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EXHIBIT 99
H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
FOR THE QUARTERLY PERIOD ENDED AUGUST 1, 2001
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H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
<Table>
<Caption>
First Quarter Ended
-------------------------------
August 1, 2001 August 2, 2000
FY 2002 FY 2001
-------------- --------------
(Unaudited)
(in thousands)
Sales....................................................... $530,120 $1,096,464
Cost of products sold....................................... 259,153 653,899
-------- ----------
Gross profit................................................ 270,967 442,565
Selling, general and administrative expenses................ 126,455 238,115
Royalty expense to related parties.......................... 45,280 24,092
-------- ----------
Operating income............................................ 99,232 180,358
Interest income............................................. 11,763 27,975
Interest expense............................................ 52,173 1,661
Dividends from related parties.............................. 38,519 --
Other income/(expense)...................................... 202 (3,607)
-------- ----------
Income before income taxes, minority interest and cumulative
effect of accounting change............................... 97,543 203,065
Provision for income taxes.................................. 9,712 75,134
-------- ----------
Income before minority interest and cumulative effect of
accounting change......................................... 87,831 127,931
Minority interest........................................... (71,295) --
-------- ----------
Income before cumulative effect of accounting change........ 16,536 127,931
Cumulative effect of accounting change...................... -- (4,849)
-------- ----------
Net income.................................................. $ 16,536 $ 123,082
======== ==========
</Table>
See notes to condensed consolidated and combined financial statements.
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H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
<Table>
<Caption>
August 1, 2001 May 2, 2001*
FY 2002 FY 2001
-------------- ------------
(Unaudited)
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 17,682 $ 393
Receivables, net.......................................... 372,675 506,447
Due from related parties.................................. 110,750 75,429
Short-term notes receivable from related parties.......... 1,032,999 --
Inventories............................................... 672,336 655,170
Deferred income taxes..................................... 575 50,042
Prepaid expenses and other current assets................. 100,723 49,428
---------- ----------
Total current assets................................... 2,307,740 1,336,909
Property, plant and equipment............................... 1,482,055 1,608,514
Less accumulated depreciation............................... 679,038 738,731
---------- ----------
Total property, plant and equipment, net............... 803,017 869,783
Long-term notes receivable from related parties............. 35,000 35,000
Investments in related parties.............................. 1,907,245 1,895,245
Other investments........................................... 195,104 201,438
Intangible assets, net...................................... 1,479,971 1,208,294
Other noncurrent assets..................................... 65,826 54,822
---------- ----------
Total other noncurrent assets.......................... 3,683,146 3,394,799
---------- ----------
Total assets........................................... $6,793,903 $5,601,491
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Portion of long-term debt due within one year............. $ 303,201 $ 29,833
Accounts payable.......................................... 232,008 321,222
Due to related parties.................................... 226,348 96,221
Other accrued liabilities................................. 249,227 224,384
---------- ----------
Total current liabilities.............................. 1,010,784 671,660
Long-term debt.............................................. 3,705,999 23,932
Deferred income taxes....................................... 4,413 205,134
Deferred income............................................. 28,160 29,684
Other liabilities........................................... 5,677 12,684
Minority interest........................................... 1,561,859 --
Mandatorily Redeemable Series A Preferred shares............ 325,000 --
Shareholders' equity:
Common stock.............................................. 11 --
Additional capital........................................ 135,385 --
Retained earnings......................................... 15,095 --
Accumulated other comprehensive income.................... 1,520 --
Parent company's investment............................... -- 4,658,397
---------- ----------
Total shareholders' equity............................. 152,011 4,658,397
---------- ----------
Total liabilities and shareholders' equity............. $6,793,903 $5,601,491
========== ==========
</Table>
---------------
* Summarized from audited Fiscal Year 2001 balance sheet
See notes to condensed consolidated and combined financial statements.
