-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OtmUoNu1C20mtSCvObEKDue7gTWeu/Us2Yl1Zgg89SIvfQoZ58SJoaprseXDCxBc 2xRMupHqp1J3G9jFq1gtWg== 0000950132-97-000868.txt : 19971216 0000950132-97-000868.hdr.sgml : 19971216 ACCESSION NUMBER: 0000950132-97-000868 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971029 FILED AS OF DATE: 19971215 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEINZ H J CO CENTRAL INDEX KEY: 0000046640 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030] IRS NUMBER: 250542520 STATE OF INCORPORATION: PA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03385 FILM NUMBER: 97737812 BUSINESS ADDRESS: STREET 1: 600 GRANT ST CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4124565700 MAIL ADDRESS: STREET 2: P O BOX 57 CITY: PITTSBURGH STATE: PA ZIP: 15230 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 29, 1997 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ---------------- --------------- FOR THE SIX MONTHS ENDED OCTOBER 29, 1997 COMMISSION FILE NUMBER 1-3385 H. J. HEINZ COMPANY (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0542520 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 GRANT STREET, PITTSBURGH, PENNSYLVANIA 15219 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 412-456-5700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes X No --- --- The number of shares of the Registrant's Common Stock, par value $.25 per share, outstanding as of December 1, 1997, was 365,469,863 shares. PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. H. J. HEINZ COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Six Months Six Months Ended Ended October 29, 1997 October 30, 1996 ---------------- ---------------- FY 1998 FY 1997 (Unaudited) (In Thousands, Except per Share Amounts) Sales................... $4,497,352 $4,602,818 Cost of products sold... 2,817,617 2,959,675 ---------- ---------- Gross profit............ 1,679,735 1,643,143 Selling, general and administrative expenses............... 856,741 942,109 ---------- ---------- Operating income........ 822,994 701,034 Interest income......... 15,542 20,377 Interest expense........ 126,108 133,985 Other expense, net...... 13,788 20,681 ---------- ---------- Income before income taxes.................. 698,640 566,745 Provision for income taxes.................. 266,473 209,695 ---------- ---------- Net income.............. $ 432,167 $ 357,050 ========== ========== Net income per share.... $ 1.16 $ .95 ========== ========== Cash dividends per share.................. $ .60 1/2 $ .55 1/2 ========== ========== Average shares for earnings per share..... 373,732 374,500 ========== ==========
See Notes to Condensed Consolidated Financial Statements. ------------ 2 H. J. HEINZ COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Three Months Three Months Ended Ended October 29, 1997 October 30, 1996 ---------------- ---------------- FY 1998 FY 1997 (Unaudited) (In Thousands, Except per Share Amounts) Sales................... $2,264,082 $2,394,058 Cost of products sold... 1,409,414 1,546,554 ---------- ---------- Gross profit............ 854,668 847,504 Selling, general and administrative expenses............... 498,891 494,746 ---------- ---------- Operating income........ 355,777 352,758 Interest income......... 7,636 9,947 Interest expense........ 62,797 68,141 Other expense, net...... 7,290 12,787 ---------- ---------- Income before income taxes.................. 293,326 281,777 Provision for income taxes.................. 104,460 104,257 ---------- ---------- Net income.............. $ 188,866 $ 177,520 ========== ========== Net income per share.... $ .51 $ .47 ========== ========== Cash dividends per share.................. $ .31 1/2 $ .29 ========== ========== Average shares for earnings per share..... 373,732 374,500 ========== ==========
See Notes to Condensed Consolidated Financial Statements. ------------ 3 H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
October 29, 1997 April 30, 1997* ---------------- --------------- FY 1998 FY 1997 (Unaudited) (Thousands of Dollars) Assets Current Assets: Cash and cash equivalents..................... $ 178,980 $ 156,986 Short-term investments, at cost which approximates market.......................... 42,246 31,451 Receivables, net.............................. 1,070,948 1,118,874 Inventories................................... 1,555,231 1,432,511 Prepaid expenses and other current assets..... 239,068 273,284 ---------- ---------- Total current assets........................ 3,086,473 3,013,106 ---------- ---------- Property, plant and equipment................. 4,183,217 4,380,598 Less accumulated depreciation................. 1,819,255 1,901,378 ---------- ---------- Total property, plant and equipment, net.... 2,363,962 2,479,220 ---------- ---------- Goodwill, net................................. 1,785,483 1,803,552 Other intangibles, net........................ 633,917 627,096 Other non-current assets...................... 513,828 514,813 ---------- ---------- Total other non-current assets.............. 2,933,228 2,945,461 ---------- ---------- Total assets................................ $8,383,663 $8,437,787 ========== ==========
*Summarized from audited fiscal year 1997 balance sheet. See Notes to Condensed Consolidated Financial Statements. ------------ 4 H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
October 29, 1997 April 30, 1997* ---------------- --------------- FY 1998 FY 1997 (Unaudited) (Thousands of Dollars) Liabilities and Shareholders' Equity Current Liabilities: Short-term debt............................... $ 448,729 $ 589,893 Portion of long-term debt due within one year. 320,233 573,549 Accounts payable.............................. 915,999 865,154 Salaries and wages............................ 74,556 64,836 Accrued marketing............................. 165,696 164,354 Accrued restructuring costs................... 155,397 210,804 Other accrued liabilities..................... 352,626 315,662 Income taxes.................................. 207,030 96,163 ---------- ---------- Total current liabilities................... 2,640,266 2,880,415 ---------- ---------- Long-term debt................................ 2,457,043 2,283,993 Deferred income taxes......................... 253,586 265,409 Non-pension postretirement benefits........... 210,151 211,500 Other......................................... 386,778 356,049 ---------- ---------- Total long-term debt and other liabilities.. 3,307,558 3,116,951 ---------- ---------- Shareholders' Equity: Capital stock................................. 107,991 108,015 Additional capital............................ 204,366 175,811 Retained earnings............................. 4,251,260 4,041,285 Cumulative translation adjustments............ (257,227) (210,864) ---------- ---------- 4,306,390 4,114,247 Less: Treasury shares at cost (65,696,859 shares at October 29, 1997 and 63,912,463 shares at April 30, 1997).......................... 1,827,745 1,629,501 Unfunded pension obligation.................. 26,465 26,962 Unearned compensation relating to the ESOP... 16,341 17,363 ---------- ---------- Total shareholders' equity.................. 2,435,839 2,440,421 ---------- ---------- Total liabilities and shareholders' equity.. $8,383,663 $8,437,787 ========== ==========
