H.J. Heinz Company (ticker: HNZ, exchange: New York Stock Exchange (.N))
News Release -
Heinz Elects Johnson Chairman; Becomes Fifth Chairman in Heinz's 131-Year History; O'Reilly Retires Following Shareholder Meeting
PITTSBURGH, Sept. 12, 2000 /PRNewswire/ -- The Board of Directors of the
H.J. Heinz Company (NYSE: HNZ) today unanimously elected William R. Johnson as
Chairman, effective immediately. As only the fifth Chairman in Heinz's
131-year history, Mr. Johnson succeeds Anthony J.F. O'Reilly, who retired
today, as previously announced, following the annual shareholders meeting held
in Pittsburgh, Pa.
(Photo: http://www.newscom.com/cgi-bin/prnh/20000912/PHTU043 )
(Photo: http://www.newscom.com/cgi-bin/prnh/20000912/PHTU050 )
"I am greatly honored to be chosen Heinz's new chairman and to take up the
standard carried so successfully by visionary leaders such as Tony O'Reilly
and Henry J. Heinz," Mr. Johnson said. "Like them, I am committed to making
Heinz the world's leading food company in terms of growth and performance, and
I am grateful to Heinz's Board for its vote of confidence in our management
team and global growth strategy."
In addition to his new responsibilities as Chairman, Mr. Johnson will
continue to serve as President and Chief Executive Officer of the H.J. Heinz
Company. He was named President and Chief Operating Officer in June 1996 and
CEO on April 30, 1998. Dr. O'Reilly, who had been Heinz's Chairman since
1987, had also held the positions of President and CEO before Mr. Johnson.
"Tony leaves us a proud legacy, upon which we will continue to build as we
open new markets and explore new growth opportunities around the world,"
Mr. Johnson told the shareholders at today's meeting. "I have greatly admired
and respected Tony's accomplishments over the years and have enjoyed working
with him. He transformed Heinz into a global food company and was one of the
first truly global CEOs. His vision and energy were key to Heinz's
During a tribute at the annual meeting, Mr. Johnson showed a special
commemorative video that highlighted Dr. O'Reilly's many accomplishments as
sportsman, business statesman and philanthropist. Mr. Johnson then presented
a gift to the outgoing Chairman of a rare and historic glass ketchup display
bottle from the time of the company's Founder.
In his final remarks to Heinz shareholders as Chairman, Dr. O'Reilly
called Heinz "a fine, sturdy, dedicated, well-directed company that knows what
it wants, knows how to make it, knows who its customers are and can deliver
earnings and volume growth to the market." Heinz's largest individual
shareholder, Dr. O'Reilly recalled that he did not own a single share when he
joined the company in 1969, but has been "well rewarded" by building his stock
holdings over the years and "reinvesting everything I could back into the
He expressed his full confidence in Heinz's leadership, praising
"consistent, loyal, tough, talented managers like Bill Johnson" and his senior
management team, as well as "a host of others who testify to the fact that the
company nurtures great talent and loyalty within its workforce."
Additionally, Dr. O'Reilly singled out several key achievements that would
distinguish Heinz in the 21st Century, such as its "icon brands;" its
foodservice business ("indisputably the finest in the world of all food
companies"); its efficient global manufacturing capabilities; and its strong
"These things just don't happen by accident," Dr. O'Reilly observed.
"They happen by planning and by people and by having the right product in the
right place at the right time."
INCREASING SHAREHOLDER VALUE
Mr. Johnson's shareholder address focused on the "prime concern of Heinz
management, today and in the future -- increasing shareholder value."
Heinz's CEO pointed to strong financial performance and credible growth
strategies as two key pillars of shareholder value. "Heinz is doing well in
both areas, positioning the company for sustained value in the future," he
Mr. Johnson cited the company's strong first quarter results, announced on
September 6, which included an 8% increase in operating income and 11.5%
increase in earnings per share, excluding special items and the impact of the
sale of the Weight Watchers classroom business. He also pointed to a record
gross profit margin for the period of 42.2%.
Furthermore, Mr. Johnson noted that the Board of Directors had approved an
increase in the annual dividend on common stock from $1.47 per share to $1.57
per share -- Heinz's 33rd consecutive year of dividend increases. "Heinz's
long history of increasing dividends is an excellent reminder of our company's
reliable and consistent financial performance," he stated.
Mr. Johnson presented other indicators of Heinz's financial performance,
Compound EPS growth in excess of 10% per year since 1996;
A nearly 6-point increase in Gross Profit Margins in the most recent
quarter, from 36.6% in Fiscal 1996 to 42.2%;
A 4-point improvement in Operating Margins over the past four years to
18.2% from 14.1%;
An increase in the Return on Invested Capital to 30.6% from 21% in
An improvement in the Return on Equity to 54.4% from 25.5% four years
ago; and a
Reduction in the number or shares outstanding by nearly 6%.
