x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the quarterly period ended July 27,
2011
|
||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from
to
|
PENNSYLVANIA
|
25-0542520 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
One PPG Place, Pittsburgh, Pennsylvania (Address of Principal Executive Offices) |
15222 (Zip Code) |
Large accelerated filer X | Accelerated filer | Non-accelerated filer | Smaller reporting company |
Item 1. | Financial Statements |
First Quarter Ended | ||||||||
July 27, 2011 |
July 28, 2010 |
|||||||
FY 2012 | FY 2011 | |||||||
(Unaudited) | ||||||||
(In thousands, Except per Share Amounts) | ||||||||
Sales
|
$ | 2,849,581 | $ | 2,480,825 | ||||
Cost of products sold
|
1,864,088 | 1,572,848 | ||||||
Gross profit
|
985,493 | 907,977 | ||||||
Selling, general and administrative expenses
|
615,930 | 502,262 | ||||||
Operating income
|
369,563 | 405,715 | ||||||
Interest income
|
9,777 | 4,117 | ||||||
Interest expense
|
70,955 | 66,752 | ||||||
Other expense, net
|
2,280 | 10,289 | ||||||
Income before income taxes
|
306,105 | 332,791 | ||||||
Provision for income taxes
|
71,146 | 84,196 | ||||||
Net income
|
234,959 | 248,595 | ||||||
Less: Net income attributable to the noncontrolling interest
|
8,845 | 8,168 | ||||||
Net income attributable to H. J. Heinz Company
|
$ | 226,114 | $ | 240,427 | ||||
Net income per share attributable to H. J. Heinz Company common
shareholdersdiluted
|
$ | 0.70 | $ | 0.75 | ||||
Average common shares outstandingdiluted
|
324,246 | 321,009 | ||||||
Net income per share attributable to H. J. Heinz Company common
shareholdersbasic
|
$ | 0.70 | $ | 0.76 | ||||
Average common shares outstandingbasic
|
321,411 | 318,060 | ||||||
Cash dividends per share
|
$ | 0.48 | $ | 0.45 | ||||
2
July 27, 2011 |
April 27, 2011* |
|||||||
FY 2012 | FY 2011 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 677,728 | $ | 724,311 | ||||
Trade receivables, net
|
896,422 | 1,039,064 | ||||||
Other receivables, net
|
215,201 | 225,968 | ||||||
Inventories:
|
||||||||
Finished goods and
work-in-process
|
1,211,142 | 1,165,069 | ||||||
Packaging material and ingredients
|
285,123 | 286,477 | ||||||
Total inventories
|
1,496,265 | 1,451,546 | ||||||
Prepaid expenses
|
204,663 | 159,521 | ||||||
Other current assets
|
137,094 | 153,132 | ||||||
Total current assets
|
3,627,373 | 3,753,542 | ||||||
Property, plant and equipment
|
5,242,036 | 5,224,715 | ||||||
Less accumulated depreciation
|
2,761,385 | 2,719,632 | ||||||
Total property, plant and equipment, net
|
2,480,651 | 2,505,083 | ||||||
Goodwill
|
3,289,920 | 3,298,441 | ||||||
Trademarks, net
|
1,148,261 | 1,156,221 | ||||||
Other intangibles, net
|
434,976 | 442,563 | ||||||
Other non-current assets
|
1,102,321 | 1,074,795 | ||||||
Total other non-current assets
|
5,975,478 | 5,972,020 | ||||||
Total assets
|
$ | 12,083,502 | $ | 12,230,645 | ||||
* | The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. |
3
July 27, 2011 |
April 27, 2011* |
|||||||
FY 2012 | FY 2011 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Liabilities and Equity
|
||||||||
Current Liabilities:
|
||||||||
Short-term debt
|
$ | 95,756 | $ | 87,800 | ||||
Portion of long-term debt due within one year
|
640,713 | 1,447,132 | ||||||
Trade payables
|
1,176,652 | 1,337,620 | ||||||
Other payables
|
174,906 | 162,047 | ||||||
Accrued marketing
|
309,082 | 313,389 | ||||||
Other accrued liabilities
|
602,289 | 715,147 | ||||||
Income taxes
|
96,271 | 98,325 | ||||||
Total current liabilities
|
3,095,669 | 4,161,460 | ||||||
Long-term debt
|
3,940,821 | 3,078,128 | ||||||
Deferred income taxes
|
914,302 | 897,179 | ||||||
Non-pension postretirement benefits
|
219,368 | 216,172 | ||||||
Other non-current liabilities
|
563,774 | 570,571 | ||||||
Total long-term liabilities
|
5,638,265 | 4,762,050 | ||||||
Redeemable noncontrolling interest
|
126,677 | 124,669 | ||||||
Equity:
|
||||||||
Capital stock
|
107,835 | 107,843 | ||||||
Additional capital
|
622,749 | 629,367 | ||||||
Retained earnings
|
7,335,185 | 7,264,678 | ||||||
8,065,769 | 8,001,888 | |||||||
Less:
|
||||||||
Treasury stock at cost (110,052 shares at July 27,
2011 and 109,818 shares at April 27, 2011)
|
4,615,825 | 4,593,362 | ||||||
Accumulated other comprehensive loss
|
309,402 | 299,564 | ||||||
Total H. J. Heinz Company shareholders equity
|
3,140,542 | 3,108,962 | ||||||
Noncontrolling interest
|
82,349 | 73,504 | ||||||
Total equity
|
3,222,891 | 3,182,466 | ||||||
Total liabilities and equity
|
$ | 12,083,502 | $ | 12,230,645 | ||||
* | The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. |
4
First Quarter Ended | ||||||||
July 27, 2011 |
July 28, 2010 |
|||||||
FY 2012 | FY 2011 | |||||||
(Unaudited) | ||||||||
(Thousands of Dollars) | ||||||||
Cash Flows from Operating Activities:
|
||||||||
Net income
|
$ | 234,959 | $ | 248,595 | ||||
Adjustments to reconcile net income to cash provided by
operating activities:
|
||||||||
Depreciation
|
72,900 | 58,715 | ||||||
Amortization
|
11,104 | 10,604 | ||||||
Deferred tax provision
|
3,483 | 37,751 | ||||||
Pension contributions
|
(3,351 | ) | (6,616 | ) | ||||
Other items, net
|
43,086 | (7,380 | ) | |||||
Changes in current assets and liabilities, excluding effects of
acquisitions and divestitures:
|
||||||||
Receivables (includes proceeds from securitization)
|
108,771 | 71,750 | ||||||
Inventories
|
(39,593 | ) | 5,769 | |||||
Prepaid expenses and other current assets
|
(37,365 | ) | (29,277 | ) | ||||
Accounts payable
|
(147,755 | ) | (47,792 | ) | ||||
Accrued liabilities
|
(101,238 | ) | (143,130 | ) | ||||
Income taxes
|
19,789 | 73,417 | ||||||
Cash provided by operating activities
|
164,790 | 272,406 | ||||||
Cash Flows from Investing Activities:
|
||||||||
Capital expenditures
|
(74,270 | ) | (55,625 | ) | ||||
Proceeds from disposals of property, plant and equipment
|
6,592 | 205 | ||||||
Other items, net
|
(4,461 | ) | 1,932 | |||||
Cash used for investing activities
|
(72,139 | ) | (53,488 | ) | ||||
Cash Flows from Financing Activities:
|
||||||||
Payments on long-term debt
|
(806,282 | ) | (7,726 | ) | ||||
Proceeds from long-term debt
|
610,349 | 9,457 | ||||||
Net proceeds/(payments) on commercial paper and short-term debt
|
259,904 | (90,514 | ) | |||||
Dividends
|
(155,081 | ) | (143,726 | ) | ||||
Exercise of stock options
|
43,913 | 19,434 | ||||||
Purchase of treasury stock
|
(86,740 | ) | | |||||
Other items, net
|
13,248 | 15,068 | ||||||
Cash used for financing activities
|
(120,689 | ) | (198,007 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(18,545 | ) | (9,655 | ) | ||||
Net (decrease)/increase in cash and cash equivalents
|
(46,583 | ) | 11,256 | |||||
Cash and cash equivalents at beginning of year
|
724,311 | 483,253 | ||||||
Cash and cash equivalents at end of period
|
$ | 677,728 | $ | 494,509 | ||||
5
(1) | Basis of Presentation |
(2) | Recently Issued Accounting Standards |
6
(3) | Productivity Initiatives |
| The establishment of a European supply chain hub in the Netherlands in order to consolidate and centrally lead procurement, manufacturing, logistics and inventory control, | |
| The exit of at least five factories, including two in Europe, two in the U.S. and one in the Pacific in order to enhance manufacturing effectiveness and efficiency, and | |
| A reduction of the global workforce by approximately 800 to 1,000 positions. |
| $16.8 million pre-tax relating to asset write-offs for the closure of four factories, including two in Europe, one in the U.S. and one in the Pacific, | |
| $14.9 million pre-tax for severance and employee benefit costs relating to the reduction of the global workforce by approximately 160 positions, and | |
| $8.8 million pre-tax costs associated with other implementation costs, primarily for professional fees and relocation costs for the establishment of the European supply chain hub. |
7
(4) | Goodwill and Other Intangible Assets |
North |
||||||||||||||||||||||||
American |
||||||||||||||||||||||||
Consumer |
U.S. |
Rest of |
