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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 April 30, 1997
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 (Zip Code)
executive offices)
412-456-5700
(Registrant's telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, par value $.25
per share New York Stock Exchange; Pacific Stock Exchange
Third Cumulative Preferred
Stock,
$1.70 First Series, par value
$10 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of June 30, 1997 the aggregate market value of the Registrant's voting
stock held by non-affiliates of the Registrant was approximately
$16,110,335,000.
The number of shares of the Registrant's Common Stock, par value $.25 per
share, outstanding as of June 30, 1997, was 369,301,849 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the fiscal year
ended April 30, 1997, 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 1997 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, pasta, full calorie frozen dinners and entrees, coated
products, bakery products, vegetables and fruits (frozen and canned), chicken,
frozen pizza and pizza components, edible oils, margarine/shortening, vinegar,
pickles, juices, canned meats 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 two 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.
1997 1996 1995
---- ---- ----
Ketchup, sauces and other condiments....................... 18% 19% 21%
Pet food................................................... 13 12 9
All other classes of products, none of which accounts
for 10% or more of consolidated sales..................... 69 69 70
--- --- ---
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 spot and term contracts directly with tuna vessel
owners or their cooperatives and by brokered 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. 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, and 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. Congress is considering amendments (the "proposed
amendments") to the Act and the Dolphin Information Act which, if enacted,
would modify the regulation of the incidental taking of dolphins in the course
of fishing for yellowfin tuna in the eastern tropical Pacific Ocean and revise
the definition of "dolphin safe." If enacted, the proposed amendments are not
expected to have a material 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 retail potato products, "Bagel Bites"
for pizza snack products, "Moore's" for retail coated vegetables, "Rosetto"
for frozen pasta products, "Earth's Best" for baby food and "Dyna Bites" and
"Cheese Bites" for retail snack 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 Bone",
"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,
"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. "John West" is used for tuna, salmon and other products in the
United Kingdom and other European countries. "Wattie's" is used for various
grocery products and frozen foods, "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.
"Hellaby" is used for canned meats in New Zealand 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 and "Martins", "Medi-Cal" and "Techni-cal" is used
for dog and cat foods in Canada and certain 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, agents and distributors to chain, wholesale, cooperative
and independent grocery accounts, pharmacies, mass merchants, club stores, pet
stores, foodservice distributors and 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 1998 and the succeeding fiscal year are not material
and will not materially affect either the earnings or competitive position of
the Company.
The Company's factories are subject to inspections by various governmental
agencies, and its products must comply with the applicable laws, including
food and drug laws, of the jurisdictions in which they are manufactured and
marketed.
The Company employed, on a full-time basis as of April 30, 1997,
approximately 44,700 persons around the world.
Financial segment information by major geographic area for the most recent
three fiscal years is set forth on page 34 of the Company's Annual Report to
Shareholders for the fiscal year ended April 30, 1997. 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 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 Letter
from the Chairman and CEO and the Letter from the President and COO (pages 2
to 7 of the Company's Annual Report to Shareholders for the fiscal year ended
April 30, 1997), Management's Discussion and Analysis (pages 26 to 33 of the
Company's Annual Report to Shareholders for the fiscal year ended April 30,
1997) 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 economic conditions, including 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 37 food processing plants in the United States and its
possessions, of which 32 are owned and five are leased, as well as 61 food
processing plants outside of the United States, of which 57 are owned and four
are leased, including 11 in New Zealand, eight in Canada, six in the United
Kingdom, five in Italy, five in Australia, two 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
4
Company and certain of its subsidiaries also own or lease office space,
warehouses, distribution centers 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.
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, see Note 14
to the Consolidated Financial Statements on page 58 of the Company's Annual
Report to Shareholders for the fiscal year ended April 30, 1997, which is
incorporated herein by reference. The Company continues to believe that all of
the suits and claims are without merit and is defending itself vigorously
against them.
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 10, 1996.
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, 1997.
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 10, 1997) Employment During Past Five Years
---- ------------------- ---------------------------------
Anthony J. F. O'Reilly 61 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 85 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 48 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. and President and Chief Executive Officer of
Heinz Pet Products Company to June 12, 1996 from
May 1, 1992 and November 1, 1988, respectively.
Lawrence J. McCabe 62 Senior Vice President-General Counsel since June
12, 1991.
Paul F. Renne 54 Executive Vice President and Chief Financial
Officer since June 11, 1997; Senior Vice President-
Finance and Chief Financial Officer from September
13, 1996 to June 11, 1997 and Vice President-
Treasurer from October 1, 1986 to September 13,
1996.
5
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 10, 1997) Employment During Past Five Years
---- ------------------- ---------------------------------
Luigi Ribolla 60 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.
