Heinz Reports Significant Progress on Its Strategy for Growth And an Increase in Operating Income, Excluding Special Items, of 8.1% for the Third Quarter.PITTSBURGH Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. -- H.J. Heinz Company (NYSE NYSE See: New York Stock Exchange :HNZ HNZ HJ Heinz Co (stock symbol) ) --Total sales increased 5.7% (9.4% on a constant currency basis). Heinz's top 10 brands grew 4.4% in constant currency, led by double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in Smart Ones(R), Classico(R) and TGI TGI Tribunal de Grande Instance TGI Target Group Index TGI Thank God It's Friday (US restaurant chain) TGI Tracheal Gas Insufflation TGI Tumor Growth Inhibition TGI Trato Gastrointestinal (Portugese) Friday's(R). --Volume/mix grew 2.9%, with every operating segment delivering increased volume. --Definitive agreements to sell both the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Seafood and Tegel For the New Zealand poultry company, see . Tegel is a locality in the Berlin borough of Reinickendorf at . Although chiefly known for being the location of Berlin's main airport, Berlin-Tegel, also known as (R) poultry poultry, domesticated fowl kept primarily for meat and eggs; including birds of the order Galliformes, e.g., the chicken, turkey, guinea fowl, pheasant, quail, and peacock; and natatorial (swimming) birds, e.g., the duck and goose. businesses were executed. --Progress was also made toward the potential sale of other non-core assets. Additionally, the Company sold its investment in The Hain Celestial Group The Hain Celestial Group is a food company whose main focus is natural and organic foods and personal care products. Their products range from herbal teas, offered through their Celestial Seasonings brand to organic free range chickens from the FreeBird brand. , Inc. and the HAK HAK Handelsakademie (German: kind of school) HAK Hrvatski Autoklub (Croatian Automobile Club) HAK Hugs And kisses (chat) HAK Haikou, China - Haikou (Airport Code) (R) vegetable line in Northern Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Plans were also finalized See finalization. regarding the repatriation RepatriationThe process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of dividends under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act (AJCA AJCA American Jobs Creation Act of 2004 (US) AJCA American Jersey Cattle Association AJCA Association of Juvenile Compact Administrators AJCA All Japan Cooks Association AJCA Alabama Junior Cattlemen’s Association ). --Special items were $0.10 for continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and $0.08 for discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Including these special items, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for continuing operations was down 3.7% for the quarter. --EPS for continuing operations was $0.39 versus $0.37 in the prior year and, excluding special items, was $0.50 versus $0.58 in the prior year, reflecting increased interest expense and a higher tax rate. On a total-company GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. was $0.35 versus $0.43 last year. --The Company also reconfirms its pro-forma EPS expectations for fiscal 2006 and 2007. Pro-forma EPS is expected to be $2.10 to $2.16 for the current fiscal year, with 6 to 8% growth off this base in fiscal 2007. H.J.Heinz Company (NYSE:HNZ) today reported strong operating results and significant progress on its strategy for growth during the third quarter that ended January January: see month. 25, 2006. Net income for the quarter, on a total-company GAAP basis, was $116.6 million, or $0.35 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus $152.4 million, or $0.43 per diluted share, last year. In continuing operations, sales increased by 5.7% (9.4% on a constant currency basis) for the quarter, driven by an increase of 2.9% in volume/mix and an increase due to acquisitions, net of divestitures, of 6.6%. These increases were partially offset by an unfavorable foreign exchange impact of 3.7%. Operating Free Cash Flow for the quarter was $58 million, despite the impact of spending for special items. Excluding the impact of special items, Operating Free Cash Flow would have been up over 30% from the same period last year. EPS from continuing operations increased 5%, to $0.39 from $0.37 last year. EPS from continuing operations, excluding special items, decreased by $0.08 to $0.50 due to higher interest costs and a significantly higher tax rate during the quarter. Beginning in the third quarter of fiscal 2006, the operating results related to the European Seafood and the Tegel(R) poultry businesses have been included in discontinued operations in the company's consolidated statements of income for all periods presented. In addition, net income from discontinued operations includes amounts related to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement of tax liabilities associated with the businesses spun-off to Del Monte Monte (Italian, Portuguese and Spanish meaning mount) may refer to various things: Monte is the name of several places: In Brazil