||||||||||||||||||||||
Products | Europe | Asia/Pacific | Foodservice | World | Total | |||||||||||||||||||
(Thousands of Dollars) | ||||||||||||||||||||||||
Balance at April 28, 2010
|
$ | 1,102,891 | $ | 1,106,744 | $ | 289,425 | $ | 257,674 | $ | 14,184 | $ | 2,770,918 | ||||||||||||
Acquisitions
|
| | 77,345 | | 300,227 | 377,572 | ||||||||||||||||||
Purchase accounting adjustments
|
| (278 | ) | (10,688 | ) | | | (10,966 | ) | |||||||||||||||
Translation adjustments
|
8,846 | 114,774 | 35,998 | | 1,299 | 160,917 | ||||||||||||||||||
Balance at April 27, 2011
|
1,111,737 | 1,221,240 | 392,080 | 257,674 | 315,710 | 3,298,441 | ||||||||||||||||||
Purchase accounting adjustments
|
| | | | 1,980 | 1,980 | ||||||||||||||||||
Translation adjustments
|
(16 | ) | (27,061 | ) | 13,669 | | 2,907 | (10,501 | ) | |||||||||||||||
Balance at July 27, 2011
|
$ | 1,111,721 | $ | 1,194,179 | $ | 405,749 | $ | 257,674 | $ | 320,597 | $ | 3,289,920 | ||||||||||||
July 27, 2011 | April 27, 2011 | |||||||||||||||||||||||
Accum |
Accum |
|||||||||||||||||||||||
Gross | Amort | Net | Gross | Amort | Net | |||||||||||||||||||
(Thousands of Dollars) | ||||||||||||||||||||||||
Trademarks
|
$ | 293,836 | $ | (84,453 | ) | $ | 209,383 | $ | 297,020 | $ | (83,343 | ) | $ | 213,677 | ||||||||||
Licenses
|
208,186 | (159,657 | ) | 48,529 | 208,186 | (158,228 | ) | 49,958 | ||||||||||||||||
Recipes/processes
|
90,553 | (33,056 | ) | 57,497 | 90,553 | (31,988 | ) | 58,565 | ||||||||||||||||
Customer related assets
|
224,771 | (61,268 | ) | 163,503 | 224,173 | (57,555 | ) | 166,618 | ||||||||||||||||
Other
|
52,233 | (27,933 | ) | 24,300 | 79,045 | (54,833 | ) | 24,212 | ||||||||||||||||
$ | 869,579 | $ | (366,367 | ) | $ | 503,212 | $ | 898,977 | $ | (385,947 | ) | $ | 513,030 | |||||||||||
8
(5) | Income Taxes |
(6) | Employees Stock Incentive Plans and Management Incentive Plans |
9
(7) | Pensions and Other Postretirement Benefits |
First Quarter Ended | ||||||||||||||||
July 27, 2011 | July 28, 2010 | July 27, 2011 | July 28, 2010 | |||||||||||||
Pension Benefits | Other Retiree Benefits | |||||||||||||||
(Thousands of Dollars) | ||||||||||||||||
Service cost
|
$ | 8,611 | $ | 7,737 | $ | 1,508 | $ | 1,561 | ||||||||
Interest cost
|
35,547 | 34,279 | 2,887 | 3,154 | ||||||||||||
Expected return on plan assets
|
(59,781 | ) | (55,292 | ) | | | ||||||||||
Amortization of prior service cost/(credit)
|
498 | 591 | (1,530 | ) | (1,290 | ) | ||||||||||
Amortization of unrecognized loss
|
21,229 | 18,968 | 273 | 401 | ||||||||||||
Net periodic benefit cost
|
$ | 6,104 | $ | 6,283 | $ | 3,138 | $ | 3,826 | ||||||||
(8) | Segments |
10
First Quarter Ended | ||||||||
July 27, 2011 |
July 28, 2010 |
|||||||
FY 2012 | FY 2011 | |||||||
(Thousands of Dollars) | ||||||||
Net external sales:
|
||||||||
North American Consumer Products
|
$ | 774,621 | $ | 761,812 | ||||
Europe
|
837,832 | 713,323 | ||||||
Asia/Pacific
|
670,766 | 558,180 | ||||||
U.S. Foodservice
|
324,950 | 328,534 | ||||||
Rest of World
|
241,412 | 118,976 | ||||||
Consolidated Totals
|
$ | 2,849,581 | $ | 2,480,825 | ||||
Operating income (loss):
|
||||||||
North American Consumer Products
|
$ | 190,778 | $ | 191,080 | ||||
Europe
|
137,439 | 115,036 | ||||||
Asia/Pacific
|
61,245 | 71,702 | ||||||
U.S. Foodservice
|
31,556 | 39,489 | ||||||
Rest of World
|
32,296 | 15,920 | ||||||
Other:
|
||||||||
Non-Operating(a)
|
(43,240 | ) | (27,512 | ) | ||||
Productivity initiatives(b)
|
(40,511 | ) | | |||||
Consolidated Totals
|
$ | 369,563 | $ | 405,715 | ||||
(a) | Includes corporate overhead, intercompany eliminations and charges not directly attributable to operating segments. | |
(b) | See Note 3 for further details. |
First Quarter Ended | ||||||||
July 27, 2011 |
July 28, 2010 |
|||||||
FY 2012 | FY 2011 | |||||||
(Thousands of Dollars) | ||||||||
Ketchup and Sauces
|
$ | 1,310,480 | $ | 1,092,196 | ||||
Meals and Snacks
|
1,008,396 | 917,824 | ||||||
Infant/Nutrition
|
322,114 | 280,775 | ||||||
Other
|
208,591 | 190,030 | ||||||
Total
|
$ | 2,849,581 | $ | 2,480,825 | ||||
11
(9) | Income Per Common Share |
First Quarter Ended | ||||||||
July 27, 2011 |
July 28, 2010 |
|||||||
FY 2012 | FY 2011 | |||||||
(In thousands) | ||||||||
Income attributable to H. J. Heinz Company
|
$ | 226,114 | $ | 240,427 | ||||
Allocation to participating securities(a)
|
360 | 186 | ||||||
Preferred dividends
|
3 | 3 | ||||||
Income applicable to common stock
|
$ | 225,751 | $ | 240,238 | ||||
Average common shares outstandingbasic
|
321,411 | 318,060 | ||||||
Effect of dilutive securities:
|
||||||||
Convertible preferred stock
|
101 | 104 | ||||||
Stock options, restricted stock and the global stock purchase
plan
|
2,734 | 2,845 | ||||||
Average common shares outstandingdiluted
|
324,246 | 321,009 | ||||||
(a) | Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid). |
(10) | Comprehensive Income |
First Quarter Ended | ||||||||
July 27, 2011 |
July 28, 2010 |
|||||||
FY 2012 | FY 2011 | |||||||
(Thousands of Dollars) | ||||||||
Net income
|
$ | 234,959 | $ | 248,595 | ||||
Other comprehensive income/(loss):
|
||||||||
Foreign currency translation adjustments
|
(25,745 | ) | (26,055 | ) | ||||
Reclassification of net pension and postretirement benefit
losses to net income
|
13,920 | 13,207 | ||||||
Net deferred gains on derivatives from periodic revaluations
|
15,737 | 4,039 | ||||||
Net deferred gains on derivatives reclassified to earnings
|
(11,742 | ) | (2,473 | ) | ||||
Total comprehensive income
|
227,129 | 237,313 | ||||||
Comprehensive income attributable to the noncontrolling interest
|
(10,853 | ) | (8,672 | ) | ||||
Comprehensive income attributable to H. J. Heinz Company
|
$ | 216,276 | $ | 228,641 | ||||
12
H. J. Heinz |
Noncontrolling |
|||||||||||
Company | Interest | Total | ||||||||||
(Thousands of Dollars) | ||||||||||||
Net income
|
$ | 226,114 | $ | 8,845 | $ | 234,959 | ||||||
Other comprehensive income:
|
||||||||||||
Foreign currency translation adjustments
|
(27,729 | ) | 1,984 | (25,745 | ) | |||||||
Reclassification of net pension and postretirement benefit
losses/(gains) to net income
|
13,951 | (31 | ) | 13,920 | ||||||||
Net deferred gains/(losses) on derivatives from periodic
revaluations
|
15,776 | (39 | ) | 15,737 | ||||||||
Net deferred (gains)/losses on derivatives reclassified to
earnings
|
(11,836 | ) | 94 | (11,742 | ) | |||||||
Total comprehensive income
|
$ | 216,276 | $ | 10,853 | $ | 227,129 | ||||||
(11) | Changes in Equity |
H. J. Heinz Company | ||||||||||||||||||||||||||||
Capital |
Additional |
Retained |
Treasury |
Accum |
Noncontrolling |
|||||||||||||||||||||||
Total | Stock | Capital | Earnings | Stock | OCI | Interest | ||||||||||||||||||||||
(Thousands of Dollars) | ||||||||||||||||||||||||||||
Balance as of April 27, 2011
|
$ | 3,182,466 | $ | 107,843 | $ | 629,367 | $ | 7,264,678 | $ | (4,593,362 | ) | $ | (299,564 | ) | $ | 73,504 | ||||||||||||
Comprehensive income(1)
|
225,121 | | | 226,114 | | (9,838 | ) | 8,845 | ||||||||||||||||||||
Dividends paid to shareholders of H. J. Heinz Company
|
(155,081 | ) | | | (155,081 | ) | | | | |||||||||||||||||||
Stock options exercised, net of shares tendered for payment
|
50,720 | | (11,564 | ) | | 62,284 | | | ||||||||||||||||||||
Stock option expense
|
1,561 | | 1,561 | | | | | |||||||||||||||||||||
Restricted stock unit activity
|
4,817 | | 3,941 | | 876 | | | |||||||||||||||||||||
Conversion of preferred into common stock
|
| (8 | ) | (539 | ) | | 547 | | | |||||||||||||||||||
Shares reacquired
|
(86,740 | ) | | | | (86,740 | ) | | | |||||||||||||||||||
Other
|
27 | | (17 | ) | (526 | ) | 570 | | | |||||||||||||||||||
Balance as of July 27, 2011
|
$ | 3,222,891 | $ | 107,835 | $ | 622,749 | $ | 7,335,185 | $ | (4,615,825 | ) | $ | (309,402 | ) | $ | 82,349 | ||||||||||||
(1) | The allocation of the individual components of comprehensive income attributable to H. J. Heinz Company and the noncontrolling interest is disclosed in Note 10. |
(12) | Debt |
13
(13) | Financing Arrangements |
(14) | Fair Value Measurements |
