SAN FRANCISCO, March 14/ PRNewswire-Asia/--H. J. Heinz Company (NYSE: HNZ) today announced its largest ever reorganization plan designed to stregthen the company's six core businesses and improve Heinz's profitability and global growth. Heinz, the global food company, has number-one brands such as Heinz ketchep and infant foods, Ore-Ida, Weight Watchers, Starkist, Farley's and 9-Lives. Brand building, increasing media spend by 30% over two years, overseas expansion, Efficient Consumer Response (ECR), value-added manufacturing, price-based costing and working capital savings are important elements of the plan to make Heinz one of the three preeminent branded food companies in the world. "Heinz has launched this bold initiative, which we call Project Millennia, to deliver the 21st Century early and produce unprecedented competitve strengh to ride the global growth wave in terms of brand growth, financial performance and enhanced shareholders value," said Heinz Chairman and Chief Executive Officer Anthony J. F. O'Rrilly to The Security Analysts of San Francisco. "This plan will make Heinz one of the three preeminent branded food companies in the world." O'Reilly said. "Heinz is one of the most global of American food companies," O'Reilly said. "With GDP growth in Asia predicted at 7% this year and 6% in Eastern Europe, this is the right time for Heinz to accelerate the sales of its big brands to the millions of new consumers who are enjoying economic liberalization." Reqorganization Initiatives: Heinz announced its intention to implement a plan to reorganize the company for the millennium which will reduce Fiscal 1997 (ends April 30) full- 0year pre-tax earnings by approximately $650 million, net of anticiapted capital gains of approximatly $100 million from the sale of non-strategic assets in New Zealand and real estate in the U.K. The plan will include the following initiatives: 1. Heinz has entered into a letter of agreement with McCain Foods Limited to sell, for approximately $500 million, Ore-Ida's foodservice business, including two potato factories at Burley and Plover and four appetizer plants for a total of six factories, subject to customery due diligence, the formal approval if the Board of Directors of McCain Foods and regulatory approvals. Heinz is pleased that McCain plans to offer employment to substantially all of the Ore Ida's employees currently working full-time at its production facilities, and to headquarters and sales personnel as deemed necessary to support the business. Heinz will now focus on expanding its foodservice global leadership in high-margin ketchep and condiments, tuna and portion control, not only in the U.S., but also in Europe and Asia. The aggregate cash proceeds from all these transactions, and from the sale of other plants and businesses Heinz intends to sell during the next 12 months, should be approximately $750 million to $850 million. (See separate release issued March 14, 1997) 2. The company will close or sale at least 25 plants throughout the world while investing heavily tp upgrade and build plants to add capacity in fast- growing markets. Excluding the sale of plants and businesses, the global workforce will be reduced by approximately 2,500. "We regret the loss of jobs but this plan is necessary to make us more competitive in the tough global marketplace." said Dr. O'Reilly. "We will be sensitive and responsive to our people who are affected." Specific plants and businesses for closure will not be publicly identified untill after affected employees have been notified in the next few months. 3. These plant closures or sales will be ficilitated by the elimination of end-of-quarter trade promotion practices to improve inventory turns, cash flow and working capital for both Heinz and its customers. These practices have built up all companies, "and I stress in all companies," Dr. O'Reilly noted, over the past 10 years and are no longer efficient because of new technology such as scanning, EDI, cross-dock software and computer-assisted ordering which enable the retailer and manufacturuer to work in tandem to achieve more efficient ECR and Continuous Replenishment Program objectives. As a result of this initiative, sales in the fourth quarter are expected to be flat compared to last year. This action is designed to fundamentally change the way Heinz goes to market in key U.S. businesses. If the company had to continued to do business as usual, it would have expected to achieve an additional $90 to $95 million in operating income for the forth quarter, "yeilding EPS of$1.93 for the full year, the impact of whice is included in the $650 million cost of the reorganization," Dr, o'Reilly added. 4.The compant plans to exit at least four non-strategic businesses that do not fit its core categories or are underperforming. 5. The company will dramatically reduce the costs of its entire U.S. Weight Watchers meeting systems, at a cost of $55 million within the reorganization charge, to replicate its very successful Weight Watchers system in the U.K., the European continent, Australia and South America. Dr. O'Reilly added, "This growth plan is designed to: -- Ensure 10 to 12% earnings growth into the next century. -- Target sales to grow to $14 to $15 billion by 2003, compared to approximately %9.5 billion this year. -- Grow Fiscal '98 earnings 10 to 12 from this year's anticiapted operating base of $1.93. -- Generate working capital reductions of $300 million within the next 12 months. -- Yeild pre-tax savings of approximately $120 million in Fiscal '98 and approximatley $200 million in Fiscal '99 and beyond. -- Achieve over$2 billion in free cash flow over the next five years, with $1 billion in the next 12 months." Third Quarter Results: Earlier in the morning, Heinz announced record third-quarter results. Earnings per share, excluding non-recurring items, were $0.48. This represented an increase of 14.3% over the same period last year. Sales growth for the third quarter was strong at over 5%. (See separate release issued March 14, 1997) (more)