SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 27, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-3385

H. J. HEINZ COMPANY

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	25-0542520
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One PPG Place, Pittsburgh, Pennsylvania (Address of Principal Executive Offices)	15222 (Zip Code)

Registrant’s telephone number, including area code: (412) 456-5700

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes X  No 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes X  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer _	Accelerated filer _	Non-accelerated filer X	Smaller reporting company _
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No X

The number of shares of the Registrant’s Common Stock, no par value per share, outstanding as of October 27, 2013 was 100 shares.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

H. J. HEINZ COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Second Quarter Ended
	Successor			Predecessor
	October 27, 2013 FY 2014			October 28, 2012 FY 2013
	(Unaudited)
	(In thousands)
Sales	$	2,717,336		$	2,821,534
Cost of products sold	1,827,088			1,808,517
Gross profit	890,248			1,013,017
Selling, general and administrative expenses	710,917			617,286
Merger related costs	7,538			—
Operating income	171,793			395,731
Interest income	5,702			7,821
Interest expense	160,333			69,388
Other expense, net	(11,296		)	(6,277		)
Income from continuing operations before income taxes	5,866			327,887
(Benefit from)/provision for income taxes	(34,182		)	31,037
Income from continuing operations	40,048			296,850
Loss from discontinued operations, net of tax	(3,936		)	(5,262		)
Net income	36,112			291,588
Less: Net income attributable to the noncontrolling interest	2,071			2,144
Net income attributable to H. J. Heinz Company	$	34,041		$	289,444
Amounts attributable to H.J. Heinz Company common shareholders:
Income from continuing operations, net of tax	37,977			$	294,706
Loss from discontinued operations, net of tax	(3,936		)	(5,262		)
Net income	$	34,041		$	289,444

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

2

H. J. HEINZ COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(Unaudited)
	(In thousands)
Sales	$	4,243,841		$	1,112,872		$	5,604,984
Cost of products sold	3,148,889			729,537			3,590,024
Gross profit	1,094,952			383,335			2,014,960
Selling, general and administrative expenses	1,015,839			243,364			1,202,833
Merger related costs	157,938			112,188			—
Operating (loss)/income	(78,825		)	27,783			812,127
Interest income	9,355			2,878			16,146
Interest expense	270,815			35,350			141,978
Unrealized gain on derivative instruments	117,934			—			—
Other expense, net	(31,240		)	(125,638		)	(3,994		)
(Loss)/income from continuing operations before income taxes	(253,591		)	(130,327		)	682,301
(Benefit from)/provision for income taxes	(220,738		)	61,097			92,624
(Loss)/income from continuing operations	(32,853		)	(191,424		)	589,677
Loss from discontinued operations, net of tax	(5,636		)	(1,273		)	(33,411		)
Net (loss)/income	(38,489		)	(192,697		)	556,266
Less: Net income attributable to the noncontrolling interest	3,346			2,874			8,795
Net (loss)/income attributable to H. J. Heinz Company	$	(41,835	)	$	(195,571	)	$	547,471
Amounts attributable to the H.J. Heinz Company shareholders:
(Loss)/income from continuing operations, net of tax	$	(36,199	)	$	(194,298	)	$	580,882
Loss from discontinued operations, net of tax	(5,636		)	(1,273		)	(33,411		)
Net (loss)/income	$	(41,835	)	$	(195,571	)	$	547,471

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

3

H. J. HEINZ COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

	Second Quarter Ended
	Successor			Predecessor
	October 27, 2013 FY 2014			October 28, 2012 FY 2013
	(Unaudited)
	(In thousands)
Net income	$	36,112		$	291,588
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	286,458			144,979
Net pension and post-retirement benefit gains	14,213			—
Reclassification of net pension and post-retirement benefit losses to net income	—			13,450
Net deferred (losses)/gains on derivatives from periodic revaluations	(60,078		)	705
Net deferred (gains)/losses on derivatives reclassified to earnings	(960		)	4,890
Total comprehensive income	275,745			455,612
Comprehensive income attributable to the noncontrolling interest	(573		)	(418		)
Comprehensive income attributable to H. J. Heinz Company	$	275,172		$	455,194

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

4

H. J. HEINZ COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(Unaudited)
	(In thousands)
Net (loss)/income	$	(38,489	)	$	(192,697	)	$	556,266
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	118,094			(97,863		)	(163,427		)
Net pension and post-retirement benefit gains	14,213			—			—
Reclassification of net pension and post-retirement benefit losses to net income	—			7,266			27,151
Net deferred gains/(losses) on derivatives from periodic revaluations	27,132			(1,059		)	6,917
Net deferred (gains)/losses on derivatives reclassified to earnings	(1,067		)	6,552			(4,215		)
Total comprehensive income/(loss)	119,883			(277,801		)	422,692
Comprehensive loss attributable to the noncontrolling interest	4,450			1,193			5,886
Comprehensive income/(loss) attributable to H. J. Heinz Company	$	124,333		$	(276,608	)	$	428,578

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

5

H. J. HEINZ COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	Successor		Predecessor
	October 27, 2013 FY 2014		April 28, 2013* FY 2013
	(Unaudited)
	(In thousands)
Assets
Current Assets:
Cash and cash equivalents	$	2,590,155	$	2,476,699
Trade receivables, net	1,050,429		872,864
Other receivables, net	220,867		200,988
Inventories:
Finished goods and work-in-process	1,234,718		1,076,779
Packaging material and ingredients	296,109		255,918
Total inventories	1,530,827		1,332,697
Prepaid expenses	164,236		160,658
Other current assets	188,057		91,656
Total current assets	5,744,571		5,135,562
Property, plant and equipment	2,819,966		5,359,089
Less accumulated depreciation	111,029		2,900,288
Total property, plant and equipment, net	2,708,937		2,458,801
Goodwill	15,652,494		3,079,250
Trademarks, net	11,561,977		1,037,283
Other intangibles, net	2,084,517		378,187
Other non-current assets	1,041,449		849,924
Total other non-current assets	30,340,437		5,344,644
Total assets	$	38,793,945	$	12,939,007

_______________________________________

* The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

6

H. J. HEINZ COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	Successor			Predecessor
	October 27, 2013 FY 2014			April 28, 2013* FY2013
	(Unaudited)
	(In thousands)
Liabilities and Equity
Current Liabilities:
Short-term debt	$	137,197		$	1,137,181
Portion of long-term debt due within one year	106,353			1,023,212
Trade payables	1,240,811			1,310,009
Other payables	154,407			182,828
Accrued marketing	329,605			313,930
Other accrued liabilities	712,126			705,482
Income taxes	39,776			114,230
Total current liabilities	2,720,275			4,786,872
Long-term debt	14,618,371			3,848,339
Deferred income taxes	4,057,854			678,565
Non-pension postretirement benefits	229,788			240,319
Other non-current liabilities	470,071			506,562
Total long-term liabilities	19,376,084			5,273,785
Redeemable noncontrolling interest	27,979			29,529
Equity:
Capital stock	16,320,000			107,774
Additional capital	224			608,504
(Accumulated deficit)/retained earnings	(41,835		)	7,907,033
Accumulated other comprehensive income/(loss)	166,168			(1,174,538		)
	16,444,557			7,448,773
Less:
Treasury stock at cost (109,831 shares at April 28, 2013)	—			(4,647,242		)
Total H. J. Heinz Company shareholders’ equity	16,444,557			2,801,531
Noncontrolling interest	225,050			47,290
Total equity	16,669,607			2,848,821
Total liabilities and equity	$	38,793,945		$	12,939,007

_______________________________________

* The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

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H. J. HEINZ COMPANY AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(Unaudited) (In thousands)
Cash Flows from Operating Activities:
Net (loss)/income	$	(38,489	)	$	(192,697	)	$	556,266
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	114,330			35,880			147,334
Amortization	29,821			4,276			21,075
Amortization of deferred debt issuance costs	18,807			867			2,333
Inventory fair value step-up charged to cost of products sold	383,300			—			—
Deferred tax benefit	(257,990		)	(20,492		)	(60,101		)
Net loss on divestitures	—			—			20,915
Pension contributions	(105,857		)	(6,812		)	(31,701		)
Unrealized gain on derivative instruments	(117,934		)	—			—
Other items, net	13,854			23,706			14,623
Changes in current assets and liabilities, excluding effects of acquisitions and divestitures:
Receivables (includes proceeds from securitization)	(36,558		)	(3,360		)	(148,839		)
Inventories	26,228			(183,413		)	(241,878		)
Prepaid expenses and other current assets	21,611			(18,411		)	(7,022		)
Accounts payable	(79,527		)	(69,825		)	95,077
Accrued liabilities	(30,724		)	48,025			(51,899		)
Income taxes	(70,433		)	10,163			(24,906		)
Cash (used for)/provided by operating activities	(129,561		)	(372,093		)	291,277
Cash Flows from Investing Activities:
Capital expenditures	(98,833		)	(120,154		)	(175,673		)
Proceeds from disposals of property, plant and equipment	4,332			108			15,133
Proceeds from divestitures	25,987			—			16,777
Acquisition of business, net of cash on hand	(21,494,287		)	—			—
Other items, net	(4,478		)	30,251			(7,500		)
Cash used for investing activities	(21,567,279		)	(89,795		)	(151,263		)
Cash Flows from Financing Activities:
Payments on long-term debt	(2,663,521		)	(439,747		)	(208,728		)
Proceeds from long-term debt	12,568,875			1,521			198,419
Debt issuance costs	(320,824		)	—			—
Net (payments)/proceeds on commercial paper and short-term debt	(1,647,305		)	480,672			19,996
Dividends	(180,000		)	—			(333,349		)
Exercise of stock options	—			886			60,664
Purchase of treasury stock	—			—			(80,016		)
Acquisitions of subsidiary shares from noncontrolling interest	—			—			(80,132		)
Capital contributions	16,500,000			—			—
Other items, net	31,199			42,086			1,536
Cash provided by/(used for) financing activities	24,288,424			85,418			(421,610		)
Effect of exchange rate changes on cash and cash equivalents	(1,429		)	(30,262		)	(41,643		)
Net increase/(decrease) in cash and cash equivalents	2,590,155			(406,732		)	(323,239		)
Cash and cash equivalents at beginning of period	—			2,476,699			1,330,441
Cash and cash equivalents at end of period	$	2,590,155		$	2,069,967		$	1,007,202

See Notes to Condensed Consolidated Financial Statements.

_______________________________________

8

H. J. HEINZ COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

Organization

On June 7, 2013, H. J. Heinz Company (the “Company,” “we,” “us,” and “our”) was acquired by H.J. Heinz Holding Corporation (formerly known as Hawk Acquisition Holding Corporation) (“Parent”), a Delaware corporation controlled by Berkshire Hathaway Inc. (“Berkshire Hathaway”) and 3G Special Situations Fund III, L.P. (“3G Capital,” and together with Berkshire Hathaway, the “Sponsors”), pursuant to the Agreement and Plan of Merger, dated February 13, 2013 (the “Merger Agreement”), as amended by the Amendment to Agreement and Plan of Merger, dated March 4, 2013 (the “Amendment”), by and among the Company, Parent and Hawk Acquisition Sub, Inc., a Pennsylvania corporation and an indirect wholly owned subsidiary of Parent (“Merger Subsidiary”), in a transaction hereinafter referred to as the “Merger.” As a result of the Merger, Merger Subsidiary merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Hawk Acquisition Intermediate Corporation II ("Holdings"), which in turn is an indirect wholly owned subsidiary of Parent, the entity that is controlled by the Sponsors. See Note 2 "Merger and Acquisition" for further information on the Merger.

Basis of Presentation

The Merger was accounted for as a business combination using the acquisition method of accounting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 805, Business Combinations. The Sponsors' cost of acquiring the Company has been pushed-down to establish a new accounting basis for the Company. Accordingly, the interim consolidated financial statements are presented for two periods, Predecessor and Successor, which relate to the accounting periods preceding and succeeding the completion of the Merger. The Predecessor and Successor periods have been separated by a vertical line on the face of the consolidated financial statements to highlight the fact that the financial information for such periods has been prepared under two different historical-cost bases of accounting.

Successor -The consolidated financial statements as of October 27, 2013, and for the period from February 8, 2013 through October 27, 2013, include the accounts of Merger Subsidiary from inception on February 8, 2013 and the accounts of the Company subsequent to the closing of the Merger on June 7, 2013.

Predecessor -The consolidated financial statements of the Company prior to the Merger on June 7, 2013.

Change In Fiscal Year

On October 21, 2013, our board of directors approved a change in our fiscal year-end from the Sunday closest to April 30 to the Sunday closest to December 31. The Company's Form 10-Q for the quarter ended October 27, 2013 will be the last interim filing under the old fiscal year, and the Company will file a Transitional Report on Form 10-K for the eight months ended December 29, 2013. The Company will subsequently file its quarterly and annual reports for the new fiscal year ending December 28, 2014.

The interim condensed consolidated financial statements of the Company are unaudited. In the opinion of management, all adjustments, which are of a normal and recurring nature, except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q, necessary for a fair statement of the results of operations of these interim periods, have been included. The results for interim periods are not necessarily indicative of the results to be expected for the full fiscal year due in part to the seasonal nature of the Company's business. These statements should be read in conjunction with the Company's consolidated financial statements and related notes, and management's discussion and analysis of financial condition and results of operations which appear in the Company's Annual Report on Form 10-K for the year ended April 28, 2013.

Earnings per share information has not been presented because the Company's stock is no longer publicly traded.

9

(2) Merger and Acquisition

On February 13, 2013, the Company entered into the Merger Agreement with Parent and Merger Subsidiary. The acquisition was consummated on June 7, 2013, and as a result, Merger Subsidiary merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Holdings, which in turn is an indirect wholly owned subsidiary of Parent. Parent is controlled by the Sponsors. Upon the completion of the Merger, the Company's shareholders received $72.50 in cash, without interest and less applicable taxes thereon, for each share of common stock held prior to the effective time of the Merger.

Additionally, all outstanding stock option awards, restricted stock units (except for certain retention RSUs which continue on their original terms) and restricted stock awards issued pursuant to various shareholder-approved plans and a shareholder-authorized employee stock purchase plan were automatically canceled and converted into the right to receive cash consideration of $72.50.

The total consideration paid in connection with the Merger was approximately $28.75 billion, including the assumption of the Company's outstanding debt, which was funded by equity contributions from the Sponsors totaling $16.5 billion as well as proceeds received by Merger Subsidiary of approximately $11.5 billion, pursuant to the Senior Credit Facilities (of which $9.5 billion was drawn at the close of the transaction), and $3.1 billion upon the issuance of 4.25% Senior Secured Notes (as defined and described herein) by Merger Subsidiary, less applicable debt issuance costs of $315.9 million. As a result of the Merger and the transactions entered into in connection therewith, we have assumed the liabilities and obligations of Merger Subsidiary, including Merger Subsidiary's obligations under the Senior Credit Facilities.

The preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in the Merger reflects preliminary fair value estimates based on management analysis, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The Company has also not yet finalized its estimated acquisition date deferred taxes associated with planned repatriation of accumulated earnings of foreign subsidiaries. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the Merger Date.

The following is a summary of the preliminary allocation of the purchase price of the Merger to the estimated fair values of assets acquired and liabilities assumed in the transaction:

	(In thousands)
Current assets	$	6,138,826
Property, Plant and Equipment	2,683,059
Trademark and other intangibles	13,527,665
Other assets	1,475,152
Trade and other payables	(2,520,207		)
Long term debt	(3,021,655		)
Deferred income taxes	(4,173,721		)
Non-pension postretirement benefits and other noncurrent liabilities	(658,439		)
Redeemable non controlling interest and non controlling interest	(258,008		)
Net assets acquired	13,192,672
Goodwill on acquisition	15,560,292
Total consideration paid	$	28,752,964

During the quarter ended October 27, 2013, the Company made revisions to the preliminary purchase price allocation, principally affecting estimated deferred taxes and goodwill, which were not recorded retrospectively due to immateriality.