14
July 27, 2011 | April 27, 2011 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(Thousands of Dollars) | ||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||
Derivatives(a)
|
$ | | $ | 103,327 | $ | | $ | 103,327 | $ | | $ | 115,705 | $ | | $ | 115,705 | ||||||||||||||||
Short-term investments(b)
|
$ | 57,165 | $ | | $ | | $ | 57,165 | $ | 60,125 | $ | | $ | | $ | 60,125 | ||||||||||||||||
Total assets at fair value
|
$ | 57,165 | $ | 103,327 | $ | | $ | 160,492 | $ | 60,125 | $ | 115,705 | $ | | $ | 175,830 | ||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||||||||||
Derivatives(a)
|
$ | | $ | 43,318 | $ | | $ | 43,318 | $ | | $ | 43,007 | $ | | $ | 43,007 | ||||||||||||||||
Earn-out(c)
|
$ | | $ | | $ | 45,714 | $ | 45,714 | $ | | $ | | $ | 45,325 | $ | 45,325 | ||||||||||||||||
Total liabilities at fair value
|
$ | | $ | 43,318 | $ | 45,714 | $ | 89,032 | $ | | $ | 43,007 | $ | 45,325 | $ | 88,332 | ||||||||||||||||
(a) | Foreign currency derivative contracts are valued based on observable market spot and forward rates and classified within Level 2 of the fair value hierarchy. Interest rate swaps are valued based on observable market swap rates and classified within Level 2 of the fair value hierarchy. Cross-currency interest rate swaps are valued based on observable market spot and swap rates and classified within Level 2 of the fair value hierarchy. | |
(b) | The Company acquired Coniexpress in Brazil in Fiscal 2011. The acquisition included short-term investments that are valued based on observable market rates and classified within Level 1 of the fair value hierarchy. |
(c) | The Company acquired Foodstar Holding Pte (Foodstar) in China in Fiscal 2011. Consideration for this acquisition included a potential earn-out payment in Fiscal 2014 contingent upon certain net sales and EBITDA (earnings before interest, taxes, depreciation and amortization) targets during Fiscals 2013 and 2014. The fair value of the earn-out was estimated using a discounted cash flow model and is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Key assumptions in determining the fair value of the earn-out include the discount rate and revenue and EBITDA projections for Fiscals 2013 and 2014. As of July 27, 2011 there were no significant changes to the fair value of the earn-out recorded for Foodstar at the acquisition date. A change in fair value of the earn-out could have a material impact on the Companys earnings. |
15
(15) | Derivative Financial Instruments and Hedging Activities |
July 27, 2011 | April 27, 2011 | |||||||||||||||||||||||
Cross- |
Cross- |
|||||||||||||||||||||||
Currency |
Currency |
|||||||||||||||||||||||
Foreign |
Interest |
Interest Rate |
Foreign |
Interest |
Interest Rate |
|||||||||||||||||||
Exchange |
Rate |
Swap |
Exchange |
Rate |
Swap |
|||||||||||||||||||
Contracts | Contracts | Contracts | Contracts | Contracts | Contracts | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Derivatives designated as hedging instruments:
|
||||||||||||||||||||||||
Other receivables, net
|
$ | 15,354 | $ | 22,769 | $ | | $ | 28,139 | $ | 38,703 | $ | | ||||||||||||
Other non-current assets
|
9,274 | 19,534 | 34,380 | 7,913 | 16,723 | 14,898 | ||||||||||||||||||
24,628 | 42,303 | 34,380 | 36,052 | 55,426 | 14,898 | |||||||||||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||||||||||||||
Other receivables, net
|
2,016 | | | 9,329 | | | ||||||||||||||||||
Other non-current assets
|
| | | | | | ||||||||||||||||||
2,016 | | | 9,329 | | | |||||||||||||||||||
Total assets
|
$ | 26,644 | $ | 42,303 | $ | 34,380 | $ | 45,381 | $ | 55,426 | $ | 14,898 | ||||||||||||
Liabilities:
|
||||||||||||||||||||||||
Derivatives designated as hedging instruments:
|
||||||||||||||||||||||||
Other payables
|
$ | 23,946 | $ | | $ | 5,778 | $ | 27,804 | $ | | $ | 6,125 | ||||||||||||
Other non-current liabilities
|
6,990 | | | 8,054 | | | ||||||||||||||||||
30,936 | | 5,778 | 35,858 | | 6,125 | |||||||||||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||||||||||||||
Other payables
|
6,604 | | | 1,024 | | | ||||||||||||||||||
Other non-current liabilities
|
| | | | | | ||||||||||||||||||
6,604 | | | 1,024 | | | |||||||||||||||||||
Total liabilities
|
$ | 37,540 | $ | | $ | 5,778 | $ | 36,882 | $ | | $ | 6,125 | ||||||||||||
16
First Quarter Ended | ||||||||||||
July 27, 2011 | ||||||||||||
Cross-Currency |
||||||||||||
Foreign Exchange |
Interest Rate |
Interest Rate |
||||||||||
Contracts | Contracts | Swap Contracts | ||||||||||
(Dollars in Thousands) | ||||||||||||
Cash flow hedges:
|
||||||||||||
Net gains recognized in other comprehensive loss (effective
portion)
|
$ | 7,386 | $ | | $ | 18,329 | ||||||
Net gains/(losses) reclassified from other comprehensive loss
into earnings (effective portion):
|
||||||||||||
Sales
|
$ | 2,104 | $ | | $ | | ||||||
Cost of products sold
|
(5,588 | ) | | | ||||||||
Selling, general and administrative expenses
|
123 | | | |||||||||
Other income, net
|
5,150 | | 20,264 | |||||||||
Interest income/(expense)
|
107 | | (1,506 | ) | ||||||||
1,896 | | 18,758 | ||||||||||
Fair value hedges:
|
||||||||||||
Net losses recognized in other expense, net
|
| (13,123 | ) | | ||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||
Net losses recognized in other expense, net
|
(8,863 | ) | | | ||||||||
Total amount recognized in statement of income
|
$ | (6,967 | ) | $ | (13,123 | ) | $ | 18,758 | ||||
17
First Quarter Ended | ||||||||||||
July 28, 2010 | ||||||||||||
Cross-Currency |
||||||||||||
Foreign Exchange |
Interest Rate |
Interest Rate |
||||||||||
Contracts | Contracts | Swap Contracts | ||||||||||
(Dollars in Thousands) | ||||||||||||
Cash flow hedges:
|
||||||||||||
Net (losses)/gains recognized in other comprehensive loss
(effective portion)
|
$ | (3,167 | ) | $ | | $ | 9,855 | |||||
Net gains/(losses) reclassified from other comprehensive loss
into earnings (effective portion):
|
||||||||||||
Sales
|
$ | 380 | $ | | $ | | ||||||
Cost of products sold
|
(3,793 | ) | | | ||||||||
Selling, general and administrative expenses
|
(97 | ) | | | ||||||||
Other (expense)/income, net
|
(3,642 | ) | | 12,000 | ||||||||
Interest expense
|
(2 | ) | | (891 | ) | |||||||
(7,154 | ) | | 11,109 | |||||||||
Fair value hedges:
|
||||||||||||
Net gains recognized in other income, net
|
| 1,681 | | |||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||
Net losses recognized in other expense, net
|
(5,285 | ) | | | ||||||||
Total amount recognized in statement of income
|
$ | (12,439 | ) | $ | 1,681 | $ | 11,109 | |||||
18
(16) | Venezuela- Foreign Currency and Inflation |
19
(17) | Redeemable Noncontrolling Interest |
20
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
| Accelerate growth in emerging markets; | |
| Expand the core portfolio; | |
| Strengthen and leverage global scale; and | |
| Make talent an advantage. |
First Quarter Ended July 27, 2011 | ||||||||||||||||||||||||
Operating |
||||||||||||||||||||||||
Sales | Gross Profit | SG&A | Income | Net Income | EPS | |||||||||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||||||||||||
Reported results
|
$ | 2,849,581 | $ | 985,493 | $ | 615,930 | $ | 369,563 | $ | 226,114 | $ | 0.70 | ||||||||||||
Charges for productivity initiatives
|
| 31,390 | 9,121 | 40,511 | 28,448 | 0.09 | ||||||||||||||||||
Results excluding charges for productivity initiatives
|
$ | 2,849,581 | $ | 1,016,883 | $ | 606,809 | $ | 410,074 | $ | 254,562 | $ | 0.78 | ||||||||||||
(Totals may not add due to rounding)
|
21
| The establishment of a European supply chain hub in the Netherlands in order to consolidate and centrally lead procurement, manufacturing, logistics and inventory control, | |
| The exit of at least five factories, including two in Europe, two in the U.S. and one in the Pacific in order to enhance manufacturing effectiveness and efficiency, and | |
| A reduction of the global workforce by approximately 800 to 1,000 positions. |
| $17 million pre-tax relating to asset write-offs for the closure of four factories, including two in Europe, one in the U.S. and one in the Pacific, | |
