EXHIBIT 99
NEW RELEASE
(HEINZ LOGO)
WORLD HEADQUARTERS
"THE GOOD FOOD COMPANY"
FOR RELEASE UPON RECEIPT
HEINZ REPORTS FULL-YEAR FISCAL 2005 EPS FROM CONTINUING OPERATIONS OF $2.34, UP
6.4% (EXCLUDING SPECIAL ITEMS), AND OPERATING FREE CASH FLOW OF $920 MILLION
o HEINZ ANNOUNCES STRATEGIC REVIEW OF KEY BUSINESSES AND FORMATION OF OFFICE
OF THE CHAIRMAN.
o FOR THE 4TH QUARTER, HEINZ'S REPORTED EPS WAS $0.58, UP 5.5% FROM $0.55
LAST YEAR. EXCLUDING SPECIAL ITEMS, EPS FROM CONTINUING OPERATIONS WAS
$0.63 VERSUS $0.58 IN THE YEAR-AGO 4TH QUARTER, AN INCREASE OF 8.6%.
o SALES INCREASED 5% AND OPERATING INCOME, EXCLUDING SPECIAL ITEMS, INCREASED
9.4% FOR THE 4TH QUARTER, DRIVEN BY STRONG PERFORMANCES IN THE NORTH
AMERICAN CONSUMER PRODUCTS AND U.S. FOODSERVICE SEGMENTS.
o FOR THE FULL FISCAL YEAR, HEINZ REPORTED EPS WAS $2.13 VERSUS $2.27 LAST
YEAR. FROM CONTINUING OPERATIONS, EPS WAS $2.08 VERSUS $2.20 IN THE PRIOR
YEAR.
PITTSBURGH - MAY 26, 2005 - H.J. Heinz Company (NYSE: HNZ) today reported net
income of $206.5 million, or $0.58 per diluted share, for its fourth quarter
ended April 27, 2005. This represents a 5.5% increase versus the fourth quarter
of Fiscal 2004 on a fully reported, total company basis. The fourth quarter
diluted earnings per share from continuing operations, excluding special items
of $0.63, is an 8.6% increase over earnings of $0.58 per share in the prior
year.
For the full year, EPS from continuing operations, excluding special
items was $2.34, up 6.4% and in-line with previous guidance. The special items
in fiscal year 2005 are comprised of non-cash asset impairment charges of $27.0
million pre-tax ($18.0 million after-tax) recorded in the fourth quarter related
to the anticipated disposition of the HAK(R) vegetable product line in Northern
Europe early in Fiscal 2006 and $73.8 million recorded in the third quarter
primarily related to Heinz's investment in The Hain Celestial Group, Inc.
The company continued to generate impressive Operating Free Cash Flow,
posting $545 million in the fourth quarter and $920 million for the fiscal year.
The Cash Conversion Cycle for the fiscal year improved by six days versus the
prior year. In addition, the company continued to reduce net debt (total debt
less cash and cash equivalents, short-term investments and the value of interest
rate swaps), with a reduction of $244 million in Fiscal 2005 versus 2004.
H.J. HEINZ COMPANY, P.O. BOX 57, PITTSBURGH 15230-0057
2
Commenting on the company's performance, Heinz's Chairman, President
and CEO William R. Johnson said: "I am pleased to report that we achieved many
of our critical objectives in Fiscal 2005 and, most importantly, enhanced the
fundamentals of the company by continuing to strengthen our brands, improve our
management team and streamline our organization. We achieved strong results in
sales, volume, cash flow, and EPS in Fiscal 2005. We are particularly pleased
with our volume and sales momentum, especially in North America and the Pacific,
and expect this trend to continue into Fiscal 2006, given the healthy
consumption data that we are seeing in our core businesses. Sales of our top 15
power brands grew by a robust 7.1% and finished the year even stronger with 8.4%
growth in the fourth quarter. We continue to drive very strong Operating Free
Cash Flow through significant reductions in the cash conversion cycle and
disciplined capital processes. Our outstanding free cash flow was also
accompanied by improved customer service and supply chain efficiencies."
