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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 May 1, 1996
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, New York Stock Exchange
$1.70 First Series, par value
$10 per share
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, 1996 the aggregate market value of the Registrant's voting
stock held by non-affiliates of the Registrant was approximately
$10,661,067,896.
The number of shares of the Registrant's Common Stock, par value $.25 per
share, outstanding as of June 30, 1996, was 369,813,162 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the fiscal year
ended May 1, 1996, are incorporated into Part I, Items 1 and 3; Part II, Items
5, 7 and 8; and Part IV, Item 14.
Portions of Registrant's Proxy Statement for the 1996 Annual Meeting of
Shareholders are incorporated into Part III, Items 10, 11, 12 and 13.
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 and sauces/condiments, pet food, tuna and other seafood products, baby
food, frozen potato products, soup (canned and frozen), lower-calorie products
(frozen entrees, frozen desserts, frozen breakfasts, dairy and other
products), beans, full calorie frozen dinners and entrees, pasta, coated
products, bakery products, chicken, vegetables (frozen and canned), frozen
pizza and pizza components, ice cream and ice cream novelties, edible oils,
margarine/shortening, vinegar, pickles, 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, homogenization, chilling,
freezing, pickling, drying, freeze 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.
1996 1995 1994
---- ---- ----
Ketchup, sauces and other condiments....................... 19% 21% 19%
Pet food................................................... 12 9 9
Tuna and other seafood products............................ 9 9 10
All other classes of products, none of which accounts
for 10% or more of consolidated sales..................... 60 61 62
--- --- ---
100% 100% 100%
=== === ===
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 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
2
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, "Ore-Ida" for frozen potato products, "Bagel Bites" for
pizza snack products, "Moore's" for coated vegetables, "Rosetto" and "Domani"
for frozen pasta products, "Earth's Best" for baby food and "Dyna Bites" and
"Cheese Bites" for appetizer products, all of which are marketed in the United
States. "9 Lives" is used for cat foods, "Kibbles N' Bits", "Ken-L-Ration",
"Reward" and "IVD" for dog food, "Jerky Treats", "Meaty Bones", "Snausages"
and "Pup-Peroni" for dog snacks, "Nature's Recipe" for dog and cat foods, all
of which are marketed in the United States and Canada. "Amore" is used for cat
foods, "Kozy Kitten" for canned cat foods, "Cycle", "Gravy Train", "Skippy
Premium", "Recipe" and "Vets" for dog food, "Pounce" for cat treats, 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. "Pablum" is used for baby food products marketed in 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 "Mareblu" for tuna, "Mr. Foody" for table and
kitchen sauces, "Bi-Aglut", "Aproten", "Polial" and "Dialibra" for
nutraceutical products, 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,
"Tegel" for poultry products, "Chef" and "Champ" for cat and dog foods and
"Craig's" for jams and marmalades, all of which are marketed in New Zealand,
Australia and the Asia/Pacific region. "Farley's" and "Farex" are used for
baby food products marketed in Europe, Canada, India, Australia and New
Zealand. "Glucon D" and "Complan" are used for nutritional drink mixes
marketed in India and in the case of "Complan" also Latin America and New
Zealand. "Ganave" is used for pet food in Argentina. "N/R Original Recipe" is
used for dog and cat foods marketed in various European countries. "Weight
Watchers" is used in numerous countries in conjunction with owned and
franchised weight control classes, programs, related activities and certain
food products. "Budget Gourmet" is used on frozen entrees and dinners. 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.
3
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 pharmacies, 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 year 1997 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 May 1, 1996, approximately
43,300 persons around the world.
