
Table 11: Potential Financial Impact of the Trian Group’s Action Plan ($ in millions, except per share values)

				Incremental Impact of Action Plan
	Pro Forma May 3, 2006E⁴⁰															Post-Trian Action Plan Heinz
	Pro Forma May 3, 2006E⁴⁰			Number 1			Number 2			Number 3			Number 4⁴¹			Post-Trian Action Plan Heinz


Gross Revenue	$	10,195								$	(873	)				$	9,321

Deals & Allowances	$	1,812					$	(300	)	$	(130	)				$	1,383
% of Gross Revenue		17.8	%					(2.9	%)								14.8	%

Net Revenue	$	8,382					$	(300		$	(744	)				$	7,939

Cost of Sales	$	5,274		$	(175	)		—		$	(496	)				$	4,603
% of Net Revenue		62.9	%		(2.1	%)		(2.1	%)		(0.7	%)					58.0	%

Gross Profit	$	3,108		$	175		$	300		$	(248	)				$	3,335
% of Net Revenue		37.1	%		2.1	%		2.1	%		0.7	%					42.0	%

SG&A	$	1,800		$	(400	)	$	300		$	(176	)				$	1,524
% of Net Revenue		21.5	%		(4.8	%)		2.9	%		(0.4	%)					19.2	%

EBIT	$	1,308		$	575			—		$	(72	)				$	1,811
% of Net Revenue		15.6	%		6.9	%		(0.8	%)		1.1	%					22.8	%

Depreciation & Amortization	$	238						—		$	(18	)				$	221
% of Net Revenue		2.8	%					(0.1	%)		0.0	%					2.8	%

EBITDA	$	1,546		$	575			—		$	(89	)				$	2,032
% of Net Revenue		18.4	%		6.9	%		(0.9	%)		1.2	%					25.6	%

Net Interest and Other Expenses	$	284								$	(36	)	$	96		$	344

Pre-Tax Income	$	1,024		$	575					$	(36	)	$	(96	)	$	1,467

Income Taxes	$	312		$	175					$	(11	)	$	(29	)	$	447

Tax Rate		30.5	%					See Table 13 for Potential Impact of Marketing Initiatives									30.5	%

Net Income	$	712		$	400					$	(25	)	$	(67	)	$	1,019

Fully Diluted Shares		333												(43	)		289

Earnings Per Share	$	2.14		$	1.20					$	(0.08	)	$	0.26		$	3.53



Management Claims		Heinz – The Reality

•	“It has been a long journey that began with the spin-off of our non-core U.S. businesses in December 2002, and has culminated with the recently completed sale of our European Seafood and New Zealand Poultry businesses.”	•	We take exception to management’s tendency to “reset the bar” beginning in 2002 with the Del Monte spin-off. After all, current management took control four-and-a-half years earlier – if it’s been a long journey since the divestiture of these businesses in 2002, it’s been a far longer journey for shareholders who have endured negative returns since April 1998.

		•	The constant restructurings, acquisitions and divestitures are never completed. Earnings releases and conference call transcripts, dating back years, are filled with references to Heinz finally turning the corner after yet another company-changing event, leaving it more focused and better positioned to grow. However, the record shows there is always another restructuring or divestiture on the horizon… and more excuses for management.

•	“Our North America Consumer Products business is on-track to grow sales at a compound annual rate of 6% over the 3 years since the spin- off, while profits are expected to increase at close to double-digit rates over that period.”	•	While there has been better performance in this segment compared to the rest of the Company, the focus on the recent success in the North America Consumer Products segment belies the fact that Heinz is a global company and this segment generated only 25% of revenue in fiscal 2005.

		•	Further, we believe Heinz’s calculated 6% compound annual growth rate (“CAGR”) is largely a factor of recent acquisitions as we note, based on reported numbers, that the North America Consumer Products segment’s revenue had grown at a mere 2% CAGR from 2002 through 2005.

		•	We also note that increasing package sizes, as Heinz had done recently, results in only a short-term lift in sales.

•	“Implemented a similar transformational plan in our Pacific operations of Australia and New Zealand, where results have been even better than in the U.S.”	•	Again, we think the Company is guilty of “losing the forest in the trees” with respect to its operational priorities. The total Asia / Pacific segment represented approximately 15% of revenue and 10% of EBITDA in fiscal 2005. While certain countries have out-performed, clearly the results have not been substantial enough to meaningfully increase consolidated profits.

		•	Further, the Asia / Pacific segment continues to significantly under-perform relative to the rest of the business in terms of profitability.