*Summarized from audited fiscal year 1997 balance sheet. See Notes to Condensed Consolidated Financial Statements. ------------ 5 H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Six Months Ended Ended October 29, 1997 October 30, 1996 ---------------- ---------------- FY 1998 FY 1997 (Unaudited) (Thousands of Dollars) Cash Provided by Operating Activities........ $ 397,160 $ 211,796 --------- --------- Cash Flows from Investing Activities: Capital expenditures....................... (171,830) (193,938) Acquisitions, net of cash acquired......... (117,939) (119,539) Proceeds from sale of Ore-Ida frozen foodservice foods business................ 490,739 -- Purchases of short-term investments........ (448,509) (628,707) Sales and maturities of short-term investments............................... 453,926 639,207 Other items, net........................... 23,559 21,523 --------- --------- Cash provided by (used for) investing activities.............................. 229,946 (281,454) --------- --------- Cash Flows from Financing Activities: Proceeds from long-term debt............... -- 36,907 Payments on long-term debt................. (252,876) (91,577) Proceeds from short-term debt, net......... 35,430 430,515 Dividends.................................. (222,192) (203,700) Purchases of treasury stock................ (316,721) (155,494) Exercise of stock options.................. 114,366 66,775 Other items, net........................... 40,894 16,906 --------- --------- Cash (used for) provided by financing activities.............................. (601,099) 100,332 --------- --------- Effect of exchange rate changes on cash and cash equivalents............................. (4,013) 3,292 --------- --------- Net increase in cash and cash equivalents.... 21,994 33,966 Cash and cash equivalents at beginning of year......................................... 156,986 90,064 --------- --------- Cash and cash equivalents at end of period... $ 178,980 $ 124,030 ========= =========
See Notes to Condensed Consolidated Financial Statements. ------------ 6 H. J. HEINZ COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) The Management's Discussion and Analysis of Financial Condition and Results of Operations which follows these notes contains additional information on the results of operations and the financial position of the company. Those comments should be read in conjunction with these notes. The company's annual report on Form 10-K for the fiscal year ended April 30, 1997 includes additional information about the company, its operations, and its financial position, and should be read in conjunction with this quarterly report on Form 10-Q. (2) The results for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year due to the seasonal nature of the company's business. Certain prior year amounts have been reclassified in order to conform with the fiscal 1998 presentation. (3) In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair statement of the results of operations of these interim periods have been included. (4) The composition of inventories at the balance sheet dates was as follows:
October 29, 1997 April 30, 1997 ---------------- -------------- (Thousands of Dollars) Finished goods and work-in-process.......... $1,193,514 $1,040,104 Packaging material and ingredients.......... 361,717 392,407 ---------- ---------- $1,555,231 $1,432,511 ========== ==========
(5) The provision for income taxes consists of provisions for federal, state, U.S. possessions and foreign income taxes. The company operates in an international environment with significant operations in various locations outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable tax rates. (6) On June 30, 1997, the company completed the sale of its Ore-Ida frozen foodservice foods business to McCain Foods Limited of New Brunswick, Canada. The transaction resulted in a pretax gain of approximately $96.6 million ($0.14 per share), and was recorded as an offset to selling, general and administrative expenses. The transaction included the sale of the company's Ore-Ida appetizer, pasta and potato foodservice business and five of the Ore-Ida plants that manufacture the products. The Ore-Ida frozen foodservice foods business contributed approximately $525 million in net sales for fiscal 1997. This sale was an essential part of Project Millennia as it will allow the company to focus its efforts on the Ore-Ida retail frozen potato and pasta business, and on the frozen retail snacks business. The sale is not expected to have an adverse impact on the company's results of operations. (7) On June 30, 1997, the company acquired John West Foods Limited from Unilever. John West Foods Limited, with annual sales of more than $250 million, is the leading brand of canned tuna and fish in the United Kingdom. Based in Liverpool, John West Foods Limited sells its canned fish products throughout Continental Europe and in a number of other international markets. (John West operations in Australia, New Zealand and South Africa were not included in the transaction.) On July 21, 1997, the company announced that it had acquired a majority interest in a joint venture with Tiger Oats Limited of Johannesburg, South Africa. The new company will be known as Pet Products (Pty) Limited with its headquarters in Cape Town. Pet Products will manufacture and market pet food brands formerly owned exclusively by Tiger Oats. These brands include Dogmor, Husky, Pamper and Catmor. 7 On August 28, 1997, the company acquired a majority interest in one of Poland's leading food processors, Pudliszki S.A. Pudliszki is the largest ketchup producer in Poland and also markets tomato concentrate, canned vegetables and cooking sauces. During the current year the company also made other acquisitions, primarily in Australasia. All of the above acquisitions have been accounted for as purchases and, accordingly, the respective purchase prices have been allocated on a preliminary basis to the respective assets and liabilities based on their estimated fair values as of the dates of the acquisitions. Operating results of these acquisitions have been included in the Consolidated Statement of Income from the dates of the acquisitions. Pro forma results of the company, assuming all of the above transactions had been made at the beginning of each period presented, would not be materially different from the results reported. (8) The company's $2.30 billion credit agreement, which expires in September 2001, supports its domestic commercial paper program. At October 29, 1997, the company had $1.53 billion of domestic commercial paper outstanding, all of which has been classified as long-term debt due to the long-term nature of the credit agreement. As of April 30, 1997, the company had $1.35 billion of domestic commercial paper outstanding and classified as long-term debt. (9) On September 10, 1997, the company's board of directors raised the quarterly dividend on the company's common stock to $0.31 1/2 per share from $0.29 per share, for an indicated annual rate of $1.26 per share. (10) On September 10, 1997, the company's board of directors authorized the repurchase of additional shares of its common stock, par value $0.25 per share. As of October 29, 1997, there is authorization to repurchase up to 14.7 million shares. (11) In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," effective for financial statements issued for periods ending after December 15, 1997. The new standard specifies the computation, presentation and disclosure requirements for earnings per share for entities with publicly held common stock. Since early adoption of the standard is prohibited, pro forma earnings per share amounts computed using the new standard are presented below.
