-----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, HDO14mqjRAmUGkutCLq+yqWUKXO4XO64eNm85/VPzA6TVfmmV7IruLOLKB9Scujw FDsJLsMHDOWRhrjbUqMMCw== 0000950152-05-004749.txt : 20050611 0000950152-05-004749.hdr.sgml : 20050611 20050526104537 ACCESSION NUMBER: 0000950152-05-004749 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050526 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20050526 DATE AS OF CHANGE: 20050526 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03385 FILM NUMBER: 05858527 BUSINESS ADDRESS: STREET 1: 600 GRANT ST CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4124565700 MAIL ADDRESS: STREET 1: P O BOX 57 STREET 2: P O BOX 57 CITY: PITTSBURGH STATE: PA ZIP: 15230 8-K 1 j1404901e8vk.txt H.J. HEINZ COMPANY 8-K ============================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): May 26, 2005 H. J. HEINZ COMPANY (Exact name of registrant as specified in its charter) Pennsylvania 1-3385 25-0542520 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 600 Grant Street, Pittsburgh, 15219 Pennsylvania (Zip Code) (Address of principal executive offices) 412-456-5700 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ============================================================================= GENERAL ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION Attached is H.J. Heinz Company's press release dated May 26, 2005 furnished herewith as Exhibit 99. This press release presents the financial results of the Registrant and its business segments and identifies certain special items that impacted the financial results that management deemed to be significant. These special items include, in Fiscal Year 2005, non-cash asset impairment charges related to both cost and equity investments as well as the anticipated disposition of the HAK vegetable product line in Northern Europe early in Fiscal Year 2006. For Fiscal Year 2004, these include the impact of reorganization costs and the gain on the sale of the company's bakery business in Northern Europe. Operating segment income and net income excluding these special items is not a measure that is defined in generally accepted accounting principles ("GAAP"). These special items are measures that management believe are important to adjust for in order to have a meaningful year to year comparison and to provide a basis for future projections and for estimating our earnings growth prospects. These non-GAAP measures are used by management as a supplemental performance measure to judge profitability of core businesses absent special items. For compensation purposes, for example, it would unfairly reward or punish managers for corporate special charges outside their control. These measures provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. This press release also presents the business measures of operating free cash flow and net debt as defined below. These measures are utilized by senior management and the board of directors to gauge our business operating performance, and management believes these measures provide clarity in understanding the trends of the business. Management, and investors, can benefit from the use of the operating free cash flow measure as it provides cash flow derived from product sales and the short-term application of cash, including the effect of capital expenditures. The limitation of operating free cash flow is that it adjusts for cash used for capital expenditures that is no longer available to the Company for other purposes. Management compensates for this limitation by using the GAAP operating cash flow number as well. Operating free cash flow does not represent residual cash flow available for discretionary expenditures and does not provide insight to the entire scope of the historical cash inflows or outflows of an operations that are captured in the other cash flow measures reported in the statement of cash flows. Net debt is an additional measure that is important to our liquidity and financial condition. Disclosed on Exhibit 99 is supplemental information regarding reconciliation and calculation of the non-GAAP measures discussed above in connection with the