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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 28, 1999
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, 15219
Pennsylvania (Zip Code)
(Address of principal 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. [ ]
As of June 30, 1999 the aggregate market value of the Registrant's voting
stock held by non-affiliates of the Registrant was approximately
$17,234,599,601.
The number of shares of the Registrant's Common Stock, par value $.25 per
share, outstanding as of June 30, 1999, was 358,402,871 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the fiscal year
ended April 28, 1999 are incorporated into Part I, Items 1 and 3; Part II,
Items 5, 7, 7A and 8; and Part IV, Item 14.
Portions of Registrant's Proxy Statement for the 1999 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 and other products),
beans, pasta, full calorie frozen dinners and entrees, chicken, vegetables and
fruits (frozen and canned), coated products, meats, edible oils, pickles,
vinegar, nutritional/performance drinks, margarine/shortening, juices and
other processed food products. 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 manufactures its products from a wide variety of raw foods. Pre-
season contracts are made with farmers for a 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
generally 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 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 passed the International Dolphin
Conservation Program Act ("IDCPA") on August 15, 1997. It modified the
regulation of the incidental taking of dolphins in the course of fishing for
yellowfin tuna in the eastern tropical Pacific Ocean and revised the
definition of "dolphin safe". Revision of the definition of "dolphin safe" and
modification of the regulation of the incidental taking of dolphins in the
course of fishing for yellowfin tuna in the eastern tropical Pacific Ocean 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.
2
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, central and eastern Europe, 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" and
"Pounce" are 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, and "Nature's Recipe" for dog and cat foods, most 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, all of which are marketed in the
United States. "Chef Francisco" is used for frozen soups, "College Inn" is
used for canned broths and "Omstead" is used for frozen vegetables, frozen
coated products and frozen fish products, all 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,
"Teddy" and "Fattoria Scaldasole" for yogurt, "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. The "Frank Coopers" brand is used for single-serve
foodservice products in the United Kingdom. The "Pudliszki" trademark is used
for tomato based and other vegetable products in Poland. The "Sunar" trademark
is used for infant feeding products in the Czech Republic. "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. "Bruno" and "Winna" are used for petfood in New Zealand.
"Hellaby", "Hamper", "Tom Piper Imperial", "Pacific", "Crown", "Hellabys" and
"Oak" are used for canned meats in New Zealand, Australia and the Asia/Pacific
region. "ABC" is used for soy and other sauces in Indonesia and the Pacific
Rim. "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 the United Kingdom and 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 "Medi-Cal" is used for dog and cat
foods in Canada and Japan. "Techni-cal" is used for dog and cat foods in
Canada, certain European countries, Argentina, Chile, Hong Kong, Japan and
South Africa. "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 for frozen entrees. The
Company also markets certain products under other trademarks and brand names
and under private labels.
Although crops constituting some of the Company's raw food ingredients are
harvested on a seasonal basis, most of the Company's products are produced
throughout the year. Seasonal factors inherent in the business have always
influenced the quarterly sales and net income of the Company. Consequently,
comparisons between quarters have always been more meaningful when made
between the same quarters of different years.
The products of the Company are sold under highly competitive conditions,
with many large and small competitors. The Company regards its principal
competition to be other manufacturers of processed foods, including branded,
retail products, foodservice products and private label products, that compete
with the Company for consumer preference, distribution, shelf space and
merchandising support. Product quality and consumer value are important areas
of competition. The Company's Weight Watchers International, Inc. subsidiary
also competes with a wide variety of weight control programs.
The Company's products are sold through its own sales force and through
independent brokers, 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
3
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 2000 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 28, 1999,
approximately 38,600 persons around the world.