Six Months Ended --------------------------------- October 29, 1997 October 30, 1996 ---------------- ---------------- As presented.............................. $1.16 $0.95 Pro forma: Basic earnings per share................ $1.18 $0.97 Diluted earnings per share.............. $1.16 $0.95
Three Months Ended --------------------------------- October 29, 1997 October 30, 1996 ---------------- ---------------- As presented.............................. $0.51 $0.47 Pro forma: Basic earnings per share................ $0.52 $0.48 Diluted earnings per share.............. $0.51 $0.47
8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SIX MONTHS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996 H. J. Heinz Company announced its largest-ever reorganization plan in the fourth quarter of Fiscal 1997. This reorganization and restructuring program ("Project Millennia") is designed to strengthen the company's six core businesses and improve the company's profitability and global growth. On June 30, 1997, the company completed the sale of its Ore-Ida frozen foodservice foods business to McCain Foods Limited. The transaction resulted in a pretax gain of approximately $96.6 million ($0.14 per share), and was recorded as an offset to selling, general and administrative expenses. This sale was an essential part of Project Millennia as it will allow the company to focus its efforts on the Ore-Ida retail frozen potato and pasta business, and on the frozen retail snacks business. In addition, the company has announced the closure or sale of 19 plants worldwide, with another 6 to be announced. During the first six months of Fiscal 1998, the company incurred non- recurring costs related to the ongoing implementation of Project Millennia of $31.0 million pretax ($0.05 per share). These non-recurring costs consist primarily of relocation, training, consulting and start-up costs. In the second half of the fiscal year, the company expects additional non-recurring costs associated with the implementation of Project Millennia of between $0.06 and $0.09 per share. RESULTS OF OPERATIONS For the six months ended October 29, 1997, sales decreased $105.5 million, or 2.3%, to $4,497.4 million from $4,602.8 million recorded in the same period a year ago. The sales decrease resulted from divestitures of 5.8% and the unfavorable effect of foreign exchange translation rates of 2.0%; partially offset by acquisitions of 3.4%, price of 1.7% and volume gains of 0.4%. Domestic operations provided 53.2% of the current period's net sales compared to 56.2% in the same period last year. During the first six months of Fiscal 1998, the company acquired John West Foods Limited in Europe, a majority interest in Pudliszki S.A., one of Poland's top food processors, and other smaller acquisitions. Fiscal 1997 acquisitions impacting the period to period sales dollar comparison include substantially all of the pet food businesses of Martin Feed Mills Limited in Canada, the canned beans and pasta business of Nestle Canada, Inc. and other acquisitions, primarily in Australasia. The sales impact of these acquisitions was more than offset by divestitures, primarily the Ore-Ida frozen foodservice foods business and the New Zealand ice cream business. Price increases recorded in Heinz ketchup, pet food, infant food, tuna and condiments were offset partially by price decreases in frozen entrees and bakery products. Volume increases recorded in bakery products, sauces and pastes, weight loss classroom activities, soups and retail frozen potatoes were partially offset by volume declines in Heinz ketchup, dog food, infant food and frozen entrees. Gross profit increased $36.6 million to $1,679.7 million from $1,643.1 million a year ago. The ratio of gross profit to sales increased to 37.3% from 35.7%. Excluding the impact of non-recurring costs related to the ongoing implementation of Project Millennia, gross profit would have increased $47.4 million to $1,690.5 million, and the gross profit percentage would have increased to 37.6%. The current year's gross profit and gross profit ratio were favorably impacted by price increases and reduced trade allowances which resulted from the discontinuance of inefficient end-of-quarter trade promotions, cost savings resulting from Project Millennia and a favorable product mix. 9 Operating income increased $122.0 million, or 17.4%, to $823.0 million from $701.0 million for the same period last year. Excluding the impact of the gain on the sale of the Ore-Ida frozen foodservice foods business and non-recurring costs related to the ongoing implementation of Project Millennia, operating income would have increased $56.4 million to $757.4 million. The increase in operating income, excluding the effects of these non-recurring items, is primarily due to the increase in gross profit as SG&A expenses were relatively flat period to period. Interest expense decreased $7.9 million to $126.1 million from $134.0 million in the comparable period a year ago as the impact of higher average interest rates was more than offset by lower average borrowings. The effective tax rate for the first six months of Fiscal 1998 was 38.1% compared to 37.0% for the same period a year ago. The current period effective rate reflects the benefit of a recent reduction in the income tax rate in the United Kingdom, partially offset by a significantly higher tax rate associated with the sale of the Ore-Ida frozen foodservice foods business. Excluding the impact of the Ore-Ida foodservice sale, the effective tax rate through six months is 37.0%. Net income for the first six months was $432.2 million compared to $357.1 million for the same period last year, and earnings per share was $1.16 compared to $0.95 a year ago. Excluding the impact of the gain on the sale of the Ore-Ida frozen foodservice foods business and non-recurring costs related to the ongoing implementation of Project Millennia, net income would have increased 11.6% to $398.6 million, and earnings per share would have increased 12.6% to $1.07 per share. THREE MONTHS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996 RESULTS OF OPERATIONS For the three months ended October 29, 1997, sales decreased $130.0 million, or 5.4%, to $2,264.1 million from $2,394.1 million recorded in the same period a year ago. The sales decrease resulted from the impact of divestitures of 7.3%, the unfavorable effect of foreign exchange translation rates of 2.6% and sales volume declines of 0.4%; partially offset by acquisitions which contributed 3.9% to sales and price of 1.0%. Domestic operations provided 52.3% of the current period's net sales compared to 56.8% in the same period last year. Acquisitions impacting the quarter to quarter sales dollar comparison included John West Foods Limited in Europe, substantially all of the pet food businesses of Martin Feed Mills Limited in Canada, the canned beans and pasta business of Nestle Canada, Inc., a majority interest in Pudliszki S.A., one of Poland's top food processors and other acquisitions, primarily in Australasia. The sales impact of these acquisitions was more than offset by divestitures, primarily the Ore-Ida frozen foodservice foods business and the New Zealand ice cream business. Volume decreases occurred in Heinz ketchup, dog food and infant food, and were partially offset by volume increases in weight loss classroom activities, sauces and pastes, cat food and bakery products. Price increases noted in Heinz ketchup and infant food were partially offset by a decrease in frozen entrees. Gross profit increased $7.2 million to $854.7 million from $847.5 million a year ago. The ratio of gross profit to sales increased to 37.7% from 35.4%. Excluding the impact of non-recurring costs related to the ongoing implementation of Project Millennia, gross profit would have increased $17.0 million to $864.5 million, and the gross profit percentage would have increased to 38.2%. The current quarter's gross profit and gross profit ratio were favorably impacted by price increases and reduced trade allowances which resulted from the discontinuance of inefficient end-of-quarter trade promotions, cost savings resulting from Project Millennia and a favorable product mix. 10 Operating income increased to $355.8 million from $352.8 million for the same period last year. Excluding non-recurring costs related to the ongoing implementation of Project Millennia of $19.5 million pre-tax, operating income for the second quarter would have increased 6.4% to $375.2 million. The increase in operating income, excluding these non-recurring costs, is primarily due to the increase in gross profit as SG&A expenses were relatively flat quarter to quarter. Interest expense decreased $5.3 million to $62.8 million from $68.1 million in the second quarter a year ago as the impact of higher average interest rates was more than offset by lower average borrowings. The effective tax rate for the second quarter was 35.6% compared to 37.0% for the same period a year ago. The decrease in the effective tax rate for the current quarter reflects the benefit of a recent reduction in the income tax rate in the United Kingdom. Net income for the current quarter was $188.9 million compared to $177.5 million for the same quarter last year, and earnings per share was $0.51 compared to $0.47, an increase of 8.5%. Excluding the impact of non-recurring costs related to the ongoing implementation of Project Millennia, net income would have increased 13.4% to $201.3 million, and earnings per share would have increased 14.9% to $0.54 per share. LIQUIDITY AND FINANCIAL POSITION Cash provided by operating activities totaled $397.2 million for the six month period ended October 29, 1997 compared to $211.8 million last year. Cash provided by investing activities totaled $229.9 million compared to requiring $281.5 million last year. Cash provided by divestitures in the current period totaled $490.7 million, due to the sale of the Ore-Ida frozen foodservice food business. Acquisitions in the current period required $117.9 million, due mainly to the purchases of John West Limited in Europe, a majority interest in Pudliszki S.A. of Poland, a majority interest in a pet food joint venture with Tiger Oats Limited of Johannesburg, South Africa and other acquisitions, primarily in Australasia. Acquisitions in the prior year's comparable period totaled $119.5 million, due mainly to the purchases of substantially all of the pet food businesses of Martin Feed Mills Limited in Canada and Southern Country Foods Ltd. in Australia. Purchases of property, plant and equipment totaled $171.8 million in the current period compared to $193.9 million a year ago. In the current period, $601.1 million was applied to financing activities while financing activities provided $100.3 million a year ago. Treasury stock purchases totaled $316.7 million (7.0 million shares) versus $155.5 million (4.8 million shares) in the prior year's first six months. Payments on long- term debt totaled $252.9 million for the current period compared to $91.6 million last year. Dividend payments totaled $222.2 million compared to $203.7 million a year ago. Proceeds from long-term debt provided $36.9 million in the prior period. Stock options exercised provided $114.4 million in the current period versus $66.8 million in the prior year's comparable period. Net proceeds from short-term debt provided $35.4 million in the current period versus $430.5 million in the prior year's comparable period. The company's $2.30 billion credit agreement, which expires in September 2001, supports its domestic commercial paper program. As of October 29, 1997, the company had $1.53 billion of domestic commercial paper outstanding, all of which has been classified as long-term debt due to the long-term nature of the credit agreement. As of April 30, 1997, the company had $1.35 billion of domestic commercial paper outstanding and classified as long-term debt. The company continues to evaluate long-term financing vehicles in order to reduce short-term variable interest rate debt. On September 10, 1997, the company's board of directors raised the quarterly dividend on the company's common stock to $0.31 1/2 per share from $0.29 per share, for an indicated annual rate of $1.26 per share. On December 2, 1997, the company's board of directors declared the quarterly dividend 11 on the company's common stock of $0.31 1/2 per share payable on January 10, 1998 to shareholders of record at the close of business on December 19, 1997. On September 10, 1997, the company's board of directors authorized the repurchase of additional shares of its common stock, par value $0.25 per share. As of October 29, 1997, there is authorization to repurchase up to 14.7 million shares. In the second half of the fiscal year, the company expects to spend approximately $275 million on share repurchases, net of proceeds from stock options exercised. The company's financial position continues to remain strong, enabling it to meet cash requirements for operations, capital expansion programs and dividends to shareholders. OTHER MATTERS On December 2, 1997, following the recommendation of the Chairman and Chief Executive Officer Anthony J. F. O'Reilly, to the Management Development and Compensation Committee of outside directors, the board of directors of the company announced the appointment of William R. Johnson as president and chief executive officer, effective April 30, 1998, the beginning of the company's financial year. Dr. O'Reilly has agreed to remain as non-executive chairman of the company through the annual meeting of shareholders in September 2000. 12 PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See the description of legal proceedings set forth under this caption in the company's Quarterly Report on Form 10-Q for the three months ended July 30, 1997. ITEM 2. CHANGES IN SECURITIES Nothing to report under this item. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Nothing to report under this item. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of H. J. Heinz Company was held in Pittsburgh, Pennsylvania on September 10, 1997. The following individuals were elected as directors for a one-year term expiring in September 1998:
Shares Director Shares for Withheld -------- ---------- -------- A. J. F. O'Reilly 318,625,447 6,388,905 W. P. Snyder III 318,831,139 6,183,213 J. J. Bogdanovich 318,095,104 6,919,248 H. J. Schmidt 318,804,925 6,209,427 A. Lippert 319,109,389 5,904,963 E. B. Sheldon 318,991,851 6,022,501 R. M. Cyert 318,944,398 6,069,954 S. C. Johnson 319,453,810 5,560,542 D. R. Keough 319,311,228 5,703,124 S. D. Wiley 318,767,533 6,246,819 L. J. McCabe 319,055,291 5,959,061 D. R. Williams 319,056,625 5,957,727 L. Ribolla 318,995,386 6,018,966 N. F. Brady 318,808,593 6,205,759 W. R. Johnson 319,037,552 5,976,800 W. C. Springer 318,978,965 6,035,387 E. E. Holiday 319,425,598 5,588,754 *T. S. Foley 318,284,440 6,729,912 P. F. Renne 318,984,305 6,030,047