financial results for the fourth quarter and fiscal year-to-date periods for Fiscal Years 2004 and 2005. INDEX TO EXHIBITS Exhibit Number (Referenced to Item 601 of Regulation S-K) Description of Exhibit - --------------- ---------------------- 99 H.J. Heinz Company Press Release dated May 26, 2005 SIGNATURE 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 By /s/ Arthur Winkleblack ---------------------------------- Arthur Winkleblack Executive Vice President and Chief Financial Officer Dated: May 26, 2005 EXHIBIT INDEX Exhibit NO. Description - ----------- ----------- 99 H. J. Heinz Company Press Release dated May 26, 2005 EX-99 2 j1404901exv99.txt EXHIBIT 99 EXHIBIT 99 NEW RELEASE (HEINZ LOGO) WORLD HEADQUARTERS "THE GOOD FOOD COMPANY" FOR RELEASE UPON RECEIPT HEINZ REPORTS FULL-YEAR FISCAL 2005 EPS FROM CONTINUING OPERATIONS OF $2.34, UP 6.4% (EXCLUDING SPECIAL ITEMS), AND OPERATING FREE CASH FLOW OF $920 MILLION o HEINZ ANNOUNCES STRATEGIC REVIEW OF KEY BUSINESSES AND FORMATION OF OFFICE OF THE CHAIRMAN. o FOR THE 4TH QUARTER, HEINZ'S REPORTED EPS WAS $0.58, UP 5.5% FROM $0.55 LAST YEAR. EXCLUDING SPECIAL ITEMS, EPS FROM CONTINUING OPERATIONS WAS $0.63 VERSUS $0.58 IN THE YEAR-AGO 4TH QUARTER, AN INCREASE OF 8.6%. o SALES INCREASED 5% AND OPERATING INCOME, EXCLUDING SPECIAL ITEMS, INCREASED 9.4% FOR THE 4TH QUARTER, DRIVEN BY STRONG PERFORMANCES IN THE NORTH AMERICAN CONSUMER PRODUCTS AND U.S. FOODSERVICE SEGMENTS. o FOR THE FULL FISCAL YEAR, HEINZ REPORTED EPS WAS $2.13 VERSUS $2.27 LAST YEAR. FROM CONTINUING OPERATIONS, EPS WAS $2.08 VERSUS $2.20 IN THE PRIOR YEAR. PITTSBURGH - MAY 26, 2005 - H.J. Heinz Company (NYSE: HNZ) today reported net income of $206.5 million, or $0.58 per diluted share, for its fourth quarter ended April 27, 2005. This represents a 5.5% increase versus the fourth quarter of Fiscal 2004 on a fully reported, total company basis. The fourth quarter diluted earnings per share from continuing operations, excluding special items of $0.63, is an 8.6% increase over earnings of $0.58 per share in the prior year. For the full year, EPS from continuing operations, excluding special items was $2.34, up 6.4% and in-line with previous guidance. The special items in fiscal year 2005 are comprised of non-cash asset impairment charges of $27.0 million pre-tax ($18.0 million after-tax) recorded in the fourth quarter related to the anticipated disposition of the HAK(R) vegetable product line in Northern Europe early in Fiscal 2006 and $73.8 million recorded in the third quarter primarily related to Heinz's investment in The Hain Celestial Group, Inc. The company continued to generate impressive Operating Free Cash Flow, posting $545 million in the fourth quarter and $920 million for the fiscal year. The Cash Conversion Cycle for the fiscal year improved by six days versus the prior year. In addition, the company continued to reduce net debt (total debt less cash and cash equivalents, short-term investments and the value of interest rate swaps), with a reduction of $244 million in Fiscal 2005 versus 2004. H.J. HEINZ COMPANY, P.O. BOX 57, PITTSBURGH 15230-0057 2 Commenting on the company's performance, Heinz's Chairman, President and CEO William R. Johnson said: "I am pleased to report that we achieved many of our critical objectives in Fiscal 2005 and, most importantly, enhanced the fundamentals of the company by continuing to strengthen our brands, improve our management team and streamline our organization. We achieved strong results in sales, volume, cash flow, and EPS in Fiscal 2005. We are particularly pleased with our volume and sales momentum, especially in North America and the Pacific, and expect this trend to continue into Fiscal 2006, given the healthy consumption data that we are seeing in our core businesses. Sales of our top 15 power brands grew by a robust 7.1% and finished the year even stronger with 8.4% growth in the fourth quarter. We continue to drive very strong Operating Free Cash Flow through significant reductions in the cash conversion cycle and disciplined capital processes. Our outstanding free cash flow was also accompanied by improved customer