Segment information is set forth on pages 62 through 64 in Note 14 to the
Company's Annual Report to Shareholders for the fiscal year ended April 28,
1999. 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
Section 21E of the Securities Exchange Act of 1934 (the "Exchange 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
Exchange 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 Essay from the Chairman and the Interview with the
President and CEO (pages 3 to 7 of the Company's Annual Report to Shareholders
for the fiscal year ended April 28, 1999), Year In Review (pages 21 to 22 of
the Company's Annual Report to Shareholders for the fiscal year ended April
28, 1999), Management's Discussion and Analysis (pages 23 to 38 of the
Company's Annual Report to Shareholders for the fiscal year ended April 28,
1999) 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 exchange rate fluctuations;
interest rate fluctuations; the effects of changing prices for the raw
materials used by the Company; the effectiveness of the Company's marketing,
advertising and promotional programs; and the ability of the Company, its
major service providers, vendors, suppliers and customers to adequately
address the year 2000 issue.
Item 2. Properties.
As of April 28, 1999, the Company had 24 food processing plants in the
United States and its possessions, of which 21 are owned and three are leased,
as well as 65 food processing plants outside of the United States, of which 59
are owned and six are leased, including eight in New Zealand, five in Canada,
five in South Africa, five in the United Kingdom, four in Australia, four in
Italy, three in Indonesia, two in India, two in Venezuela, two in Spain, two
in Greece, two in Portugal, two in Zimbabwe, and one in each of Argentina,
Belgium, Botswana, the Czech Republic, Ecuador, France, Germany, Ghana,
Hungary, Ireland, Japan, Netherlands, New Guinea, People's Republic of China,
Republic of Korea, Poland, Russia, Seychelles and Thailand. The Company also
leases two can-making factories in the United States and its possessions. The
Company also owns or leases 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.
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, see Note 16
to the Consolidated Financial Statements on page 66 of the Company's Annual
Report to Shareholders for the fiscal year ended April 28, 1999, 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 8, 1998.
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 8, 1999.
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 8, 1999) Employment During Past Five Years
---- ------------------ -----------------------------------------------
William R. Johnson 50 President and Chief Executive Officer of H. J.
Heinz Company since April 30, 1998; President and
Chief Operating Officer from June 12, 1996 until
April 29, 1998; Senior Vice President from
September 8, 1993 until June 12, 1996; President
and Chief Executive Officer of Star-Kist Foods,
Inc. from September 8, 1993 until June 12, 1996.
Paul F. Renne 56 Executive Vice President and Chief Financial
Officer of H. J. Heinz Company since June 11, 1997;
Senior Vice President--Finance and Chief Financial
Officer from September 13, 1996 to June 11, 1997;
Vice President--Treasurer from October 1, 1986 to
September 13, 1996.
A. G. Malcolm Ritchie 45 Executive Vice President and President--Europe of
H. J. Heinz Company since May 1, 1998; Vice
President of European Grocery and Foodservice--H.
J. Heinz Company, Ltd. from May 1, 1997 to May 1,
1998; Managing Director of H. J. Heinz Company,
Ltd. from August 15, 1994 to May 1, 1997.
William C. Springer 59 Executive Vice President of H. J. Heinz Company
since June 12, 1996 and in charge of Heinz U.S.A.,
Heinz Canada, Weight Watchers International and
Heinz affiliates in Latin America; Senior Vice
President from September 8, 1993 until June 12,
1996.
Richard H. Wamhoff 53 Executive Vice President--Global
Manufacturing/Supply Chain and Frozen Foods of H.
J. Heinz Company since May 1, 1998 and President
and Chief Executive Officer--Ore-Ida Foods, Inc.
from May 1, 1993 until May 1, 1998.
David R. Williams 56 Executive Vice President of H. J. Heinz Company
since June 12, 1996 and in charge of Heinz Pet
Products, Star-Kist Seafood and Heinz operations in
Asia and Australasia; 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 until June 12, 1996.
5
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name September 8, 1999) Employment During Past Five Years
---- ------------------ -----------------------------------------------
Michael J. Bertasso 49 Senior Vice President--Strategy, Process and
Business Development of H. J. Heinz Company since
May 1, 1998; Executive Vice President--Star-Kist
Foods, Inc. from July 1, 1996 to May 1, 1998; Chief
Cost Officer--Star-Kist Foods, Inc. from May 1,
1995 to July 1, 1996; Vice President Purchasing &
Logistics--Star-Kist Foods, Inc. from November 1,
1988 to May 1, 1995.