| $15 million pre-tax for severance and employee benefit costs relating to the reduction of the global workforce by approximately 160 positions, and | |
| $9 million pre-tax costs associated with other implementation costs, primarily for professional fees and relocation costs for the establishment of the European supply chain hub. |
22
23
24
25
26
27
28
| sales volume, earnings, or cash flow growth, | |
| general economic, political, and industry conditions, including those that could impact consumer spending, | |
| competitive conditions, which affect, among other things, customer preferences and the pricing of products, production, and energy costs, | |
| competition from lower-priced private label brands, | |
| increases in the cost and restrictions on the availability of raw materials including agricultural commodities and packaging materials, the ability to increase product prices in response, and the impact on profitability, | |
| the ability to identify and anticipate and respond through innovation to consumer trends, | |
| the need for product recalls, | |
| the ability to maintain favorable supplier and customer relationships, and the financial viability of those suppliers and customers, | |
| currency valuations and devaluations and interest rate fluctuations, | |
| changes in credit ratings, leverage, and economic conditions, and the impact of these factors on our cost of borrowing and access to capital markets, | |
| our ability to effectuate our strategy, including our continued evaluation of potential opportunities, such as strategic acquisitions, joint ventures, divestitures and other initiatives, our ability to identify, finance and complete these transactions and other initiatives, and our ability to realize anticipated benefits from them, | |
| the ability to successfully complete cost reduction programs and increase productivity, | |
| the ability to effectively integrate acquired businesses, | |
| new products, packaging innovations, and product mix, | |
| the effectiveness of advertising, marketing, and promotional programs, | |
| supply chain efficiency, | |
| cash flow initiatives, | |
| risks inherent in litigation, including tax litigation, | |
| the ability to further penetrate and grow and the risk of doing business in international markets, particularly our emerging markets, economic or political instability in those markets, strikes, nationalization, and the performance of business in hyperinflationary environments, in each case, such as Venezuela; and the uncertain global macroeconomic environment and sovereign debt issues, particularly in Europe, | |
| changes in estimates in critical accounting judgments and changes in laws and regulations, including tax laws, |
29
| the success of tax planning strategies, | |
| the possibility of increased pension expense and contributions and other people-related costs, | |
| the potential adverse impact of natural disasters, such as flooding and crop failures, and the potential impact of climate change, | |
| the ability to implement new information systems, potential disruptions due to failures in information technology systems, and risks associated with social media, | |
| with regard to dividends, dividends must be declared by the Board of Directors and will be subject to certain legal requirements being met at the time of declaration, as well as our Boards view of our anticipated cash needs, and | |
| other factors described in Risk Factors and Cautionary Statement Relevant to Forward-Looking Information in the Companys Form 10-K for the fiscal year ended April 27, 2011. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
30
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Maximum |
||||||||||||||||
Total |
Total Number of |
Number of Shares |
||||||||||||||
Number of |
Average |
Shares Purchased as |
that May Yet Be |
|||||||||||||
Shares |
Price Paid |
Part of Publicly |
Purchased Under |
|||||||||||||
Period | Purchased | per Share | Announced Programs | the Programs | ||||||||||||
April 28, 2011 May 25, 2011
|
| $ | | | | |||||||||||
May 26, 2011 June 22, 2011
|
750,000 | 53.30 | | | ||||||||||||
June 23, 2011 July 27, 2011
|
875,000 | 53.45 | | | ||||||||||||
Total
|
1,625,000 | $ | 53.38 | | | |||||||||||
Item 3. | Defaults upon Senior Securities |
Item 4. | (Removed and Reserved). |
Item 5. | Other Information |
Item 6. | Exhibits |
31
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be furnished and not filed. |
32
By: |
/s/ Arthur
B. Winkleblack
|
By: |
/s/ Edward
J. McMenamin
|
33
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be furnished and not filed. |
Three Months |
||||
Ended |
||||
July 27, 2011 | ||||
(Thousands of Dollars) | ||||
Fixed Charges:
|
||||
Interest expense*
|
$ | 71,958 | ||
Capitalized interest
|
87 | |||
Interest component of rental expense
|
11,091 | |||
Total fixed charges
|
$ | 83,136 | ||
Earnings:
|
||||
Income before income taxes
|
$ | 306,105 | ||
Add: Interest expense*
|
71,958 | |||
Add: Interest component of rental expense
|
11,091 | |||
Add: Amortization of capitalized interest
|
186 | |||
Earnings as adjusted
|
$ | 389,340 | ||
Ratio of earnings to fixed charges
|
4.68 | |||
* | Interest expense includes amortization of debt expense and any discount or premium relating to indebtedness. |
By: |
/s/ William
R. Johnson
|
Title: | Chairman, President and |
By: |
/s/ Arthur
B. Winkleblack
|
Title: | Executive Vice President and |
Title: | Chairman, President and |
/s/ Arthur
B. Winkleblack
|
Title: | Executive Vice President |
Condenced Consolidated Balance Sheets (USD $)
In Thousands |
Jul. 27, 2011
|
Apr. 27, 2011
|
|||
---|---|---|---|---|---|
Current Assets: | |||||
Cash and cash equivalents | $ 677,728 | $ 724,311 | [1] | ||
Trade receivables, net | 896,422 | 1,039,064 | [1] | ||
Other receivables, net | 215,201 | 225,968 | [1] | ||
Inventories: | |||||
Finished goods and work-in-process | 1,211,142 | 1,165,069 | [1] | ||
Packaging material and ingredients | 285,123 | 286,477 | [1] | ||
Total inventories | 1,496,265 | 1,451,546 | [1] | ||
Prepaid expenses | 204,663 | 159,521 | [1] | ||
Other current assets | 137,094 | 153,132 | [1] | ||
Total current assets | 3,627,373 | 3,753,542 | [1] | ||
Property, plant and equipment | 5,242,036 | 5,224,715 | [1] | ||
Less accumulated depreciation | 2,761,385 | 2,719,632 | [1] | ||
Total property, plant and equipment, net | 2,480,651 | 2,505,083 | [1] | ||
Goodwill | 3,289,920 | 3,298,441 | [1] | ||
Trademarks, net | 1,148,261 | 1,156,221 | [1] | ||
Other intangibles, net | 434,976 | 442,563 | [1] | ||
Other non-current assets | 1,102,321 | 1,074,795 | [1] | ||
Total other non-current assets | 5,975,478 | 5,972,020 | [1] | ||
Total assets | 12,083,502 | 12,230,645 | [1] | ||
Current Liabilities: | |||||
Short-term debt | 95,756 | 87,800 | [1] | ||
Portion of long-term debt due within one year | 640,713 | 1,447,132 | [1] | ||
Trade payables | 1,176,652 | 1,337,620 | [1] | ||
Other payables | 174,906 | 162,047 | [1] | ||
Accrued marketing | 309,082 | 313,389 | [1] | ||
Other accrued liabilities | 602,289 | 715,147 | [1] | ||
Income taxes | 96,271 | 98,325 | [1] | ||
Total current liabilities | 3,095,669 | 4,161,460 | [1] | ||
Long-term debt | 3,940,821 | 3,078,128 | [1] | ||
Deferred income taxes | 914,302 | 897,179 | [1] | ||
Non-pension postretirement benefits | 219,368 | 216,172 | [1] | ||
Other non-current liabilities | 563,774 | 570,571 | [1] | ||
Total long-term liabilities | 5,638,265 | 4,762,050 | [1] | ||
Redeemable noncontrolling interest | 126,677 | 124,669 | [1] | ||
Equity: | |||||
Capital stock | 107,835 | 107,843 | [1] | ||
Additional capital | 622,749 | 629,367 | [1] | ||
Retained earnings | 7,335,185 | 7,264,678 | [1] | ||
Sum of capital stock, additional capital and retained earnings | 8,065,769 | 8,001,888 | [1] | ||
Less: | |||||
Treasury stock at cost (110,052 shares at July 27, 2011 and 109,818 shares at April 27, 2011) | 4,615,825 | 4,593,362 | [1] | ||