Trade receivables and payables, as well as other current and non-current assets and liabilities were valued at the existing carrying values as they represented the fair value of those items at the time of the Merger, based on management's judgments and estimates.

10

Finished goods and work-in-process inventory has been valued using a net realizable value approach resulting in a step-up of $384.4 million which is recognized in Cost of products sold in the Successor period as the related inventory is sold. Raw materials and packaging inventory has been valued using the replacement cost approach.

Property, plant and equipment have been valued using a combination of the income approach, the market approach and cost approach which is based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors. Useful lives of the property, plant and equipment were estimated to be between 3 and 40 years.

Trademarks have been valued using the excess earnings method for top tier brands and the relief from royalty method for other brands. The excess earnings method estimates fair value of an intangible asset by deducting expected costs, including income taxes, from expected revenues attributable to that asset to arrive at after-tax cash flows. From such after-tax cash flows, after-tax contributory asset charges are deducted to arrive at incremental after-tax cash flows. These resulting cash flows are discounted to a present value to which the tax amortization benefit is added to arrive at fair value. Relief from royalty method under the income approach estimates the cost savings that accrue to the Company which would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. Trademarks are considered to have indefinite lives.

Customer relationships were determined using the distributor method, a variation of the excess earnings method discussed above, whereby distributor-based inputs for margins and contributory asset charges are used. The useful lives of customer relationships is estimated to be 20 years each.

Existing long term debt assumed in the Merger was fair valued based on quoted market prices. The debt assumed included the Company's existing 6.375% Debentures due 2028, 6.25% Notes due 2030, 6.75% Notes due 2032 and 7.125% Notes due 2039.

Deferred income tax assets and liabilities as of the acquisition date represent the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases.

The total non tax deductible goodwill relating to the Merger is $15.56 billion. The goodwill recognized relates principally to the Company's established global organization, reputation and strategic positioning.

The Company incurred $157.9 million in Merger related costs on a pretax basis, including $70.0 million consisting primarily of advisory fees, legal, accounting and other professional costs. The Company also incurred $87.9 million related to severance and compensation arrangements pursuant to existing agreements with certain former executives and employees in connection with the Merger. These amounts are separately reflected in the accompanying statement of operations for the Successor period.

Prior to consummation of the Merger, the Company incurred $112.2 million of Merger related costs, including $48.1 million resulting from the acceleration of expense for stock options, restricted stock units and other compensation plans pursuant to the existing change in control provisions of those plans, and $64.0 million of professional fees. These amounts are separately reflected in Merger related costs in the accompanying statement of operations for the Predecessor period. The Company also recorded a loss from the extinguishment of debt of approximately $129.4 million for debt required to be repaid upon closing as a result of the change in control which is reflected in Other (expense) income, net, in the accompanying statement of operations for the Predecessor period.

The following unaudited pro forma financial data summarizes the Company's results of operations as if the Transaction had occurred as of April 30, 2012. The pro forma data is for informational purposes only and may not necessarily reflect the actual results of operations had the Merger been consummated on April 30, 2012.

11

	Second Quarter Ended				Six Months Ended
	October 27, 2013 FY 2014		October 28, 2012 FY 2013		Six Months Ended October 27, 2013		Six Months Ended October 28, 2012 FY 2013
	(In thousands)
Revenue	$	2,717,336	$	2,821,533	$	5,356,713	$	5,604,984
Income/(loss) from continuing operations	$	74,968	$	202,560	$	237,455	$	(63,255	)

The most significant of the pro forma adjustments were to reflect the impact of Merger related costs, the unrealized gain on derivative instruments, higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step-up in inventory, and higher interest expense associated with increased debt, in the prior year periods.

(3) Recently Issued Accounting Standards

In February 2013, the FASB issued an amendment to the comprehensive income standard to improve the transparency of reporting reclassifications out of accumulated other comprehensive income/loss. Other comprehensive income/loss includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income/loss into net income. The amendment does not change the current requirements for reporting net income or other comprehensive income/loss in financial statements. The new amendment will require the Company to present the effects on income statement line items of certain significant amounts reclassified out of accumulated other comprehensive income/loss, and cross-reference to other disclosures currently required under U.S. generally accepted accounting principles for certain other reclassification items. The Company adopted this revised standard in the first quarter of Fiscal 2014. The adoption of this revised standard did not impact our results of operations or financial position.

In July 2012, the FASB issued an amendment to the indefinite-lived intangibles impairment standard. This revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment by providing entities with the option to first assess qualitatively whether it is more likely than not that an indefinite-lived intangible asset is impaired. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired. An entity can choose to perform the qualitative assessment on none, some, or all of its indefinite-lived intangible assets. Moreover, an entity can by-pass the qualitative assessment and perform the quantitative impairment test for any indefinite-lived intangible asset in any period. The Company early adopted this amendment in the fourth quarter of Fiscal 2013 for use in the Fiscal 2013 annual impairment testing. The adoption of this revised standard did not impact our results of operations or financial position.

In December 2011, the FASB issued an amendment on disclosures about offsetting assets and liabilities. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. The Company adopted this amendment on the first day of Fiscal 2014, and this adoption did not impact the Company's disclosure requirements.

(4) Fiscal 2014 Restructuring and Productivity Initiatives

During Fiscal 2014, the Company is investing in restructuring and productivity initiatives as part of its ongoing cost reduction efforts with the goal of driving efficiencies and creating fiscal resources that will be reinvested into the Company's business as well as to accelerate overall productivity on a global scale. As of October 27, 2013, these initiatives have resulted in the reduction of approximately 2,000 corporate and field positions across the Company's global business segments as well as the closure and consolidation of manufacturing and corporate office facilities.

The Company recorded pre-tax costs related to these initiatives of $198.7 million in the three months ended October 27, 2013 (the Three Month Successor period), $201.0 million in the Successor period from February 8, 2013 to October 27, 2013 (the Year-to-Date Successor period), and $6.0 million in the Predecessor period, which were recorded in the Non-Operating segment.  These pre-tax restructuring and productivity initiatives were comprised of the following:

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• $150.7 million for the Three Month Successor period and $153.0 million for the Year-to-Date Successor period for severance and employee benefit costs relating to the reduction of corporate and field positions across the Company.

• $40.6 million for the Three Month Successor period and Year-to-Date Successor period associated with other implementation costs, primarily for professional fees, and contract and lease termination costs.

• $7.4 million for the Three Month Successor period and Year-to-Date Successor period, and $6.0 million for the Predecessor period relating to asset write-downs and accelerated depreciation for the closure of corporate offices and a factory in China and the reduction of manufacturing capacity of a factory in the U.K.

Of the $198.7 million total pre-tax charges for the three months ended October 27, 2013, $38.9 million was recorded in Cost of products sold and $159.8 million in Selling, general and administrative expenses ("SG&A"). Of the $201.0 million total pre-tax charges in the Year-to-Date Successor period, $40.9 million was recorded in Cost of products sold and $160.1 million in SG&A.

The Company does not include productivity charges in the results of its reportable segments. The pre-tax impact of allocating such charges to segment results would have been as follows:

	Successor				Predecessor
	Three months ended October 27, 2013		February 8 - October 27, 2013		April 29 - June 7, 2013
	(In millions)
North American Consumer Products	$	43.7	$	43.7	$	—
Europe	63.8		63.8		3.6
Asia/Pacific	7.2		9.5		2.4
U.S. Foodservice	21.8		21.8		—
Rest of World	17.5		17.5		—
Non-Operating	44.7		44.7		—
Total productivity charges	$	198.7	$	201.0	$	6.0

On November 14, 2013, the Company announced the planned closure and consolidation of 3 factories in the U.S. and Canada by the middle of calendar year 2014.  The number of employees expected to be impacted by these 3 plant closures and consolidation is approximately 1,350. The Company currently estimates it will incur total charges of approximately $63 million related to severance benefits and other severance-related expenses related to these factory closures.  In addition the Company will recognize accelerated depreciation on assets to be disposed of.

The severance-related charges that the Company expects to incur in connection with these factory workforce reductions and factory closures are subject to a number of assumptions and may differ from actual results.  The Company may also incur other charges not currently contemplated due to events that may occur as a result of, or related to, these cost reductions.

Activity in other accrued liability balances for restructuring and productivity charges incurred by the Successor were as follows:

	Severance and other severance related costs		Other exit costs (a)		Total
	(In millions)
Fiscal 2014 restructuring and productivity initiatives	$	153.0	$	40.6	$	193.6
Cash payments	38.0		10.5		48.5
Accrual balance at October 27, 2013	$	115.0	$	30.1	$	145.1

______________________________________

(a) Other exit costs primarily represent professional fees, and contract and lease termination costs.

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(5) Discontinued Operations

During the first quarter of Fiscal 2014, the Company completed the sale of Shanghai LongFong Foods ("LongFong") business, resulting in an insignificant pre-tax and after-tax loss which was recorded in discontinued operations in the Successor period. The net assets held for sale related to LongFong are reported in Other current assets, Other non-current assets, Other accrued liabilities and Other non-current liabilities on the condensed consolidated balance sheet as of April 28, 2013 as they are not material for separate balance sheet presentation.

During the first quarter of Fiscal 2013, the Company completed the sale of its U.S. Foodservice frozen desserts business, resulting in a $32.7 million pre-tax ($21.1 million after-tax) loss which has been recorded in discontinued operations.

The operating results related to these businesses have been included in discontinued operations in the Company's consolidated statements of income for all periods presented. The following table presents summarized operating results for these discontinued operations:

	Second Quarter Ended
	Successor			Predecessor
	October 27, 2013 FY 2014			October 28, 2012 FY 2013
	(In millions)
Sales	$	—		$	5.7
Net after-tax losses	$	(3.9	)	$	(4.6	)
Tax benefit on losses	$	—		$	—

	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(In millions)
Sales	$	2.9		$	1.2		15.9
Net after-tax losses	$	(5.6	)	$	(1.3	)	(12.3	)
Tax benefit on losses	$	—		$	—		0.6

(6) Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the Predecessor period April 29, 2013 to June 7, 2013, and the Successor period February 8, 2013 to October 27, 2013, by reportable segment, are as follows:

	North American Consumer Products			Europe		Asia/Pacific			U.S. Foodservice		Rest of World			Total
	(In thousands)
Predecessor
Balance at April 28, 2013	1,101,927			1,105,461		359,842			256,775		255,245			3,079,250
Translation adjustments	(409		)	9,849		(16,523		)	—		(15,986		)	(23,069		)
Balance at June 7, 2013	1,101,518			1,115,310		343,319			256,775		239,259			3,056,181
Successor
Balance at February 8, 2013	—			—		—			—		—			—
Acquisition (see Note 2)	8,698,266			3,689,719		1,403,531			1,450,552		318,224			15,560,292
Translation adjustments	(24,853		)	135,802		(16,315		)	—		(2,432		)	92,202
Balance at October 27, 2013	$	8,673,413		$	3,825,521	$	1,387,216		$	1,450,552	$	315,792		$	15,652,494

14

Prior to the Merger, total goodwill accumulated impairment losses for the Company since Fiscal 2003 were $120.6 million consisting of $54.5 million for Europe, $38.7 million for Asia/Pacific and $27.4 million for Rest of World. As a result of the Merger, there were no accumulated impairment losses to goodwill as of October 27, 2013.

Intangible assets not subject to amortization at October 27, 2013 totaled $12.39 billion and consisted of $11.56 billion of trademarks, $776.9 million of licenses, and $50.6 million of other intangibles. Intangible assets not subject to amortization at April 28, 2013 totaled $981.3 million and consisted of $846.9 million of trademarks, $115.0 million of recipes/processes, and $19.4 million of licenses. The increase in intangible assets, not subject to amortization expense, since April 28, 2013 is due to purchase accounting adjustments as a result of the Merger and subsequent translation adjustments due to changes in foreign exchange rates.

Other intangible assets at October 27, 2013 and April 28, 2013, subject to amortization expense, are as follows:

	Successor							Predecessor
	October 27, 2013							April 28, 2013
	Gross		Accum Amort			Net		Gross		Accum Amort			Net
	(In thousands)
Customer-related assets	1,136,287		(19,437		)	1,116,850		209,428		(77,310		)	132,118
Licenses	123,119		(6,792		)	116,327		208,186		(169,666		)	38,520
Other	24,644		(747		)	23,897		419,642		(156,032		)	263,610
	$	1,284,050	$	(26,976	)	$	1,257,074	$	837,256	$	(403,008	)	$	434,248

Amortization expense for Other intangible assets was $3.2 million during the Predecessor period and $27.0 million during the Successor period and $19.7 million for the second quarter ended October 28, 2012. Based upon the amortizable intangible assets recorded on the balance sheet as of October 27, 2013, average annual amortization expense for each of the next five fiscal years is estimated to be approximately $71.0 million.

(7) Income Taxes

The provision for income taxes consists of provisions for federal, state and foreign income taxes. The Company operates in an international environment with almost 70% of its sales outside the U.S.  Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, Italy, the United Kingdom and the United States. The Company has substantially concluded all national income tax matters for years through Fiscal 2011 for the United Kingdom, through Fiscal 2010 for the U.S., and through Fiscal 2008 for Australia, Canada, and Italy.

The quarterly income tax provision is ordinarily comprised of tax on ordinary income using the most recent estimated annual effective tax rate, adjusted for the effect of discrete items.  However, due to the recent acquisition of Heinz and related costs incurred, the restructuring and productivity charges and significant amount of special items anticipated for the remainder of the year, a reliable estimated annual effective tax rate does not currently exist.  Accordingly, the income tax benefit recognized for both the second quarter ending October 27, 2013, and the period February 8, 2013 through October 27, 2013, is the amount of tax expense associated with actual results generated in each period.

For the year to date Successor period ended October 27, 2013, the Company recorded a tax benefit of $220.7 million, or 87% of pretax loss. For the Predecessor period ended June 7, 2013, the Company recorded a tax expense of $61.1 million, or (46.9%) of pretax loss. For the six month period ending October 28, 2012, the Company recorded a tax expense of $92.6 million, or 13.6% of pretax income.

The tax benefit in the Successor period included a benefit of $105.6 million related to the impact on deferred taxes of a 300 basis point statutory tax rate reduction in the United Kingdom which was enacted during July 2013, and a favorable jurisdictional income mix. The benefit of the statutory tax rate reduction in the United Kingdom was significantly increased as compared to the prior year due to the increase in deferred tax liabilities recorded in purchase accounting for the Merger.

The tax provision for the Fiscal 2014 Predecessor period was principally caused by the effect of repatriation costs of approximately $100 million for earnings of foreign subsidiaries distributed during the period and the effect of current period nondeductible Merger related costs.

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The tax provision for the six month period ending October 28, 2012 included a $63.0 million tax benefit that occurred as a result of an increase in the tax basis of both fixed and intangible assets resulting from a tax-free reorganization in a foreign jurisdiction, a $13.0 million tax benefit from an intangible asset revaluation for tax purposes elected by a foreign subsidiary, and a benefit of $9.7 million related to a 200 basis point statutory tax rate reduction also in the United Kingdom.

The total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $57.9 million and $45.4 million on October 27, 2013 and April 28, 2013, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $49.6 million and $38.3 million on October 27, 2013, and April 28, 2013, respectively. It is reasonably possible that the amount of unrecognized tax benefits will decrease by as much as $20.2 million in the next 12 months primarily due to the progression of state and foreign audits in process.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. The total amounts of interest accrued at October 27, 2013 and April 28, 2013 were $10.6 million and $8.5 million, respectively. The corresponding amounts of accrued penalties at October 27, 2013 and April 28, 2013 were $9.1 million and $6.9 million, respectively.

(8) Employees’ Stock Incentive Plans and Management Incentive Plans

In connection with the Merger and in accordance with the existing change in control provisions in these plans, all outstanding stock option awards, restricted stock units (except for certain retention RSUs as discussed below) and restricted stock awards issued pursuant to various shareholder-approved plans and a shareholder-authorized employee stock purchase plan were automatically canceled and converted into the right to receive $72.50 in cash. The expense from accelerated vesting of these stock based awards totaling $24.3 million was recorded in Merger related costs in the accompanying statement of operations for the Predecessor period ended June 7, 2013.

