I have been looking forward to seeing the fourth-quarter and fiscal 2006 earnings from Motley Fool Income Investor selection H.J. Heinz (NYSE:HNZ) not so much for the earnings themselves but to see whether plans to cut costs and improve returns to shareholders are materializing.

Both the earnings and the company's new superior value plan were released Thursday. The earnings numbers can be seen in the Fool by Numbers, so I won't belabor any points there. The superior value proposals are very interesting in how they compare with suggestions from activist shareholder Nelson Peltz and are far more important to the company's future valuation than today's earnings are.

The details of the plan and some supporting materials can be found on the company's website. The main parts read somewhat similar to what Peltz proposed in a proxy filing more than a week ago, calling for savings in selling, general, and administrative expenses and reduced spending on trade (allowances to retailers for marketing and product placement). These savings will be used to fund new product launches, increased conventional marketing, and increased dividends from the higher earnings that the savings, combined with 3% to 4% sales growth, should create. The plan also calls for $1 billion in share repurchases across 2007 and 2008. With this combination, I find reason to be optimistic about the company's valuation if the plan is executed successfully. If it isn't, I'll have a hard time justifying a valuation any higher than today's price.

The battle between Heinz and Peltz is receiving plenty of publicity, but in truth the struggles at Heinz aren't unusual in the food industry. ConAgra (NYSE:CAG), Campbell Soup (NYSE:CPB), and fellow Income Investor selection Sara Lee (NYSE:SLE) have all had a rough time in the last five years or more. All have some pretty strong brands, but the competition in the grocery aisles and at large retailers such as Target (NYSE:TGT) has increased.

Heinz has done well to keep its free cash flow relatively high and improve on that measure over the last five years. That said, it clearly has room to improve on its SG&A expenses and how it markets its products. In the last five years, Heinz has removed complexity in its business by reducing the number of products it sells and the number of markets it serves, but SG&A costs still increased faster than sales over the period.

If Heinz can make some headway on those expenses and improve the marketing message behind its core ketchup and sauces product lines, that would be a boon for shareholders. And it doesn't matter if Peltz is intimately involved or if he is the primary reason this plan is being spelled out today. All that matters is that management accomplishes its goals -- historically a mixed bag. If management should happen to not meet its goals, I have a feeling we'll be hearing from Peltz and other activist holders in the near future.

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Nathan Parmelee has a beneficial interest in shares of Heinz but has no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.