Financial segment information by major geographic area for the most recent
three fiscal years is set forth on page 41 of the Company's Annual Report to
Shareholders for the fiscal year ended May 1, 1996. 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.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements to encourage companies to provide
prospective information about their companies, so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors (the "Factors") that could cause
actual results to differ materially from those discussed in the statement. The
Company desires to take advantage of the "safe harbor" provisions of the Act
with regard to oral and written forward-looking statements made from time to
time including but not limited to the forward-looking statements contained in
the Chairman's Letter to Shareholders (pages 3 to 5 of the Company's Annual
Report to Shareholders for the fiscal year ended May 1, 1996), Management's
Discussion and Analysis (pages 34 to 41 of the Company's Annual Report to
Shareholders for the fiscal year ended May 1, 1996) and statements set forth
in this Annual Report on Form 10-K and other 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
financial performance. The Factors identified by the Company include, among
other things, the following: general economic and business conditions in the
domestic and global markets; actions of competitors, including competitive
pricing; changes in consumer preferences and spending patterns; changes in
social and demographic trends; changes in laws and regulations, including
changes in taxation and accounting standards; foreign currency rate
fluctuations; interest rate fluctuations; the effects of changing prices for
the raw materials used by the Company and its subsidiaries; and the
effectiveness of the Company's marketing, advertising and promotional
programs.
ITEM 2. PROPERTIES.
The Company has 42 food processing plants in the United States and its
possessions, of which 36 are owned and six are leased, as well as 62 food
processing plants in foreign countries, of which 56 are owned and six are
leased, including thirteen in New Zealand, six in Canada, six in the United
Kingdom, six in Italy, four in Australia, three in Spain, two in Greece, two
in Portugal, two in Zimbabwe, and one in each of Argentina, Botswana, the
Czech Republic, Ecuador, France, Ghana, Hungary, India, Ireland, Japan,
Netherlands, People's Republic of China, Republic of Korea, Russia,
Seychelles, South Africa, Thailand and Venezuela. The Company also leases two
can-making factories in the United States and its possessions. The Company and
certain of its subsidiaries also own or lease office space, warehouses and
research and other 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.
4
ITEM 3. LEGAL PROCEEDINGS.
With respect to the antitrust litigation against the Company and its two
principal competitors in the United States baby food industry which was
previously reported in the Company's Annual Report on Form 10-K for the fiscal
year ended May 3, 1995, see Note 13 to the Consolidated Financial Statements
on page 61 of the Company's Annual Report to Shareholders for the fiscal year
ended May 1, 1996, which is incorporated herein by reference. On April 15,
1996, the defendants filed a motion for summary judgment to which the
plaintiffs filed a response on May 20, 1996. The Company continues to believe
that all of the suits and claims are without merit and is defending itself
vigorously against them.
With respect to the lawsuit in the U.S. District Court for the District of
Puerto Rico which was previously reported in the Company's Annual Report on
Form 10-K for the fiscal year ended May 3, 1995, the District Court approved a
consent decree filed in the matter and dismissed the lawsuit on May 22, 1996.
Related appeals to the Puerto Rico Supreme Court by the plaintiff have also
been dismissed. The Puerto Rico Environmental Quality Board ("EQB") and the
U.S. Environmental Protection Agency have approved the consent decree which
required Mayaguez Water Treatment Company, Inc., an indirectly 70% owned
subsidiary of the Company, to pay $500,000 to the EQB and $500,000 to fund
research relating to the ecology of the Bay of Mayaguez.
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 12, 1995.
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 10, 1996.
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 10, 1996) Employment During Past Five Years
---- ------------------- ---------------------------------
Anthony J. F. O'Reilly 60 Chairman of the Board since March 11, 1987, Chief
Executive Officer since July 1, 1979 and President
from July 1, 1979 to June 12, 1996.
Joseph J. Bogdanovich 84 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.
William R. Johnson 47 President and Chief Operating Officer since June
12, 1996; Senior Vice President in charge of Star-
Kist Foods, Inc. and Heinz operations in the Asia
Pacific area from September 8, 1993 to June 12,
1996; Chief Executive Officer of Star-Kist Foods,
Inc. since May 1, 1992 and President and Chief
Executive Officer of Heinz Pet Products Company
from November 1, 1988 to June 12, 1996.
Luigi Ribolla 59 Executive Vice President and President-Heinz Europe
since June 12, 1996 and 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; Senior Vice President from
August 1, 1992 to June 12, 1996; Director of Heinz
Mediterranean Area from 1988 to July 31, 1992.
