EXHIBIT 99
H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JANUARY 30, 2002
H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
<Table>
<Caption>
Third Quarter Ended
-----------------------------------
January 30, 2002 January 31, 2001
FY 2002 FY 2001
---------------- ----------------
(Unaudited)
(in thousands)
Sales...................................................... $1,317,978 $1,176,093
Cost of products sold...................................... 799,155 717,011
---------- ----------
Gross profit............................................... 518,823 459,082
Selling, general and administrative expenses............... 307,280 262,287
Royalty expense to related parties......................... 54,437 22,102
---------- ----------
Operating income........................................... 157,106 174,693
Interest income............................................ 7,700 29,531
Interest expense........................................... 50,707 349
Dividends from related parties............................. 30,799 --
Other (income) expenses, net............................... (4,056) 7,092
---------- ----------
Income before income taxes and minority interest........... 148,954 196,783
Provision for income taxes................................. 17,121 72,776
---------- ----------
Income before minority interest............................ 131,833 124,007
Minority interest.......................................... (103,202) --
---------- ----------
Net income................................................. $ 28,631 $ 124,007
========== ==========
</Table>
See notes to condensed consolidated and combined financial statements.
1
H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
<Table>
<Caption>
Nine Months Ended
-----------------------------------
January 30, 2002 January 31, 2001
FY 2002 FY 2001
---------------- ----------------
(Unaudited)
(in thousands)
Sales...................................................... $3,095,761 $3,520,667
Cost of products sold...................................... 1,847,838 2,142,884
---------- ----------
Gross profit............................................... 1,247,923 1,377,783
Selling, general and administrative expenses............... 707,733 770,641
Royalty expense to related parties......................... 125,775 72,807
---------- ----------
Operating income........................................... 414,415 534,335
Interest income............................................ 29,860 93,421
Interest expense........................................... 156,962 6,571
Dividends from related parties............................. 99,923 --
Other expenses, net........................................ 5,176 16,960
---------- ----------
Income before income taxes, minority interest and
cumulative effect of accounting change................... 382,060 604,225
Provision for income taxes................................. 35,836 223,502
---------- ----------
Income before minority interest and cumulative effect of
accounting change........................................ 346,224 380,723
Minority interest.......................................... (285,726) --
---------- ----------
Income before cumulative effect of accounting change....... 60,498 380,723
Cumulative effect of accounting change..................... -- 4,849
---------- ----------
Net income................................................. $ 60,498 $ 375,874
========== ==========
</Table>
See notes to condensed consolidated and combined financial statements.
2
H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
<Table>
<Caption>
January 30, 2002 May 2, 2001*
FY 2002 FY 2001
---------------- ------------
(Unaudited)
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 9,589 $ 393
Receivables, net.......................................... 682,572 506,447
Due from related parties.................................. 187,368 75,429
Short-term notes receivable from related parties.......... 894,880 --
Inventories............................................... 783,917 655,170
Deferred income taxes..................................... 4,395 50,042
Prepaid expenses and other current assets................. 152,050 49,428
---------- ----------
Total current assets................................... 2,714,771 1,336,909
Property, plant and equipment............................... 1,507,334 1,608,514
Less accumulated depreciation............................... 664,581 738,731
---------- ----------
Total property, plant and equipment, net............... 842,753 869,783
Long-term notes receivable from related parties............. 35,000 35,000
Investments in related parties.............................. 1,895,245 1,895,245
Other investments........................................... 195,475 201,438
Intangible assets, net...................................... 1,900,022 1,208,294
Other noncurrent assets..................................... 64,821 54,822
---------- ----------
Total other noncurrent assets.......................... 4,090,563 3,394,799
---------- ----------
Total assets........................................... $7,648,087 $5,601,491
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term debt........................................... $ 43,455 $ --
Portion of long-term debt due within one year............. 501,576 29,833
Accounts payable.......................................... 277,995 321,222
Due to related parties.................................... 229,930 96,221
Other accrued liabilities................................. 219,475 224,384
---------- ----------
Total current liabilities.............................. 1,272,431 671,660
Long-term debt.............................................. 4,215,495 23,932
Deferred income taxes....................................... 9,422 205,134
Deferred income............................................. 33,259 29,684
Other liabilities........................................... 5,986 12,684
Minority interest........................................... 1,601,455 --
Mandatorily redeemable Series A preferred shares............ 325,000 --
Shareholders' equity:
Common stock.............................................. 11 --
Additional capital........................................ 135,386 --
Retained earnings......................................... 49,876 --
Accumulated other comprehensive (loss).................... (234) --
Parent company's investment............................... -- 4,658,397
---------- ----------
Total shareholders' equity............................. 185,039 4,658,397
---------- ----------
Total liabilities and shareholders' equity............. $7,648,087 $5,601,491
========== ==========
</Table>
- ---------------
* Summarized from audited Fiscal Year 2001 balance sheet
See notes to condensed consolidated and combined financial statements.
