ANYTIMEkANYPLACEkANYWHERE - Heinz

In Fiscal 2000, the company repurchased 12.8 million shares of common stock, or 3.6% of
the amount outstanding at the beginning of Fiscal 2000, at a cost of $511.5 million compared to
the repurchase of 7.5 million shares, or 2.1% of the amount outstanding at the beginning of
Fiscal 1999, at a cost of $410.1 million in Fiscal 1999. On June 1, 1999, the company completed
the 10.0 million share repurchase program which was authorized by the Board of Directors
on September 10, 1997. On June 9, 1999, the Board of Directors authorized the repurchase of
up to 20.0 million shares. As of May 3, 2000, the company had repurchased 12.0 million shares
of the 20.0 million share program. The company may reissue repurchased shares upon the
exercise of stock options, conversions of preferred stock and for general corporate purposes.
In Fiscal 2000, the cash requirements of Operation Excel were $479.4 million, consisting of
spending for severance and exit costs ($89.3 million), capital expenditures ($173.6 million) and
implementation costs ($216.5 million). The Fiscal 2000 cash requirements for Project Millennia
were $29.1 million, consisting of spending for severance and exit costs ($19.6 million) and
capital expenditures ($9.5 million). In Fiscal 1999, the cash requirements of Operation Excel
were $75.6 million, consisting of spending for severance and exit costs ($16.6 million), capital
expenditures ($5.8 million) and implementation costs ($53.2 million). The Fiscal 1999 cash
requirements for Project Millennia were $117.4 million, consisting of spending for severance
and exit costs ($48.6 million), capital expenditures ($46.5 million) and implementation costs
($22.3 million). In Fiscal 2001, the company expects the cash requirements of Operation Excel
to be approximately $413 million, consisting of severance and exit costs ($104 million of the
$125.2 million accrued at May 3, 2000), capital expenditures ($159 million) and implementation
costs ($150 million). The company is financing the cash requirements of these programs
through operations, proceeds from the sale of non-strategic assets and with short-term and
long-term borrowings. The cash requirements of Operation Excel will not have a significant
impact on the company’s liquidity or financial position.
During 1995, the company participated in the formation of a business (‘‘the entity’’) which
purchases a portion of the trade receivables generated by the company. The company sells
receivables to Jameson, Inc., a wholly owned subsidiary, which then sells undivided interests
in the receivables to the entity. Outside investors contributed $95.4 million in capital to the
entity. The company consolidates the entity, and the capital contributed by outside investors is
classified as minority interest (other long-term liabilities) on the Consolidated Balance Sheets.
In June 1998, the Financial Accounting Standards Board (the ‘‘FASB’’) issued Statement
of Financial Accounting Standards (‘‘SFAS’’) No. 133, ‘‘Accounting for Derivative Instruments
and Hedging Activities.’’ This statement establishes accounting and reporting standards for
derivative instruments. The statement requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those instruments at fair
value. In June 1999, the FASB issued SFAS No. 137, ‘‘Accounting for Derivative Instruments
and Hedging Activities – Deferral of the Effective Date of FAS Statement 133,’’ which postponed
the adoption date of SFAS No. 133. As such, the company is not required to adopt the statement
until Fiscal 2002. In June 2000, the FASB issued SFAS No. 138, ‘‘Accounting for Certain
Derivative Instruments and Certain Hedging Activities – an Amendment of FASB Statement
No. 133.’’ This statement amends the accounting and reporting standards of SFAS No. 133
for certain derivative instruments and certain hedging activities. The company is currently
evaluating the effect that implementation of the new standard will have on its results of
operations and financial position.
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