"Our strong performance has successfully overcome the continuing challenge
of the strong U.S. dollar," he said, noting that from Fiscal 1997 through
Fiscal 2001, unfavorable currency exchange rates will have reduced Heinz sales
by more than $1 billion and operating profits by $200 million -- or
approximately $0.37 per share.
BRAND AND CATEGORY GROWTH
Continued success will flow from Heinz's ability to generate brand and
category growth, Mr. Johnson maintained. He pointed to three dominant growth
trends that Heinz is addressing: technology, globalization and innovation.
He pointed Heinz shareholders to dramatic and transformative innovations
and growth initiatives that the company is launching in the current fiscal
Heinz EZ Squirt ketchup for kids;
The Trap Cap in retail ketchup to eliminate the "watery stuff" on the
The Forever-Full Foodservice ketchup bottle with the non-removable
New Boston Market HomeStyle Meals lines of frozen soups and chili
Ore-Ida's Stand-Up Resealable Packaging;
The StarKist tuna pouch;
Pounce Purr-Fections dual-texture cat treats; and
Farley's Simplifeed system for infant formula in the U.K.
BUILDING INTERNAL STRENGTH
Mr. Johnson explained the company's recent acquisitions and reorganization
in terms of its growth and innovation strategy. "Our acquisition strategy is
designed to give us the scale, the market presence and the know-how to gain
marketing leverage against key global consumer trends," he said.
This strategy was the impetus for Heinz's acquisitions in Fiscal 2000,
Acquiring a 19.5% stake in the Hain Celestial Group, the premier
organic food company;
Expansion of Heinz's rapidly growing foodservice business by acquiring
Thermo Pac, Quality Chef and, in July, International DiverseFoods;
Acquisition of UB Frozen and Chilled Foods to significantly expand
Heinz's fast-growing European frozen business; and
A joint venture with Nutri Asia, the Philippines' leading ketchup
company, which opened a major new Asian market.
Heinz's CEO also cited the company's successful reorganization under
Operation Excel and the rapid combination of Heinz's North American operations
in Pittsburgh to "strengthen our focus, coordination and leverage in North
"As we unite this wealth of human resources and ideas, we are tapping the
tremendous talent of our people through intensive employee development
programs," he said.
Mr. Johnson also told shareholders Heinz is "leveraging the power of new
technology" through significant investment in new Internet applications, in
particular as a co-founder of a major electronic-commerce exchange, known as
Transora. "Through Transora, we are purchasing a wide range of goods and
services at substantially lower cost via the Internet," he stated.
"As fellow shareholders, we know that Heinz is greatly undervalued,"
Mr. Johnson said. "We are confident that we are on track to achieve our
growth goals for Fiscal 2001, which will validate Heinz as a true industry
Mr. Johnson concluded: "Our vision is to be the best food company in
America, with a future marked by innovation, global expansion and new
technology. Above all, we see greater value for our customers, our consumers,
our employees and especially the shareholders of this great company."
EDITOR'S NOTE: Please refer to photo release featuring Heinz President
and CEO Bill Johnson presenting a commemorative gift, on behalf of Heinz
employees, to Retiring Chairman Anthony J. F. O'Reilly.
This news release contains forward-looking statements regarding the
company's future performance. These forward-looking statements are based on
management's views and assumptions, and involve risks, uncertainties and other
important factors that could cause actual results to differ materially from
those expressed or implied in the forward-looking statements. These include,
but are not limited to, sales, earnings and volume growth, competitive
conditions, production costs, currency valuations, global economic and
industry conditions, achieving cost savings programs, success of acquisitions
and new product and packaging innovations, including the innovations listed
above and other factors described in "Cautionary Statement Relevant to
Forward-Looking Information" in the company's Form 10-K for the fiscal year
ended May 3, 2000, as updated from time to time by the company in its
subsequent filings with the Securities and Exchange Commission.
ABOUT HEINZ: With sales over US$9 billion, H.J. Heinz Company is one of
the world's leading marketers of branded foods to supermarkets and
away-from-home eating establishments. Its 50 companies operate in some 200
countries, offering more than 57 hundred varieties. Among the company's
famous brands are Heinz, StarKist, Ore-Ida, 9-Lives, Weight Watchers,
Wattie's, Plasmon, Farley's, Smart Ones, The Budget Gourmet, Linda McCartney,
San Marco, Go Ahead!, Bagel Bites, John West, Petit Navire, Boston Market,
Skippy, Kibbles 'n Bits, Pounce, Wagwells, Orlando, ABC, Olivine and
Pudliszki. Information on Heinz is available at http://www.heinz.com.
SOURCE H. J. Heinz Company
CONTACT: MEDIA: Ted Smyth, SVP-Corp. & Govt. Affairs, 412-456-5780;
Debbie Foster, Director-Corp. Comm., 412-456-5778; or Jack Kennedy,
GM-Strategic Comm., 412-456-5923; INVESTORS: Jack Runkel, VP-Investor
Relations, 412-456-6034, all of Heinz/