			•	2005 Gross margins of 31.8% vs. 36.3% for the Company as a whole

			•	2005 EBITDA margins of 12.9% vs. 18.3% for the Company as a whole

•	“Applied the strategies that have proven so successful in the U.S. and Pacific operations to the rest of Heinz, and particularly to Europe.”	•	Performance in Europe, which generated 39% of revenue in fiscal 2005 and is critical to the Company’s overall success, has been sub-par with favorable exchange rates masking deteriorating trends.

			•	Excluding the impact of exchange rates, Europe’s revenue growth would have been negative for the past three years (-0.5% in 2003, -3.9% in 2004 and -2.6% in 2005)

			•	Gross profit margins down from 37.8% in 2002 to 36.1% in 2005

			•	EBITDA margins down from 23.3% in 2002 to 19.8% in 2005

•	“Reduced the total number of Heinz manufacturing facilities by 15%, global employees by approximately 30% and overall stock keeping units (SKU’s) by almost 50%. In addition, regional headquarters in Europe and Asia have been virtually eliminated and global executive positions have been reduced by more than 35%.”	•	When the current management team took over in 1998 there were 40,500 employees and 96 plants. At the end of fiscal 2005 (prior to the most recent round of divestitures) there were 41,000 employees and 101 plants. This despite three restructurings (excluding the most recent), billions of dollars of charges and the spin-off or divestiture of major businesses.

		•	Since adjusted fiscal 1998,⁴³ we believe, SG&A has increased $242 million and SG&A as a percentage of net revenue has increased 370 basis points. See Table 2.

		•	We suspect many of the reductions referenced by management were realized through the sale of brands and businesses. If that is indeed the case, we are shocked that management believes it deserves credit; reducing headcount through the dilutive sales of businesses is hardly worthy of praise.

•	“Returned over $4 billion to shareholders over the last four years through the dividend derived from the spin-off to Del Monte, the annual dividend program and share repurchases.”	•	$2.3 billion of this return relates to the Del Monte transaction, which was effectively a sale of sound brands and businesses. The Company may have been able to create significantly more value for shareholders by effectively competing in these businesses and improving performance over the long-run.

•	“As we approach Fiscal 2007, we like what we see and expect a strong start to the new phase of our strategic development. Specifically, we can reconfirm that from our pro forma FY06 base, we anticipate sales growth of 3% to 4%, improvement in operating profit and EPS at the upper end of our 6% to 8% range.”	•	We are not impressed by the promise of 6-8% EPS growth off a significantly diluted/reduced “pro forma base” in 2006, particularly in light of all the benefits that management promised would come from being smaller and more focused.



•	“Importantly, overseeing our continuing growth and transformation is a diverse, talented and engaged Board of Directors, where 11 of 12 members are independent outsiders and leaders in their respective fields.”	•	Five of Heinz’s twelve directors have sat on the board since 1998, overseeing eight years of negative shareholder returns

		•	Once again, we are not sure what metrics management is using to support its claims of “continuing growth.” Under this management team’s watch, EBITDA has decreased, EPS is virtually unchanged and total shareholder returns (including dividends and spin-offs) are negative.

Appendix B: Historical Financial Performance


($ in millions, except per share values)

	12 Months Ended
																									Pro Forma 5/3/06E⁴⁴			Cumulative ‘99 – ‘06E
	4/29/98			4/28/99			5/3/00			5/2/01			5/1/02			4/30/03			4/28/04			4/27/05			Pro Forma 5/3/06E⁴⁴			Cumulative ‘99 – ‘06E


Net Revenue	$	9,209		$	9,300		$	9,408		$	9,430		$	9,431		$	8,237		$	8,415		$	8,912		$	8,382		$	71,515
Growth		(1.6	%)		1.0	%		1.2	%		0.2	%		0.0	%		(12.7	%)		2.2	%		5.9	%		(5.9	%)		—

Gross Profit	$	3,534		$	3,745		$	3,810		$	3,884		$	3,346		$	2,986		$	3,092		$	3,233		$	3,108		$	27,205
Growth		5.0	%		6.0	%		1.7	%		2.0	%		(13.9	%)		(10.8	%)		3.6	%		4.6	%		(3.9	%)		—
% of Net Revenue		38.4	%		40.3	%		40.5	%		41.2	%		35.5	%		36.3	%		36.7	%		36.3	%		37.1	%		—