5
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 10, 1996) Employment During Past Five Years
---- ------------------- ---------------------------------
William C. Springer 56 Executive Vice President-The Americas in charge of
Heinz North America, Heinz Service Company, Heinz
operations in Latin America since September 8, 1993
and in charge of Weight Watchers International,
Inc., Weight Watchers Gourmet Food Company, Heinz
Bakery Products Division and Ore-Ida Foods, Inc.
since June 12, 1996; 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; Senior Vice President from September
8, 1993 to June 12, 1996.
David R. Williams 53 Executive Vice President-Finance and Chief
Financial Officer since June 12, 1996 and in charge
of all Heinz affiliates and development activities
in India, Pakistan and southern Africa since
October 12, 1994; Senior Vice President-Finance and
Chief Financial Officer from August 1, 1992 to June
12, 1996; 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.
Lawrence J. McCabe 61 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 W. Sculley* 50 Senior Vice President since June 1, 1989 and in
charge of Weight Watchers International, Inc. from
June 1, 1989 to June 12, 1996, Weight Watchers
Gourmet Food Company from July 1, 1991 to June 12,
1996, and Heinz Bakery Products Division and Ore-
Ida Foods, Inc. from January 1, 1992 to June 12,
1996; 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.
- -------
*The Company announced on June 5, 1996 that Mr. Sculley will be leaving the
Company on September 1, 1996 to launch a private investment company, The
Blackburn Group, with his two brothers and several associates.
6
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 beginning on
page 40 under the caption "Stock Market Information" and on page 60 in Note
12, "Quarterly Results (Unaudited)," of the Company's Annual Report to
Shareholders for the fiscal year ended May 1, 1996. 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 1992 through
1996. All amounts are in thousands except per share data. Prior years per
share amounts have been adjusted to reflect the three-for-two stock split,
which was effective October 3, 1995.
Fiscal year ended
---------------------------------------------------------
May 1, May 3, April 27, April 28, April 29,
1996 1995 1994 1993 1992
(52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
Sales................... $9,112,265 $8,086,794 $7,046,738 $7,103,374 $6,581,867
Interest expense........ 277,411 210,585 149,243 146,491 134,948
Income before cumulative
effect of
accounting change...... 659,319 591,025 602,944 529,943 638,295
Net income.............. 659,319 591,025 602,944 396,313 638,295
Income before cumulative
effect of
accounting change per
common share........... 1.75 1.59 1.57 1.36 1.60
Net income per common
share................... 1.75 1.59 1.57 1.02 1.60
Short-term debt and
current portion
of long-term debt...... 1,082,169 1,074,291 439,701 1,604,355 1,724,095
Long-term debt,
exclusive of
current portion........ 2,281,659 2,326,785 1,727,002 1,009,381 178,388
Total assets............ 8,623,691 8,247,188 6,381,146 6,821,321 5,931,901
Cash dividends per
common share............ 1.03 1/2 .94 .86 .78 .70
Results recorded in 1996 include gains related to the sale of the Weight
Watchers Magazine ($0.02 per share) and the sale of two regional dry pet food
product lines ($0.02 per share) and a charge for restructuring costs at
certain overseas affiliates ($0.01 per share). See Note 12 to the Consolidated
Financial Statements on page 60 of the Company's Annual Report to Shareholders
for the fiscal year ended May 1, 1996.
During 1995, the Company invested approximately $1.2 billion in
acquisitions, the most significant of which was the North American pet food
businesses of The Quaker Oats Company. See Note 2 to the Consolidated
Financial Statements, beginning on page 48 of the Company's Annual Report to
Shareholders for the fiscal year ended May 1, 1996.
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 50
of the Company's Annual Report to Shareholders for the fiscal year ended May
1, 1996.
During 1993, the Company adopted the provisions of FAS No. 106 and elected
immediate recognition of 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 $0.34 per
share. In addition, the adoption of FAS No. 106 increased the company's pretax
postretirement benefit expense by $16.3 million ($0.03 per share) in 1993.
In 1993, restructuring charges of $192.3 million on a pretax basis ($0.30
per share) were reflected in operating income. The major components of the
restructuring plan related to employee severance and relocation costs ($99.0
million) and facilities consolidation and closure costs ($73.0 million).
