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Heinz Reports Third-Quarter EPS From Continuing Operations, Excluding Special Items, Of $0.99 ($0.95 Reported)

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 the calculation of the non-GAAP performance ratios discussed in the Company's press release dated February 21, 2013:

Fiscal 2013 Results Excluding Charge for Settlement of Foodstar Earn-Out

The following table reconciles the Company's Fiscal 2013 reported results to results excluding the charge for the settlement of the Foodstar earn-out.

(amounts in thousands)         Third Quarter Ended January 27, 2013
Continuing Operations Reported Results     _    

Charge for earn-out settlement

    =    

Results excluding charge for earn-out settlement (b)

Operating Income

$

467,861        

$

(12,081 )        

$

479,942
Effective tax rate 19.9 % 19.3 %
Income from continuing operations, net of tax

$

308,214

$

(12,081 )

$

320,295
Diluted earnings per share from continuing operations

$

0.95

$

(0.04 )

$

0.99
 
(amounts in thousands) Nine Months Ended January 27, 2013
Continuing Operations Reported Results     _    

Charge for earn-out settlement

    =    

Results excluding charge for earn-out settlement (b)

Operating Income $ 1,279,988 $ (12,081 ) $ 1,292,069
Income from continuing operations, net of tax $ 889,096 $ (12,081 ) $ 901,177
Diluted earnings per share from continuing operations $ 2.75 $ (0.04 ) $ 2.79
 

Fiscal 2012 Results Excluding Charges for Productivity Initiatives

The following table reconciles the Company's Fiscal 2012 reported results to results excluding charges for productivity initiatives.

(amounts in thousands)         Third Quarter Ended January 25, 2012
Continuing Operations Reported Results     _    

Charges for productivity initiatives

 

 

=

   

Results excluding charges for productivity initiatives (c)

Gross Profit $ 1,033,598         $ (22,218 )       $ 1,055,816
Gross Profit Margin 36.0 % (0.7 )% 36.7 %
Operating Income $ 426,528 $ (33,657 ) $ 460,185
Effective tax rate 18.8 % 32.7 % 20.0 %
Income from continuing operations, net of tax $ 288,283 $ (22,647 ) $ 310,930
Diluted earnings per share from continuing operations $ 0.89 $ (0.07 ) $ 0.96
 
(amounts in thousands) Nine Months Ended January 25, 2012
Continuing Operations Reported Results     _    

Charges for productivity initiatives

    =    

Results excluding charges for productivity initiatives (c)

Operating Income $ 1,169,898 $ (111,152

)

$

1,281,050
Income from continuing operations, net of tax $ 767,710 $ (76,295

)

$

844,005
Diluted earnings per share from continuing operations $ 2.37 $ (0.24

)

$

2.60
 

Organic Sales Growth

        Third Quarter Ended January 27, 2013
Organic Sales

Organic Sales Growth (a)

    +     Foreign Exchange     +    

Acquisitions/ Divestitures

    =    

Total Net Sales Change

Emerging Markets 17.6 % (3.4 )% 4.6 % (d) 18.8 %
Global Ketchup 4.2 % 0.6 % 4.7 %
Top 15 Brands 2.6 % (0.4 )% 2.2 %
Total Company 2.3 % (0.1 )% (0.3 )% 2.0 %
 
Nine Months Ended January 27, 2013
Total Company 3.7 % (2.7 )% (0.4 )% 0.5 %
 

Operating Free Cash Flow

Total Company (amounts in thousands)         Third Quarter Ended
January 27, 2013
Cash provided by operating activities 385,644
Capital expenditures (83,514 )
Proceeds from disposals of property, plant and equipment 2,202  
Operating Free Cash Flow 304,332
Foodstar earn-out (15,453 )
Operating Free Cash Flow adjusted for the Foodstar earn-out 319,785  
 

(a) Organic sales growth is a non-GAAP measure that is defined as volume plus price or total sales growth excluding the impact of foreign currency translation rates and acquisitions/divestitures.(b) Excludes a charge in Fiscal 2013 for the early settlement of the earn-out payment that was due in Fiscal 2014 related to the Fiscal 2011 acquisition of Foodstar. This early settlement was completed in order to give the Company additional flexibility in the future for growing its business in one of its largest and most important emerging markets, China.(c) Excludes costs in Fiscal 2012 associated with targeted workforce reductions, asset write-offs associated with factory closures and other implementation costs in order to increase manufacturing effectiveness and accelerate productivity on a global scale. Other implementation costs primarily include professional fees and relocation costs for the establishment of a European supply chain hub in the Netherlands.(d) Emerging Markets sales in Fiscal 2013 now include the markets of Papua New Guinea, South Korea and Singapore. Sales in these markets were included in Developed Markets sales in the prior year and therefore, were treated as an acquisition variance when comparing current year sales to the prior year for Emerging Markets.

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