EBITDA	$	1,821		$	1,955		$	2,018		$	1,982		$	1,910		$	1,576		$	1,606		$	1,634		$	1,546		$	14,227
Growth		9.8	%		7.3	%		3.2	%		(1.8	%)		(3.6	%)		(17.5	%)		1.9	%		1.8	%		(5.4	%)		—
% of Net Revenue		19.8	%		21.0	%		21.4	%		21.0	%		20.3	%		19.1	%		19.1	%		18.3	%		18.4	%		—

EBIT	$	1,508		$	1,653		$	1,711		$	1,683		$	1,608		$	1,361		$	1,372		$	1,382		$	1,308		$	12,078
Growth		14.4	%		9.6	%		3.5	%		(1.7	%)		(4.4	%)		(15.4	%)		0.8	%		0.7	%		(5.3	%)		—
% of Net Revenue		16.4	%		17.8	%		18.2	%		17.8	%		17.1	%		16.5	%		16.3	%		15.5	%		15.6	%		—

Normalized EPS	$	2.15		$	2.40		$	2.57		$	2.55		$	2.39		$	2.03		$	2.20		$	2.34		$	2.14			—
Growth		22.2	%		11.6	%		7.1	%		(0.8	%)		(6.3	%)		(15.1	%)		8.4	%		6.4	%		(8.6	%)		—

Net Capital Investment
Capital Expenditures	$	(374	)	$	(317	)	$	(452	)	$	(411	)	$	(213	)	$	(154	)	$	(232	)	$	(241	)	$	(201	)	$	(2,222	)
Acquisitions (Net of Cash Acquired)		(142	)		(269	)		(394	)		(673	)		(835	)		(14	)		(113	)		(127	)		(1,054	)		(3,478	)
Proceeds from Divestitures⁴⁵		495			180			726			151			33			2,332			71			51			1,006			4,551

Total Writedowns, Costs and
Charges from Restructurings⁴⁶		(84	)		(549	)		(393	)		(587	)		(287	)		3			—			—			(130	)		(1,942	)

Total Net Capital Investment	$	(105	)	$	(955	)	$	(513	)	$	(1,520	)	$	(1,302	)	$	2,168		$	(274	)	$	(316	)	$	(379	)	$	(3,090	)


Source:	Historical results based on the Heinz Annual Reports on Form 10-K for each respective fiscal year, Company press releases, Company guidance, Wall Street equity research and Trian estimates. Pro forma 2006 results based on Trian estimates.
Note:	Historical results are not restated for discontinued operations or changes to accounting. As a result, they are not necessarily comparable across years and they do not match the revenue and SG&A figures in Table 5. All figures are adjusted to add-back non-recurring expenses and restructuring charges.

* * * *


•	Heinz is one of the most valuable brands in the world. According to the Company’s 2005 Annual Report, the New England Consulting Group found that the Heinz brand has achieved “global icon status” and has a “lifetime brand value” of more than $20 billion and possibly in excess of $50 billion. Why? First, like other iconic brands, Heinz makes a statement about those who use the product and those who serve it. In the same way that consumers might question the quality of a restaurant that serves a cola other than one of the two leading brands, consumers often question the quality of the food at a restaurant that does not have Heinz on its tables. Second, Heinz is one of the few iconic brands with “versatility” across countries and product lines. For example, it has a 60% retail share of ketchup in the United States, a 74% retail share of baby food in Australia and a 67% retail share of beans in the U.K. Third, unlike other global iconic brands such as Coke and Pepsi or Crest and Colgate, where consumers have preferences but will typically settle for their second choice, there is no meaningful substitute for Heinz ketchup.

•	The dominant and iconic Heinz brand is complemented by a large portfolio of leading brands worldwide, including Ore-Ida, Smart Ones, Lea & Perrins, HP, Classico, Plasmon and others.

•	The power of its brands makes Heinz a superior and predictable cash flow generator. The Company has generated approximately $14 billion of cumulative EBITDA¹ since April 1998, and has produced strong free cash flow through a variety of economic and consumer cycles.

