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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 29, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________
FOR THE SIX MONTHS ENDED OCTOBER 29, 2003 COMMISSION FILE NUMBER 333-85064
H. J. HEINZ FINANCE COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 82-0382406
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 GRANT STREET, PITTSBURGH, PENNSYLVANIA 15219
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 456-5700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) Yes __ No X
All of the outstanding shares of the registrant's common stock are owned by
H. J. Heinz Company.
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
H. J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Second Quarter Ended
------------------------------------
October 29, 2003 October 30, 2002
FY 2004 FY 2003
---------------- -----------------
(Unaudited)
(in thousands)
Sales.................................................... $825,720 $821,813
Cost of products sold.................................... 522,540 517,462
-------- --------
Gross profit............................................. 303,180 304,351
Selling, general and administrative expenses............. 134,601 143,032
Royalty expense to related parties....................... 41,554 40,109
-------- --------
Operating income......................................... 127,025 121,210
Interest income.......................................... 2,371 7,369
Interest expense......................................... 35,706 35,538
Dividends from related parties........................... 30,798 30,798
Currency loss............................................ 9,864 1,512
Other income/(expense), net.............................. 519 (6,261)
-------- --------
Income from continuing operations before income taxes and
minority interest...................................... 115,143 116,066
Provision for income taxes............................... 13,359 16,982
-------- --------
Income from continuing operations before minority
interest............................................... 101,784 99,084
Minority interest........................................ (81,901) (69,003)
-------- --------
Income from continuing operations........................ 19,883 30,081
Loss from discontinued operations, net of tax and
minority interest...................................... -- (10,885)
-------- --------
Net income............................................... $ 19,883 $ 19,196
======== ========
See notes to condensed consolidated financial statements.
2
H. J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
------------------------------------
October 29, 2003 October 30, 2002
FY 2004 FY 2003
---------------- -----------------
(Unaudited)
(in thousands)
Sales.................................................... $1,541,590 $1,511,092
Cost of products sold.................................... 976,137 951,675
---------- ----------
Gross profit............................................. 565,453 559,417
Selling, general and administrative expenses............. 260,005 272,164
Royalty expense to related parties....................... 77,530 74,581
---------- ----------
Operating income......................................... 227,918 212,672
Interest income.......................................... 3,771 13,813
Interest expense......................................... 67,301 68,843
Dividends from related parties........................... 61,596 61,596
Currency loss............................................ 14,716 23,617
Other expenses, net...................................... 3,927 10,498
---------- ----------
Income from continuing operations before income taxes and
minority interest...................................... 207,341 185,123
Provision for income taxes............................... 27,740 21,068
---------- ----------
Income from continuing operations before minority
interest............................................... 179,601 164,055
Minority interest........................................ (133,570) (127,201)
---------- ----------
Income from continuing operations........................ 46,031 36,854
Loss from discontinued operations, net of tax and
minority interest...................................... -- (13,404)
---------- ----------
Net income............................................... $ 46,031 $ 23,450
========== ==========
See notes to condensed consolidated financial statements.
3
H. J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 29, 2003 April 30, 2003*
FY 2004 FY 2003
---------------- ---------------
(Unaudited)
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents............................... $ 254,134 $ 194,266
Receivables, net........................................ 320,727 400,565
Due from related parties................................ 21,618 24,603
Short-term notes receivable from related parties........ 550,414 217,988
Inventories............................................. 512,066 386,889
Prepaid expenses and other current assets............... 49,923 29,901
---------- ----------
Total current assets................................. 1,708,882 1,254,212
Property, plant and equipment............................. 1,137,355 1,120,294
Less accumulated depreciation............................. 505,763 482,981
---------- ----------
Total property, plant and equipment, net............. 631,592 637,313
Investments in related parties............................ 1,895,245 1,895,245
Goodwill.................................................. 1,062,982 1,008,734
Other intangible assets, net.............................. 253,128 257,378
Other non-current assets.................................. 394,181 512,803
---------- ----------
Total other non-current assets....................... 3,605,536 3,674,160
---------- ----------
Total assets......................................... 5,946,010 $5,565,685
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term debt with related parties.................... $ 153,621 $ 82,716
Portion of long-term debt due within one year........... 543 1,738
Accounts payable........................................ 227,958 212,751
Accounts payable to related parties..................... 73,663 98,947
Accrued interest........................................ 101,251 66,170
Accrued marketing....................................... 84,718 77,353
Other accrued liabilities............................... 66,563 45,007
---------- ----------
Total current liabilities............................ 708,317 584,682
Long-term debt............................................ 4,195,682 3,981,145
Long-term debt with related parties....................... 193,156 --
Deferred income taxes..................................... 14,715 14,511
Other liabilities......................................... 4,566 5,979
---------- ----------
Total long-term debt and other liabilities........... 4,408,119 4,001,635
Minority interest......................................... 591,063 457,493
Mandatorily Redeemable Series A Preferred shares.......... -- 325,000
Shareholder's equity:
Common stock............................................ 11 11
Additional capital...................................... 128,050 128,050
Retained earnings....................................... 109,669 68,697
Accumulated other comprehensive gain.................... 781 117
---------- ----------
Total shareholder's equity........................... 238,511 196,875
---------- ----------
Total liabilities and shareholder's equity........... $5,946,010 $5,565,685
========== ==========
- ---------------
* Summarized from audited Fiscal Year 2003 balance sheet.
See notes to condensed consolidated financial statements.