William C. Springer 57 Executive Vice President-The Americas since June
12, 1996 and in charge of Heinz U.S.A. and Heinz
Canada since September 8, 1993 and in charge of
Weight Watchers operations worldwide and Heinz
Bakery Products since June 12, 1996; in charge of
Heinz operations in Latin America from September 8,
1993 to January 6, 1997 and in charge of Ore-Ida
Foods, Inc. from June 12, 1996 to January 6, 1997;
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 54 Executive Vice President since June 12, 1996 in
charge of Ore-Ida Foods, Inc. Star-Kist Foods, Inc.
and Heinz operations in Latin America since January
6, 1997 and in charge of all Heinz affiliates and
development activities in India, Pakistan and
southern Africa since October 12, 1994; Executive
Vice President-Finance and Chief Financial Officer
from June 12, 1996 to September 13, 1996; Senior
Vice President-Finance and Chief Financial Officer
from August 1, 1992 to June 12, 1996.
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 33 under the caption "Stock Market Information" and on page 57 in Note
13, "Quarterly Results (Unaudited)," of the Company's Annual Report to
Shareholders for the fiscal year ended April 30, 1997. 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 1993 through
1997. 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
------------------------------------------------------------
April 30, May 1, May 3, April 27, April 28,
1997 1996 1995 1994 1993
(52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
Sales................... $9,357,007 $9,112,265 $8,086,794 $7,046,738 $7,103,374
Interest expense........ 274,746 277,411 210,585 149,243 146,491
Income before cumulative
effect of
accounting change...... 301,871 659,319 591,025 602,944 529,943
Net income.............. 301,871 659,319 591,025 602,944 396,313
Income before cumulative
effect of
accounting change per
common share........... 0.81 1.75 1.59 1.57 1.36
Net income per common
share.................. 0.81 1.75 1.59 1.57 1.02
Short-term debt and
current portion
of long-term debt...... 1,163,442 1,082,169 1,074,291 439,701 1,604,355
Long-term debt,
exclusive of
current portion........ 2,283,993 2,281,659 2,326,785 1,727,002 1,009,381
Total assets............ 8,437,787 8,623,691 8,247,188 6,381,146 6,821,321
Cash dividends per
common share............ 1.13 1/2 1.03 1/2 0.94 0.86 0.78
Results recorded in 1997 include a pretax charge for restructuring and
related costs of $647.2 million ($1.09 per share). See Note 4 to the
Consolidated Financial Statements beginning on page 44 of the Company's Annual
Report to Shareholders for the fiscal year ended April 30, 1997. These charges
were partially offset by gains recognized on the sale of the New Zealand ice
cream business, $72.1 million pretax ($0.12 per share) and real estate in the
United Kingdom, $13.2 million pretax ($0.02 per share). See Notes 3 and 13 to
the Consolidated Financial Statements on pages 44 and 57, respectively, of the
Company's Annual Report to Shareholders for the fiscal year ended April 30,
1997.
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 13 to the Consolidated
Financial Statements on page 57 of the Company's Annual Report to Shareholders
for the fiscal year ended April 30, 1997.
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 41 of the Company's Annual Report to
Shareholders for the fiscal year ended April 30, 1997.
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.
During 1993, the Company adopted the provisions of SFAS 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 SFAS 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).
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 26 through 33 of the Company's Annual Report to Shareholders
for the fiscal year ended April 30, 1997. Such information is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheets of the Company and its subsidiaries as of
April 30, 1997 and May 1, 1996 and the related Consolidated Statements of
Income, Retained Earnings and Cash Flows for the fiscal years ended April 30,
1997, May 1, 1996 and May 3, 1995 together with the related Notes to
Consolidated Financial Statements, included in the Company's Annual Report to
Shareholders for the fiscal year ended April 30, 1997, 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, 1997. 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,
1997. 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, 1997. 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 Certain
Beneficial Owners" in the Company's definitive Proxy Statement in connection
with its Annual Meeting of Shareholders to be held September 10, 1997. 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 April 30, 1997
are incorporated herein by reference:
Consolidated Balance Sheets as of April 30, 1997 and May 1, 1996
Consolidated Statements of Income for the fiscal years ended April
30, 1997, May 1, 1996 and May 3, 1995
Consolidated Statements of Retained Earnings for the fiscal years
ended April 30, 1997, May 1, 1996 and May 3, 1995
Consolidated Statements of Cash Flows for the fiscal years ended
April 30, 1997, May 1, 1996 and May 3, 1995
Notes to Consolidated Financial Statements
Report of Independent Accountants of Coopers & Lybrand L.L.P. dated
June 17, 1997 except for Note 16, as to which the date is June 30,
1997, on the Company's consolidated financial statements for the
fiscal years ended April 30, 1997, May 1, 1996 and May 3, 1995
(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 17, 1997, on the Company's consolidated financial statement
schedule filed as a part hereof for the fiscal years ended April 30,
1997, May 1, 1996 and May 3, 1995
Schedule II (Valuation and Qualifying Accounts and Reserves) for the
three fiscal years ended April 30, 1997, May 1, 1996 and May 3, 1995
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 July 10, 1996.