3
H.J. HEINZ FINANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
Nine Months Ended
------------------------------------
January 30, 2002 January 31, 2001
FY 2002 FY 2001
---------------- ----------------
(Unaudited)
(in thousands)
Cash used for Operating Activities....................... (388,589) (244,673)
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures................................... (51,888) (108,666)
Proceeds from disposals of property, plant and
equipment........................................... 3,046 --
Acquisitions, net of cash acquired..................... (777,718) (161,008)
Investment in The Hain Celestial Group, Inc............ -- (79,743)
Other items, net....................................... (14,395) 36,200
--------- ---------
Cash used for investing activities.................. (840,955) (313,217)
--------- ---------
Cash Flows from Financing Activities:
Payments on long-term debt............................. (9,179) (310,029)
Proceeds from long-term debt........................... 751,059 323,928
Proceeds from (payments on) commercial paper and
short-term borrowings, net.......................... 270,131 (217)
Distributions to Partners.............................. (96,835) --
Dividends on preferred shares.......................... (10,622) (316,678)
Net parent advances.................................... -- 870,023
Proceeds from mandatorily redeemable Series A preferred
shares.............................................. 325,000 --
Other items, net....................................... (548) --
--------- ---------
Cash provided by financing activities............... 1,229,006 567,027
--------- ---------
Net (decrease) increase in cash and cash equivalents..... (538) 9,137
Cash and cash equivalents, beginning of period........... 10,127 2,322
--------- ---------
Cash and cash equivalents, end of period................. 9,589 11,459
========= =========
</Table>
See notes to condensed consolidated and combined financial statements.
4
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, and H.J. Heinz Company, L.P. ("Heinz
LP") collectively referred to as "Heinz Finance" in the accompanying
notes. H.J. Heinz Finance Company has limited partnership interests in
Heinz LP. H.J. Heinz Finance Company 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. H.J. Heinz Finance Company, 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 amount on the January 30, 2002
statement of income and balance sheet represents the Class A and General
Partner interests in Heinz LP.
The preparation of the January 31, 2001 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 finalizing the reorganization, certain assets and
liabilities which are included in the May 2, 2001 "carve out" balance
sheet, were not contributed to Heinz Finance. 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 Heinz Finance. 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.
5
(3) INVENTORIES
The composition of inventories at the balance sheet dates was as follows:
<Table>
<Caption>
January 30, May 2,
2002 2001
(in thousands) ----------- --------
Finished goods and work-in-process........................ $624,059 $515,315
Packaging material and ingredients........................ 159,858 139,855
-------- --------
$783,917 $655,170
======== ========
</Table>
(4) TAXES
The provision for income taxes consists of provisions for federal and state
income taxes. The tax provision in the January 30, 2002 financial
statements declined significantly since Heinz Finance has no tax obligation
on the minority partners' interest in Heinz LP's income.