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H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
First Quarter Ended
--------------------------------
August 1, 2001 August 2, 2000
FY 2002 FY 2001
-------------- --------------
(Unaudited)
(in thousands)
Cash used for Operating Activities.......................... $(118,569) $(12,250)
--------- --------
Cash Flows from Investing Activities:
Capital expenditures...................................... (11,992) (35,528)
Acquisitions, net of cash acquired........................ (290,200) (128,813)
Investment in The Hain Celestial Group, Inc............... -- (79,743)
Other items, net.......................................... (20,978) (9,457)
--------- --------
Cash used for investing activities..................... (323,170) (253,541)
--------- --------
Cash Flows from Financing Activities:
Payments on long-term debt................................ (7,167) (5,884)
Proceeds from long-term debt.............................. 748,959 --
Payments on commercial paper and short-term borrowings,
net.................................................... (617,998) --
Dividends................................................. -- (103,019)
Net parent advances....................................... -- 381,596
Proceeds from mandatorily redeemable Series A preferred
shares................................................. 325,000 --
Other items, net.......................................... 500 --
--------- --------
Cash provided by financing activities.................. 449,294 272,693
--------- --------
Net increase in cash and cash equivalents................... 7,555 6,902
Cash and cash equivalents, beginning of period.............. 10,127 2,322
--------- --------
Cash and cash equivalents, end of period.................... $ 17,682 $ 9,224
========= ========
</Table>
See notes to condensed consolidated and combined financial statements.
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H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED AND
COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(1) On May 3, 2001, H.J. Heinz Company ("Heinz") reorganized its U.S.
corporate structure and established two primary companies for the
management of U.S. trademarks and for U.S. treasury functions. As a
result, all of the business operations of Heinz's domestic operations
("the U.S. Group") are now being conducted by H.J. Heinz Finance Company
and its wholly-owned subsidiaries (collectively, "HFC"), and H.J. Heinz
Company, L.P. ("Heinz LP"). HFC has limited partnership interests in Heinz
LP. HFC assumed primary liability for approximately $2.9 billion of
Heinz's outstanding senior unsecured debt and accrued interest by becoming
co-obligor with Heinz.
Heinz LP owns or leases the operating assets involved in manufacturing
throughout the United States which were contributed by Heinz and its
subsidiaries, together with other assets and liabilities, to Heinz LP and
manages the business. Heinz LP has two classes of limited partnership
interests, Class A and Class B. HFC, directly and through wholly-owned
subsidiaries, owns the Class B interests. Heinz, directly and through
wholly-owned subsidiaries, owns the Class A interests. Heinz Management
Company, a wholly-owned subsidiary of Heinz, is the managing General
Partner of Heinz LP and employs the salaried personnel of the U.S. Group.
The minority interest amounts on the August 1, 2001 statement of income and
balance sheet represents the Class A and General Partner limited
partnership interest in Heinz LP.
The preparation of the August 2, 2000 and May 2, 2001 financial statements
include the use of "carve out" and "push down" accounting procedures
wherein certain assets, liabilities and expenses historically recorded or
incurred at the parent company level or an affiliate of Heinz, which
related to or were incurred on behalf of the U.S. Group, have been
identified and allocated or pushed down as appropriate to reflect results
of the U.S. Group for the periods presented. See Note (9), for a further
discussion regarding Heinz parent company costs.
As a result of the finalizing of the reorganization, certain assets and
liabilities which are included in the May 2, 2001 "carve out" balance
sheet, were not contributed to HFC. Substantially all finished goods
inventories of the U.S. Group remained assets of Heinz and were not
contributed to Heinz LP. These retained inventories result in reduced sales
and operating results in Fiscal 2002 when compared to Fiscal 2001.
(2) The results for the interim periods are not necessarily indicative of the
results to be expected for the full fiscal year due to the seasonal nature
of the business of HFC. In the opinion of management, all adjustments
which are of a normal and recurring nature, necessary for a fair statement
of the results of operations of these interim periods have been included.
(3) INVENTORIES
The composition of inventories at the balance sheet dates was as follows:
<Table>
<Caption>
August 1, May 2,
2001 2001
(in thousands) --------- --------
Finished goods and work-in-process......................... $547,245 $515,315
Packaging material and ingredients......................... 125,091 139,855
-------- --------
$672,336 $655,170
======== ========
</Table>
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(4) TAXES
The provision for income taxes consists of provisions for federal and state
income taxes. The tax provision in the August 1, 2001 financial statements
declined significantly given the non-taxable status of Heinz LP.
(5) RESTRUCTURING
In the fourth quarter of Fiscal 2001, Heinz announced a restructuring
initiative named "Streamline" which includes an organizational
restructuring aimed at reducing overhead costs and the consolidation of
HFC's canned pet food production to Bloomsburg, Pennsylvania (which
resulted in ceasing canned pet food production at HFC's Terminal Island,
California facility).