4
H. J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
-----------------------------------
October 29, 2003 October 30, 2002
FY 2004 FY 2003
---------------- ----------------
(Unaudited)
(in thousands)
Cash Flows from Operating Activities:
Net income.............................................. $ 46,031 $ 23,450
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation......................................... 28,819 37,359
Amortization......................................... 5,938 6,532
Deferred tax (benefit)/provision..................... (4,666) 2,932
Minority interest.................................... 133,570 187,528
Currency loss........................................ 14,716 23,617
Other items, net..................................... (7,001) 11,971
Changes in current assets and liabilities, excluding
effects of acquisitions and divestitures:
Receivables........................................ 92,423 160,511
Inventories........................................ (113,681) (38,896)
Due from/to related parties........................ (22,328) 36,756
Prepaid expenses and other current assets.......... (20,101) (93,870)
Accounts payable................................... 7,025 56,083
Accrued liabilities................................ 35,110 66,783
Income taxes....................................... 30,708 (1,458)
--------- ---------
Cash provided by operating activities................... 226,563 479,298
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures.................................... (19,232) (31,955)
Proceeds from disposals of property, plant and
equipment............................................ 1,495 5,153
Acquisitions, net of cash acquired...................... (61,298) --
Other items, net........................................ 1,342 3,356
--------- ---------
Cash used for investing activities................... (77,693) (23,446)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from long-term debt with related parties....... 185,639 --
Payments on long-term debt.............................. (8,058) (1,673)
Payments on commercial paper, net....................... -- (89,142)
Payments on short-term debt with related parties, net... (261,524) (241,414)
Distributions to minority partners...................... -- (64,844)
Dividends on preferred shares........................... (5,059) (10,116)
Other items, net........................................ -- 1,861
--------- ---------
Cash used for financing activities................... (89,002) (405,328)
--------- ---------
Net increase in cash and cash equivalents................. 59,868 50,524
Cash and cash equivalents, beginning of period............ 194,266 6,924
--------- ---------
Cash and cash equivalents, end of period.................. $ 254,134 $ 57,448
========= =========
See notes to condensed consolidated financial statements.
5
H. J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The U.S. treasury and domestic business operations of H. J. Heinz Company
("Heinz") are conducted by H. J. Heinz Finance Company and its wholly-owned
subsidiaries, and H. J. Heinz Company, L.P. ("Heinz LP") collectively
referred to as "Heinz Finance" in the accompanying notes. H. J. Heinz
Finance Company has limited partnership interests in Heinz LP equal to
approximately 40% of the capital of Heinz L.P.
Heinz LP owns or leases the operating assets involved in manufacturing
throughout the United States and manages the business. Heinz LP has two
classes of limited partnership interests, Class A and Class B, that are
allocated varying income and cash distributions in accordance with the
Heinz LP agreement. H. J. Heinz Finance Company, directly and through
wholly-owned subsidiaries, owns the Class B interests. Heinz directly owns
the Class A interests. Heinz Management Company, a wholly-owned subsidiary
of Heinz, is the managing General Partner of Heinz LP and employs the
salaried personnel of Heinz's domestic operations. Under the partnership
agreement, Heinz Finance has the power to control the general partner
through majority membership on Heinz LP's management board. The minority
interest amounts on the October 29, 2003 and April 30, 2003 balance sheets
represent the Class A and General Partner limited partnership interest in
Heinz LP, and have been adjusted for the minority partners' share of income
and cash distributions.
The interim condensed consolidated financial statements of Heinz Finance
are unaudited. In the opinion of management, all adjustments which are of a
normal and recurring nature, necessary for a fair statement of the results
of operations of these interim periods have been included. The results for
the interim periods are not necessarily indicative of the results to be
expected for the full fiscal year due to the seasonal nature of the
business of Heinz Finance. Certain prior year amounts have been
reclassified in order to conform with the Fiscal 2004 presentation. These
statements should be read in conjunction with Heinz Finance's consolidated
and combined financial statements and related notes, and management's
discussion and analysis of financial condition and results of operations
which appear in Heinz Finance's Annual Report on Form 10-K for the year
ended April 30, 2003.
For all Heinz financial reporting and disclosure purposes, H. J. Heinz
Finance Company and its subsidiaries (including Heinz LP) are treated as
fully consolidated subsidiaries. All of the assets, liabilities, results of
operations and cash flows of these entities are included in the Heinz
consolidated financial statements. All of the intercompany transactions and
accounts are eliminated within the Heinz consolidated financial statements.
The preferred shares issued by Heinz Finance are reported in the Heinz
consolidated financial statements as long-term debt at October 29, 2003 and
minority interest at April 30, 2003.
(2) DISCONTINUED OPERATIONS AND SPIN-OFF
On December 20, 2002, Heinz transferred to a wholly-owned subsidiary ("SKF
Foods") certain assets and liabilities, including its U.S. pet food and pet
snacks, U.S. tuna, U.S. retail private label soup and private label gravy,
College Inn broths and its U.S. infant feeding businesses, and distributed
all of the shares of SKF Foods common stock on a pro rata basis to its
shareholders. Immediately thereafter, SKF Foods merged with a wholly-owned
subsidiary of Del Monte Foods Company ("Del Monte") resulting in SKF Foods
becoming a wholly-owned subsidiary of Del Monte ("the Merger").
6
In accordance with accounting principles generally accepted in the United
States of America the operating results related to these businesses spun
off to Del Monte have been treated as discontinued operations in Heinz
Finance's consolidated statements of income. The discontinued operations
generated sales of $454.8 million and $803.9 million and a net loss of
$10.9 million (net of $6.0 million of a tax benefit) and $13.4 million (net
of $7.7 million of a tax benefit) for the second quarter and six months
ended October 30, 2002, respectively.
(3) SPECIAL ITEMS
REORGANIZATION COSTS
Heinz Finance recognized reorganization costs of $4.0 million pretax for
the six months ended October 29, 2003, all of which was recorded in the
first quarter of Fiscal 2004. These costs were primarily due to employee
termination and severance costs following last year's spin-off transaction
with Del Monte, and of this amount, $3.9 million was charged to Heinz
Finance by Heinz Management Company through a management fee for all
salaried employee costs. These costs were recognized as a component of
selling, general and administrative expenses ("SG&A"). For the second
quarter of Fiscal 2003, Heinz Finance recognized reorganization costs
totaling $5.4 million pretax, of which $3.5 million was charged to Heinz
Finance by Heinz Management Company, and $1.9 million was recorded in cost
of products sold and $3.5 million in SG&A. For the first six months of
Fiscal 2003, Heinz Finance recognized reorganization costs totaling $11.7
million pretax, of which $9.8 million was charged to Heinz Finance by Heinz
Management Company, and $1.9 million was recorded in cost of products sold
and $9.8 million in SG&A.