(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
Heinz Finance's canned pet food production to Bloomsburg, Pennsylvania
(which resulted in ceasing canned pet food production at Heinz Finance's
Terminal Island, California facility).
The major components of the restructuring charge and implementation costs
and the remaining accrual balances as of January 30, 2002 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.............. -- (2.5) (8.5) (1.2) (12.2)
Liability assumed by related party--Fiscal
2002..................................... -- (3.8) (0.6) -- (4.4)
----- ----- ----- ----- -----
Accrued restructuring costs--
January 30, 2002......................... $ -- $ 3.3 $12.0 $ -- $15.3
===== ===== ===== ===== =====
</Table>
During the first nine months of Fiscal 2002, Heinz Finance 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 Heinz Finance's restructuring
liability as a result of the realignment that occurred on May 3, 2001.
During the first nine months of Fiscal 2002, Heinz Finance utilized $11.0
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 second quarter of Fiscal 2002, Heinz Finance acquired Anchor
Food Products branded retail business which includes the retail licensing
rights to the T.G.I. Friday's brand
6
of frozen snacks and appetizers and the Poppers brand of retail appetizer
lines. Also during the second quarter of Fiscal 2002, Heinz Finance
completed the acquisition of Delimex Holdings, Inc., a leading maker of
frozen Mexican food products. Delimex is a 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 quesadillas, tamales and
rice bowls.
During the first quarter of Fiscal 2002, Heinz Finance completed the
acquisition of Borden Food Corporation's pasta sauce, dry bouillon and soup
business. Under this transaction, Heinz Finance acquired such brands as
Classico pasta sauces, Aunt Millie's pasta sauce, Mrs. Grass Recipe soups
and Wyler's bouillons and soups. Heinz Finance also made a 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.
Pro forma results of Heinz Finance, 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, Heinz Finance 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, Heinz Finance 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 nine months amounts include the effect of the change in
accounting for revenue recognition.
(8) RECENTLY ISSUED ACCOUNTING STANDARDS
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". In addition, during May 2000, the EITF issued new guidelines
entitled "Accounting for Certain Sales Incentives". Both of these issues
provide guidance primarily on income statement classification of
consideration from a vendor to a purchaser of the vendor's products,
including both customers and consumers. Generally, cash consideration is to
be classified as a reduction of revenue, unless specific criteria are met
regarding goods or services that the vendor may receive in return for this
consideration.
In the fourth quarter of Fiscal 2002, Heinz Finance will reclassify
promotional payments to its customers and the cost of consumer coupons and
other cash redemption offers from SG&A to net sales. Heinz Finance is
currently assessing the combined impact of both issues, however, we believe
that, based on historic information, sales could be reduced up to 7 to 8%.
SG&A will be correspondingly reduced such that net earnings will not be
affected.
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.
7
The provisions of SFAS Nos. 141 and 142 apply to all business combinations
after June 30, 2001. Heinz Finance has not fully assessed the potential
impact of the adoption of SFAS No. 142 which is effective for Heinz Finance
in Fiscal 2003. The reassessment of intangible assets, including the
ongoing impact of amortization, must be completed during the first quarter
of Fiscal 2003. The assignment of goodwill to reporting units, along with
completion of the first step of the transitional goodwill impairment tests,
must be completed during the first six months of Fiscal 2003.
In June 2001, the FASB approved SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses accounting for legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and the normal operation of
a long-lived asset, except for certain obligations of lessees. This
standard is effective for fiscal years beginning after June 15, 2002. Heinz
Finance does not expect that the adoption of this standard will have a
significant impact on the consolidated financial statements.
In October 2001, the FASB issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-lived Assets." SFAS No. 144 clarifies and
revises existing guidance on accounting for impairment of plant, property,
and equipment, amortized intangibles, and other long-lived assets not
specifically addressed in other accounting literature. This standard will
be effective for Heinz Finance beginning in Fiscal 2003. Heinz Finance does
not expect that the adoption of this standard will have a significant
impact on the consolidated financial statements.
