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Heinz Achieves Fourth-Quarter Sales Growth of 7.6% and Substantially Completes Portfolio Realignment; Fourth-Quarter Operating Income Rose 6.3%, Excluding Special Charges

Posted on: Thursday, 1 June 2006, 09:00 CDT

H.J. Heinz Company (NYSE:HNZ):

Fourth Quarter EPS of $0.54 from Continuing Operations, Excluding

Special Charges, Exceeded Expectations;

Separate Press Release Issued on Superior Value and Growth Plan

H.J. Heinz Company (NYSE:HNZ) today reported solid financial results for the fourth quarter and fiscal year ended May 3, 2006, with growth in sales and operating income.

Commenting on the Company's performance in Fiscal Year 2006, Heinz Chairman, President and CEO William R. Johnson said: "In Fiscal Year 2006, Heinz generated strong sales growth, operating profit and cash flow. Our achievements in the fourth quarter of FY 2006 included sales growth of 7.6%, led by double-digit growth in Smart Ones(R) nutritional meals, Classico(R) premium pasta sauces and Ore-Ida(R) potatoes, and a 6.3% increase in operating income, excluding special charges, reflecting strong volume across all segments and recent acquisitions."

Mr. Johnson continued, "We have good momentum going into Fiscal Year 2007 as we execute our plan to deliver superior value and growth." (See separate Heinz news release today on Superior Value and Growth Plan or visit www.heinzsuperiorvalue.com).

Reconciliations for all non-GAAP financial measures are set forth in the attached tables.

FOURTH-QUARTER SUMMARY

-- For the fourth quarter of FY 2006, EPS for continuing

operations, excluding special items, was $0.54 versus $0.59 in

the prior year, exceeding previous estimates. The results in

FY 2006 reflected increased interest costs and a substantially

higher quarterly tax rate compared to last year.

-- Net income for the fourth quarter, on a total company, GAAP

basis, was $167.9 million, or $0.50 per diluted share, versus

$206.5 million, or $0.59 per diluted share, last year. Net

income reflected the impact of special items including a

write-down of the company's Zimbabwe operations and a gain

related to the sales of certain businesses (see below).

-- Fourth-quarter sales increased 7.6% (10.7% on a constant

currency basis) to $2.4 billion. Sales of Heinz's top 10

brands in constant currency grew 7.9%, led by double-digit

growth in Smart Ones(R), Classico(R) and Ore-Ida(R) brands.

Sales in Australia rose strongly on new product introductions.

-- Overall, volume/mix increased 7.8% with every operating

segment posting strong growth, aided by an extra week in the

fourth quarter.

-- Acquisitions, net of divestitures increased sales by 3.4%,

while unfavorable exchange reduced sales by 3.1%.

-- Special items in the fourth quarter reduced total earnings by

a total of $0.05 per share, and included a net gain of $0.48

per share in discontinued operations resulting from the sale

of non-core businesses.

-- During the fourth quarter, Heinz completed the sales of its

European Seafood business, its Tegel(R) poultry business in

New Zealand and several other smaller non-core businesses.

Heinz also received final regulatory clearance for its

acquisition of the HP Foods Group, which strengthened the

company's core product line in sauces, including Lea &

Perrins(R) Worcestershire sauce.

-- Operating Free Cash Flow (cash flow from operations less

capital expenditures) for the quarter was a strong $492

million which includes the use of approximately $45 million

for special items related to strategic initiatives.

Special Items

Special items in the fourth quarter for downsizing, integration, separation and preparation for sale of assets totaled $58.7 million pre-tax in continuing operations. Additionally, the net loss on dispositions and impairments in anticipation of potential asset sales was $174.1 million pre-tax for continuing operations and relates primarily to the write-down of the company's operations in Zimbabwe. The decision to write down the Zimbabwe investment relates to management's determination that this investment is not a core business and as a consequence the company will explore strategic options to exit this business. Management's determination is based on a current evaluation of political and economic conditions existing in Zimbabwe and the ability for the company to recover its cost in this investment. This evaluation considered the continued economic turmoil, further instability in the local currency and the uncertainty regarding the ability to source raw material in the future. A pretax gain of $209.1 million was recorded in discontinued operations primarily related to the sales of European Seafood and the Tegel poultry business.