Lawrence J. McCabe 64 Senior Vice President, General Counsel and
Secretary of H. J. Heinz Company since November 1,
1997; Senior Vice President--General Counsel from
June 12, 1991 to October 30, 1997.
D. Edward I. Smyth 49 Senior Vice President--Corporate and Government
Affairs of H. J. Heinz Company since May 1, 1998;
Vice President--Corporate Affairs from March 14,
1990 to May 1, 1998.
William C. Goode 58 Vice President and Chief Administrative Officer of
H. J. Heinz Company since May 1, 1998; Vice
President--Operations of Heinz Pet Products from
October 1, 1996 until April 30, 1997; Vice
President--Human Resources & Quality Systems of
Star-Kist Foods, Inc. from May 1, 1993 until
September 30, 1996.
Michael D. Milone 43 Vice President--Global Category Development since
August, 1998; President and Chief Operating Officer
of Heinz Pet Products from July 1996 to July 1998;
Chief Revenue Officer--Star-Kist Foods, Inc. from
May 1995 to July 1996; Vice President--Marketing
Heinz Pet Products from June 1991 to July 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 38 under the caption "Stock Market Information" and on page 65 in Note
15, "Quarterly Results (Unaudited)," of the Company's Annual Report to
Shareholders for the fiscal year ended April 28, 1999. 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 1995 through
1999. 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 28, April 29, April 30, May 1, May 3,
1999 1998 1997 1996 1995
(52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (53 Weeks)
---------- ---------- ---------- ---------- ----------
Sales................... $9,299,610 $9,209,284 $9,357,007 $9,112,265 $8,086,794
Interest expense........ 258,813 258,616 274,746 277,411 210,585
Net income.............. 474,341 801,566 301,871 659,319 591,025
Net income per share--
diluted................ 1.29 2.15 0.81 1.75 1.58
Net income per share--
basic.................. 1.31 2.19 0.82 1.79 1.61
Short-term debt and
current portion
of long-term debt...... 904,207 339,626 1,163,442 1,082,169 1,074,291
Long-term debt,
exclusive of
current portion........ 2,472,206 2,768,277 2,283,993 2,281,659 2,326,785
Total assets............ 8,053,634 8,023,421 8,437,787 8,623,691 8,247,188
Cash dividends per
common share............ 1.34 1/4 1.23 1/2 1.13 1/2 1.03 1/2 0.94
The 1999 results include restructuring and implementation costs of $552.8
million pretax ($1.11 per share) for Phase I of Operation Excel and costs of
$22.3 million pretax ($0.04 per share) related to the implementation of
Project Millennia, offset by the reversal of unutilized Project Millennia
accruals for severance and exit costs of $25.7 million pretax ($0.04 per
share) and a gain of $5.7 million pretax on the sale of the bakery
products unit. See Notes 3 and 4 to the Consolidated Financial Statements
beginning on page 48 of the Company's Annual Report to Shareholders for the
fiscal year ended April 28, 1999.
Results recorded in 1998 include costs of $84.1 million pretax ($0.14 per
share) related to the implementation of Project Millennia, offset by the gain
on the sale of the Ore-Ida frozen foodservice business, $96.6 million pretax
($0.14 per share). See Notes 3 and 4 to the Consolidated Financial Statements
beginning on page 48 of the Company's Annual Report to Shareholders for the
fiscal year ended April 28, 1999.
Results recorded in 1997 include a pretax charge for restructuring and
implementation costs of $647.2 million ($1.09 per share). See Note 4 to the
Consolidated Financial Statements beginning on page 48 of the Company's Annual
Report to Shareholders for the fiscal year ended April 28, 1999. 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 Note 3 to the
Consolidated Financial Statements on page 48 of the Company's Annual Report to
Shareholders for the fiscal year ended April 28, 1999.
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).
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.
Note: In the third quarter of Fiscal 1998, the Company adopted SFAS No. 128,
"Earnings Per Share." Previously reported earnings per share amounts have been
restated, as necessary, to conform to SFAS No. 128 requirements. All earnings
per share amounts are presented on an after-tax diluted basis unless otherwise
noted.