•	Nevertheless, despite the Company’s iconic namesake brand, portfolio of power brands and robust cash flow characteristics, Heinz’s total shareholder returns have almost uniformly underperformed those of both the broader market and the consumer packaged food universe since the current management team began leading the Company in April 1998. In fact, total shareholder returns at Heinz have been negative over this timeframe (-10.8%) while other packaged food companies with leading brands such as The Hershey Company, PepsiCo, Inc. and Wm. Wrigley Jr. Company, the three companies specifically referred to by management as the most focused in the industry,² have generated total shareholder returns of 60.4%, 60.4% and 65.3%, respectively, during this timeframe. The table below highlights Heinz’s history of underperformance not only during this eight-year period but also over the last five and three year periods:

	Table 1: Relative Shareholder Returns:


	Total Shareholder Returns³

	8-Year⁴		5-Year		3-Year

Heinz⁵	(10.8	%)	2.0	%	15.7	%
S&P 500	28.2		1.7		59.2
Large-Cap Food Index⁶	26.4		42.0		41.0
Mid-Cap Food Index⁷	54.6		46.1		33.8


Management’s Objectives = Over-Promise		Actual Results = Under-Deliver


•	Reach $14 – $15 billion of net sales by 2003 (Millennia, 1997)	•	In pro forma fiscal 2006, the Company is still only expected to generate approximately 60% of targeted sales volume

•	Increase gross profit margins to 42% over several years (Excel, 1999)	•	Gross profit margins are in the mid-high 30% range

•	Achieve up to $490 million of annual cost savings cumulatively (Millennia, 1997; Excel, 1999; Streamline, 2001; Growth and Innovation, 2005)	•	Appears that the Company will spend its highest percentage of net sales on SG&A in pro forma fiscal 2006

•	Grow EPS by 10 – 12% (Millennia, 1997), then 8 – 10% (Del Monte, 2002) and then 6 – 8% (Growth and Innovation, 2005)	•	EPS is virtually unchanged since management took control in April 1998

•	Simplify the business by divesting non-core assets (all restructurings)	•	The divestiture process is ongoing


	will also look to implement the Trian Group’s Action Plan (outlined below), which we believe will help re-establish Heinz as a leading branded consumer products company that generates strong, consistent returns for shareholders. We are not looking to take over the Board of Directors and have no intention of moving Heinz from Pittsburgh, where it has had an important corporate presence for 137 years.

•	While we intend to conduct a proxy solicitation for our nominees, we remain open to further discussions (see Recent Events below) with members of the Board as to how we can make our resources immediately available to the Company.

•	Heinz’s stock price has appreciated 23%¹⁷ (or $8 per share) since February 2006 when rumors of activist involvement in Heinz first surfaced. If Trian’s nominees are not elected to the Board, we believe that the Company’s management will continue to over-promise and under-deliver, thus jeopardizing the prospects of long overdue value creation for the shareholders of Heinz.

•	*The Trian Group’s Action Plan:*

	1)	Take immediate measures to reduce annual costs by at least $575 million. The Company has allowed its SG&A expense to increase more than 300 basis points (as a percentage of net revenue) from 2000–2002 levels (see Table 5), despite having divested a number of non-core, capital intensive businesses in transactions intended to reduce complexity. We believe SG&A over this period should have decreased by approximately 200 basis points – implying a total of 500 basis points (approximately $400 million) of savings from current levels. Further, based on our experience, we believe there is considerable opportunity to reduce cost of sales and increase gross margins by at least 200 basis points (approximately $175 million) given the Company’s inefficient operations.

	2)	Reduce “deals and allowances” by $300 million over time and drive growth by reinvesting these funds in consumer marketing and product innovation. In the past, Heinz has failed to properly invest in its “power” brands and has increasingly competed on price, to the detriment of long-term growth and overall brand health. As a leading consumer products company, Heinz must make marketing and innovation its core competency and top priority. Management should reduce deals, allowances and other trade spending to retailers by at least $300 million, or approximately 3%, over a period of time and should reinvest these funds in the Company’s brands through increased consumer marketing and product innovation. We believe that these changes would at least double Heinz’s current advertising budget and help grow the market for Heinz’s products.

	3)	Drive profitability by focusing on the key brands and geographies…once and for all. The Company’s Board should establish a strategic vision that puts an end to the frantic activity of divestitures, acquisitions and restructurings that have been so damaging over the last eight years and focuses management on the key brands and geographies. For example, in our view, Plasmon in Italy and ABC in Indonesia represent potential divestiture candidates that are non-core, are geographically independent and could likely be sold at premium valuations, subject to tax considerations. We suspect other brands and geographies could, and perhaps should, be divested as well. Given the lack of publicly available information on returns by country and product line, our director nominees are anxious to better understand the various businesses, once on the Heinz Board, to help ensure prudent portfolio decisions.