(9) RELATED PARTY TRANSACTIONS
Employee Costs
Certain of Heinz's general and administrative expenses are allocated to
Heinz Finance. 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 Heinz Finance for these services were $87.8 million and
$7.9 million for the quarters ended January 30, 2002 and January 31, 2001,
respectively, and $252.6 million and $20.5 million for the nine months
ended January 30, 2002 and January 31, 2001, respectively. These costs are
recorded as cost of products sold and SG&A expense in the accompanying
consolidated and combined statements of income.
Heinz charges Heinz Finance 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 Heinz
Finance through Heinz's consolidated programs. Workers compensation, auto,
property, product liability and other insurance coverages are charged
directly based on Heinz Finance's loss experience. Amounts charged to Heinz
Finance for insurance costs were $13.1 million and $20.6 million for the
quarter ended January 30, 2002 and January 31, 2001, respectively, and
$45.8 million and $60.7 million for the nine months ended January 30, 2002
and January 31, 2001, respectively, and are recorded in SG&A expense in the
accompanying consolidated and combined statements of income.
Pension costs and postretirement costs are also charged to Heinz Finance
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 expense related to this arrangement,
included in the combined statements of income was $8.7 million for the
quarter ended January 31,
8
2001 and $9.3 million for the nine months ended January 31, 2001. The
interest rate charged to or received by the U.S. Group was 6.83% for the
nine months ended January 31, 2001.
Beginning in Fiscal 2002, Heinz Finance became the treasury center for cash
management and debt financing for all of Heinz's domestic operations
resulting in the $894.8 million of short-term notes receivable with related
parties on the January 30, 2002 condensed consolidated balance sheet. An
average interest rate of 3.21% was charged on these notes resulting in $6.9
million of interest income for the quarter ended January 30, 2002 and $27.5
million of interest income for the nine months ended January 30, 2002.
Product sales and purchases
Heinz Finance sells and purchases products and services to and from other
Heinz affiliates. The results of such transactions are the $187.4 million
and $75.4 million balances due from related parties as of January 30, 2002
and May 2, 2001, respectively, and the $229.9 million and $96.2 million
balances due to related parties as of January 30, 2002 and May 2, 2001,
respectively. Sales to related parties were $13.4 million and $16.1 million
for the quarter ended January 30, 2002 and January 31, 2001, respectively,
and $37.6 million and $50.3 million in the nine months ended January 30,
2002 and January 31, 2001, respectively, and purchases from related parties
were $93.7 million and $97.8 million for the quarter ended January 30, 2002
and January 31, 2001, respectively, and $258.7 million and $338.4 million
in the nine months ended January 30, 2002 and January 31, 2001,
respectively.
Other related party items
Heinz Finance sells undivided interests in certain accounts receivable to a
Heinz affiliate, Receivables Servicing Company ("RSC"). Heinz Finance sold
$619.2 million and $1,291.0 million of receivables net of discount expense
of $2.8 million and $9.4 million for the nine months ended January 30, 2002
and the year ended May 2, 2001, respectively, to RSC. As of January 30,
2002 and May 2, 2001, respectively, Heinz Finance had $-0- and $126.9
million of receivables sold to RSC. These sales were reflected as
reductions of trade accounts receivable. Heinz Finance's contract with RSC
terminated in December 2001.
Until the fourth quarter of Fiscal 2001, Heinz Finance had outstanding
notes receivable from Heinz affiliates which were 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
Heinz Finance related to these receivables was $33.0 million for the
quarter ended January 31, 2001 and $90.7 million for the nine months ended
January 31, 2001. In the fourth quarter of Fiscal 2001, these notes
receivable from related parties were exchanged by Heinz Finance 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 $30.8 million for the quarter ended
January 30, 2002 and $99.9 million for the first nine 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 January 30, 2002 and May 2, 2001.