- -------- * Mr. Foley resigned from the Board of Directors effective November 6, 1997 to become the United States Ambassador to Japan. Shareholders also acted upon the following proposal at the Annual Meeting: Elected Coopers & Lybrand L.L.P. the company's independent accountants for the fiscal year ending April 29, 1998. Votes totaled 322,879,487 for; 740,848 against; and 1,394,018 abstentions. ITEM 5. OTHER INFORMATION See Note 7 to the Condensed Consolidated Financial Statements in Part I-- Item 1 of this Quarterly Report on Form 10-Q and "Other Matters" in Part I-- Item 2 of this Quarterly Report on Form 10-Q. This report contains certain forward-looking statements which are based on management's current views and assumptions regarding future events and financial performance. Reference should be made 13 to the section "Forward-Looking Statements" in Item 1 of the registrant's Annual Report on Form 10-K for the fiscal year ended April 30, 1997 for a description of the important factors that could cause actual results to differ materially from those discussed herein. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits required to be furnished by Item 601 of Regulation S-K are listed below and are filed as part hereof. The Registrant has omitted certain exhibits in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K. The Registrant agrees to furnish such documents to the Commission upon request. 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. 10. Employment Agreement between H. J. Heinz Company and Daniel J. O'Neill. 11. Computation of net income per share. 27. Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended October 29, 1997. 14 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. H. J. HEINZ COMPANY (Registrant) Date: December 12, 1997 /s/ Paul F. Renne By................................... Paul F. Renne Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: December 12, 1997 /s/ Edward J. McMenamin By................................... Edward J. McMenamin Vice President and Corporate Controller (Principal Accounting Officer) 15 EX-10 2 DANIEL J. O'NEILL EMPLOYMENT AGREEMENT Exhibit 10 EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT, made as of the 6th day of January, 1997, by and between H. J. HEINZ COMPANY, a Pennsylvania corporation ("Heinz"), and DANIEL J. O'NEILL of 591 Longchamps Drive, Devon, Pennsylvania ("Employee"). W I T N E S S E T H - - - - - - - - - - WHEREAS, Heinz is the parent company of multiple subsidiaries and business units; and WHEREAS, Star-Kist Foods, Inc. ("Star-Kist") is a wholly owned subsidiary of Heinz engaged in the business of tuna and pet food processing and related activities and businesses; and WHEREAS, Employee desires to contribute his professional skills and abilities to Heinz as an executive vice president with responsibility as president and chief executive officer of Star-Kist; and WHEREAS, Employee is the signator of an Employee Agreement Relating to Confidential and Proprietary Information with Campbell Soup Company dated December 6, 1995 (the "Restrictive Agreement") which places certain restraints on Employee, including those restraints on subsequent employment under Section 9 thereof as are reasonable and necessary under applicable law (the "Restraint") but which specifies permitted types of employment with "Conflicting Organizations" in Section 9(b) thereof (the "Restraint Exception"); and WHEREAS, the employment of Employee hereunder shall be limited to employment authorized under the Restraint Exception only during the term of the Restraint and which is otherwise not in violation of the Restrictive Agreement. NOW, THEREFORE, intending to be legally bound, Heinz agrees to employ Employee, and Employee hereby agrees to be employed by Heinz, upon the following terms and conditions: -2- ARTICLE I EMPLOYMENT ---------- 1.01 (a) Office. Employee is hereby employed by Heinz, and Employee ------ hereby accepts employment by Heinz as Executive Vice President of Heinz with responsibility as President and Chief Executive Officer of Star-Kist. Employee shall be based in Pittsburgh, Pennsylvania. Employee's Position Description is set forth in Exhibit A, attached hereto and made a part hereof. Employee shall use his best energies and abilities in the performance of these duties. In no case shall Employee's duties involve, directly or indirectly, any role or function in any product, process, equipment, project or service, or component thereof, in violation of the Restraint unless the same qualifies under the Restraint Exception. The Position Description and the job description and requirements of Employee's job under this Agreement shall be subject to and superseded by the requirements of the Restraint and shall be deemed to be modified and amended in order that the Position Description, the job description and requirements strictly confirm to the scope of the Restraint Exception. As soon as Employee is released from restrictions under the Restraint, Employee shall be considered for appointment to additional executive duties on behalf of Heinz. (b) Nomination. Dr. Anthony J. F. O'Reilly, Chairman of the Board of ---------- Directors and Chief Executive Officer of Heinz shall recommend Employee to the nominating committee of the Board of Directors of Heinz for nomination to the Board of Directors of Heinz and such nomination shall be considered and promptly acted upon by the nominating committee of the Heinz Board of Directors upon the expiration of the Restraint or at any time prior to such expiration upon receipt by Heinz of an opinion of Paul, Weiss, Rifkind, Wharton & Garrison stating that Employee's nomination and election to the Heinz Board of Directors should not breach the Restraint or the Restrictive Agreement. 1.02 Term. Employee's employment hereunder shall commence on the first ---- business day after the effective date of the termination of his present employment. Employee has advised Heinz that he shall submit his resignation from his present employment on the first business day after execution of this Agreement with the effective date thereof to be set in the discretion of Employee, but in no case shall such effective date extend more than three weeks from the date of resignation. -3- 1.03. Initial Payment. Upon Employee's resignation from his current --------------- employment, and execution of this Agreement, Heinz shall forthwith pay to Employee the non-refundable sum of One Million Dollars ($1,000,000). 1.04. Base Salary. Upon commencement of his employment with Heinz ----------- hereunder, Heinz shall pay Employee compensation at the rate of $400,000.00 per year (hereinafter the "Base Salary"), with such adjustments from time to time which, as determined by Heinz, are appropriate to recognize and reward Employee for his achievements for, and contributions to, Heinz pursuant to established guidelines of Heinz. 1.05. Incentive Compensation. Employee shall be a participant in the ---------------------- Shareholder Success Program ("SSP") or any successor program to SSP. Employee shall receive payments annually in accordance with the SSP or any successor program applicable to Employee. For the Heinz fiscal year ending April 30, 1997, Employee shall receive from the SSP and, if necessary, a supplemental payment for a bonus totaling not less than $200,000.00. For the Heinz fiscal year ending April 29, 1998, Employee shall receive from the SSP and, if necessary, a supplemental payment for a bonus totaling not less than $400,000.00. During the term of the Restraint, all payments to Employee from the SSP, any successor program to the SSP or any other bonus payments shall be based upon and calculated from the performance of Star-Kist Foods, Inc.; no such SSP or any other bonus program shall be based on the performance of H. J. Heinz Company as a whole during the term of the Restraint; except that should the bonuses calculated as described above be less than the guaranties provided above, then Heinz shall be permitted to pay Employee such guaranteed amounts. Employee shall have Hay Points under the Heinz compensation system as recommended by Heinz' Chief Executive Officer and such Hay Point total shall not be less than that of any officer of Heinz or any affiliate of Heinz other than the Chairman of the Board of Directors and Chief Executive Officer of Heinz or the President of Heinz. 