	4)	Enhance total shareholder returns by more aggressively returning capital through increased share repurchases and a higher long-term target dividend payout ratio. Given the opportunity to drive earnings growth through the Trian Group’s Action Plan, we believe now is an opportune time to significantly increase share repurchase activity. The Company should execute a debt financing to increase its leverage ratio (which we define as net debt to EBITDA) to 3.5x or more, subject to maintaining investment grade ratings, and should use those proceeds plus the majority of its existing cash and cash from divestitures to repurchase shares. Based on Heinz’s strong free cash flow and the stability of its brands, the Company could comfortably support these proposed debt levels while also maintaining ample flexibility to operate and grow its businesses. Moreover, we believe that implementing Trian’s initiatives outlined above should substantially increase the Company’s cash flow going forward, resulting in a net debt to pro forma EBITDA ratio of only 2.5x. We also believe that the Company should consider maintaining its current dividend payout ratio in the mid-50% range. The Company has previously suggested that it will reduce its payout ratio to a 45-50% long-term target over time.¹⁸

•	Valuation Target: Following the execution of the plan elements highlighted above, we believe the Company could generate EPS of $3.53 versus an estimated $2.14 (an increase of 65%) for pro forma fiscal 2006 without assuming an increase to sales volumes as a result of significantly higher advertising spending. At current market multiples of 17.0x to 19.0x earnings, this implies a target valuation of $60.00 to $67.00 per share. Assuming sales volumes increase due to additional advertising, as we believe will take place over time, the Company could generate an additional $0.98 of EPS and be worth up to $81.00 per share. Further, in the event the Company is sold following the execution of


	12 Months Ended

	5/3/2000			5/2/2001			5/1/2002			4/30/2003			4/28/2004			4/27/2005			Pro Forma 5/3/2006E²¹


Net Revenue	$	8,764	²²	$	8,821		$	9,431		$	8,237		$	8,415		$	8,912		$	8,382

SG&A		1,582			1,592			1,738			1,625			1,721			1,852			1,800
% of Net Revenue		18.1	%		18.0	%		18.4	%		19.7	%		20.4	%		20.8	%		21.5	%

2000 – 2002 Average								18.2	%


Note:	All share prices used to calculate Total Shareholder Returns throughout the paper are as of February 6, 2006. See end note 3.


•	We believe the disappointing shareholder returns at Heinz are a result of management’s inability to grow the business and have a focused strategy. Furthermore, we also believe shareholder value has been destroyed


Net Capital Investment (1999-2006)


Capital Expenditures	$	2,222
Acquisitions		3,478
Proceeds from Divestitures¹⁵		(4,551	)
Total Writedowns, Costs and Charges from Restructurings¹⁶		1,942

Total Net Capital Investment	$	3,090


•	Over the past eight years, the management team at Heinz has consistently failed to turn plans and promises into tangible results on the income statement and balance sheet. Moreover, management has been unable to establish and commit to a broad strategic vision for the Company. Heinz can, and should, generate significantly better results and, as one of the Company’s largest shareholders, we are intent on making this happen.

	Table 3: History of Past Promises


	Note:	“Millennia,” “Excel,” “Streamline” and “Growth and Innovation” refer to management restructuring initiatives and strategic plans. “Del Monte” refers to the spin-off of assets to Del Monte. See Table 7 for more details on the above restructurings and strategic plans.


	our operating initiatives – many industry insiders believe this industry will be ripe for consolidation within the next 18 months – we believe Heinz could be worth even more.

	Table 4 – Trian Action Plan: Potential Incremental Impact to EPS


Source:	Historical results based on the Heinz Annual Reports on Form 10-K for the periods ended May 1, 2002 and April 27, 2005. Pro forma fiscal 2006 results based on Trian estimates.
Note:	Net revenue and SG&A for fiscal 2000 through 2002 reflect the Company’s restated results following implementation of new accounting standards adopted in fiscal 2002 that transferred a portion of trade spending previously classified as part of SG&A into trade spending that reduced net revenue. Beginning in fiscal 2003, net revenue and SG&A reflect the Del Monte spin-off completed in December 2002 (fiscal 2000 through 2002 are not restated for the spin-off). All figures are adjusted to add-back non-recurring expenses and restructuring charges.