Retention RSUs were not canceled in connection with the Merger, andremain subject to the vesting schedule pursuant to the existing terms of the applicable award agreements and the general timing of payment would be in accordance with such terms. Pursuant to the Merger Agreement, these equity awards have been converted into liability awards and for the vested portion of these awards the Company recorded an amount equal to the Merger consideration plus any accrued and unpaid dividend equivalents.

The compensation cost related to equity plans that were in place in the Predecessor periods primarily recognized in SG&A and Merger related costs, and the related tax benefit, are as follows:

	Second Quarter Ended
	Successor		Predecessor
	October 27, 2013 FY 2014		October 28, 2012 FY 2013
	(In millions)
Pre-tax compensation cost	$	0.5	$	11.8
Tax benefit	0.2		4.1
After-tax compensation cost	$	0.3	$	7.7

	Successor		Predecessor
	February 8 - October 27, 2013 FY 2014		April 29 - June 7, 2013 FY 2014		Six Months Ended October 28, 2012 FY 2013
	(In millions)
Pre-tax compensation cost	$	2.4	$	26.1	$	18.7
Tax benefit	0.9		7.9		6.2
After-tax compensation cost	$	1.5	$	18.2	$	12.5

In the first quarter of Fiscal 2014, the Company granted performance awards as permitted in the Fiscal Year 2003 Stock Incentive Plan, subject to the achievement of certain performance goals. These performance awards were tied to the Company’s Relative Total Shareholder Return (“Relative TSR”) Ranking within the defined Long-term Performance

16

Program (“LTPP”) peer group and the two-year average after-tax Return on Invested Capital (“ROIC”) metrics. The Relative TSR metric was based on the two-year cumulative return to shareholders from the change in stock price and dividends paid between the starting and ending dates. These LTPP awards, as well as those granted in the first quarter of Fiscal 2013 were settled in connection with the Merger.

The compensation cost related to LTPP awards primarily recognized in SG&A and the related tax benefit during the Predecessor period are as follows (there was no compensation cost related to LTPP awards in the Successor periods):

	Predecessor
	April 29 - June 7, 2013 FY 2014		Three Months Ended October 28, 2012 FY 2013		Six Months Ended October 28, 2012 FY 2013
Pre-tax compensation cost	$	3.8	$	2.4	$	11.1
Tax benefit	1.3		0.8		3.8
After-tax compensation cost	$	2.5	$	1.6	$	7.3

At October 27, 2013, the Company has no outstanding stock option awards, restricted stock units and restricted stock awards, other than the retention RSUs described above.

During the quarter ended October 27, 2013, the Board adopted the H.J. Heinz Holding Corporation 2013 Omnibus Incentive Plan (the “2013 Omnibus Plan”).  On October 16, 2013, the Company granted non-qualified stock options to purchase up to 14,300,000 shares of Common Stock in H.J. Heinz Holding Corporation to select employees and Directors.  With respect to the 14,300,000 shares underlying such options, the exercise price is $10.00 per share with a five year cliff vesting from the grant date, provided the employee is continuously employed by H.J. Heinz Holding Corporation or one of its subsidiaries or affiliates. The weighted-average grant date fair value of the options granted was $2.43 per share based on the following input assumptions: exercise price of $10.00 per share; risk-free interest rate of 1.41%; expected term of 5 years; expected volatility of 24.3%; expected forfeiture rate of 5.0%; and expected dividend yield of zero.  The Company recorded $0.2 million of share-based compensation expense in selling, general and administrative expenses for the three months ended October 27, 2013 related to stock options.

17

(9) Pensions and Other Post-Retirement Benefits

Following the closing of the Merger, the Company's employees will continue to participate in various employee benefit plans that were in place prior to the acquisition.

The components of net periodic benefit (income)/expense are as follows:

	Second Quarter Ended
	Successor			Predecessor			Successor			Predecessor
	October 27, 2013			October 28, 2012			October 27, 2013			October 28, 2012
	Pension Benefits						Other Retiree Benefits
	(In thousands)
Service cost	$	9,209		$	7,968		$	1,617		$	1,633
Interest cost	31,593			33,371			2,240			2,492
Expected return on plan assets	(51,396		)	(63,290		)	—			—
Amortization of prior service cost/(credit)	—			641			—			(1,544		)
Amortization of unrecognized loss	—			19,180			—			450
Curtailments	14,854			—			(1,021		)	$	—
Settlements	—			333			—			$	—
Special Termination Benefits	739			—			—			—
Net periodic benefit (income)/expense	$	4,999		$	(1,797	)	$	2,836		$	3,031

	Six Months Ended
	Successor						Predecessor
	February 8 - October 27, 2013 FY 2014						April 29 - June 7, 2013 FY 2014						Six Months Ended October 28, 2012 FY 2013
	Pension Benefits			Other Retiree Benefits			Pension Benefits			Other Retiree Benefits			Pension Benefits			Other Retiree Benefits
	(In thousands)
Service cost	$	14,283		$	2,525		$	3,974		$	740		$	15,803		$	3,247
Interest cost	49,016			3,497			13,576			937			66,253			4,965
Expected return on plan assets	(79,739		)	—			(28,826		)	—			(125,630		)	—
Amortization of prior service cost/(credit)	—			—			245			(677		)	1,273			(3,089		)
Amortization of unrecognized loss	—			—			10,460			223			38,084			901
Curtailments	14,854			(1,021		)	—			—			—			—
Settlements	—			—			—			—			1,347			—
Special Termination Benefits	739			—			17,230			—			—			—
Net periodic benefit expense/ (income)	$	(847	)	$	5,001		$	16,659		$	1,223		$	(2,870	)	$	6,024

The reductions in work force resulting from restructuring of the Company triggered curtailment and special termination benefit charges for certain defined benefit plans in the second quarter of FY14. The Company elected to accelerate vesting of benefits under certain supplemental retirement plans upon consummation of the Merger and such plans will be terminated within 364 days of the Merger. The expense associated with the accelerated vesting of $17.2 million was recognized in the Predecessor period ended June 7, 2013.

The amounts recognized for pension benefits as Other non-current assets on the Company's condensed consolidated balance sheets were $428.9 million as of October 27, 2013 and $399.9 million as of April 28, 2013.

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During the first six months of Fiscal 2014, the Company contributed $106 million in the Successor period and $7 million in the Predecessor period to these defined benefit plans. On July 6, 2012, Congress passed the Moving Ahead for Progress in the 21st Century Act, which included pension funding stabilization provisions.  The measure, which is designed to stabilize the discount rate used to determine the funding requirements from the effects of interest rate volatility, will serve to preserve existing credit balances in the Heinz U.S. funded defined benefit pension plans.  The Company expects to make combined cash contributions of approximately $160 million for the period April 29, 2013 through December 29, 2013, none of which relate to these U.S. funded defined benefit pension plans.  However, actual contributions may be affected by pension asset and liability valuations during the year.

(10) Segments

The Company’s segments are primarily organized by geographical area. The composition of segments and measure of segment profitability are consistent with that used by the Company’s management.

Descriptions of the Company’s reportable segments are as follows:

North American Consumer Products—This segment primarily manufactures, markets and sells ketchup, condiments, sauces, pasta meals, and frozen potatoes, entrees, snacks, and appetizers to the grocery channels in the United States of America and includes our Canadian business.

Europe—This segment includes the Company’s operations in Europe and sells products in all of the Company’s categories.

Asia/Pacific—This segment includes the Company’s operations in Australia, New Zealand, India, Japan, China, Papua New Guinea, South Korea, Indonesia, Vietnam and Singapore. This segment’s operations include products in all of the Company’s categories.

U.S. Foodservice—This segment primarily manufactures, markets and sells branded and customized products to commercial and non-commercial food outlets and distributors in the United States of America including ketchup, condiments, sauces and frozen soups.

Rest of World—This segment includes the Company’s operations in Africa, Latin America, and the Middle East that sell products in all of the Company’s categories.

The Company’s management evaluates performance based on several factors including net sales, operating income, and the use of capital resources. Inter-segment revenues, items below the operating income line of the consolidated statements of income and certain costs associated with Fiscal 2014 Restructuring and Productivity Initiatives (see Note 4) and Merger related costs, are not presented by segment, since they are not reflected in the measure of segment profitability reviewed by the Company’s management.

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The following table presents information about the Company’s reportable segments:

	Second Quarter Ended
	Successor			Predecessor
	October 27, 2013 FY 2014			October 28, 2012 FY 2013
	(In thousands)
Net external sales:
North American Consumer Products	$	747,724		$	794,957
Europe	782,573			808,427
Asia/Pacific	561,505			600,607
U.S. Foodservice	346,487			348,028
Rest of World	279,047			269,515
Consolidated Totals	$	2,717,336		$	2,821,534
Operating income/(loss):
North American Consumer Products(a)	$	184,390		$	190,341
Europe(a)	116,812			140,398
Asia/Pacific(a)	9,838			53,818
U.S. Foodservice(a)	57,097			44,223
Rest of World(a)	39,265			27,094
Other:
Non-Operating(b)	(29,409		)	(60,143		)
Special Items(c)	(206,200		)	—
Consolidated Totals	$	171,793		$	395,731

	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(In thousands)
Net external sales:
North American Consumer Products	$	1,144,475		$	307,972		$	1,553,809
Europe	1,225,154			284,657			1,586,343
Asia/Pacific	927,134			272,116			1,250,766
U.S. Foodservice	516,394			135,688			663,374
Rest of World	430,684			112,439			550,692
Consolidated Totals	$	4,243,841		$	1,112,872		$	5,604,984
Operating income/(loss):
North American Consumer Products(a)	$	145,446		$	65,459		$	373,772
Europe(a)	91,759			32,918			277,592
Asia/Pacific(a)	(1,195		)	37,616			132,705
U.S. Foodservice(a)	37,674			15,531			80,873
Rest of World(a)	49,289			10,559			58,107
Other:
Non-Operating(b)	(43,064		)	(16,070		)	(110,922		)
Special Items(c)	(358,734		)	(118,230		)	—
Consolidated Totals	$	(78,825	)	$	27,783		$	812,127

______________________________________

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(a) The negative impact of the inventory step-up adjustment recorded in purchase accounting to operating income in the Successor period was $139.8 million and $0.0 million for North American Consumer Products, $110.3 million and $4.7 million for Europe, $89.6 million and $31.1 million for Asia/Pacific, $33.8 million and $0.0 million for U.S. Foodservice and $9.8 million and $2.5 million for Rest of World for the six and three months ended October 27, 2013, respectively.

(b) Includes corporate overhead, intercompany eliminations and charges not directly attributable to operating segments.

(c) Includes costs related to Fiscal 2014 Restructuring and Productivity Initiatives and Merger related costs including legal, accounting and other professional fees as well as severance and employee benefit costs.

The Company’s revenues are generated via the sale of products in the following categories:

	Second Quarter Ended
	Successor		Predecessor
	October 27, 2013 FY 2014		October 28, 2012 FY 2013
	(In thousands)
Ketchup and Sauces	$	1,330,635	$	1,315,116
Meals and Snacks	968,823		1,067,216
Infant/Nutrition	272,965		285,254
Other	144,913		153,948
Total	$	2,717,336	$	2,821,534

	Successor		Predecessor
	February 8 - October 27, 2013 FY 2014		April 29 - June 7, 2013 FY 2014		Six Months Ended October 28, 2012 FY 2013
	(In thousands)
Ketchup and Sauces	$	2,103,758	$	533,932	$	2,634,416
Meals and Snacks	1,461,004		359,412		2,030,095
Infant/Nutrition	438,380		118,528		581,971
Other	240,699		101,000		358,502
Total	$	4,243,841	$	1,112,872	$	5,604,984

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(11) Comprehensive Income/(Loss)

The following tables summarize the allocation of total comprehensive income/(loss) between H. J. Heinz Company and the noncontrolling interest for the second quarter and six months endedOctober 27, 2013 and October 28, 2012, respectively:

	Second Quarter Ended
	Successor									Predecessor
	October 27, 2013 FY 2014									October 28, 2012 FY 2013
	H. J. Heinz Company			Noncontrolling Interest			Total			H. J. Heinz Company		Noncontrolling Interest			Total
	(In thousands)
Net (loss)/income	$	34,041		$	2,071		$	36,112		$	289,444	$	2,144		$	291,588
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	389,606			(1,210		)	388,396			146,681		(1,702		)	144,979
Net deferred (losses) on net investment hedges from periodic revaluations	(101,938		)	—			(101,938		)	—		—			—
Net pension and post-retirement benefit (losses)/gains	14,213			—			14,213			—		—			—
Reclassification of net pension and post-retirement benefit losses/(gains) to net income	—			—			—			13,438		12			13,450
Net deferred (losses)/gains on other derivatives from periodic revaluations	(59,799		)	(279		)	(60,078		)	704		1			705
Net deferred losses/(gains) on derivatives reclassified to earnings	(951		)	(9		)	(960		)	4,927		(37		)	4,890
Total comprehensive income/(loss)	275,172			573			275,745			455,194		418			455,612

	Successor									Predecessor
	February 8 - October 27, 2013 FY 2014									April 29 - June 7, 2013 FY 2014									Six Months Ended October 28, 2012 FY 2013
	H. J. Heinz Company			Noncontrolling Interest			Total			H. J. Heinz Company			Noncontrolling Interest			Total			H. J. Heinz Company			Noncontrolling Interest			Total
	(In thousands)
Net (loss)/income	$	(41,835	)	$	3,346		$	(38,489	)	$	(195,571	)	$	2,874		$	(192,697	)	$	547,471		$	8,795		$	556,266
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	227,608			(7,576		)	220,032			(93,780		)	(4,083		)	(97,863		)	(148,694		)	(14,733		)	(163,427		)
Net deferred (losses) on net investment hedges from periodic revaluations	(101,938		)	—			(101,938		)	—			—			—			—			—			—
Net pension and post-retirement benefit (losses)/gains	14,213			—			14,213			—			—			—			—			—			—
Reclassification of net pension and post-retirement benefit losses/(gains) to net income	—			—			—			7,291			(25		)	7,266			27,092			59			27,151
Net deferred (losses)/gains on other derivatives from periodic revaluations	27,343			(211		)	27,132			(1,099		)	40			(1,059		)	6,884			33			6,917
Net deferred losses/(gains) on derivatives reclassified to earnings	(1,058		)	(9		)	(1,067		)	6,551			1			6,552			(4,175		)	(40		)	(4,215		)
Total comprehensive income/(loss)	$	124,333		$	(4,450	)	$	119,883		$	(276,608	)	$	(1,193	)	$	(277,801	)	$	428,578		$	(5,886	)	$	422,692

22

The tax (expense)/benefit associated with each component of other comprehensive income/(loss) are as follows:

	Second Quarter Ended
	H. J. Heinz Company			Noncontrolling Interest			Total
	(In thousands)
Predecessor
October 28, 2012 FY 2013
Foreign currency translation adjustments	$	(164	)	$	—		$	(164	)
Reclassification of net pension and post-retirement benefit losses to net income	$	5,675		$	—		$	5,675
Net change in fair value of cash flow hedges	$	320		$	(1	)	$	319
Net hedging gains/losses reclassified into earnings	$	2,560		$	(13	)	$	2,547
Successor
October 27, 2013 FY 2014
Foreign currency translation adjustments	$	153		$	—		$	153
Net change in fair value of net investment hedges	$	64,491		$	—		$	64,491
Net pension and post-retirement benefit (losses)/gains	$	(3,480	)	$	—		$	(3,480	)
Net change in fair value of cash flow hedges	$	31,762		$	93		$	31,855
Net hedging gains/losses reclassified into earnings	$	365		$	(3	)	$	362

