-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, eT1Jy33rNGvjcpHhBKxD0P0fmFYRmMVX2SkR0Wj093St1RmkxXbni4H6jLhjTPu7 vnwiEXjVO0P5LvrH9E8ALw== 0000950132-94-000223.txt : 19940914 0000950132-94-000223.hdr.sgml : 19940914 ACCESSION NUMBER: 0000950132-94-000223 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940727 FILED AS OF DATE: 19940912 SROS: NASD SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEINZ H J CO CENTRAL INDEX KEY: 0000046640 STANDARD INDUSTRIAL CLASSIFICATION: 2030 IRS NUMBER: 250542520 STATE OF INCORPORATION: PA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03385 FILM NUMBER: 94548742 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 July 27, 1994 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 Three Months Ended July 27, 1994 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 August 31, 1994, was 246,611,779 shares. PART I--FINANCIAL INFORMATION Item 1. Financial Statements. H. J. HEINZ COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Three Months Three Months Ended Ended July 27, 1994 July 28, 1993 ------------- ------------- FY 1995 FY 1994 (Unaudited) (In Thousands, Except per Share Amounts) Sales.......................................................................... $ 1,736,098 $ 1,583,312 Cost of products sold.......................................................... 1,101,450 963,338 ------------- -------------- Gross profit................................................................... 634,648 619,974 Selling, general and administrative expenses................................... 347,894 346,761 ------------- -------------- Operating income............................................................... 286,754 273,213 Interest income................................................................ 9,361 8,513 Interest expense............................................................... 40,710 39,168 Other expense, net............................................................. 7,860 8,375 ------------- -------------- Income before income taxes..................................................... 247,545 234,183 Provision for income taxes..................................................... 92,829 82,004 ------------- -------------- Net income..................................................................... $ 154,716 $ 152,179 ============= ============== Net income per share........................................................... $ .62 $ .59 ============= ============== Cash dividends per share....................................................... $ .33 $ .30 ============= ============== Average shares for earnings per share.......................................... 251,237 258,710 ============= ==============
See Notes to Condensed Consolidated Financial Statements. ------------------ 2 H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
July 27, 1994 April 27, 1994* ------------- -------------- FY 1995 FY 1994 (Unaudited) (Thousands of Dollars) ASSETS Current Assets: Cash and cash equivalents..................................................... $ 90,715 $ 98,536 Short-term investments, at cost which approximates market..................... 71,603 43,868 Receivables, net.............................................................. 809,318 812,501 Inventories................................................................... 1,171,957 1,145,747 Prepaid expenses and other current assets..................................... 200,827 190,878 ------------- -------------- Total current assets..................................................... 2,344,420 2,291,530 ------------- -------------- Property, plant and equipment................................................. 3,616,347 3,442,940 Less accumulated depreciation................................................. 1,338,584 1,275,213 ------------- -------------- Total property, plant and equipment, net................................. 2,277,763 2,167,727 ------------- -------------- Investments, advances and other assets........................................ 543,290 579,420 Goodwill, net................................................................. 1,000,335 992,994 Other intangibles, net........................................................ 477,822 349,475 ------------- -------------- Total other noncurrent assets............................................ 2,021,447 1,921,889 ------------- -------------- Total assets............................................................. $ 6,643,630 $ 6,381,146 ============= ==============
*Summarized from audited fiscal year 1994 balance sheet. See Notes to Condensed Consolidated Financial Statements. ------------------ 3 H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