Mr. Johnson added: "We have initiated a strategic review of our
international portfolio and our global organizational structure. This strategic
review follows the successful transformation of our North American businesses,
and we expect, as a result, that Heinz will become a faster-growing, even more
focused company. We are going to place our focus and resources on our big brands
with number-one and number-two market positions and in four large developing
markets."
FOURTH QUARTER FISCAL 2005 RESULTS
(Comments on the fourth quarter that follow refer to results from continuing
operations, excluding special items. See attached tables for further details,
including reconciliation of non-GAAP financial measures. Management believes
that the adjusted GAAP measures provide additional clarity in understanding the
trends of the business as they provide management with a view of the business
excluding special items.)
Overall, Heinz's fourth-quarter sales increased 5.0%, reflecting a 1.5%
volume improvement and the favorable impact of foreign exchange. Volume was
primarily driven by the success of the company's U.S. consumer products and
foodservice businesses, including Ore-Ida(R) frozen potatoes, Delimex(R), Bagel
Bites(R), TGI Friday's(R) frozen snacks, Heinz(R) ketchup and frozen soup, as
well as the Latin America, Australia and New Zealand businesses behind a number
of new product launches. These improvements were partially offset by volume
declines in Heinz Europe.
Net pricing increased sales 0.6% as pricing improvements in North
American Consumer Products and the U.K. were partially offset by lower pricing
in the Italian infant nutrition and Tegel(R) poultry businesses. The price
declines in the Italian infant nutrition business include an additional $13.0
million trade spending charge related to prior years.
3
Gross profit increased 6.6%, with a 50-basis-point improvement in gross
profit margin, as increased commodity and fuel costs were more than offset by
favorable volume, mix and pricing. Operating income increased 9.4%. EPS
increased 8.6% for the fourth quarter, reflecting the operating income
improvement along with a reduced effective tax rate offset partially by
increased interest costs and currency losses. The company's effective tax rate,
excluding special items, was 27.6% for the fourth quarter of Fiscal 2005 versus
32.7% in the prior year.
FISCAL 2006 OUTLOOK
Looking forward to Fiscal 2006, Heinz is targeting 4-6% sales growth
and 7-10% growth in operating income. EPS is expected to be in the range of
$2.35 to $2.45, as anticipated strong operating results are expected to be
partially offset by increases in interest costs and a higher tax rate. The
company has set a target for Operating Free Cash Flow of $900 million to $1
billion.
STRATEGIC REVIEW
Heinz has announced its intentions to sell the HAK(R) line of prepared
vegetables in Northern Europe and has commenced a strategic review of its
seafood and frozen businesses in Europe and its Tegel(R) poultry businesses in
New Zealand. This is in line with the company's strategic focus on its core
categories: Ketchup, Condiments and Sauces; Foodservice; Infant Nutrition; and
Quick Serve Meals and Snacks.
Some of the brands involved in the strategic review will include: John
West(R), Weight Watchers from Heinz(R), Linda McCartney(R), Aunt Bessie's(R) in
the United Kingdom; Petit Navire(R) and Parmentier(R) canned fish in France;
Tegel(R) poultry products in New Zealand; Marie Elisabeth(R) seafood in Portugal
and Mareblu(R) seafood in Italy.
OFFICE OF THE CHAIRMAN
Heinz has announced the formation of a new Office of the Chairman to
provide a stronger focus on growth and innovation and to better leverage the
global power of Heinz.
The Office of the Chairman will be comprised of the four senior-most
executives responsible for operations globally, and the heads of three global
corporate functions. All will be based in Pittsburgh. The members, in addition
to William R. Johnson, are:
o Jeffrey P. Berger - Executive Vice President for Global Foodservice;
o Joseph Jimenez - Executive Vice President for Europe;
o David C. Moran - Senior Vice President and President for Consumer
Products;
o The Executive Vice President for Asia/Pacific, to be named later;
o Arthur B. Winkleblack, Executive Vice President and Chief Financial
Officer;
o Theodore N. Bobby, Senior Vice President and General Counsel;
o D. Edward I. Smyth, Chief Administrative Officer and Senior Vice
President of Corporate and Government Affairs.
4
Reporting to the Office of the Chairman will be a Presidents Council,
comprised of the heads of the company's largest business units.
The Office of the Chairman and the Presidents Council will enhance
global communications and coordination, and facilitate a process to simplify and
de-layer regional overhead.