service and supply chain efficiencies." Mr. Johnson added: "We have initiated a strategic review of our international portfolio and our global organizational structure. This strategic review follows the successful transformation of our North American businesses, and we expect, as a result, that Heinz will become a faster-growing, even more focused company. We are going to place our focus and resources on our big brands with number-one and number-two market positions and in four large developing markets." FOURTH QUARTER FISCAL 2005 RESULTS (Comments on the fourth quarter that follow refer to results from continuing operations, excluding special items. See attached tables for further details, including reconciliation of non-GAAP financial measures. Management believes that the adjusted GAAP measures provide additional clarity in understanding the trends of the business as they provide management with a view of the business excluding special items.) Overall, Heinz's fourth-quarter sales increased 5.0%, reflecting a 1.5% volume improvement and the favorable impact of foreign exchange. Volume was primarily driven by the success of the company's U.S. consumer products and foodservice businesses, including Ore-Ida(R) frozen potatoes, Delimex(R), Bagel Bites(R), TGI Friday's(R) frozen snacks, Heinz(R) ketchup and frozen soup, as well as the Latin America, Australia and New Zealand businesses behind a number of new product launches. These improvements were partially offset by volume declines in Heinz Europe. Net pricing increased sales 0.6% as pricing improvements in North American Consumer Products and the U.K. were partially offset by lower pricing in the Italian infant nutrition and Tegel(R) poultry businesses. The price declines in the Italian infant nutrition business include an additional $13.0 million trade spending charge related to prior years. 3 Gross profit increased 6.6%, with a 50-basis-point improvement in gross profit margin, as increased commodity and fuel costs were more than offset by favorable volume, mix and pricing. Operating income increased 9.4%. EPS increased 8.6% for the fourth quarter, reflecting the operating income improvement along with a reduced effective tax rate offset partially by increased interest costs and currency losses. The company's effective tax rate, excluding special items, was 27.6% for the fourth quarter of Fiscal 2005 versus 32.7% in the prior year. FISCAL 2006 OUTLOOK Looking forward to Fiscal 2006, Heinz is targeting 4-6% sales growth and 7-10% growth in operating income. EPS is expected to be in the range of $2.35 to $2.45, as anticipated strong operating results are expected to be partially offset by increases in interest costs and a higher tax rate. The company has set a target for Operating Free Cash Flow of $900 million to $1 billion. STRATEGIC REVIEW Heinz has announced its intentions to sell the HAK(R) line of prepared vegetables in Northern Europe and has commenced a strategic review of its seafood and frozen businesses in Europe and its Tegel(R) poultry businesses in New Zealand. This is in line with the company's strategic focus on its core categories: Ketchup, Condiments and Sauces; Foodservice; Infant Nutrition; and Quick Serve Meals and Snacks. Some of the brands involved in the strategic review will include: John West(R), Weight Watchers from Heinz(R), Linda McCartney(R), Aunt Bessie's(R) in the United Kingdom; Petit Navire(R) and Parmentier(R) canned fish in France; Tegel(R) poultry products in New Zealand; Marie Elisabeth(R) seafood in Portugal and Mareblu(R) seafood in Italy. OFFICE OF THE CHAIRMAN Heinz has announced the formation of a new Office of the Chairman to provide a stronger focus on growth and innovation and to better leverage the global power of Heinz. The Office of the Chairman will be comprised of the four senior-most executives responsible for operations globally, and the heads of three global corporate functions. All will be based in Pittsburgh. The members, in addition to William R. Johnson, are: o Jeffrey P. Berger - Executive Vice President for Global Foodservice; o Joseph Jimenez - Executive Vice President for Europe; o David C. Moran - Senior Vice President and President for Consumer Products; o The Executive Vice President for Asia/Pacific, to be named later; o Arthur B. Winkleblack, Executive Vice President and Chief Financial Officer; o Theodore N. Bobby, Senior Vice President and General Counsel; o D. Edward I. Smyth, Chief Administrative Officer and Senior Vice President of Corporate and Government Affairs. 