July 27, 1994 April 27, 1994* ------------- -------------- FY 1995 FY 1994 (Unaudited) (Thousands of Dollars) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt............................................................... $ 688,487 $ 416,372 Portion of long-term debt due within one year................................. 41,014 23,329 Accounts payable.............................................................. 525,058 575,269 Salaries and wages............................................................ 64,408 72,312 Accrued marketing............................................................. 92,776 105,102 Other accrued liabilities..................................................... 319,204 369,443 Income taxes.................................................................. 120,966 130,535 ------------- -------------- Total current liabilities................................................ 1,851,913 1,692,362 ------------- -------------- Long-term debt................................................................ 1,761,231 1,727,002 Deferred income taxes......................................................... 262,633 248,630 Non-pension postretirement benefits........................................... 218,731 217,044 Other liabilities............................................................. 163,730 157,557 ------------- -------------- Total long-term debt and other liabilities............................... 2,406,325 2,350,233 ------------- -------------- Shareholders' Equity: Capital stock................................................................. 72,239 72,248 Additional capital............................................................ 168,011 170,179 Retained earnings............................................................. 3,706,152 3,633,385 Cumulative translation adjustments............................................ (217,938) (264,119) ------------- -------------- 3,728,464 3,611,693 Less: Treasury stock at cost (40,397,029 shares at July 27, 1994 and 38,359,744 shares at April 27, 1994)................................................ 1,311,372 1,239,177 Unearned compensation relating to the ESOP.................................. 31,700 33,965 ------------- -------------- Total shareholders' equity............................................... 2,385,392 2,338,551 ------------- -------------- Total liabilities and shareholders' equity............................... $ 6,643,630 $ 6,381,146 ============= ==============
*Summarized from audited fiscal year 1994 balance sheet. See Notes to Condensed Consolidated Financial Statements. ------------------ 4 H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Three Months Ended Ended July 27, 1994 July 28, 1993 ------------- ------------- FY 1995 FY 1994 (Unaudited) (Thousands of Dollars) Cash Provided by Operating Activities......................................... $ 105,761 $ 206,259 ------------- ------------- Cash Flows from Investing Activities: Capital expenditures..................................................... (60,626) (71,242) Acquisitions, net of cash acquired....................................... (209,411) (90,120) Proceeds from divestitures............................................... -- 38,834 Purchases of short-term investments...................................... (855,105) (62,744) Sales and maturities of short-term investments........................... 851,004 496 Other items, net......................................................... (3,993) (11,883) ------------- ------------- Cash used for investing activities.................................. (278,131) (196,659) ------------- ------------- Cash Flows from Financing Activities: Proceeds from short-term debt, net....................................... 315,454 45,302 Dividends................................................................ (81,949) (76,299) Purchases of treasury stock.............................................. (89,086) (42,772) Proceeds from borrowings against insurance policies...................... 70,930 65,264 Repayments of borrowings against insurance policies...................... (68,898) -- Other items, net......................................................... 14,216 (2,890) ------------- ------------- Cash provided by (used for) financing activities.................... 160,667 (11,395) ------------- ------------- Effect of exchange rate changes on cash and cash equivalents.................. 3,882 (1,407) ------------- ------------- Net decrease in cash and cash equivalents..................................... (7,821) (3,202) Cash and cash equivalents at beginning of year................................ 98,536 68,432 ------------- ------------- Cash and cash equivalents at end of period.................................... $ 90,715 $ 65,230 ============= =============
See Notes to Condensed Consolidated Financial Statements. ------------------ 5 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 27, 1994 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 1995 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:
July 27, 1994 April 27, 1994 ------------- ------------- (Thousands of Dollars) Finished goods and work-in-process....................................... $ 869,710 $ 851,944 Packaging material and ingredients....................................... 302,247 293,803 ------------- ------------- $ 1,171,957 $ 1,145,747 ============= =============
(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 September 6, 1994, the company replaced its line of credit agreements supporting domestic commercial paper. The new line of credit agreements total $1.6 billion, of which $800 million expires on September 5, 1995 unless otherwise extended and the remaining $800 million expires in September 1999. As a result, $800 million of the $1.1 billion domestic commercial paper outstanding is classified as long-term debt at July 27, 1994. Fiscal year 1994 domestic line of credit agreements of $1.5 billion have been terminated. As of fiscal year end 1994, $750 million of domestic commercial paper was classified as long-term debt. (7) On May 16, 1994, the company acquired the Borden Foodservice Group, a unit of Borden, Inc. The group's product range includes a single-serve line of