In 1992, restructuring charges of $88.3 million on a pretax basis ($0.13 per
share) were reflected in operating income to provide for the consolidation of
functions, staff reductions, organizational reform and plant modernizations
and closures.
Results recorded in 1992 also include a pretax gain of $221.5 million on the
sale of The Hubinger Company of Keokuk, Iowa to Roquette Freres, a major
worldwide producer of corn starches. Hubinger is a producer of corn
derivatives, including corn syrup, starch and ethanol.
7
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 34 through 41 of the Company's Annual Report to Shareholders
for the fiscal year ended May 1, 1996. Such information is incorporated herein
by reference.
Subsequent to year-end, the Company entered into a letter of intent to
acquire substantially all of the pet food business of Martin Feed Mills
Limited of Elmira, Ontario. Martin's cat and dog food lines, sold under the
brand Techni-Cal, are produced and marketed throughout Canada and exported to
Japan, the United Kingdom, France, Holland, Spain, the Czech Republic and
other European countries.
In addition, Questor Partners Fund, L.P., an unrelated national investment
group, has entered into a letter of intent to acquire the brand name and
ongoing canned seafood business of Bumble Bee Seafoods, Inc. of San Diego,
California. The letter of intent also provides for H.J. Heinz Company, through
its affiliate, Star-Kist Foods, Inc., to purchase the Bumble Bee tuna
production facilities in Mayaguez, Puerto Rico; Santa Fe Springs, California
and Manta, Ecuador. Star-Kist plans to co-pack tuna under the Bumble Bee label
for the new Questor entity.
The above transactions, if consummated, combined with the acquisition of
Southern Country Foods Limited will not have a material impact on the
company's results of operations or financial position in fiscal 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheets of the Company and its subsidiaries as of
May 1, 1996 and May 3, 1995 and the related Consolidated Statements of Income,
Retained Earnings and Cash Flows for the fiscal years ended May 1, 1996, May
3, 1995 and April 27, 1994, together with the related Notes to Consolidated
Financial Statements, included in the Company's Annual Report to Shareholders
for the fiscal year ended May 1, 1996, 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.
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--Section 16 Beneficial Ownership Reporting Compliance"
in the Company's definitive Proxy Statement in connection with the Annual
Meeting of Shareholders to be held September 10, 1996. 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 10,
1996. 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 10, 1996. 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 "Certain
Business Relationships" and "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 10,
1996. Such information is incorporated herein by reference.
8
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 May 1, 1996 are
incorporated herein by reference:
Consolidated Balance Sheets as of May 1, 1996 and May 3, 1995
Consolidated Statements of Income for the fiscal years ended May 1,
1996, May 3, 1995 and April 27, 1994
Consolidated Statements of Retained Earnings for the fiscal years
ended May 1, 1996, May 3, 1995 and April 27, 1994
Consolidated Statements of Cash Flows for the fiscal years ended May
1, 1996, May 3, 1995 and April 27, 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants of Coopers & Lybrand L.L.P. dated
June 18, 1996, on the Company's consolidated financial statements
for the fiscal years ended May 1, 1996, May 3, 1995 and April 27,
1994
(2) The following report and schedule is filed herewith as a part hereof:
Report of Independent Accountants of Coopers & Lybrand L.L.P. dated
June 18, 1996, on the Company's consolidated financial statement
schedule filed as a part hereof for the fiscal years ended May 1,
1996, May 3, 1995 and April 27, 1994.
Schedule II (Valuation and Qualifying Accounts and Reserves) for the
three fiscal years ended May 1, 1996, May 3, 1995 and April 27,
1994.
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 are incorporated herein by reference
to Exhibit 3(i) to the Company's Annual Report on Form 10-K for the
fiscal year ended April 27, 1994.
3(ii) The Company's By-Laws, as amended effective October 12, 1994 are
incorporated herein by reference to Exhibit 3(ii) to the Company's
Annual Report on Form 10-K for the fiscal year ended May 3, 1995.
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.