4 Reporting to the Office of the Chairman will be a Presidents Council, comprised of the heads of the company's largest business units. The Office of the Chairman and the Presidents Council will enhance global communications and coordination, and facilitate a process to simplify and de-layer regional overhead. FULL-YEAR FISCAL 2005 RESULTS Heinz reported net income for the year of $752.7 million, or $2.13 per diluted share, a decrease of 6.2% versus Fiscal 2004. Current year and prior year results include after-tax earnings from discontinued operations of $0.05 per share and $0.07 per share, respectively. EPS from continuing operations of $2.08 per share represents a 5.5% decrease versus the earnings of $2.20 per diluted share in the prior year. Excluding special items, the current year fully diluted EPS was $2.34 per share, a 6.4% increase over earnings of $2.20 per share last year. (Comments on the fiscal year that follow refer to results from continuing operations, excluding special items. See attached tables for further details, including reconciliation of non-GAAP financial measures. Management believes that the adjusted GAAP measures provide additional clarity in understanding the trends of the business as they provide management with a view of the business excluding special items.) Sales for Fiscal 2005 increased 5.9%, to $8.91 billion. Sales were favorably impacted by volume growth of 1.9%, at the top end of the company's range, and foreign exchange translation rates of 3.9%. The favorable volume impact was due primarily to strong increases in the North American Consumer Products and U.S. Foodservice segments. Lower pricing decreased sales by 0.2%, principally due to the restage of Heinz's Italian infant nutrition business, a $34.1 million charge for prior-year trade spending for the Italian infant nutrition business, and market price pressures impacting the Tegel(R) poultry business in New Zealand and the trade in Northern Europe. These price decreases were partially offset by favorable pricing in the North American Consumer Products and U.S. Foodservice segments and in U.K. convenience meals. Acquisitions, net of divestitures, increased sales by 0.3%. Gross profit increased 4.6%, primarily a result of higher volume and favorable foreign exchange. The gross profit margin declined by 50 basis-points, due to increased commodity and fuel costs, lower pricing as discussed above, and increased production costs in the European seafood business, partially offset by cost improvements in the U.S. consumer products and foodservice businesses. Operating income increased 0.7%, as the increase in gross profit was offset by increased SG&A expenses in the current year. The increase in SG&A is primarily due to exchange translation rates, higher fuel costs, employee-related and litigation expenses and professional fees related to various projects across the company, including costs associated with compliance with Section 404 of Sarbanes-Oxley. EPS increased 6.4% in Fiscal 2005, as the operating income improvement along with the reduced effective tax rate were partially offset by increased interest costs. The company's effective tax rate, excluding special items, was 28.6% for Fiscal 2005 versus 33.0% in the prior year. 5 HIGHLIGHTS FOR FISCAL YEAR 2005 NORTH AMERICAN CONSUMER PRODUCTS Sales of the North American Consumer Products segment increased 9.3%. Sales volume increased 5.7% due to significant growth in Ore-Ida(R) frozen potatoes and SmartOnes(R) frozen entrees. Strong performance in Boston Market HomeStyle(R) meals and in the frozen snack brands of Delimex(R), Bagel Bites(R) and TGI Friday's(R) also contributed to the volume increase. Pricing increased sales 2.7%, largely due to