During the first six months of Fiscal 2004, Heinz Finance utilized $16.8
million of severance and exit cost accruals related to reorganization
costs. Amounts included in accounts payable to related parties and other
accrued liabilities related to these initiatives totaled $1.4 million and
$14.1 million at October 29, 2003 and April 30, 2003, respectively.
(4) INVENTORIES
The composition of inventories at the balance sheet dates was as follows:
October 29, April 30,
(in thousands) 2003 2003
- -------------- ----------- ---------
Finished goods and work-in-process........................ $325,218 $275,295
Packaging material and ingredients........................ 186,848 111,594
-------- --------
$512,066 $386,889
======== ========
(5) GOODWILL AND OTHER INTANGIBLE ASSETS
Effective May 2, 2002, Heinz Finance adopted Statement of Financial
Accounting Standard ("SFAS") No. 142, "Goodwill and Other Intangible
Assets." Under this standard, goodwill and intangibles with indefinite
useful lives are no longer amortized. The annual impairment tests are
performed in the fourth quarter of each fiscal year unless events suggest
an impairment may have occurred in the interim. No impairment issues were
identified as a result of adopting SFAS No. 142.
7
Changes in the carrying amount of goodwill for the six months ended October
29, 2003 by reportable segment, are as follows (see Note 9 for information
on changes to reportable segments):
North
American
Consumer U.S.
(in thousands) Products Foodservice Total
- -------------- -------- ----------- ----------
Balance at April 30, 2003....................... $844,192 $164,542 $1,008,734
Acquisition..................................... -- 49,381 49,381
Purchase accounting reclassifications........... 4,327 540 4,867
-------- -------- ----------
Balance at October 29, 2003..................... $848,519 $214,463 $1,062,982
======== ======== ==========
Trademarks and other intangible assets at October 29, 2003 and April 30,
2003, subject to amortization expense, are as follows:
October 29, 2003 April 30, 2003
---------------------------------- ----------------------------------
Accumulated Accumulated
(in thousands) Gross Amortization Net Gross Amortization Net
- -------------- -------- ------------ -------- -------- ------------ --------
Trademarks........... $ 39,103 $ (2,660) $ 36,443 $ 39,103 $ (2,051) $ 37,052
Licenses............. 208,186 (115,561) 92,625 208,186 (112,617) 95,569
Other................ 75,907 (42,989) 32,918 75,907 (42,269) 33,638
-------- --------- -------- -------- --------- --------
$323,196 $(161,210) $161,986 $323,196 $(156,937) $166,259
======== ========= ======== ======== ========= ========
Amortization expense for trademarks and other intangible assets subject to
amortization was $4.3 million and $5.4 million for the six months ended
October 29, 2003 and October 30, 2002, respectively. Based upon the
amortizable intangible assets recorded on the balance sheet at October 29,
2003, amortization expense for each of the next five years is estimated to
be approximately $9.0 million.
Intangible assets not subject to amortization at October 29, 2003 and April
30, 2003, were $91.1 million and consisted solely of trademarks.
(6) TAXES
The provision for income taxes consists of provisions for federal and state
income taxes. The low effective tax rate for Heinz Finance occurs because
the income of Heinz LP that is allocated to minority interest is not
subject to tax at the Heinz LP level or at Heinz Finance, partially offset
by the nondeductible interest expense associated with Heinz Finance's
mandatorily redeemable preferred shares. The effective tax rate will
fluctuate depending on the proportion of minority interest to total Heinz
Finance income before tax.
(7) RECENTLY ISSUED ACCOUNTING STANDARDS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
This statement affects the classification, measurement and disclosure
requirements of certain financial instruments, including mandatorily
redeemable shares. SFAS No. 150 was effective for Heinz Finance for the
second quarter of Fiscal 2004. The adoption of SFAS No. 150 required the
prospective classification of Heinz Finance's $325 million of mandatorily
redeemable preferred shares as long-term debt and the $5.1 million
preferred dividend from retained earnings to interest expense for the
second quarter ended October 29, 2003.
(8) RELATED PARTY TRANSACTIONS
Employee Costs
Certain of Heinz's general and administrative expenses are allocated to
Heinz Finance. These costs primarily include a management charge of all
salaried employee costs from the Heinz
8
Management Company. Total costs charged to Heinz Finance for these
services, including discontinued operations, were $62.1 million and $81.3
million for the second quarter ended October 29, 2003 and October 30, 2002,
respectively, and $125.6 million and $168.2 million for the six months
ended October 29, 2003 and October 30, 2002, respectively. These costs are
recorded as cost of products sold or selling, general and administrative
("SG&A") expense in the accompanying consolidated statements of income
depending on the nature of the cost.
Heinz charges Heinz Finance for its share of group health insurance costs
for eligible company employees based upon location-specific costs, overall
insurance costs and loss experience incurred during a calendar year. In
addition, various other insurance coverages are also provided to Heinz
Finance through Heinz's corporate programs. Workers compensation, auto,
property, product liability and other insurance coverages are charged
directly based on Heinz Finance's loss experience. Amounts charged to Heinz
Finance for insurance costs, including discontinued operations, were $15.3
million and $18.0 million for the second quarter ended October 29, 2003 and
October 30, 2002, respectively, and $33.5 million and $36.2 million for the
six months ended October 29, 2003 and October 30, 2002, respectively, and
are recorded in SG&A expense in the accompanying consolidated statements of
income.
Pension costs and postretirement costs are also charged to Heinz Finance
based upon eligible employees participating in the plans.
Cash Management
Heinz Finance represents the treasury center for cash management and debt
financing for all of Heinz's domestic operations. In addition, Heinz
Finance enters into a number of short-term notes payable with foreign
wholly-owned subsidiaries of Heinz. As a result of these cash management
activities, Heinz Finance had $361.8 million and $100.3 million of net
short-term notes receivable with related parties recorded on the
consolidated balance sheets as of October 29, 2003 and April 30, 2003,
respectively. An average interest rate of 1.17% and 1.93% was charged on
these combined domestic and foreign notes resulting in $1.4 million and
$4.8 million of net interest income for the second quarter ended October
29, 2003 and October 30, 2002, respectively, and $2.2 million and $8.7
million of net interest income for the six months ended October 29, 2003
and October 30, 2002, respectively.
