to the provisions of subparagraph (2) hereof) at the time
outstanding, given in person or by proxy, either in writing or at a special
meeting called for the purpose, at which the Third Preferred Stock entitled to
vote shall vote separately as a class, regardless of series, shall be necessary
to effect or validate any one or more of the following:
Subparagraph (1). The authorization of, or any increase in the
authorized amount of, any class of stock of the corporation ranking prior
to or on a parity with the Third Preferred Stock, either as to dividends or
upon liquidation, or any increase in the authorized amount of the Third
Preferred Stock;
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Subparagraph (2). The amendment, alteration or repeal of any of the
provisions of the Restated Articles of Incorporation, as now or hereafter
amended, of the corporation, or any of the provisions of the resolution or
resolutions of the Board of Directors providing for the issue of shares of
any series of the Third Preferred Stock, so as to affect adversely the
rights, preferences or powers of the Third Preferred Stock or of any series
of the Third Preferred Stock; provided, however, that if any such
amendment, alteration or repeal shall affect adversely the rights,
preferences or powers of one or more, but not all, of the series of Third
Preferred Stock at the time outstanding, the consent of the holders of at
least two-thirds in interest of the shares then outstanding of each series
so affected entitled to vote, similarly given, shall be required in lieu of
the consent of the holders of two-thirds of the Third Preferred Stock
entitled to vote voting as a class; or
Subparagraph (3). The redemption of less than all of the Third
Preferred Stock at the time outstanding or the purchase of any of the Third
Preferred Stock except in accordance with a purchase offer made to all
holders thereof, unless the full dividend on the Third Preferred Stock for
all past quarter-yearly dividend periods shall have been paid or declared
and a sum sufficient for the payment thereof set apart;
provided that no consent of the holders of the Third Preferred Stock entitled to
vote or of the holders of a particular series of the Third Preferred Stock
entitled to vote shall be required under the provisions of this Subsection E if,
at or prior to the time of the act with respect to which such vote would
otherwise be required, provision is made in accordance with the provisions of
the fourth paragraph of Subsection C of this Section I for the redemption of all
shares of Third Preferred Stock or of all shares of the particular series of the
Third Preferred Stock at the time outstanding.
If in any case the amounts payable with respect to any requirements to
retire shares of the Third Preferred Stock are not paid in full in the case of
all series with respect to which such requirements exist, the number of shares
to be retired in each series shall be in proportion to the respective amounts
which would be payable on account of such requirements if all amounts payable
were met in full.
Subsection F. Voting Rights.
Holders of the Third Preferred Stock entitled to vote shall be entitled to
vote together with the Common Stock and not as a separate class on all matters
at every meeting of the holders of Common Stock of the corporation, and, in
addition, holders of the Third Preferred Stock entitled to vote shall be
entitled to vote, separately as a class, to the extent provided in Subsection E
above, and as hereinafter in this Subsection F set forth. If and when six
quarter-yearly dividends payable on the Third Preferred Stock of any series
shall be in default, in whole or in part, the holders of the outstanding Third
Preferred Stock entitled to vote, voting separately as a class regardless of
series, shall, in addition to the voting rights provided in Subsection E of this
Section I and hereinabove provided in this Subsection F, become entitled to
elect two Directors, who shall be additional Directors to the then existing
Board, and the holders of the Third Preferred Stock entitled to vote and the
Common Stock, voting together, shall be entitled to elect the remaining
Directors of the corporation. When all dividends then in default on the Third
Preferred Stock then outstanding shall thereafter be paid, the Third Preferred
Stock shall then be divested of such additional voting power, but always subject
to the same provisions for the vesting of such additional voting power in the
Third Preferred Stock entitled to vote in case of any similar future default or
defaults. A meeting of the holders of the Third Preferred Stock for the election
of such Directors, at which the holders of the Third Preferred Stock entitled to
vote shall vote as a class, shall be held at any time after the accrual of such
additional voting power, upon notice similar to that provided in the By-Laws for
a special meeting of shareholders, upon call by the Secretary of the
corporation, who shall call such meeting at the written request of the holders
of record of not less than 5% of the Third Preferred Stock entitled to vote then
outstanding, addressed to him at the principal business office of the
corporation. The holders of a majority of the Third Preferred Stock entitled to
vote present in person or by proxy shall be entitled to elect the additional
Directors above provided for. Upon termination of the additional voting power of
the Third Preferred Stock at any time by reason of the payment of all
accumulated and defaulted dividends on such
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stock, the terms of office of all persons who may have been elected Directors of
the corporation by vote of the holders of the Third Preferred Stock shall
forthwith terminate.
At all times each holder of a share of the Third Preferred Stock of any
series who at the time possessed voting power for any purpose shall, for such
purpose, be entitled to such vote, or no vote, for each share of the Third
Preferred Stock standing in such holder's name on the books of the corporation
as shall have been theretofore fixed by the Board of Directors as hereinbefore
authorized.
Subsection G. Status of Redeemed and Purchased Shares.
Except as otherwise required by law, all shares of the Third Preferred
Stock redeemed, purchased or otherwise acquired by the corporation shall be
cancelled and shall have the status of authorized but unissued shares, and the
Board of Directors of the corporation shall have authority, by resolution, to
change shares of any particular series redeemed or purchased into shares of
another series of the Third Preferred Stock, subject to such limitations, if
any, as are stated in the Restated Articles of Incorporation, as now or
hereafter amended, of the corporation. However, no shares of the Third Preferred
Stock of any series redeemed or purchased (whether or not so changed into shares
of another series) shall be re-issued as a part of such series or any other
series of the Third Preferred Stock so long as any shares of the Third Preferred
Stock of such series shall remain outstanding. Any such cancellation of shares
of any series of the Third Preferred Stock redeemed pursuant to Subsection C of
this Section I shall not prevent the corporation from subsequently using such
shares in satisfaction of sinking fund requirements with respect to the same
series if and to the extent permitted by the terms of such series.
Subsection H. Status of Converted Shares.
Upon conversion of any shares of any series of the Third Preferred Stock
into another class or classes or series of shares of the corporation pursuant to
the provisions of the resolution or resolutions of the Board of Directors
providing for the issue of such series, the number of shares which the
corporation is authorized to issue shall be thereby so reduced.
Subsection I. Relative Rights and Preferences of the First Series of Third
Cumulative Preferred Stock.
Pursuant to a resolution duly adopted by the Board of Directors of the
corporation on December 10, 1975 the first series of the Third Cumulative
Preferred Stock was established, such series having originally consisted of
1,800,000 shares but having been thereafter reduced to 38,876 shares through
conversion and cancellation, the designation and the relative rights and
preferences thereof, in addition to those set forth in Subsections A through H
of this Section I, being as follows:
(1) The designation is "Third Cumulative Preferred Stock, $1.70 First
Series" (hereinafter called the "First Series")
(2) The amount of $1.70 per share of the First Series per year, and no
more, is hereby fixed as the rate per annum at which the holders of shares
of the First Series shall be entitled to receive dividends; and the date of
issue of the First Series is hereby fixed as the date from and after which
such dividends shall accumulate.
(3) Each holder of a share of the First Series shall have voting
rights and shall be entitled to one-half vote for each share of the First
Series standing in such holder's name on the books of the corporation.
(4) The shares of the First Series are redeemable in whole or in part
at any time. The redemption price payable upon the exercise of the right to
redeem the shares of the First Series is fixed at $28.50 plus dividends
accrued and unpaid thereon to the date fixed for redemption. In addition to
the publication of notice of redemption in the newspapers specified in
Subsection C of this Section I, such notice shall also be published in the
City of Keokuk, Iowa.
(5) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the corporation the holders of shares of the First Series
shall be entitled to receive at the time thereof in cash out of the assets
of the corporation, before any distribution or payment shall be made to the
holders of any junior
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stock, an amount equal to the redemption price of $28.50 plus dividends
accrued and unpaid thereon to such time.
(6) At the option of the holder thereof and upon surrender to the
corporation at the office of a Transfer Agent of the Common Stock, either
in the Borough of Manhattan, The City of New York, New York or in the City
of Pittsburgh, Pennsylvania, each share of the First Series shall be
convertible (or if such share is called for redemption, then in respect of
such share to and including but not after the date fixed for such
redemption), into fully paid non-assessable shares of Common Stock of the
corporation (as such Common Stock shall then be constituted) at the
conversion rate of 9.0 shares of Common Stock per share of stock of the
First Series, the conversion rate having been previously adjusted from the
initial conversion rate through the date of these Amended and Restated
Articles of Incorporation pursuant to subparagraph (d) of this Paragraph 6
being subject to further adjustment as hereinafter provided:
(a) If and whenever the corporation shall at any time after the
date of issue of the First Series make any distribution described in
paragraph (b) below or issue any shares of Common Stock (excluding
shares of Common Stock or other securities issued upon the
conversion of shares of the First Series, and excluding shares of
Common Stock or other securities issued on the exercise of options
and warrants outstanding on the date of issue of the First Series,
and excluding shares of Common Stock or other securities issued on
the exercise of options granted at any time after the date of issue
of the First Series pursuant to any option plan for employees of the
corporation or its subsidiaries, all of which are hereinafter in this
Paragraph (6) referred to as "Excluded Shares"), then successively
upon each such distribution or issuance the conversion rate shall be
immediately (except as provided in subparagraph (g) below) adjusted
in accordance with the following formula:
$28.50 shall be multiplied by the number of shares of Common
Stock outstanding after any such issuance (other than Excluded
Shares) and the resulting product shall be divided by the aggregate
consideration, determined in accordance with subparagraph (b) of this
Paragraph (6), received by the corporation for shares of Common Stock
then outstanding (other than Excluded Shares). The resulting
quotient, adjusted to the nearest one-thousandth, shall thereafter be
the conversion rate until further adjusted as herein provided, except
that if by any such computation the current conversion rate would be
decreased to less than the basic conversion rate as defined in
subparagraph (d) of this Paragraph (6), then the conversion rate
shall nevertheless be the basic conversion rate.
(b) For the purpose of this Paragraph (6), the corporation shall be
deemed to have received as consideration for the shares of its Common
Stock outstanding at the time of making any computation hereunder
$862,332,309, minus the aggregate of the amount (as valued by the
Board of Directors) of all distributions (other than dividends
payable in cash and/or in equity or other securities of the
corporation) which have been made payable to holders of Common Stock
as of a record date occurring after the date of issue of the First
Series, plus any additional consideration received by the
corporation after the date of issue of the First Series (other than
the consideration received by the corporation in connection with the
issue of shares of the First Series), which additional consideration
shall be determined as follows:
(i) In the case of the issuance of shares for cash, the
consideration shall be the amount of such cash, provided that in no
case under this subparagraph (b) shall any deduction be made for
any underwriting discounts or commissions or any expenses incurred
by the corporation for any underwriting of the issue or otherwise
in connection therewith;
(ii) In the case of the issuance of shares for a consideration
in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by
the Board of Directors;
(iii) In the case of shares issued as a stock dividend, no
consideration shall be deemed to have been received therefor and
such securities shall be deemed to have been issued at the
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close of business on the record date for the determination of
shareholders entitled to receive the same; and
(iv) In case the corporation shall at any time after the date of
issue of the First Series issue any new securities, other than the
shares of the First Series, convertible into Common Stock, or any
options (other than options granted pursuant to any option plan for
employees of the corporation or its subsidiaries) or rights
(including warrants) to subscribe to Common Stock, the shares of
Common Stock issuable on the conversion of any such securities or
upon the exercise of any such options or rights shall (A) if
inclusion thereof would result in a current conversion rate greater
than if excluded be deemed (so long as such conversion or purchase
privilege is outstanding), for the purpose of the computation made
pursuant to subparagraph (a) of this Paragraph (6), to have been
forthwith issued and (B) in every other case shall be deemed to be
issued at the close of business on the date of conversion of such
convertible securities or exercise of such options or rights. The
corporation for the purpose of any computation under this
subdivision (iv) shall be deemed to have received a consideration
for such Common Stock equal to the consideration received by the
corporation for the convertible securities, options or rights so
issued, plus the consideration, if any, to be received by the
corporation upon their conversion or the exercise of any such
options or rights, as the case may be.
(c) For the purpose of this Paragraph (6), a sale or other
disposition by the corporation of its securities which had been issued
and outstanding and were acquired by the corporation and which have not
been retired, or an issuance of Common Stock to the corporation upon
conversion of shares of the First Series held by it, or a sale or other
disposition by it of such Common Stock, or a purchase or other
acquisition by it of its securities, shall not effect, result in or
require any adjustment in the conversion rate or be taken into account
in computing any future adjustment in the conversion rate.
(d) In case shares of Common Stock at any time outstanding shall be
subdivided into a greater or consolidated into a lesser number of
shares, either with or without par value, then the current conversion
rate and the basic conversion rate shall be proportionately increased or
decreased, as the case may be, and in the case of a stock dividend, the
basic conversion rate shall be proportionately increased. The basic
conversion rate as used in this Paragraph (6) shall mean the conversion
rate hereinbefore stated, as such conversion rate may be adjusted from
time to time pursuant to this subparagraph (d); provided that if any
such adjustment of the basic conversion rate has once been made, then
each subsequent adjustment thereof shall be made with respect to the
last previously established basic conversion rate.
(e) In case of any reclassification or change of outstanding shares
of Common Stock of the class issuable upon conversion of the shares of
the First Series (other than a change from no par value to par value, or
from par value to no par value, or a change in par value, or as a result
of a subdivision or consolidation of shares), or in case of any
consolidation or merger of the corporation with or into another
corporation (other than a merger with a subsidiary in which merger the
corporation is the continuing corporation and which does not result in
any reclassification or change of outstanding shares of Common Stock of
the class issuable upon conversion of the shares of the First Series),
or in case of any sale or conveyance to another corporation of the
property of the corporation as an entirety or substantially as an
entirety, the holder of each share of the First Series then outstanding
shall have the right thereafter (or if such share is called for
redemption, then in respect of such share to and including but not after
the date fixed for such redemption), to convert such share into the kind
and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of shares of Common Stock
of the corporation into which such share might have been converted
immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance.
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(f) In case at any time conditions shall arise by reason of action
taken by the corporation which, in the opinion of the Board of Directors
of the corporation, are not adequately covered by the other provisions
of this Paragraph (6) and which might materially and adversely affect
the conversion rights pertaining to the shares of the First Series, or
in case at any time any such conditions are expected to arise by reason
of any action contemplated by the corporation, the Board of Directors of
the corporation shall appoint a firm of independent public accountants
of recognized standing (which may be the firm that regularly examines
the financial statements of the corporation) who shall give their
opinion as to the adjustment, if any (not inconsistent with the
standards established in this Paragraph (6)), of the conversion rate
(including, if necessary, any adjustment as to the securities into which
the shares of the First Series may thereafter be converted) which is, or
would be, required to preserve without dilution the conversion rights
pertaining to the shares of the First Series. The Board of Directors
shall make the adjustment recommended forthwith upon the receipt of such
opinion or the taking of any such action contemplated, as the case may
be; provided, however, that no adjustment of the conversion rate shall
be made which in the opinion of the accountant or firm of accountants
giving the aforesaid opinion would result in a decrease of the
conversion rate to less than the then basic conversion rate, except as
otherwise provided in subparagraph (d) of this Paragraph (6).