Sales Per Employee

	Employees (000s)		2005 Revenue			Sales Per Employee

Hershey		12		$	4,836		$	417
General Mills		28			11,244			404
Kellogg		26			10,177			398
ConAgra		38			14,567			383
Kraft		94			34,113			363
Campbell Soup		24			7,548			315
Wrigley		14			4,159			291
Sara Lee		137			19,254			141

Median							$	373

Heinz Pro Forma 2006²⁴		31		$	8,382		$	270
*Discount to Median*								*(28*	%)


Sales Per Plant

	Number of Plants		2005 Revenue			Sales Per Plant

Hershey²³		18		$	4,836		$	269
Kraft		175			34,113			195
General Mills		60			11,244			187
Wrigley		25			4,159			166
Campbell Soup		47			7,548			161
ConAgra		157			14,567			93

Median							$	177

Heinz Pro Forma 2006²⁵		80		$	8,382		$	105
*Discount to Median*								*(41*	%)


Source:	Company filings, Wall Street equity research estimates, Trian estimates and Heinz September 20, 2005 Analyst Day Presentation.
Note:	Kellogg and Sara Lee excluded from sales per plant calculation due to lack of data.


Table 7: Summary of Major Restructuring Initiatives



Project	Goals		Major Initiatives			Key Financial Targets

Streamline (2001) Total Cost: $317 million	•	Implementation of worldwide organizational restructuring to reduce overhead costs and streamline pet foods and tuna businesses	•	Eliminate tuna operations in Puerto Rico	•	$60 million in annual savings

			•	Consolidate the Company’s North American canned pet food production to Bloomsburg, PA

			•	Divest the company’s U.S. fleet of fishing boats and related equipment

			•	Centralize European supply chain

			•	Reduce workforce by approximately 1,900 people


Table 10: Comparison of Acquisition / Divestiture Activity Since 1998 ($ in billions)

							Number of Deals Since 1998³³				Total Number of Transactions

Company	Enterprise Value			LTM Revenue			Acquisitions		Divestitures


Nestle SA		$	122.6		$	74.9		56		52		108
Unilever NV			79.8			51.6		28		60		88
HJ Heinz Co.³⁴			18.1			8.4		35		21		56
Sara Lee Corp.			16.8			19.1		24		22		46
Cadbury Schweppes Public Ltd. Co.			27.2			12.2		34		10		44
ConAgra Foods Inc.			15.2			14.7		14		22		36
Kraft Foods Inc.			62.9			34.2		10		20		30
Kellogg Co.			23.5			10.3		10		4		14
General Mills Inc.			25.1			11.5		7		6		13
Hershey Co.			15.3			4.8		7		4		11
Campbell Soup Co.			16.2			7.6		4		6		10
Wm. Wrigley Jr. Co.			13.9			4.3		4		1		5


	•	Sale of Ore-Ida foodservice business to McCain in 1997

	•	Spin-off of North American Pet Foods, U.S. tuna and U.S. infant feeding businesses to Del Monte Foods Co. in 2002



Excel (1999) Total Cost: $1.2 billion	•	4-year growth and restructuring initiative aimed at creating more efficient manufacturing centers, a more focused product portfolio and a more centralized management structure	•	Focus on six core food categories and six key countries to provide a platform for growth in other new markets worldwide	•	$200 million in annual savings

			•	Realign global manufacturing and distribution and create ‘‘Centers of Manufacturing Excellence’’ through expansion of 13 to 15 factories, closure or sale of 15 to 20 factories and the downsizing of at least 10 more	•	Volume growth of 3-4% annually

			•	Reduce worldwide workforce by approximately 3,000 to 4,000 people over four years	•	Increase gross profit margin to 42%

			•	Sell the Weight Watchers classroom business (see Divestiture and Acquisition section below for details on how the Company left billions of dollars on the table from this sale)	•	Plan to invest $100 million to support marketing and pricing initiatives



Del Monte Spin-Off (2002) Total Cost: $269 million	•	Spin-off businesses generating $1.8 billion in annual revenue (20% of Heinz’s sales) to Del Monte	•	Spin-off North American pet food and pet snacks, U.S. tuna, private label soups, College Inn broth and U.S. infant feeding businesses to shareholders and merge entity with Del Monte	•	Revenue growth of 3-4% after “transition year” in fiscal 2003

			•	Reduce dividend by approximately one-third to reflect the smaller business base and to help finance greater investment in brand growth	•	EPS growth of 8-10% per year

			•	Transfer 5,000 Heinz employees to Del Monte	•	Plan to invest additional $100 million plus in marketing



Growth & Innovation Plan (2005) Total Cost: $130 million	•	Drive growth and innovation by focusing on main categories and divesting non-core businesses with $1.4 billion in annual revenue	•	Focus on three attractive categories where the Company has unique strengths	•	$30 million in annual savings