Excluding special items, EPS for the fourth quarter from continuing operations, although ahead of market estimates and projections established by the company last September, decreased from FY2005 by $0.05 to $0.54 due to increased interest costs and a significantly higher quarterly tax rate. However, including special items, net income from continuing operations and EPS were completely offset by the special charges, most notably by the Zimbabwe write down.

FULL YEAR SUMMARY

-- Total sales 6.7% (8.2% on a constant currency basis) to $8.6

billion. Heinz's top 10 brands, in constant currency, grew

4.5% led by double-digit growth in the Smart Ones(R),

Classico(R) and TGIF(R) brands.

-- Increased volume/mix 3.8% with every operating segment

contributing to the increase.

-- Increased operating income, excluding special items, by 3.2%

over prior year despite significant cost increases for fuel

and commodities.

-- Improved Cash Conversion Cycle an additional 2 days, to an

historic low of 56 days.

-- Generated strong operating free cash flow of $844 million,

despite spending approximately $75 million for special items

related to strategic initiatives.

-- Completed the sale of 10 non-core assets resulting in cash

proceeds of approximately $857 million.

-- Repatriated approximately $1.3 billion in foreign dividends,

aided by the American Jobs Creation Act.

Net income, on a total company, GAAP basis, was $645.6 million, or $1.89 per diluted share, versus $752.7 million, or $2.13 per diluted share, last year.

Volume performance was strong in North America, Australia and in the Italian infant feeding business, partially offset by softness in frozen food category in the U.K. Acquisitions, net of divestitures increased sales another 4.4%. These increases were partially offset by an unfavorable foreign exchange impact of 1.5%.

Operating income, excluding special items, increased 3.2%, driven by strong volume and recent acquisitions offset somewhat by unfavorable foreign exchange rates.

EPS from continuing operations decreased $0.66 from the prior year. Excluding special items, EPS decreased by $0.11 to $2.10 due to increased interest costs and a higher tax rate despite the increase in operating income excluding special items.

Special items for the full year for downsizing, integration, and separation totaled $146.7 million pre-tax in continuing operations and $11.8 million pre-tax in discontinued operations. Additionally, the net loss on dispositions and impairments in anticipation of potential sales was $206.5 million pre-tax for continuing operations and relates mainly to the impairment of the company's operations in Zimbabwe and losses on the exit of several small, non-core product lines and businesses. A pretax gain of $209.1 million was recorded in discontinued operations related primarily to the sales of European Seafood and the Tegel poultry business.

(Comments on the financial results that follow refer to adjusted gross profit and adjusted operating income, which exclude 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 enable investors to use financial measures that management uses in addition to GAAP measures to evaluate the day-to-day operations of the business.)

FISCAL 2006 FOURTH QUARTER OPERATING RESULTS

Sales for the fourth quarter increased 7.6% (10.7% on a constant currency basis). Volume increased 7.8%, lead by a 10.6% increase in North American Consumer Products and 22.9% in Australia. Pricing decreased sales slightly, as improvements in North America, Latin America and Indonesia were offset primarily by declines in the U.K. Acquisitions, net of divestitures, increased sales by 3.4%. Foreign exchange translation rates decreased sales by 3.1%.

Adjusted gross profit increased 6.2%, primarily due to higher sales volume and the favorable impact of acquisitions, partially offset by unfavorable exchange translation rates. The adjusted gross profit margin decreased 50 basis points to 36.5% mainly due to declines in the Europe segment, particularly in the U.K. behind increased promotional spending, and in addition, increased commodity costs, particularly in the North American and Indonesian businesses.

Adjusted operating income increased 6.3%. The increase in adjusted operating income was offset by increased net interest expense and a higher effective tax rate, resulting in the 8.5% decrease in EPS. The adjusted effective tax rate was 37.3% compared to 27.0% for the prior year.

QUARTERLY OPERATING RESULTS BY BUSINESS SEGMENT

North American Consumer Products

Sales of the North American Consumer Products segment increased 16.4%. Volume increased 10.6%, as a result of growth in Smart Ones (R) frozen entrees and desserts, in Ore-Ida (R) frozen potatoes and Heinz(R) Ketchup. The acquisition of HP/Lea & Perrins and Nancy's added an additional 4.1% to sales along with higher pricing of 0.4%. Favorable Canadian exchange translation rates increased sales 1.3%.