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 23 through 38 of the Company's Annual Report to Shareholders
for the fiscal year ended April 28, 1999. Such information is incorporated
herein by reference.
Subsequent to the end of fiscal year 1999, on July 22, 1999, the Company
signed a definitive agreement for the sale of the Weight Watchers weight
control business for $735 million to a unit of Artal Luxembourg, S.A., a
European private investment firm for which The Invus Group, Ltd. of New York
acts as exclusive investment advisor. The sale does not include Weight
Watchers core food businesses such as Weight Watchers Smart Ones frozen meals,
desserts and breakfast items, Weight Watchers from Heinz in the UK and a broad
range of other Weight Watchers branded foods in Heinz's global core product
categories. The sale is expected to close in about three months subject to
customary closing conditions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
This information is set forth in the Management's Discussion and Analysis
section on pages 35 through 36 of the Company's Annual Report to Shareholders
for the fiscal year ended April 28, 1999. 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 28, 1999 and April 29, 1998 and the related Consolidated Statements of
Income, Shareholders' Equity and Cash Flows for the fiscal years ended April
28, 1999, April 29, 1998 and April 30, 1997 together with the related Notes to
Consolidated Financial Statements, on pages 39 through 66 of the Company's
Annual Report to Shareholders for the fiscal year ended April 28, 1999, 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 "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 8, 1999. 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 8,
1999. 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 caption
"Security Ownership of Management" in the Company's definitive Proxy Statement
in connection with its Annual Meeting of Shareholders to be held
September 8, 1999. 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 Agreements" in the Company's definitive Proxy
Statement in connection with its Annual Meeting of Shareholders to be held
September 8, 1999. 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 28, 1999
are incorporated herein by reference:
Consolidated Balance Sheets as of April 28, 1999 and April 29, 1998
Consolidated Statements of Income for the fiscal years ended April
28, 1999, April 29, 1998 and April 30, 1997
Consolidated Statements of Shareholders' Equity for the fiscal years
ended April 28, 1999, April 29, 1998 and April 30, 1997
Consolidated Statements of Cash Flows for the fiscal years ended
April 28, 1999, April 29, 1998 and April 30, 1997
Notes to Consolidated Financial Statements
Report of Independent Accountants of PricewaterhouseCoopers LLP
dated June 14, 1999 on the Company's consolidated financial
statements for the fiscal years ended April 28, 1999, April 29, 1998
and April 30, 1997
(2)The following report and schedule is filed herewith as a part hereof:
Report of Independent Accountants of PricewaterhouseCoopers LLP
dated June 14, 1999 on the Company's consolidated financial
statement schedule filed as a part hereof for the fiscal years ended
April 28, 1999, April 29, 1998 and April 30, 1997
Consent of Independent Accountants of PricewaterhouseCoopers LLP
dated July 23, 1999 filed as a part hereof
Schedule II (Valuation and Qualifying Accounts and Reserves) for the
three fiscal years ended April 28, 1999, April 29, 1998 and April
30, 1997
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 April 30, 1998 are
incorporated herein by reference to Exhibit 3(ii) to the Company's
Annual Report on Form 10-K for the fiscal year ended April 29,
1998.
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) The Indenture between the Company and The First National Bank of
Chicago dated as of July 15, 1992 is incorporated herein by
reference to Exhibit 4(a) to the Company's Registration
Statement on Form S-3 (Reg. No. 333-48017) and the supplements
to such Indenture are incorporated herein by reference to the
Company's Form 8-Ks dated October 29, 1992, January 27, 1993,
March 25, 1998 and July 16, 1998 relating to the Company's
$300,000,000 6 3/4% Notes due 1999, $200,000,000 6 7/8% Notes
due 2003, $300,000,000 6% Notes due 2008 and $250,000,000 6.375%
Debentures due 2028, respectively.
10(a) 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, is
9
incorporated herein by reference to Exhibit 10(c)(i) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 1, 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
(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
(xi) Service Agreement between H. J. Heinz Company and Anthony J.