The major components of the restructuring charge and implementation costs
and the remaining accrual balances as of August 1, 2001 were as follows:
<Table>
<Caption>
Employee
Termination
Non-Cash and Accrued
Asset Severance Exit Implementation
(in millions) Write-Downs Costs Costs Costs Total
------------- ----------- ----------- ------- -------------- -----
Restructuring and Implementation
costs--Fiscal 2001.................. $34.7 $15.4 $22.8 $11.8 $84.7
Amounts utilized--Fiscal 2001......... (34.7) (5.8) (1.7) (11.8) (54.0)
----- ----- ----- ----- -----
Accrued restructuring costs--May 2,
2001................................ -- $ 9.6 $21.1 -- $30.7
Implementation costs--Fiscal 2002..... -- -- -- 1.2 1.2
Amounts utilized--Fiscal 2002......... -- -- (0.5) (1.2) (1.7)
Liability assumed by related
party--Fiscal 2002.................. -- (5.5) (0.6) -- (6.1)
----- ----- ----- ----- -----
Accrued restructuring costs--August 1,
2001................................ $ -- $ 4.1 $20.0 $ -- $24.1
===== ===== ===== ===== =====
</Table>
During the first quarter of Fiscal 2002, HFC incurred implementation costs
totaling $1.2 million pretax, which consisted of incremental costs directly
related to the implementation of the Streamline initiative. Pretax charges
of $1.1 million were classified as cost of products sold and $0.1 million
as selling, general and administrative expenses ("SG&A"). In addition,
Heinz Management Company, a wholly-owned subsidiary of Heinz, assumed a
portion of the HFC's restructuring liability as a result of the realignment
that occurred on May 3, 2001.
During the first quarter of Fiscal 2002, HFC utilized $0.5 million of
severance and exit cost accruals, principally for ceasing canned pet food
production in its Terminal Island, California facility and its overhead
reduction plan.
(6) ACQUISITIONS
During the first quarter of Fiscal 2002, HFC completed the acquisition of
Borden Food Corporation's pasta sauce and dry bouillon and soup business.
Under this transaction, HFC acquired such brands as Classico pasta sauces,
Aunt Millie's pasta sauce, Mrs. Grass Recipe soups, Wyler's bouillons and
soups. HFC also made another smaller acquisition.
The above acquisitions have been accounted for as purchases and,
accordingly, the respective purchase prices have been allocated to the
respective assets and liabilities based upon their estimated fair values as
of the acquisition dates. Final allocations of the purchase prices are not
expected to differ significantly from the preliminary allocations.
Operating results of the businesses acquired have been included in the
consolidated and combined statements of income from the respective
acquisition dates forward.
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Pro forma results of HFC, assuming all of the acquisitions had been made at
the beginning of each period presented, would not be materially different
from the results reported.
(7) RECENTLY ADOPTED ACCOUNTING STANDARDS
In Fiscal 2001, HFC changed its method of accounting for revenue
recognition in accordance with Staff Accounting Bulletin (SAB) 101,
"Revenue Recognition in Financial Statements." Under the new accounting
method, adopted retroactive to May 4, 2000, HFC recognizes revenue upon the
passage of title, ownership and risk of loss to the customer. The
cumulative effect adjustment of $4.8 million in net income as of May 4,
2000, was recognized during the first quarter of Fiscal 2001. The Fiscal
2001 first quarter amounts include the effect of the change in accounting
for revenue recognition.
(8) RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2001, the FASB issued SFAS No. 141 "Business Combinations" and SFAS
No. 142 "Goodwill and Other Intangible Assets". These standards require
that all business combinations be accounted for using the purchase method
and that goodwill and intangible assets with indefinite useful lives should
not be amortized but should be tested for impairment at least annually, and
they provide guidelines for new disclosure requirements. These standards
outline the criteria for initial recognition and measurement of
intangibles, assignment of assets and liabilities including goodwill to
reporting units and goodwill impairment testing. The provisions of SFAS
Nos. 141 and 142 apply to all business combinations after June 30, 2001.
The provisions of SFAS No. 142 for existing goodwill and other intangible
assets are required to be implemented in the first quarter of Fiscal 2003.
HFC is currently evaluating the impact of these standards on the
consolidated financial statements.