Commenting on the Company's progress, Heinz's Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. William R. Johnson
Special items in the third quarter for downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing , integration, separation and preparation for sale totaled $22.0 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta in continuing operations and $5.9 million pre-tax in discontinued operations. Additionally, the net loss on dispositions and impairments in anticipation of potential sales, were $19.5 million pre-tax for continuing operations. During the third quarter, significant progress was made on Heinz's strategy for growth (outlined in September 2005) to drive consistent annual sales growth of 3% to 4% and profits of 6% to 8%. The goals of this strategy are to focus on three core categories, to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. in Heinz's top ten brands, to reduce supply chain costs, and to use cash to drive shareholder value. The following milestones were reached: --The signing of definitive agreements to sell the European Seafood business to Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. Merchant Banking for EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 425 million (approx. US$500 million) and to sell the Tegel(R) poultry business to Pacific Equity Partners for NZ$ 250 million (approximately US$165 million). The sale processes for European Seafood and Tegel businesses could both close around the end of March. --The U.K. Competition Commission approved our request to complete the sale of the Ethnic portion of the recently acquired HP/Lea & Perrins business. The business has been sold to Associated British Foods
--Subsequent to the end of the quarter, the Company received provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. clearance from the U.K. Competition Commission for Heinz's purchase of the HP/LP business in the U.K. A final decision from the commission is expected by mid-April. --Completed the sale of the HAK vegetable line in Northern Europe for $51 million. --The registration and sale of the Company's common stock interest in The Hain Celestial Group, Inc. for $116 million. --Plans were finalized to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. $800 million of additional foreign dividends during the fourth quarter, which required an incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. tax accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. during the third quarter of approximately $24 million. The Company continues to explore the potential sale of other non-core businesses and is currently exploring ways to maximize shareholder value in its European frozen foods business. Importantly, Heinz is on-track to achieve, by the end of the first quarter of fiscal 2007, the approximately $1 billion in disposition proceeds as outlined in September. (Comments on the third quarter and nine months that follow refer to certain financial measures that are adjusted to exclude special items. In addition, management refers to Operating Free Cash Flow, defined as cash from operations less capital expenditures. See attached tables for further details, including reconciliation of these non-GAAP financial measures. Management believes that the adjusted GAAP measures and the Operating Free Cash Flow presentation provide additional clarity in understanding the trends of the business as they provide management with a view of the continuing business excluding special items.) THIRD QUARTER SUMMARY Overall, Heinz's third quarter sales increased 5.7% (9.4% on a constant currency basis). Volume increased 2.9%, driven primarily by good results in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Consumer Products segment, as well as the Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. and U.K. businesses. Every operating segment achieved year-on-year volume growth. These volume increases were partially offset by declines in the European Frozen Food and the Italian infant nutrition businesses. Net pricing was virtually flat, and foreign exchange translation rates decreased sales by 3.7%. Acquisitions, net of divestitures, increased sales by 6.6%, and consisted primarily of the acquisition of HP Foods ("HPF HPF - High Performance Fortran "), Nancy's Specialty Foods, Inc., Petrosoyuz, and Appetizers And, Inc. ("AAI AAI American Association of Immunologists. "). Adjusted gross profit increased 1.7%, due primarily to the favorable impact of acquisitions and higher sales volume, partially offset by unfavorable exchange rates. Adjusted gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 36.5%, a decline from 37.9% in the prior year, largely due to increased commodity costs, particularly in the U.S. and Indonesian businesses. Adjusted operating income grew 8.1%, as the adjusted gross profit increase combined with reduced General & Administrative expenses ("G&A") to offset increased fuel and transportation costs, particularly in the U.S. businesses. The increase in adjusted operating income was offset by increased net interest expense and a higher effective tax rate, resulting