condiments. On July 22, 1994, the company announced the completion of the acquisition of the Farley's infant food and adult nutrition business from The Boots Company PLC of Nottingham, England for a total purchase price of approximately $140 million. Farley's product offerings include a wide range of infant feeding products from formulas to post-weaning biscuits, cereals and dry meals. During the first quarter of fiscal 1995, the company also made other small acquisitions. All of the above acquisitions have been accounted for as purchases and, accordingly, the respective purchase prices have been allocated 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 Statements of Income from the dates of the acquisitions. Pro forma results of the company, assuming the above-noted acquisitions had been made at the beginning of each period presented, would not be materially different from the results reported. 6 H. J. HEINZ COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (Unaudited) (8) On August 9, 1994, the company entered into an agreement with Glaxo India Limited, based in Bombay, to acquire Glaxo's Family Products Division, which produces a wide range of nutritional drinks, baby foods and other consumer products. All necessary corporate approvals to complete the transaction have been obtained, but the closing is subject to final governmental approvals. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. THREE MONTHS ENDED JULY 27, 1994 AND JULY 28, 1993 Results of Operations For the three months ended July 27, 1994, sales increased $152.8 million or 10% to $1,736.1 million from $1,583.3 million recorded in the same period a year ago. The sales increase came primarily from volume increases of 7%, acquisitions, net of divestitures of 2% and price increases of one percent. The effect of foreign exchange translation rates was negligible on the results of the quarter. Volume increases were noted in many of the company's core products, such as StarKist tuna, Heinz grocery ketchup, Heinz petfoods, Ore-Ida frozen potatoes and foodservice, which exhibited strong growth in Heinz ketchup. Price increases on Heinz grocery ketchup, Heinz babyfood and Ore-Ida foodservice frozen potatoes were partially offset by price decreases in Heinz petfoods, Heinz beans and Heinz pasta. Although the Weight Watchers businesses (meetings and foods) were down slightly for the quarter, recent indicators show that the downward trend experienced throughout last year is slowing. Attendance increased in markets where new marketing programs were tested and, as a result, it is expected that both of these businesses will exhibit improved performance when the marketing programs are fully implemented later this year. Gross profit increased $14.7 million to $634.6 million from $620.0 million a year ago. The ratio of gross profit to sales decreased 2.6% to 36.6%. The current year's gross profit ratio was negatively impacted by an unfavorable profit mix related to recent acquisitions and divestitures and higher foodservice sales, partially offset by lower costs and operating improvements resulting from the implementation of the restructuring strategy. The prior year's gross profit ratio was favorably impacted by the divestiture of the Chico-San rice cake business and lower costs associated with restructuring projects. Operating income increased $13.5 million or 5.0% to $286.8 million from $273.2 million for the same period last year. The increase in operating income is directly attributable to the increase in gross profit. Selling, general and administrative expenses increased by $1.1 million but decreased slightly as a percentage of net sales, reflecting lower administrative costs, offset by higher volume-driven selling and distribution costs. Net interest expense increased slightly to $31.3 million from $30.7 million in the first quarter a year ago mainly due to higher average short-term borrowings and higher short-term interest rates, offset by the favorable effect of the refinancing of certain long-term debt issuances. Net income for the current quarter was $154.7 million compared to $152.2 million for the same period last year and earnings per share was $0.62 compared to $0.59. The effective tax rate for the first quarter increased to 37.5% from 35.0%. The fiscal 1994 effective tax rate of 35.0% resulted from the recognition of the benefits attributable to prior years' operating losses overseas and a reduction in the statutory rate in Australia. The reduction in the number of common shares outstanding offset the effect of the higher tax rate on earnings per share. Liquidity and Financial Position Cash provided by operating activities totaled $105.8 million for the three month period ended July 27, 1994 compared to $206.3 million last year. Cash provided by operations in the first quarter of the prior year benefited from a $249.4 million reduction in receivables related to the company's trade "de-loading" strategy. Cash used by investing activities required $278.1 million compared to $196.7 million last year. Cash used for acquisitions in the current quarter totaled $209.4 million and resulted from the following 8 acquisitions: Farley's infant foods and adult nutrition business from The Boots Company PLC on July 22, 1994; the Borden Foodservice Group, a unit of Borden, Inc.; DEGA, a foodservice products company located in Italy; and other smaller acquisitions. The prior year's acquisitions included the purchase of the Moore's and Domani product