(g) Anything in this Paragraph (6) to the contrary notwithstanding,
the corporation shall not be required to make any adjustment of the
conversion rate in any case in which the amount by which such conversion
rate would be increased or decreased in accordance with the foregoing
provisions of this Paragraph (6) would be less than one one-hundredth of
a share of Common Stock but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and made
at the time and together with the next subsequent adjustment which,
together with any and all such adjustments so carried forward, shall
amount to one one-hundredth of a share of Common Stock.
(h) The corporation shall give written notice of each adjustment in
the conversion rate to each holder of record of the First Series at the
address of each such holder as shown on the books of the corporation at
the time of payment of the regular cash dividend on the First Series
occurring next after such adjustment.
Whenever the corporation shall make any adjustment in the
conversion rate as herein provided, the corporation shall forthwith file
with the Transfer Agents of the Common Stock in the Borough of
Manhattan, The City of New York, New York and in the City of Pittsburgh,
Pennsylvania, a statement, signed by the President or a Vice President
of the corporation and by its Treasurer or an Assistant Treasurer,
showing in detail the facts requiring such adjustment and the conversion
rate that will be effective after such adjustment.
In case at any time:
(1) the corporation shall pay any dividend payable in shares of
its Common Stock upon its Common Stock or make any distribution
(other than a quarterly cash dividend in an amount per share not in
excess of the amount per share of the last preceding quarterly cash
dividend) to the holders of its Common Stock;
(2) the corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the corporation or
consolidation or merger of the corporation with, or sale of all or
substantially all of its assets to, another corporation; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the corporation;
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then, in any one or more of said cases, the corporation shall give
written notice, by first class mail, postage prepaid, addressed
to each holder of record of the First Series at the address of
each such holder as shown on the books of the corporation, of the
date on which (a) the books of the corporation shall close or a
record shall be taken for such dividend, distribution or
subscription rights or (b) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding
up shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case may be. Such
written notice shall be given at least 21 days prior to the action
in question and not less than 21 days prior to the record date or
the date on which the corporation's transfer books are closed
with respect thereto.
No fraction of share of Common Stock shall be issued upon
conversion of shares of the First Series but, in lieu thereof the
corporation shall pay to the holder of such shares so converted who
would otherwise be entitled to a fractional share, a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the
market value of a full share of Common Stock on the date immediately
preceding the date upon which any such shares are surrendered for
conversion. The market value of a share of Common Stock shall be
computed on the basis of the average of the bid and asked quotations in
the over-the-counter market on the last business day before the
conversion date or, if the Common Stock shall at the time be dealt in on
a securities exchange, shall be the last recorded sale price of a share
of Common Stock on such exchange on the last business day preceding the
conversion date or, if there be no such last recorded sale price, the
last quoted bid price on such exchange at the close of trading on such
day.
The corporation shall at all times reserve and keep available out
of its authorized but unissued Common Stock the full number of shares of
Common Stock deliverable upon the conversion of all shares of the First
Series from time to time outstanding.
The corporation will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion
of shares of the First Series pursuant hereto. The corporation shall
not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of the First Series
so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the
corporation the amount of any such tax or has established, to the
satisfaction of the corporation, that such tax has been paid.
SECTION II. COMMON STOCK
This Section II sets forth the powers, preferences and rights and the
qualifications, limitations or restrictions in respect to the Common Stock of
the corporation.
Subsection A. Equal Rights.
Each share of Common Stock issued or to be issued under the provisions of
this Article Fifth shall be equal in all respects one with the other, and no
dividend shall be paid on any shares of Common Stock unless the same dividend is
paid on all shares of Common Stock outstanding at the time of such payment, and
there shall be no distinction or difference between any share of Common Stock,
or any rights appertaining thereto, and any other share of Common Stock.
Subsection B. Other Rights.
Except for and subject to those rights expressly granted in Section I of
this Article Fifth to the holders of the Third Cumulative Preferred Stock, or
except as may be provided by the laws of the Commonwealth of Pennsylvania, the
holders of the Common Stock shall have exclusively all other rights of
stockholders
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including but not by way of limitation: (a) exclusive voting power for all
purposes and exclusive rights to all notices of meetings or of any action to be
taken by the corporation or by its stockholders, (b) the right to receive
dividends, when and as declared by the Board of Directors out of assets lawfully
available therefor, and (c) in the event of any distribution of assets upon
liquidation, dissolution or winding up of the corporation or otherwise, the
right to receive ratably and equally all of the assets and funds of the
corporation remaining after the payment to the holders of other classes of stock
of the corporation of the specific amounts which they are entitled to receive
upon such liquidation, dissolution or winding up of the corporation as
hereinbefore provided in Section I of this Article Fifth.
Subsection C. Issuance of Common Stock.
The Common Stock shall be issued from time to time and at such time and in
such manner and for such consideration, whether in cash or property or
otherwise, as the Board of Directors shall in their absolute discretion by a
duly adopted resolution provide.
SECTION III. PREEMPTIVE RIGHTS
No holder of stock of the corporation of any class, whether now or
hereafter outstanding, shall be entitled or have any right, as such holder, to
subscribe for or to purchase any part of (i) any shares of any class whatsoever
which the corporation may hereafter issue or sell or (ii) any obligations or
securities which the corporation may hereafter issue or sell convertible into or
exchangeable for any shares of the corporation of any class or (iii) any
warrants which the corporation may hereafter issue or sell that shall confer
upon the holder or owner thereof the right to subscribe for or purchase from the
corporation any of its shares of any class. The provisions of this Section III
shall be effective to eliminate and deny any preemptive right which may exist or
may have existed in respect of any outstanding shares.
SECTION IV. CUMULATIVE VOTING RIGHTS
No shareholder shall in any election of directors have any right to
cumulate his votes and cast them for one candidate or distribute them among two
or more candidates.
6. Section I. Limitation of Director Liability. To the fullest extent that
laws of the Commonwealth of Pennsylvania, as in effect on January 27, 1987 or as
thereafter amended, permit elimination of limitation of the liability of
directors, no Director of the corporation shall be personally liable for
monetary damages as such for any action taken, or any failure to take any
action, as a Director. This Section I shall not apply to any action filed prior
to January 27, 1987, nor to any breach of performance of duty or any failure of
performance of duty by any Director occurring prior to January 27, 1987. The
provisions of this Section I shall be deemed to be a contract with each Director
of the corporation who serves as such at any time while such provisions are in
effect, and each such Director shall be deemed to be serving as such in reliance
on the provisions of this Section I. This Section I shall not be amended,
altered or repealed without the affirmative vote of the holders of at least 80%
of the voting power (without consideration of the rights of any class of stock
to elect directors by a separate class vote) of the then outstanding shares of
capital stock of the corporation entitled to vote in an annual election of
Directors, voting together and not as separate classes, unless such amendment,
alteration or repeal is first recommended and approved by a majority of the
entire Board of Directors in which case only a majority shareholder vote shall
be required. Such affirmative vote shall be required notwithstanding the fact
that no vote is required, or that a lesser percentage may be specified, by law
or in any agreement with any national securities exchange or otherwise. Any
amendment to, alteration or repeal of this Section I which has the effect of
increasing Director liability shall operate prospectively only and shall not
have any effect with respect to any action taken, or any failure to act, by a
Director prior thereto.
Section II. Indemnification of Directors, Officers and Others. Except as
prohibited by law, the corporation may indemnify any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, any
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employee benefit plan) and may take such steps as may be deemed appropriate by
the Board of Directors, including purchasing and maintaining insurance, entering
into contracts (including, without limitation, contracts or indemnification
between the corporation and its directors, officers or employees), creating a
trust fund, granting security interests or using other means (including, without
limitation, a letter of credit) to ensure the payment of such amount as may be
necessary to effect such indemnification. This Section II shall apply to any
action taken, or any failure to take any action, on or after January 27, 1987.
This Section II shall not be amended, altered or repealed without the
affirmative vote of the holders of at least 80% of the voting power (without
consideration of the rights of any class of stock to elect directors by a
separate class) of the then outstanding shares of capital stock of the
corporation entitled to vote in an annual election of Directors, voting together
and not as separate classes, unless such amendment, alteration or repeal is
first recommended and approved by a majority of the entire Board of Directors in
which case only a majority shareholder vote shall be required. Such affirmative
vote shall be required notwithstanding the fact that no vote is required, or
that a lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise. Any amendment to, alteration or
repeal of this Section II which has the effect of limiting the authority of the
corporation to indemnify persons under this Section II shall operate
prospectively only and shall not limit in any way any indemnification provided
pursuant to this Section II with respect to any action taken, or failure to act,
occurring prior thereto.
7.1 A higher than majority shareholder vote for certain Business
Combinations shall be required as follows (all capitalized terms being used as
subsequently defined herein):
(a) In addition to any affirmative vote required by law or the
Articles of Incorporation, and except as otherwise expressly provided in
Section 7.2 of this Article Seventh:
(1) any merger or consolidation of the corporation or any
Subsidiary with (A) any Interested Shareholder or with (B) any other
corporation (whether or not itself an Interested Shareholder) which is,
or after such merger or consolidation would be, an Affiliate or
Associate of an Interested Shareholder;
(2) any sale, lease, exchange, loan, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder of any assets of the corporation or any
Subsidiary having an aggregate Fair Market Value of $15,000,000 or
more;
(3) the issuance or sale by the corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
corporation or any Subsidiary to any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder in exchange for
cash, securities or other consideration (or a combination thereof)
having an aggregate Fair Market Value of $15,000,000 or more;
(4) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of any
Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder; or
(5) any reclassification of securities (including any reverse stock
split), or recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving
any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder) which has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding shares of any
class of equity securities or securities convertible into equity
securities of the corporation or any Subsidiary which is directly or
indirectly owned by any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of the
voting power (without consideration of the rights of any class of stock to
elect directors by a separate class vote) of the then outstanding shares of
capital stock of the corporation entitled to vote in an annual election of
directors (the "Voting
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Stock"), voting together and not as separate classes. Such affirmative vote
shall be required notwithstanding the fact that no vote is required, or
that a lesser percentage may be specified, by law or in any agreement with
any national securities exchange or otherwise.
(b) the term "Business Combination" as used in this Article Seventh
shall mean any transaction which is referred to in any one or more of
clauses (1) through (5) of paragraph (a) of Section 7.1 of this Article
Seventh.
7.2 The provisions of Section 7.1 of this Article Seventh shall not be
applicable to any Business Combination, and such Business Combination shall
require only such affirmative vote (if any) as is required by law or any other
provision of the Articles of Incorporation if the conditions specified in either
of the following paragraphs (a) or (b) are met:
(a) The Business Combination shall have been approved by a majority of
the Continuing Directors; or
(b) All of the following six conditions shall have been met:
(1) The transaction constituting the Business Combination shall
provide for a consideration to be received by holders of Common Stock
in exchange for their stock, and the aggregate amount of the cash and
the Fair Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be received
per share by holders of Common Stock in such Business Combination
shall be at least equal to the highest of the following:
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid in order to acquire any shares of Common Stock beneficially
owned by the Interested Shareholder which were acquired (i) within
the two-year period immediately prior to the first public
announcement of the proposed Business Combination (the
"Announcement Date") or (ii) in the transaction in which it became
an Interested Shareholder, whichever is higher;
(B) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (the "Determination
Date"), whichever is higher; and
(C) (if applicable) the price per share equal to the Fair Market
Value per share of Common Stock determined pursuant to clause (B)
immediately preceding, multiplied by the ratio of (i) the highest
per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid in order to acquire any
shares of Common Stock beneficially owned by the Interested
Shareholder which were acquired within the two-year period
immediately prior to the Announcement Date to (ii) the Fair Market
Value per share of Common Stock on the first day in such two-year
period on which the Interested Shareholder beneficially owned any
shares of Common Stock.
All per share prices shall be adjusted to reflect any intervening
stock splits, stock dividends and reverse stock splits.
(2) If the transaction constituting the Business Combination shall
also provide for a consideration to be received by holders of any class
of outstanding Voting Stock (other than Common Stock and other than
Institutional Voting Stock) in exchange for their stock, the aggregate
amount of the cash and the Fair Market Value as of the date of the
consummation of the Business Combination of consideration other than
cash to be received per share by holders of Shares of such Voting Stock
shall be at least equal to the highest of the following (it being
intended that the requirements of this clause (b) (2) shall be required
to be met with respect to every class of outstanding Voting Stock (other
than Institutional Voting Stock), whether or not the Interested
Shareholder beneficially owns any shares of a particular class of Voting
Stock):
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(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid in order to acquire any shares of such class of Voting Stock
beneficially owned by the Interested Shareholder which were acquired
(i) within the two-year period immediately prior to the Announcement
Date or (ii) in the transaction in which it became an Interested
Shareholder, whichever is higher;
(B) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation;
(C) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(D) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Stock determined pursuant to
clause (C) immediately preceding, multiplied by the ratio of (i) the
highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid in order to acquire
any shares of such class of Voting Stock beneficially owned by the
Interested Shareholder which were acquired within the two-year period
immediately prior to the Announcement Date to (ii) the Fair Market
Value per share of such class of Voting Stock on the first day in
such two-year period on which the Interested Shareholder beneficially
owned any shares of such class of Voting Stock.
All per share prices shall be adjusted for intervening stock
splits, stock dividends and reverse stock splits.
(3) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock) shall be in
cash or in the same form as was previously paid in order to acquire
shares of such class of Voting Stock which are beneficially owned by the
Interested Shareholder. If the Interested Shareholder beneficially owns
shares of any class of Voting Stock which were acquired with varying
forms of consideration, the form of consideration to be received by
holders of such class of Voting Stock shall be either cash or the form
used to acquire the largest number of shares of such class of Voting
Stock beneficially owned by it.
(4) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination:
(A) except as approved by a majority of the Continuing Directors, there
shall have been no failure to declare and pay at the regular date
therefor any full quarterly dividends (whether or not cumulative) on any
outstanding preferred stock; (B) there shall have been (i) no reduction
in the annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock) except as
approved by a majority of the Continuing Directors, and (ii) an increase
in such annual rate of dividends (as necessary to prevent any such
reduction) in the event of any reclassification (including any reverse
stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of the common Stock, unless the failure so to increase such
annual rate is approved by a majority of the Continuing Directors; and
(C) such Interested Shareholder shall not have become the beneficial
owner of any shares of Voting Stock except as part of the transaction in
which it became an Interested Shareholder.
(5) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages provided
by the corporation, whether in anticipation of or in connection with
such Business Combination or otherwise.
(6) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations thereunder
(or any subsequent provisions replacing such Act, rules or regulations)
shall be mailed to all shareholders of the corporation at least 30 days
prior to the consummation of such
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Business Combination (whether or not such proxy or information statement
is required to be mailed pursuant to such Act or subsequent provisions).
7.3 For the purposes of this Article Seventh:
(a) A "person" shall mean any individual, firm, corporation or other
entity.
(b) "Interested Shareholder" at any particular time shall mean any
person (other than the corporation or any Subsidiary) who or which:
(1) is at such time the beneficial owner, directly or indirectly,
of shares of the corporation having more than 10% of the voting power of
the then outstanding Voting Stock; or
(2) at any time within the two-year period immediately prior to
such time was the beneficial owner, directly or indirectly, of shares of
the corporation having more than 10% of the voting power of the then
outstanding Voting Stock; or
(3) is at such time an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock which were at any
time within the two-year period immediately prior to such time
beneficially owned by any Interested Shareholder, if such assignment or
succession shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the meaning of
the Securities Act of 1933.