FULL-YEAR FISCAL 2005 RESULTS
Heinz reported net income for the year of $752.7 million, or $2.13 per
diluted share, a decrease of 6.2% versus Fiscal 2004. Current year and prior
year results include after-tax earnings from discontinued operations of $0.05
per share and $0.07 per share, respectively. EPS from continuing operations of
$2.08 per share represents a 5.5% decrease versus the earnings of $2.20 per
diluted share in the prior year. Excluding special items, the current year fully
diluted EPS was $2.34 per share, a 6.4% increase over earnings of $2.20 per
share last year.
(Comments on the fiscal year that follow refer to results from continuing
operations, excluding special items. See attached tables for further details,
including reconciliation of non-GAAP financial measures. Management believes
that the adjusted GAAP measures provide additional clarity in understanding the
trends of the business as they provide management with a view of the business
excluding special items.)
Sales for Fiscal 2005 increased 5.9%, to $8.91 billion. Sales were
favorably impacted by volume growth of 1.9%, at the top end of the company's
range, and foreign exchange translation rates of 3.9%. The favorable volume
impact was due primarily to strong increases in the North American Consumer
Products and U.S. Foodservice segments. Lower pricing decreased sales by 0.2%,
principally due to the restage of Heinz's Italian infant nutrition business, a
$34.1 million charge for prior-year trade spending for the Italian infant
nutrition business, and market price pressures impacting the Tegel(R) poultry
business in New Zealand and the trade in Northern Europe. These price decreases
were partially offset by favorable pricing in the North American Consumer
Products and U.S. Foodservice segments and in U.K. convenience meals.
Acquisitions, net of divestitures, increased sales by 0.3%.
Gross profit increased 4.6%, primarily a result of higher volume and
favorable foreign exchange. The gross profit margin declined by 50 basis-points,
due to increased commodity and fuel costs, lower pricing as discussed above, and
increased production costs in the European seafood business, partially offset by
cost improvements in the U.S. consumer products and foodservice businesses.
Operating income increased 0.7%, as the increase in gross profit was offset by
increased SG&A expenses in the current year. The increase in SG&A is primarily
due to exchange translation rates, higher fuel costs, employee-related and
litigation expenses and professional fees related to various projects across the
company, including costs associated with compliance with Section 404 of
Sarbanes-Oxley.
EPS increased 6.4% in Fiscal 2005, as the operating income improvement
along with the reduced effective tax rate were partially offset by increased
interest costs. The company's effective tax rate, excluding special items, was
28.6% for Fiscal 2005 versus 33.0% in the prior year.
5
HIGHLIGHTS FOR FISCAL YEAR 2005
NORTH AMERICAN CONSUMER PRODUCTS
Sales of the North American Consumer Products segment increased 9.3%.
Sales volume increased 5.7% due to significant growth in Ore-Ida(R) frozen
potatoes and SmartOnes(R) frozen entrees. Strong performance in Boston Market
HomeStyle(R) meals and in the frozen snack brands of Delimex(R), Bagel Bites(R)
and TGI Friday's(R) also contributed to the volume increase. Pricing increased
sales 2.7%, largely due to reduced trade spending and decreased product
placement fees on SmartOnes(R) frozen entrees and Ore-Ida(R) potatoes, as well
as increases related to Classico(R) pasta sauces and Heinz(R) ketchup.
Operating income increased 10.6%, despite higher commodity and fuel
costs, driven by favorable sales volume and higher net pricing.
HEINZ U.S. FOODSERVICE
Sales of the U.S. Foodservice segment increased 5.3%. Sales volume
increased sales 2.9%, due to growth in Heinz(R) ketchup, strong performance on
Truesoups(R) frozen soup and growth in custom recipe tomato products. Higher
pricing increased sales by 1.5%.
Operating income increased 4.5%, primarily due to favorable volume and
pricing, partly offset by increases in commodity costs and increased S&D, which
reflects a substantial increase in fuel and trucking costs.