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
(x) H. J. Heinz Company's 1996 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company's Proxy
Statement dated August 2, 1996
11. Computation of net income per share.
13. Pages 26 through 59 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended April 30, 1997, 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.
99. H. J. Heinz Company Board of Directors' Guidelines on Political
Contributions.
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 28, 1997.
H. J. HEINZ COMPANY
(Registrant)
/s/ Paul F. Renne
By......................................
PAUL F. RENNE
Executive Vice President 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 28, 1997.
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/ Paul F. Renne
............................. Executive Vice President and Chief
PAUL F. RENNE Financial Officer (Principal Financial
Officer)
/s/ Edward J. McMenamin Vice President-Corporate
............................. Controller (Principal
EDWARD J. MCMENAMIN Accounting Officer)
Anthony J. F. O'ReillyDirector
Joseph J. BogdanovichDirector
Nicholas F. BradyDirector
Richard M. CyertDirector
Thomas S. FoleyDirector
Edith E. HolidayDirector
Samuel C. JohnsonDirector
William R. JohnsonDirector
Donald R. KeoughDirector
Albert LippertDirector /s/ Lawrence J. McCabe
Lawrence J. McCabeDirector By............................................
Paul F. RenneDirector LAWRENCE J. MCCABE
Luigi RibollaDirector Director and Attorney-in-Fact
Herman J. SchmidtDirector
Eleanor B. SheldonDirector
William P. Snyder IIIDirector
William C. SpringerDirector
S. Donald WileyDirector
David R. WilliamsDirector
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 April 30, 1997 and appears on page 59 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 17, 1997
---------------
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, 33-62623 and 333-13849) of our
reports dated June 17, 1997, except for Note 16, as to which the date is June
30, 1997, on our audits of the consolidated financial statements and financial
statement schedule of H. J. Heinz Company and Subsidiaries as of April 30,
1997, and May 1, 1996 and for the fiscal years ended April 30, 1997, May 1,
1996 and May 3, 1995 which reports are included or incorporated by reference
in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Pittsburgh, PA
July 25, 1997
12
SCHEDULE II
H. J. HEINZ COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FISCAL YEARS ENDED APRIL 30, 1997, MAY 1, 1996 AND MAY 3, 1995
(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 April
30, 1997:
Reserves deducted in
the balance sheet
from the assets to
which they apply:
Receivables......... $ 17,298 $11,106 $ -- $ 9,470(1) $ 18,934
======== ======= ====== ======= ========
Investments,
advances and other
assets.............. $ 5,864 $ -- $ -- $ 1,097 $ 4,767
======== ======= ====== ======= ========
Goodwill............ $211,693 $50,955 $ -- $ 3,629(1) $259,019
======== ======= ====== ======= ========
Other intangibles... $141,886 $29,075 $ -- $ 7,729(1) $163,232
======== ======= ====== ======= ========
Deferred tax assets
(2)................. $ 35,594 $ 2,987 $ -- $33,122 $ 5,459
======== ======= ====== ======= ========
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
(3)................. $ 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(4) $ 7,466
======== ======= ====== ======= ========
Goodwill............ $127,708 $33,970 $ -- $(2,115) $163,793
======== ======= ====== ======= ========
Other intangibles... $ 85,862 $31,441 $ -- $ (127) $117,430
======== ======= ====== ======= ========
Deferred tax assets
(5)................. $ 28,888 $28,178 $ -- $ 7,579 $ 49,487
======== ======= ====== ======= ========
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 $30.1 million. The decrease was due to the utilization of tax
credit ($27.0 million) and loss ($5.0 million) carryforwards and
recognition of the realizability of certain other deferred tax assets in
future years ($1.1 million). An increase in the valuation allowance
primarily related to deferred tax assets for loss carryforwards ($2.7
million) partially offset the decrease. See Note 5 to the Consolidated
Financial Statements on pages 45 to 47 of the Company's Annual Report to
Shareholders for the fiscal year ended April 30, 1997.
(3) 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 5 to
the Consolidated Financial Statements on pages 45 to 47 of the Company's
Annual Report to Shareholders for the fiscal year ended April 30, 1997.
(4) Represents amounts reclassified as a result of consolidation of certain
fishing vessel operations.
(5) 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 5 to the Consolidated Financial Statements on pages 45 to 47 of
the Company's Annual Report to Shareholders for the fiscal year ended
April 30, 1997.
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 July 10, 1996.
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
(x)H. J. Heinz Company's 1996 Stock Option Plan is incorporated herein
by reference to Appendix A to the Company's Proxy Statement dated
August 2, 1996
11.Computation of net income per share.
13.Pages 26 through 59 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended April 30, 1997, 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.
99.H. J. Heinz Company Board of Directors' Guidelines on Political
Contributions.