In September 2000, the FASB Emerging Issues Task Force (the "EITF") issued
new guidelines entitled "Accounting for Consideration from a Vendor to a
Retailer in Connection with the Purchase or Promotion of the Vendor's
Products," which address the income statement classification of
consideration from a vendor to a retailer. These guidelines will be
effective for HFC beginning in the fourth quarter of Fiscal 2002. The
implementation of these guidelines will require HFC to make
reclassifications between SG&A and sales, the amounts of which have not yet
been determined.
In May 2000, the EITF issued new guidelines entitled "Accounting for
Certain Sales Incentives" which addresses the recognition, measurement and
income statement classification for certain sales incentives (e.g.,
coupons). These guidelines will be effective for HFC beginning in the
fourth quarter of Fiscal 2002. The implementation of these guidelines will
require HFC to make reclassifications between SG&A and sales, the amounts
of which have not yet been determined.
(9) RELATED PARTY TRANSACTIONS
Employee Costs
Certain of Heinz's general and administrative expenses are allocated to
HFC. In Fiscal 2001, total costs allocated include charges for salaries of
corporate officers and staff and other Heinz corporate overhead. In Fiscal
2002, these costs primarily include a management charge of all salaried
employee costs from the Heinz Management Company. Total costs charged to
HFC for these services were $18.0 million and $6.9 million for the three
months ended August 1, 2001 and August 2, 2000, respectively. These costs
are recorded as SG&A expense in the accompanying condensed consolidated and
combined statements of income.
Heinz charges HFC for its share of group health insurance costs for
eligible company employees based upon location-specific costs, overall
insurance costs and loss experience incurred during a calendar year. In
addition, various other insurance coverages are also provided to HFC
through Heinz's consolidated programs. Workers compensation, auto,
property, product
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liability and other insurance coverages are charged directly based on HFC's
loss experience. Amounts charged to HFC for insurance costs were $15.4
million and $20.4 million for the three months ended August 1, 2001 and
August 2, 2000, respectively, and are recorded in SG&A expense in the
accompanying condensed consolidated and combined statement of income.
Pension costs and postretirement costs are also charged to HFC based upon
eligible employees participating in the Plans.
Cash Management
In Fiscal 2001, the U.S. Group maintained a cash management arrangement
with Heinz. On a daily basis, all available cash was deposited and
disbursements were withdrawn. Heinz charged (credited) the U.S. Group's
interest on the average daily balance maintained in the resulting
intercompany account. Net interest income related to this arrangement,
included in the condensed combined statement of income for August 2, 2000
was $0.1 million. The interest rate charged to or received by the U.S.
Group was 5.4% for the three months ended August 2, 2000
Beginning in Fiscal 2002, HFC became the treasury center for cash
management and debt financing for all of Heinz's domestic operations
resulting in the $1.0 billion of short term notes receivable with related
parties on the August 1, 2001 condensed consolidated balance sheet. An
average interest rate of 3.93% was charged on these notes resulting in
$11.0 million of interest income recorded on the August 1, 2001 condensed
consolidated statement of income.
Product sales and purchases
HFC sells and purchases products and services to and from other Heinz
affiliates. The results of such transactions are the $110.8 million and
$75.4 million balances due from related parties as of August 1, 2001 and
May 2, 2001, respectively, and the $226.3 million and $96.2 million
balances due to related parties as of August 1, 2001 and May 2, 2001,
respectively. Sales to related parties were $12.3 million and $19.7 million
in the three months ended August 1, 2001 and August 2, 2000, respectively,
and purchases from related parties were $70.8 million and $114.3 million in
the three months ended August 1, 2001 and August 2, 2000, respectively.
Other related party items
HFC sells undivided interests in certain accounts receivable to a Heinz
affiliate, Receivables Servicing Company (RSC). HFC sold $318.6 million and
$1,291.0 million of receivables net of discount expense of $1.6 million and
$9.4 million for the quarter ended August 1, 2001 and the year ended May 2,
2001, respectively, to RSC. As of August 1, 2001 and May 2, 2001,
respectively, HFC had $130.1 million and $126.9 million of receivables sold
to RSC. These sales were reflected as reductions of trade accounts
receivable. HFC's contract with RSC will terminate in December 2001.