EUROPE
Heinz Europe's sales increased 4.9%. Favorable exchange translation
rates increased sales by 7.5%. Volume was essentially flat, as increases in
Heinz(R) ketchup, resulting from the successful introduction of the Top Down
bottle, and increases in Heinz(R) ready-to-serve soups were offset by declines
in European seafood, frozen entrees in the U.K. and jarred vegetables in
Northern Europe. Lower pricing decreased sales 1.8%, primarily due to the
restage of the Italian infant nutrition business, the trade spending charge in
the Italian infant nutrition business and increased promotional activity in the
Netherlands.
Operating income decreased 6.1%, due to lower pricing as discussed
above, increased commodity and production costs, particularly in the European
seafood and the U.K. businesses, and increased G&A. The increase in G&A is
largely due to increased pension costs, litigation costs and professional fees
for various projects across Europe.
6
ASIA PACIFIC
Sales in Asia/Pacific increased 3.9%. Favorable exchange translation
rates increased sales by 4.4%. Volume increased sales 0.5%, chiefly due to new
product introductions in the frozen foods and convenience meals categories in
the Australia and New Zealand businesses. These were partially offset by the
discontinuation of an Indonesian energy drink, declines in Tegel(R) poultry and
sales declines in China. Lower pricing reduced sales 2.0% primarily due to
market price pressures on Tegel(R) poultry. The acquisition of a controlling
interest in Shanghai LongFong Foods, a maker of popular frozen Chinese snacks
and desserts, increased sales 2.3%. The divestiture of a Korean oils and fats
product line reduced sales 1.3%.
Operating income decreased 7.3%, due primarily to reduced pricing in
Tegel.
MEETING WITH SECURITIES ANALYSTS - INTERNET BROADCASTS
Heinz will host a conference call with security analysts today at 8:30
a.m. (Eastern Time). The call will be webcast live on www.heinz.com and will be
archived for playback beginning at 2 p.m. The call is available live via
conference call at 1-866-215-1938 (listen only). It will be hosted by William R.
Johnson, Chairman, President & CEO; Arthur B. Winkleblack, Executive Vice
President and Chief Financial Officer; David C. Moran - Senior Vice President
and President for Consumer Products; and Jack Runkel, Vice President - Investor
Relations.
# #
SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS:
This press release contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect management's view of future
events and financial performance. These statements are subject to risks,
uncertainties, assumptions and other important factors, many of which may be
beyond Heinz's control and could cause actual results to differ materially from
those expressed or implied in these forward-looking statements. Uncertainties
contained in such statements include, but are not limited to, sales, earnings,
and volume growth, general economic, political, and industry conditions,
competitive conditions, which affect, among other things, customer preferences
and the pricing of products, production, energy and raw material costs, the need
for product recalls, the ability to maintain favorable supplier relationships,
achieving cost savings programs and gross margins, currency valuations and
interest rate fluctuations, the ability to execute and the success of
acquisitions, joint ventures, divestitures and other strategic initiatives, new
product and packaging innovations, product mix, the effectiveness of
advertising, marketing, and promotional programs, supply chain efficiency and
cash flow initiatives, the impact of e-commerce and e-procurement, risks
inherent in litigation (including the Remedia-related claims in Israel and
rights against third parties) and international operations, particularly the
performance of business in hyperinflationary environments, changes in estimates
in critical
7
accounting judgments and other laws and regulations, including tax laws, the
success of tax-planning strategies, the possibility of increased pension expense
and contributions and other people-related costs, the possibility of an
impairment in Heinz's investments, and other factors described in "Cautionary
Statement Relevant to Forward-Looking Information" in the Company's Form 10-K
for the fiscal year ended April 28, 2004, and the Company's subsequent filings
with the Securities and Exchange Commission. The forward-looking statements are
and will be based on management's then current views and assumptions regarding
future events and speak only as of their dates. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required
by the securities laws.
# #
ABOUT HEINZ: H.J. Heinz Company, offering "Good Food Every Day(TM)," is one of
the world's leading marketers and producers of branded foods in ketchup,
condiments, sauces, meals, soups, seafood, snacks, and infant foods. Heinz
satisfies hungry consumers in every outlet, from supermarkets to restaurants to
convenience stores and kiosks. Heinz is a global family of leading brands,
including Heinz(R) Ketchup, Sauces, Soups, Beans, Pasta and Infant Foods
(representing nearly one-third of total sales or close to $3 billion),
Ore-Ida(R) french fries and roasted potatoes, Boston Market(R) and SmartOnes(R)
meals, and Plasmon(R) baby food. Heinz's 50 companies have number-one or
number-two brands in 200 countries, showcased by Heinz(R) Ketchup, the World's
Favorite Ketchup(TM). Information on Heinz is available at www.heinz.com/news.