lines from the Clorox Company for approximately $90.0 million, which was partially offset by the proceeds received from the divestiture of Chico-San and other small businesses. Purchases of property, plant and equipment totaled $60.6 million, compared to $71.2 million a year ago. Financing activities provided $160.7 million in the current quarter compared to using $11.4 million a year ago. Net proceeds on short-term debt provided $315.5 million in the current period versus providing $45.3 million in the prior year's first quarter. Short-term debt proceeds were used to finance treasury stock purchases of $89.1 million (2.7 million shares) and dividend payments of $81.9 million in the quarter ended July 27, 1994. As of July 27, 1994, the company has repurchased approximately 8.7 million shares of the currently authorized 10.0 million share repurchase program. On September 6, 1994, the company replaced its line of credit agreements supporting domestic commercial paper. The new line of credit agreements total $1.6 billion, of which $800 million expires on September 5, 1995 unless otherwise extended and the remaining $800 million expires in September 1999. As a result, $800 million of the $1.1 billion domestic commercial paper outstanding is classified as long-term debt at July 27, 1994. Fiscal year 1994 domestic line of credit agreements of $1.5 billion have been terminated. As of fiscal year end 1994, $750 million of domestic commercial paper was classified as long-term debt. The company's financial position continues to remain strong, enabling it to meet cash requirements for operations, capital expansion programs and dividends to shareholders. Recent Development On August 9, 1994, the company entered into an agreement with Glaxo India Limited, based in Bombay, to acquire Glaxo's Family Products Division, which produces a wide range of nutritional drinks, baby foods and other consumer products. All necessary corporate approvals to complete the transaction have been obtained, but the closing is subject to final governmental approvals. The transaction is expected to close during the second quarter of fiscal 1995. 9 PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Mayaguez Water Treatment Company, Inc. ("MWTC"), an indirect 70%-owned subsidiary of the Company, has been advised that the Puerto Rico Environmental Quality Board is contemplating initiating proceedings against MWTC which could result in a fine being assessed in excess of $100,000 as a consequence of violations of an administrative order relating to MWTC's NPDES permit at its Mayaguez, Puerto Rico facility. 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 Nothing to report under this item. ITEM 5. OTHER INFORMATION Nothing to report under this item. 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. 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 July 27, 1994. 10 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) /s/ DAVID R. WILLIAMS Date: September 12, 1994 By......................................... David R. Williams Senior Vice President-Finance and Chief Financial Officer (Principal Financial Officer) /s/ TRACY E. QUINN Date: September 12, 1994 By......................................... Tracy E. Quinn Corporate Controller (Principal Accounting Officer) 11 EX-11 2 EXHIBIT 11 H. J. Heinz Company and Subsidiaries COMPUTATION OF NET INCOME PER SHARE (Unaudited)
Three Months Ended ---------------------- July 27, July 28, 1994 1993 ---------- ---------- FY 1995 FY 1994 Primary income per share: Net income.......................................................................... $ 154,716 $ 152,179 Preferred dividends................................................................. 17 18 ---------- ---------- Net income applicable to common stock............................................... $ 154,699 $ 152,161 ========== ========== Average common shares outstanding and common stock equivalents...................... 251,237 258,710 ========== ========== Net income per share--primary....................................................... $ .62 $ .59 ========== ========== Fully diluted income per share: Net income.......................................................................... $ 154,716 $ 152,179 ========== ========== Average common shares outstanding and common stock equivalents...................... 251,237 258,710 Additional common shares assuming: Conversion of $1.70 third cumulative preferred stock.............................. 360 387 Additional common shares assuming options were exercised at the period-end market price................................................. 124 13 ---------- ---------- Average common shares outstanding and common stock equivalents...................... 251,721 259,110 ========== ========== Net income per share--fully diluted............................................... $ .61 $ .59 ========== ==========
All amounts in thousands except per share amounts. ------------------ EX-27 3
5 This schedule contains summary financial information extracted from Form 10-Q for the Period Ended July 27, 1994 and is qualified in its entirety by reference to such financial statements. 1,000 QTR-1 MAY-03-1995 APR-28-1994 JUL-27-1994 90,715 71,603 809,318 0 1,171,957 2,344,420 3,616,347 1,338,584 6,643,630 1,851,913 1,761,231 71,850 0 389 2,313,153 6,643,630 1,736,098 1,736,098 1,101,450 1,101,450 0 0 40,710 247,545 92,829 154,716 0 0 0 154,716 0.62 0.61
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