(c) A person shall be a "beneficial owner" of any shares of Voting
Stock:
(1) which are beneficially owned, directly or indirectly, by such
person or any of its Affiliates or Associates;
(2) which such person or any of its Affiliates or Associates has
(A) the right to acquire (whether or not such right is exercisable
immediately) pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(d) For the purposes of determining whether a person is an Interested
Shareholder pursuant to paragraph (b) of this Section 7.3, the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned by an Interested Shareholder through application of paragraph (c) of
this Section 7.3 but shall not include any other shares of Voting Stock
which may be issuable pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise.
(e) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on September 14,
1983 (the term "registrant" in said Rule 12b-2 meaning, in this case, the
corporation).
(f) "Beneficially owned" shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on September 14, 1983.
(g) "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in paragraph (b) of this Section 7.3, the
term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
corporation.
(h) "Continuing Director" means any member of the Board of Directors
of the corporation who is unaffiliated with, and not a representative of,
the Interested Shareholder and was a member of the
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Board of Directors on September 14, 1983 or prior to the time that the
Interested Shareholder became an Interested Shareholder, and any successor
of a Continuing Director who is unaffiliated with, and not a representative
of, the Interested Shareholder and is recommended to succeed a Continuing
Director by a majority of the Continuing Directors then on the Board of
Directors.
(i) "Fair Market Value" means: (1) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or if such stock is not
listed on such exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in
use, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by a majority of
the Continuing Directors in good faith; and (2) in the case of property
other than cash or stock, the fair market value of such property on the
date in question as determined by the Board of Directors in good faith.
(j) "Institutional Voting Stock" shall mean any class of Voting Stock
which was issued directly to and continues to be held solely by one or more
insurance companies, pension funds, commercial banks, savings banks or
similar financial institutions or institutional investors.
(k) In the event of any Business Combination in which the corporation
survives, the phrase "consideration other than cash to be received" as used
in paragraph (b) of Section 7.2 of this Article Seventh shall include the
shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
7.4 The Board of Directors shall have the power and duty to determine for
the purposes of this Article Seventh, on the basis of information known to them
after reasonable inquiry, (a) whether a person is an Interested Shareholder, (b)
the number of shares of Voting Stock beneficially owned by any person, (c)
whether a person is an Affiliate or Associate of another, (d) whether a class of
Voting Stock is Institutional Voting Stock and (e) whether the assets which are
the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value of
$15,000,000 or more. Any such determination made in good faith shall be binding
and conclusive.
7.5 Nothing contained in this Article Seventh shall be construed to relieve
any Interested Shareholder from any fiduciary obligation imposed by law.
7.6 Notwithstanding any other provisions of law, the Articles of
Incorporation or the By-Laws of the corporation, the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding shares of
Voting Stock, voting together as a single class, shall be required to amend or
repeal, or to adopt any provision inconsistent with, this Article Seventh.
8. The Articles of Incorporation, as amended and restated herein, supersede
the original Articles of Incorporation and all amendments thereto.
FURTHER RESOLVED, that the Chairman of the Board, President and Chief
Executive Officer or any Vice President of the corporation be, and they hereby
are, authorized, empowered and directed to execute, under
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the corporate seal of the corporation, Articles of Amendment to the Amended and
Restated Articles of Incorporation of the corporation and to cause said Articles
of Amendment to be filed forthwith with the Department of State of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, H. J. Heinz Company has caused these Articles of
Amendment to be signed by its Chairman, President and Chief Executive Officer
and its corporate seal, duly attested by its Secretary, to be hereunto affixed
this 13th day of July 1994.
Attest: H. J. HEINZ COMPANY
/s/ BENJAMIN E. THOMAS, JR. /s/ A. J. F. O'REILLY
BY ................................... BY .....................................
Benjamin E. Thomas, Jr., Secretary A. J. F. O'Reilly, Chairman, President
and Chief Executive Officer
(Corporate Seal)
Filed in the Department of State on
July 25, 1994.
Commonwealth of Pennsylvania
/s/
.....................................
Secretary of the Commonwealth
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Exhibit 10(c)(x)
H. J. Heinz Company
Executive Deferred Compensation Plan
Article 1. Establishment and Purposes
1.1 Establishment. H. J. Heinz Company (the "Company"), hereby
establishes, effective as of June 8, 1994 (the "Effective Date"), a deferred
compensation plan for key employees as described herein, which shall be known
as the "H. J. Heinz Company Executive Deferred Compensation Plan" (the "Plan").
1.2 Purpose. The primary Purpose of the Plan is to provide certain key
employees of the Company, its subsidiaries, and affiliates with the opportunity
to voluntarily defer a portion of their compensation, subject to the terms of
the Plan. By adopting the Plan, the Company desires to enhance its ability to
attract and retain employees of outstanding competence.
Article 2. Administration
2.1 The Committee. The Plan shall be administered by the Management
Development and Compensation Committee of the Board of Directors of the Company
or any other successor Committee appointed by the Board (the "Committee"). The
members of the Committee shall be appointed by, and shall serve at the
discretion of, the Board.
2.2 Authority of the Committee. Except as limited by law or by the
Company's Articles of Incorporation or Bylaws, and subject to the provisions
herein, the Committee shall have authority to select eligible employees of the
Company for participation in the Plan; determine the terms and conditions of
each employee's participation in the Plan; interpret the Plan; establish,
amend, or waive rules and regulations for the Plan's administration; and,
subject to Article 8 herein, amend the terms and conditions of the Plan and any
agreement entered into under the Plan. Further, the Committee shall make all
other determinations which may be necessary or advisable for the administration
of the Plan. As permitted by law, the Committee may delegate any of its
authority granted under the Plan to such other person or entity it deems
appropriate, including, but not limited to, senior management of the Company.
2.3 Guidelines. Subject to the provisions herein, the Committee may adopt
written guidelines for the implementation and administration of the Plan.
2.4 Decisions Binding. All determinations and decisions of the Committee
arising under the Plan shall be final, binding, and conclusive upon all
parties.
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Article 3. Eligibility and Participation
3.1 Eligibility. Subject to Section 3.2, Employees eligible to be selected
to participate in the Plan in any fiscal year of the Company (hereinafter, a
"Year") include all full-time, salaried employees of the Company, its
subsidiaries, and affiliates who are key employees, as determined by the
Committee in its sole discretion.
3.2 Limitation on Eligibility. It is the intent of the Company that the
Plan qualify for treatment as a "top hat" plan under the Employee Retirement
Income Security Act of 1974, as amended from time to time, or any successor Act
thereto ("ERISA"). Accordingly, to the extent required by ERISA to obtain such
"top hat" treatment, eligibility shall be extended only to those executives who
comprise a select group of management or highly compensated employees. Further,
the Committee may place such additional limitations on eligibility as it deems
necessary and appropriate under the circumstances.
3.3 Participation. Participation in the Plan shall be determined annually
by the Committee based upon the criteria set forth in Sections 3.1 and 3.2
herein. An employee who is chosen to participate in the Plan in any Year (a
"Participant") shall be so notified in writing.
In the event a Participant selected to participate in the Plan no longer
meets the criteria for participation, such Participant shall become an inactive
Participant, retaining all the rights described under the Plan, except the
right to make any further deferrals, until such time that the Participant again
becomes an active Participant.
3.4 Partial Year Eligibility. In the event that an employee first becomes
eligible to participate in the Plan during a Year, such employee shall, within
thirty (30) calendar days of becoming eligible, be notified by the Company of
his or her eligibility to participate, and the Company shall provide each such
employee with an "Election to Defer Form," which must be completed by the
employee as provided in Section 4.2 herein; provided, however, that such
employee may only make an election to defer with respect to that portion of his
or her compensation, as defined herein, for such Year which is to be earned
after the filing of the deferral election.
3.5 No Right to Participate. No employee shall have the right to be
selected as a Participant, or, having been so selected for any given Year, to
be selected again as a Participant for any other Year.
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Article 4. Deferral Opportunity
4.1 Amount Which May Be Deferred. A Participant may elect to defer, in any
Year, up to one hundred percent (100%) of eligible components of Compensation,
including but not limited to Salary, Bonus, and Long-Term Awards, all as
defined herein; provided, however, that the Committee shall have sole
discretion to designate which components of Compensation are eligible for
deferral elections under the Plan in any given Year. In addition, the Committee
may, in its sole discretion, designate the minimum amount or increments of any
single eligible component of Compensation which may be deferred in any Year or
establish any other limitations as it deems appropriate in any Year.
The following definitions shall apply for purposes of this Plan:
(a) "Bonus" means any incentive award based on an assessment of
performance, payable by the Company to a Participant with respect to
the Participant's services during a Year, including but not limited to
amounts awarded under the Company's Incentive Compensation Plan;
provided, however, that for purposes of the Plan, "Bonus" shall be
deemed earned only upon award by the Company and shall not include
incentive awards which relate to a period exceeding one (1) Year.
(b) "Compensation" means the gross Salary, Bonus, Long-Term Awards,
and other payments eligible for deferral under the Plan, which are
payable to a Participant with respect to services performed during a
Year.
(c) "Long-Term Award" means any cash award payable to a Participant
pursuant to a Company program which establishes incentive award
opportunities which are contingent upon performance which is measured
over periods greater than one (1) Year.
(d) "Salary" means all regular, basic wages, before reduction for amounts
deferred pursuant to the Plan or any other plan of the Company,
payable in cash to a Participant for services to be rendered during
the Year, exclusive of any Bonus, Long-Term Awards, other special
fees, awards, or incentive compensation, allowances, or amounts
designated by the Company as payment toward or reimbursement of
expenses.
4.2 Deferral Election. Participants shall make their elections to defer
Compensation under the Plan at least thirty (30) calendar days prior to the
beginning of each Year, or not later than thirty (30) calendar days following
notification of eligibility to participate for a partial Year. All deferral
elections shall be irrevocable, and shall be made on an "Election to Defer
Form," as described herein.
3
<PAGE>
Participants shall make the following irrevocable elections on each
"Election to Defer Form":
(a) The amount to be deferred with respect to each eligible component of
Compensation for the Year;
(b) The length of the deferral period with respect to each eligible
component of Compensation, pursuant to the terms of Section 4.3
herein; and
(c) The form of payment to be made to the Participant at the end of the
deferral period(s), pursuant to the terms of Section 4.4 herein.
Notwithstanding the amounts requested to be deferred pursuant to
Subparagraph (a) above, the limits on deferrals set forth in Section 4.1 herein
shall apply to the requested deferrals each Year.
4.3 Length of Deferral. The deferral periods elected by each Participant
with respect to deferrals of Compensation for any Year shall be at least equal
to one (1) year following the end of the Year in which the Compensation is
earned, and shall be no greater than the date of retirement or other
termination of employment, whichever is earlier. However, notwithstanding the
deferral periods elected by a Participant, payment of deferred amounts and
accumulated interest thereon shall be made to the Participant in a single lump
sum in the event the Participant's employment with the Company is terminated by
reason of death or total disability, as defined in the Company's Long-Term
Disability Plan, at any time prior to full payment of deferred amounts and
interest thereon. Such payment following employment termination shall be made
in cash, within thirty (30) calendar days after the termination of the
Participant's employment, or as soon thereafter as practicable.
4.4 Payment of Deferred Amounts. Participants shall be entitled to elect
to receive payment of deferred amounts, together with interest earned thereon,
at the end of the deferral period in a single lump-sum cash payment, by means
of installments, or in such other format approved by the Committee.
(a) Lump-Sum Payment. Such payment shall be made in cash within
thirty (30) calendar days of the date specified by the Participant as
the date for payment of deferred Compensation, as described in
Sections 4.2 and 4.3 herein, or as soon thereafter as practicable.
4
<PAGE>
(b) Installment Payments. Participants may elect payout in installments,
with a minimum number of installments of two (2), and a maximum
of ten (10). The initial payment shall be made in cash within thirty
(30) calendar days after the commencement date selected by the
Participant pursuant to Sections 4.2 and 4.3 herein, or as soon
thereafter as practicable. The remaining installment payments shall be
made in cash each year thereafter, until the Participant's entire
deferred compensation account has been paid. Interest shall accrue on
the deferred amounts in the Participant's deferred compensation
account, as provided in Section 5.2 of this Plan. The amount of each
installment payment shall be equal to the balance remaining in the
Participant's deferred compensation account immediately prior to
each such payment, multiplied by a fraction, the numerator of which
is one (1), and the denominator of which is the number of installment
payments remaining.
In the event a Participant's employment with the Company is
terminated by reason of death or total disability at a time when there
is a balance in the Participant's deferred compensation account, the
entire balance shall be paid out to the Participant, as set forth in
Section 4.3 herein.
(c) Alternative Payment Schedule. A participant may submit an
alternate payment schedule to the Committee for approval; provided,
however, that no such alternate payment schedule shall be permitted
unless approved by the Committee.
4.5 Financial Hardship. The Committee shall have the authority to alter
the timing or manner of payment of deferred amounts in the event that the
Participant establishes, to the satisfaction of the Committee, severe financial
hardship. In such event, the Committee may, in its sole discretion:
(a) Authorize the cessation of deferrals by such Participant under the
Plan; or
(b) Provide that all or a portion of the amount previously deferred
by the Participant shall immediately be paid in a lump-sum cash
payment; or
(c) Provide that all or a portion of the installments payable over a period
of time shall immediately be paid in a lump-sum cash payment; or
(d) Provide for such other installment payment schedule as deemed
appropriate by the Committee under the circumstances.
5
<PAGE>
For purposes of this Section 4.5, "severe financial hardship" shall be
determined by the Committee, in its sole discretion, in accordance with all
applicable laws. The Committee's's decision with respect to the severity of
financial hardship and the manner in which, if at all, the Participant's future
deferral opportunities shall be ceased, and/or the manner in which, if at all,
the payment of deferred amounts to the Participant shall be altered or
modified, shall be final, conclusive, and not subject to appeal. The
Participant's account will be credited with earnings in accordance with the
Plan up to the date of distribution.
Article 5. Deferred Compensation Accounts
5.1 Participants' Accounts. The Company shall establish and maintain an
individual bookkeeping account for deferrals made by each Participant under
Article 4 herein. Each account shall be credited as of the date the amount
deferred otherwise would have become due and payable to the Participant.
5.2 Interest on Deferred Amounts. Compensation deferred under Article 4
shall accrue interest at the rate selected by the Committee. Each
Participant's deferred compensation account shall be credited on the last day
of each calendar quarter, with interest computed on the average balance in the
account during such quarter.
Interest earned on deferred amounts shall be paid out to Participants at
the same time and in the same manner as the underlying deferred amounts.
5.3 Charges Against Accounts. There shall be charged against each
Participant's deferred compensation account any payments made to the
Participant or to his or her beneficiary.
Article 6. Rights of Participants
6.1 Contractual Obligation. The Plan shall create a contractual obligation
on the part of the Company to make payments from the Participants' accounts
when due. Payment of account balances shall be made out of the general funds of
the Company.
6.2 Unsecured Interest. No Participant or party claiming an interest in
amounts deferred by a Participant, including any interest thereon, shall have
any interest whatsoever in any specific asset of the Company. To the extent
that any party acquires a right to receive payments under the Plan, such right
shall be equivalent to that of an unsecured general creditor of the Company.
6
<PAGE>
The Company may, but shall not be required to, establish one or more
trusts, with such trustee as the Committee may approve, for the purpose of
providing for the payment of deferred amounts. Such trust or trusts may be
irrevocable, but the assets thereof shall be subject to the claims of the
Company's general creditors. To the extent any amounts deferred under the Plan
are actually paid from any such trust, the Company shall have no further
obligation with respect thereto, but to the extent not so paid, such deferred
amounts shall remain the obligation of, and shall be paid by, the Company.