# # #
CONTACT:
Media:
-----
Ted Smyth, 412-456-5780;
Debbie Foster, 412-456-5778;
OR
Investors:
---------
Jack Runkel, 412-456-6034.
8
H. J. Heinz Company and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except per Share Amounts)
<Table>
<Caption>
Fourth Quarter Ended Fiscal Year Ended
------------------------------- -------------------------------
April 27, April 28, April 27, April 28,
2005 2004 2005 2004
FY2005 FY2004 FY2005 FY2004
------------- ------------- ------------- -------------
Sales $ 2,448,492 $ 2,331,372 $ 8,912,297 $ 8,414,538
Cost of products sold 1,600,801 1,510,656 5,705,926 5,326,281
------------- ------------- ------------- -------------
Gross profit 847,691 820,716 3,206,371 3,088,257
Selling, general and
administrative
expenses 505,519 494,937 1,851,529 1,709,000
------------- ------------- ------------- -------------
Operating income 342,172 325,779 1,354,842 1,379,257
Interest income 7,598 7,411 27,776 23,312
Interest expense 61,605 51,572 232,431 211,826
Asset impairment
charges for cost and
equity investments -- -- 73,842 --
Other (expense)/
income, net (6,900) 12,827 (17,731) (22,192)
------------- ------------- ------------- -------------
Income from continuing
operations before
income taxes 281,265 294,445 1,058,614 1,168,551
Provision for income
taxes 76,078 96,061 322,792 389,618
------------- ------------- ------------- -------------
Income from continuing
operations 205,187 198,384 735,822 778,933
Income/(loss) from
discontinued
operations, net of
tax 1,300 (1,860) 16,877 25,340
------------- ------------- ------------- -------------
Net income $ 206,487 $ 196,524 $ 752,699 $ 804,273
============= ============= ============= =============
Income per common
share - Diluted
Continuing
operations $ 0.58 $ 0.56 $ 2.08 $ 2.20
Discontinued
operations 0.00 (0.01) 0.05 0.07
------------- ------------- ------------- -------------
Net Income $ 0.58 $ 0.55 $ 2.13 $ 2.27
============= ============= ============= =============
</Table>
9
<Table>
Average common shares
outstanding - diluted 353,450 354,372 353,450 354,372
============= ============= ============= =============
Income per common
share - Basic
Continuing
operations $ 0.59 $ 0.56 $ 2.10 $ 2.21
Discontinued
operations 0.00 (0.01) 0.05 0.07
------------- ------------- ------------- -------------
Net Income $ 0.59 $ 0.56 $ 2.15 $ 2.29
============= ============= ============= =============
Average common shares
outstanding - basic 350,042 351,810 350,042 351,810
============= ============= ============= =============
Cash dividends per
share $ 0.285 $ 0.27 $ 1.14 $ 1.08
============= ============= ============= =============
</Table>
Note: Fiscal 2005 and 2004 include special items.