	Six Months Ended
	H. J. Heinz Company			Noncontrolling Interest			Total
	(In thousands)
Predecessor
October 28, 2012 FY 2013
Foreign currency translation adjustments	$	(3	)	$	—		$	(3	)
Reclassification of net pension and post-retirement benefit losses to net income	$	11,481		$	—		$	11,481
Net change in fair value of cash flow hedges	$	(3,756	)	$	(12	)	$	(3,768	)
Net hedging gains/losses reclassified into earnings	$	(3,216	)	$	(14	)	$	(3,230	)
April 29 - June 7, 2013
Foreign currency translation adjustments	$	(116	)	$	—		$	(116	)
Reclassification of net pension and post-retirement benefit losses/(gains) to net income	$	2,958		$	—		$	2,958
Net change in fair value of cash flow hedges	$	377		$	(13	)	$	364
Net hedging gains/losses reclassified into earnings	$	2,822		$	1		$	2,823
Successor
February 8 - October 27, 2013
Foreign currency translation adjustments	$	106		$	—		$	106
Net change in fair value of net investment hedges	$	64,491		$	—		$	64,491
Net pension and post-retirement benefit (losses)/gains	$	(3,480	)	$	—		$	(3,480	)
Net change in fair value of cash flow hedges	$	(11,924	)	$	74		$	(11,850	)
Net hedging gains/losses reclassified into earnings	$	3		$	(3	)	$	—

23

The following table provides a summary of the changes in the carrying amount of accumulated other comprehensive (loss)/income, net of tax, by component attributable to H.J. Heinz Company:

	Foreign currency translation adjustments			Net pension and post retirement benefit			Net cash flow hedges			Total
	(In thousands)
Predecessor
Balance as of April 28, 2013	$	(236,412	)	$	(962,653	)	$	24,527		(1,174,538		)
Other comprehensive (loss)/income before reclassifications	(93,780		)	—			(1,099		)	(94,879		)
Amounts reclassified from accumulated other comprehensive loss	—			7,291			6,551			13,842
Net current-period other comprehensive loss	(93,780		)	7,291			5,452			(81,037		)
Balance as of June 7, 2013	$	(330,192	)	$	(955,362	)	$	29,979		$	(1,255,575	)
Successor
Balance as of February 8, 2013	$	—		$	—		$	—		—
Other comprehensive (loss)/income before reclassifications	227,608			14,213			27,343			269,164
Net change in fair value of net investment hedges	(101,938		)	—			—			(101,938		)
Amounts reclassified from accumulated other comprehensive loss	—			—			(1,058		)	(1,058		)
Net current-period other comprehensive loss	125,670			14,213			26,285			166,168
Balance as of October 27, 2013	$	125,670		$	14,213		$	26,285		$	166,168

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The following table presents the affected earnings line for reclassifications out of accumulated other comprehensive income/(loss), net of tax, by component attributable to H.J. Heinz Company for the second quarter and six months endedOctober 27, 2013:

Accumulated other comprehensive income/(loss) component	Reclassified from accumulated other comprehensive income/(loss) to earnings						Reclassified from accumulated other comprehensive income/(loss) to earnings			Line affected by reclassification
(In thousands)
	Successor						Predecessor
	Three months ended October 27, 2013 FY 2014			February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014
Gains/(losses) on cash flow hedges:
Foreign exchange contracts	$	(558	)	$	(325	)	$	990		Sales
Foreign exchange contracts	1,190			1,427			1,814			Cost of products sold
Foreign exchange contracts	—			—			(1,859		)	Other income
Foreign exchange contracts	(46		)	(46		)	—			Selling, general, and administrative expenses
Foreign exchange contracts	—			—			61			Interest expense
Interest rate contracts	—			—			(20		)	Interest expense
Cross-currency interest rate swap contracts	—			—			(538		)	Other expense
Cross-currency interest rate swap contracts	—			—			(9,821		)	Interest expense
	586			1,056			(9,373		)	Gain/(loss) from continuing operations before income tax
	365			2			2,822			Provision for income taxes
	$	951		$	1,058		$	(6,551	)	Gain/(loss) from continuing operations
Gains/(losses) on pension and post retirement benefit:
Actuarial gains/(losses)	$	—		$	—		$	(10,681	)	(a)
Prior service credit/(cost)	—			—			432			(a)
	—			—			(10,249		)	Loss from continuing operations before income tax
	—			—			2,958			Provision for income taxes
	$	—		$	—		$	(7,291	)	Loss from continuing operations

______________________________________

(a) As these components are included in the computation of net periodic pension and post retirement benefit costs refer to Note 9 for further details.

25

(12) Changes in Equity

The following table provides a summary of the changes in the carrying amounts of total equity, H. J. Heinz Company shareholders’ equity and equity attributable to the noncontrolling interest:

	Capital Stock		Treasury Stock			Additional Capital			Retained Earnings			Accum OCI			Noncontrolling Interest		Total
Predecessor	(In thousands)
Balance as of April 28, 2013	$	107,774	$	(4,647,242	)	$	608,504		$	7,907,033		$	(1,174,538	)	$	47,290	$	2,848,821
Comprehensive (loss)/ income(a)	—		—			—			(195,571		)	(81,037		)	502		(276,106		)
Stock options exercised, net of shares tendered for payment	—		1,133			36,434			—			—			—		37,567
Stock option expense	—		—			(143,061		)	—			—			—		(143,061		)
Restricted stock unit activity	—		351			(68,499		)	—			—			—		(68,148		)
Other	—		36			(48		)	(15		)	—			—		(27		)
Balance as of June 7, 2013	$	107,774	$	(4,645,722	)	$	433,330		$	7,711,447		$	(1,255,575	)	$	47,792	$	2,399,046

	Capital Stock			Additional Capital		Accumulated deficit			Accum OCI		Noncontrolling Interest			Total
Successor	(In thousands)
Balance as of February 8, 2013	$	—		$	—	$	—		$	—	$	—		$	—
Common stock issued to Holdings (b)	16,500,000			—		—			—		—			16,500,000
Fair Value of Noncontrolling Interest as of June 8, 2013	—			—		—			—		230,000			230,000
Comprehensive (loss)/income (a)	—			—		(41,835		)	166,168		(4,950		)	119,383
Dividends Paid to Shareholder	(180,000		)	—		—			—		—			(180,000		)
Stock option expense	—			224		—			—		—			224
Balance at October 27, 2013	$	16,320,000		$	224	$	(41,835	)	$	166,168	$	225,050		$	16,669,607

______________________________________

(a) The allocation of the individual components of comprehensive (loss)/income attributable to H. J. Heinz Company and the noncontrolling interest is disclosed in Note 11.

(b) The Company issued 100 shares of common stock with no par value per share to Holdings.

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(13) Debt

The Company's long-term debt consists of the following:

	Successor			Predecessor
	October 27, 2013			April 28, 2013
	(Unaudited)
	(In thousands)
$2.95 billion Term B-1 Loan	$	2,928,804		$	—
$6.55 billion Term B-2 Loan	6,518,134			—
$3.10 billion 4.25% Second Lien Senior Secured Notes due 2020	3,100,000			—
Other U.S. Dollar Debt due May 2013 — November 2034 (0.94%—7.96%)	10,845			25,688
Other Non-U.S. Dollar Debt due May 2013 — May 2023 (3.50%—11.00%)	73,296			56,293
5.35% U.S. Dollar Notes due July 2013	—			499,993
8.0% Heinz Finance Preferred Stock due July 2013	—			350,000
Japanese Yen Credit Agreement due December 2013 (variable rate)	—			163,182
U.S. Dollar Private Placement Notes due May 2014 — May 2021 (2.11% - 4.23%)	—			500,000
Japanese Yen Credit Agreement due October 2015 (variable rate)	—			152,983
U.S. Dollar Private Placement Notes due July 2016 — July 2018 (2.86% - 3.55%)	—			100,000
2.00% U.S. Dollar Notes due September 2016	58,308			299,933
1.50% U.S. Dollar Notes due March 2017	17,742			299,648
U.S. Dollar Remarketable Securities due December 2020	—			119,000
3.125% U.S. Dollar Notes due September 2021	34,433			395,772
2.85% U.S. Dollar Notes due March 2022	5,599			299,565
$235 million 6.375% U.S. Dollar Debentures due July 2028	258,336			231,396
£125 million6.25% British Pound Notes due February 2030	214,408			192,376
$437 million 6.75% U.S. Dollar Notes due March 2032	477,313			435,185
$931 million 7.125% U.S. Dollar Notes due August 2039	1,027,506			628,082
	14,724,724			4,749,096
Hedge Accounting Adjustments (See Note 16)	—			122,455
Less portion due within one year	(106,353		)	(1,023,212		)
Total long-term debt	$	14,618,371		$	3,848,339
Weighted-average interest rate on long-term debt, including the impact of applicable interest rate swaps	4.01		%	4.07		%

Senior Credit Facilities

The Senior Credit Facilities are with a syndicate of banks and other financial institutions and provides financing of up to $9.5 billion and consist of (i)(a) term B-1 loans in an aggregate principal amount of $2.95 billion (the “B-1 Loans”) and (b) term B-2 loans in aggregate principal amount of $6.55 billion (the “B-2 Loans”) in each case under the new senior secured term loan facilities (the “Term Loan Facilities”) and (ii) revolving loans of up to $2.0 billion (including revolving loans, swingline loans and letters of credit), a portion of which may be denominated in Euro, Sterling, Australian Dollars, Japanese Yen or New Zealand Dollars, under the new senior secured revolving loan facilities (the “Revolving Credit Facilities” and, together with the Term Loan Facilities, the "Senior Credit Facilities"). Concurrently with the consummation of the Merger, the full amount of the term loan was drawn, and no revolving loans were drawn.

Borrowings under the Term Loan Facilities have tranches of 6 and 7 year maturities and fluctuating interest rates based on, at the Company's election, base rate or LIBOR plus a spread on each of the tranches, with respective spreads ranging from 125-150 basis points for base rate loans with a 2% base rate floor and 225-250 basis points for LIBOR loans with a 1% LIBOR floor. Loans under the revolving credit facilities have 5 year maturities and a fluctuating interest rate based

27

on, at the Company's election, base rate or LIBOR, with respective spreads ranging from 50-100 basis points for base rate loans and 150-200 basis points for LIBOR loans, on which nothing is currently drawn.

The obligations of the Company under the Senior Credit Facilities are guaranteed by Holdings and each direct and indirect, existing and future, domestic material wholly-owned restricted subsidiary of the Company. The Senior Credit Facilities and any swap agreements and cash management arrangements provided by any party to the Senior Credit Facilities or any of its affiliates are expected to be secured on a first priority basis by a perfected security interest in substantially all of the Company's and each guarantor's tangible and intangible assets (subject to certain exceptions), including U.S. registered intellectual property, owned real property above a value to be agreed and all of the capital stock of the borrower and all capital stock directly held by the borrower or any subsidiary guarantor of each of its wholly-owned material restricted subsidiaries (limited to 65% of the capital stock of foreign subsidiaries).

The Senior Credit Facilities contain a number of customary affirmative and negative covenants that, among other things, limits or restricts the ability of the Company and its restricted subsidiaries to incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers, consolidations, liquidations and dissolutions (other than the Merger); sell assets; pay dividends and make other payments in respect of capital stock; make acquisitions, investments, loans and advances; pay and modify the terms of certain indebtedness; engage in certain transactions with affiliates; enter into negative pledge clauses and clauses restricting subsidiary distributions; and change its line of business.

In addition, under the Revolving Credit Facilities, the Company is required to comply with a specified first lien senior secured leverage ratio to the extent any loans are outstanding under the New Revolving Credit Facility or Letters of Credit issued and outstanding thereunder exceed $50 million as of the end of any fiscal quarter. The Senior Credit Facilities also contains certain customary representations and warranties, affirmative covenants and events of default. As of October 27, 2013, the Company is in compliance with these credit facility covenants.

4.25% Second Lien Senior Secured Notes

On April 1, 2013, in connection with the Merger, Merger Subsidiary completed the private placement of $3.1 billion aggregate principal amount of 4.25% Second Lien Senior Secured Notes due 2020 (the “Notes”) to initial purchasers for resale by the Initial Purchasers to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the United States under Regulation S of the Securities Act. The Notes were issued pursuant to an indenture (the “Indenture”), dated as of April 1, 2013, by and among Merger Subsidiary, Holdings and Wells Fargo Bank, National Association, as trustee (in such capacity, the “Trustee”) and as collateral agent (in such capacity, the “Collateral Agent”).

On June 7, 2013, the Company, certain of its direct and indirect wholly owned domestic subsidiaries (the “Guarantors”), the Trustee and the Collateral Agent entered into a supplemental indenture (the “Supplemental Indenture”) to the Indenture pursuant to which the Company assumed all of the obligations of Merger Subsidiary as issuer of the Notes. Also on June 7, 2013, in connection with the Merger, we executed a Joinder Agreement (the “Purchase Agreement Joinder”) to the Purchase Agreement, dated March 22, 2013 (the “Purchase Agreement”), among Merger Subsidiary, Parent and the several initial purchasers named in the schedule thereto (the “Initial Purchasers”), relating to the issuance and sale by Merger Subsidiary to the Initial Purchasers of $3.1 billion in aggregate principal amount of the Notes, pursuant to which the H. J. Heinz Company and certain of its subsidiaries became parties to the Purchase Agreement.

Interest on the Notes accrues at the rate of 4.25% per annum and is payable, in cash, semi-annually in arrears on each date April 15 and October 15, beginning on October 15, 2013, to holders at the close of business on April 1 and October 1 immediately preceding the applicable interest payment date. Interest on the Notes accrues from and includes the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months. Each interest period will end on (but not include) the relevant interest payment date.

The Notes are jointly and severally, unconditionally guaranteed on a senior secured basis, by Holdings and each direct and indirect, existing and future, domestic material wholly-owned restricted subsidiary that guarantee our obligations under the Senior Credit Facilities.

The Indenture (as supplemented by the Supplemental Indenture) limits the ability of the Company and its restricted subsidiaries to incur additional indebtedness or guarantee indebtedness; create liens or use assets as security in other transactions; declare or pay dividends, redeem stock or make other distributions to stockholders; make investments; merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets; enter into transactions with affiliates;

28

sell or transfer certain assets; and agree to certain restrictions on the ability of restricted subsidiaries to make payments to us. We are in compliance with these covenants as of October 27, 2013.

The Notes can be redeemed at any time prior to April 15, 2015 by paying a make-whole premium, plus accrued and unpaid interest to the redemption date. We may redeem all or part of the Notes at any time after April 15, 2015 at the following percentages: 2015: 102.125%, 2016: 101.0625%, 2017 and thereafter: 100.00%. In addition, at any time prior to April 15, 2015, we may redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 104.25% of the principal amount thereof plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds from certain equity offerings.

If the Company experiences a change of control, the holders of the Notes have the right to require the Company to offer to repurchase the Notes at a purchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest and additional amounts, if any, to the date of such repurchase.

On April 1, 2013, concurrently with the consummation of the issuance of the Notes, we entered into a Registration Rights Agreement (the "Registration Rights Agreement") among Merger Subsidiary, Holdings and Wells Fargo Securities, LLC for itself and on behalf of the Initial Purchasers. On June 7, 2013, we executed a joinder to the Registration Rights Agreement pursuant to which the H. J. Heinz Company and certain of its subsidiaries became parties to the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we agreed, at our own cost, for the benefit of the holders of the Notes, to use our commercially reasonable efforts to file a registration statement (the “exchange offer registration statement”) with respect to a registered exchange offer (each, an “exchange offer”) to exchange such notes for new notes with terms substantially identical in all material respects with the notes (except for the provisions relating to the transfer restrictions and payment of additional interest), to cause the exchange offer registration statement to be declared effective by the SEC under the Securities Act and to consummate the exchange offer not later than 365 days after the Merger closing date.