in the 13.8% decrease in EPS. The adjusted effective tax rate for the quarter was 35.5% versus 22.3% in the prior year. The Company reaffirms its projected effective tax rate for the full fiscal year, excluding special items, of 30% to 31%. Heinz's working capital management improved over the prior year, as the Cash Conversion Cycle continued its improvement for the quarter by improving by two days, on a total company basis. THIRD QUARTER SEGMENT HIGHLIGHTS NORTH AMERICAN CONSUMER PRODUCTS Sales of the North American Consumer Products segment increased 13.8%. Volume increased 4.9%, as a result of strong growth in Smart Ones(R) frozen entrees and desserts, TGI Friday's(R) and Delimex(R) brands of frozen snacks, Classico(R) pasta While the only basic difference between these names is the shape of the pasta, each pasta is typically matched with a particular sauce based on cooking time, consistency, ability to hold sauce, ease of eating, etc. sauces and Heinz(R) Ketchup. Overall, pricing increased 1.5%, largely due to more efficient trade spending on SmartOnes(R) frozen entrees and Ore-Ida(R) frozen potatoes. The acquisitions of HP Foods and Nancy's acquisitions increased sales 6.6%, and exchange translation rates increased sales 0.7%. During the third quarter, Heinz Canada's Classico(R) sauce market share improved 2.4 points to 41.5%. Heinz(R) Ketchup in the U.S. grew 1.7 market share points. Heinz Consumer Products launched several new Smart Ones(R) varieties that address the growing Asian and Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum segments. These latest offerings include Southwest Style Adobo a·do·bo n. pl. a·do·bos A Philippine dish of marinated meat or fish seasoned with garlic, soy sauce, vinegar, and spices. [Spanish, from Old Spanish adobar, to stew Chicken, Chicken Enchiladas Monterey, Grilled grill tr.v. grilled, grill·ing, grills 1. To broil on a gridiron. 2. To torture or afflict as if by broiling. 3. Informal To question relentlessly; cross-examine. 4. Mandarin Mandarin (măn`dərĭn) [Port. mandar=to govern, or from Malay mantri=counselor of state], a high official of imperial China. For each of the nine grades there was a different colored button worn on the dress cap. Chicken and Dragon dragon, mythical beast usually represented as a huge, winged, fire-breathing reptile. For centuries the dragon has been prominent in the folklore of many peoples; thus, its physical characteristics vary greatly and include combinations of numerous animals. Shrimp LoMein. The TGI Friday's(R) range grew with Spicy Thai Egg Rolls and Onion Rings Onion rings are a type of fast food commonly found in the United States, Canada, United Kingdom, Australia, Malaysia and other places. It generally consists of a small ring of onion dipped in batter and then deep fried. . Likewise, the popular Ore-Ida(R) brand added Easy Breakfast Potatoes. In the pipeline is a new Fridge Door Fit(R) Ketchup bottle, an easier-to-handle pack designed to fit into refrigerator door compartments In developmental biology, compartments are fields of cells of distinct cell lineage, cell affinity, and genetic identity. In a developing organ, all cells within a compartment possess similar affinities, and so intermingle with each other. . Available in both 46- and 64-ounce sizes, this new innovation offers consumers large-size convenience with less packaging. Fridge Door Fit(R) Ketchup is expected to be available this spring. Adjusted operating income increased 4.1%, driven primarily by the favorable impact of acquisitions, volume growth and increased net pricing, partially offset by increased commodity and fuel costs and increased G&A. HEINZ U.S. FOODSERVICE U.S. Foodservice is one of the largest broadline foodservice distributor in the United States. The company distributes food and related products to over 250,000 customers, including restaurants, healthcare facilities, lodging establishments, cafeterias, schools and colleges. U.S. Sales of the U.S. Foodservice segment increased 7.0%. The acquisition of AAI increased sales 5.2%. Volume increased 1.3%, driven by increases in Truesoups frozen soup and single-serve condiments. Higher pricing increased sales by 0.6%. One of the company's most unique foodservice customers, NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. , is expanding the line of Heinz(R) single-serve condiments aboard the International Space Station. Adjusted operating income increased 5.3%, largely due to the favorable impact of the AAI acquisition, and partially offset by higher commodity and fuel costs. EUROPE Heinz Europe's sales increased 1.3%. The acquisitions of HP Foods and Petrosoyuz increased sales 12.0%. Volume increased 2.1%, as increases from Heinz(R) soup and the roll out of new Top-Down ketchup sizes were partially offset by declines in the frozen foods business in the U.K., resulting mainly from category softness, and declines in the Italian infant nutrition business. Lower pricing decreased sales 2.8%, driven primarily by increased promotional spending on Heinz(R) soup in the U.K. and other condiments in Northern Europe. Divestitures