reduced trade spending and decreased product placement fees on SmartOnes(R) frozen entrees and Ore-Ida(R) potatoes, as well as increases related to Classico(R) pasta sauces and Heinz(R) ketchup. Operating income increased 10.6%, despite higher commodity and fuel costs, driven by favorable sales volume and higher net pricing. HEINZ U.S. FOODSERVICE Sales of the U.S. Foodservice segment increased 5.3%. Sales volume increased sales 2.9%, due to growth in Heinz(R) ketchup, strong performance on Truesoups(R) frozen soup and growth in custom recipe tomato products. Higher pricing increased sales by 1.5%. Operating income increased 4.5%, primarily due to favorable volume and pricing, partly offset by increases in commodity costs and increased S&D, which reflects a substantial increase in fuel and trucking costs. EUROPE Heinz Europe's sales increased 4.9%. Favorable exchange translation rates increased sales by 7.5%. Volume was essentially flat, as increases in Heinz(R) ketchup, resulting from the successful introduction of the Top Down bottle, and increases in Heinz(R) ready-to-serve soups were offset by declines in European seafood, frozen entrees in the U.K. and jarred vegetables in Northern Europe. Lower pricing decreased sales 1.8%, primarily due to the restage of the Italian infant nutrition business, the trade spending charge in the Italian infant nutrition business and increased promotional activity in the Netherlands. Operating income decreased 6.1%, due to lower pricing as discussed above, increased commodity and production costs, particularly in the European seafood and the U.K. businesses, and increased G&A. The increase in G&A is largely due to increased pension costs, litigation costs and professional fees for various projects across Europe. 6 ASIA PACIFIC Sales in Asia/Pacific increased 3.9%. Favorable exchange translation rates increased sales by 4.4%. Volume increased sales 0.5%, chiefly due to new product introductions in the frozen foods and convenience meals categories in the Australia and New Zealand businesses. These were partially offset by the discontinuation of an Indonesian energy drink, declines in Tegel(R) poultry and sales declines in China. Lower pricing reduced sales 2.0% primarily due to market price pressures on Tegel(R) poultry. The acquisition of a controlling interest in Shanghai LongFong Foods, a maker of popular frozen Chinese snacks and desserts, increased sales 2.3%. The divestiture of a Korean oils and fats product line reduced sales 1.3%. Operating income decreased 7.3%, due primarily to reduced pricing in Tegel. MEETING WITH SECURITIES ANALYSTS - INTERNET BROADCASTS Heinz will host a conference call with security analysts today at 8:30 a.m. (Eastern Time). The call will be webcast live on www.heinz.com and will be archived for playback beginning at 2 p.m. The call is available live via conference call at 1-866-215-1938 (listen only). It will be hosted by William R. Johnson, Chairman, President & CEO; Arthur B. Winkleblack, Executive Vice President and Chief Financial Officer; David C. Moran - Senior Vice President and President for Consumer Products; and Jack Runkel, Vice President - Investor Relations. # # SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect management's view of future events and financial performance. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond Heinz's control and could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Uncertainties contained in such statements include, but are not limited to, sales, earnings, and volume growth, general economic, political, and industry conditions, competitive conditions, which affect, among other things, customer preferences and the pricing of products, production, energy and raw material costs, the need for product recalls, the ability to maintain favorable supplier relationships, achieving cost savings programs and gross margins, currency valuations and interest rate fluctuations, the ability to execute and the success of acquisitions, joint ventures, divestitures and other strategic initiatives, new product and packaging innovations, product mix, the effectiveness of