Financing implications of the acquisition on our existing debt

A substantial portion of the Company's indebtedness was subject to acceleration upon a change of control or required the Company to offer holders the option to repurchase such indebtedness from such holders (assuming such change of control triggered certain downgrades in the ratings of the Company's debt).  On June 7, 2013 certain of the Company's outstanding indebtedness that was not subject to acceleration upon a change of control and that either did not contain change of control repurchase obligations or where the holders did not elect to have such indebtedness repurchased in a change of control offer remain outstanding as at June 7, 2013. 

On March 13, 2013, the Company launched a consent solicitation relating to the 7.125% Notes due 2039 seeking a waiver of the change of control provisions as applicable to the Merger Agreement. As of March 21, 2013, the Company received the required consents to waive such provisions and as a result those notes remain outstanding as at October 27, 2013.

Debt issuance costs

As of October 27, 2013, unamortized debt issuance costs related to new borrowings under our current Senior Credit Facilities and the Notes were $320.8 million, collectively. Amortization of debt issuance costs recorded were $12.4 million and $21.0 million for the three months ended October 27, 2013 and the period February 8, 2013 to October 27, 2013 respectively, and $0.9 million for the Predecessor period. These costs are amortized on a straight-line basis or using the effective interest method, as appropriate, over the respective term of debt to which they specifically relate.

Total long term debt matures as follows:

	Fiscal Year
	2014		2015		2016		2017		2018		There After		Total
	(In thousands)
Maturity /Retirements	$	106,353	$	106,584	$	112,064	$	193,374	$	104,151	$	14,102,198	$	14,724,724

29

(14) Financing Arrangements

On May 31, 2013, the Company entered into an amendment of the $175 million accounts receivable securitization program that extended the term until May 30, 2014. For the sale of receivables under the program, the Company receives cash consideration of up to $175 million and a receivable for the remainder of the purchase price (the "Deferred Purchase Price"). Prior to this amendment, the Company accounted for transfers of receivables pursuant to this program as a sale and removed them from the consolidated balance sheet. This amendment results in the transfers no longer qualifying for sale treatment under U.S. GAAP. As a result, all transfers subsequent to this amendment are accounted for as secured borrowings and the receivables sold pursuant to this program are included on the balance sheet as trade receivables, along with the Deferred Purchase price.

In addition, the Company acted as servicer for approximately $104 million and $191 million of trade receivables which were sold to unrelated third parties without recourse as of October 27, 2013 and April 28, 2013, respectively. These trade receivables are short-term in nature. The proceeds from these sales are also recognized on the statements of cash flows as a component of operating activities.

The Company has not recorded any servicing assets or liabilities as of October 27, 2013 and April 28, 2013 for the arrangements discussed above because the fair value of these servicing agreements as well as the fees earned were not material to the financial statements.

(15) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three levels to prioritize the inputs used in valuations, as defined below:

Level 1:  Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2:  Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3:  Unobservable inputs for the asset or liability.

As of October 27, 2013 and April 28, 2013, the fair values of the Company’s assets and liabilities measured on a recurring basis are categorized as follows:

	Successor								Predecessor
	October 27, 2013									April 28, 2013
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Derivatives(a)	$	—	$	182,826	$	—	$	182,826		$	—	$	68,892	$	—	$	68,892
Total assets at fair value	$	—	$	182,826	$	—	$	182,826		$	—	$	68,892	$	—	$	68,892
Liabilities:
Derivatives(a)	$	—	$	202,834	$	—	$	202,834		$	—	$	79,871	$	—	$	79,871
Total liabilities at fair value	$	—	$	202,834	$	—	$	202,834		$	—	$	79,871	$	—	$	79,871

_______________________________________

(a) Foreign currency derivative contracts are valued based on observable market spot and forward rates and classified within Level 2 of the fair value hierarchy. Interest rate swaps are valued based on observable market swap rates and classified within Level 2 of the fair value hierarchy. Cross-currency interest rate swaps are valued based on observable market spot and swap rates and classified within Level 2 of the fair value hierarchy. Cross-currency swaps are valued based on observable market spot and swap rates and classified within Level 2 of the fair value hierarchy. The total rate of return swap is valued based on observable market swap rates and the Company's credit spread, and is classified within Level 2 of the fair value hierarchy.

30

The aggregate fair value of the Company's long-term debt, including the current portion, was $14.62 billion as compared with the carrying value of $14.72 billion at October 27, 2013, and $5.35 billion as compared with the carrying value of $4.87 billion at April 28, 2013. The Company's debt obligations are valued based on market quotes and are classified within Level 2 of the fair value hierarchy.

There have been no transfers between Levels 1, 2 and 3 in the first quarters of Fiscal 2014 and 2013.

(16) Derivative Financial Instruments and Hedging Activities

The Company operates internationally, with manufacturing and sales facilities in various locations around the world, and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At October 27, 2013, the Company had outstanding currency exchange, interest rate, and cross-currency swap derivative contracts with notional amounts of $2.06 billion, $9 billion and $8.3 billion respectively. At April 28, 2013, the Company had outstanding currency exchange, interest rate, and cross-currency interest rate derivative contracts with notional amounts of $873 million, $160 million and $316 million, respectively.

The following table presents the fair values and corresponding balance sheet captions of the Company’s derivative instruments as of October 27, 2013 and April 28, 2013:

	Successor						Predecessor
	October 27, 2013						April 28, 2013
	Foreign Exchange Contracts		Interest Rate Contracts		Cross-Currency Swap Contracts		Foreign Exchange Contracts		Interest Rate Contracts		Cross- Currency Interest Rate Swap Contracts
	(In thousands)
Assets:
Derivatives designated as hedging instruments:
Other receivables, net	$	29,011	$	—	$	—	$	23,240	$	4,226	$	—
Other non-current assets	6,291		137,894		—		11,498		29,103		—
	35,302		137,894		—		34,738		33,329		—
Derivatives not designated as hedging instruments:
Other receivables, net	9,630		—		—		825		—		—
Other non-current assets	—		—		—		—		—		—
	9,630		—		—		825		—		—
Total assets	$	44,932	$	137,894	$	—	$	35,563	$	33,329	$	—
Liabilities:
Derivatives designated as hedging instruments:
Other payables	$	5,079	$	—	$	—	$	1,508	$	—	$	34,805
Other non-current liabilities	272		—		166,429		217		—		37,520
	5,351		—		166,429		1,725		—		72,325
Derivatives not designated as hedging instruments:
Other payables	31,054		—		—		4,860		—		—
Other non-current liabilities	—		—		—		—		960		—
Total liabilities	$	36,405	$	—	$	166,429	$	6,585	$	960	$	72,325

Refer to Note 15 for further information on how fair value is determined for the Company’s derivatives.

31

The following table presents the pre-tax effect of derivative instruments on the consolidated statement of income for the second quarters endedOctober 27, 2013 and October 28, 2012:

	Second Quarter Ended
	Successor									Predecessor
	October 27, 2013 FY 2014									October 28, 2012 FY 2013
	Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Swap Contracts			Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts
	(In thousands)
Cash flow hedges:
Net gains/(losses) recognized in other comprehensive loss (effective portion)	$	10,692		$	(102,253	)	$	(166,429	)	$	7,184		$	—		$	(6,798	)
Net gains/(losses) reclassified from other comprehensive loss into earnings (effective portion):
Sales	$	(558	)	$	—		$	—		$	2,439		$	—		$	—
Cost of products sold	1,190			—			—			(3,920		)	—			—
Selling, general and administrative expenses	(46		)	—			—			31			—			—
Other expense, net	—			—			—			1,259			—			(5,908		)
Interest expense	—			—			—			(70		)	(59		)	(1,215		)
	586			—			—			(261		)	(59		)	(7,123		)
Fair value hedges:
Net losses recognized in other expense, net	—			—			—			—			(3,900		)	—
Derivatives not designated as hedging instruments:
Unrealized gain on derivative instruments	—			—			—			—			—			—
Net (losses)/gains recognized in other expense, net	(8,881		)	—			—			564			—			—
Net gains recognized in interest income	—			—			—			—			297			—
	(8,881		)	—			—			564			297			—
Total amount recognized in statement of operations	$	(8,295	)	$	—		$	—		$	303		$	(3,662	)	$	(7,123	)

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The following table presents the pre-tax effect of derivative instruments on the consolidated statement of income for the six months endedOctober 27, 2013 and October 28, 2012:

	Successor									Predecessor
	February 8 - October 27, 2013 FY 2014									April 29 - June 7, 2013 FY 2014									Six Months Ended October 28, 2012 FY 2013
	Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Swap Contracts			Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts			Foreign Exchange Contracts			Interest Rate Contracts			Cross-Currency Interest Rate Swap Contracts
	(In thousands)
Cash flow hedges:
Net gains/(losses) recognized in other comprehensive loss (effective portion)	$	19,308		$	19,959		$	(166,429	)	$	2,603		$	—		$	(4,079	)	$	12,360		$	—		$	(1,675	)
Net (losses)/gains reclassified from other comprehensive loss into earnings (effective portion):
Sales	$	(325	)	$	—		$	—		$	990		$	—		$	—		$	4,184		$	—		$	—
Cost of products sold	1,427			—			—			1,814			—			—			(5,288		)	—			—
Selling, general and administrative expenses	(46		)	—			—			—			—			—			(117		)	—			—
Other expense, net	—			—			—			(1,858		)	—			(9,821		)	8,559			—			3,009
Interest income/(expense)	—			—			—			61			(20		)	(538		)	(120		)	(118		)	(2,667		)
	1,056			—			—			1,007			(20		)	(10,359		)	7,218			(118		)	342
Fair value hedges:
Net (losses)/gains recognized in other expense, net	—			(180		)	—			—			(5,925		)	—			—			734			—
Derivatives not designated as hedging instruments:
Unrealized gain on derivative instruments	—			117,934			—			—			—			—			—			—			—
Net losses recognized in other expense, net	(27,270		)	—			—			(3,890		)	—			—			(1,111		)	—			—
Net gains recognized in interest income	—			—			—			—			—			—			—			490			—
	(27,270		)	117,934			—			(3,890		)	—			—			(1,111		)	490			—
Total amount recognized in statement of operations	$	(26,214	)	$	117,754		$	—		$	(14,249	)	$	(10,379	)	$	(10,359	)	$	7,213		$	1,106		$	118,096

Foreign Currency Hedging:

The Company uses forward contracts and to a lesser extent, option contracts to mitigate its foreign currency exchange rate exposure due to forecasted purchases of raw materials and sales of finished goods, and future settlement of foreign currency denominated assets and liabilities. The Company’s principal foreign currency exposures that are hedged include the Australian dollar, British pound sterling, Canadian dollar, Euro, and the New Zealand dollar. Derivatives used to hedge forecasted transactions and specific cash flows associated with foreign currency denominated financial assets and liabilities that meet the criteria for hedge accounting are designated as cash flow hedges. Consequently, the effective portion of gains and losses is deferred as a component of accumulated other comprehensive loss and is recognized in earnings at the time the hedged item affects earnings, in the same line item as the underlying hedged item.

Interest Rate Hedging:

The Company uses interest rate swaps to manage debt and interest rate exposures. The Company is exposed to interest rate volatility with regard to existing and future issuances of fixed and floating rate debt. Primary exposures include U.S. Treasury rates and London Interbank Offered Rates (LIBOR). Derivatives used to hedge risk associated with changes in the fair value of certain fixed-rate debt obligations are primarily designated as fair value hedges. Consequently, changes in the fair value of these derivatives, along with changes in the fair value of the hedged debt obligations that are attributable to the hedged risk, are recognized in current period earnings.

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The Company also entered into cross-currency interest rate swaps which were designated as cash flow hedges of the future payments of loan principal and interest associated with certain foreign denominated variable rate debt obligations. As a result of the merger, these contracts were terminated in May 2013.

Prior to the Merger date, Merger Subsidiary entered into interest rate swaps to mitigate exposure to variable rate debt that was raised to finance the acquisition. These agreements were not designated as hedging instruments prior to the acquisition date, and as such, we recognized the fair value of these instruments as an asset with income of $117.9 million in the Successor period. As a result of the Merger and the transactions entered into in connection therewith, we have assumed the liabilities and obligations of Merger Subsidiary. Upon consummation of the acquisition, these interest rate swaps with an aggregate notional amount of $9.0 billion met the criteria for hedge accounting and were designated as hedges of future interest payments.

Deferred Hedging Gains and Losses:

As of October 27, 2013, the Company is hedging forecasted transactions for periods not exceeding 2 years. During the next 12 months, the Company expects $10.4 million of net deferred gains reported in accumulated other comprehensive loss to be reclassified to earnings, assuming market rates remain constant through contract maturities. Hedge ineffectiveness related to cash flow hedges as well as reclassifications to earnings due to hedged transactions no longer expected to occur, which is reported in current period earnings as other income/(expense), net, was not significant for the first quarters of Fiscal 2014 and Fiscal 2013, respectively.

Hedges of Net Investments in Foreign Operations:

We have numerous investments in our foreign subsidiaries, the net assets of which are exposed to volatility in foreign currency exchange rates. Beginning in October 2013, we have used cross currency swaps to hedge a portion of our net investment in such foreign operations against adverse movements in exchange rates. We designated cross currency swap contracts between pound sterling and USD, the Euro and USD, the Australian Dollar and USD, and the Japanese Yen and USD, as net investment hedges of a portion of our equity in foreign operations in those currencies. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates, are economically offset by movements in the fair values of our cross currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in foreign currency translation adjustments within accumulated other comprehensive income (loss), net of tax. Such amounts will remain in other comprehensive income (loss) until the complete or substantially complete liquidation of our investment in the underlying foreign operations.

In relation to the cross currency swaps:

•We pay 6.462% per annum on the pound sterling notional amount of £2.795 billion and receive 6.15% per annum on the USD notional amount of $4.5 billion on each January 8, April 8, July 8 and October 8, through the maturity date of the swap, which was also expected to be on October 8, 2019.

•We pay 5.696% per annum on the Euro notional amount of €2.21 billion and receive 6.15% per annum on the USD notional amount of $3.0 billion on each January 9, April 9, July 9 and October 9, through the maturity date of the swap, which was also expected to be on October 9, 2019.

•We pay 9.164% per annum on the Australian dollar notional amount of A$793.8 million and receive 6.15% per annum on the USD notional amount of $750.0 million on each January 10, April 10, July 10 and October 10, through the maturity date of the swap, which was also expected to be on October 10, 2019.

•We pay 4.104% per annum on the Japanese yen notional amount of ¥4,854.5 billion and receive 6.15% per annum on the USD notional amount of $50.0 million on each January 11, April 11, July 11 and October 11, through the maturity date of the swap, which was also expected to be on October 11, 2019.

The net amounts paid or received on a quarterly basis are recorded in Other income/(expense), net, in the consolidated statement of operations, and are immaterial in the quarter ended October 27, 2013.

Other Activities:

The Company enters into certain derivative contracts in accordance with its risk management strategy that do not meet the criteria for hedge accounting but which have the economic impact of largely mitigating foreign currency or interest rate exposures. The Company maintained foreign currency forward contracts with a total notional amount of $1,081.2 million and $369.9 million that did not meet the criteria for hedge accounting as of October 27, 2013 and April 28, 2013, respectively. These forward contracts are accounted for on a full mark-to-market basis through current earnings, with gains and losses recorded as a component of other income/(expense), net. Net unrealized gains/(losses) related to

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outstanding contracts totaled $(19.8) million and $(4.0) million as of October 27, 2013 and April 28, 2013, respectively. These contracts are scheduled to mature within one year.

During the first quarter of Fiscal year 2013, forward contracts were put into place to help mitigate the unfavorable impact of translation associated with key foreign currencies which resulted in a loss of $(4.8) million for the second quarter ended October 28, 2012 and a gain of $1.4 million for the six months endedOctober 28, 2012.

The Company entered into a three-year total rate of return swap with an unaffiliated international financial institution during the third quarter of Fiscal 2012 with a notional amount of $119 million. This instrument was being used as an economic hedge to reduce the interest cost related to the Company's $119 million remarketable securities. The swap was being accounted for on a full mark-to-market basis through current earnings, with gains and losses recorded as a component of interest income. As a result of the Merger, the remarketable securities were repaid and the associated total rate of return swap was terminated.