			•	Heinz Europe to replicate success in North America and Australasia	•	Revenue growth of 3-4% per year

			•	Hire JP Morgan Chase and UBS to assist on non-core divestitures (seafood, vegetable and frozen businesses in Europe and Tegel poultry business in New Zealand)	•	EPS growth of 6-8% per year off the fiscal 2006 pro forma base (net dilution of $0.25-$0.29 per share in fiscal 2006)

			•	Open new Global Innovation and Quality Center	•	Operating Free Cash Flow of $800 million – $1.0 billion


Source:	Heinz Annual Reports on Form 10K for the periods ended April 30, 1997, April 28, 1999, May 2, 2001 and May 1, 2002, Heinz Quarterly Report on form 10-Q for the period ended January 25, 2006, Company Presentations and Company Press Releases.


Source:	Heinz Annual Reports on Form 10-K for the fiscal years ended April 28, 2004 and April 27, 2005 and Trian estimates.
Note	EBITDA margins adjusted for non-recurring expenses.


Source:	Heinz Annual Report on Form 10-K for the fiscal year ended April 27, 2005.
Note:	EBITDA margins adjusted for non-recurring expenses.


Source:	Company Filings, Bloomberg and Trian estimates.
Note:	Prices as of May 19, 2006.


	Weight Watchers:

	•	We note that in July 1999, Heinz sold a 94% interest in the Weight Watchers weight control business to Artal Luxembourg, S.A., a European private investment firm, for a total valuation of approximately $735 million because the business was not deemed to be a good strategic fit. While this management team cannot be credited for the gain recorded from this sale (Weight Watchers had been purchased decades before), there is nobody but this management team to blame for selling the business for far too low a price. Two-and-a-half years after the divestiture, following a relatively small acquisition, Weight Watchers went public in November 2001 with a valuation of more than $3.0 billion after having almost doubled EBITDA following the sale by Heinz. Today, Weight Watchers has a market capitalization of $4.2 billion, an enterprise value of $4.9 billion and has grown EBITDA more than three-fold since the sale. Rather than allowing a private equity firm to make an astronomical return and earn windfall profits by buying such an “on-trend” business from Heinz, we believe the current management team should have spun-off a portion of Weight Watchers to the public. This strategy would have given the Company full control of the brand and allowed Heinz’s shareholders to benefit from the billions of dollars of value that others have reaped since the sale – significantly more value than management has created with the remaining businesses and a substantial portion of Heinz’s current market capitalization.

	Hain Food Group / Earth’s Best:

	•	In September 1999, with an eye on the growing organic food industry, Heinz entered into a strategic alliance with Hain Food Group, Inc. (“Hain”). Upon announcement of the transaction, management stated that the alliance “thrusts Heinz into the natural and organic food segment, which is among the fastest growing in the international food industry. The resulting sales growth and cost synergies will benefit shareholders at both Heinz and Hain.” As part of the agreement, the Company initially purchased a 19.5% interest in Hain for nearly $100 million and then invested an additional $80 million in June 2000 in order to maintain its ownership percentage following the acquisition by Hain of Celestial Seasonings, Inc. Heinz also sold the Earth’s Best trademark to Hain – a trademark and brand that we believe could have had unlimited potential under the Heinz umbrella through line extensions given how well organic food fits the current mindset of consumers towards healthier eating, particularly for their children. Yet in December 2005, in a reversal of strategy, Heinz announced it had sold its ownership stake in Hain after taking a $65 million impairment charge on its Hain stock in fiscal 2005 and a further loss upon the sale. The reason for the sale – the Company was “redeploying [its] assets and concentrating on driving growth and shareholder value” in other areas, most likely another “strategic” acquisition. As of May 19, 2006, Hain’s stock traded at $25.07 per share, representing a 25% premium to the price that Heinz








		sold its shares in December 2005. The Hain saga is a stark example of management lacking a consistent strategic vision to guide its divestiture and acquisition activity.


	•	Potential sale of the Plasmon baby food business in Italy, along with the Company’s other remaining baby food businesses (we note Heinz has already sold a significant portion of its baby food operations globally)

	•	As highlighted above, potential sale of select businesses in the Asia Pacific and Rest of World segments (including ABC in Indonesia)


1)	Realize $575 million of annual cost savings by reducing SG&A and cost of sales by $400 million and $175 million, respectively.³⁸

2)	Reduce deals and allowances by approximately 3% or $300 million. Reinvest those savings in consumer marketing, in effect more than doubling the advertising budget. Our financial analysis in Table 11 below assumes no impact of the increased marketing campaign on sales volumes or to the bottom line, which is conservative, though Table 13 highlights the potential impact of volume gains on sales, EBITDA and EPS assuming revenue grows.

