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H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
$107.3 million for the years ended April 27, 2011, April 28, 2010 and April 29, 2009, respectively.
During Fiscal 2011, 2010 and 2009, the Company also (paid)/received $(11.5) million, $(1.7) million
and $106.3 million of cash related to these forward contracts, respectively.
During Fiscal 2010, the Company terminated its $175 million notional total rate of return swap
that was being used as an economic hedge to reduce a portion of the interest cost related to the
Company’s remarketable securities. The unwinding of the total rate of return swap was completed in
conjunction with the exchange of $681 million of dealer remarketable securities discussed in Note 7.
Upon termination of the swap, the Company received net cash proceeds of $47.6 million, in addition
to the release of the $192.7 million of restricted cash collateral that the Company was required to
maintain with the counterparty for the term of the swap. Prior to termination, the swap was being
accounted for on a full mark-to-market basis through earnings, as a component of interest income.
The Company recorded a benefit in interest income of $28.3 million for the year ended April 28, 2010,
and $28.1 million for the year ended April 29, 2009, representing changes in the fair value of the swap
and interest earned on the arrangement, net of transaction fees.
Concentration of Credit Risk:
Counterparties to currency exchange and interest rate derivatives consist of major international
financial institutions. The Company continually monitors its positions and the credit ratings of the
counterparties involved and, by policy, limits the amount of credit exposure to any one party. While
the Company may be exposed to potential losses due to the credit risk of non-performance by these
counterparties, losses are not anticipated. During Fiscal 2011, one customer represented
approximately 11% of the Company’s sales. The Company closely monitors the credit risk
associated with its counterparties and customers and to date has not experienced material losses.
13. Income Per Common Share
The following are reconciliations of income from continuing operations to income from
continuing operations applicable to common stock and the number of common shares outstanding
used to calculate basic EPS to those shares used to calculate diluted EPS:
April 27,
2011
(52 Weeks)
Fiscal Year Ended
April 28,
2010
(52 Weeks)
(Amounts in thousands)
April 29,
2009
(52 Weeks)
Income from continuing operations attributable to
H.J. Heinz Company . . . . . . . . . . . . . . . . . . . . . . . . . $989,510 $914,489 $929,511
Allocation to participating securities . . . . . . . . . . . . . . 1,746 2,153 4,121
Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 9 12
Income from continuing operations applicable to
common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $987,752 $912,327 $925,378
Average common shares outstanding-basic . . . . . . . . . 320,118 315,948 313,747
Effect of dilutive securities:
Convertible preferred stock. . . . . . . . . . . . . . . . . . . . 105 105 106
Stock options, restricted stock and the global stock
purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,819 2,060 4,210
Average common shares outstanding-diluted. . . . . . . . 323,042 318,113 318,063
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