Concentration of Credit Risk:

Counterparties to currency exchange and interest rate derivatives consist of major international financial institutions. The Company continually monitors its positions and the credit ratings of the counterparties involved and, by policy, limits the amount of credit exposure to any one party. While the Company may be exposed to potential losses due to the credit risk of non-performance by these counterparties, losses are not anticipated. The Company closely monitors the credit risk associated with its counterparties and customers and to date has not experienced material losses.

(17) Venezuela- Foreign Currency and Inflation

The Company applies highly inflationary accounting to its business in Venezuela. Under highly inflationary accounting, the financial statements of our Venezuelan subsidiary are remeasured into the Company's reporting currency (U.S. dollars) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than accumulated other comprehensive loss on the balance sheet, until such time as the economy is no longer considered highly inflationary. The impact of applying highly inflationary accounting for Venezuela on our consolidated financial statements is dependent upon movements in the official exchange rate between the Venezuelan bolivar fuerte and the U.S. dollar. The amount of net monetary assets and liabilities included in our subsidiary's balance sheet was $101.2 million at October 27, 2013.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Merger

The H.J. Heinz Company has been a pioneer in the food industry for over 140 years and possesses one of the world's best and most recognizable brands - Heinz^®. The Company has a global portfolio of leading brands focused in three core categories, Ketchup and Sauces, Meals and Snacks, and Infant/Nutrition.

On February 13, 2013, the Company entered into the Merger Agreement with Parent and Merger Subsidiary. The terms of the Merger Agreement were unanimously approved by the Company's Board of Directors on February 13, 2013 and by the majority of votes cast at a special shareholder meeting on April 30, 2013. The acquisition was consummated on June 7, 2013, and as a result, Merger Subsidiary merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Holdings, which is in turn an indirect wholly owned subsidiary of Parent. Parent is controlled by the Sponsors. Upon the completion of the Merger, the Company's shareholders received $72.50 in cash for each share of common stock. The total aggregate value of the Merger consideration was approximately $28.75 billion, including the assumption of the Company's outstanding debt. The Merger consideration was funded through a combination of equity contributed by the Sponsors totaling $16.5 billion and proceeds from long-term borrowings totaling $12.6 billion. The Company's capital structure is further discussed under Liquidity and Financial Position.

Purchase Accounting Effects. The Merger was accounted for using the acquisition method of accounting which affected our results of operations in certain significant respects. The Sponsors' cost of acquiring the Company has been pushed-down to establish a new accounting basis for the Company. Accordingly, the accompanying interim consolidated financial statements are presented for two periods, Predecessor and Successor, which relate to the accounting periods preceding and succeeding the completion of the Merger. The allocation of the total purchase price to the Company's net tangible and identifiable intangible assets were based on preliminary estimated fair values as of the Merger date, as described further in Note 2 to the Financial Statements. In addition to the transaction related expenses discussed further below, the following are reflected in our results of operations for the three month Successor period ended October 27, 2013 (the Three Month Successor period) and the Successor period from February 8, 2013 to October 27, 2013 (the Year-to-Date Successor period):

• The preliminary purchase accounting adjustment to inventory resulted in an increase in cost of products sold of approximately $38 million and $383 million, respectively, as those products were sold to customers during the period subsequent to the Merger.

• Incremental amortization of approximately $14 million and $18 million, respectively, on the step-up in basis of definite-lived intangible assets which was included within cost of products sold.

• Incremental interest expense of $91 million and $164 million, respectively, related to new borrowings under the Senior Credit Facilities and the Notes issued in a private offering, in connection with the Merger.

• The purchase accounting adjustment to deferred pension costs resulted in a decrease in pension expense of approximately $9 million and $13 million, respectively, which was primarily reflected in cost of products sold.

• The purchase accounting adjustment to deferred derivative gains related to foreign currency cash flow hedges resulted in an increase in cost of products sold of approximately $9 million and $11 million, respectively.

• We recognized a gain of $118 million on interest rate swap agreements entered into by Merger Subsidiary prior to the Merger to mitigate exposure to variable rate debt that was raised to finance the acquisition. These agreements were not designated as hedging instruments prior to the Merger date, and as such, we recorded the gain due to changes in fair value of these instruments, and separately reflected in the accompanying statement of operations. As a result of the Merger and the transactions entered into in connection therewith, we have assumed the liabilities and obligations of Merger Subsidiary. As of the Merger date, these interest rate swaps were designated as cash flow hedges of the variable interest payments on the term notes issued in connection with the Merger, with changes in fair value of the derivatives reflected in other comprehensive income from that date forward.

Transaction Related Expenses. During the Three Month Successor period and the Year-to-Date Successor period, the Company incurred $7.5 million and $157.9 million, respectively, in Merger related costs on a pretax basis, including $9.6 million and $70.0 million, respectively, consisting primarily of advisory fees, legal, accounting and other professional costs. The Company also incurred $87.9 million during the Year-to-Date Successor period related to severance and compensation arrangements pursuant to existing agreements with certain former executives and employees in connection with the Merger. These amounts are separately reflected in the accompanying statement of operations for the Successor period.

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Prior to consummation of the Merger, the Company incurred $112.2 million of Merger related costs, including $48.1 million resulting from the acceleration of expense for stock options, restricted stock units and other compensation plans pursuant to the existing change in control provisions of those plans, and $64.0 million of professional fees. These amounts are separately reflected in Merger related costs in the accompanying statement of operations for the Predecessor period. The Company also recorded a loss from the extinguishment of debt of approximately $129.4 million for debt required to be repaid upon closing as a result of the change in control which is reflected in Other (expense) income, net, in the accompanying statement of operations for the Predecessor period.

Change In Fiscal Year. On October 21, 2013, our board of directors approved a change in our fiscal year-end from the Sunday closest to April 30 to the Sunday closest to December 31. The Company's Form 10-Q for the quarter ended October 27, 2013 will be the last interim filing under the old fiscal year, and the Company will file a Transitional Report on Form 10-K for the eight months ended December 29, 2013. The Company will subsequently file its quarterly and annual reports for the new fiscal year ending December 28, 2014.

Executive Overview

During the second quarter of Fiscal 2014, the Company's total sales were $2.72 billion, compared to $2.82 billion for the second quarter of Fiscal 2013. The decline in sales was principally due to unfavorable foreign exchange translation rates which decreased sales by 2.2% and a decrease in volume of 1.5% as favorable volume in emerging markets was more than offset by declines in developed markets. Volume in the current quarter was unfavorably impacted by category softness and the continuation of the strategic decision to realign promotional activity in the U.S. and U.K. Net pricing increased sales by 0.4%, driven by price increases in Brazil, Indonesia and the U.K.

In the second quarter of Fiscal 2014, gross profit, operating income and net income have been significantly impacted by Merger and restructuring related costs and expenses. In addition, for the Successor period, the effects of the new basis of accounting resulted in increased non-cash charges to cost of sales for the step up in inventory value, increased amortization expense associated with the fair value adjustments to intangible assets and the increased borrowings to fund the Merger resulting in higher interest costs compared to prior year quarter. See The Merger and The Results of Operation sections for further information on the Merger related costs and expenses and further analysis of our operating results for the quarter.

Fiscal 2014 Restructuring and Productivity Initiatives

During Fiscal 2014, the Company is investing in restructuring and productivity initiatives as part of its ongoing cost reduction efforts with the goal of driving efficiencies and creating fiscal resources that will be reinvested into the Company's business as well as to accelerate overall productivity on a global scale. As of October 27, 2013, these initiatives have resulted in the reduction of approximately 2,000 corporate and field positions across the Company's global business segments as well as the closure and consolidation of manufacturing and corporate office facilities. Including charges incurred as of October 27, 2013, the Company currently estimates it will incur total charges of approximately $300 million related to severance benefits and other severance-related expenses related to the reduction in corporate and field positions and the ongoing annual cost savings is estimated to be approximately $250 million. The severance-related charges and cost savings assumptions that the Company expects to incur in connection with these work force reductions are subject to a number of assumptions and may differ from actual results. The Company recorded pre-tax costs related to these productivity initiatives of $199 million in the Three Month Successor period, $201 million in the Year-to-Date Successor period and $6 million in the Predecessor period which were recorded in the Non-Operating segment. See Note 4, “Fiscal 2014 Productivity Initiatives” for additional information on these productivity initiatives. There were no such charges in the second quarter and first half of Fiscal 2013.

On November 14, 2013, the Company announced the planned closure of 3 factories in the U.S. and Canada by the middle of calendar year 2014.  The number of employees expected to be impacted by these 3 plant closures and consolidation is approximately 1,350. The Company currently estimates it will incur total charges of approximately $63 million related to severance benefits and other severance-related expenses related to these factory closures.  In addition the Company will recognize accelerated depreciation on assets to be disposed of. The ongoing annual cost savings is estimated to be approximately $55 million. The severance-related charges and cost savings assumptions that the Company expects to incur in connection with these factory workforce reductions and factory closures are subject to a number of assumptions and may differ from actual results. The Company may also incur other charges not currently contemplated due to events that may occur as a result of, or related to, these cost reductions.

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Discontinued Operations

During the first quarter of Fiscal 2014, the Company completed the sale of Shanghai LongFong Foods, a maker of frozen products in China, resulting in an insignificant loss which has been recorded in discontinued operations in the Successor period.

During the first quarter of Fiscal 2013, the Company completed the sale of its U.S. Foodservice frozen desserts business, resulting in a $32.7 million pre-tax ($21.1 million after-tax) loss which has been recorded in discontinued operations.

The operating results related to these businesses have been included in discontinued operations in the Company's consolidated statements of income for all periods presented. The following table presents summarized operating results for discontinued operations:

	Second Quarter Ended
	Successor			Predecessor
	October 27, 2013 FY 2014			October 28, 2012 FY 2013
	(In millions)
Sales	$	—		$	5.7
Net after-tax losses	$	(3.9	)	$	(4.6	)
Tax benefit on losses	$	—		$	—

	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(In millions)
Sales	$	2.9		$	1.2		$	15.9
Net after-tax losses	$	(5.6	)	$	(1.3	)	$	(12.3	)
Tax benefit on losses	$	—		$	—		$	0.6

THREE MONTHS ENDED OCTOBER 27, 2013 (SUCCESSOR) AND OCTOBER 28, 2012 (PREDECESSOR)

Results of Continuing Operations

Sales for the three months ended October 27, 2013 decreased $104 million, or 3.7%, to $2.72 billion. Volume decreased 1.5%, as favorable volume in emerging markets was more than offset by declines in developed markets. Volume in the current quarter was unfavorably impacted by category softness and reduced promotional pricing mainly in the U.S. and U.K. when compared to the prior year period. Net pricing increased sales by 0.4%, driven by price increases in Brazil, Indonesia and the U.K. partially offset by price decreases in Australia, Italy and New Zealand. Divestitures decreased sales by 0.4% and unfavorable foreign exchange translation rates decreased sales by 2.2%.

Gross profit decreased $123 million or 12.1% to $890 million, and gross profit margin decreased to 32.8% from 35.9%. These decreases are primarily related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory and severance costs related to the current year restructuring plan discussed above. Gross profit was also negatively impacted by the lower volume in current period. The charges related to the current year restructuring plan are recorded in the non-operating segment.

Selling, general and administrative expenses ("SG&A") increased $94 million, or 15.2% to $711 million, and increased as a percentage of sales to 26.2% from 21.9% period over period. The increase in SG&A is attributable to higher fixed selling and general and administrative expense resulting from the Restructuring and Merger related initiatives.

Merger related costs in the current period include $7.5 million consisting primarily of advisory fees, legal, accounting and other professional costs.

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Operating income decreased $224 million or 56.6%, to $172 million, reflecting the decrease in gross profit discussed above and the impact of the restructuring and merger related items discussed above.

Net interest expense increased $93 million, to $155 million, reflecting higher average debt balances resulting from the Merger. Other income(expense), net, was $11 million of expense this year compared to $6 million of expense in the prior year. The increase is primarily related to an increase in amortization of debt issuance costs related to the Merger.

For the current quarter the Company recorded a tax benefit of $34.2 million, or (582.7%) of pretax income. In the prior year the Company recorded a tax expense of $31.0 million, or 9.5% of pretax income. The current period tax benefit results from a significant amount of tax exempt income being offset by tax deductible expenses in higher tax rate jurisdictions. The prior year included a $63.0 million tax benefit that occurred as a result of an increase in the tax basis of both fixed and intangible assets resulting from a tax-free reorganization in a foreign jurisdiction.

The net income from continuing operations attributable to H. J. Heinz Company was $38 million compared to $295 million in the prior year.

OPERATING RESULTS BY BUSINESS SEGMENT

North American Consumer Products

Sales of the North American Consumer Products segment decreased $47 million, or 5.9%, to $748 million. Higher net price of 0.1% reflects higher pricing on ketchup primarily resulting from reduced promotions offset by price reductions on frozen appetizers and snacks. Volume was down 5.0% primarily reflecting declines in Heinz® gravy, Ore-Ida® frozen potatoes and Smart Ones® frozen entrees, partially due to the strategic decision to realign promotional activity as well as category softness. Unfavorable Canadian exchange translation rates decreased sales 1.0%.

Gross profit decreased $25 million, or 7.6%, to $303 million and the gross profit margin decreased slightly to 40.6% from 41.3%. These decreases are primarily related to lower volume and higher cost of products sold associated with the amortization of the preliminary purchase accounting adjustments relative to customer related assets. Operating income decreased $6 million or 3.1% to $184 million reflecting the decline in gross profit, partially offset by lower SG&A primarily related to reduced costs related to workforce reductions and lower marketing spend.

Europe

Heinz Europe sales decreased $26 million, or 3.2%, to $783 million. Volume was down 3.0% as strong performance in Russia was more than offset by soft category sales in the U.K., Italy and Continental Europe. Volume in the U.K. was also impacted by the strategic decision to realign promotional activity. Net pricing increased 0.6% primarily reflecting higher pricing in the U.K partially offset by reduced pricing in Italy and Russia. The divestitures of a small soup business in Germany and a non-core product line in Russia decreased sales 1.5%. Favorable exchange translation rates increased sales 0.7%.

Gross profit decreased $19 million, or 6.3%, to $289 million while the gross profit margin decreased to 36.9% from 38.1%. These decreases are primarily related to higher cost of products sold associated with the amortization of the preliminary purchase accounting adjustments relative to customer related assets and lower volume. Operating income decreased $24 million to $117 million reflecting the decline in gross profit and higher SG&A primarily related to increased marketing spend across Europe.

Asia/Pacific

Heinz Asia/Pacific sales decreased $39 million, or 6.5%, to $562 million, as unfavorable exchange translation rates decreased sales by 7.3%. Volume increased 1.2% largely a result of continued strong performance of Master® branded sauces and Heinz branded infant feeding products in China and frozen products in Japan. These increases were partially offset by declines in Glucon D® and Complan® branded products in India and by declines in ABC® products in Indonesia primarily due to the timing of Ramadan. Pricing decreased 0.4%, due to higher promotion spending in Australia and New Zealand partially offset by increased pricing on ABC® sauces in Indonesia.

Gross profit decreased $53 million, or 28.5%, to $132 million, while the gross profit margin decreased to 23.6% from 30.8%. These decreases are related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory, as well as, unfavorable foreign exchange translation rates. Operating income decreased $44 million to $10 million, reflecting the decline in gross profit, partially offset by lower SG&A.

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U.S. Foodservice

Sales of the U.S. Foodservice segment decreased $2 million, or 0.4%, to $346 million. Pricing decreased sales 0.4%, as price decreases on frozen soup were partially offset by price increases on ketchup. Volume was flat as increases across Heinz® ketchup and sauces were offset by declines in frozen soup.

Gross profit increased $3 million, or 2.7%, to $104 million and the gross profit margin increased to 29.9% from 29.0%. These increases are primarily related to lower manufacturing costs resulting from the current year restructuring initiatives partially offset by increased cost of products sold associated with the amortization of the preliminary purchase accounting adjustments relative to customer related assets. Operating income increased $13 million to $57 million reflecting the increase in gross profit and lower SG&A resulting from the current year restructuring initiatives.