Until the fourth quarter of Fiscal 2001, HFC had outstanding notes
receivable from Heinz affiliates which are used for working capital
purposes and to fund acquisitions. The short-term notes had interest rates
ranging from 6.50% to 7.00%. The long-term notes had interest rates ranging
from 6.75% to 7.50% with a maturity of May 2003. Interest income earned by
HFC related to these receivables was $27.2 million for the three months
ended August 2, 2000. In the fourth quarter of Fiscal 2001, these notes
receivable from related parties were exchanged by HFC with a subsidiary of
Heinz, PM Holding, Inc. ("PM Holding"), for $1.9 billion of non-voting,
6.5% cumulative non-participating preferred stock of PM Holding. This
dividend amounted to $38.5 million for the first three months of Fiscal
2002. This preferred stock investment is recorded in the Investments in
related parties balance on the condensed consolidated and combined balance
sheets as of August 1, 2001 and May 2, 2001.
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HFC paid royalties of $45.3 million and $24.1 million as of August 1, 2001
and August 2, 2000, respectively, to Promark International, Inc., an
indirect subsidiary of Heinz, for the use of trademarks.
The $35.0 million long-term note receivable from related parties recorded
on the accompanying condensed consolidated and combined balance sheets
relates to a receivable from Heinz that was contributed to HFC in exchange
for common stock of HFC.
(10) On September 6, 2001, HFC, Heinz and a group of domestic and international
banks entered into a $1.50 billion credit agreement which expires in
September 2006 and an $800 million credit agreement which expires in
September 2002. These credit agreements, which support HFC's commercial
paper program, replaced the $2.30 billion credit agreement which expired on
September 6, 2001. As of August 1, 2001, $673 million of commercial paper
was outstanding and classified as long-term debt due to the long-term
nature of the supporting credit agreement.
On July 6, 2001, HFC raised $325 million via the issuance of Voting
Cumulative Preferred Stock, Series A with a liquidation preference of
$100,000 per share. The Series A Preferred shares are entitled to receive
quarterly dividends at a rate of 6.226% per annum and are required to be
redeemed for cash on July 15, 2008. In addition, HFC issued $750 million of
6.625% Guaranteed Notes due July 15, 2011 which are guaranteed by Heinz.
The proceeds were used for general corporate purposes, including retiring
commercial paper borrowings, financing acquisitions and ongoing operations.
(11) COMPREHENSIVE INCOME
<Table>
<Caption>
First Quarter Ended
-------------------
August 1, 2001
(in thousands) FY 2002
-------------- -------------------
Net income.................................................. $16,536
Deferred gains/(losses) on derivatives:
Net change from periodic revaluations..................... 1,643
Net amount reclassified to earnings....................... 138
-------
Comprehensive income........................................ $18,317
=======
</Table>
(12) FINANCIAL INSTRUMENTS
HFC utilizes certain financial instruments to manage its commodity price
and interest rate exposures.
COMMODITY PRICE HEDGING: HFC uses commodity futures and options in order to
reduce price risk associated with anticipated purchases of raw materials
such as corn, soybean oil and soybean meal. Commodity price risk arises due
to factors such as weather conditions, government regulations, economic
climate and other unforeseen circumstances. Hedges of anticipated commodity
purchases which meet the criteria for hedge accounting are designated as
cash flow hedges. When using a commodity option as a hedging instrument,
HFC excludes the time value of the option from the assessment of hedge
effectiveness.
INTEREST RATE HEDGING: HFC uses interest rate swaps to manage interest rate
exposure. These derivatives are designated as cash flow hedges or fair
value hedges depending on the nature of the particular risk being hedged.
HEDGE INEFFECTIVENESS: During the quarter ended August 1, 2001, hedge
ineffectiveness related to cash flow hedges was a net loss of $0.1 million,
which is reported in the consolidated statements of income as other
expenses.
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DEFERRED HEDGING GAINS AND LOSSES: As of August 1, 2001, HFC is hedging
forecasted transactions for periods not exceeding 12 months, and expects
$1.5 million of net deferred gain reported in accumulated other
comprehensive income to be reclassified to earnings within that time frame.
(13) SUBSEQUENT EVENTS
On August 2, 2001, HFC announced that it acquired Delimex Holdings, Inc.
("Delimex"), a leading maker of frozen Mexican food products, from Fenway
Partners. Delimex is the leading U.S. producer of frozen taquitos, tightly
rolled fried corn and flour tortillas with fillings such as beef, chicken
or cheese. Delimex also makes quesadillos, tamales and rice bowls.
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