reduced sales 1.5%, and unfavorable exchange translation rates decreased sales by 8.5%. Momentum continued in the U.K. and Ireland as third-quarter shipments were the highest in the last three years. Volume for ketchup was up by double-digits, while Heinz(R) Salad Cream Noun 1. salad cream - a creamy salad dressing resembling mayonnaise dressing, salad dressing - savory dressings for salads; basically of two kinds: either the thin French or vinaigrette type or the creamy mayonnaise type Britain, Great Britain, U.K. rose 5%. Newest introductions include Top Down and Extra Lite varieties of Heinz(R) Salad Cream. Sales of HP Foods brands, HP(R), Lea & Perrins(R) and Amoy(R), were up 5% versus a year ago. Across Europe ketchup volume rose by 14%. Adjusted operating income increased 11.8%, mainly due to the favorable impact of acquisitions, higher volume, reduced marketing expense, and decreased G&A. These increases were partially offset by unfavorable pricing and exchange translation rates. ASIA/PACIFIC Sales in Asia/Pacific increased 2.0%. Volume increased sales 3.7%, reflecting strong volume in Australia, largely due to new product introductions, partially offset by declines in Indonesian sauces and noodles noo·dle 1 n. A narrow, ribbonlike strip of dried dough, usually made of flour, eggs, and water. [German Nudel. due to changes in promotional timing. Pricing increased sales 0.5%, resulting largely from price increases on various products in Indonesia. Acquisitions, net of divestitures, increased sales 1.8%, largely due to the acquisition of Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. LongFong Foods. Unfavorable exchange translation rates decreased sales by 4.0%. Innovation continues to drive growth at Heinz Australia, which this quarter launched six Heinz(R) International Ready-to-Serve Soups inspired by global taste trends; Heinz(R) Spaghetti spaghetti: see pasta. Plus varieties fortified fortified (fôrt  ´fīd),adj containing additives more potent than the principal ingredient. with calcium, fiber, iron and Omega 3; and a collection of premium Heinz(R) SteamFresh frozen meals. Adjusted operating income decreased $8.9 million, chiefly due to increased commodity and manufacturing costs primarily in Indonesia. REST OF WORLD Sales in Heinz's ROW segment decreased 3.3%, as the impact of divestitures and exchange translation rates more than offset the 1.4% volume increase and 6.4% pricing improvements, primarily in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and India. Adjusted operating income increased due mainly to favorable pricing and decreased SG&A. YEAR-TO-DATE Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. HIGHLIGHTS Heinz reported income from continuing operations, excluding special items, of $537.0 million in the nine months ended January 25, 2006, down 5.8% compared to $570.4 million for the year-earlier period. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations, excluding special items, was $1.56, a 3.1% decrease from $1.61 in the prior year. Sales increased 6.3% (7.2% on a constant currency basis) for the first nine months of Fiscal 2006, driven by volume increases of 2.3% and acquisitions, net of divestitures of 4.8%. The favorable volume was due primarily to the North American Consumer Products segment, as well as the Australian, Indonesian and Italian infant nutrition businesses. These volume increases were partially offset by declines in the European Frozen Food business and the U.S. Foodservice segment. Adjusted gross profit increased 3.3%, despite a 110 basis point decline in adjusted gross profit margin. The gross profit increase was due to the favorable impact of acquisitions and higher sales volume and the decline in adjusted gross profit margin was primarily due to higher commodity and fuel costs, particularly in the U.S. businesses. Adjusted operating income increased 2.1%, as the increase in gross profit and decreased G&A in Europe were partially offset by higher fuel and transportation costs, particularly in the U.S. businesses. On a GAAP basis, net income for the nine months was $477.7 million compared to $546.2 million in the prior year, and EPS was $1.39 compared to $1.54 in the prior year. The current year includes income of $36.0 million related to discontinued operations and the prior year includes income of $49.7 million related to discontinued operations. In the current year, charges for special items in continuing operations were $120.4 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern ($95.4 million after tax) and in discontinued operations were $31.9 million after tax. The special items related to loss on sale or impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. were $32.2 million pre-tax in continuing operations. In the prior year, charges for special items were $73.8 million both pre- pre- word element [L.], before (in time or space). pre- pref. 1. Earlier; before; prior to: prenatal. 2. and after-tax, all of which were recorded in continuing operations. OUTLOOK For Fiscal 2007, Heinz is projecting sales growth of 3% to 4%, operating income growth of 6% to 8% and EPS growth also of 6% to 8% from a pro-forma range of $2.10 to $2.16 anticipated for Fiscal 2006. 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 Playback could mean:
The process by which the corporation communicates with its investors. . SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. PROVISIONS FOR FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 ability to identify and anticipate and respond through innovation to consumer trends, the need for product recalls, the ability to maintain favorable supplier relationships, achieving cost savings and gross margins objectives, currency valuations and interest rate fluctuations, change in credit ratings, the ability to identify and complete and the timing, pricing and success of acquisitions, joint ventures, divestitures and other strategic initiatives, approval of acquisitions and divestitures by competition authorities and satisfaction of other legal requirements, the success of Heinz's growth and innovation strategy and the ability to limit disruptions to the business resulting from the emphasis on three core categories and potential divestitures, the ability to effectively integrate acquired businesses, new product and packaging innovations, product mix, the effectiveness of advertising, marketing, and promotional programs, supply chain efficiency and cash flow initiatives, risks inherent in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , including tax litigation, and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , particularly the performance of business in hyperinflationary environments, changes in estimates in critical accounting judgments and other laws and regulations, including tax laws, the success of tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended April 27, 2005. 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 The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. and kiosks. Heinz is a global family of leading brands, including Heinz(R) Ketchup, sauces, soups, beans See JavaBeans. , pasta and infant foods (representing nearly one-third of total sales or close to $3 billion), HP(R) and Lea & Perrins(R), Ore-Ida(R) french fries French fry n. A thin strip of potato fried in deep fat. Often used in the plural. and roasted roast v. roast·ed, roast·ing, roasts v.tr. 1. To cook with dry heat, as in an oven or near hot coals. 2. To dry, brown, or parch by exposing to heat. 3. potatoes, Boston Market Boston Market (known before 1995 as Boston Chicken), headquartered in Golden, Colorado, is a chain of American fast-food restaurants. Founded in December 1985 in Newton, Massachusetts, the chain grew rapidly in the early and mid-1990s, filed bankruptcy in the late 1990s, and (R) and Smart Ones(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.
H.J. Heinz Company and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except per Share Amounts)
Third Quarter Ended Nine Months Ended
----------------------- -----------------------
January 25, January 26, January 25, January 26,
2006 2005 2006 2005
FY2006 FY2005 FY2006 FY2005
----------- ----------- ----------- -----------
Sales $2,186,524 $2,069,159 $6,243,786 $5,872,950
Cost of products sold 1,405,807 1,284,425 3,956,735 3,637,655
----------- ----------- ----------- -----------
Gross profit 780,717 784,734 2,287,051 2,235,295
Selling, general and
administrative
expenses 473,081 465,365 1,421,589 1,273,274
----------- ----------- ----------- -----------
Operating income 307,636 319,369 865,462 962,021
Interest income 7,693 7,370 21,491 19,629
Interest expense 86,336 60,434 229,140 169,871
Asset impairment
charges for cost and
equity investments - 73,842 - 73,842
Other expense, net (9,918) (2,173) (19,836) (10,238)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 219,075 190,290 637,977 727,699
Provision for income
taxes 85,897 58,778 196,295 231,179
----------- ----------- ----------- -----------
Income from continuing
operations 133,178 131,512 441,682 496,520
(Loss)/income
from discontinued
operations,
net of tax (16,578) 20,899 36,013 49,692
----------- ----------- ----------- -----------
Net income $116,600 $152,411 $477,695 $546,212
=========== =========== =========== ===========
Income/(loss) per
common share -
Diluted
Continuing
operations $0.39 $0.37 $1.29 $1.40
Discontinued
operations (0.05) 0.06 0.10 0.14
----------- ----------- ----------- -----------
Net Income $0.35 $0.43 $1.39 $1.54
=========== =========== =========== ===========
Average common shares
outstanding - diluted 337,822 352,591 343,532 353,842
=========== =========== =========== ===========
Income/(loss) per
common share - Basic
Continuing
operations $0.40 $0.38 $1.30 $1.42
Discontinued
operations (0.05) 0.06 0.11 0.14
----------- ----------- ----------- -----------
Net Income $0.35 $0.44 $1.40 $1.56
=========== =========== =========== ===========
Average common shares
outstanding - basic 334,879 349,729 340,484 350,357
=========== =========== =========== ===========
Cash dividends per
share $0.30 $0.2850 $0.90 $0.8550
=========== =========== =========== ===========
Note: Fiscals 2006 and 2005 include special items.