In the first quarter of Fiscal 2004, Heinz Finance entered into a long-term
note payable with a wholly-owned subsidiary of Heinz. The balance was
$193.2 million as of October 29, 2003, and is reported as long-term debt
with related parties on the condensed consolidated balance sheet. Interest
expense on this note totaled $1.7 million and $2.2 million for the second
quarter and six months ended October 29, 2003, respectively, and was based
on a fixed interest rate of 4.0%. This note is scheduled to mature in April
2005.
At October 29, 2003 and April 30, 2003, short-term notes receivable from
related parties includes $35.0 million related to a receivable from Heinz.
This note is classified as short-term given its maturity of April 29, 2004.
Product Sales and Purchases
Heinz Finance sells and purchases products and services to and from other
Heinz affiliates. The results of related party transactions are the $21.6
million and $24.6 million balances due from related parties as of October
29, 2003 and April 30, 2003, respectively, and the $73.7 million and $98.9
million balances for accounts payable to related parties as of October 29,
2003 and April 30, 2003, respectively. Product sales to related parties
were $12.3 million and $10.1 million for the second quarter ended October
29, 2003 and October 30, 2002, respectively, and $22.9 million and $19.9
million for the six months ended October 29, 2003 and October 30, 2002,
respectively. Purchases from related parties were $8.4 million and $6.6
million for the second quarter ended October 29, 2003 and October 30, 2002,
respectively, and $14.7 million for the six months ended October 29, 2003
and October 30, 2002.
9
Other Related Party Items
Heinz Finance held $1.9 billion of non-voting, 6.5% cumulative
non-participating preferred stock of PM Holding, Inc. ("PM Holding"), a
subsidiary of Heinz. Heinz Finance's preferred stock investment in PM
Holding was converted to a preferred stock investment in Heinz as a result
of the merger of PM Holding with and into Heinz during the third quarter of
Fiscal 2003. The dividends on the preferred stock amounted to $30.8 million
and $61.6 million for the second quarters and six months ended October 29,
2003 and October 30, 2002, respectively. This preferred stock investment is
recorded in the Investments in related parties balance on the condensed
consolidated balance sheets as of October 29, 2003 and April 30, 2003.
Heinz Finance paid royalties of $41.6 million and $40.1 million for the
second quarter ended October 29, 2003 and October 30, 2002, respectively,
and $77.5 million and $74.6 million for the six months ended October 29,
2003 and October 30, 2002, respectively, to Promark International, Inc. and
Promark Brands, Inc., direct subsidiaries of Heinz, for the use of certain
trademarks.
(9) SEGMENTS
In the first quarter of Fiscal 2004, Heinz Finance changed its segment
reporting to reflect changes in organizational structure and management of
its businesses. Heinz Finance is now managing and reporting its operating
businesses under two segments, designated North American Consumer Products
and U.S. Foodservice. Prior periods have been restated to conform with the
current presentation.
Descriptions of Heinz Finance's reportable segments are as follows:
- North American Consumer Products -- This segment manufactures, markets
and sells ketchup, condiments, sauces, pasta meals, frozen potatoes,
entrees, snacks and appetizers to the grocery channels in the U.S.
- U.S. Foodservice -- This segment manufactures, markets and sells branded
and customized products to commercial and non-commercial food outlets and
distributors in the U.S. including ketchup, condiments, sauces and frozen
soups and desserts.
Heinz Finance's management evaluates performance based on several factors
including net sales, operating income and the use of capital resources.
Intersegment revenues are accounted for at current market values. Items
below the operating income line of the consolidated statements of income
are not presented by segment, since they are excluded from the measure of
segment profitability reviewed by Heinz Finance's management.
The following table presents information about Heinz Finance's reportable
segments:
Net External Sales Net External Sales
----------------------------------- -----------------------------------
Second Quarter Ended Six Months Ended
----------------------------------- -----------------------------------
October 29, 2003 October 30, 2002 October 29, 2003 October 30, 2002
(in thousands) FY 2004 FY 2003 FY 2004 FY 2003
- -------------- ---------------- ---------------- ---------------- ----------------
North American Consumer
Products.................. $450,727 $475,973 $ 831,842 $ 853,969
U.S. Foodservice............ 374,993 345,840 709,748 657,123
-------- -------- ---------- ----------
Consolidated totals....... $825,720 $821,813 $1,541,590 $1,511,092
======== ======== ========== ==========
10
Intersegment Revenues Intersegment Revenues
----------------------------------- -----------------------------------
Second Quarter Ended Six Months Ended
----------------------------------- -----------------------------------
October 29, 2003 October 30, 2002 October 29, 2003 October 30, 2002
(in thousands) FY 2004 FY 2003 FY 2004 FY 2003
- -------------- ---------------- ---------------- ---------------- ----------------
North American Consumer
Products.................. $10,660 $10,755 $21,320 $20,510
U.S. Foodservice............ -- -- -- --
------- ------- ------- -------
Consolidated totals....... $10,660 $10,755 $21,320 $20,510
======= ======= ======= =======
Operating Income (Loss) (b) Operating Income (Loss) (b)
----------------------------------- -----------------------------------
Second Quarter Ended Six Months Ended
----------------------------------- -----------------------------------
October 29, 2003 October 30, 2002 October 29, 2003 October 30, 2002
(in thousands) FY 2004 FY 2003 FY 2004 FY 2003
- -------------- ---------------- ---------------- ---------------- ----------------
North American Consumer
Products.................. $ 84,147 $ 79,586 $149,805 $141,302
U.S. Foodservice............ 43,439 42,401 79,246 72,614
Non-Operating(a)............ (561) (777) (1,133) (1,244)
-------- -------- -------- --------
Consolidated totals....... $127,025 $121,210 $227,918 $212,672
======== ======== ======== ========
--------------------
(a) Includes charges not directly attributable to operating segments.
(b) Second Quarter ended October 30, 2002 - Includes Del Monte transaction
related costs and costs to reduce overhead of the remaining businesses
recorded on Heinz Finance as well as charged back to Heinz Finance by
Heinz Management Company as follows: North American Consumer Products
$4.3 million and U.S. Foodservice $1.1 million.