Rest of World

Sales for Rest of World increased $10 million, or 3.5%, to $279 million. Volume increased 5.6% as volume growth was realized across the segment. Pricing increased sales by 3.4%, largely due to price increases on Quero® branded products in Brazil and Heinz branded products in Egypt. Foreign exchange translation rates decreased sales 5.4%.

Gross profit increased $11 million, or 12.6%, to $100 million, and the gross profit margin increased to 35.8% from 33.0%. These increases are primarily related to higher sales and favorable product mix partially offset by higher cost of products sold associated with the amortization of the preliminary purchase accounting adjustments relative to customer related assets. Operating income increased $12 million to $39 million, primarily reflecting the increase in gross profit and lower G&A costs partially offset by increased marketing across the segment.

THE PERIOD FROM FEBRUARY 8, 2013 THROUGH OCTOBER 27, 2013 (SUCCESSOR), THE PERIOD FROM APRIL 29, 2013 THROUGH JUNE 7, 2013 (PREDECESSOR) AND SIX MONTHS ENDED OCTOBER 28, 2012

Results of Continuing Operations

Sales were $4.24 billion for the Successor period and $1.11 billion for the Predecessor period, respectively, compared to $5.60 billion for the six months ended October 28, 2012, a decrease of $248 million or 4.4% period over period. Volume decreased 3.0%, as favorable volume in emerging markets was more than offset by declines in developed markets. Volume in the current six month period was unfavorably impacted by reduced promotional pricing mainly in the U.S. when compared to the prior year period and by one extra month of sales (approximating 0.7% of sales) being reported in Brazil in the prior year period as the subsidiary's fiscal reporting was conformed to the Company's fiscal period as the subsidiary no longer required an earlier closing date to facilitate timely reporting. Net pricing increased sales by 0.5%, driven by price increases in Brazil, Indonesia and the U.K. partially offset by price decreases in Australia and Venezuela. Divestitures decreased sales by 0.4% and unfavorable foreign exchange translation rates decreased sales by 1.6%.

Gross profit decreased $537 million or 26.6% to $1,095 million for the Successor period and $383 million for the Predecessor, respectively, from a gross profit of $2.01 billion for the six months ended October 28, 2012, and gross profit margin decreased to 27.6% from 35.9%. These decreases are primarily related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory and incremental amortization of the step-up in basis of definite lived intangible assets. Gross profit was also negatively impacted by the lower volume and by Fiscal 2014 restructuring and productivity initiatives of $41 million for the Successor period and $6 million for the Predecessor period, respectively. The restructuring and productivity related charges are recorded in the non-operating segment.

Selling, general and administrative expenses ("SG&A") increased $56 million, or 4.7% to $1,016 million for the Successor period and $243 million for the Predecessor period, and increased as a percentage of sales to 23.5% from 21.5% period over period. The increase in SG&A is attributable to severance related to the Fiscal 2014 Restructuring and Productivity Initiatives.

Merger related costs in the Successor period include $70 million consisting primarily of advisory fees, legal, accounting and other professional costs and $87.9 million related to severance and compensation arrangements pursuant to existing agreements with certain former executives and employees in connection with the Merger. In the Predecessor period, Merger related costs include $48 million resulting from the acceleration of stock options, restricted stock units and other compensation plans, and $64 million of professional fees.

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Operating income decreased $863 million to an operating loss of $79 million for the Successor period and an operating income of $28 million for the Predecessor period, respectively, reflecting the decrease in gross profit discussed above and the impact of the merger related charges.

Net interest expense increased $168 million, to $261 million for the Successor period and $32 million for the Predecessor period, respectively, reflecting higher average debt balances resulting from the Merger. Included in the Successor period is $25 million of interest expense incurred by Merger Subsidiary prior to the consummation of the Merger. Other income(expense), net, decreased $153 million, to an expense of $31 million for the Successor period and expense of $126 million for the Predecessor period, respectively, primarily related to the costs for early extinguishment of debt related to the Merger.

Prior to the Merger, Merger Subsidiary entered into interest rate swap agreements to mitigate exposure to variable rate debt that was raised to finance the acquisition. These agreements were not designated as hedging instruments prior to the Merger date, and as such, we recorded a gain of $118 million due to changes in fair value of these instruments and separately reflected in the accompanying statement of operations. As a result of the Merger and the transactions entered into in connection therewith, we have assumed the liabilities and obligations of Merger Subsidiary.

For the Successor period the Company recorded a tax benefit of $221 million, or 87.0% of pretax loss. For the Predecessor period the Company recorded a tax expense of $61 million, or (46.9%) of pretax loss. In the first six months of Fiscal 2013, the Company recorded a tax expense of $93 million, or 13.6% of pretax income.

The tax benefit in the Successor period included a benefit of $106 million related to the impact on deferred taxes of a 300 basis point statutory tax rate reduction in the United Kingdom which was enacted during July 2013, and a favorable jurisdictional income mix. The benefit of the statutory tax rate reduction in the United Kingdom was favorably impacted by the increase in deferred tax liabilities recorded in purchase accounting for the Merger.

The tax provision for the Predecessor period was principally caused by the effect of repatriation costs of approximately $100 million for earnings of foreign subsidiaries distributed during the period and the effect of current period nondeductible Merger related costs.

The tax provision for the first six months of Fiscal 2013 included the $63 million tax benefit that occurred as a result of an increase in the tax basis of both fixed and intangible assets resulting from a tax-free reorganization in a foreign jurisdiction, a $13 million tax benefit from an intangible asset revaluation for tax purposes elected by a foreign subsidiary, and a benefit of $10 million related to a 200 basis point statutory tax rate reduction also in the United Kingdom.

The net loss from continuing operations attributable to H. J. Heinz Company was $36 million for the Successor period and $194 million for the Predecessor period, compared to net income of $581 million in the first six months of Fiscal 2013.

OPERATING RESULTS BY BUSINESS SEGMENT

North American Consumer Products

Sales of the North American Consumer Products segment decreased $101 million, or 6.5%, to $1,144 million for the Successor period and $308 million for the Predecessor period, respectively. Higher net price of 0.3% reflects higher pricing on ketchup in the U.S. primarily resulting from reduced promotions partially offset by lower pricing on frozen appetizers and snacks. Volume was down 6.2% reflecting declines in Heinz® ketchup and gravy, Ore-Ida® frozen potatoes and Smart Ones® frozen entrees, primarily due to the strategic decision to realign promotional activity and category softness. Unfavorable Canadian exchange translation rates decreased sales 0.6%.

Gross profit decreased $187 million, or 29.1%, to $332 million for the Successor period and $123 million for the Predecessor period, and the gross profit margin decreased to 31.3% from 41.3%. These decreases are primarily related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory, and lower volume. Operating income decreased $163 million to $145 million for the Successor period and $66 million for the Predecessor period reflecting the decline in gross profit, partially offset by lower SG&A primarily related to lower marketing spend and G&A expenses related to the current year restructuring initiatives.

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Europe

Heinz Europe sales decreased $77 million, or 4.8%, to $1,225 million for the Successor period and $285 million for the Predecessor period. Volume was down 4.5% as strong performance in Russia and Germany was more than offset by soft category sales in the U.K., Italy and The Netherlands. Volume in the U.K. was also impacted by the strategic decision to realign promotional activity and by the timing of sales related to the Project Keystone go-live in May. Net pricing increased 0.2% primarily reflecting higher pricing in the U.K offset by pricing declines in Italy and Russia. The divestitures of a small soup business in Germany and a non-core product line in Russia decreased sales 1.3%. Favorable exchange translation rates increased sales 0.8%.

Gross profit decreased $157 million, or 25.9%, to $350 million for the Successor period and $98 million for the Predecessor period, while the gross profit margin decreased to 29.7% from 38.1%. These decreases are primarily related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory and lower volume. Operating income decreased $153 million to $92 million for the Successor period and operating income of $33 million for the Predecessor period, reflecting the decline in gross profit, partially offset by lower SG&A expenses.

Asia/Pacific

Heinz Asia/Pacific sales decreased $52 million, or 4.1%, to $927 million for the Successor period and $272 million for the Predecessor period, as unfavorable exchange translation rates decreased sales by 5.2%. Volume increased 1.0% largely a result of continued strong performance of Master® branded sauces in China and Heinz branded infant feeding products in China as well as frozen products in Japan. These increases were partially offset by declines in Glucon D® and Complan® branded products in India. Pricing increased 0.2%, as price increases on ABC® sauces in Indonesia and Master® branded sauces in China were offset by higher promotion spending in Australia and New Zealand.

Gross profit decreased $106 million, or 26.9%, to $195 million for the Successor period and $93 million for the Predecessor period, while the gross profit margin decreased to 24.0% from 31.5%. These decreases are related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory, as well as, unfavorable foreign exchange translation rates. Operating income decreased $96 million to an operating loss of $1 million for the Successor period and operating income of $38 million for the Predecessor period, reflecting the decline in gross profit, partially offset by lower SG&A expense across the region as well as lower marketing spend in India. SG&A in the prior year benefited from a gain on the sale of excess land in Indonesia.

U.S. Foodservice

Sales of the U.S. Foodservice segment decreased $11 million, or 1.7%, to $516 million for the Successor period and $136 million for the Predecessor period. Pricing increased sales 0.2%, largely due to price increases on ketchup partially offset by pricing decreases on frozen soup. Volume decreased by 1.9% reflecting declines primarily in ketchup and frozen soup.

Gross profit decreased $38 million, or 20.3%, to $112 million for the Successor period and $39 million for the Predecessor period and the gross profit margin decreased to 23.1% from 28.5%. These decreases are primarily related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory and lower volume. Operating income decreased $28 million to $38 million for the Successor period and operating income of $16 million for the Predecessor period reflecting the decline in gross profit partially offset by lower SG&A primarily related to the current year restructuring initiatives.

Rest of World

Sales for Rest of World decreased $8 million, or 1.4%, to $431 million for the Successor period and $112 million for the Predecessor period. Volume increased 0.3% as volume gains across the segment were partially offset by the one extra month of sales reported in Brazil in the prior year as discussed above, the impact of which was split evenly between the Ketchup & Sauces and Meals & Snacks categories and mainly impacted Quero® branded sales. Pricing increased sales by 2.8%, largely due to price increases on Quero® branded products in Brazil, partially offset by price decreases in Venezuela. (See the “Venezuela- Foreign Currency and Inflation” section below for further discussion on inflation in Venezuela.) Foreign exchange translation rates decreased sales 4.5%.

Gross profit decreased $1 million, or 0.6%, to $145 million for the Successor period and $36 million for the Predecessor period while the gross profit margin increased to 33.3% from 33.0%. The decrease in gross profit is primarily related to higher cost of products sold associated with the preliminary purchase accounting adjustments related to the step up in value of inventory and the lower volume in Brazil resulting from the extra month of results in the prior year period, partially offset by the favorable impact of the higher pricing. Operating income increased $2 million to $49 million for the Successor period and $11 million for the

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Predecessor period, primarily reflecting the decline in gross profit which was more than offset by lower SG&A primarily related to the current year restructuring initiatives.

Liquidity and Financial Position

In connection with the Merger, the cash consideration was funded from equity contributions from the Sponsors and cash of the Company, as well as proceeds received by Merger Subsidiary in connection with the following debt financing pursuant to the Senior Credit Facilities and the Notes:

• $9.5 billion in senior secured term loans, with tranches of 6 and 7 year maturities and fluctuating interest rates based on, at the Company's election, base rate or LIBOR plus a spread on each of the tranches, with respective spreads ranging from 125-150 basis points for base rate loans with a 2% base rate floor and 225-250 basis points for LIBOR loans with a 1% LIBOR floor. Prior to the Merger, Merger Subsidiary entered into interest rate swaps to mitigate exposure to the variable interest rates on these term loans and as a result, the rate on future interest payments beginning in January 2015 and extending through July 2020 have been fixed at an average fixed rate of 2.1%,

• $2.0 billion senior secured revolving credit facility with a 5 year maturity and a fluctuating interest rate based on, at the Company's election, base rate or LIBOR, with respective spreads ranging from 50-100 basis points for base rate loans and 150-200 basis points for LIBOR loans, on which nothing is currently drawn, and

• $3.1 billion of 4.25% secured second lien notes with a 7.5 year maturity, which are required to be exchanged within one year of consummation of the Merger Agreement for registered notes.

On June 7, 2013, Merger Subsidiary's indebtedness was assumed by the Company, substantially increasing the Company's overall level of debt. Refer to Note 13 of consolidated interim financial statements for a more thorough discussion of our new debt arrangements.

Cash used for operating activities was $130 million for the Successor period and $372 million for the Predecessor period, compared to cash provided by operating activities of $291 million for the six months ended October 28, 2012. The decline reflects the operating loss in the current period resulting from merger and restructuring related costs and charges incurred on the early extinguishment of debt. The decline also reflects unfavorable movements in accounts payable and income taxes, additional pension funding, partially offset by favorable movements in inventories.

Cash used for investing activities totaled $21.6 billion for the Successor period and $89.8 million for the Predecessor period, compared to $151 million for the prior year. Reflected in our cash flows used in investing activities for the Successor period is the merger consideration, net of cash on hand, of $21.5 billion.

Cash provided by financing activities totaled $24.3 billion for the Successor period and $85.4 million for the Predecessor period, compared to cash used for financing activities of $422 million in the prior year. The Merger was funded by equity contributions from the Sponsors totaling $16.5 billion as well as proceeds of approximately $11.5 billion under Senior Credit Facilities (of which $9.5 billion was drawn at the close of the transaction), and $3.1 billion upon the issuance of the Notes. The Company used such proceeds, which was partially offset by $320.8 million of debt issuance costs, to repay $4.2 billion of the Predecessor's outstanding short and long term debt and associated hedge contracts. Net cash used in the first six months of Fiscal 2013 primarily related to an additional interest acquired in Coniexpress S.A. Industrias Alimenticias ("Coniexpress") for $80 million and dividend payments of $333 million.

At October 27, 2013, the Company had total debt of $14.86 billion and cash and cash equivalents of $2.59 billion.

In order to more efficiently manage foreign cash, we had a taxable distribution of earnings from certain foreign subsidiaries to the U.S. in the Predecessor period ended June 7, 2013 totaling approximately $420 million which resulted in a charge to our provision for income taxes of approximately $100 million in the same period. We are able to use existing foreign tax credit carryforwards to offset the tax liability created by such distributions such that there were no incremental cash taxes incurred in the period.  Prior to the Merger, our intent was to reinvest the accumulated earnings of our foreign subsidiaries in our international operations, except where remittance could be made tax free in certain situations, and our plans did not demonstrate a need to repatriate them to fund our cash requirements in the U.S. and, accordingly, a liability for the related deferred income taxes was not reflected in the Company's financial statements as of April 28, 2013. While we continue to expect to reinvest a substantial portion of the future earnings of our foreign subsidiaries in our international operations, as of the Acquisition date we determined that a portion of our accumulated unremitted foreign earnings are likely to be needed to meet U.S. cash needs. For the portion of unremitted foreign earnings preliminarily determined not to be permanently reinvested, a deferred tax liability of approximately $195 million is

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recorded. As of October 27, 2013, the Company has not yet finalized its estimate of acquisition date deferred taxes associated with repatriation plans and further adjustments of this estimate may be made as the purchase price allocation is finalized during the measurement period.

Berkshire Hathaway has an $8.0 billion preferred stock investment in Parent which requires a 9.0% annual dividend to be paid quarterly in cash or in-kind.  The Company expects to continue to make quarterly cash distributions to Holdings to fund this dividend.

The Company will continue to monitor the credit markets to determine the appropriate mix of long-term debt and short-term debt going forward. The Company believes that its operating cash flow, existing cash balances, together with the credit facilities and other available capital market financing, will be adequate to meet the Company's cash requirements for operations, including capital spending, debt maturities and interest payments. While the Company is confident that its needs can be financed, there can be no assurance that increased volatility and disruption in the global capital and credit markets will not impair its ability to access these markets on commercially acceptable terms.