(Totals may not add due to rounding)
H.J. Heinz Company and Subsidiaries
Segment Data
Third Quarter Ended Nine Months Ended
----------------------- -----------------------
January 25, January 26, January 25, January 26,
2006 2005 2006 2005
FY2006 FY2005 FY2006 FY2005
----------- ----------- ----------- -----------
Net external sales:
North American
Consumer Products $658,771 $579,039 $1,828,770 $1,633,798
U.S. Foodservice 401,098 374,835 1,139,654 1,098,535
Europe 772,212 762,602 2,159,654 2,101,586
Asia/Pacific 258,985 253,974 819,300 758,750
Other Operating
Entities 95,458 98,709 296,408 280,281
----------- ----------- ----------- -----------
Consolidated Totals $2,186,524 $2,069,159 $6,243,786 $5,872,950
=========== =========== =========== ===========
Intersegment revenues:
North American
Consumer Products $13,202 $12,773 $38,633 $38,464
U.S. Foodservice 6,726 7,130 16,931 16,711
Europe 2,732 4,455 9,206 13,621
Asia/Pacific 479 825 1,702 2,435
Other Operating
Entities 378 434 942 1,192
Non-Operating (23,517) (25,617) (67,414) (72,423)
----------- ----------- ----------- -----------
Consolidated Totals $- $- $- $-
=========== =========== =========== ===========
Operating income
(loss):
North American
Consumer Products $154,440 $148,352 $425,389 $394,421
U.S. Foodservice 56,902 54,378 154,566 166,682
Europe 124,147 123,933 324,757 374,912
Asia/Pacific (957) 27,073 53,744 90,471
Other Operating
Entities 4,927 2,587 6,292 25,075
Non-Operating (31,823) (36,954) (99,286) (89,540)
----------- ----------- ----------- -----------
Consolidated Totals $307,636 $319,369 $865,462 $962,021
=========== =========== =========== ===========
Operating income
(loss) excluding
special items:
North American
Consumer Products $154,479 $148,352 $427,817 $394,421
U.S. Foodservice 57,273 54,378 161,617 166,682
Europe 138,509 123,933 372,459 374,912
Asia/Pacific 18,185 27,073 80,675 90,471
Other Operating
Entities 8,293 2,587 27,044 25,075
Non-Operating (31,511) (36,954) (87,717) (89,540)
----------- ----------- ----------- -----------
Consolidated Totals $345,228 $319,369 $981,895 $962,021
=========== =========== =========== ===========
The company's revenues
are generated via the
sale of products in
the following
categories:
Ketchup, Condiments
and Sauces $872,114 $793,614 $2,545,123 $2,356,649
Frozen Foods 668,428 594,690 1,774,765 1,599,280
Convenience Meals 371,382 394,576 1,046,473 1,063,532
Infant Feeding 196,934 220,431 598,630 601,819
Other 77,666 65,848 278,795 251,670
----------- ----------- ----------- -----------
Total $2,186,524 $2,069,159 $6,243,786 $5,872,950
=========== =========== =========== ===========
H.J. Heinz Company and Subsidiaries
Special Items - Third Quarters Ended January 25, 2006 and
January 26, 2005
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America ("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 third quarters ended January
25, 2006 and January 26, 2005:
Third Quarter Ended January 25, 2006
-------------------------------------------------
(amounts in Income from
millions) Net Gross Operating Continuing Per
Sales Profit Income Operations Share
--------- ------- --------- ----------- ------
Reported results
from continuing
operations $2,186.5 $780.7 $307.6 $133.2 $0.39
Reorganization
costs - 1.6 13.3 9.6 0.03
Strategic review
costs - 0.1 8.7 8.7 0.03
Net loss/ (gain) on
disposals and
impairment - 15.7 15.6 (11.2)(a) (0.03)
American Jobs
Creation Act - - - 27.7 0.08
--------- ------- --------- ----------- ------
Results from
continuing
operations
excluding special
items $2,186.5 $798.1 $345.2 $168.0 $0.50
========= ======= ========= =========== ======
(a) Includes a $20.6 million benefit related to the reversal of tax
valuation allowances.