6.3 Employment. Nothing in the Plan shall interfere with nor limit, in any
way, the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company.
Article 7. Withholding of Taxes
The Company shall have the right to require Participants to remit to the
Company an amount sufficient to satisfy any withholding tax requirements or
to deduct from all payments made pursuant to the Plan amounts sufficient to
satisfy withholding tax requirements.
Article 8. Amendment and Termination
The Company hereby reserves the right to amend, modify, or terminate
the Plan at any time by action of the Committee. Except as described below in
this Article 8, no such amendment or termination shall in any material manner
adversely affect any Participant's rights to amounts previously deferred
hereunder, or interest earned thereon, without the consent of the Participant.
The Plan is intended to be an unfunded plan which is maintained primarily
to provide deferred compensation benefits for a select group of "management or
highly compensated employees" within the meaning of Sections 201, 301, and 401
of ERISA, and to therefore be exempt from the provisions of Parts 2, 3, and 4
of Title I of ERISA. Accordingly, the Board may terminate the Plan and commence
termination payout for all or certain Participants, or remove certain employees
as Participants, if it is determined by the United States Department of Labor
or a court of competent jurisdiction that the Plan constitutes an employee
pension benefit plan within the meaning of Section 3(2) of ERISA which is not
so exempt. If payout is commenced pursuant to the operation of this Article 8,
the payment of such amounts shall be made in the manner selected by each
Participant under Section 4.4 herein as applicable.
7
<PAGE>
Article 9. Miscellaneous
9.1 Notice. Any notice or filing required or permitted to be given to the
Company under the Plan shall be sufficient if in writing and hand delivered, or
sent by registered or certified mail to the Vice President--Organization
Development and Administration of the Company. Notice to the Vice
President--Organization Development and Administration of the Company, if
mailed, shall be addressed to the principal executive offices of the Company.
Notice mailed to a Participant shall be at such address as is given in the
records of the Company. Notices shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
9.2 Nontransferability. Participants' rights to deferred amounts,
contributions, and interest earned thereon under the Plan may not be sold,
transferred, assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. In no event shall the Company
make any payment under the Plan to any assignee or creditor of a Participant.
9.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
9.4 Costs of the Plan. All costs of implementing and administering the
Plan shall be borne by the Company.
9.5 Applicable Law. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
9.6 Successors. All obligations of the Company under the Plan shall be
binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.
8
<PAGE>
Exhibit 11
H. J. Heinz Company and Subsidiaries
COMPUTATION OF NET INCOME PER SHARE
(In Thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------
April 27, April 28, April 29,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Primary income per share:
Net income............................................................. $ 602,944 $ 396,313 $ 638,295
Less-preferred dividends............................................... 71 78 86
---------- ---------- ----------
Net income applicable to common stock.................................. $ 602,873 $ 396,235 $ 638,209
========== ========== ==========
Average common shares outstanding and
common stock equivalents.................................................. 256,812 259,788 266,339
========== ========== ==========
Net income per share--primary.......................................... $ 2.35 $ 1.53 $ 2.40
========== ========== ==========
Fully diluted income per share:
Net income............................................................. $ 602,944 $ 396,313 $ 638,295
========== ========== ==========
Average common shares outstanding and
common stock equivalents............................................. 256,812 259,788 266,339
Additional common shares assuming:
Conversion of $1.70 third cumulative preferred stock.............. 418 461 507
Additional common shares assuming options were
exercised at the year-end market price.......................... 86 578 407
---------- ---------- ----------
257,316 260,827 267,253
========== ========== ==========
Net income per share--fully diluted.................................... $ 2.34 $ 1.52 $ 2.39
========== ========== ==========
</TABLE>
<PAGE>
Exhibit 13
Pages 32 through 54 of the H.J. Heinz Company Annual Report to Shareholders
for the fiscal year ended April 27, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS H.J. HEINZ COMPANY AND SUBSIDIARIES
.............................................................................
In 1994, the company continued to restructure
its portfolio of businesses and operations to be
better positioned for future profit growth. During
the year, the company acquired the Moore's and Domani
product lines and divested businesses that did not
fit with the company's long-term growth objectives.
The company implemented several productivity
improvement and cost reduction initiatives in 1994
for which a $192.3 million pretax charge had been
recorded in 1993. The major components of the 1993
restructuring plan related to employee severance and
relocation costs ($99 million) and facilities
consolidation and closure costs ($73 million).
Specifically, the company reduced headcount at its
Australian operations; closed a pet food plant in
Pascagoula, Mississippi; downsized and consolidated
StarKist Seafood headquarters functions with those of
Heinz Pet Products in Newport, Kentucky; realigned
production at Ore-Ida's Ontario, Oregon factory;
downsized the administration of Weight Watchers
International meeting operations; downsized the
administrative functions of the Italian operations;
reduced manufacturing headcount and reorganized the
administrative functions in the United Kingdom;
consolidated domestic sales service functions into
the Heinz Service Company; and realigned production
between Canada and the United States. Remaining
restructuring initiatives provided for in 1993 in
both the United States and foreign locations will be
completed in 1995. At the time the restructuring
charges were recorded, it was anticipated that the
company would reduce headcount by 3,000 and realize
cost savings of approximately $100 million annually.
The company expects to achieve the original
projections of cost savings and headcount reductions
upon completion of the remaining projects.
Fiscal 1994 was a disappointing year for the
Weight Watchers businesses (meetings and food) which
were affected by the Los Angeles earthquake, one of
the worst winters in many years in the U.S. and
declining meeting attendance in the U.S. of 15%, all
of which have affected the entire weight-loss
industry. One of the company's primary objectives is
to stabilize and rebuild domestic attendance volumes
in order to improve the overall profitability of the
Weight Watchers businesses, which currently represent
less than 10% of sales.
Several of the company's domestic operations
were affected by the company's trade "de-loading"
strategy implemented in 1994, whereby shipments to
meet the trade's promotional period sales activity
were more closely aligned with the consumer demand
for certain grocery products. This strategy had a
negative impact on the company's sales volume.
In 1994, the strengthening dollar against most
currencies had a negative impact on the company's
results from overseas operations. Fluctuating
exchange rates adversely impacted the company's
results during the first three quarters of 1994,
mainly due to the depreciation of the United Kingdom
pound sterling and Italian lira associated with the
breakdown of the Exchange Rate Mechanism (ERM) of the
European Monetary System experienced in Fiscal 1993.
As the company moved beyond the twelve-month
anniversary of the breakdown of the ERM, the adverse
impact of foreign exchange comparisons on the results
of operations has diminished. The company does not
anticipate exchange rate fluctuations to have a
significant impact on the results of operations in
the near future.
..............................................................................
RESULTS OF OPERATIONS: 1994 versus 1993: Sales for 1994 decreased $56.6
million, or 0.8%, to $7.05 billion from $7.10 billion
in 1993. The sales decrease was due to the effects of
the stronger U.S. dollar against most foreign
currencies and to divestitures, partially offset by
price increases and acquisitions. Volume remained
flat.
For the third year in a row, unfavorable foreign
currency translation rates adversely impacted sales.
The negative sales impact of foreign currency
translation was $278.6 million, or 3.9%, the largest
dollar decline in the company's history. This
resulted principally from an unprecedented decline of
the United Kingdom pound sterling and Italian lira
against the U.S. dollar as a result of these two
countries leaving the European Monetary System in
Fiscal 1993.
Prices increased $134.1 million in 1994, or
1.9%, principally in the U.S. Increases in StarKist
tuna, Ore-Ida frozen potatoes and Heinz grocery
ketchup were partially offset by declines in pet
food. Overseas, price increases occurred in several
countries,
32
<PAGE>
notably Italy, Zimbabwe and Venezuela.
Acquisitions, net of divestitures, increased
sales $89.1 million, or 1.3%. Acquisitions included
the 1994 purchase of the Moore's and Domani product
lines (coated frozen foods and Italian frozen pastas)
from The Clorox Company of Oakland, California; the
purchases of Wattie's Limited of New Zealand in
October 1992; and several domestic Weight Watchers
franchises in 1993. Divestitures included the
confectionery business of Heinz Italia, the Near East
specialty rice business and other smaller businesses,
including the Chico-San rice cake business.
Volume was flat year-on-year; increases at
foreign operations were offset by decreases at
domestic operations. Foreign volume increases were
noted in baby food, sauces and pastes and Heinz
beans. Foreign volume declines occurred in condiments
and soups. Domestically, volume decreases were noted
in the Weight Watchers businesses (meetings and
food), Ore-Ida grocery frozen potatoes, Heinz grocery
ketchup, StarKist tuna and Heinz baby food; the
volume decrease was due in part to the strategy to
"de-load" the trade's inventories implemented in
1994. Domestic volume increases occurred in Ore-Ida
foodservice potatoes, pet food, Heinz foodservice
ketchup and single-serve condiments.
Gross profit increased $92.2 million in 1994 to
$2.66 billion from $2.57 billion. Excluding the
effect of the 1993 restructuring charges of $143.5
million, gross profit declined $51.3 million due
primarily to the sales decline in the Weight Watchers
businesses (meetings and food), the trade "de-
loading" strategy and foreign exchange. This was
partially offset by the effects of acquisition and
divestiture activities, reduced trade promotions,
lower costs associated with the restructuring
projects and operating improvements resulting from
the implementation of the restructuring strategy. The
ratio of gross profit to sales increased to 37.8%
from 36.2%. Excluding the effect of the restructuring
charges, the 1993 gross profit ratio was 38.2%.
Selling, general and administrative (SG&A)
expenses increased $11.7 million to $1.72 billion
from $1.71 billion, primarily due to increased
consumer promotions as well as incremental selling
and distribution expenses resulting from the full-
year effect of the Wattie's Limited acquisition,
partially offset by a decrease in general and
administrative expenses. The decline in general and
administrative expenses was due to restructuring
charges recorded in 1993, lower costs associated with
the restructuring projects and operating improvements
resulting from the implementation of the
restructuring strategy.
Operating income increased $207.5 million in
1994 to $1.07 billion from $860.9 million in 1993.
The increase in operating income was primarily due to
the inclusion of the gains on the sale of the
confectionery business of Heinz Italia and the sale
of the Near East specialty rice business in 1994
($127.0 million) and to the restructuring charges
recorded in 1993 ($192.3 million). Adjusting for
these items, operating income declined $111.8
million, or 10.6% (declined to 13.4% of sales from
14.8% of sales). This decline was principally due to
the decline in gross profit and increase in SG&A
expenses, as discussed above.
Non-operating expenses totaled $146.0 million in
1994 compared to $145.1 million in 1993. Interest
income increased $7.3 million from $29.5 million in
1993 to $36.8 million in 1994 due to higher invested
cash generated from recent divestitures. Interest
expense increased $2.8 million to $149.2 million in
1994 from $146.5 million in 1993, primarily the
result of the additional interest associated with the
$750 million of debentures issued in the second and
third quarters of 1993, partially offset by lower
average short-term borrowings. Offsetting this
decrease in net interest were lower foreign
government grants in 1994.
The effective tax rate was 34.6% in 1994 and
26.0% in 1993. Both years' effective tax rates
reflect tax benefits from overseas operations ($57.3
million in 1994 and $41.8 million in 1993). The 1993
tax rate also benefited from the recognition of
foreign tax credits associated with the company's
overseas dividend strategy ($40.0 million). (See Note
5 to the Consolidated Financial Statements.)
Net income increased $206.6 million, or 52.1%,
to $602.9 million from $396.3 million in the prior
year and net income per share increased to $2.35 from
$1.53. The increase in net income per share of 53.6%
in 1994, versus the 52.1% increase in net income,
reflected the favorable benefit of the company's
share repurchase plan. The 1994 results included
gains of $0.24 per share from the sale of the
confectionery business of Heinz Italia and the sale
of the Near East specialty rice business. In
addition, 1994
33
<PAGE>
and 1993 benefited from lower effective tax rates.
The 1993 results included the effect of the adoption
of FAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions"
($0.51 per share) and restructuring charges ($0.45
per share).
The impact of fluctuating exchange rates for
1994 remained relatively consistent on a line-by-line
basis throughout the Consolidated Statement of
Income.
1993 versus 1992: Sales for 1993 increased $521.5
million, or 7.9%, to $7.10 billion. The sales
increase came primarily from volume and acquisitions,
partially offset by the effects of the stronger U.S.
dollar against most foreign currencies.
Volume increased 5.7%, or $376.6 million, and
reflected sustained marketing support and
restructuring initiatives that occurred in 1992.
Approximately 70% of the volume increase came from
domestic operations, with gains in: StarKist tuna;
Weight Watchers brand entrees, desserts and specialty
foods; 9-Lives cat food; Ore-Ida frozen potatoes;
coated frozen foods; various dog food; Chef Francisco
frozen soup; and Heinz foodservice ketchup.
Domestically, volume declines occurred in Weight
Watchers meeting operations, Heinz grocery ketchup
and Heinz baby food. Overseas, volume increases were
noted in baby food, Heinz ketchup and sauces and
pastes, with declines in Heinz soup and beans.
Acquisitions, net of divestitures, accounted for
$245.6 million, or 3.7%. Companies acquired during
1993 included Wattie's Limited (a producer of a broad
range of grocery products in New Zealand), Arimpex
(an Italian foodservice distribution company) and
several Weight Watchers franchises.
Unfavorable foreign currency translation rates
adversely impacted sales in 1993. Declines came
principally from the stronger U.S. dollar versus the
United Kingdom pound sterling, the Italian lira, the
Zimbabwean dollar, the Canadian dollar and the
Australian dollar. The net reduction in sales
attributable to foreign currency translation was
$120.7 million, or 1.8%.
Prices were flat year-on-year, with increases in
foreign prices offset by domestic declines. Increases
in baby food, soups, Weight Watchers meeting
operations and Weight Watchers brand desserts,
StarKist white meat tuna, edible oils, margarines and
soaps were offset by price declines in Ore-Ida frozen
potatoes, various pet foods, StarKist light meat
tuna, Weight Watchers brand frozen entrees, Heinz
beans and domestic Heinz ketchup.
The results of operations for 1993 and 1992
included the effect of the company's restructuring
strategy. A pretax charge of $192.3 million was
recorded in 1993, versus a charge of $88.3 million in
1992.
Gross profit increased $93.8 million in 1993 to
$2.57 billion from $2.48 billion, primarily as a
result of the increase in sales. The ratio of gross
profit to sales declined to 36.2% from 37.7%. The
decline in the gross profit ratio was principally the
result of increased restructuring charges associated
with consolidating and downsizing manufacturing
operations; the ratio was favorably impacted by
product mix, cost efficiencies realized at the
company's pet products operations and lower raw fish
prices. Excluding the 1993 restructuring charge, the
gross profit ratio would have been 38.2%.
In 1993, the company continued to invest heavily
in marketing its brands. Total marketing support,
which consists of trade and consumer promotions and
media, increased approximately 3% over the record
level established in 1992. Increased marketing
support was noted primarily in Ore-Ida frozen
potatoes and Weight Watchers brand entrees and at
Wattie's Limited in New Zealand.
SG&A expenses increased $117.9 million to $1.71
billion from $1.59 billion, primarily due to:
increased marketing; higher selling and distribution
expenses resulting from the increased sales volume;
and the curtailment gain of the domestic salaried
defined benefit pension plan of $38.8 million pretax
included in the 1992 results. (See Note 10 to the
Consolidated Financial Statements.) As a percentage
of sales, SG&A expenses declined to 24.1% in 1993
from 24.2% in 1992.