Accumulated other comprehensive loss | 309,402 | 299,564 | [1] | ||
Total H. J. Heinz Company shareholders' equity | 3,140,542 | 3,108,962 | [1] | ||
Noncontrolling interest | 82,349 | 73,504 | [1] | ||
Total equity | 3,222,891 | 3,182,466 | [1] | ||
Total liabilities and equity | $ 12,083,502 | $ 12,230,645 | [1] | ||
|
Condenced Consolidated Balance Sheets (Parenthetical)
In Thousands |
Jul. 27, 2011
|
Apr. 27, 2011
|
|||
---|---|---|---|---|---|
Equity (Less): | |||||
Treasury stock, shares | 110,052 | 109,818 | [1] | ||
|
Recently Issued Accounting Standards (Policies)
|
3 Months Ended |
---|---|
Jul. 27, 2011
|
|
Accounting Policies [Abstract] | |
Presentation of comprehensive income policy |
In June 2011, the Financial Accounting Standards Board
(“FASB”) issued an amendment on the presentation of
comprehensive income. This amendment is intended to improve
comparability, consistency, and transparency of financial
reporting and to increase the prominence of items reported in
other comprehensive income. This amendment eliminates the
current option to report other comprehensive income and its
components in the statement of changes in equity. Under this
amendment, an entity can elect to present items of net income
and other comprehensive income in one continuous statement or in
two separate, but consecutive, statements. The statement(s)
would need to be presented with equal prominence as the other
primary financial statements. While the options for presenting
other comprehensive income change under this amendment, many
items will not change, including: the items that constitute net
income and other comprehensive income; when an item of other
comprehensive income must be reclassified to net income; and the
earnings-per-share
computation. The Company is required to adopt this amendment
retrospectively on the first day of Fiscal 2013. This adoption
will only impact the presentation of the Company’s
financial statements, not the financial results.
|
Adoption and impact of policy related to the accounting and disclosure requirements for fair value measurements |
In May 2011, the FASB issued an amendment to revise the wording
used to describe the requirements for measuring fair value and
for disclosing information about fair value measurements. For
many of the requirements, the FASB does not intend for the
amendments to result in a change in the application of the
current requirements. Some of the amendments clarify the
FASB’s intent about the application of existing fair value
measurement requirements, such as specifying that the concepts
of highest and best use and valuation premise in a fair value
measurement are relevant only when measuring the fair value of
nonfinancial assets. Other amendments change a particular
principle or requirement for measuring fair value or for
disclosing information about fair value measurements such as
specifying that, in the absence of a Level 1 input (refer
to Note 14 for additional information), a reporting entity
should apply premiums or discounts when market participants
would do so when pricing the asset or liability. The Company is
required to adopt this amendment on the first day of the fourth
quarter of Fiscal 2012 and this adoption is not expected to have
an impact on the Company’s financial statements.
|
Adoption and impact of policy related to the accounting and disclosure requirements for business combinations |
In December 2010, the FASB issued an amendment to the disclosure
requirements for Business Combinations. This amendment clarifies
that if a public entity is required to disclose pro forma
information for business combinations, the entity should
disclose such pro forma information as though the business
combination(s) that occurred during the current year had
occurred as of the beginning of the comparable prior annual
reporting period only. This amendment also expands the
supplemental pro forma disclosures for business combinations to
include a description of the
nature and amount of material nonrecurring pro forma adjustments
directly attributable to the business combination included in
reported pro forma revenue and earnings. The Company adopted
this amendment on the first day of Fiscal 2012 and will apply
such amendment for any business combinations that are material
on an individual or aggregate basis if and when they occur.
|
Adoption and impact of policy related to the accounting and disclosure requirements for goodwill and other intangibles |
In December 2010, the FASB issued an amendment to the accounting
requirements for Goodwill and Other Intangibles. This amendment
modifies Step 1 of the goodwill impairment test for reporting
units with zero or negative carrying amounts. For those
reporting units, an entity is required to perform Step 2 of the
goodwill impairment test if it is more likely than not that a
goodwill impairment exists. In determining whether it is more
likely than not that a goodwill impairment exists, an entity
should consider whether there are any adverse qualitative
factors indicating that impairment may exist. The Company
adopted this amendment on the first day of Fiscal 2012. This
adoption did not have an impact on the Company’s financial
statements.
|
Document and Entity Information (USD $)
In Billions, except Share data |
3 Months Ended | |
---|---|---|
Jul. 27, 2011
|
Oct. 27, 2010
|
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HEINZ H J CO | |
Entity Central Index Key | 0000046640 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 27, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2012 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --05-02 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $ 15.5 | |
Entity Common Stock, Shares Outstanding | 321,044,792 |
Venezuela - Foreign Currency and Inflation (Details) (USD $)
In Millions |
Jul. 27, 2011
|
---|---|
Venezuela - Foreign Currency and Inflation [Abstract] | |
Monetary assets, net of monetary liabilities, subject to an earnings impact from exchange rate movements for Venezuelan subsidiary under highly inflationary accounting | $ 72.4 |
Segments (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
|
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Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments |
The following table presents information about the
Company’s reportable segments:
The Company’s revenues are generated via the sale of
products in the following categories:
|
Derivative Financial Instruments and Hedging Activities 3 (Details) (USD $)
|
3 Months Ended | |
---|---|---|
Jul. 27, 2011
|
Apr. 27, 2011
|
|
Derivative Financial Instruments and Hedging Activities (Textuals) [Abstract] | ||
Notional amount of foreign currency derivatives | $ 1,900,000,000 | $ 1,860,000,000 |
Notional amount of interest rate derivatives | 760,000,000 | 1,510,000,000 |
Notional amount of cross currency interest rate swap | 397,500,000 | 377,300,000 |
Maturity date of foreign currency forward contracts | 2014 | |
Cash proceeds from termination of foreign currency forward contracts | 11,600,000 | |
Number of year company decided for forecasting hedging transaction | Not exceeding 3 years. | |
Net deferred gains/(losses) reported in AOCI to be reclassified to earnings within twelve months | (5,100,000) | |
Notional amount of foreign currency derivative instruments not designated as hedging Instruments | 376,600,000 | 309,900,000 |
Net unrealized gain/(loss) related to outstanding nondesignated derivative instruments | $ (4,600,000) | $ 8,300,000 |
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Pensions and Other Postretirement Benefits
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pensions and Other Postretirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pensions and Other Postretirement Benefits |
The components of net periodic benefit cost are as follows:
The amounts recognized for pension benefits as other non-current
assets on the Condensed Consolidated Balance Sheets were
$654.9 million as of July 27, 2011 and
$644.6 million as of April 27, 2011.