Adjusted operating income increased 19.2%, driven primarily by the volume growth and the favorable impact of acquisitions partially offset by increased SG&A expenses resulting from the increased volume and transportation costs, as well as acquisitions.

U.S. Foodservice

Sales of the U.S. Foodservice segment increased 6.1%. Volume increased 3.1%, behind increases in Truesoups(R) frozen soup and Heinz (R) Ketchup. Higher pricing increased sales by 0.7% as increases in custom recipe tomato products and single-serve condiments were largely offset by declines in ketchup and soups. The acquisition of Appetizers And, Inc. ("AAI") and Kabobs, Inc. increased sales 2.4%.

Adjusted operating income decreased $7.7 million, largely due to higher marketing, commodity, fuel and transportation costs.

Europe

Heinz Europe's sales increased 2.6%. Volume increased 6.5%, from increases in the U.K. in Heinz (R) soup and top-down ketchup and in the Italian infant nutrition business. The acquisitions of the HP/Lea & Perrins and Petrosoyuz businesses increased sales 9.1%. Lower pricing decreased sales 2.6%. These decreases were partially offset by increased pricing initiated on Heinz (R) beans. Divestitures reduced sales 3.1%, and unfavorable exchange translation rates decreased sales by 7.3%.

Adjusted operating income increased 1.2% mainly due to the favorable impact of acquisitions, higher volume and reduced marketing expense. These increases were partially offset by unfavorable pricing, higher G&A expense and exchange translation rates.

Asia/Pacific

Sales in Asia/Pacific increased 6.7%. Volume increased sales 13.4%, reflecting strong performance in Australia and New Zealand, largely due to new product introductions, and in China and Indonesia. Pricing unfavorably impacted sales by 1.3%. Acquisitions, net of divestitures, decreased sales slightly by 0.1%. Unfavorable exchange translation rates decreased sales by 5.4%.

Adjusted operating income increased $9.1 million chiefly due to the strong volume performance and reduced G&A expenses.

Rest of World

In Heinz's ROW segment, sales increased 1.8%. Volume increased 5.3% due primarily to strong sales in Latin America and India. Higher pricing increased sales by 6.4%, largely due to price increases taken in Latin America and India. Divestitures, net of acquisitions, reduced sales by 7.4%. Unfavorable exchange translation rates decreased sales 2.4%.

Adjusted operating income increased $9.0 million due primarily to the increased pricing and volume and decreased G&A principally due to divestitures.

FISCAL 2006 FULL YEAR OPERATING RESULTS

Sales for Fiscal 2006 increased 6.7%, to $8.6 billion (+8.2% on a constant currency basis). Sales were favorably impacted by increased volume of 3.8% driven primarily by the North American Consumer Products segment, as well as the Australian, Indonesian and the Italian infant nutrition businesses. These volume increases were partially offset by declines in the European frozen food business. Pricing decreased sales slightly, by 0.1%, as improvements in Latin America and Indonesia and North America were offset by declines in Australia, U.K. and Northern Europe. Acquisitions, net of divestitures, increased sales by 4.4%. Foreign exchange translation rates decreased sales by 1.5%.

Adjusted gross profit increased 4.1%, primarily due to the favorable impact of acquisitions and higher sales volume, partially offset by unfavorable exchange translation rates. The adjusted gross profit margin decreased 90 basis points mainly due to pricing declines in Europe and increased commodity costs, particularly in the North American and Indonesian businesses.

Adjusted operating income increased 3.2% as the increase in adjusted gross profit and the decrease in G&A expenses in Europe were partially offset by higher fuel and transportation costs, particularly in the U.S. businesses. The increase in adjusted operating income was offset by increased net interest expense and a higher effective tax rate, resulting in a 5.0% decrease in EPS. The adjusted effective tax rate was 31.4% compared to 28.3% for the prior year.

The company's working capital management initiatives improved the Cash Conversion Cycle by an additional two days, on a total company basis. Operating free cash flow was $844 million, despite spending of approximately $75 million for special items related to strategic initiatives.