1.06 Stock Options. Upon Employee's resignation from his current ------------- employment and his execution of this Agreement, Employee shall be deemed to be an employee under the 1996 H. J. Heinz Company Stock Option Plan and shall be granted options for the purchase of 500,000 shares of Heinz -4- stock on the following terms: . Grant in accordance with the 1996 H. J. Heinz Company Stock Option Plan and shall have a term of ten (10) years; and . All of such options shall vest on January 6, 2000. Any and all unvested options granted under this Section 1.06 shall become vested and immediately exercisable upon a Change in Control of Heinz as defined in the 1996 H. J. Heinz Company Stock Option Plan or upon Employee's termination by Heinz under Section 2.03. Pursuant to the 1996 H. J. Heinz Company Stock Option Plan, vested and unvested options become immediately exercisable upon the death or physical disability of the Employee during his employment hereunder and shall remain exercisable at all times prior to expiration of such options. Should Employee's employment hereunder terminate under Section 2.03, Employee may exercise his options at any time within three months of his last date of employment hereunder. Should Employee choose to resign his employment hereunder, all of his options shall terminate on the effective date of this resignation. 1.07. Employee Benefits and Related Items ----------------------------------- (a) Employee shall participate in and shall receive from time to time such fringe benefits as other executives in comparable or similar positions with Heinz, in accordance with employment policies of Heinz, including but not limited to participation in any vacation plan, any disability or wage continuation plan, or group insurance, hospitalization or other benefit plan arrangement of Heinz, which is applicable to employees generally and which is or may be applicable to executive employees. The vacation entitlement of Employee shall be five (5) weeks per year. (b) Employee shall receive a car for his use while he is employed by Heinz pursuant to the Heinz executive automobile policy and guidelines. -5- (c) Heinz shall reimburse Employee for Employee's reasonable costs to relocate at Heinz' request. (d) Heinz shall pay or, if Employee pays, shall reimburse Employee, for such reasonable business expenses as he incurs in performing his responsibilities under this Agreement. ARTICLE II TERMINATION ----------- 2.01. Illness, Incapacity. If during the term of Employee's employment ------------------- hereunder Employee shall be prevented, in accordance with the then current Heinz disability policy and based upon the judgment of competent medical personnel, from effectively performing his duties hereunder for a period of six consecutive months or six months in any 12 month period by reason of illness or disability, then Heinz may, by written notice to Employee, terminate Employee's employment hereunder. Upon delivery to Employee of such notice, together with payment of any accrued Base Salary, and pro-rata fiscal year Incentive Compensation, if any, Employee's employment and all obligations of Heinz under Article I hereof shall forthwith terminate; provided, however, Employee shall continue to own those Heinz stock options issued to him under their terms as specified in Section 1.06 and shall receive any disability benefits to which he is entitled under the Heinz benefit plan then in effect and applicable to Employee. The obligations of Employee under Article III hereof shall continue notwithstanding termination of Employee's employment pursuant to this Section 2.01. 2.02. Death. If Employee dies during the term of his employment, ----- Employee's employment hereunder shall terminate and all obligations of Heinz hereunder, other than obligations with respect to the payment of accrued and unpaid Base Salary, stock options as specified in Section 1.06, pro-rata fiscal year Incentive Compensation, if any, and benefits, shall terminate. 2.03. Heinz Termination. Employee's employment hereunder may be terminated ----------------- at any time by Heinz with or without cause. Following such termination, Heinz shall pay Employee the amount of his base salary ordinarily due for twelve months work hereunder plus the amount of the last Incentive -6- Compensation bonus received by Employee. Payment of all other compensation and benefits to Employee hereunder shall cease effective as of the date of any such termination; provided, however, Employee shall retain his rights in vested stock options as specified in Section 1.06 and shall retain the Initial Payment made to Employee under 1.03 hereinabove. The obligations of Employee under Article III hereof shall continue notwithstanding termination of Employee's employment under this Section 2.03. 2.04. Employee Termination. Employee's employment hereunder may be -------------------- terminated at any time by Employee. Employee shall give Heinz sixty (60) days prior written notice of such termination of his employment with Heinz. The obligations of Employee under Article III hereof shall continue notwithstanding termination of Employee's employment pursuant to this Section 2.04. If Employee terminates his employment with Heinz, Employee shall not be entitled to any further payments or other compensation or benefits from Heinz. ARTICLE III CERTAIN EMPLOYEE ACKNOWLEDGEMENTS AND COVENANTS ----------------------------------------------- 3.01. Confidential Information. For purposes of this Agreement, the "Heinz ------------------------ Group" shall mean Heinz, Star-Kist and any subsidiary and affiliate of Heinz. Employee recognizes and acknowledges that: (a) in the course of Employee's employment hereunder it may be necessary for Employee to acquire or be exposed to information which could include, in whole or in part, information concerning the Heinz Group's business plans and strategies, marketing research, sales techniques, methods, customers and prospective customers, sources of supply, computer programs, system documentation, special hardware, software development, manuals, formulae, processes, machine, compositions, ideas, improvements, inventions or any other confidential or proprietary information belonging to the Heinz Group or relating to the Heinz Group's affairs (collectively referred to herein as the "Confidential Information"); (b) the Confidential Information is the property of the Heinz Group; (c) the unauthorized use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Heinz Group; and (d) it is essential to the protection of the Heinz Group's goodwill and to the maintenance of the Heinz Group's competitive position that the Confidential Information be kept secret and that Employee not disclose the Confidential Information to others or use -7- the Confidential Information to Employee's own advantage or the advantage of others. Confidential Information shall not include information that becomes publicly available through no fault of Employee. Nothing herein shall conflict with the strict compliance of Employee with the Restraint and the Restrictive Agreement; Employee shall have no role in the receipt, handling or consideration of information about businesses not authorized or permitted for Employee's receipt, handling or consideration by the Restraint Exception and Restrictive Agreement. 