9
(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) 1986 Deferred Compensation Program for H. J. Heinz Company
and affiliated companies, as amended and restated in its
entirety effective December 6, 1995
(ii) 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
(iii) 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
(iv) H. J. Heinz Company's 1990 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company's Proxy
Statement dated August 3, 1990
(v) H. J. Heinz Company's 1994 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company's Proxy
Statement dated August 5, 1994
(vi) H. J. Heinz Company Supplemental Executive Retirement Plan,
as amended, is incorporated herein 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
(vii) H. J. Heinz Company Executive Deferred Compensation Plan is
incorporated herein by reference to Exhibit 10(c)(x) to the
Company's Annual Report on Form 10-K for the fiscal year
ended April 27, 1994
(viii) H. J. Heinz Company Incentive Compensation Plan is
incorporated herein by reference to Appendix B to the
Company's Proxy Statement dated August 5, 1994
(ix) H. J. Heinz Company Stock Compensation Plan for Non-Employee
Directors is incorporated herein by reference to Appendix A
to the Company's Proxy Statement dated August 3, 1995
11. Computation of net income per share.
13. Pages 34 through 62 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended May 1, 1996, 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 L.L.P.
24. Powers-of-attorney of the Company's directors.
27. Financial Data Schedule.
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
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, 1996.
H. J. HEINZ COMPANY
(Registrant)
/s/ David R. Williams
By......................................
DAVID R. WILLIAMS
Executive 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, 1996.
Signature Capacity
/s/ Anthony J. F. O'Reilly
............................. Chairman of the Board and
ANTHONY J. F. O'REILLY Chief Executive Officer
(Principal Executive
Officer)
/s/ David R. Williams
............................. Executive Vice President-Finance and
DAVID R. WILLIAMS Chief Financial Officer (Principal
Financial Officer)
/s/ Tracy E. Quinn Corporate Controller
............................. (Principal Accounting
TRACY E. QUINN Officer)
Anthony J. F. O'Reilly Director
Joseph J. Bogdanovich Director
Nicholas F. Brady Director
Richard M. Cyert Director
Thomas S. Foley Director
Edith E. Holiday Director
Samuel C. Johnson Director
William R. Johnson Director
Donald R. Keough Director
Albert Lippert Director /s/ Lawrence J. McCabe
Lawrence J. McCabe Director By...................................
Luigi Ribolla Director LAWRENCE J. MCCABE
Herman J. Schmidt Director Director and Attorney-in-Fact
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
REPORT OF INDEPENDENT ACCOUNTANTS
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 May 1, 1996 and appears on page 62 therein. In connection with our
audits of such financial statements, we have also audited the related
financial statement schedule listed in Item 14(a) of this Annual Report on
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
Pittsburgh, PA
June 18, 1996
---------------
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, 33-
00390, 33-19639, 33-32563, 33-42015, 33-55777 and 33-62623) of our reports
dated June 18, 1996, on our audits of the consolidated financial statements
and financial statement schedule of H. J. Heinz Company and Subsidiaries as of
May 1, 1996 and May 3, 1995 and for the fiscal years ended May 1, 1996, May 3,
1995 and April 27, 1994, which reports are included or incorporated by
reference in this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Pittsburgh, PA
July 26, 1996
12
SCHEDULE II
H. J. HEINZ COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FISCAL YEARS ENDED MAY 1, 1996, MAY 3, 1995 AND APRIL 27, 1994
(THOUSANDS OF DOLLARS)
Additions
-------------------
Balance at Charged to Charged Balance at
beginning costs and to other end of
Description of period expenses accounts Deductions period
----------- ---------- ---------- -------- ---------- ----------
Fiscal year ended May 1,
1996:
Reserves deducted in
the balance sheet
from the assets to
which they apply:
Receivables......... $ 16,309 $ 7,254 $ -- $ 6,265(1) $ 17,298
======== ======= ====== ======= ========
Investments,
advances and other
assets.............. $ 7,466 $ -- $ -- $ 1,602 $ 5,864
======== ======= ====== ======= ========
Goodwill............ $163,793 $48,583 $ -- $ 683 $211,693
======== ======= ====== ======= ========