Third Quarter Ended January 26, 2005
-------------------------------------------------
Income from
Net Gross Operating Continuing Per
Sales Profit Income Operations Share
--------- ------- ---------- ------------ -------
Reported results
from continuing
operations $2,069.2 $784.7 $319.4 $131.5 $0.37
Asset impairment
charges for
cost and
equity investments - - - 73.8 0.21
--------- ------- ---------- ------------ -------
Results from
continuing
operations
excluding special
items $2,069.2 $784.7 $319.4 $205.4 $0.58
========= ======= ========== ============ =======
(Note: Totals may not add due to rounding.)
H.J. Heinz Company and Subsidiaries
Special Items - Nine Months Ended January 25, 2006 and
January 26, 2005
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America ("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 nine months ended January 25,
2006 and January 26, 2005:
Nine Months Ended January 25, 2006
--------------------------------------------------
Income from
(amounts in Net Gross Operating Continuing Per
millions) Sales Profit Income Operations Share
--------- --------- --------- ------------ ------
Reported results
from continuing
operations $6,243.8 $2,287.1 $865.5 $441.7 $1.29
Reorganization
costs - 7.7 69.8 48.7 0.14
Strategic review
costs - 1.6 18.4 16.6 0.05
Net loss on
disposals &
impairment - 12.3 28.3 2.4(a) 0.01
American Jobs
Creation Act - - - 27.7 0.08
--------- --------- --------- ------------ ------
Results from
continuing
operations
excluding
special items $6,243.8 $2,308.7 $981.9 $537.0 $1.56
========= ========= ========= ============ ======
(a) Includes a $20.6 million benefit related to the reversal of tax
valuation allowances.
Nine Months Ended January 26, 2005
----------------------------------------------------
Income from
Net Gross Operating Continuing Per
Sales Profit Income Operations Share
--------- --------- --------- -------------- -------
Reported results
from continuing
operations $5,873.0 $2,235.3 $962.0 $496.5 $1.40
Asset impairment
charges for
cost and
equity
investments - - - 73.8 0.21
--------- --------- --------- -------------- -------
Results from
continuing
operations
excluding
special items $5,873.0 $2,235.3 $962.0 $570.4 $1.61
========= ========= ========= ============== =======
(Note: Totals may not add due to rounding.)
H.J. Heinz Company and Subsidiaries
Non-GAAP Performance Ratios
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America ("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
the non-GAAP performance ratio discussed in the Company's press
release dated February 28, 2006:
Operating Free Cash Flow Calculation
(amounts in thousands)
Third Quarter Ended Nine Months Ended
----------------------- -----------------------
January 25, January 26, January 25, January 26,
2006 2005 2006 2005
FY 2006 FY 2005 FY 2006 FY 2005
----------- ----------- ----------- -----------
Cash provided by
operating
activities $109,437 $126,584 $502,920 $506,146
Capital expenditures (51,408) (48,404) (151,017) (131,024)
----------- ----------- ----------- -----------
Operating Free
Cash Flow $58,029 $78,180 $351,903 $375,122
=========== =========== =========== ===========
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