During the first quarter of Fiscal 2012, the Company contributed
$3 million to these defined benefit plans. The Company
expects to make combined cash contributions of less than
$40 million in Fiscal 2012; however, actual contributions
may be affected by pension asset and liability valuations during
the year.
|
Income Per Common Share (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
|
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Income Per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Reconciliation |
|
Financing Arrangements (Details) (USD $)
In Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jul. 27, 2011
|
Jul. 28, 2010
|
Apr. 27, 2011
|
||||
Financing Arrangements [Abstract] | ||||||
Financing Arrangement Term | 3 years | |||||
Amount of accounts receivable securitization program | $ 175 | |||||
Initial cash funding under receivable securitization program | 118.7 | 116.2 | ||||
Cash proceeds from receivables sold through accounts receivable securitization program | 89.7 | 32.0 | ||||
Fair value of deferred purchase price | 56.2 | 173.9 | ||||
Cash proceeds from deferred purchase price of accounts receivable securitization program | 117.7 | 51.5 | ||||
Trade receivables sold without recourse | $ 168 | $ 146 | [1] | |||
|
Pensions and Other Postretirement Benefits (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
|
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Pensions and Other Postretirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost |
|
Debt
|
3 Months Ended | ||||
---|---|---|---|---|---|
Jul. 27, 2011
|
|||||
Debt [Abstract] | |||||
Debt |
During the first quarter of Fiscal 2012, the Company modified
its $1.2 billion credit agreement to increase the available
borrowings under the facility to $1.5 billion as well as to
extend its maturity date from April 2012 to June 2016. This
credit agreement supports the Company’s
commercial paper borrowings. As a result, the commercial paper
borrowings are classified as long-term debt based upon the
Company’s intent and ability to refinance these borrowings
on a long-term basis.
During the first quarter of Fiscal 2012, the Company issued
$500 million of private placement notes at an average
interest rate of 3.48% with maturities of three, five, seven and
ten years. Additionally, during the first quarter of Fiscal
2012, the Company issued $100 million of private placement
notes at an average interest rate of 3.38% with maturities of
five and seven years. These proceeds were used to pay off the
Company’s $750 million 6.625% U.S. Dollar Notes,
which matured on July 15, 2011.
Certain of the Company’s debt agreements contain customary
covenants, including a leverage ratio covenant. The Company was
in compliance with all of its debt covenants as of July 27,
2011.
|
Productivity Initiatives
|
3 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 27, 2011
|
|||||||||||||||||||||||||||||||||
Productivity Initiatives [Abstract] | |||||||||||||||||||||||||||||||||
Productivity Initiatives |
In order to accelerate growth and offset the impact of
escalating commodity costs, the Company announced on
May 26, 2011 that it will invest in productivity
initiatives during Fiscal 2012 designed to increase
manufacturing effectiveness and efficiency as well as accelerate
productivity on a global scale. These initiatives, as well as
other initiatives currently being evaluated, include:
The Company anticipates investing at least $130 million of
cash and $160 million of pre-tax income ($0.35 per share)
on these initiatives during Fiscal 2012.
During the first quarter of Fiscal 2012, the Company recorded
costs of $40.5 million pre-tax ($28.4 million
after-tax or $0.09 per share), all of which were reported in the
Non-operating segment, related to these productivity
initiatives. These costs were comprised of the following:
Of the $40.5 million total pre-tax charges,
$31.4 million was recorded in cost of products sold and
$9.1 million in selling, general and administrative
expenses (“SG&A”). Cash paid for productivity
initiatives in the first quarter of Fiscal 2012 was
$10.9 million. The amount included in other accrued
liabilities related to these initiatives totaled
$11.1 million at July 27, 2011, most of which is
expected to be paid in the third quarter of Fiscal 2012.
|
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | ||
---|---|---|---|
Jul. 27, 2011
|
Jul. 28, 2010
|
Apr. 27, 2011
|
|
Income Taxes [Abstract] | |||
Unrecognized tax benefits | $ 66.3 | $ 70.7 | |
Unrecognized tax benefits that would impact effective tax rate | 53.5 | 56.5 | |
Significant change in unrecognized tax benefits is reasonably possible, amount of unrecorded benefit | 17.8 | ||
Unrecognized tax benefits, interest on income taxes accrued | 28.4 | 27.3 | |
Unrecognized tax benefits, income tax penalties accrued | $ 20.6 | $ 21.1 | |
Effective tax rate | 23.20% | 25.30% |
Income Per Common Share
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
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Income Per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Per Common Share |
The following are reconciliations of income to income applicable
to common stock and the number of common shares outstanding used
to calculate basic EPS to those shares used to calculate diluted
EPS:
Diluted earnings per share is based upon the average shares of
common stock and dilutive common stock equivalents outstanding
during the periods presented. Common stock equivalents arising
from dilutive stock options, restricted common stock units, and
the global stock purchase plan are computed using the treasury
stock method.
Options to purchase an aggregate of 0.2 million and
2.9 million shares of common stock for the first quarters
ended July 27, 2011 and July 28, 2010, respectively,
were not included in the computation of diluted earnings per
share because inclusion of these options would be anti-dilutive.
These options expire at various points in time through 2018.
|
Fair Value Measurements
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The fair value hierarchy consists of three levels to prioritize
the inputs used in valuations, as defined below:
Level 1: Observable inputs that reflect
unadjusted quoted prices for identical assets or liabilities in
active markets.
Level 2: Inputs other than quoted prices
included within Level 1 that are observable for the asset
or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or
liability.
As of July 27, 2011 and April 27, 2011, the fair
values of the Company’s assets and liabilities measured on
a recurring basis are categorized as follows:
There have been no transfers between Levels 1 and 2 in
Fiscals 2012 and 2011.
The Company recognized $16.8 million of non-cash asset
write-offs during the first quarter of Fiscal 2012 related to
four factory closures including two in Europe, one in the
U.S. and one in the Pacific. These factory closures are
directly linked to the Company’s Fiscal 2012 productivity
initiatives. See Note 3. These charges reduced the
Company’s carrying value in the assets to estimated fair
value, which is not material.
As of July 27, 2011 and April 27, 2011, the aggregate
fair value of the Company’s debt obligations, based on
market quotes, approximated the recorded value, with the
exception of the 7.125% notes issued as part of the dealer
remarketable securities exchange transaction. The book value of
these notes has been reduced as a result of the cash payments
made in connection with the exchange, which occurred in Fiscal
2010.
|
Comprehensive Income
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income |
The following table provides a summary of comprehensive income
attributable to H. J. Heinz Company:
The following table summarizes the allocation of total
comprehensive income between H. J. Heinz Company and
the noncontrolling interest for the first quarter ended
July 27, 2011:
|
Segments
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
|
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Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments |
The Company’s segments are primarily organized by
geographic area. The composition of segments and measure of
segment profitability are consistent with that used by the
Company’s management.
Descriptions of the Company’s reportable segments are as
follows:
North American Consumer Products—This segment primarily
manufactures, markets and sells ketchup, condiments, sauces,
pasta meals, and frozen potatoes, entrees, snacks, and
appetizers to the grocery channels in the United States of
America and includes our Canadian business.
Europe—This segment includes the Company’s operations
in Europe and sells products in all of the Company’s
categories.
Asia/Pacific—This segment includes the Company’s
operations in Australia, New Zealand, India, Japan, China, South
Korea, Indonesia, Vietnam and Singapore. This segment’s
operations include products in all of the Company’s
categories.
U.S. Foodservice—This segment primarily manufactures,
markets and sells branded and customized products to commercial
and non-commercial food outlets and distributors in the United
States of America including ketchup, condiments, sauces, frozen
soups and desserts.
Rest of World—This segment includes the Company’s
operations in Africa, Latin America, and the Middle East that
sell products in all of the Company’s categories.
The Company’s management evaluates performance based on
several factors including net sales, operating income and the
use of capital resources. Inter-segment revenues, items below
the operating income line of the consolidated statements of
income, and certain costs associated with the corporation-wide
productivity initiatives (see Note 3) are not
presented by segment, since they are not reflected in the
measure of segment profitability reviewed by the Company’s
management.
The following table presents information about the
Company’s reportable segments:
The Company’s revenues are generated via the sale of
products in the following categories:
|
Basis of Presentation
|
3 Months Ended | ||||
---|---|---|---|---|---|
Jul. 27, 2011
|
|||||
Basis of Presentation [Abstract] | |||||
Basis of Presentation |
The interim condensed consolidated financial statements of H. J.