Operating income declined $245.6 million in
1993, to $860.9 million from $1.11 billion in 1992.
The decline in operating income year-on-year was
primarily due to higher restructuring charges
recorded in 1993 and the inclusion in 1992 of the
gain on the sale of The Hubinger Company. Operating
income as a percentage of sales declined to 12.1% in
1993 from 16.8% in 1992.
34
<PAGE>
Non-operating expenses totaled $145.1 million in
1993, compared to $122.2 million in 1992. The
increase was primarily due to higher interest expense
resulting from higher average debt, offset partially
by lower average interest rates. The higher average
debt resulted from borrowings for acquisitions,
higher operating needs, capital expenditures and
purchases of treasury shares. Also contributing to
the increase in non-operating expenses was lower
interest income as a result of a reduction in the
company's Italian short-term investment portfolio.
Partially offsetting the increase were higher foreign
government grants.
The effective tax rate was 26.0% in 1993 and
35.2% in 1992. The 1993 effective rate of 26.0%
resulted from tax benefits overseas and the
recognition of foreign tax credits associated with
the company's overseas dividend strategy. The
effective rate on income from operations before the
current year charges for postretirement benefits and
restructuring was 29.0%. (See Note 5 to the
Consolidated Financial Statements.)
In 1993 the company adopted FAS No. 106,
"Employers' Accounting for Postretirement Benefits
Other Than Pensions." The company elected to
immediately recognize the transition obligation. The
cumulative effect of adopting FAS No. 106 was $133.6
million ($0.51 per share) and the incremental current
year after-tax effect was $9.9 million ($0.04 per
share). (See Note 11 to the Consolidated Financial
Statements.)
Net income declined $242.0 million in 1993 to
$396.3 million from $638.3 million in 1992 and net
income per share declined to $1.53 from $2.40. The
1993 results included the effects of the prescribed
accounting change, the company's restructuring
strategy and the lower effective tax rate. The 1992
results included the gain on the sale of The Hubinger
Company.
..............................................................................
LIQUIDITY AND FINANCIAL Return on average shareholders' equity (ROE) was
POSITION: 25.9% in 1994, 22.0% in 1993 (before the cumulative
effect of adopting FAS No. 106) and 27.5% in 1992.
Pretax return on average invested capital (ROIC) was
22.7% in 1994 compared to 18.7% in 1993 and 28.8% in
1992. Both ROE and ROIC in 1992 included the effect
of the gain on the sale of The Hubinger Company. The
increase in both ROE and ROIC in 1994 was primarily
attributable to restructuring initiatives and
divestitures.
Cash provided by operating activities was $931.2
million in 1994, which increased $519.3 million from
$411.9 million in 1993. The increase was the result
of lower working capital requirements, resulting from
trade "de-loading," offset partially by expenditures
on the restructuring program.
In 1993, cash provided by operating activities
decreased $65.3 million to $411.9 million, from
$477.2 million in 1992. The decline was primarily the
result of increased working capital, specifically
receivables, inventories and income taxes payable.
Cash used for investing activities was $27.4
million in 1994 versus $829.8 million in 1993. The
decrease in cash used for investing activities was
due primarily to lower capital expenditures, a
reduction in cash used for acquisitions and increased
proceeds from divestitures.
Capital expenditures totaled $275.1 million in
1994 and $430.7 million in 1993. Both years reflected
expenditures for productivity improvements and plant
expansions, principally at the company's Ore-Ida,
United Kingdom, Heinz U.S.A., StarKist Foods and
Weight Watchers operations. Major capital spending
projects, such as the Pittsburgh factory and the
factory improvements in the United Kingdom, have been
completed and the company does not anticipate
undertaking any additional significant projects in
the near future.
Acquisitions in 1994 included the Moore's and
Domani product lines (see Note 2 to the Consolidated
Financial Statements) and Farex (a baby food company
in Australia). Acquisitions in 1993 totaled $370.2
million, which included: the purchase of Wattie's
Limited (see Note 2 to the Consolidated Financial
Statements); Arimpex (a foodservice distribution
company in Italy); Weight Watchers franchises in
Chicago, Wisconsin, Minnesota and Kentucky; and
assets of a Venezuelan company which produces
gelatins and puddings.
Current-year divestitures included proceeds from
the Near East specialty rice business and the Italian
confectionery
35
<PAGE>
business. In addition, the company sold
several small businesses in 1994, including the
Chico-San rice cake business. The financial statement
impact of these other small divestitures, taken
together, was not material. Pro forma results of the
company, assuming all of the 1994 divestitures had
been made at the beginning of each period presented,
would not be materially different from the results
reported. (See Note 3 to the Consolidated Financial
Statements.)
Purchases and sales/maturities of short-term
investments increased from 1993 to 1994, primarily as
a result of the investment of the proceeds from the
sale of the Italian confectionery business in Italian
short-term securities.
Financing activities required $861.5 million in
1994, compared to providing $405.2 million in 1993.
In 1994, cash was used to reduce short-term debt, to
pay dividends and to purchase treasury stock. In
1993, proceeds from long-term debt totaled $969.4
million, primarily due to the issuance of the long-
term senior unsecured notes totaling $750 million.
Cash provided by financing activities in 1993
also included proceeds from the issuance of
(pound sterling)125 million ($197.0 million) of 8.85%
notes. These notes were issued by the company's United
Kingdom affiliate and were privately placed with
various banks. The proceeds of the above-mentioned
issuances were used to refinance existing debt.
(See Note 6 to the Consolidated Financial Statements.)
In 1993, payments on long-term debt totaled
$240.2 million and were mainly the result of the
payment of the NZ$150.0 million debt ($84.3 million).
Also, in April 1993, an affiliated company paid
(pound sterling)70.6 million ($111.3 million) for an
interest in the 8.85% (pound sterling)125 million
notes discussed above.
During 1994, the Board of Directors authorized
an increase of 10.0% in the quarterly dividend for
common stock from 30 cents per share to 33 cents per
share. The company paid $326.0 million in dividends
to both common and preferred shareholders, an
increase of $28.9 million over 1993. The dividend
rate in effect at the end of each year resulted in a
payout ratio of 56.2% in 1994, 58.8% in 1993 (before
the cumulative effect of the accounting change) and
45.0% in 1992.
Cash used for financing activities also included
the purchase of treasury stock. In 1994, 6.5 million
shares were repurchased at a cost of $222.6 million.
The 10 million share repurchase program, which began
in December 1991, was completed in June 1993. As of
April 27, 1994, 6.0 million shares were repurchased
as part of the new 10 million share repurchase
program, which was authorized by the Board of
Directors on June 9, 1993. The company plans to
complete the current program in 1995. During 1993,
3.9 million shares were repurchased at a cost of
$148.5 million under the previous repurchase program.
The company may reissue repurchased shares upon the
exercise of stock options, conversion of preferred
stock and for general corporate purposes.
The Board of Directors adopted, effective April
13, 1994, subject to the approval of the shareholders
at the annual meeting in September 1994, a new stock
option plan providing for the grant of up to 12.0
million shares of common stock at any time over the
next 10 years. As of April 27, 1994, options for
approximately 6.3 million shares had been
contingently granted under this plan. In general, the
terms of the 1994 plan are similar to the company's
other stock option plans.
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 expires in
September 1994, at which time it is anticipated that
a new credit facility of at least one year in length
will be established. The remaining $750 million
expires in August 1996. As a result, $750 million of
the domestic commercial paper outstanding as of April
27, 1994 is classified as long-term debt. At fiscal
year-end 1993, total domestic commercial paper
outstanding of $1.2 billion was classified as short-
term debt. The domestic commercial paper had a
weighted average interest rate during 1994 of 3.3%
and at year-end of 3.6%. In 1993, the weighted
average rate was 3.4% and the rate at year-end was
3.2%.
In November 1992, the Financial Accounting
Standards Board (FASB) issued Financial Accounting
Standard (FAS) No. 112, "Employers' Accounting for
Postemployment Benefits." This statement requires
recognition of benefits provided by an employer to
former or inactive employees after employment but
before retirement. In May 1993, the FASB issued FAS
No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." This statement expands the
use of fair value accounting for debt and equity
securities, but retains the use of the amortized cost
method for investments in debt securities that the
company intends to hold to
36
<PAGE>
maturity. These statements must be implemented in the
first quarter of Fiscal 1995. The impact of the
adoption of these standards is not expected to have
a material impact on the company's financial position
or results of operations.
The impact of inflation on both the company's
financial position and results of operations has been
minimal and is not expected to adversely affect 1995
results.
The company's financial position continues to
remain strong, enabling it to meet cash requirements
for operations, capital expansion programs and
dividends to shareholders.
..............................................................................
RECENT DEVELOPMENTS: Subsequent to fiscal year-end 1994, the company
announced the following: the purchase of the Borden
Foodservice Group, a unit of Borden, Inc.; an
agreement to negotiate with Glaxo India Limited to
acquire Glaxo's Family Products Division; and the
agreement to acquire the Farley's infant food and
milk businesses, as well as its adult nutrition
business, from The Boots Company PLC. (See Note 14 to
the Consolidated Financial Statements.)
..............................................................................
STOCK MARKET H.J. Heinz Company common stock is traded
INFORMATION: principally on the New York Stock Exchange and the
Pacific Stock Exchange, under the symbol HNZ. The
number of shareholders of record of the company's
common stock as of June 23, 1994 approximated 61,655.
The closing price of the common stock on the New York
Stock Exchange composite listing on April 26, 1994
was $33 1/8.
Stock price information for common stock by
quarter follows:
<TABLE>
<CAPTION>
Stock Price Range
.....................
High Low
<S> <C> <C>
.................................................................
1994
First $39 1/4 $35 1/8
Second 39 7/8 34 1/8
Third 38 1/2 34
Fourth 35 7/8 30 3/4
.................................................................
1993
First $39 7/8 $35 1/4
Second 42 5/8 37 5/8
Third 45 1/2 38 1/2
Fourth 45 1/4 35 1/4
-----------------------------------------------------------------
</TABLE>
37
<PAGE>
..............................................................................
SEGMENT AND GEOGRAPHIC The company is engaged principally in one line
DATA: of business--processed food products--which
represents more than 90% of consolidated sales. The
following table presents information about the
company by geographic area. Prior years' geographic
data have been restated to reflect the regrouping of
geographic areas to more closely align the operating
results with the management strategy of the company.
There were no material amounts of sales or transfers
among geographic areas and no material amounts of
United States export sales.
<TABLE>
<CAPTION>
(Dollars in thousands) Domestic Foreign Worldwide North America Europe Asia/Pacific Other
<S> <C> <C> <C> <C> <C> <C> <C>
................................................................................................................................
1994 |
Sales $4,021,436 $3,025,302 $7,046,738 | $4,380,310 $1,685,167 $816,943 $164,318
Operating income# 534,395 533,948 1,068,343 | 587,622 371,794 89,359 19,568
Identifiable assets 3,657,114 2,724,032 6,381,146 | 3,992,820 1,551,477 729,240 107,609
Capital expenditures* 154,505 120,547 275,052 | 167,473 65,802 33,491 8,286
Depreciation and |
amortization expense 161,219 98,590 259,809 | 177,398 54,543 23,433 4,435
|
1993 |
Sales $4,049,901 $3,053,473 $7,103,374 | $4,429,916 $1,952,831 $565,465 $155,162
Operating income# 412,998 447,887 860,885 | 478,053 300,463 58,620 23,749
Identifiable assets 3,930,173 2,891,148 6,821,321 | 4,296,904 1,772,138 669,420 82,859
Capital expenditures* 266,670 164,043 430,713 | 291,980 101,736 27,046 9,951
Depreciation and |
amortization expense 136,590 98,345 234,935 | 155,530 60,142 15,076 4,187
|
1992 |
Sales $3,848,026 $2,733,841 $6,581,867 | $4,231,781 $1,865,010 $354,946 $130,130
Operating income# 697,852 408,663 1,106,515 | 739,867 298,617 46,613 21,418
Identifiable assets 3,360,687 2,571,214 5,931,901 | 3,744,989 1,834,821 259,235 92,856
Capital expenditures* 226,758 104,385 331,143 | 246,629 62,885 13,060 8,569
Depreciation and |
amortization expense 125,649 86,137 211,786 | 144,519 56,431 6,860 3,976
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Excludes property, plant and equipment acquired through acquisitions.
#Fiscal 1994 domestic and foreign operating income includes the gain on the
sale of the confectionery and specialty rice businesses of $46.3 million and
$80.7 million, respectively. Fiscal 1993 domestic and foreign operating income
includes restructuring charges of $109.7 million and $82.6 million,
respectively. Fiscal 1992 domestic operating income includes a gain on the
sale of The Hubinger Company of $221.5 million and restructuring charges of
$37.2 million. In addition, Fiscal 1992 foreign operating income includes
restructuring charges of $51.1 million.
38
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND H.J. HEINZ COMPANY AND SUBSIDIARIES
RETAINED EARNINGS
<TABLE>
<CAPTION>
Fiscal Year Ended April 27, 1994 April 28, 1993 April 29, 1992
(Amounts in thousands except per share data) (52 weeks) (52 weeks) (52 weeks)
<S> <C> <C> <C> <C>
..................................................................................................................................
CONSOLIDATED Sales $7,046,738 $7,103,374 $6,581,867
STATEMENTS OF Cost of products sold 4,381,745 4,530,563 4,102,816
INCOME: ................................................................................................................
Gross profit 2,664,993 2,572,811 2,479,051
Selling, general and administrative expenses 1,723,651 1,711,926 1,593,995
Gain on sale of confectionery and specialty
rice businesses 127,001 - -
Gain on sale of The Hubinger Company - - 221,459
................................................................................................................
Operating income 1,068,343 860,885 1,106,515
Interest income 36,771 29,495 46,607
Interest expense 149,243 146,491 134,948
Other expense, net 33,485 28,108 33,829
................................................................................................................
Income before income taxes and cumulative
effect of accounting change 922,386 715,781 984,345
Provision for income taxes 319,442 185,838 346,050
................................................................................................................
Income before cumulative effect of accounting
change 602,944 529,943 638,295
Cumulative effect of FAS No. 106 adoption - (133,630) -
................................................................................................................
Net income $ 602,944 $ 396,313 $ 638,295
..................................................................................................................................
CONSOLIDATED Amount at beginning of year $3,356,399 $3,257,173 $2,889,476
STATEMENTS OF Net income 602,944 396,313 638,295
RETAINED Cash dividends:
EARNINGS: Common stock 325,887 297,009 270,512
Preferred stock 71 78 86
................................................................................................................
Amount at end of year $3,633,385 $3,356,399 $3,257,173
..................................................................................................................................
PER COMMON Income before cumulative effect of accounting
SHARE AMOUNTS: change $ 2.35 $ 2.04 $ 2.40
Cumulative effect of FAS No. 106 adoption - (.51) -
................................................................................................................
Net income $ 2.35 $ 1.53 $ 2.40
Cash dividends $ 1.29 $ 1.17 $ 1.05
----------------------------------------------------------------------------------------------------------------
Average shares for earnings per share 256,812 259,788 266,339
----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
39
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Assets (Dollars in thousands) April 27, 1994 April 28, 1993
<S> <C> <C> <C>
..........................................................................................................................
CURRENT ASSETS: Cash and cash equivalents $ 98,536 $ 68,432
Short-term investments, at cost which approximates
market 43,868 155,872
Receivables (net of allowances: 1994 - $15,407 and 1993
- $16,299) 812,501 978,935
Inventories:
Finished goods and work-in-process 851,944 874,912
Packaging material and ingredients 293,803 310,516
.................................................................................................