F. O'Reilly is incorporated herein by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the nine
months ended January 28, 1998
(xii) H. J. Heinz Company Deferred Compensation Plan for Directors
incorporated herein by reference to Exhibit 10(xiii) to the
Company's Annual Report on Form 10-K for the fiscal year
ended April 29, 1998
12. Computation of Ratios of Earnings to Fixed Charges.
13. Pages 23 through 67 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended April 28, 1999, 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 PricewaterhouseCoopers LLP.
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) During the last fiscal quarter of the period covered by this Report the
Company filed a Current Report on Form 8-K dated February 22, 1999
relating to the announcement of Operation Excel.
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 23, 1999.
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 23, 1999.
Signature Capacity
/s/ William R. Johnson
............................. President and Chief
William R. Johnson Executive Officer (Principal
Executive Officer)
/s/ Paul F. Renne Executive Vice President and Chief
............................. Financial Officer (Principal Financial
Paul F. Renne Officer)
/s/ Edward J. McMenamin
............................. Vice President and Corporate
Edward J. McMenamin Controller (Principal
Accounting Officer)
Anthony J. F. O'Reilly Director
William R. Johnson Director
Nicholas F. Brady Director
Leonard S. Coleman, Jr. Director
Edith E. Holiday Director
Samuel C. Johnson Director
Candace Kendle Director
Donald R. Keough Director /s/ Paul F. Renne
Lawrence J. McCabe Director By............................................
Paul F. Renne Director Paul F. Renne
A. G. Malcolm Ritchie Director Director and Attorney-in-Fact
Herman J. Schmidt Director
Eleanor B. Sheldon Director
William P. Snyder III Director
William C. Springer Director
S. Donald Wiley Director
David R. Williams Director
James M. Zimmerman Director
11
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
The Shareholders of
H. J. Heinz Company:
Our audits of the consolidated financial statements referred to in our
report dated June 14, 1999 appearing in the Annual Report to Shareholders of
H. J. Heinz Company and Subsidiaries (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers
LLP
PricewaterhouseCoopers LLP
Pittsburgh, PA
June 14, 1999
---------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-48017) and Form S-8 (Nos. 2-51719, 2-45120, 33-
00390, 33-19639, 33-32563, 33-42015, 33-55777, 33-62623 and 333-13849) of H.
J. Heinz Company and Subsidiaries of our report dated June 14, 1999 relating
to the financial statements, which appears in the Annual Report to
Shareholders, which is incorporated in this Annual Report on Form 10-K. We
also consent to the incorporation by reference of our report dated June 14,
1999 relating to the financial statement schedule, which appears in this Form
10-K.
/s/ PricewaterhouseCoopers
LLP
PricewaterhouseCoopers LLP
July 23, 1999
12
Schedule II
H. J. Heinz Company and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Fiscal Years Ended April 28, 1999, April 29, 1998 and April 30, 1997
(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
28, 1999:
Reserves deducted in
the balance sheet
from the assets to
which they apply:
Receivables......... $ 17,627 $ 8,427 $ -- $ 4,421(1) $ 21,633
======== ======= ====== ======= ========
Investments,
advances and other
assets.............. $ 2,392 $ -- $ -- $ 516 $ 1,876
======== ======= ====== ======= ========
Goodwill............ $297,868 $80,931 $ -- $26,590(1) $352,209
======== ======= ====== ======= ========
Trademarks.......... $ 67,791 $20,319 $ -- $ 3,438(1) $ 84,672
======== ======= ====== ======= ========
Other intangibles... $112,768 $16,708 $ -- $12,438(1) $117,038
======== ======= ====== ======= ========
Deferred tax assets
(2)................. $ 20,992 $25,949 $ -- $ 6,130 $ 40,811
======== ======= ====== ======= ========
Fiscal year ended April
29, 1998:
Reserves deducted in
the balance sheet
from
the assets to which
they apply:
Receivables......... $ 18,934 $ 4,934 $ -- $ 6,241(1) $ 17,627
======== ======= ====== ======= ========
Investments,
advances and other
assets.............. $ 4,767 $ -- $ -- $ 2,375 $ 2,392
======== ======= ====== ======= ========
Goodwill............ $259,019 $51,890 $ -- $13,041(1) $297,868
======== ======= ====== ======= ========
Trademarks.......... $ 57,186 $13,857 $ -- $ 3,252 $ 67,791
======== ======= ====== ======= ========
Other intangibles... $106,046 $14,788 $ -- $ 8,066(1) $112,768
======== ======= ====== ======= ========
Deferred tax assets
(3)................. $ 5,459 $16,755 $ -- $ 1,222 $ 20,992
======== ======= ====== ======= ========
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
======== ======= ====== ======= ========
Trademarks.......... $ 49,093 $12,102 $ -- $ 4,009 $ 57,186
======== ======= ====== ======= ========
Other intangibles... $ 92,793 $16,973 $ -- $ 3,720(1) $106,046
======== ======= ====== ======= ========
Deferred tax assets
(4)................. $ 35,594 $ 2,987 $ -- $33,122 $ 5,459
======== ======= ====== ======= ========
Notes:
(1) Principally reserves on assets sold, written-off or reclassified.
