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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 10, 1998
H.J. HEINZ COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 1-3385 25-0542520
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
600 Grant Street, Pittsburgh, 15219
Pennsylvania (Zip Code)
(Address of principal executive offices)
412-456-5700
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) EXHIBITS:
Exhibit Number
(Referenced to
Item 601 of
Regulation S-K) Description of Exhibit
- --------------- ----------------------
12 Computation of Ratios of Earnings to Fixed
Charges
99 H.J. Heinz Company press release dated
June 16, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
H. J. HEINZ COMPANY
By /s/ Paul F. Renne
------------------------------
Paul F. Renne
Executive Vice President and
Chief Financial Officer
Dated: July 10, 1998
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EXHIBIT 12
<TABLE>
<CAPTION>
H.J. HEINZ COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Fiscal Years Ended
---------------------------------------------------------------------------------
April 29, April 30, May 1, May 3, April 27, April 28,
1998 1997 1996 1995 1994 1993+
---------- --------- ---------- ---------- ---------- ---------
(In thousands, except ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense* .................. $ 260,401 $277,818 $ 279,368 $ 212,123 $ 150,598 $147,113
Capitalized Interest ............... 1,542 2,688 1,007 414 770 9,369
Interest Component of
Rental Expense ................... 30,828 27,382 26,728 24,200 26,638 26,433
---------- -------- ---------- ---------- ---------- --------
Total Fixed Charges .............. $ 292,771 $307,888 $ 307,103 $ 236,737 $ 178,006 $182,915
---------- -------- ---------- ---------- ---------- --------
Earnings:
Income Before Income
Taxes and Cumulative
Effect of Accounting
Change ........................... $1,254,981 $479,064 $1,023,661 $ 938,007 $ 922,386 $715,781
Add: Interest Expense* ............. 260,401 277,818 279,368 212,123 150,598 147,113
Add: Interest Component
of Rental Expense ................ 30,828 27,382 26,728 24,200 26,638 26,433
Add: Amortization of
Capitalized Interest ............. 3,525 3,454 3,399 3,465 3,327 2,944
---------- -------- ---------- ---------- ---------- --------
Earnings as Adjusted ............... $1,549,735 $787,718 $1,333,156 $1,177,795 $1,102,949 $892,271
---------- -------- ---------- ---------- ---------- --------
Ratio of Earnings to Fixed
Charges .......................... 5.29 2.56 4.34 4.98 6.20 4.88
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<FN>
__________
* Interest expense includes amortization of debt expense and any discount or premium relating to indebtedness.
+ During the fiscal year ended April 28, 1993, the Company adopted the provisions of Statement of Financial Accounting
Standards No. 106, "Employees' Accounting for Postretirement Benefits Other Than Pensions."
</FN>
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EXHIBIT 99
NEWS RELEASE
[HEINZ LETTERHEAD]
FOR RELEASE UPON RECEIPT
HEINZ REPORTS EPS OF $2.15 FOR FY98, IN LINE WITH FIRST CALL CONSENSUS;
AND 7% VOLUME INCREASE IN FOURTH QUARTER
PITTSBURGH, JUNE 16, 1998--H.J. Heinz Company (NYSE:HNZ) today reported
that fourth quarter Fiscal 1998 diluted earnings per share increased to $0.53
from $0.32 in the fourth quarter last year, excluding non-recurring items in
both periods related to Project Millennia, the company's reorganization and
growth plan announced last fiscal year. In addition to the restructuring
charges and related costs, last year's fourth quarter was negatively impacted
by the company's decision to eliminate inefficient end-of-quarter trade
promotion practices ($0.17 per share). Including non-recurring items in both
periods, diluted earnings per share increased to $0.49 from a loss per share of
$0.62 a year ago.
Sales for the quarter ended April 29, 1998 rose 8.7%, excluding the impact
of divestitures. Sales volume increased by a robust 7%. In addition,
acquisitions increased sales by 3.9% and favorable pricing increased sales by
1.1%. The unfavorable effect of foreign exchange translation rates reduced
sales by 3.3% or $81.8 million. Divestitures reduced sales by 7.5% for the
quarter. Including the impact of divestitures, sales for the quarter increased
$29.2 million or 1.2% to $2.48 billion.
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2
FISCAL YEAR
Diluted earnings per share increased to $2.15 from $1.76, in line with
First Call consensus, excluding items related to Project Millennia in both
years. The fiscal year included non-recurring costs of $84.1 million pretax
($0.14 per share) related to the implementation of Project Millennia offset by
the gain on the sale of the Ore-Ida foodservice foods business, $96.6 million
pretax ($0.14 per share). Restructuring charges and related costs recorded in
Fiscal 1997 for Project Millennia, net of gains on the sale of non-strategic
assets totaled $561.9 million pretax ($0.95 per share). In addition to
restructuring charges and related costs, last year's fourth quarter was
negatively impacted by the company's decision to eliminate inefficient
end-of-quarter trade promotion practices. Including the restructuring related
items, Fiscal 1998 diluted earnings per share increased to $2.15 compared to
$0.81 last year.
Sales for the year ended April 29, 1998 rose 5.0%, excluding the impact of
divestitures. Fiscal 1998 sales volume increased 3.1%. In addition,
acquisitions increased sales by 3.5% and favorable pricing increased sales by
1.5%. The unfavorable effect of foreign exchange translation rates reduced
sales by 3.1% or $285.9 million. Divestitures reduced sales by 6.6% for the
year. Including the impact of divestitures, sales for the year decreased by
$147.7 million or 1.6% to $9.21 billion.