Heinz Company, together with its subsidiaries (collectively
referred to as the “Company”), are unaudited. In the
opinion of management, all adjustments, which are of a normal
and recurring nature, except those which have been disclosed
elsewhere in this Quarterly Report on
Form 10-Q,
necessary for a fair statement of the results of operations of
these interim periods, have been included. The results for
interim periods are not necessarily indicative of the results to
be expected for the full fiscal year due to the seasonal nature
of the Company’s business. These statements should be read
in conjunction with the Company’s consolidated financial
statements and related notes, and management’s discussion
and analysis of financial condition and results of operations
which appear in the Company’s Annual Report on
Form 10-K
for the year ended April 27, 2011.
|
Goodwill and Other Intangible Assets
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
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Goodwill and Other Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
Changes in the carrying amount of goodwill for the first quarter
ended July 27, 2011, by reportable segment, are as follows:
During the fourth quarter of Fiscal 2011, the Company acquired
Coniexpress S.A. Industrias Alimenticias
(“Coniexpress”) in Brazil and recorded a preliminary
purchase price allocation which is expected to be finalized upon
third party valuation procedures. Total goodwill accumulated
impairment losses for the Company were $84.7 million
consisting of $54.5 million for Europe, $2.7 million
for Asia/Pacific, $27.4 million for Rest of World as of
April 28, 2010, April 27, 2011 and July 27, 2011.
Trademarks and other intangible assets at July 27, 2011 and
April 27, 2011, subject to amortization expense, are as
follows:
Amortization expense for trademarks and other intangible assets
was $8.0 million and $7.1 million for the quarters
ended July 27, 2011 and July 28, 2010, respectively.
Based upon the amortizable intangible assets recorded on the
balance sheet as of July 27, 2011, annual amortization
expense for each of the next five fiscal years is estimated to
be approximately $32 million.
Intangible assets not subject to amortization at July 27,
2011 totaled $1,080.0 million and consisted of
$938.9 million of trademarks, $120.6 million of
recipes/processes, and $20.5 million of licenses.
Intangible assets not subject to amortization at April 27,
2011, totaled $1,085.7 million and consisted of
$942.5 million of trademarks, $122.5 million of
recipes/processes, and $20.7 million of licenses.
|
Derivative Financial Instruments and Hedging Activities (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
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Derivative Financial Instruments and Hedging Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair values and corresponding balance sheet captions of the Company's derivative instruments |
|
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Effect of derivative instruments on the statement of income |
|
Income Taxes
|
3 Months Ended | ||||
---|---|---|---|---|---|
Jul. 27, 2011
|
|||||
Income Taxes [Abstract] | |||||
Income Taxes |
The total amount of gross unrecognized tax benefits for
uncertain tax positions, including positions impacting only the
timing of tax benefits, was $66.3 million and
$70.7 million, on July 27, 2011 and April 27,
2011, respectively. The amounts of unrecognized tax benefits
that, if recognized, would impact the effective tax rate were
$53.5 million and $56.5 million, on July 27, 2011
and April 27, 2011, respectively. It is reasonably possible
that the amount of unrecognized tax benefits will decrease by as
much as $17.8 million in the next 12 months due to the
expiration of statutes of limitations in various foreign
jurisdictions along with the progression of federal, state, and
foreign audits in process.
The Company classifies interest and penalties on tax
uncertainties as a component of the provision for income taxes.
The total amounts of interest and penalties accrued at
July 27, 2011 were $28.4 million and
$20.6 million, respectively. The corresponding amounts of
accrued interest and penalties at April 27, 2011 were
$27.3 million and $21.1 million, respectively.
The provision for income taxes consists of provisions for
federal, state and foreign income taxes. The Company operates in
an international environment with significant operations in
various locations outside the U.S. Accordingly, the
consolidated income tax rate is a composite rate reflecting the
earnings in various locations and the applicable tax rates. In
the normal course of business, the Company is subject to
examination by taxing authorities throughout the world,
including such major jurisdictions as Australia, Canada, Italy,
the United Kingdom and the United States. The Company has
substantially concluded all national income tax matters for
years through Fiscal 2009 for the U.S., through Fiscal 2008 for
the United Kingdom, through Fiscal 2007 for Italy, and through
Fiscal 2006 for Australia and Canada.
The effective tax rate for the current quarter was 23.2%
compared to 25.3% last year. The decrease in the effective tax
rate is primarily the result of a statutory tax rate reduction
in the United Kingdom that was enacted during the first quarter
of Fiscal 2012.
|
Debt (Details) (USD $)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Jul. 27, 2011
|
Apr. 27, 2011
|
|
Debt Instrument [Line Items] | ||
Total credit agreements supporting commercial paper borrowings | $ 1,500,000,000 | $ 1,200,000,000 |
Maturity date | June 2016 | April 2012 |
3.48% Private Placement Notes [Member]
|
||
Debt Instrument [Line Items] | ||
Private placement notes, face amount | 500,000,000 | |
Private placement notes, average interest rate | 3.48% | |
3.38% Private Placement Notes [Member]
|
||
Debt Instrument [Line Items] | ||
Private placement notes, face amount | 100,000,000 | |
Private placement notes, average interest rate | 3.38% | |
6.625% U.S. Dollar Notes due July 2011 [Member]
|
||
Debt Instrument [Line Items] | ||
Private placement notes, face amount | $ 750,000,000 | |
Private placement notes, average interest rate | 6.625% |
Comprehensive Income (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 27, 2011
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of comprehensive income |
The following table provides a summary of comprehensive income
attributable to H. J. Heinz Company:
The following table summarizes the allocation of total
comprehensive income between H. J. Heinz Company and
the noncontrolling interest for the first quarter ended
July 27, 2011:
|
Goodwill and Other Intangible Assets 1 (Details) (USD $)
|
3 Months Ended | ||
---|---|---|---|
Jul. 27, 2011
|
Jul. 28, 2010
|
Apr. 27, 2011
|
|
Finite Lived Intangible Assets [Line Items] | |||
Gross | $ 869,579,000 | $ 898,977,000 | |
Accumulated Amortization | (366,367,000) | (385,947,000) | |
Net | 503,212,000 | 513,030,000 | |
Intangible assets not subject to amortization | 1,080,000,000 | 1,085,700,000 | |
Finite Lived Intangible Assets (Textuals) [Abstract] | |||
Amortization expense for trademarks and other intangible assets | 8,000,000 | 7,100,000 | |
Future amortization expense for finite-lived intangible assets | 32,000,000 | ||
Trademarks [Member]
|
|||
Finite Lived Intangible Assets [Line Items] | |||
Gross | 293,836,000 | 297,020,000 | |
Accumulated Amortization | (84,453,000) | (83,343,000) | |
Net | 209,383,000 | 213,677,000 | |
Intangible assets not subject to amortization | 938,900,000 | 942,500,000 | |
Licenses [Member]
|
|||
Finite Lived Intangible Assets [Line Items] | |||
Gross | 208,186,000 | 208,186,000 | |
Accumulated Amortization | (159,657,000) | (158,228,000) | |
Net | 48,529,000 | 49,958,000 | |
Intangible assets not subject to amortization | 20,500,000 | 20,700,000 | |
Recipes/processes [Member]
|
|||
Finite Lived Intangible Assets [Line Items] | |||
Gross | 90,553,000 | 90,553,000 | |
Accumulated Amortization | (33,056,000) | (31,988,000) | |
Net | 57,497,000 | 58,565,000 | |
Intangible assets not subject to amortization | 120,600,000 | 122,500,000 | |
Customer-related assets [Member]
|
|||
Finite Lived Intangible Assets [Line Items] | |||
Gross | 224,771,000 | 224,173,000 | |
Accumulated Amortization | (61,268,000) | (57,555,000) | |
Net | 163,503,000 | 166,618,000 | |
Other [Member]
|
|||
Finite Lived Intangible Assets [Line Items] | |||
Gross | 52,233,000 | 79,045,000 | |
Accumulated Amortization | (27,933,000) | (54,833,000) | |
Net | $ 24,300,000 | $ 24,212,000 |
Fair Value Measurements (Tables)
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Jul. 27, 2011
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value assets and liabilities measured on recurring basis |
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Financing Arrangements
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3 Months Ended | ||||
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Jul. 27, 2011
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Financing Arrangements [Abstract] | |||||
Financing Arrangements |
In Fiscal 2010, the Company entered into a three-year
$175 million accounts receivable securitization program.
