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HEINZ REPORTS RECORD EARNINGS BEFORE ACCOUNTING CHANGE AND RESTRUCTURING CHARGE TO ACCELERATE PRODUCTIVITY INITIATIVES

 PITTSBURGH, June 15 /PRNewswire/ -- H.J. Heinz Company (NYSE: HNZ) announced today a record increase in sales for both its fourth quarter and full-year ended April 28, 1993, due principally to the highest sales volume increase in seven years and the acquisition of Wattie's Limited in New Zealand.
 Heinz also announced that full-year net income after the cumulative effect of the accounting change for certain postretirement benefits and the restructuring charge to accelerate productivity initiatives was $396.3 million or $1.53 per share. The after tax cumulative effect of adopting Financial Accounting Statement (FAS) No. 106, Accounting for Postretirement Benefits Other Than Pensions was $133.6 million ($.51 per share); the current year after tax effect of adopting FAS No. 106 was $9.9 million ($.04 per share); and the after tax effect of the restructuring charge was $117 million ($.45 per share).
 Commenting on the results Heinz Chairman, President and Chief Executive Officer Anthony J. F. O'Reilly said: "I am very pleased to report that, before the restructuring charge and the recognition of postretirement costs, earnings per share were $2.53, slightly in excess of our recent forecast of $2.50 per share. The company has produced record sales and attained record market shares in almost all major categories both domestically and abroad."
 Restructuring Charge Will Enhance Profit Margins
 "The lingering recession in the United States and Europe actually provides a growth opportunity for those companies which are most aggressive in their marketing and cost cutting. With this restructuring charge, Heinz will accomplish in approximately one year the productivity advances which would normally have taken three years. Simply stated, we believe these actions will keep Heinz ahead of the curve and will further enhance our profit margins," O'Reilly said.
 The restructuring charge will be used to accelerate productivity improvement, to streamline operations in line with new trade agreements, and to retrain and reduce the worldwide work force.
 Among the actions Heinz plans are to: reconfigure manufacturing operations between the U.S. and Canada; invest in training and technology to downsize operations in the U.K., Italy and Ore-Ida; implement a transformative agreement with labor unions in Australia; restructure the administration of Weight Watchers International; consolidate sales service functions in North America with the recently established Heinz Service Company; and combine administrative functions of Heinz Pet Products and StarKist.
 In the present context of debate about the selling power of brands, O'Reilly noted that, "the resurgence of Heinz brands against both branded and private label competition demonstrates that properly priced, skillfully marketed brands which offer extra value in terms of quality, packaging -- and in our case, taste, nutrition and recipe -- continue to enjoy widespread consumer support. In fact, during the past year we have introduced 500 product innovations."
 Sales for the year increased 8 percent to $7.1 billion. The sales growth for the year was primarily the result of volume gains (6 percent) and the acquisition of Wattie's Limited (3 percent). Partially offsetting these increases is the unfavorable effect of the strengthening U.S. dollar against most currencies, primarily the Pound Sterling and the Italian Lira.
 Strong volume gains were noted in many of the company's core products, including StarKist tuna, Weight Watchers brand frozen entrees, Heinz baby food, various pet food products, Ore-Ida frozen potatoes and coated frozen foods.
 Record Earnings Reduced by FAS No. 106 and Restructuring Charge
 Operating income after a pre-tax restructuring charge of $192 million was $860.9 million reflecting record sales, the acquisition of Wattie's Limited in New Zealand and the benefit from reorganization initiatives undertaken last year. These factors were partially offset by changes in foreign currency exchange rates against the U.S. dollar. Last year's results include a gain of $221.5 million resulting from the sale of The Hubinger Company.
 Net income was the beneficiary of a lower effective tax rate (26 percent) resulting from tax benefits overseas and the recognition of foreign tax credits associated with the company's overseas dividend strategy. The effective tax rate on income from operations before the current-year charges for postretirement benefits and restructuring was 29 percent.
 For the three months ended April 28, 1993, net income was $69.7 million or $.27 per share. The results include a $.47 per share charge related to the current-year effect of adopting FAS No. 106 and the restructuring charge. Also included in the results are the benefits attributable to the above-mentioned tax strategies.
 Sales for the fourth quarter increased 9 percent to $2.0 billion. The increase in sales for the fourth quarter was primarily due to volume gains (9 percent) and the acquisition of Wattie's Limited (5 percent) which was offset in part by the stronger U.S. dollar exchange rate adversely impacting sales by 6 percent. Strong volume gains were registered for StarKist tuna, Weight Watchers brand frozen entrees, Ore-Ida frozen potatoes, various pet food products, pizza products and Heinz ketchup.
 O'Reilly concluded: "We accomplished what we set out to do in 1993. It was a year of very significant achievements with record volume and market shares which, together with the benefits of our new restructuring initiative, substantially strengthen our competitive position for 1994 and beyond."
 H.J. HEINZ COMPANY
 Consolidated Statement of Income
 (000's omitted - except for per share amounts)
 Fourth Quarter Ended Twelve Months Ended
 April 28, April 29, April 28, April 29,
 1993 1992 1993 1992
 Sales $ 2,033,662 $ 1,866,946 $ 7,103,374 $ 6,581,867
 Cost of
 products sold 1,415,829 1,170,095 4,530,563 4,102,816
 Gross profit 617,833 696,851 2,572,811 2,479,051
 Selling, general
 and administrative
 expenses 563,022 466,321 1,711,926 1,593,995
 Gain on sale of
 The Hubinger Co. -- -- -- 221,459
 Operating income 54,811 230,530 860,885 1,106,515
 Interest income 7,928 8,753 29,495 46,607
 Interest expense 39,445 31,553 146,491 134,948
 Other expense, net 4,889 13,018 28,108 33,829
 Income before
 income taxes and
 cumulative effect of
 accounting change 18,405 194,712 715,781 984,345
 Provision for
 income taxes (51,270) 49,001 185,838 346,050
 Income before
 cumulative effect of
 accounting change 69,675 145,711 529,943 638,295
 Cumulative effect of
 FAS No. 106 adoption -- -- (133,630) --
 Net income $ 69,675 $ 145,711 $ 396,313 $ 638,295
 Income per share:
 Income before
 cumulative effect of
 accounting change $.27 $.56 $2.04 $2.40
 Cumulative effect of
 FAS No. 106 adoption -- -- (.51) --
 Net income per share $.27 $.56 $1.53 $2.40
 Cash dividends
 per share $.30 $.27 $1.17 $.05
 Note 1: In Fiscal 1993, income per share includes restructuring charges ($.45) and the current year effect of the adoption of FAS No. 106 ($.04).
 /delval/
 -0-
 /CONTACT: D. Edward I. Smyth, vp-Corporate Affairs, 412-456-5780, or Debora S. Foster, general manager-Corporate Communications, 412-456-5778, both of H.J. Heinz; or John E. Kennedy or L. Michael Kelly Jr. of Ketchum Public Relations, 412-456-3586 or 412-456-3840/
 (HNZ)


CO: H.J. Heinz Company ST: Pennsylvania IN: FOD SU: ERN

KC -- PG002 -- 1942 06/15/93 08:23 EDT
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Date:Jun 15, 1993
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