MEETING WITH SECURITIES ANALYSTS - INTERNET BROADCASTS

Heinz will host a conference call with security analysts today at 8:30 a.m. (Eastern Time) to discuss fiscal year 2006 results and its Superior Value and Growth Plan. 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 800-955-1760 (listen only). It will be hosted by William R. Johnson, Chairman, President & CEO; Art Winkleblack, Executive Vice President and Chief Financial Officer; Dave Moran, Executive Vice President - Heinz North America Consumer Products; Scott O'Hara, Executive Vice President - Heinz Europe; 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. Forward-looking statements are generally identified by the words "will,""expects,""anticipates,""believes,""estimates" or similar expressions and include our expectations as to future revenue growth, earnings, capital expenditures and other spending, as well as anticipated reductions in spending. 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. Factors that could cause actual results to differ from 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 ability to identify and anticipate and respond through

innovation to consumer trends,

-- the need for product recalls,

-- the ability to maintain favorable supplier relationships,

-- currency valuations and interest rate fluctuations,

-- change in credit ratings,

-- the ability to identify and complete and the timing, pricing

and success of acquisitions, joint ventures, divestitures and

other strategic initiatives,

-- approval of acquisitions and divestitures by competition

authorities, and satisfaction of other legal requirements,

-- the ability to successfully complete cost reduction programs,

-- the results of shareholder proposals,

-- the ability to limit disruptions to the business resulting

from the emphasis on three core categories and potential

divestitures,

-- the ability to effectively integrate acquired businesses, new

product and packaging innovations,

-- product mix,

-- the effectiveness of advertising, marketing, and promotional

programs,

-- the ability to maintain sales growth while reducing spending

on advertising, marketing and promotional programs,

-- supply chain efficiency,

-- cash flow initiatives,

-- risks inherent in litigation, including tax litigation, and

international operations, particularly the performance of

business in hyperinflationary environments,

-- changes in estimates in critical 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 27, 2005.

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.

Heinz will file a proxy statement in connection with its 2006 annual meeting of stockholders. Heinz stockholders are strongly advised to read the proxy statement and the accompanying WHITE proxy card when they become available, as they will contain important information.

Stockholders will be able to obtain this proxy statement, any amendments or supplements to the proxy statement and other documents filed by Heinz with the Securities and Exchange Commission for free at the Internet website maintained by the Securities and Exchange Commission at www.sec.gov. Copies of the proxy statement and any amendments and supplements to the proxy statement will also be available for free at Heinz's Internet website at www.heinz.com or by writing to H. J. Heinz Company, World Headquarters, 600 Grant Street, Pittsburgh, Pennsylvania 15219. In addition, copies of the proxy materials may be requested by contacting our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 toll-free or by email at proxy@mackenziepartners.com. Detailed information regarding the names, affiliations and interests of individuals who are participants in the solicitation of proxies of Heinz's shareholders is available on Schedule 14A filed with the Securities and Exchange Commission on March 3, 2006.