(Totals may not add due to rounding)
10
H. J. Heinz Company and Subsidiaries
Segment Data
<Table>
<Caption>
Fourth Quarter Ended Fiscal Year Ended
------------------------------- -------------------------------
April 27, April 28, April 27, April 28,
2005 2004 2005 2004
FY2005 FY2004 FY2005 FY2004
------------- ------------- ------------- -------------
Net external sales:
North American
Consumer Products $ 623,064 $ 570,524 $ 2,256,862 $ 2,064,937
U.S. Foodservice 405,283 371,648 1,503,818 1,428,641
Europe 959,032 950,482 3,447,299 3,287,737
Asia/Pacific 344,751 331,895 1,307,675 1,258,556
Other Operating
Entities 116,362 106,823 396,643 374,667
------------- ------------- ------------- -------------
Consolidated Totals $ 2,448,492 $ 2,331,372 $ 8,912,297 $ 8,414,538
============= ============= ============= =============
Intersegment revenues:
North American
Consumer Products $ 13,278 $ 12,950 $ 51,742 $ 55,379
U.S. Foodservice 5,839 4,932 22,550 15,310
Europe 3,707 3,292 17,328 13,644
Asia/Pacific 985 753 3,420 2,911
Other Operating
Entities 379 461 1,571 2,188
Non-Operating (24,188) (22,388) (96,611) (89,432)
------------- ------------- ------------- -------------
Consolidated Totals $ -- $ -- $ -- $ --
============= ============= ============= =============
Operating income
(loss):
North American
Consumer Products $ 136,023 $ 114,864 $ 530,444 $ 474,129
U.S. Foodservice 58,102 49,821 224,784 211,129
Europe 142,497 160,027 550,585 639,157
Asia/Pacific 27,868 34,161 135,588 146,190
Other Operating
Entities 9,664 7,750 34,739 29,934
Non-Operating (31,982) (40,844) (121,298) (121,282)
------------- ------------- ------------- -------------
Consolidated Totals $ 342,172 $ 325,779 $ 1,354,842 $ 1,379,257
============= ============= ============= =============
</Table>
11
<Table>
Operating income (loss)
excluding special items:
North American
Consumer Products $ 136,023 $ 118,692 $ 530,444 $ 479,453
U.S. Foodservice 58,102 51,221 224,784 215,029
Europe 169,473 161,072 577,561 615,403
Asia/Pacific 27,868 34,161 135,588 146,190
Other Operating
Entities 9,664 8,750 34,739 30,934
Non-Operating (31,982) (36,444) (121,298) (115,424)
------------- ------------- ------------- -------------
Consolidated Totals $ 369,148 $ 337,452 $ 1,381,818 $ 1,371,585
============= ============= ============= =============
</Table>
The company's revenues are generated via the sale of products in the following
categories:
<Table>
Ketchup, Condiments
and Sauces $ 877,580 $ 818,465 $ 3,234,229 $ 3,047,662
Frozen Foods 610,306 545,148 2,209,586 1,947,777
Convenience Meals 558,953 525,260 2,005,468 1,874,272
Infant Feeding 253,739 278,700 855,558 908,469
Other 147,914 163,799 607,456 636,358
------------- ------------- ------------- -------------
Total $ 2,448,492 $ 2,331,372 $ 8,912,297 $ 8,414,538
============= ============= ============= =============
</Table>
12
H.J. Heinz Company and Subsidiaries
Special Items - Fourth Quarters Ended April 27, 2005 and
April 28, 2004
The company reports its financial results in accordance with generally accepted
accounting principles ("GAAP"). However, management believes that certain
non-GAAP performance measures and ratios, used in managing the business, may
provide users of this financial information with additional meaningful
comparisons between current results and results in prior periods. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative
for, the company's reported results prepared in accordance with GAAP. The
following table provides a reconciliation of the company's reported results from
continuing operations to the results excluding special items for the fourth
quarters ended April 27, 2005 and April 28, 2004:
<Table>
<Caption>
Fourth Quarter Ended April 27, 2005
----------------------------------------------------------------------------
Net Gross Operating Per
Sales Profit Income Income Share
------------ ------------ ------------ ------------ ------------
Reported results from
continuing operations $ 2,448.5 $ 847.7 $ 342.2 $ 205.2 $ 0.58
Asset impairment charge
for HAK vegetable
product line -- 27.0 27.0 18.0 0.05
------------ ------------ ------------ ------------ ------------
Results from continuing
operations excluding
special items $ 2,448.5 $ 874.7 $ 369.1 $ 223.2 $ 0.63
============ ============ ============ ============ ============
<Caption>
Fourth Quarter Ended April 28, 2004
----------------------------------------------------------------------------
Net Gross Operating Per
Sales Profit Income Income Share
------------ ------------ ------------ ------------ ------------
Reported results from
continuing operations $ 2,331.4 $ 820.7 $ 325.8 $ 198.4 $ 0.56
Reorganization costs -- -- 11.7 7.6 0.02
------------ ------------ ------------ ------------ ------------
Results from continuing
operations excluding
special items $ 2,331.4 $ 820.7 $ 337.5 $ 205.9 $ 0.58
============ ============ ============ ============ ============
</Table>
(Note: Totals may not add due to rounding.)