Venezuela- Foreign Currency and Inflation

The Company applies highly inflationary accounting to its business in Venezuela. Under highly inflationary accounting, the financial statements of our Venezuelan subsidiary are remeasured into the Company's reporting currency (U.S. dollars) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than accumulated other comprehensive loss on the balance sheet, until such time as the economy is no longer considered highly inflationary. The impact of applying highly inflationary accounting for Venezuela on our consolidated financial statements is dependent upon movements in the official exchange rate between the Venezuelan bolivar fuerte and the U.S. dollar and the amount of net monetary assets and liabilities included in our subsidiary's balance sheet, which was $101.2 million at October 27, 2013.

On February 8, 2013, the Venezuelan government announced the devaluation of its currency relative to the U.S. dollar, changing the official exchange rate from 4.30 to 6.30. The monetary net asset position of our Venezuelan subsidiary was also reduced as a result of the devaluation. While our future operating results in Venezuela will be negatively impacted by the currency devaluation, we plan to take actions to help mitigate these effects. Accordingly, we do not expect the devaluation to have a material impact on our operating results going forward. In Fiscal 2013, sales in Venezuela represented 3% of the Company's total sales.

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Contractual Obligations

The Company is obligated to make future payments under various contracts such as debt agreements, lease agreements and unconditional purchase obligations. In addition, the Company has purchase obligations for materials, supplies, services, and property, plant and equipment as part of the ordinary conduct of business. A few of these obligations are long-term and are based on minimum purchase requirements. Certain purchase obligations contain variable pricing components, and, as a result, actual cash payments are expected to fluctuate based on changes in these variable components. Due to the proprietary nature of some of the Company's materials and processes, certain supply contracts contain penalty provisions for early terminations. The Company does not believe that a material amount of penalties are reasonably likely to be incurred under these contracts based upon historical experience and current expectations.

The following table represents the contractual obligations of the Company as of October 27, 2013.

	Fiscal Year
	2014		2015-2016		2017-2018		2019 Forward		Total
	(In thousands)
Long Term Debt(1)	$	393,536	$	1,431,672	$	1,330,168	$	16,760,743	$	19,916,119
Capital Lease Obligations	3,343		19,377		20,029		13,383		56,132
Operating Leases	42,471		127,715		105,202		303,987		579,375
Purchase Obligations	664,233		816,081		180,318		222,064		1,882,696
Other Long Term Liabilities Recorded on the Balance Sheet	115,687		190,036		159,551		588,527		1,053,801
Total	$	1,219,270	$	2,584,881	$	1,795,268	$	17,888,704	$	23,488,123

(1) Amounts include expected cash payments for interest on fixed rate long-term debt. Due to the uncertainty of forecasting expected variable rate interest payments, those amounts are not included in the table.

Other long-term liabilities primarily consist of certain incentive compensation arrangements and pension and postretirement benefit commitments. Long-term liabilities related to income taxes and insurance accruals included on the consolidated balance sheet are excluded from the table above as the Company is unable to estimate the timing of the payments for these items.

As of the end of the second quarter of Fiscal 2014, the total amount of gross unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was approximately $67.5 million. The timing of payments will depend on the progress of examinations with tax authorities. The Company does not expect a significant tax payment related to these obligations within the next year. The Company is unable to make a reasonably reliable estimate as to when cash settlements with taxing authorities may occur.

Recently Issued Accounting Standards

See Note 3 to the Condensed Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.

Non-GAAP Measures

Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States (“GAAP”). Each of the measures is used in reporting to the Company's executive management and as a component of the Board of Directors' measurement of the Company's performance for incentive compensation purposes. Management and the Board of Directors believe that these measures provide useful information to investors, and include these measures in other communications to investors.

For each of these non-GAAP financial measures, a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure has been provided. In addition, an explanation of why management believes the non-GAAP measure provides useful information to investors and any additional purposes for which management uses the non-GAAP measure are provided below. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measure.

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Results Excluding Special Items

Management believes that this measure provides useful information to investors because it is the profitability measure used to evaluate earnings performance on a comparable year-over-year basis.

Fiscal 2014 Results Excluding Charges for Productivity Initiatives and Merger Related Costs

The adjustments were charges in Fiscal 2014 for productivity initiatives and merger related costs that, in management's judgment, significantly affect the year-over-year assessment of operating results. See "The Merger" and “Fiscal 2014 Productivity Initiatives” sections for further explanation of these charges and the following reconciliation of the Company's second quarter of Fiscal 2014 results excluding charges for merger related costs and productivity initiatives to the relevant GAAP measure.

	Successor
	Second Quarter Ending October 27, 2013 FY 2014
(Continuing Operations)	Sales		Gross Profit		SG&A		Merger Related Costs		Operating Income		Pre-Tax Income		Net Income attributable to H.J. Heinz Company
	(In thousands)
Reported results	$	2,717,336	$	890,248	$	710,917	$	7,538	$	171,793	$	5,866	$	37,977
Charges for productivity initiatives and merger related costs	—		38,861		159,801		7,538		206,200		206,200		143,926
Results excluding charges for productivity initiatives and merger related costs	$	2,717,336	$	929,109	$	551,116	$	—	$	377,993	$	212,066	$	181,903

	Successor
	February 8 - October 27, 2013 FY 2014
(Continuing Operations)	Sales		Gross Profit		SG&A		Merger Related Costs		Operating (Loss) / Income			Pre-Tax (Loss) / Income			Net (Loss) / Income attributable to H.J. Heinz Company
	(In thousands)
Reported results	$	4,243,841	$	1,094,952	$	1,015,839	$	157,938	$	(78,825	)	$	(253,591	)	$	(36,199	)
Charges for productivity initiatives and merger related costs	—		40,901		159,895		157,938		358,734			358,734			248,592
Results excluding charges for productivity initiatives and merger related costs	$	4,243,841	$	1,135,853	$	855,944	$	—	$	279,909		$	105,143		$	212,393

	Predecessor
	April 29 - June 7, 2013 FY 2014
(Continuing Operations)	Sales		Gross Profit		SG&A		Merger Related Costs		Operating Income		Pre-Tax (Loss) / Income			Net Loss attributable to H.J. Heinz Company
	(In thousands)
Reported results	$	1,112,872	$	383,335	$	243,364	$	112,188	$	27,783	$	(130,327	)	$	(194,298	)
Charges for productivity initiatives and merger related costs	—		5,725		317		112,188		118,230		247,598			168,735
Results excluding charges for productivity initiatives and merger related costs	$	1,112,872	$	389,060	$	243,047	$	—	$	146,013	$	117,271		$	(25,563	)

There were no such adjustments in the Company's second quarter of Fiscal 2013.

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EBITDA & Adjusted EBITDA (from Continuing Operations)

EBITDA is defined as earnings (net income or loss) before interest, taxes, depreciation and amortization, and is used by management to measure operating performance of the business. Adjusted EBITDA is a tool intended to assist our management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations. These items include share-based compensation and non-cash compensation expense, other operating (income) expenses, net, and all other specifically identified costs associated with projects, transaction costs, restructuring and related professional fees.    EBITDA and Adjusted EBITDA are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles in the U.S. or U.S. GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income or other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as measures of our liquidity.

We believe that EBITDA and adjusted EBITDA are useful to investors, analysts and other external users of our consolidated financial statements because they are widely used by investors to measure operating performance without regard to items such as income taxes, net interest expense, depreciation and amortization, non-cash stock compensation expense and other one-time items, which can vary substantially from company to company depending upon accounting methods and book value of assets, financing methods, capital structure and the method by which assets were acquired.

Because of their limitations, neither EBITDA nor adjusted EBITDA should be considered as a measure of discretionary cash available to us to reinvest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. Additionally, our presentation of Adjusted EBITDA is different than Adjusted EBITDA as defined in our debt agreements.

	Second Quarter Ended
	Successor			Predecessor
	October 27, 2013 FY 2014			October 28, 2012 FY 2013
	(In thousands)
Income from continuing operations, net of tax	$	40,048		$	296,850
Interest expense, net	154,631			61,567
(Benefit from)/provision for income tax	(34,182		)	31,037
Depreciation	77,920			74,696
Amortization	20,968			10,370
EBITDA	$	259,385		$	474,520
Amortization of inventory step-up	38,306			—
Merger related costs	7,538			—
Severance related costs	150,726			—
Other special charges/(income)	37,185			(2,609		)
Asset write downs and accelerated depreciation	7,362			—
Other expense, net	11,296			6,277
Stock based compensation	224			14,200
Adjusted EBITDA	$	512,022		$	492,388

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	Successor			Predecessor
	February 8 - October 27, 2013 FY 2014			April 29 - June 7, 2013 FY 2014			Six Months Ended October 28, 2012 FY 2013
	(In thousands)
(Loss)/income from continuing operations, net of tax	$	(32,853	)	$	(191,424	)	$	589,677
Interest expense, net	261,460			32,472			125,832
(Benefit from)/provision for income tax	(220,738		)	61,097			92,624
Depreciation	114,330			35,880			147,334
Amortization	29,821			4,276			21,075
EBITDA	$	152,020		$	(57,699	)	$	976,542
Amortization of inventory step-up	383,300			—			—
Merger related costs	157,938			112,188			—
Severance related costs	152,989			—			—
Other special charges/(income)	39,085			(12,136		)	(7,361		)
Asset write downs and accelerated depreciation	7,362			6,000			—
Unrealized gain on derivative instruments	(117,934		)	—			—
Loss from the extinguishment of debt	—			129,367			—
Other expense/(income), net	31,240			(3,729		)	3,994
Stock based compensation	224			4,318			29,800
Adjusted EBITDA	$	806,224		$	178,309		$	1,002,975

The decrease in net income in the Successor and Predecessor periods of Fiscal 2014 was driven by productivity initiatives, merger related costs, and a increase in interest expense related to new borrowings under the new Senior Credit Facilities and the Notes. The decrease was partially offset by an unrealized gain on interest rate swap agreements that served as economic hedges of future interest payments on new borrowings and a decrease in income tax expense. The decline in Adjusted EBITDA was primarily due to the strategic decision to realign promotional activity in the U.S. and the U.K., one extra month of sales being reported in Brazil in the prior year as the subsidiary's fiscal reporting was conformed to the Company's fiscal period as the subsidiary no longer required an earlier closing date to facilitate timely reporting, the timing of sales in the U.K. related to the Project Keystone go-live in May, and unfavorable exchange translation rates.

Discussion of Significant Accounting Estimates

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of its financial statements in conformity with GAAP. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company addresses in the Annual Report on Form 10-K for the year ended April 28, 2013 its most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. No changes to such policies as discussed in the Company's current Form 10-K have occurred as of October 27, 2013.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s market risk during the six months ended October 27, 2013. For additional information, refer to pages 23-25 of the Company’s Annual Report on Form 10-K for the fiscal year ended April 28, 2013.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures, as of the end of the period covered by this report, were effective and provided reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

During the first six months of Fiscal 2014, the Company continued its implementation of SAP software across operations in the U.K. As appropriate, the Company is modifying the design and documentation of internal control processes and procedures relating to the new systems to simplify and harmonize existing internal control over financial reporting. There were no additional changes in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.   

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Nothing to report under this item.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item IA to our Annual Report on Form 10-K for the fiscal year ended April 28, 2013. The risk factors disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended April 28, 2013, in addition to the other information set forth in this report, could materially affect our business, financial condition, or results of operations. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect its business, financial condition, or results of operations.

CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION

Statements about future growth, profitability, costs, expectations, plans, or objectives included in this report, including in management's discussion and analysis, and the financial statements and footnotes, are forward-looking statements based on management's estimates, assumptions, and projections. These forward-looking statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond the Company's control and could cause actual results to differ materially from those expressed or implied in this report and the financial statements and footnotes. Uncertainties contained in such statements include, but are not limited to:

• the ability of the Company to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners,

• sales, volume, earnings, or cash flow growth,

• general economic, political, and industry conditions, including those that could impact consumer spending,

• competitive conditions, which affect, among other things, customer preferences and the pricing of products, production, and energy costs,

• competition from lower-priced private label brands,

• increases in the cost and restrictions on the availability of raw materials including agricultural commodities and packaging materials, the ability to increase product prices in response, and the impact on profitability,

• the ability to identify and anticipate and respond through innovation to consumer trends,

• the need for product recalls,

• the ability to maintain favorable supplier and customer relationships, and the financial viability of those suppliers and customers,

• currency valuations and devaluations and interest rate fluctuations,

• our substantial level of indebtedness and related debt-service obligations,

• changes in credit ratings, leverage, and economic conditions, and the impact of these factors on our cost of borrowing and access to capital markets,

• our ability to effectuate our strategy, including our continued evaluation of potential opportunities, such as strategic acquisitions, joint ventures, divestitures and other initiatives, our ability to identify, finance and complete these transactions and other initiatives, and our ability to realize anticipated benefits from them,

50

• the ability to successfully complete cost reduction programs and increase productivity including our restructuring and productivity initiatives,

• the ability to effectively integrate acquired businesses,

• new products, packaging innovations, and product mix,

• the effectiveness of advertising, marketing, and promotional programs,

• supply chain efficiency,

• cash flow initiatives,

• risks inherent in litigation, including tax litigation,

• the ability to further penetrate and grow and the risk of doing business in international markets, particularly our emerging markets, economic or political instability in those markets, strikes, nationalization, and the performance of business in hyperinflationary environments, in each case, such as Venezuela; and the uncertain global macroeconomic environment and sovereign debt issues, particularly in Europe,

• changes in estimates in critical accounting judgments and changes in 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 potential adverse impact of natural disasters, such as flooding and crop failures, and the potential impact of climate change,

• the ability to implement new information systems, potential disruptions due to failures in information technology systems, and risks associated with social media, and

• other factors described in “Risk Factors” and "Cautionary Statement Relevant to Forward-Looking Information" in the Company's Form 10-K for the fiscal year ended April 28, 2013.

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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Nothing to report under this item.

Item 3. Defaults upon Senior Securities

Nothing to report under this item.

Item 4. Mine Safety Disclosures

Nothing to report under this item.

Item 5. Other Information

Nothing to report under this item.

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Item 6. Exhibits

Exhibits required to be filed by Item 601 of Regulation S-K are listed below. Documents not designated as being incorporated herein by reference are filed herewith. The paragraph numbers correspond to the exhibit numbers designated in Item 601 of Regulation S-K.

3(ii)	Amended and Restated Bylaws of H. J. Heinz Company effective June 7, 2013 and amended October 15, 2013.
31(a)	Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
31(b)	Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
32(a)	18 U.S.C. Section 1350 Certification by the Chief Executive Officer.
32(b)	18 U.S.C. Section 1350 Certification by the Chief Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Labels Linkbase Document
101.LAB	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

_______________________________________

52

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		H. J. HEINZ COMPANY
		(Registrant)
Date:	December 11, 2013
		By:	/s/  Paulo Basilio
			Paulo Basilio
			Chief Financial Officer
			(Principal Financial Officer)

Date:	December 11, 2013
		By:	/s/  John Mastalerz Jr.
			John Mastalerz Jr.
			Corporate Controller
			(Principal Accounting Officer)

53

EXHIBIT INDEX

DESCRIPTION OF EXHIBIT

Exhibits required to be filed by Item 601 of Regulation S-K are listed below. Documents not designated as being incorporated herein by reference are filed herewith. The paragraph numbers correspond to the exhibit numbers designated in Item 601 of Regulation S-K.

3(ii)	Amended and Restated Bylaws of H. J. Heinz Company effective June 7, 2013 and amended October 15, 2013.
31(a)	Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
31(b)	Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
32(a)	18 U.S.C. Section 1350 Certification by the Chief Executive Officer.
32(b)	18 U.S.C. Section 1350 Certification by the Chief Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Labels Linkbase Document
101.LAB	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

_______________________________________