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 and condiments; meals & snacks; and infant foods. Heinz delights 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), HP(R) and Lea & Perrins(R), Ore-Ida(R) french fries and roasted potatoes, Boston Market(R) and Smart Ones(R) meals, and Plasmon(R) baby food. Heinz's has leading brands in six core developed geographies and five developing geographies. Information on Heinz is available at www.heinz.com/news. H.J. Heinz Company and Subsidiaries Consolidated Statements of Income (In Thousands, Except per Share Amounts) Fourth Quarter Ended Fiscal Year Ended ----------------------- ----------------------- May 3, April 27, May 3, April 27, 2006 2005 2006 2005 FY 2006 FY 2005 FY 2006 FY 2005 ----------- ----------- ----------- ----------- Sales $2,399,652 $2,230,506 $8,643,438 $8,103,456 Cost of products sold 1,593,629 1,432,270 5,550,364 5,069,926 ----------- ----------- ----------- ----------- Gross profit 806,023 798,236 3,093,074 3,033,530 Selling, general and administrative expenses 557,873 478,786 1,979,462 1,752,058 ----------- ----------- ----------- ----------- Operating income 248,150 319,450 1,113,612 1,281,472 Interest income 11,699 7,310 33,190 26,939 Interest expense 87,155 62,217 316,296 232,088 Asset impairment charge for cost and equity investments 110,994 - 110,994 73,842 Other expense, net (6,215) (4,727) (26,051) (14,966) ----------- ----------- ----------- ----------- Income from continuing operations before income taxes 55,485 259,816 693,461 987,515 Provision for income taxes 54,405 68,332 250,700 299,511 ----------- ----------- ----------- ----------- Income from continuing operations 1,080 191,484 442,761 688,004 Income from discontinued operations, net of tax 166,829 15,003 202,842 64,695 ----------- ----------- ----------- ----------- Net income $ 167,909 $ 206,487 $ 645,603 $ 752,699 =========== =========== =========== =========== Income per common share - Diluted Continuing operations $ - $ 0.54 $ 1.29 $ 1.95 Discontinued operations 0.50 0.05 0.59 0.18 ----------- ----------- ----------- ----------- Net Income $ 0.50 $ 0.59 $ 1.89 $ 2.13 =========== =========== =========== =========== Average common shares outstanding - diluted 337,471 352,440 342,121 353,450 Income per common share - Basic Continuing operations $ - $ 0.55 $ 1.31 $ 1.97 Discontinued operations 0.50 0.04 0.60 0.18 ----------- ----------- ----------- ----------- Net Income $ 0.50 $ 0.59 $ 1.90 $ 2.15 =========== =========== =========== =========== Average common shares outstanding - basic 334,625 349,258 339,102 350,042 Cash dividends per share $ 0.30 $ 0.285 $ 1.20 $ 1.14 =========== =========== =========== =========== Note: Fiscals 2006 and 2005 include special items. (Totals may not add due to rounding) H.J. Heinz Company and Subsidiaries Segment Data Fourth Quarter Ended Fiscal Year Ended ----------------------- ----------------------- May 3, April 27, May 3, April 27, 2006 2005 2006 2005 FY 2006 FY 2005 FY 2006 FY 2005 ----------- ----------- ----------- ----------- Net external sales: North American Consumer Products $ 725,348 $ 623,064 $2,554,118 $2,256,862 U.S. Foodservice 430,179 405,284 1,569,833 1,503,818 Europe 828,083 807,032 2,987,737 2,908,618 Asia/Pacific 297,564 278,764 1,116,864 1,037,514 Rest of World 118,478 116,362 414,886 396,644 ----------- ----------- ----------- ----------- Consolidated Totals $2,399,652 $2,230,506 $8,643,438 $8,103,456 =========== =========== =========== =========== Intersegment revenues: North American Consumer Products $ 12,856 $ 13,278 $ 51,489 $ 51,742 U.S. Foodservice 6,354 5,839 23,285 22,550 Europe 3,249 3,707 12,455 17,328 Asia/Pacific 602 985 2,304 3,420 Rest of World 901 379 1,843 1,571 Non-Operating (23,962) (24,188) (91,376) (96,611) ----------- ----------- ----------- ----------- Consolidated Totals $ - $ - $ - $ - =========== =========== =========== =========== Operating income (loss): North American Consumer Products $ 157,978 $ 136,023 $ 583,367 $ 530,444 U.S. Foodservice 22,726 58,102 177,292 224,784 Europe 89,421 125,039 414,178 499,951 Asia/Pacific 31,467 22,648 85,211 113,119 Rest of World 11,562 9,664 17,854 34,739 Non-Operating (65,004) (32,026) (164,290) (121,565) ----------- ----------- ----------- ----------- Consolidated Totals $ 248,150 $ 319,450 $1,113,612 $1,281,472 =========== =========== =========== =========== Operating income (loss) excluding special items: North American Consumer Products $ 162,141 $ 136,023 $ 589,958 $ 530,444 U.S. Foodservice 50,436 58,102 212,053 224,784 Europe 153,913 152,015 526,372 526,927 Asia/Pacific 31,765 22,648 112,440 113,119 Rest of World 18,688 9,664 45,732 34,739 Non-Operating (48,847) (32,025) (136,564) (121,565) ----------- ----------- ----------- ----------- Consolidated Totals $ 368,096 $ 346,427 $1,349,991 $1,308,448 =========== =========== =========== =========== The company's revenues are generated via the sale of products in the following categories: Ketchup, Condiments and Sauces $ 985,223 $ 877,580 $3,530,346 $3,234,229 Frozen Foods 686,965 610,306 2,461,730 2,209,586 Convenience Meals 368,540 407,802 1,415,013 1,471,334 Infant Feeding 265,313 253,739 863,943 855,558 Other 93,611 81,079 372,406 332,749 ----------- ----------- ----------- ----------- Total $2,399,652 $2,230,506 $8,643,438 $8,103,456 =========== =========== =========== =========== H.J. Heinz Company and Subsidiaries Non-GAAP Performance Ratios The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America ("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 calculation of the non-GAAP performance ratio discussed in the Company's press release dated June 1, 2006. Operating Free Cash Flow Calculation (amounts in thousands) Fourth Quarter Ended Fiscal Year Ended --------------------- ----------------------- May 3, April 27, May 3, April 27, 2006 2005 2006 2005 FY 2006 FY 2005 FY 2006 FY 2005 ---------- ---------- ----------- ----------- Cash provided by operating activities $572,041 $ 654,648 $1,074,961 $1,160,793 Capital expenditures (79,560) (109,647) (230,577) (240,671) --------- ----------- ----------- ----------- Operating Free Cash Flow $492,481 $ 545,001 $ 844,384 $ 920,122 ========= =========== =========== =========== H.J. Heinz Company and Subsidiaries Special Items - Fourth Quarters Ended May 3, 2006 and April 27, 2005 The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America ("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 May 3, 2006 and April 27, 2005: Fourth Quarter Ended May 3, 2006 ----------------------------------------------- Income from (amounts in millions) Net Gross Operating Continuing Per Sales Profit Income Operations Share --------- -------- --------- ---------- ------- Reported results from continuing operations $2,399.7 $ 806.0 $248.2 $ 1.1 $ 0.00 Separation, downsizing and integration - 8.1 58.7 26.1 0.08 Net loss on disposals & impairments - 61.8 61.3 51.2 0.15 Asset impairment charges for cost and equity investments 105.6 0.31 American Jobs Creation Act (3.3) (0.01) --------- -------- --------- ---------- ------- Results from continuing operations excluding special items $2,399.7 $ 876.0 $368.1 $180.7 $ 0.54 ========= ======== ========= ========== ======= Fourth Quarter Ended April 27, 2005 ----------------------------------------------- Income from Net Gross Operating Continuing Per Sales Profit Income Operations Share --------- -------- --------- ---------- ------- Reported results from continuing operations $2,230.5 $ 798.2 $319.5 $191.5 $ 0.54 Asset impairment charge for HAK vegetable product line - 27.0 27.0 18.0 0.05 --------- -------- --------- ---------- ------- Results from continuing operations excluding special items $2,230.5 $ 825.2 $346.4 $209.5 $ 0.59 ========= ======== ========= ========== ======= (Note: Totals may not add due to rounding.) H.J. Heinz Company and Subsidiaries Special Items - Fiscal Years Ended May 3, 2006 and April 27, 2005 The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America ("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 May 3, 2006 and April 27, 2005: Fiscal Years Ended May 3, 2006 ----------------------------------------------- Income from (amounts in millions) Net Gross Operating Continuing Per Sales Profit Income Operations Share --------- --------- --------- ---------- ------ Reported results from continuing operations $8,643.4 $3,093.1 $1,113.6 $442.8 $1.29 Separation, downsizing and integration - 17.4 146.7 96.6 0.28 Net loss on disposals & impairments - 74.1 89.7 48.3 0.14 Asset impairment charges for cost and equity investments 105.6 0.31 American Jobs Creation Act - - - 24.4 0.07 --------- --------- --------- ---------- ------ Results from continuing operations excluding special items $8,643.4 $3,184.6 $1,350.0 $717.7 $2.10 ========= ========= ========= ========== ====== Fiscal Years Ended April 27, 2005 ----------------------------------------------- Income from Net Gross Operating Continuing Per Sales Profit Income Operations Share --------- --------- --------- ---------- ------ Reported results from continuing operations $8,103.5 $3,033.5 $1,281.5 $688.0 $1.95 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 $8,103.5 $3,060.5 $1,308.4 $779.8 $2.21 ========= ========= ========= ========== ====== (Note: Totals may not add due to rounding.)

Source: Business Wire

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