Six Months ended October 29, 2003 - Includes costs to reduce overhead
of the remaining businesses recorded on Heinz Finance as well as
charged back to Heinz Finance by Heinz Management Company as follows:
North American Consumer Products $1.5 million and U.S. Foodservice $2.5
million.
Six Months ended October 30, 2002 - Includes Del Monte transaction
related costs and costs to reduce overhead of the remaining businesses
recorded on Heinz Finance as well as charged back to Heinz Finance by
Heinz Management Company as follows: North American Consumer Products
$8.4 million and U.S. Foodservice $3.2 million.
(10) COMPREHENSIVE INCOME
Second Quarter Ended Six Months Ended
------------------------------------- -----------------------------------
October 29, 2003 October 30, 2002 October 29, 2003 October 30, 2002
(in thousands) FY 2004 FY 2003 FY 2004 FY 2003
- -------------- ----------------- ----------------- ---------------- ----------------
Net income................ $ 19,883 $19,196 $46,031 $ 23,450
Other comprehensive
income:
Net deferred
gains/(losses) on
derivatives from
periodic
revaluations.......... 12,237 2,038 7,042 17,811
Net deferred
(gains)/losses on
derivatives
reclassified to
earnings.............. (13,007) (1,668) (6,378) (14,874)
-------- ------- ------- --------
Comprehensive income...... $ 19,113 $19,566 $46,695 $ 26,387
======== ======= ======= ========
(11) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Heinz Finance utilizes certain derivative financial instruments to manage
its foreign currency, commodity price and interest rate exposures.
11
FOREIGN CURRENCY HEDGING: Heinz Finance may hedge specific foreign currency
cash flows associated with foreign-currency-denominated financial assets
and liabilities. Derivatives meeting the criteria for hedge accounting are
designated as cash flow hedges. Consequently, the effective portion of
gains and losses is deferred as a component of accumulated other
comprehensive income and is recognized in earnings at the time the hedged
item affects earnings, in the same line item as the underlying hedged item.
COMMODITY PRICE HEDGING: Heinz Finance uses commodity futures, swaps and
option contracts in order to reduce price risk associated with forecasted
purchases of raw materials such as corn, soybean oil and soybean meal.
Commodity price risk arises due to factors such as weather conditions,
government regulations, economic climate and other unforeseen
circumstances. Derivatives used to hedge forecasted commodity purchases
that meet the criteria for hedge accounting are designated as cash flow
hedges.
INTEREST RATE HEDGING: Heinz Finance uses interest rate swaps to manage
interest rate exposure. These derivatives may be designated as cash flow
hedges or fair value hedges depending on the nature of the risk being
hedged.
HEDGE INEFFECTIVENESS: Hedge ineffectiveness related to cash flow hedges,
which is reported in current period earnings as other expenses, net, was
not significant for the six months ended October 29, 2003, and was a net
gain of $0.1 million for the six months ended October 30, 2002.
DEFERRED HEDGING GAINS AND LOSSES: As of October 29, 2003, Heinz Finance is
hedging forecasted transactions for periods not exceeding two years. During
the next 12 months, Heinz Finance expects $0.8 million of net deferred gain
reported in accumulated other comprehensive income to be reclassified to
earnings.
OTHER ACTIVITIES: Heinz Finance enters into certain derivative contracts in
accordance with its risk management strategy that do not meet the criteria
for hedge accounting. Although these derivatives do not qualify as hedges,
they have the economic impact of largely mitigating commodity price or
interest rate exposures. These derivative financial instruments are
accounted for on a full mark to market basis through current earnings even
though they were not acquired for trading purposes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SPECIAL ITEMS
DISCONTINUED OPERATIONS
On December 20, 2002, Heinz transferred to a wholly-owned subsidiary ("SKF
Foods") certain assets and liabilities, including its U.S. pet food and pet
snacks, U.S. tuna, U.S. retail private label soup and private label gravy,
College Inn broths and its U.S. infant feeding businesses, and distributed all
of the shares of SKF Foods common stock on a pro rata basis to its shareholders.
Immediately thereafter, SKF Foods merged with a wholly-owned subsidiary of Del
Monte Foods Company ("Del Monte") resulting in SKF Foods becoming a wholly-owned
subsidiary of Del Monte ("the Merger").
In accordance with accounting principles generally accepted in the United
States of America, the operating results related to these businesses spun off to
Del Monte have been treated as discontinued operations in Heinz Finance's
consolidated statements of income. The discontinued operations generated sales
of $454.8 million and $803.9 million and a net loss of $10.9 million (net of
$6.0 million of a tax benefit) and $13.4 million (net of $7.7 million of a tax
benefit) for the second quarter and six months ended October 30, 2002,
respectively.
REORGANIZATION COSTS
Heinz Finance recognized reorganization costs of $4.0 million pretax for
the six months ended October 29, 2003, all of which was recorded in the first
quarter of Fiscal 2004. These costs were
12
primarily due to employee termination and severance costs following last year's
spin-off transaction with Del Monte, and of this amount, $3.9 million was
charged to Heinz Finance by Heinz Management Company through a management fee
for all salaried employee costs. These costs were recognized as a component of
selling, general and administrative expenses ("SG&A"). For the second quarter of
Fiscal 2003, Heinz Finance recognized reorganization costs totaling $5.4 million
pretax, of which $3.5 million was charged to Heinz Finance by Heinz Management
Company, and $1.9 million was recorded in cost of products sold and $3.5 million
in SG&A. For the first six months of Fiscal 2003, Heinz Finance recognized
reorganization costs totaling $11.7 million pretax, of which $9.8 million was
charged to Heinz Finance by Heinz Management Company, and $1.9 million was
recorded in cost of products sold and $9.8 million in SG&A.
During the first six months of Fiscal 2004, Heinz Finance utilized $16.8
million in severance and exit cost accruals related to reorganization costs.
THREE MONTHS ENDED OCTOBER 29, 2003 AND OCTOBER 30, 2002
In the first quarter of Fiscal 2004, Heinz Finance changed its segment
reporting to reflect changes in organizational structure and the management of
its business. Heinz Finance is now managing and reporting its operating
businesses under two segments, designated North American Consumer Products and
U.S. Foodservice. Prior periods have been restated to conform with the current
presentation. (See Note 9 to the condensed consolidated financial statements for
further discussion of Heinz Finance's reportable segments).