3.02. Non-Disclosure of Confidential Information. Employee agrees to, and ------------------------------------------ hereby shall, hold and abide by Heinz procedures to safeguard the Confidential Information in trust for Heinz, its successors and assigns, and shall not, without the prior written consent of Heinz, misappropriate or disclose or make available to anyone for use outside the Heinz Group at any time, either during his employment with Heinz or the Heinz Group or subsequent to the termination of his employment with Heinz for any reason, including without limitation termination by Heinz for cause or without cause, any of the Confidential Information, whether or not developed by Employee, except as required in the performance of Employee's duties to Heinz. 3.03. Disclosure of Works and Inventions/Assignment of Patents. Employee -------------------------------------------------------- shall disclose promptly to Heinz or its nominee or assignee any and all works, inventions, trademarks, discoveries and improvements authored, conceived or made by Employee during the period of employment and related to the business or activities of Heinz, and hereby assigns and agrees to assign all his interest therein to Heinz or its nominee. Whenever requested to do so by Heinz, Employee shall execute any and all applications, assignments or other instruments which Heinz shall deem necessary to apply for and obtain Letters Patent or Copyrights of the United States or any foreign country or to otherwise protect Heinz' interest therein. Such obligations shall continue beyond the termination of employment with respect to works, inventions, trademarks, discoveries and improvements authored, conceived or made by Employee during the period of employment, and shall be binding upon Employee's assigns, executors, administrators and other legal representatives. Heinz agrees to reimburse Employee for all reasonable expenses incurred in complying with this Section 3.03. 3.04. Duties. Employee agrees to be a loyal employee of Heinz. Employee ------ agrees to devote his -8- best efforts full time to the performance of his duties for Heinz, to give proper time and attention to furthering Heinz' business, and to comply with all rules, regulations and instruments established or issued by Heinz. Employee further agrees that during the term of this Agreement, Employee shall not, directly or indirectly, engage in any business which, in the reasonable judgment of Heinz, would detract from Employee's ability to apply his best efforts to the performance of his duties hereunder. Employee also agrees that he shall not usurp any corporate opportunities of the Heinz Group while employed by Heinz or which came to Employee's attention while engaged at Heinz. 3.05. Return of Materials. Upon the termination of Employee's employment ------------------- with Heinz, Employee shall promptly deliver to Heinz all correspondence, business plans, drawings, blueprints, manuals, letters, notes, notebooks, reports, flow-charts, programs, computer storage media, proposals and any documents concerning the Heinz Group's businesses, customers, products, services or processes and, without limiting the foregoing, will promptly deliver to Heinz any and all other documents or materials containing or constituting Confidential Information. 3.06. Non-Solicitation of Employees. Employee agrees that, during his ----------------------------- employment with Heinz and for two (2) years following termination of Employee's employment with Heinz, including without limitation termination by Heinz for cause or without cause, Employee shall not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any employee of Heinz or the Heinz Group to leave Heinz or the Heinz Group for any reason whatsoever or hire any employee of Heinz or the Heinz Group. ARTICLE IV REPRESENTATIONS AND WARRANTIES ------------------------------ 4.01. No Prior Agreements. Employee states that he is not aware of and, ------------------- to the best of his knowledge has not signed or agreed to, any contract, agreement or understanding which in any manner would limit or otherwise affect his ability to perform his obligations hereunder, including without limitation any contract, agreement or understanding containing terms and provisions restricting his employment after leaving the employ of Campbell Soup Company, with the sole exception of the Restrictive Agreement, a copy of which was delivered to Heinz by Employee. To the best of Employee's -9- recollection, Employee did not sign the Patent-Trade Secret Agreement referenced in the Restrictive Agreement but if he did sign it or is bound by it, Employee does not believe such Patent-Trade Secret Agreement is inconsistent with Employee's obligations and duties under this Agreement. Employee and Heinz acknowledge that Employee's employment with Heinz will not require him to, and Employee shall not, (i) disclose or use any confidential information belonging to prior employers or other persons or entities in violation of the Restrictive Agreement or any other agreement to which Employee is bound, or (ii) directly or indirectly engage in any activity on behalf of or in furtherance of Heinz or the Heinz Group in breach of the Restraint or the Restrictive Agreement and shall at all times during the term of the Restraint restrict his employment and activities to those permitted under the Restraint Exception. It is Heinz' policy, and the policy of the Heinz Group and a specific direction to Employee, that Employee shall not (i) disclose or use any of the confidential information of Campbell Soup Company or any prior employer of Employee, to or for the benefit of Heinz or the Heinz Group, (ii) retain or withdraw from Campbell Soup Company any materials, documents or property of Campbell Soup Company upon his termination of employment with them, or (iii) breach the Restraint or undertake any activity not permitted by the Restraint Exception or the Restrictive Agreement. If at any meeting which Employee attends there is any discussion concerning businesses in which Employee may not participate or to which he may not contribute under the Restraint or the Restrictive Agreement, then Employee shall be and hereby is directed to withdraw from such meeting and not participate in or be a party to such meeting. 4.02. Review by Counsel. Both Heinz and Employee represent and warrant ----------------- that their respective counsel have reviewed this Agreement. ARTICLE V MISCELLANEOUS ------------- 5.01. Entire Agreement. This Agreement represents the entire agreement ---------------- of the parties and may be amended only by a writing signed by each of them. 5.02. Governing Law. This Agreement shall be governed by and construed in ------------- accordance with the laws of the Commonwealth of Pennsylvania. -10- 5.03. Agreement Binding. The obligations of Employee under this Agreement ----------------- shall continue after the termination of his employment with Heinz for any reason and shall be binding on his heirs, executors, legal representatives and assigns and shall inure to the benefit of any successors and assigns of Heinz. 