(2) The net change in the valuation allowance for deferred tax assets was an
increase of $19.8 million. The increase was due to a change in judgment
about the realizability of deferred tax assets related to foreign tax
credit carryforwards ($4.1 million) and the addition of deferred tax
assets for loss carryforwards ($21.8 million). The increase was partially
offset by decreases in the valuation allowance related to a reduction in
deferred tax assets for loss carryforwards ($3.0 million) and foreign tax
credit carryforwards ($3.1 million). See Note 5 to the Consolidated
Financial Statements of the Company's Annual Report to Shareholders for
the fiscal year ended April 28, 1999.
(3) The net change in the valuation allowance for deferred tax assets was an
increase of $15.5 million. The increase was due to increases in the
valuation allowance related to additional deferred tax assets for foreign
tax credit carryforwards ($9.5 million) and loss carryforwards ($7.2
million). The increase was partially offset by a decrease in the valuation
allowance related to the utilization of loss carryforwards ($1.2 million).
See Note 5 to the Consolidated Financial Statements of the Company's
Annual Report to Shareholders for the fiscal year ended April 28, 1999.
(4) 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 of the Company's Annual Report to Shareholders for
the fiscal year ended April 29, 1998.
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 April 30, 1998 are
incorporated herein by reference to Exhibit 3(ii) to the Company's
Annual Report on Form 10-K for the fiscal year ended April 29,
1998.
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) The Indenture between the Company and The First National Bank of
Chicago dated as of July 15, 1992 is incorporated herein by
reference to Exhibit 4(a) to the Company's Registration
Statement on Form S-3 (Reg. No. 333-48017) and the supplements
to such Indenture are incorporated herein by reference to the
Company's Form 8-Ks dated October 29, 1992, January 27, 1993,
March 25, 1998 and July 16, 1998 relating to the Company's
$300,000,000 6 3/4% Notes due 1999, $200,000,000 6 7/8% Notes
due 2003, $300,000,000 6% Notes due 2008 and $250,000,000 6.375%
Debentures due 2028, respectively.
10(a) 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, is incorporated herein
by reference to Exhibit 10(c)(i) to the Company's Annual
Report on Form 10-K for the fiscal year ended May 1, 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
(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
(xi) Service Agreement between H. J. Heinz Company and Anthony J.
F. O'Reilly is incorporated herein by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the nine
months ended January 28, 1998
(xii) H. J. Heinz Company Deferred Compensation Plan for Directors
incorporated herein by reference to Exhibit 10(xiii) to the
Company's Annual Report on Form 10-K for the fiscal year
ended April 29, 1998
12. Computation of Ratios of Earnings to Fixed Charges.
13. Pages 23 through 67 of the H. J. Heinz Company Annual Report to
Shareholders for the fiscal year ended April 28, 1999, 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 PricewaterhouseCoopers LLP.
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.