RESULTS OF CONTINUING OPERATIONS
Sales for the three months ended October 29, 2003 increased $3.9 million,
or 0.5%, to $825.7 million. Sales were favorably impacted by volume growth of
0.5% and acquisitions, net of divestitures, of 0.8%. Lower pricing decreased
sales 0.9%.
Gross profit decreased $1.2 million, or 0.4%, to $303.2 million, and the
gross profit margin decreased to 36.7% from 37.0%. Last year's gross profit was
unfavorably impacted by reorganization costs of $1.9 million.
SG&A decreased $8.4 million, or 5.9%, to $134.6 million, and decreased as a
percentage of sales to 16.3% from 17.4%. For the second quarter of Fiscal 2003,
SG&A was unfavorably impacted by reorganization costs of $3.5 million. Operating
income increased $5.8 million, or 4.8%, to $127.0 million, and operating income
increased as a percentage of sales to 15.4% from 14.7%.
Net interest expense increased $5.2 million, to $33.3 million, primarily
due to the prospective classification of Heinz Finance's dividend on its
mandatorily redeemable preferred shares to interest expense from retained
earnings in accordance with the adoption of Statement of Financial Accounting
Standard ("SFAS") No. 150 (see below for further discussion). Other expense,
net, decreased $6.8 million, primarily related to increased equity income. There
was a non-cash currency loss of $9.9 million in the current quarter compared to
$1.5 million in the year-earlier quarter related to the marked-to-market
adjustment on Euro-denominated long-term debt. This debt represents a net
investment hedge at the Heinz level. Because Heinz Finance does not have foreign
assets, this marked-to-market adjustment does not qualify for hedge accounting
treatment at Heinz Finance. The effective tax rate for the current quarter was
11.6% compared to 14.6% last year. Heinz Finance's effective tax rate fluctuates
depending on the proportion of its nontaxable minority interest in Heinz LP to
total Heinz Finance income before tax and was also unfavorably impacted by the
nondeductible interest expense associated with Heinz Finance's mandatorily
redeemable preferred shares.
Income from continuing operations for the second quarter of Fiscal 2004 was
$19.9 million compared to $30.1 million in the year-earlier quarter.
13
OPERATING RESULTS BY BUSINESS SEGMENT
NORTH AMERICAN CONSUMER PRODUCTS
Sales of the North American Consumer Products segment decreased $26.2
million, or 5.5%. Sales volume increased 0.2% due to significant growth in Heinz
ketchup, EZ Marinader and Classico pasta sauces, partially offset by declines in
SmartOnes frozen entrees related to the increased popularity of low-carb dieting
and the continuing effects of the rationalization of Boston Market side dishes
and Hot Bites snacks. Lower pricing decreased sales 3.6% consistent with our
strategy to obtain a more competitive consumer price point on Boston Market
HomeStyle meals and due to the launch of the Every Day Low Price strategy on
Heinz gravy and Classico pasta sauces. Unfavorable sales mix on SmartOnes frozen
entrees also affected price. Divestitures reduced sales 1.9%.
Gross profit decreased $10.4 million, or 5.1%, to $192.9 million; however,
the gross profit margin increased slightly to 42.8% from 42.7%, as manufacturing
cost savings offset unfavorable pricing. Operating income increased $4.6
million, or 5.7%, to $84.1 million, primarily due to decreased consumer
marketing expenses related to Boston Market frozen entrees and the prior year
launch of Easy Squeeze!. In addition, reorganization costs unfavorably impacted
last year's operating income by $4.3 million.
U.S. FOODSERVICE
U.S. Foodservice's sales increased $29.2 million, or 8.4%. Sales volume
increased sales 1.0% primarily due to increases in Heinz ketchup, Escalon
processed tomato products and Dianne's frozen desserts. Higher pricing increased
sales by 3.0% primarily due to Heinz ketchup and single serve condiments.
Acquisitions, net of divestitures, increased sales 4.4%, primarily due to the
acquisition of Truesoups LLC, a manufacturer and marketer of premium frozen
soups.
Gross profit increased $8.9 million, or 8.8%, to $110.6 million, and the
gross profit margin increased to 29.5% from 29.4%. This increase in gross profit
margin is primarily due to favorable pricing and sales mix. In addition,
reorganization costs unfavorably impacted gross profit by $1.1 million for the
quarter ending October 30, 2002. Operating income increased $1.0 million, or
2.4%, to $43.4 million, primarily due to the increase in gross profit, partially
offset by increased SG&A expense attributable to investment in people and
infrastructure.
SIX MONTHS ENDED OCTOBER 29, 2003 AND OCTOBER 30, 2002
RESULTS OF CONTINUING OPERATIONS
Sales for the six months ended October 29, 2003 increased $30.5 million, or
2.0%, to $1.54 billion. Sales were favorably impacted by volume of 2.5% due to
strong increases in both operating segments. Lower pricing decreased sales by
0.6%. Acquisitions, net of divestitures, increased sales 0.1%.
Gross profit increased $6.0 million, or 1.1%, to $565.5 million; however,
the gross profit margin decreased to 36.7% from 37.0%. For the first six months
of Fiscal 2003, gross profit was impacted by reorganization costs of $1.9
million.
SG&A decreased $12.2 million, or 4.5%, to $260.0 million, and as a
percentage of sales was reduced to 16.9% from 18.0%. The decreases are primarily
due to decreased marketing expense as well as the impact of reorganization costs
of $4.0 million and $11.7 million for the six months ended October 29, 2003 and
October 30, 2002, respectively, partially offset by the impact of higher sales
volume. Operating income increased $15.2 million, or 7.2%, to $227.9 million,
and increased as a percentage of sales to 14.8% from 14.1%.
Net interest expense increased $8.5 million, to $63.5 million, primarily
due to the prospective classification of the Heinz Finance's second quarter of
Fiscal 2004 dividend on its mandatorily
14
redeemable preferred shares to interest expense from retained earnings in
accordance with the adoption of SFAS No. 150 (see below for further discussion).