1,145,747 1,185,428
.................................................................................................
Prepaid expenses 154,017 172,630
Other current assets 36,861 62,114
.................................................................................................
Total current assets 2,291,530 2,623,411
..........................................................................................................................
PROPERTY, PLANT AND Land 50,801 51,438
EQUIPMENT: Buildings and leasehold improvements 690,483 732,488
Equipment, furniture and other 2,701,656 2,544,425
.................................................................................................
3,442,940 3,328,351
Less accumulated depreciation 1,275,213 1,166,140
.................................................................................................
Total property, plant and equipment, net 2,167,727 2,162,211
..........................................................................................................................
OTHER NON-CURRENT Investments, advances and other assets 579,420 665,073
ASSETS: Goodwill (net of amortization: 1994 - $127,708 and 1993
- $115,631) 992,994 1,013,051
Other intangibles (net of amortization: 1994 - $85,862
and 1993 - $72,673) 349,475 357,575
.................................................................................................
Total other non-current assets 1,921,889 2,035,699
.................................................................................................
Total assets $6,381,146 $6,821,321
-------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
40
<PAGE>
H.J. HEINZ COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
(Dollars in thousands) April 27, 1994 April 28, 1993
<S> <C> <C> <C>
..........................................................................................................................
CURRENT LIABILITIES: Short-term debt $ 416,372 $1,570,462
Portion of long-term debt due within one year 23,329 33,893
Accounts payable 575,269 533,835
Salaries and wages 72,312 76,624
Accrued marketing 105,102 112,277
Other accrued liabilities 300,058 301,301
Accrued restructuring costs 69,385 179,328
Income taxes 130,535 58,623
.................................................................................................
Total current liabilities 1,692,362 2,866,343
..........................................................................................................................
LONG-TERM DEBT AND Long-term debt 1,727,002 1,009,381
OTHER LIABILITIES: Deferred income taxes 248,630 195,128
Non-pension postretirement benefits 217,044 221,684
Other 157,557 207,789
.................................................................................................
Total long-term debt and other liabilities 2,350,233 1,633,982
..........................................................................................................................
SHAREHOLDERS' EQUITY: Capital stock:
Third cumulative preferred, $1.70 first series, $10
par value 398 438
Common stock, 287,401,000 shares issued, $.25 par
value 71,850 71,850
.................................................................................................
72,248 72,288
Additional capital 170,179 170,308
Retained earnings 3,633,385 3,356,399
Cumulative translation adjustments (264,119) (193,407)
.................................................................................................
3,611,693 3,405,588
Less:
Treasury shares, at cost (38,359,744 shares at April
27, 1994 and 33,036,046 shares at April 28, 1993) 1,239,177 1,046,905
Unearned compensation relating to the ESOP 33,965 37,687
.................................................................................................
Total shareholders' equity 2,338,551 2,320,996
.................................................................................................
Total liabilities and shareholders' equity $6,381,146 $6,821,321
-------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS H.J. HEINZ COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
April 27, April 28, April 29,
Fiscal Year Ended (Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C> <C>
...............................................................................................
OPERATING ACTIVITIES: Net income $ 602,944 $ 396,313 $ 638,295
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 200,035 185,962 170,281
Amortization 59,774 48,973 41,505
Deferred tax provision 106,803 (75,263) (77,295)
Gain on sale of confectionery and
specialty rice businesses (127,001) - -
Gain on sale of The Hubinger Company - - (221,459)
Prepaid foreign income taxes (11,078) (5,978) (45,010)
Provision for restructuring - 179,328 50,523
Cumulative effect of FAS No. 106
adoption - 133,630 -
Other items, net (55,767) (44,479) (4,018)
Changes in current assets and
liabilities, excluding
effects of acquisitions and
divestitures:
Receivables 135,195 (137,499) (132,810)
Inventories 9,742 (114,347) (25,015)
Prepaid expenses and other current
assets 14,688 (47,433) 26,248
Accounts payable 67,660 15,038 (11,429)
Accrued liabilities (110,822) (5,854) 12,622
Income taxes 39,032 (116,493) 54,723
......................................................................
Cash provided by operating activities 931,205 411,898 477,161
...............................................................................................
INVESTING ACTIVITIES: Capital expenditures (275,052) (430,713) (331,143)
Acquisitions, net of cash acquired (95,685) (370,189) (574,136)
Proceeds from divestitures 265,573 1,872 344,036
Purchases of short-term investments (598,486) (116,153) (373,248)
Sales and maturities of short-term
investments 680,208 129,462 358,763
Investment in tax benefits 1,400 (37,226) (53,272)
Other items, net (5,377) (6,872) 24,956
......................................................................
Cash (used for) investing activities (27,419) (829,819) (604,044)
...............................................................................................
FINANCING ACTIVITIES: Proceeds from long-term debt 991 969,394 823
Payments on long-term debt (18,249) (240,246) (134,007)
(Payments on) proceeds from short-term
debt, net (398,333) 11,730 756,666
Dividends (325,958) (297,087) (270,598)
Purchase of treasury stock (222,582) (148,511) (398,051)
Proceeds from borrowings against
insurance policies 134,162 - -
Repayments of borrowings against
insurance policies (65,264) - -
Exercise of stock options 22,645 72,043 63,718
Tax benefits from stock options
exercised 7,320 34,036 41,744
Other items, net 3,722 3,884 2,582
......................................................................
Cash (used for) provided by financing
activities (861,546) 405,243 62,877
......................................................................
Effect of exchange rate changes on cash
and cash equivalents (12,136) (11,597) 5,734
......................................................................
Net increase (decrease) in cash and
cash equivalents 30,104 (24,275) (58,272)
Cash and cash equivalents at beginning
of year 68,432 92,707 150,979
......................................................................
Cash and cash equivalents at end of
year $98,536 $68,432 $92,707
----------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS H.J. HEINZ COMPANY AND SUBSIDIARIES
..............................................................................
1. SIGNIFICANT Fiscal Year: The company operates on a fiscal year
ACCOUNTING POLICIES: ending the Wednesday nearest April 30. However,
certain foreign subsidiaries have earlier closing
dates to facilitate timely reporting. Fiscal years
for the financial statements included herein ended
April 27, 1994, April 28, 1993 and April 29, 1992.
Principles of Consolidation: The consolidated
financial statements include the accounts of the
company and its subsidiaries. All intercompany
accounts and transactions were eliminated.
Translation of Foreign Currencies: For all
significant foreign operations, the functional
currency is the local currency. Assets and
liabilities of these operations are translated at the
exchange rate in effect at each year-end. Income
statement accounts are translated at the average rate
of exchange prevailing during the year. Translation
adjustments arising from the use of differing
exchange rates from period to period are included as
a component of shareholders' equity. Gains and losses
from foreign currency transactions are included in
net income for the period.
Inventories: Inventories are stated at the lower of
cost or market. Cost is determined principally under
the average cost method.
Property, Plant and Equipment: Land, buildings and
equipment are recorded at cost. For financial
reporting purposes, depreciation is provided on the
straight-line method over the estimated useful lives
of the assets. Accelerated depreciation methods are
generally used for income tax purposes. Expenditures
for new facilities and improvements that
substantially extend the capacity or useful life of
an asset are capitalized. Ordinary repairs and
maintenance are expensed as incurred. When property
is retired or otherwise disposed, the cost and
related depreciation are removed from the accounts
and any related gains or losses are included in
income.
Income Taxes: Deferred income taxes result primarily
from temporary differences between financial and tax
reporting. If it is more likely than not that some
portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized.
The company has not provided for possible U.S.
taxes on the undistributed earnings of foreign
subsidiaries that are considered to be reinvested
indefinitely. Calculation of the unrecognized
deferred tax liability for temporary differences
related to these earnings is not practicable. Where
it is contemplated that earnings will be remitted,
credit for foreign taxes already paid generally will
offset applicable U.S. income taxes. In cases where
they will not offset U.S. income taxes, appropriate
provisions are included in the Consolidated
Statements of Income.
Net Income Per Common Share: Net income per common
share has been computed by dividing income applicable
to common shareholders by the weighted average number
of shares of common stock outstanding and common
stock equivalents during the respective years. Fully
diluted earnings per share are not significantly
different from primary earnings per share and,
accordingly, are not presented.
Intangibles: Goodwill and other intangibles arising
from acquisitions are being amortized on a straight-
line basis over periods not exceeding 40 years. The
company regularly reviews the individual components
of the balances by analyzing the future
recoverability of the assets and recognizes, on a
current basis, any diminution in value.
Cash Equivalents: Cash equivalents are defined as
highly liquid investments with original maturities of
90 days or less.
43
<PAGE>
Business Segment Information: Information concerning
business segment and geographic data is in
Management's Discussion and Analysis.
..............................................................................
2. ACQUISITIONS: On July 1, 1993, the company purchased the Moore's
and Domani product lines from The Clorox Company of
Oakland, California for approximately $90 million.
The acquisition resulted in goodwill of approximately
$53 million, which will be amortized over a period of
40 years.
The Moore's product range includes coated frozen
foods, specifically breaded onion rings, cheeses and
vegetables. Domani offers frozen pasta, including
manicotti, shells, tortellini, ravioli and lasagna.
The acquired product lines strengthen the company's
presence in the foodservice industry.
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 acquisition
resulted in goodwill of approximately $115 million
and other intangible assets of approximately $35
million. These items are being amortized over periods
not exceeding 40 years.
During 1993, the company also acquired Arimpex,
a foodservice distribution company in Italy; Weight
Watchers franchises in Chicago, Wisconsin, Minnesota
and Kentucky; and assets of a Venezuelan company that
produces gelatins and puddings.
The above acquisitions have been accounted for
as purchases and, accordingly, the purchase prices
have been allocated 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 Statements of Income from the dates of
the acquisitions forward. Pro forma results of the
company, assuming the above-noted acquisitions had
been made at the beginning of each period presented,
would not be materially different from the results
reported.
On August 23, 1991, the company completed the
acquisition of substantially all of the assets of
JLFoods, Inc. (JLFoods) of Eugene, Oregon and
certain other related assets from John Labatt Ltd. of
Canada for $537.5 million. The acquisition has been
accounted for under the purchase method and,
accordingly, the operating results of JLFoods have
been included in the consolidated operating results
since the date of acquisition.
The acquisition resulted in goodwill of $320.5
million and other intangible assets of $79.8 million.
These items are being amortized over periods not
exceeding 40 years.
The following summary, prepared on a pro forma
basis, combines the consolidated results of
operations as if JLFoods had been acquired as of the
beginning of 1992, after including the impact of
certain adjustments, such as amortization of
intangibles, increased interest expense on the
acquisition debt, and the related income tax effects.
<TABLE>
<CAPTION>
(Dollars in thousands, except per 1992
share amount) (Unaudited)
<S> <C> <C>
.....................................................
Sales $6,721,511
Net income $ 635,595
Net income per share $ 2.39
-----------------------------------------------------
</TABLE>
The pro forma results are not necessarily
indicative of what actually would have occurred if
the acquisition had been in effect for all of 1992.
During 1992, the company also acquired
Continental Delights, Inc., a manufacturer of frozen
sandwiches; Escalon Packers, Inc., a specialty
processor of branded and foodservice tomato products;
and two Weight Watchers franchises. Other smaller
acquisitions were made. The results of operations of
these companies are included in the Consolidated
Statements of Income from the acquisition dates
forward. Pro forma results of the company, assuming
the other 1992 acquisitions had been made at the
beginning of the year, would not be materially
different from the results reported.
44
<PAGE>
..............................................................................
3. DIVESTITURES: 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
Near East's Leominster, Massachusetts plant, where
Near East products are produced. 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 included
brand names, inventory and fixed assets. The pretax
gains on these divestitures totaled $127.0 million,
or $0.24 per share.
During 1994, the company also sold several other
small businesses, including the Chico-San rice cake
business, which did not have a material impact on the
results of operations. Pro forma results of the
company, assuming all of the 1994 divestitures had
been made at the beginning of each period presented,
would not be materially different from the results
reported.
In June 1991, the company sold The Hubinger
Company of Keokuk, Iowa to Roquette Freres, a major
worldwide producer of corn starches, for
approximately $325.3 million. Hubinger is a producer
of corn derivatives, including corn syrup, starch and
ethanol. The sale resulted in a pretax gain of $221.5
million. Other 1992 divestitures did not have a
material effect on operations.
..............................................................................
4. RESTRUCTURING CHARGES:In 1993, restructuring charges of $192.3 million on
a pretax basis ($0.45 per share) were reflected in
operating income. The major components of the
restructuring plan related to employee severance and
relocation costs ($99 million) and facilities
consolidation and closure costs ($73 million). At the
time these charges were recorded, it was anticipated
that the company would reduce headcount by 3,000. As
of April 27, 1994, headcount has been reduced by
approximately 2,000. Upon completion of all of the
projects in 1995, it is anticipated that the total
headcount reduction will be achieved.
In 1992, restructuring charges of $88.3 million
on a pretax basis ($0.20 per share) were reflected in
operating income to provide for the consolidation of
functions, staff reductions, organizational reform
and plant modernizations and closures.
..............................................................................
5. INCOME TAXES: During 1992, the company adopted FAS No. 109,
"Accounting for Income Taxes." The statement requires
the use of the asset and liability approach for
financial accounting and reporting for income taxes.
Financial statements for prior years have not been
restated and the cumulative effect of the accounting
change was not material.
The following table summarizes the provision for
U.S. federal and U.S. possessions, state and foreign
taxes on income.
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
........................................................................
Current:
U.S. federal and U.S. possessions $ 65,242 $119,746 $197,287
State 22,093 28,153 48,001
Foreign 125,304 113,202 178,057
........................................................................
212,639 261,101 423,345
........................................................................
Deferred:
U.S. federal and U.S. possessions 88,989 (25,129) (6,979)
State (2,635) (581) 2,508
Foreign 20,449 (49,553) (72,824)
........................................................................
106,803 (75,263) (77,295)
........................................................................
Total tax provision $319,442 $185,838 $346,050
------------------------------------------------------------------------
</TABLE>
The tax benefit resulting from adjustments to
the beginning-of-the-year valuation allowance, due to
a change in circumstances, to recognize the
realizability of deferred tax assets in future years
totaled $57.3 million in 1994, and $41.8 million in
1993. The 1993 tax provision also benefited from an
adjustment of deferred taxes for an enacted foreign
statutory rate change ($19.8 million) and an increase
in deferred tax assets for foreign tax credit
carryforwards ($40.0 million). Changes in U.S. tax
law that increased the U.S. federal statutory tax
rate from 34% to 35% and provided for the
deductibility of certain purchased intangibles and
the change in the Australian tax rate did not have a
material effect on the company's results of
operations. Tax expense resulting from allocating
certain tax benefits directly to additional capital
totaled: $3.9 million in 1994, $32.3 million in 1993
and $41.4 million in 1992.
45
<PAGE>
The components of income before income taxes and
cumulative effect of accounting change consist of the
following:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
........................................................................
Domestic $418,395 $359,773 $643,396
Foreign 503,991 356,008 340,949
........................................................................
$922,386 $715,781 $984,345
------------------------------------------------------------------------
</TABLE>
The differences between the U.S. federal
statutory tax rate and the company's consolidated
effective tax rate are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
.......................................................................