5.04. Assignment. This Agreement may be assigned by Heinz to any company ---------- or entity in the Heinz Group and may be further assigned by any assignee hereunder to any company or entity in the Heinz Group; provided, however, that any such assignment shall not occur during the term of the Restraint unless employment with the assignee qualifies under the Restraint Exception. Any assignment of this Agreement shall not constitute termination of employment under this Agreement nor shall any assignment constitute new employment for the Employee and all obligations specified in this Agreement shall be binding upon the Employee and the assignee after any such assignment. Employee may not assign this Agreement and any attempted assignment by Employee shall be invalid. 5.05. Confidentiality of this Agreement. This Agreement shall be deemed a --------------------------------- part of the Confidentiality Information and shall not be disclosed, in whole or in part, by Employee or Heinz to any third party, or to any employees within Heinz, its affiliates or subsidiaries, other than to or at the direction of Employee's supervisor; provided, however, Employee shall disclose it to his legal counsel for the purposes of receiving legal advice thereon and Heinz may disclose it as required by law or stock exchange rules. 5.06. Legal Proceedings. ----------------- (a) If Employee is barred from the commencement or continuation of employment with Heinz hereunder by reason of a court order or injunction resulting from enforcement of the Restraint or the Restrictive Agreement, during the effective period of such order or injunction Employee shall be entitled to (i) retain in any case the payment under Section 1.03 above and those stock options already vested under Section 1.06 above and (ii) receive the Base Salary and Incentive Compensation under Sections 1.04 and 1.05 as if Employee was actively employed with Heinz hereunder provided that such continuing -11- payments under Sections 1.04 and 1.05 shall cease if the order or injunction is not fully released within twelve (12) months of its initial effective date. (b) If a court with jurisdiction hereof determines that Employee's duties as described in Section 1.01 are not permissable, then Employee's duties, at Heinz' option, shall be changed and amended, the intent of this Agreement being that Employee shall not violate any term of the Restraint or the Restrictive Agreement and, despite any such changes or amendments in Employee's duties, Employee's rights and benefits shall continue as provided in this Agreement without reduction. 5.07. (a) Counterparts, Section Headings. This Agreement may be executed ------------------------------ in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. The section headings of this Agreement are for convenience of reference only and shall not affect the construction or interpretation of any of the provisions hereof. (b) By-Laws. Employee shall be entitled to the benefit of the ------- Heinz By-Laws applicable for presidents of Heinz' North American affiliates. A copy of the current By-Laws is attached hereto as Exhibit B. In particular, Employee shall be and hereby is indemnified by Heinz against legal fees and other reasonable out of pocket expenses and any liability paid or incurred by Employee in connection with any actual, threatened or completed claim, action, suit or proceeding by reason of Employee having executed this Agreement and performing or seeking to perform his duties and obligations under this Agreement. This indemnification does not apply to any claim, action, suit or proceeding initiated by Employee against Heinz or Heinz' officers, directors or employees. -12- EMPLOYEE ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS THE FOREGOING PROVISIONS. IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed the day and year first above written. Attest: January 6, 1996 /s/ Daniel J. O'Neill (SEAL) - ---------------------------- --------------------------------- Daniel J. O'Neill Attest: H.J. HEINZ COMPANY /s/ John Cartwright By: /s/ Anthony J. F. O'Reilly - ---------------------------- ---------------------------------- Title: Chairman and Chief Executive Officer ------------------------------------ EX-11 3 COMPUTATION OF NET INCOME PER SHARE EXHIBIT 11 H. J. Heinz Company and Subsidiaries COMPUTATION OF NET INCOME PER SHARE (Unaudited)
Six Months Ended ----------------------- October 29, October 30, 1997 1996 ----------- ----------- FY 1998 FY 1997 Primary income per share: Net income........................................... $432,167 $357,050 Preferred dividends.................................. 19 22 -------- -------- Net income applicable to common stock................ $432,148 $357,028 ======== ======== Average common shares outstanding and common stock equivalents.......................... 373,732 374,500 ======== ======== Net income per share--primary........................ $ 1.16 $ 0.95 ======== ======== Fully diluted income per share: Net income........................................... $432,167 $357,050 ======== ======== Average common shares outstanding and common stock equivalents.......................... 373,732 374,500 Additional common shares assuming: Conversion of $1.70 third cumulative preferred stock........................................... 310 350 Additional common shares assuming options were exercised at the period-end market price........ 547 531 -------- -------- Average common shares outstanding and common stock equivalents.......................... 374,589 375,381 ======== ======== Net income per share--fully diluted................. $ 1.15 $ 0.95 ======== ========
All amounts in thousands except per share amounts. ------------ EXHIBIT 11 H. J. Heinz Company and Subsidiaries COMPUTATION OF NET INCOME PER SHARE (Unaudited)
Three Months Ended ----------------------- October 29, October 30, 1997 1996 ----------- ----------- FY 1998 FY 1997 Primary income per share: Net income........................................... $188,866 $177,520 Preferred dividends.................................. 9 11 -------- -------- Net income applicable to common stock................ $188,857 $177,509 ======== ======== Average common shares outstanding and common stock equivalents.......................... 373,732 374,500 ======== ======== Net income per share--primary........................ $ 0.51 $ 0.47 ======== ======== Fully diluted income per share: Net income........................................... $188,866 $177,520 ======== ======== Average common shares outstanding and common stock equivalents.......................... 373,732 374,500 Additional common shares assuming: Conversion of $1.70 third cumulative preferred stock........................................... 310 350 Additional common shares assuming options were exercised at the period-end market price........ 547 531 -------- -------- Average common shares outstanding and common stock equivalents.......................... 374,589 375,381 ======== ======== Net income per share--fully diluted................. $ 0.50 $ 0.47 ======== ========
All amounts in thousands except per share amounts. ------------ EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE PERIOD ENDED OCTOBER 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 6-MOS APR-29-1998 MAY-01-1997 OCT-29-1997 1 178,980 42,246 1,070,948 0 1,555,231 3,086,473 4,183,217 1,819,255 8,383,663 2,640,266 2,457,043 0 217 107,774 2,327,848 8,383,663 4,497,352 4,497,352 2,817,617 2,817,617 0 0 126,108 698,640 266,473 432,167 0 0 0 432,167 1.16 1.15
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