Other intangibles... $117,430 $30,519 $ -- $ 6,063(1) $141,886
======== ======= ====== ======= ========
Deferred tax assets
(2)................. $ 49,487 $ 3,195 $ -- $17,088 $ 35,594
======== ======= ====== ======= ========
Fiscal year ended May 3,
1995:
Reserves deducted in
the balance sheet
from
the assets to which
they apply:
Receivables......... $ 15,407 $ 5,135 $ -- $ 4,233(1) $ 16,309
======== ======= ====== ======= ========
Investments,
advances and other
assets.............. $ 19,841 $ -- $ -- $12,375(3) $ 7,466
======== ======= ====== ======= ========
Goodwill............ $127,708 $33,970 $ -- $(2,115) $163,793
======== ======= ====== ======= ========
Other intangibles... $ 85,862 $31,441 $ -- $ (127) $117,430
======== ======= ====== ======= ========
Deferred tax assets
(4)................. $ 28,888 $28,178 $ -- $ 7,579 $ 49,487
======== ======= ====== ======= ========
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
(5)................. $ 85,071 $ 4,655 $ -- $60,838 $ 28,888
======== ======= ====== ======= ========
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 $13.9 million. The decrease was primarily due to the
utilization of loss carryforwards ($4.6 million) and recognition of the
realizability of certain other deferred tax assets in future years ($12.5
million). An increase in the valuation allowance related to the deferred
tax asset for foreign tax credit carryforwards ($1.7 million) and loss
carryforwards ($1.5 million) partially offset the decrease. See Note 4 to
the Consolidated Financial Statements on pages 51 and 52 of the Company's
Annual Report to Shareholders for the fiscal year ended May 1, 1996.
(3) Represents amounts reclassified as a result of consolidation of certain
fishing vessel operations.
(4) The net change in the valuation allowance for deferred tax assets was an
increase of $20.6 million. The increase is primarily due to increases in
the valuation allowance related to additional deferred tax assets for
foreign tax credit carryforwards ($25.3 million) and loss carryforwards
($2.9 million). This increase was partially offset by the recognition of
the realizability of certain other deferred tax assets in future years
($3.1 million) and the utilization of loss carryforwards ($4.5 million).
See Note 4 to the Consolidated Financial Statements on pages 51 and 52 of
the Company's Annual Report to Shareholders for the fiscal year ended May
1, 1996.
(5) 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 4 to the Consolidated Financial Statements on pages 51
and 52 of the Company's Annual Report to Shareholders for the fiscal year
ended May 1, 1996.
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 are incorporated herein by reference to Exhibit 3(i)
to the Company's Annual Report on Form 10-K for the fiscal year ended
April 27, 1994.
3(ii) The Company's By-Laws, as amended effective October 12, 1994 are
incorporated herein by reference to Exhibit 3(ii) to the Company's
Annual Report on Form 10-K for the fiscal year ended May 3, 1995.
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)1986 Deferred Compensation Program for H. J. Heinz Company and
affiliated companies, as amended and restated in its entirety
effective December 6, 1995
(ii)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
(iii)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
(iv)H. J. Heinz Company's 1990 Stock Option Plan is incorporated herein
by reference to Appendix A to the Company's Proxy Statement dated
August 3, 1990
(v)H. J. Heinz Company's 1994 Stock Option Plan is incorporated herein
by reference to Appendix A to the Company's Proxy Statement dated
August 5, 1994
(vi)H. J. Heinz Company Supplemental Executive Retirement Plan, as
amended, is incorporated herein 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
EXHIBIT
(vii)H. J. Heinz Company Executive Deferred Compensation Plan is
incorporated herein by reference to Exhibit 10(c)(x) to the
Company's Annual Report on Form 10-K for the fiscal year ended
April 27, 1994
(viii)H. J. Heinz Company Incentive Compensation Plan is incorporated
herein by reference to Appendix B to the Company's Proxy Statement
dated August 5, 1994
(ix)H. J. Heinz Company Stock Compensation Plan for Non-Employee
Directors is incorporated herein by reference to Appendix A to the
Company's Proxy Statement dated August 3, 1995
11.Computation of net income per share.
13.Pages 34 through 62 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended May 1, 1996, 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 L.L.P.
24.Powers-of-attorney of the Company's directors.
27.Financial Data Schedule.