Heinz Finance paid royalties of $54.4 million and $22.1 million for the
quarter ended January 30, 2002 and January 31, 2001 and $125.8 million and
$72.8 million for the nine months ended January 30, 2002 and January 31,
2001, 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 Heinz Finance in
exchange for common stock of Heinz Finance.
Heinz Finance received an administrative fee from Heinz for acting as the
agent in the sale of the retained inventory discussed in Note (1). This fee
was $0.2 million for the quarter ended
9
January 30, 2002 and $10.2 million for the nine months ended January 30,
2002, which is recorded as income in SG&A expense in the accompanying
consolidated statements of income.
(10) On September 6, 2001, Heinz Finance, 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 Heinz
Finance's commercial paper program, replaced the $2.30 billion credit
agreement which expired on September 6, 2001. As of January 30, 2002, $1.38
billion 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, Heinz Finance 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, Heinz Finance 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) LONG-TERM DEBT
The amount of long-term debt that matures in each of the four years
following 2002 is: $450.1 million in 2003, $0.5 million in 2004, $259.0
million in 2005, and $0.5 million in 2006.
<Table>
<Caption>
Range of Maturity January 30, May 2,
(dollars in thousands) Interest (Fiscal Year) 2002 2001
- ---------------------- ------------- ------------- ----------- -------
Commercial paper............... Variable $1,380,527 $ --
Revenue bonds.................. 3.25 - 7.12% 2002-2020 1,810,352 12,392
Promissory notes............... 6.18 - 7.002% 2003-2028 1,507,210 5,081
Other.......................... 18,982 36,292
---------- -------
Total long-term debt........... 4,717,071 53,765
Less portion due within one
year......................... 501,576 29,833
---------- -------
$4,215,495 $23,932
========== =======
</Table>
(12) COMPREHENSIVE INCOME
<Table>
<Caption>
Third Quarter Nine Months
Ended Ended
------------- -----------
January 30, January 30,
2002 2002
(in thousands) FY 2002 FY 2002
- -------------- ------------- -----------
Net income.............................................. $28,631 $60,498
Deferred gains/(losses) on derivatives:
Net change from periodic revaluations................. (935) 51
Net amount reclassified to earnings................... (48) (24)
------- -------
Comprehensive income.................................... $27,648 $60,525
======= =======
</Table>
(13) FINANCIAL INSTRUMENTS
Heinz Finance utilizes certain financial instruments to manage its
commodity price and interest rate exposures.
COMMODITY PRICE HEDGING: Heinz Finance 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
10
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.
INTEREST RATE HEDGING: Heinz Finance 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.
During Fiscal 2002, Heinz Finance entered into interest rate swap
agreements to convert the interest rate exposure on certain of Heinz
Finance's existing long-term debt from fixed to floating. The weighted
average fixed rate of the associated debt is 6.433%. The aggregate notional
amount of these swaps is $1.3 billion and their average duration is 12
years.
HEDGE INEFFECTIVENESS: During the nine months ended January 30, 2002, hedge
ineffectiveness related to cash flow hedges was immaterial.
DEFERRED HEDGING GAINS AND LOSSES: As of January 30, 2002, Heinz Finance is
hedging forecasted transactions for periods not exceeding 12 months, and
expects $0.2 million of net deferred loss reported in accumulated other
comprehensive income to be reclassified to earnings within that time frame.
(14) SUBSEQUENT EVENT
On March 7, 2002, Heinz Finance issued $700 million of 6.00% Guaranteed
Notes due March 15, 2012 and $550 million of 6.75% Guaranteed Notes due
March 15, 2032, which are guaranteed by Heinz. The proceeds will be used to
retire commercial paper borrowings. Heinz Finance converted $750 million of
the new debt from fixed to floating through interest rate swap agreements.
11