13
H.J. Heinz Company and Subsidiaries
Special Items - Fiscal Years Ended April 27, 2005 and April 28, 2004
The company reports its financial results in accordance with generally accepted
accounting principles ("GAAP"). However, management believes that certain
non-GAAP performance measures and ratios, used in managing the business, may
provide users of this financial information with additional meaningful
comparisons between current results and results in prior periods. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative
for, the company's reported results prepared in accordance with GAAP. The
following table provides a reconciliation of the company's reported results from
continuing operations to the results excluding special items for the fiscal
years ended April 27, 2005 and April 28, 2004:
<Table>
<Caption>
Fiscal year Ended April 27, 2005
---------------------------------------------------------------------------------
Net Gross Operating Per
Sales Profit Income Income Share
------------- ------------- ------------- ------------- -------------
Reported results from
continuing operations $ 8,912.3 $ 3,206.4 $ 1,354.8 $ 735.8 $ 2.08
Asset impairment charges
for cost and
equity investments -- -- -- 73.8 0.21
Asset impairment charge
for HAK vegetable
product line -- 27.0 27.0 18.0 0.05
------------- ------------- ------------- ------------- -------------
Results from continuing
operations excluding
special items $ 8,912.3 $ 3,233.3 $ 1,381.8 $ 827.6 $ 2.34
============= ============= ============= ============= =============
<Caption>
Fiscal Year Ended April 28, 2004
-----------------------------------------------------------------------------------
Net Gross Operating Per
Sales Profit Income Income Share
------------- ------------- ------------- ------------- -------------
Reported results from
continuing operations $ 8,414.5 $ 3,088.3 $ 1,379.3 $ 778.9 $ 2.20
Write-down of U.K. pizza
crust assets -- 4.0 4.0 2.8 0.01
Reorganization costs -- -- 17.1 11.0 0.03
Gain on sale of the
Northern European
bakery business -- -- (28.8) (13.3) (0.04)
------------- ------------- ------------- ------------- -------------
Results from continuing
operations
excluding special items $ 8,414.5 $ 3,092.3 $ 1,371.6 $ 779.5 $ 2.20
============= ============= ============= ============= =============
</Table>
(Note: Totals may not add due to rounding.)
14
H.J. Heinz Company and Subsidiaries
Non-GAAP Performance Ratios
The company reports its financial results in accordance with generally accepted
accounting principles ("GAAP"). However, management believes that certain
non-GAAP performance measures and ratios, used in managing the business, may
provide users of this financial information with additional meaningful
comparisons between current results and results in prior periods. Non-GAAP
financial measures should be viewed in addition to, and not as an alternative
for, the company's reported results prepared in accordance with GAAP. The
following table provides the calculation of those non-GAAP performance ratios
discussed in the company's press release dated May 26, 2005:
<Table>
<Caption>
Net Debt Calculation
(amounts in thousands) April 27, April 28,
2005 2004
FY 2005 FY 2004
------------- -------------
Short-term debt $ 28,471 $ 11,434
Long-term debt,
including current
portion 4,666,782 4,962,996
------------- -------------
Total debt 4,695,253 4,974,430
Less:
Value of
interest rate
swaps (186,086) (125,324)
Cash and cash
equivalents (1,083,749) (1,140,039)
Short-term
investments -- (40,000)
------------- -------------
Net Debt $ 3,425,418 $ 3,669,067
============= =============
</Table>
<Table>
<Caption>
Operating Free Cash
Flow Calculation
(amounts in thousands) Fourth Quarter Ended Fiscal Year Ended
------------------------------- -------------------------------
April 27, April 28, April 27, April 28,
2005 2004 2005 2004
FY 2005 FY 2004 FY 2005 FY 2004
------------- ------------- ------------- -------------
Cash provided by
operating
activities $ 654,647 $ 431,954 $ 1,160,793 $ 1,249,007
Capital expenditures (109,647) (112,144) (240,671) (231,961)
------------- ------------- ------------- -------------
Operating Free
Cash Flow $ 545,000 $ 319,810 $ 920,122 $ 1,017,046
============= ============= ============= =============
</Table>