Other expense, net, decreased $6.6 million, to $3.9 million. There was a
non-cash currency loss of $14.7 million in the current year compared to $23.6
million in the year-earlier period related to the marked-to-market adjustment on
Euro-denominated long-term debt. This debt represents a net investment hedge at
the Heinz level. Because Heinz Finance does not have foreign assets, this
marked-to-market adjustment does not qualify for hedge accounting treatment at
Heinz Finance. The effective tax rate for the current year was 13.4% compared to
11.4% last year. Heinz Finance's effective tax rate fluctuates depending on the
proportion of its nontaxable minority interest in Heinz LP to total Heinz
Finance income before tax and was also unfavorably impacted by the nondeductible
interest expense associated with Heinz Finance's mandatorily redeemable
preferred shares.
Income from continuing operations for the first six months of Fiscal 2004
was $46.0 million compared to $36.9 million in the year-earlier period.
OPERATING RESULTS BY BUSINESS SEGMENT
NORTH AMERICAN CONSUMER PRODUCTS
Sales of the North American Consumer Products segment decreased $22.1
million, or 2.6%. Sales volume increased 2.1% primarily due to Heinz ketchup,
Classico pasta sauces and EZ Marinader, partially offset by declines in
SmartOnes frozen entrees related to the increased popularity of low-carb
dieting, Ore-Ida frozen potatoes due to growth in private label, and the effects
of the continuing rationalization of Boston Market side dishes and Hot Bites
snacks. Lower pricing decreased sales 3.0% consistent with our strategy to
obtain a more competitive consumer price point on Boston Market HomeStyle meals
and due to the launch of the Every Day Low Price strategy on Heinz gravy and
Classico pasta sauces. Price was also affected by unfavorable sales mix on
SmartOnes frozen entrees and promotional timing related to TGI Fridays, Poppers
and Bagel Bites partially offset by increases in Heinz ketchup due to trade
promotion efficiencies in the current year. Divestitures reduced sales 1.7%.
Gross profit decreased $13.7 million, or 3.7%, to $359.1 million and, the
gross profit margin decreased to 43.2% from 43.7%, as manufacturing cost savings
were offset by unfavorable pricing. Operating income increased $8.5 million, or
6.0%, to $149.8 million, primarily due to decreased consumer marketing expenses
related to Boston Market frozen entrees and the prior year launch of Easy
Squeeze!. In addition, reorganization costs unfavorably impacted operating
income by $1.5 million and $8.4 million for the six months ending October 29,
2003 and October 30, 2002, respectively.
U.S. FOODSERVICE
U.S. Foodservice's sales increased $52.6 million, or 8.0%. Sales volume
increased sales 2.9% primarily due to increases in Heinz ketchup, Escalon
processed tomato products, Dianne's frozen desserts and single serve condiments.
Higher pricing increased sales by 2.6% primarily due to Heinz ketchup and single
serve condiments. Acquisitions, net of divestitures, increased sales 2.6%,
primarily due to the acquisition of Truesoups LLC, a manufacturer and marketer
of premium frozen soups.
Gross profit increased $19.5 million, or 10.4%, to $206.9 million, and the
gross profit margin increased to 29.1% from 28.5%. This increase in gross profit
margin is primarily due to favorable pricing and sales mix. In addition,
reorganization costs unfavorably impacted gross profit by $1.1 million for the
six months ending October 30, 2002. Operating income increased $6.6 million, or
9.1%, to $79.2 million, primarily due to the growth in gross profit partially
offset by increased SG&A expenses. In addition, reorganization costs unfavorably
impacted operating income by $2.5 million and $3.2 million for the six months
ending October 29, 2003 and October 30, 2002, respectively.
15
LIQUIDITY AND FINANCIAL POSITION
The following discussion of cash flows includes cash flows from
discontinued operations.
Cash provided by operating activities decreased to $226.6 million compared
to $479.3 million last year. The decrease in Fiscal 2004 versus Fiscal 2003 is
primarily due to increased working capital primarily due to receivables and
inventories.
Cash used for investing activities totaled $77.7 million compared to $23.4
million last year. Acquisitions, used $61.3 million in cash in the first six
months of Fiscal 2004. Capital expenditures totaled $19.2 million compared to
$32.0 million last year.
Cash used for financing activities totaled $89.0 million compared to $405.3
million last year. Payments on short-term borrowings with related parties were
$261.5 million this year, compared to $241.4 million last year. Proceeds from
long-term debt with related parties provided $185.6 million in the current year.
Heinz Finance paid down $8.1 million in long-term debt during the current
period, compared to $1.7 million last year. Payments on commercial paper were
$89.1 million last year. Dividend payments to preferred shareholders totaled
$5.1 million in the current year compared to $10.1 million in the prior year as
a result of the adoption of SFAS No. 150 as previously discussed. Distributions
to minority partners were $64.8 million in the prior year.
At October 29, 2003, Heinz Finance's external net debt (total external debt
net of the value of interest rate swaps of $176.3 million, less cash and cash
equivalents) was $3.77 billion. Excluding the reclassification of Heinz Finance
Company's preferred stock (see below for further discussion), external net debt
would have been $3.44 billion, down approximately $799.9 million compared to the
year earlier period. Additional net debt reductions are anticipated in Fiscal
2004.
In September 2003, Heinz, Heinz Finance and a group of domestic and
international banks renewed a 364-day credit agreement at $600 million. That
credit agreement and the $1.5 billion credit agreement that expires in September
2006 support Heinz's and Heinz Finance's commercial paper programs. As of
October 29, 2003, there was no commercial paper outstanding.
In first six months of Fiscal 2004, the cash used for reorganization costs
was approximately $16.2 million.
The impact of inflation on both Heinz Finance's financial position and
results of operations is not expected to adversely affect Fiscal 2004 results.
Heinz Finance's financial position continues to remain very strong, enabling it
to meet cash requirements for operations.
RECENTLY ISSUED ACCOUNTING STANDARDS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
statement affects the classification, measurement and disclosure requirements of
certain financial instruments, including mandatorily redeemable shares. SFAS No.