For the sale of receivables under the program, the Company
receives initial cash funding and a deferred purchase price. The
initial cash funding was $118.7 million and
$116.2 million during the first quarters ended
July 27, 2011 and July 28, 2010, respectively,
resulting in an increase in cash for sales under this program
for the first quarters ended July 27, 2011 and
July 28, 2010 of $89.7 million and $32.0 million,
respectively. The fair value of the deferred purchase price was
$56.2 million and $173.9 million as of July 27,
2011 and April 27, 2011, respectively. The increase in cash
proceeds related to the deferred purchase price was
$117.7 million and $51.5 million for the first
quarters ended July 27, 2011 and July 28, 2010,
respectively. This deferred purchase price is included as a
trade receivable on the consolidated balance sheets and has a
carrying value which approximates fair value as of July 27,
2011 and April 27, 2011, due to the nature of the
short-term underlying financial assets.
In addition, the Company acted as servicer for approximately
$168 million and $146 million of trade receivables
which were sold to unrelated third parties without recourse as
of July 27, 2011 and April 27, 2011, respectively.
These trade receivables are short-term in nature. The proceeds
from these sales are also recognized on the statements of cash
flows as a component of operating activities.
The Company has not recorded any servicing assets or liabilities
as of July 27, 2011 or April 27, 2011 for the
arrangements discussed above because the fair value of these
servicing agreements as well as the fees earned were not
material to the financial statements.
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Employees' Stock Incentive Plans and Management Incentive Plans
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3 Months Ended | ||||
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Jul. 27, 2011
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Employees' Stock Incentive Plans and Management Incentive Plans [Abstract] | |||||
Employees' Stock Incentive Plans and Management Incentive Plans |
At July 27, 2011, the Company had outstanding stock option
awards, restricted stock units and restricted stock awards
issued pursuant to various shareholder-approved plans and a
shareholder-authorized employee stock purchase plan, as
described on pages 62 to 67 of the Company’s Annual Report
on
Form 10-K
for the fiscal year ended April 27, 2011. The compensation
cost related to these plans recognized in SG&A and the
related tax benefit were $6.0 million and $1.7 million
for the first quarter ended July 27, 2011, and
$5.2 million and $1.6 million for the first quarter
ended July 28, 2010, respectively.
In the first quarter of Fiscal 2012, the Company granted
performance awards as permitted in the Fiscal Year 2003 Stock
Incentive Plan, subject to the achievement of certain
performance goals. These performance awards are tied to the
Company’s relative Total Shareholder Return (“Relative
TSR”) Ranking within the defined Long-term Performance
Program (“LTPP”) peer group and the
2-year
average after-tax Return on Invested Capital (“ROIC”)
metrics. The Relative TSR metric is based on the two-year
cumulative return to shareholders from the change in stock price
and dividends paid between the starting and ending dates. The
starting value was based on the average of each LTPP peer group
company stock price for the 60 trading days prior to and
including April 27, 2011. The ending value will be based on
the average stock price for the 60 trading days prior to and
including the close of the Fiscal 2013 year end, plus
dividends paid over the 2 year performance period. The
compensation cost related to LTPP awards recognized in SG&A
was $5.6 million, with the related tax benefit of
$1.9 million for the first quarter ended July 27,
2011. The compensation cost related to LTPP awards recognized in
SG&A was $2.8 million, with the related tax benefit of
$0.9 million for the first quarter ended July 28, 2010.
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Venezuela - Foreign Currency and Inflation
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3 Months Ended | ||||
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Jul. 27, 2011
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Venezuela - Foreign Currency and Inflation [Abstract] | |||||
Venezuela - Foreign Currency and Inflation |
The Company applies highly inflationary accounting to its
business in Venezuela. Under highly inflationary accounting, the
financial statements of our Venezuelan subsidiary are remeasured
into the Company’s reporting currency (U.S. dollars)
and exchange gains and losses from the remeasurement of monetary
assets and liabilities are reflected in current earnings, rather
than accumulated other comprehensive loss on the balance sheet,
until such time as the economy is no longer considered highly
inflationary. The impact of applying highly inflationary
accounting for Venezuela on our consolidated financial
statements is dependent upon movements in the official
exchange rate between the Venezuelan bolivar fuerte and the
U.S. dollar and the amount of monetary assets and
liabilities included in our subsidiary’s balance sheet. At
July 27, 2011, the U.S. dollar value of monetary
assets, net of monetary liabilities, which would be subject to
an earnings impact from exchange rate movements for our
Venezuelan subsidiary under highly inflationary accounting was
$72.4 million.
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Income Per Common Share (Details) (USD $)
In Thousands, except Share data |
3 Months Ended | |
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Jul. 27, 2011
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Jul. 28, 2010
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Earnings Per Share Reconciliation | ||
Income from continuing operations attributable to H.J. Heinz Company common shareholders, net of tax | $ 226,114 | $ 240,427 |
Allocation to participating securities | 360 | 186 |
Preferred dividends | 3 | 3 |
Income from continuing operations applicable to common stock | $ 225,751 | $ 240,238 |
Average common shares outstanding-basic | 321,411,000 | 318,060,000 |
Effect of dilutive securities: | ||
Convertible preferred stock | 101,000 | 104,000 |
Stock options, restricted stock and the global stock purchase plan | 2,734,000 | 2,845,000 |
Average common shares outstanding-diluted | 324,246,000 | 321,009,000 |
Income Per Common Share (Textuals) [Abstract] | ||
Anti-dilutive stock options | 200,000 | 2,900,000 |
Changes In Equity (Tables)
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Jul. 27, 2011
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in carrying amounts of total equity |
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Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands |
3 Months Ended | ||||
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Jul. 27, 2011
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Jul. 28, 2010
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Cash Flows from Operating Activities: | |||||
Net income | $ 234,959 | $ 248,595 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||
Depreciation | 72,900 | 58,715 | |||
Amortization | 11,104 | 10,604 | |||
Deferred tax provision | 3,483 | 37,751 | |||
Pension contributions | (3,351) | (6,616) | |||
Other items, net | 43,086 | (7,380) | |||
Changes in current assets and liabilities, excluding effects of acquisitions and divestitures: | |||||
Receivables (includes proceeds from securitization) | 108,771 | 71,750 | |||
Inventories | (39,593) | 5,769 | |||
Prepaid expenses and other current assets | (37,365) | (29,277) | |||
Accounts payable | (147,755) | (47,792) | |||
Accrued liabilities | (101,238) | (143,130) | |||
Income taxes | 19,789 | 73,417 | |||
Cash provided by operating activities | 164,790 | 272,406 | |||
Cash Flows from Investing Activities: | |||||
Capital expenditures | (74,270) | (55,625) | |||
Proceeds from disposals of property, plant and equipment | 6,592 | 205 | |||
Other items, net | (4,461) | 1,932 | |||
Cash used for investing activities | (72,139) | (53,488) | |||
Cash Flows from Financing Activities: | |||||
Payments on long-term debt | (806,282) | (7,726) | |||
Proceeds from long-term debt | 610,349 | 9,457 | |||
Net proceeds/(payments) on commercial paper and short-term debt | 259,904 | (90,514) | |||
Dividends | (155,081) | (143,726) | |||
Exercise of stock options | 43,913 | 19,434 | |||
Purchase of treasury stock | (86,740) | 0 | |||
Other items, net | 13,248 | 15,068 | |||
Cash used for financing activities | (120,689) | (198,007) | |||
Effect of exchange rate changes on cash and cash equivalents | (18,545) | (9,655) | |||
Net (decrease)/increase in cash and cash equivalents | (46,583) | 11,256 | |||
Cash and cash equivalents at beginning of year | 724,311 | [1] | 483,253 | ||
Cash and cash equivalents at end of period | $ 677,728 | $ 494,509 | |||
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Redeemable Noncontrolling Interest
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3 Months Ended | ||||
---|---|---|---|---|---|
Jul. 27, 2011
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Redeemable Noncontrolling Interest [Abstract] | |||||
Redeemable Noncontrolling Interest |
The minority partner in Coniexpress has the right, at any time,
to exercise a put option to require the Company to purchase his
20% equity interest at a redemption value determinable from a
specified formula based on a multiple of EBITDA (subject to a
fixed minimum linked to the original acquisition date value).
The Company also has a call right on this noncontrolling
interest exercisable at any time and subject to the same
redemption price. The put and call options cannot be separated
from the noncontrolling interest and the combination of a
noncontrolling interest and the redemption feature require
classification of the minority partner’s interest as a
redeemable noncontrolling interest in the condensed consolidated
balance sheet. The carrying amount of the redeemable
noncontrolling interest approximates its maximum redemption
value. Any subsequent change in maximum redemption value would
be adjusted through retained earnings. We do not currently
believe the exercise of the put option would materially impact
our results of operations or financial condition.
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