U.S. federal statutory tax rate 35.0% 34.0% 34.0%
Tax on income of foreign subsidiaries 2.9 3.1 -
State income taxes (net of federal
benefit) 1.4 2.5 3.4
Net adjustment to valuation allowance (6.1) (7.7) -
Enacted changes in tax laws (0.1) (2.8) -
Tax credits - (5.9) -
Other 1.5 2.8 (2.2)
.......................................................................
Effective tax rate 34.6% 26.0% 35.2%
-----------------------------------------------------------------------
</TABLE>
The deferred tax (assets) and deferred tax
liabilities recorded on the balance sheet as of April
27, 1994 and April 28, 1993 are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
......................................................................
Depreciation/amortization $295,248 $274,277
Benefit plans 58,498 52,582
Other 99,729 111,234
......................................................................
453,475 438,093
......................................................................
Asset revaluations (92,802) (156,334)
Provision for estimated expenses (30,259) (86,474)
Operating loss carryforwards (32,234) (33,625)
Benefit plans (100,363) (86,514)
Tax credit carryforwards (25,907) (39,958)
Other (122,647) (137,877)
......................................................................
(404,212) (540,782)
......................................................................
Valuation allowance 28,888 85,071
......................................................................
Net deferred tax liabilities/(assets) $ 78,151 $ (17,618)
----------------------------------------------------------------------
</TABLE>
Net operating loss carryforwards total $79.7
million in 1994. Of that amount, $39.0 million
expires between 1995 and 2001; the other $40.7
million does not expire. Foreign tax credit
carryforwards total $25.9 million and expire through
1998.
The company's consolidated United States income
tax returns have been audited by the Internal Revenue
Service for all years through 1989.
Undistributed earnings of foreign subsidiaries
considered to be reinvested permanently amounted to
$1.14 billion at April 27, 1994.
The valuation allowance for deferred tax assets
decreased by $56.2 million in 1994 and $54.9 million
in 1993.
In June 1991, Heinz's Italian affiliate, PLADA,
elected to revalue for tax purposes certain assets as
a result of legislation enacted by the Italian
Parliament. The revaluation required payment of $77
million over two years for approximately $180 million
in future tax benefits. One installment payment was
made in 1992 for $44.7 million. The remaining payment
was made in 1993 for $32.3 million.
46
<PAGE>
..............................................................................
6. DEBT:
<TABLE>
<CAPTION>
Short-Term (Dollars in thousands) 1994 1993
<S> <C> <C>
.........................................................................................................................
Commercial paper $257,202 $1,294,705
Bank and other borrowings 159,170 275,757
.........................................................................................................................
$416,372 $1,570,462
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Maturity
Range of (Fiscal
Long-Term (Dollars in thousands) Interest Year) 1994 1993
<S> <C> <C> <C> <C>
.........................................................................................................................
United States Dollars:
Commercial paper Variable 1997 $ 750,000 $ -
Senior unsecured notes 5.5-6.875% 1998-2003 749,238 749,090
Eurodollar bonds 7.5 1997 75,000 75,000
Revenue bonds 5.625-11.75 1995-2016 12,383 23,968
Promissory notes 6-12 1995-2005 30,279 36,745
Other 8.1 1995-2001 5,360 5,762
.........................................................................................................................
1,622,260 890,565
.........................................................................................................................
Foreign Currencies
(U.S. Dollar Equivalents):
Promissory notes:
Pounds sterling 8.85% 1995-2000 71,490 85,747
Italian lire 8.1-17.2 1995-2003 19,067 22,158
Spanish pesetas 3.98-9.05 1995-1999 7,253 9,060
Other 5.6-18.4 1995-2005 30,261 35,744
.........................................................................................................................
128,071 152,709
.........................................................................................................................
Total long-term debt 1,750,331 1,043,274
Less portion due within one year 23,329 33,893
.........................................................................................................................
$1,727,002 $1,009,381
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
The amount of long-term debt that matures in
each of the four years succeeding 1995 is: $49.1
million in 1996, $844.6 million in 1997, $269.3
million in 1998 and $23.9 million in 1999.
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 expires in
September 1994, at which time it is anticipated that
a new credit facility of at least one year in length
will be established. The remaining $750 million
expires in August 1996. As a result, $750 million of
the domestic commercial paper outstanding as of April
27, 1994 is classified as long-term debt. The
domestic commercial paper had a weighted average
interest rate during the year of 3.3% and at year-end
of 3.6%.
The company also maintains a commercial paper
program in Canada. Outstanding Canadian commercial
paper, which is also classified as short-term debt,
was $107.7 million as of April 27, 1994. The weighted
average interest rate for Canadian commercial paper
during 1994 was 4.8% and at year-end was 4.4%. In
addition, the company had $673.3 million of other
foreign and other domestic lines of credit available
at year-end, principally for overdraft protection.
During 1993, the company issued senior unsecured
notes in three separate issuances totaling
approximately $750 million. These notes were issued
at interest rates ranging from 5.5% to 6.875% and
with maturity dates extending from 1998 through 2003.
In 1993, the company's United Kingdom affiliate
privately placed with various banks (pound
sterling)125 million ($197.0 million) aggregate
principal of 8.85% notes due during 2013. In April
1993, an affiliated company paid (pound sterling)70.6
million ($111.3 million) for an interest in the notes.
The notes are shown in the balance sheet as a net
amount outstanding of (pound sterling)48.0 million
($71.5 million), which will be fully amortized in six
years. The effective interest rate was 8.3% at April
27, 1994 and April 28, 1993.
47
<PAGE>
..............................................................................
7. SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
Cumulative
Preferred
Stock Common Stock
............ ..........................................................
Third, $1.70
First Series Additional
$10 Par Issued In Treasury Capital
............ .......................... ........................... ...........
(In thousands) Amount Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
.............................................................................................................................
Balance May 1, 1991 $538 $71,850 287,401 $ 692,547 27,966 $149,526
Reacquired - - - 398,051 10,334 -
Conversion of preferred into common
stock (58) - - (1,198) (52) (1,139)
Stock options exercised, net of shares
tendered for payment - - - (89,867) (4,866) 15,243
Other, net - - - 312 (38) 1,482
.............................................................................................................................
Balance April 29, 1992 $480 $71,850 287,401 $ 999,845 33,344 $165,112
Reacquired - - - 148,511 3,885 -
Conversion of preferred into common
stock (42) - - (946) (38) (904)
Stock options exercised, net of shares
tendered for payment - - - (99,078) (4,093) 5,112
Other, net - - - (1,427) (62) 988
.............................................................................................................................
Balance April 28, 1993 $438 $71,850 287,401 $1,046,905 33,036 $170,308
Reacquired - - - 222,582 6,475 -
Conversion of preferred into common
stock (40) - - (985) (36) (945)
Stock options exercised - - - (27,605) (1,054) 267
Other, net - - - (1,720) (61) 549
.............................................................................................................................
Balance April 27, 1994 $398 $71,850 287,401 $1,239,177 38,360 $170,179
- -----------------------------------------------------------------------------------------------------------------------------
Authorized Shares--April 27, 1994 40 600,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Capital Stock: The preferred stock outstanding
is convertible at a rate of one share of preferred
stock into 9.0 shares of common stock. The company
can redeem the stock at $28.50 per share.
On April 27, 1994, there were authorized, but
unissued, 2,200,000 shares of third cumulative
preferred stock for which the series had not been
designated.
Employee Stock Ownership Plan (ESOP): The company
established an ESOP in 1990 to replace in full or in
part the company's cash-matching contributions to the
H.J. Heinz Company Employees Retirement and Savings
Plan, a 401(k) plan for salaried employees. Matching
contributions to the 401(k) plan are based on a
percentage of the participant's contributions,
subject to certain limitations.
To finance the plan, the ESOP borrowed $50.0
million directly from the company in 1990. The loan
is in the form of a 15-year variable-rate interest-
bearing note (an average of 4.2%, 4.1% and 6.1% for
1994, 1993 and 1992, respectively) and is included in
the company's Consolidated Balance Sheets as unearned
compensation. The proceeds of the note were used to
purchase 1,577,908 shares of treasury stock from the
company at approximately $31.70 per share.
The stock held by the ESOP is released for
allocation to the participants' accounts over the
term of the loan as company contributions to the ESOP
are made. The company contributions are reported as
compensation and interest expense. Compensation
expense related to the ESOP for 1994, 1993 and 1992
was $3.3 million, $2.7 million and $2.7 million,
respectively. Interest expense was $1.7 million, $1.7
million and $2.1 million for 1994, 1993 and 1992,
respectively. The company's contributions to the ESOP
and the dividends on the company stock held by the
ESOP are used to repay loan interest and principal.
The dividends on the company stock held by the
ESOP were $1.9 million, $1.7 million and $1.4 million
in 1994, 1993 and 1992, respectively.
Cumulative Translation Adjustments: Changes in the
cumulative translation component of shareholders'
equity result principally from translation of
financial statements of foreign subsidiaries into
U.S. dollars. The reduction in shareholders' equity
related to the translation component increased $70.7
million in 1994, increased $107.6 million in 1993,
and decreased $13.9 million in 1992.
48
<PAGE>
...............................................................................
8. SUPPLEMENTAL CASH
FLOWS INFORMATION:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992
........................................................................
<S> <C> <C> <C>
Cash Paid During The Year For:
Interest $146,951 $134,179 $139,784
Income taxes 153,000 347,701 339,425
........................................................................
Details of Acquisitions:
Fair value of assets acquired $102,382 $478,240 $689,246
Liabilities assumed* 6,697 106,893 114,836
........................................................................
Cash paid 95,685 371,347 574,410
Less cash acquired - 1,158 274
........................................................................
Net cash paid for acquisitions $ 95,685 $370,189 $574,136
------------------------------------------------------------------------
*Includes notes to seller.
</TABLE>
.............................................................................
9. EMPLOYEES' STOCK Under the company's stock option plans, officers and
OPTION PLANS AND other key employees may be granted options, each of
MANAGEMENT INCENTIVE which allows for the purchase of shares of the
PLANS: company's common stock. The option price on all
outstanding options is equal to the fair market value
of the stock at the date of grant.
The Board of Directors adopted, effective April
13, 1994, subject to the approval of the shareholders
at the annual meeting in September 1994, a new stock
option plan providing for the grant of up to 12.0
million shares of common stock at any time over the
next 10 years. As of April 27, 1994, options for
approximately 6.3 million shares had been
contingently granted under this plan. In general, the
terms of the 1994 plan are similar to the company's
other stock option plans.
The shares authorized but not granted under the
company's stock option plans were 5,717,590 at April
27, 1994 and 2,711,590 at April 28, 1993.
Data regarding the company's stock option plans
follows:
<TABLE>
<CAPTION>
Range of
Shares Option Price
<S> <C> <C>
.......................................................................
Shares under option May 1, 1991 26,592,656 $ 4 1/4-39
Options granted 1,149,000 36-40 1/2
Options exercised (5,839,939) 4 1/4-34 1/2
Options surrendered (101,500) 20-37 3/4
.......................................................................
Shares under option April 29, 1992 21,800,217 $ 6 3/8-40 1/2
Options granted 2,482,500 35 7/8-43 1/4
Options exercised (4,109,275) 6 3/8-37 3/4
Options surrendered (49,000) 22-38 7/8
.......................................................................
Shares under option April 28, 1993 20,124,442 $ 8 7/8-43 1/4
Options granted 9,467,500 30 7/8-39 3/4
Options exercised (1,054,230) 9 1/2-37 3/4
Options surrendered (473,500) 34 1/2-43 1/4
.......................................................................
Shares under option April 27, 1994 28,064,212 $ 8 7/8-43 1/4
-----------------------------------------------------------------------
Options exercisable at:
April 28, 1993 7,198,040
April 27, 1994 8,307,710
-----------------------------------------------------------------------
</TABLE>
Common stock reserved for options totaled
33,781,802 shares as of April 27, 1994 and 22,836,032
shares as of April 28, 1993.
The company's management incentive plans cover
certain officers and other key employees.
Participants may elect to be paid on a current or
deferred basis. The aggregate amount of all awards
may not exceed certain limits in any year.
Compensation under the management incentive plans was
approximately $12 million in 1994, $17 million in
1993 and $18 million in 1992.
49
<PAGE>
..............................................................................
10. RETIREMENT PLANS: The company maintains retirement plans for the
majority of its employees. Benefits are based on
years of service and compensation or stated amounts
for each year of service. Plan assets are primarily
invested in equities and fixed income securities. The
company's funding policy for the domestic plans is to
contribute annually not less than the ERISA minimum
funding standards nor more than the maximum amount
which can be deducted for federal income tax
purposes. Generally, foreign plans are funded in
amounts sufficient to comply with local regulations
and ensure adequate funds to pay benefits to retirees
as they become due.
Net pension costs consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
........................................................................
Benefits earned during the year $ 15,215 $ 20,384 $ 22,801
Interest cost on projected benefit
obligation 66,706 65,612 66,668
Actual return on plan assets (98,673) (98,358) (105,940)
Net amortization and deferral 25,028 21,292 23,235
........................................................................
Net pension costs $ 8,276 $ 8,930 $ 6,764
------------------------------------------------------------------------
</TABLE>
The following table sets forth the combined
funded status of the company's principal plans at
April 27, 1994 and April 28, 1993.
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
......................................................................
Actuarial present value of:
Accumulated benefit obligation, primarily
vested $775,986 $748,089
Additional obligation for projected
compensation increases 43,074 69,992
......................................................................
Projected benefit obligation 819,060 818,081
Plan assets, at fair value 933,257 908,745
......................................................................
Plan assets in excess of projected benefit
obligation 114,197 90,664
Unamortized prior service cost 60,238 63,427
Unamortized actuarial losses, net 22,910 56,819
Unamortized net assets at date of adoption (36,885) (44,688)
......................................................................
Prepaid pension costs $160,460 $166,222
----------------------------------------------------------------------
</TABLE>
The weighted average rates used for the years
ended April 27, 1994, April 28, 1993 and April 29,
1992 in determining the net pension costs and
projected benefit obligations were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
.......................................................................
Expected rate of return on plan assets 10.0% 10.1% 10.1%
Discount rate 8.3% 8.6% 8.8%
Compensation increase rate 4.8% 6.2% 6.7%
-----------------------------------------------------------------------
</TABLE>
Assumptions for foreign plans are developed on a
basis consistent with those for U.S. plans, adjusted
for prevailing economic conditions.
In April 1992, the Board of Directors amended
the domestic salaried defined benefit pension plan to
provide that no benefits would accrue under this plan
on or after January 1, 1993. At the same time, the
Board expanded, effective January 1, 1993, the
defined contribution plan covering substantially all
domestic salaried employees, described below. The
Board's actions on the defined benefit pension plan
resulted in an after-tax curtailment gain of $23.6
million, which was recorded in 1992. No plan assets
were withdrawn from the pension plan as a result of
this curtailment.
The company maintains defined contribution plans
for the majority of its domestic non-union and
salaried employees. Benefits are provided through
company contribution accounts which consist solely of
company contributions that are a percentage of the
participant's pay based on age, with the contribution
rate increasing with age. In addition, certain non-
union employees receive supplemental contributions,
which are paid at the discretion of the company, and
matching contributions based on a percentage of the
participant's contributions to the 401(k) portion of
the plan. (The company's matching contributions for
salaried employees are provided under the ESOP.) The
expense recognized as a result of company
contributions to the defined contribution plans,
excluding the ESOP, totaled $16.5 million in 1994. In
1993, $4.5 million was expensed for the company
defined contribution plans.
50
<PAGE>
..............................................................................