advertising, marketing, and promotional programs, supply chain efficiency and cash flow initiatives, the impact of e-commerce and e-procurement, risks inherent in litigation (including the Remedia-related claims in Israel and rights against third parties) and international operations, particularly the performance of business in hyperinflationary environments, changes in estimates in critical 7 accounting judgments and other laws and regulations, including tax laws, the success of tax-planning strategies, the possibility of increased pension expense and contributions and other people-related costs, the possibility of an impairment in Heinz's investments, and other factors described in "Cautionary Statement Relevant to Forward-Looking Information" in the Company's Form 10-K for the fiscal year ended April 28, 2004, and the Company's subsequent filings with the Securities and Exchange Commission. The forward-looking statements are and will be based on management's then current views and assumptions regarding future events and speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the securities laws. # # ABOUT HEINZ: H.J. Heinz Company, offering "Good Food Every Day(TM)," is one of the world's leading marketers and producers of branded foods in ketchup, condiments, sauces, meals, soups, seafood, snacks, and infant foods. Heinz satisfies hungry consumers in every outlet, from supermarkets to restaurants to convenience stores and kiosks. Heinz is a global family of leading brands, including Heinz(R) Ketchup, Sauces, Soups, Beans, Pasta and Infant Foods (representing nearly one-third of total sales or close to $3 billion), Ore-Ida(R) french fries and roasted potatoes, Boston Market(R) and SmartOnes(R) meals, and Plasmon(R) baby food. Heinz's 50 companies have number-one or number-two brands in 200 countries, showcased by Heinz(R) Ketchup, the World's Favorite Ketchup(TM). Information on Heinz is available at www.heinz.com/news. # # # CONTACT: Media: ----- Ted Smyth, 412-456-5780; Debbie Foster, 412-456-5778; OR Investors: --------- Jack Runkel, 412-456-6034. 8 H. J. Heinz Company and Subsidiaries Consolidated Statements of Income (In Thousands, Except per Share Amounts)
Fourth Quarter Ended Fiscal Year Ended ------------------------------- ------------------------------- April 27, April 28, April 27, April 28, 2005 2004 2005 2004 FY2005 FY2004 FY2005 FY2004 ------------- ------------- ------------- ------------- Sales $ 2,448,492 $ 2,331,372 $ 8,912,297 $ 8,414,538 Cost of products sold 1,600,801 1,510,656 5,705,926 5,326,281 ------------- ------------- ------------- ------------- Gross profit 847,691 820,716 3,206,371 3,088,257 Selling, general and administrative expenses 505,519 494,937 1,851,529 1,709,000 ------------- ------------- ------------- ------------- Operating income 342,172 325,779 1,354,842 1,379,257 Interest income 7,598 7,411 27,776 23,312 Interest expense 61,605 51,572 232,431 211,826 Asset impairment charges for cost and equity investments -- -- 73,842 -- Other (expense)/ income, net (6,900) 12,827 (17,731) (22,192) ------------- ------------- ------------- ------------- Income from continuing operations before income taxes 281,265 294,445 1,058,614 1,168,551 Provision for income taxes 76,078 96,061 322,792 389,618 ------------- ------------- ------------- ------------- Income from continuing operations 205,187 198,384 735,822 778,933 Income/(loss) from discontinued operations, net of tax 1,300 (1,860) 16,877 25,340 ------------- ------------- ------------- ------------- Net income $ 206,487 $ 196,524 $ 752,699 $ 804,273 ============= ============= ============= ============= Income per common share - Diluted Continuing operations $ 0.58 $ 0.56 $ 2.08 $ 2.20 Discontinued operations 0.00 (0.01) 0.05 0.07 ------------- ------------- ------------- ------------- Net Income $ 0.58 $ 0.55 $ 2.13 $ 2.27 ============= ============= ============= =============