Operating income increased 14.4% to $1.51 billion from $1.32 billion last
year, excluding the non-recurring items related to Project Millennia in both
years. The current year was negatively impacted by foreign exchange translation
rates, which reduced operating income by $45.5 million or 3.5%. In addition to
the restructuring charges and related costs, last year's fourth quarter was
negatively impacted by the company's decision to eliminate inefficient
end-of-quarter trade promotion practices. Including non-
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recurring items in both periods, operating income for Fiscal 1998 increased to
$1.52 billion from $756.3 million reported last year.
Heinz President and Chief Executive Officer William R. Johnson said:
"Fiscal 1998 was an excellent year with significant improvements in key
performance indicators:
* Gross margins increased 240 basis points to 38.4%
* Operating income margins increased to 16.4% compared to 14.1%
* Pretax return on average invested capital increased to 27.0% from 21.4%
We enter Fiscal 1999 with good momentum and are targeting 4 to 5% volume growth
and 10 to 12% earnings growth for the year."
ACQUISITIONS
Heinz also announced today that it has signed a definitive agreement with
Nabisco Inc. to purchase its College Inn brand of canned broths. Terms of the
agreement were not disclosed. Closing of the sale is subject to
Hart-Scott-Rodino anti-trust clearance.
College Inn broths, which come in chicken, beef, and garden vegetable
varieties, have tremendous brand equity throughout the East and Midwest. Annual
sales are approximately $50 million. Heinz expects to achieve significant
synergies by bringing volume into its Pittsburgh factory. This acquisition does
not involve the purchase of any plants or equipment.
"With the acquisition of College Inn, we continue to upgrade our portfolio
with an emphasis on higher-margin, good-fit, synergistic, branded businesses,"
Mr. Johnson said.
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4
Heinz also acquired the Vidalia O's frozen onion rings brand from Vidalia
Frozen Foods, Inc. to complement the company's Ore-Ida frozen vegetable lines.
The above contains certain forward-looking statements which are based on
management's current views and assumptions regarding future events and
financial performance. Reference should be made to the section "Forward-Looking
Statements" in Item 1 of H.J. Heinz Company's Annual Report on Form 10-K for
the fiscal year ended April 30, 1997 for a description of the important factors
that could cause actual results to differ materially from those discussed above.
ABOUT HEINZ: With sales approaching $10 billion, H.J. Heinz Company is
one of the world's leading food processors and purveyors of nutritional
services. Its 50 affiliates operate in some 200 countries, offering more than
4,000 varieties. Among the company's famous brands are Heinz, StarKist,
Ore-Ida, 9-Lives, Weight Watchers, Wattie's, Plasmon, Farley's, The Budget
Gourmet, Earth's Best, Ken-L Ration, Kibbles 'n Bits, Orlando, Olivine, and
Guloso.
##
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<CAPTION>
CONTACT:
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D. Edward I. Smyth Debora S. Foster
Sr. VP - Corp. & Govt. Affairs Gen. Mgr. - Corp. Communications
(412) 456-5780 (412) 456-5778
John E. Kennedy or L. Michael Kelly, Jr.
Ketchum Public Relations Ketchum Public Relations
(412) 456-3586 (412) 456-3840
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H.J. HEINZ COMPANY
Consolidated Statements of Income
(000's omitted - except for per share amounts)
<TABLE>
<CAPTION>
Fourth Quarter Ended Twelve Months Ended
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April 29, April 30, April 29, April 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Sales $2,475,898 $2,446,651 $9,209,284 $9,357,007
Cost of products sold 1,514,378 1,966,167 5,711,213 6,385,091
---------- ---------- ---------- ----------
Gross profit 961,520 480,484 3,498,071 2,971,916
Selling, general and
administrative expenses 608,224 770,538 1,977,741 2,215,645
---------- ---------- ---------- ----------
Operating income (loss) 353,296 (290,054) 1,520,330 756,271
Interest income 9,651 10,658 32,655 39,359
Interest expense 67,660 70,265 258,616 274,746
Other expenses, net 7,559 14,703 39,388 41,820
---------- ---------- ---------- ----------
Income (loss) before income taxes 287,728 (364,364) 1,254,981 479,064
Provision for income taxes 106,485 (134,798) 453,415 177,193
---------- ---------- ---------- ----------
Net income (loss) $ 181,243 $ (229,566) $ 801,566 $ 301,871
========== ========== ========== ==========
Dividends per share $ 0.315 $ 0.290 $ 1.235 $ 1.135
========== ========== ========== ==========
Net income (loss) per share - diluted $ 0.49 $ (0.62) $ 2.15 $ 0.81
========== ========== ========== ==========
Average shares for net income
(loss) per share - diluted 372,953 367,471 372,953 374,044
========== ========== ========== ==========
Net income (loss) per share - basic $ 0.50 $ (0.62) $ 2.19 $ 0.82
========== ========== ========== ==========
Average shares for net income
(loss) per share - basic 365,982 367,471 365,982 367,471
========== ========== ========== ==========
</TABLE>
Note: Both Fiscal 1998 and Fiscal 1997 include restructuring and related costs
and gains recognized on the sales of certain non-strategic assets.
The above financial information is unaudited. However, in the opinion of the
Company's management, such financial information includes all adjustments
necessary for a fair statement of the results of such periods.