11. POSTRETIREMENT In addition to providing pension benefits, the
BENEFITS OTHER THAN company and certain of its subsidiaries provide
PENSIONS AND OTHER health care and life insurance benefits for retired
POSTEMPLOYMENT BENEFITS: employees and their eligible dependents. Certain of
the company's U.S. and Canadian employees may become
eligible for such benefits. In general,
postretirement medical coverage is provided for
eligible non-union and salaried employees with at
least 10 years of service rendered after the age of
45 and eligible union employees who retire with an
immediate pension benefit. The company currently does
not fund these benefit arrangements and may modify
plan provisions or terminate plans at its discretion.
Effective January 1, 1994, certain changes were
made to postretirement medical benefits offered to
U.S. salaried and non-union employees who retire
after May 1, 1994. Those retirees will be required to
share in the cost of providing these benefits at
percentages increasing from 20% in 1994 to 100% in
1998. The resulting curtailment gain was immaterial.
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. In addition, the adoption of FAS No. 106
increased the company's pretax postretirement benefit
expense by $16.3 million ($0.04 per share) in 1993.
These charges had no effect on consolidated cash
flows.
Net postretirement costs consisted of the
following:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
......................................................................
Postretirement benefits earned during the
year $ 6,512 $ 8,462
Interest cost on accumulated postretirement
benefit obligation 15,740 16,457
Net amortization and deferral (2,986) (885)
......................................................................
Net postretirement benefit costs $19,266 $24,034
----------------------------------------------------------------------
</TABLE>
The following table sets forth the combined status
of the company's postretirement benefit plans at
April 27, 1994 and April 28, 1993.
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
<S> <C> <C>
......................................................................
Accumulated postretirement benefit obligation:
Retirees and spouses $110,892 $108,907
Employees currently eligible to retire 20,939 40,289
Employees not yet eligible to retire 49,922 65,645
......................................................................
Total accumulated postretirement benefit
obligation 181,753 214,841
Unamortized prior service cost 34,633 15,434
Unrecognized net gain 9,658 -
......................................................................
Accrued postretirement benefit obligation 226,044 230,275
Current portion, included in other accrued
liabilities 9,000 8,591
......................................................................
Non-pension postretirement benefits $217,044 $221,684
----------------------------------------------------------------------
</TABLE>
The weighted average discount rate used in the
calculation of the accumulated postretirement benefit
obligation and the net postretirement benefit cost
was 8.0% in 1994 and 8.1% in 1993. The assumed annual
composite rate of increase in the per capita cost of
company-provided health care benefits begins at 11.5%
for 1995, gradually decreases to 5.8% by 2010, and
remains at that level thereafter. A 1% increase in
these health care cost trend rates would cause the
accumulated postretirement obligation to increase by
$20.0 million, and the aggregate of the service and
interest components of 1994 net postretirement
benefit costs to increase by $3.2 million.
Prior to 1993, the cost of retiree health care
and life insurance benefits was expensed as incurred.
These costs totaled $6.8 million in 1992.
In November 1992, the FASB issued FAS No. 112,
"Employers' Accounting for Postemployment Benefits."
This statement requires recognition of benefits
provided by an employer to former or inactive
employees after employment but before retirement. The
statement must be implemented in the first quarter of
Fiscal 1995. The impact of the adoption of this
standard is not expected to have a material impact on
the company's financial position or results of
operations.
51
<PAGE>
..................................................................
12. QUARTERLY RESULTS: (Unaudited)
<TABLE>
<CAPTION>
1994
................................................................................
(Dollars in thousands, except per share data) First Second Third Fourth Total
<S> <C> <C> <C> <C> <C>
...............................................................................................................................
Sales $1,583,312 $1,807,729 $1,710,209 $1,945,488 $7,046,738
Gross profit 619,974 649,007 671,146 724,866 2,664,993
Net income 152,179 193,125 128,567 129,073 602,944
Per Share Data:
Net income $0.59 $0.75 $0.50 $0.51 $2.35
Dividends 0.30 0.33 0.33 0.33 1.29
1993
................................................................................
(Dollars in thousands, except per share data) First Second Third Fourth Total
...............................................................................................................................
Sales $1,564,441 $1,738,559 $1,766,712 $2,033,662 $7,103,374
Gross profit 601,502 652,295 701,181 617,833 2,572,811
Income before cumulative effect of
accounting change 143,790 154,166 162,312 69,675 529,943
Cumulative effect of FAS No. 106 adoption (133,630) - - - (133,630)
Net income 10,160 154,166 162,312 69,675 396,313
Per Share Data:
Income before cumulative effect of
accounting change $0.55 $0.60 $0.62 $0.27 $2.04
Cumulative effect of FAS No. 106 adoption (0.51) - - - (0.51)
Net income 0.04 0.60 0.62 0.27 1.53
Dividends 0.27 0.30 0.30 0.30 1.17
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Second-quarter 1994 results include gains on the sale
of the confectionery and specialty rice businesses,
that totaled $127.0 million on a pretax basis ($0.24
per share). (See Note 3 to the Consolidated Financial
Statements.)
Fourth-quarter 1994 earnings benefited from a
lower effective tax rate resulting from tax benefits
from overseas operations of $57.3 million ($0.22 per
share). (See Note 5 to the Consolidated Financial
Statements.)
First-quarter 1993 results have been restated to
include the cumulative effect of adopting FAS No.
106. (See Note 11 to the Consolidated Financial
Statements.) The fourth quarter also includes a $16.3
million pretax charge ($0.04 per share), which
represents the 1993 effect of adopting FAS No. 106.
Also in the fourth quarter of 1993, pretax
restructuring charges of $181.9 million ($0.43 per
share) were recorded. (See Note 4 to the Consolidated
Financial Statements.) Fourth-quarter earnings
benefited from a lower effective tax rate resulting
from tax benefits overseas and the recognition of
foreign tax credits associated with the company's
overseas dividend strategy. (See Note 5 to the
Consolidated Financial Statements.)
52
<PAGE>
..................................................................
13. COMMITMENTS AND Legal Matters: On December 31, 1992, a food wholesale
CONTINGENCIES: distributor filed suit against the company and its
principal competitors in the U.S. baby food industry.
Subsequent to that date, several similar lawsuits
were filed in the same court and have been
consolidated into a class action suit. The
complaints, each of which seeks an injunction and
unspecified treble money damages, allege a conspiracy
to fix, maintain and stabilize the prices of baby
food. Related suits have also been filed in Alabama
and California state courts, seeking to represent a
class of indirect purchasers of baby food in the
respective states. The company believes all of the
suits are without merit and will defend itself
vigorously against them. Certain other claims have
been filed against the company or its subsidiaries
and have not been finally adjudicated. The above-
mentioned claims, when finally concluded and
determined, in the opinion of management, based upon
the information that it presently possesses, will not
have a material adverse effect on the company's
consolidated financial position or results of
operations.
Financial Instruments: The company's financial
instruments include cash and cash equivalents, short-
and long-term investments, short- and long-term debt,
interest rate swap agreements, currency exchange
agreements and guarantees. The carrying values of all
instruments approximated their fair values at April
27, 1994 and April 28, 1993. The fair values of the
instruments were based upon quoted market prices of
the same or similar instruments or on a discounted
basis using the rates available to the company for
instruments of the same remaining maturities.
The counterparties to the currency exchange and
swap agreements consist of large major international
financial institutions. The company continually
monitors its positions and the credit ratings of its
counterparties and, by policy, limits the amount of
credit exposure to any one party. While the company
may be exposed to potential losses due to credit risk
in the event of non-performance by these
counterparties, it does not anticipate losses.
In May 1993, the FASB issued FAS No. 115,
"Accounting for Certain Investments in Debt and
Equity Securities." This statement expands the use of
fair value accounting for debt and equity securities,
but retains the use of the amortized cost method for
investments in debt securities that the company
intends to hold to maturity. This statement must be
implemented in the first quarter of Fiscal 1995. The
impact of the adoption of this standard is not
expected to have a material impact on the company's
financial position or results of operations.
Lease Commitments: Operating lease rentals for
warehouse, production and office facilities and
equipment amounted to approximately $94.0 million in
1994, $89.7 million in 1993 and $78.4 million in
1992. Future lease payments for non-cancellable
operating leases as of April 27, 1994 totaled $202.2
million (1995-$49.7 million, 1996-$37.6 million,
1997-$28.7 million, 1998-$21.2 million, 1999-$13.0
million and thereafter-$52.0 million).
..................................................................
14. SUBSEQUENT EVENTS: On May 16, 1994, the company acquired the Borden
Foodservice Group, a unit of Borden, Inc. Borden's
Foodservice Group includes a single-serve line of
condiments and bulk-sized oil-based products, such as
salad dressings and mayonnaise.
On May 26, 1994, the company announced that it
had entered into negotiations with Glaxo India
Limited, based in Bombay, to acquire Glaxo's Family
Products Division, which produces a wide range of
nutritional drinks, baby food and other consumer
products. This transaction has been approved by both
companies' boards of directors, but is subject to
completion of negotiations, authorization from the
Indian government and approval by Glaxo India
Limited's shareholders.
On May 27, 1994, the company announced that it
had agreed to acquire the Farley's infant food and
milk business as well as its adult nutrition business
from The Boots Company PLC of Nottingham, England for
approximately $140 million. Farley's product
offerings include a wide range of baby feeding
products, from formulas to post-weaning biscuits,
cereals and dry meals. It also sells adult meal
supplements under the brand name Complan. The
transaction is subject to the approval of the
appropriate governmental authorities.
Pro forma results of the company, assuming
probable and completed acquisitions had been made at
the beginning of each period presented, would not be
materially different from the results reported.
53
<PAGE>
RESPONSIBILITY STATEMENTS
....................................................................
Responsibility for Financial Statements
Management of H.J. Heinz Company is responsible for the
preparation of the financial statements and other information
included in this annual report. The financial statements have been
prepared in conformity with generally accepted accounting
principles, incorporating management's best estimates and judgments,
where applicable.
Management believes that the company's internal control systems
provide reasonable assurance that assets are safeguarded,
transactions are recorded and reported appropriately, and policies
are followed. The concept of reasonable assurance recognizes that
the cost of a control procedure should not exceed the expected
benefits. Management believes that its systems provide this
appropriate balance. An important element of the company's control
systems is the ongoing program to promote control consciousness
throughout the organization. Management's commitment to this program
is emphasized through written policies and procedures (including a
code of conduct), an effective internal audit function and a
qualified financial staff.
The company engages independent public accountants who are
responsible for performing an independent audit of the financial
statements. Their report, which appears herein, is based on
obtaining an understanding of the company's accounting systems and
procedures and testing them as they deem necessary.
The company's Audit Committee is composed entirely of outside
directors. The Audit Committee meets regularly, and when appropriate
separately, with the independent public accountants, the internal
auditors and financial management to review the work of each and to
satisfy itself that each is discharging its responsibilities
properly. Both the independent public accountants and the internal
auditors have unrestricted access to the Audit Committee.
....................................................................
Independent Accountants' Report
The Shareholders
H.J. Heinz Company:
We have audited the accompanying consolidated balance sheets of H.J.
Heinz Company and subsidiaries as of April 27, 1994 and April 28,
1993, and the related consolidated statements of income, retained
earnings and cash flows for each of the three years in the period
ended April 27, 1994. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of H.J. Heinz Company and subsidiaries as of April 27, 1994
and April 28, 1993, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended
April 27, 1994 in conformity with generally accepted accounting
principles.
As discussed in Note 11 to the Consolidated Financial Statements,
the company adopted the provisions of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" in Fiscal 1993.
/s/ Cooper's & Lybrand
-----------------------
600 Grant Street
Pittsburgh, Pennsylvania
June 14, 1994
54
<PAGE>
Exhibit 21
H. J. Heinz Company and Subsidiaries
SUBSIDIARIES OF THE REGISTRANT
Following are the subsidiaries of H. J. Heinz Company (the "Company"),
other than those which if considered in the aggregate as a single subsidiary
would not constitute a significant subsidiary, and the state or country in which
each subsidiary was incorporated or organized. The accounts of each of the
listed subsidiaries are a part of the Company's consolidated financial
statements.
<TABLE>
<CAPTION>
Subsidiary State or Country
---------- ----------------
<S> <C>
Alimentos Heinz, C. A. Venezuela
Crestar Food Products, Inc. State of Delaware
Ets. Paul Paulet France
Food Service Products Company State of Delaware
Heinz Iberica S.A. Spain
Heinz Italia, S.p.A. Italy
Heinz Japan Ltd. Japan
Heinz-UFE Ltd. People's Republic of China
Heinz Win Chance Ltd. Thailand
H. J. Heinz (Botswana Proprietary) Ltd. Botswana
H. J. Heinz B. V. Netherlands
H. J. Heinz Company Australia Limited Australia
H. J. Heinz Company of Canada Ltd. Canada
H. J. Heinz Company Limited United Kingdom
H. J. Heinz Credit Company State of Delaware
Olivine Industries (Private) Limited Zimbabwe
Ore-Ida Foods, Inc. State of Delaware
Portion Pac, Inc. State of Ohio
Pro Bakers Ltd. State of New York
Pro Pastries Inc. Canada
Seoul-Heinz Ltd. Republic of Korea
Star-Kist Foods, Inc. State of California
Wattie's Limited New Zealand
Weight Watchers Food Company State of Delaware
Weight Watchers International, Inc. Commonwealth of Virginia
</TABLE>
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Anthony J. F. O'Reilly, David R.
Williams and Lawrence J. McCabe, and each of them, such person's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for such person and in such person's name, place and stead,
in any and all capacities, to sign H. J. Heinz Company's Annual Report on
Form 10-K for the fiscal year ended April 27, 1994, and to sign any and
all amendments to such Annual Report, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done, as fully to all intents
and purposes as such person might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them,
or such persons' or person's substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
This Power of Attorney has been signed below as of the 13th day of July,
1994 by the following persons in the capacities indicated.
Signature Title
--------- -----
/s/ Anthony J. F. O'Reilly Chairman of the Board, President and
.............................. Chief Executive Officer and Director
Anthony J. F. O'Reilly (Principal Executive Officer)
/s/ David R. Williams Senior Vice President--Finance and
.............................. Chief Financial Officer and Director
David R. Williams (Principal Financial Officer)
/s/ Lawrence J. McCabe Senior Vice President--
.............................. General Counsel and Director
Lawrence J. McCabe
/s/ William P. Snyder III Director
..............................
William P. Snyder III
/s/ Joseph J. Bogdanovich Director
..............................
Joseph J. Bogdanovich
/s/ Herman J. Schmidt Director
..............................
Herman J. Schmidt
/s/ Albert Lippert Director
..............................
Albert Lippert
/s/ Eleanor B. Sheldon Director
..............................
Eleanor B. Sheldon
<PAGE>
/s/ Richard M. Cyert Director
..............................
Richard M. Cyert
/s/ Samuel C. Johnson Director
..............................
Samuel C. Johnson
/s/ David W. Sculley Director
..............................
David W. Sculley
/s/ Donald R. Keough Director
..............................
Donald R. Keough
/s/ S. Donald Wiley Director
..............................
S. Donald Wiley
/s/ Luigi Ribolla Director
..............................
Luigi Ribolla
/s/ Nicholas F. Brady Director
..............................
Nicholas F. Brady
/s/ William R. Johnson Director
..............................
William R. Johnson
/s/ William C. Springer Director
..............................
William C. Springer
/s/ Edith E. Holiday Director
..............................
Edith E. Holiday