150 was effective for Heinz Finance in the second quarter of Fiscal 2004. The
adoption of SFAS No. 150 required the prospective classification of Heinz
Finance's $325 million of mandatorily redeemable preferred shares to long-term
debt and the $5.1 million quarterly preferred dividend from retained earnings to
interest expense for the second quarter ending October 29, 2003.
Effective May 2, 2002, Heinz Finance adopted SFAS No. 142, "Goodwill and
Other Intangible Assets." Under this standard, goodwill and intangibles with
indefinite useful lives are no longer amortized. No impairment issues were
identified as a result of adopting SFAS No. 142.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
Statements about future growth, profitability, costs, expectations, plans,
or objectives included in this report, including the management's discussion and
analysis, the financial statements and footnotes, are forward-looking statements
based on management's estimates, assumptions, and
16
projections. These forward-looking statements are subject to risks,
uncertainties, and other important factors that could cause actual results to
differ materially from those expressed or implied in this report and the
financial statements and footnotes. These include, but are not limited to,
sales, earnings, and volume growth, general economic, political, and industry
conditions, competitive conditions, production, energy and raw material costs,
the ability to maintain favorable supplier relationships, achieving cost savings
programs and gross margins, currency valuations and interest rate fluctuations,
success of acquisitions, joint ventures, and divestitures, new product and
packaging innovations, the effectiveness of advertising, marketing, and
promotional programs, supply chain efficiency and cash flow initiatives, the
impact of e-commerce and e-procurement, risks inherent in litigation, changes in
estimates in critical accounting judgments, the possibility of increased pension
expense, and other factors described in "Cautionary Statement Relevant to
Forward-Looking Information" in Heinz Finance's Form 10-K for the fiscal year
ended April 30, 2003, and Heinz Finance's subsequent filings with the Securities
and Exchange Commission. The forward-looking statements are and will be based on
management's then current views and assumptions regarding future events and
speak only as of their dates. Heinz Finance undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by the securities
laws.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in Heinz Finance's market risk during
the six months ended October 29, 2003. For additional information, refer to
pages 18-19 of Heinz Finance's Annual Report on Form 10-K for the fiscal year
ended April 30, 2003.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Heinz Finance's management, with participation of Heinz Finance's President
and Chief Financial and Accounting Officer, evaluated the effectiveness of Heinz
Finance's disclosure controls and procedures as of the end of the period covered
by this report. Based on that evaluation, the President and Chief Financial and
Accounting Officer concluded that Heinz Finance's disclosure controls and
procedures, as of the end of the period covered by this report, were designed
and functioning effectively to provide reasonable assurance that the information
required to be disclosed by Heinz Finance in reports filed under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms. Heinz Finance believes that
a controls system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the controls system are met, and no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.
(b) Changes in Internal Controls
No change in Heinz Finance's internal control over financial reporting
occurred during Heinz Finance's most recent fiscal quarter that has materially
affected, or is reasonable likely to materially affect, Heinz Finance's internal
control over financial reporting.
17
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report under this item.
ITEM 2. CHANGES IN SECURITIES
Nothing to report under this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Nothing to report under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Heinz Finance occurred on September 12, 2003 in
Pittsburgh, Pennsylvania. The directors of Heinz Finance were elected as
follows:
NAME CAST FOR CAST AGAINST ABSTAIN
- ---- -------- ------------ -------
Leonard A. Cullo, Jr.*...................................... 12,013 0 196
Laura Stein*................................................ 12,013 0 196
Arthur Winkleblack*......................................... 12,013 0 196
Andrew L. Stidd**........................................... 1,433 20 196
*Messrs. Cullo and Winkleblack and Ms. Stein are elected by the combined vote
of the holders of Heinz Finance's Common Stock and Series A Preferred Stock.
**Mr. Stidd is elected solely by the holders of Heinz Finance's Series A
Preferred Stock.
ITEM 5. OTHER INFORMATION
Nothing to report under this Item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be furnished by Item 601 of Regulation S-K are
listed below. Heinz Finance has omitted certain exhibits in accordance with
Item 601(b)(4)(iii)(A) of Regulation S-K. Heinz Finance agrees to furnish
such documents to the Commission upon request. Documents not designated as
being incorporated herein by reference are set forth herewith. The
paragraph numbers correspond to the exhibit numbers designated in Item 601
of Regulation S-K.
12. Computation of Ratios of Earnings to Fixed Charges.
31(a). Rule 13a-14(a)/15d-14(a) Certification by the President.
31(b). Rule 13a-14(a)/15d-14(a) Certification by the Chief
Financial and Accounting Officer.
32(a). Certification by the President Relating to a Periodic
Report Containing Financial Statements.*
32(b). Certification by the Chief Financial and Accounting Officer
Relating to a Periodic Report Containing Financial
Statements.*
(b) No reports on Form 8-K have been filed.
* The Exhibit attached to this Form 10-Q shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934
(the "Exchange Act") or otherwise subject to liability under the
section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as expressly set forth by specific reference
in such filing.
18
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 FINANCE COMPANY
(Registrant)
Date: December 8, 2003
By: /s/ LEONARD A. CULLO, JR.
..........................................
Leonard A. Cullo, Jr.
Director and President
By: /s/ ARTHUR B. WINKLEBLACK
..........................................
Arthur B. Winkleblack
Director, Vice President,
Chief Financial and Accounting
Officer
(Principal Financial Officer)
19
EXHIBIT INDEX
DESCRIPTION OF EXHIBIT
Exhibits required to be furnished by Item 601 of Regulation S-K are listed
below. Documents not designated as being incorporated herein by reference are
furnished herewith. The paragraph numbers correspond to the exhibit numbers
designated in Item 601 of Regulation S-K.
12. Computation of Ratios of Earnings to Fixed Charges.
31(a). Rule 13a-14(a)/15d-14(a) Certification of the President.
31(b). Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial and
Accounting Officer.
32(a). Certification by the President Relating to a Periodic Report
Containing Financial Statements.*
32(b). Certification by the Chief Financial and Accounting Officer
Relating to a Periodic Report Containing Financial Statements.*
* The Exhibit attached to this Form 10-Q shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") or otherwise subject to liability under that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as expressly set forth by
specific reference in such filing.