9 Average common shares outstanding - diluted 353,450 354,372 353,450 354,372 ============= ============= ============= ============= Income per common share - Basic Continuing operations $ 0.59 $ 0.56 $ 2.10 $ 2.21 Discontinued operations 0.00 (0.01) 0.05 0.07 ------------- ------------- ------------- ------------- Net Income $ 0.59 $ 0.56 $ 2.15 $ 2.29 ============= ============= ============= ============= Average common shares outstanding - basic 350,042 351,810 350,042 351,810 ============= ============= ============= ============= Cash dividends per share $ 0.285 $ 0.27 $ 1.14 $ 1.08 ============= ============= ============= =============
Note: Fiscal 2005 and 2004 include special items. (Totals may not add due to rounding) 10 H. J. Heinz Company and Subsidiaries Segment Data
Fourth Quarter Ended Fiscal Year Ended ------------------------------- ------------------------------- April 27, April 28, April 27, April 28, 2005 2004 2005 2004 FY2005 FY2004 FY2005 FY2004 ------------- ------------- ------------- ------------- Net external sales: North American Consumer Products $ 623,064 $ 570,524 $ 2,256,862 $ 2,064,937 U.S. Foodservice 405,283 371,648 1,503,818 1,428,641 Europe 959,032 950,482 3,447,299 3,287,737 Asia/Pacific 344,751 331,895 1,307,675 1,258,556 Other Operating Entities 116,362 106,823 396,643 374,667 ------------- ------------- ------------- ------------- Consolidated Totals $ 2,448,492 $ 2,331,372 $ 8,912,297 $ 8,414,538 ============= ============= ============= ============= Intersegment revenues: North American Consumer Products $ 13,278 $ 12,950 $ 51,742 $ 55,379 U.S. Foodservice 5,839 4,932 22,550 15,310 Europe 3,707 3,292 17,328 13,644 Asia/Pacific 985 753 3,420 2,911 Other Operating Entities 379 461 1,571 2,188 Non-Operating (24,188) (22,388) (96,611) (89,432) ------------- ------------- ------------- ------------- Consolidated Totals $ -- $ -- $ -- $ -- ============= ============= ============= ============= Operating income (loss): North American Consumer Products $ 136,023 $ 114,864 $ 530,444 $ 474,129 U.S. Foodservice 58,102 49,821 224,784 211,129 Europe 142,497 160,027 550,585 639,157 Asia/Pacific 27,868 34,161 135,588 146,190 Other Operating Entities 9,664 7,750 34,739 29,934 Non-Operating (31,982) (40,844) (121,298) (121,282) ------------- ------------- ------------- ------------- Consolidated Totals $ 342,172 $ 325,779 $ 1,354,842 $ 1,379,257 ============= ============= ============= =============
11 Operating income (loss) excluding special items: North American Consumer Products $ 136,023 $ 118,692 $ 530,444 $ 479,453 U.S. Foodservice 58,102 51,221 224,784 215,029 Europe 169,473 161,072 577,561 615,403 Asia/Pacific 27,868 34,161 135,588 146,190 Other Operating Entities 9,664 8,750 34,739 30,934 Non-Operating (31,982) (36,444) (121,298) (115,424) ------------- ------------- ------------- ------------- Consolidated Totals $ 369,148 $ 337,452 $ 1,381,818 $ 1,371,585 ============= ============= ============= =============
The company's revenues are generated via the sale of products in the following categories: Ketchup, Condiments and Sauces $ 877,580 $ 818,465 $ 3,234,229 $ 3,047,662 Frozen Foods 610,306 545,148 2,209,586 1,947,777 Convenience Meals 558,953 525,260 2,005,468 1,874,272 Infant Feeding 253,739 278,700 855,558 908,469 Other 147,914 163,799 607,456 636,358 ------------- ------------- ------------- ------------- Total $ 2,448,492 $ 2,331,372 $ 8,912,297 $ 8,414,538 ============= ============= ============= =============
12 H.J. Heinz Company and Subsidiaries Special Items - Fourth Quarters Ended April 27, 2005 and April 28, 2004 The company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP. The following table provides a reconciliation of the company's reported results from continuing operations to the results excluding special items for the fourth quarters ended April 27, 2005 and April 28, 2004:
Fourth Quarter Ended April 27, 2005 ---------------------------------------------------------------------------- Net Gross Operating Per Sales Profit Income Income Share ------------ ------------ ------------ ------------ ------------ Reported results from continuing operations $ 2,448.5 $ 847.7 $ 342.2 $ 205.2 $ 0.58 Asset impairment charge for HAK vegetable product line -- 27.0 27.0 18.0 0.05 ------------ ------------ ------------ ------------ ------------ Results from continuing operations excluding special items $ 2,448.5 $ 874.7 $ 369.1 $ 223.2 $ 0.63 ============ ============ ============ ============ ============ Fourth Quarter Ended April 28, 2004 ---------------------------------------------------------------------------- Net Gross Operating Per Sales Profit Income Income Share ------------ ------------ ------------ ------------ ------------ Reported results from continuing operations $ 2,331.4 $ 820.7 $ 325.8 $ 198.4 $ 0.56 Reorganization costs -- -- 11.7 7.6 0.02 ------------ ------------ ------------ ------------ ------------ Results from continuing operations excluding special items $ 2,331.4 $ 820.7 $ 337.5 $ 205.9 $ 0.58 ============ ============ ============ ============ ============
(Note: Totals may not add due to rounding.) 13 H.J. Heinz Company and Subsidiaries Special Items - Fiscal Years Ended April 27, 2005 and April 28, 2004 The company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP. The following table provides a reconciliation of the company's reported results from continuing operations to the results excluding special items for the fiscal years ended April 27, 2005 and April 28, 2004:
Fiscal year Ended April 27, 2005 --------------------------------------------------------------------------------- Net Gross Operating Per Sales Profit Income Income Share ------------- ------------- ------------- ------------- ------------- Reported results from continuing operations $ 8,912.3 $ 3,206.4 $ 1,354.8 $ 735.8 $ 2.08 Asset impairment charges for cost and equity investments -- -- -- 73.8 0.21 Asset impairment charge for HAK vegetable product line -- 27.0 27.0 18.0 0.05 ------------- ------------- ------------- ------------- ------------- Results from continuing operations excluding special items $ 8,912.3 $ 3,233.3 $ 1,381.8 $ 827.6 $ 2.34 ============= ============= ============= ============= ============= Fiscal Year Ended April 28, 2004 ----------------------------------------------------------------------------------- Net Gross Operating Per Sales Profit Income Income Share ------------- ------------- ------------- ------------- ------------- Reported results from continuing operations $ 8,414.5 $ 3,088.3 $ 1,379.3 $ 778.9 $ 2.20 Write-down of U.K. pizza crust assets -- 4.0 4.0 2.8 0.01 Reorganization costs -- -- 17.1 11.0 0.03 Gain on sale of the Northern European bakery business -- -- (28.8) (13.3) (0.04) ------------- ------------- ------------- ------------- ------------- Results from continuing operations excluding special items $ 8,414.5 $ 3,092.3 $ 1,371.6 $ 779.5 $ 2.20 ============= ============= ============= ============= =============
(Note: Totals may not add due to rounding.) 14 H.J. Heinz Company and Subsidiaries Non-GAAP Performance Ratios The company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP. The following table provides the calculation of those non-GAAP performance ratios discussed in the company's press release dated May 26, 2005:
Net Debt Calculation (amounts in thousands) April 27, April 28, 2005 2004 FY 2005 FY 2004 ------------- ------------- Short-term debt $ 28,471 $ 11,434 Long-term debt, including current portion 4,666,782 4,962,996 ------------- ------------- Total debt 4,695,253 4,974,430 Less: Value of interest rate swaps (186,086) (125,324) Cash and cash equivalents (1,083,749) (1,140,039) Short-term investments -- (40,000) ------------- ------------- Net Debt $ 3,425,418 $ 3,669,067 ============= =============
Operating Free Cash Flow Calculation (amounts in thousands) Fourth Quarter Ended Fiscal Year Ended ------------------------------- ------------------------------- April 27, April 28, April 27, April 28, 2005 2004 2005 2004 FY 2005 FY 2004 FY 2005 FY 2004 ------------- ------------- ------------- ------------- Cash provided by operating activities $ 654,647 $ 431,954 $ 1,160,793 $ 1,249,007 Capital expenditures (109,647) (112,144) (240,671) (231,961) ------------- ------------- ------------- ------------- Operating Free Cash Flow $ 545,000 $ 319,810 $ 920,122 $ 1,017,046 ============= ============= ============= =============
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