3)	Divest non-core businesses. We believe that Plasmon in Italy and ABC in Indonesia are examples of businesses that are non-core, geographically independent and that could be divested at premium valuations. However, without specific detail on profitability by brand and clarity on potential tax consequences, we cannot model the precise impact of selling these businesses. As a result, we have used the sale of 50% of the “Asia / Pacific” and “Rest of World” segments as a proxy for the magnitude of a potential divestiture strategy. Based on our assumptions, the contribution from the businesses to be divested would be approximately $744 million in annual net revenue and $89 million in annual EBITDA. Our analysis assumes these businesses are sold for approximately 10x EBITDA resulting in estimated proceeds of $894 million.³⁹

4)	Increase leverage ratio to 3.5x through a debt financing and use these proceeds plus the majority of the Company’s existing cash (subject to a $200 million minimum cash balance) and cash from divestitures (including from step number three above) to repurchase approximately 43 million shares.


Source:	Trian estimates.
Note:	Trian’s analysis of the potential impact of its Action Plan includes certain estimates and assumptions. These estimates and assumptions include, but are not limited to, pro forma fiscal 2006 financial estimates, ending cash balance, debt balance and fully diluted share count for the fourth quarter, interest rates and cost of capital. Number three assumes cash proceeds from the divestitures remain on the balance sheet and reduce net interest expense. Number four assumes that the Company increases its net debt to 3.5x EBITDA of $1.46 billion (pro forma fiscal 2006 EBITDA less the reduction from the divestitures in number three; excludes estimated cost savings). Number four further assumes that shares are repurchased at $41.45, Heinz’s closing share price on May 19, 2006.


Table 12: Implied Value Target Following Implementation of the Trian Group’s Action Plan ($ in millions, except per share values)

P / E Multiple		17.0x			18.0x			19.0x
Post-Trian Action Plan EPS	$	3.53		$	3.53		$	3.53

Implied Per Share Value Target	$	59.93		$	63.45		$	66.98
Premium to Current		44.6	%		53.1	%		61.6	%

Post-Trian Action Plan Shares Outstanding		289			289			289

Implied Market Capitalization	$	17,329		$	18,348		$	19,368
Post-Trian Action Plan Net Debt		5,099			5,099			5,099

Implied Enterprise Value	$	22,428		$	23,447		$	24,467
Post-Trian Action Plan EBITDA		2,032			2,032			2,032

Implied EV / EBITDA		11.0x			11.5x			12.0x


Table 13: Potential Incremental Impact of Revitalized Marketing Campaign ($ in millions, except per share values)


% Increase in Net Sales		—			5.0	%		10.0	%		15.0	%		20.0	%

Net Sales	$	7,939		$	8,335		$	8,732		$	9,129		$	9,526

EBITDA	$	2,032		$	2,133		$	2,235		$	2,337		$	2,438

EPS	$	3.53		$	3.77		$	4.01		$	4.26		$	4.50
Accretion from Current Levels		64.7	%		76.2	%		87.6	%		99.0	%		110.4	%

Implied Per Share Value at Midpoint of Range (18.0x EPS)	$	63.45		$	67.85		$	72.24		$	76.64		$	81.03
Premium to Current		53.1	%		63.7	%		74.3	%		84.9	%		95.5	%


	1)	Take immediate measures to reduce annual costs by at least $575 million.

	2)	Reduce “deals and allowances” by $300 million over time and drive growth by reinvesting these funds in consumer marketing and product innovation.

	3)	Drive profitability by focusing on the key brands and geographies…once and for all.

	4)	Enhance total shareholder returns by more aggressively returning capital through increased share repurchases and a higher long-term target dividend payout ratio.



Management Claims		Heinz – The Reality

•	“We have driven total shareholder return (TSR) at a rate of 41% since the spin-off in 2002, nearly double the peer food company average of 21%…We are here to create value for you, our shareholders, and that is exactly what we have done and will continue to do going forward.”	•	Nearly half of the quoted 41% return has occurred since rumors first surfaced of activist involvement in February 2006. Virtually nothing has changed at the Company operationally or strategically, since that time.

		•	Worse, over the last three, five and eight (since current management took control) year periods, Heinz’s total shareholder returns have significantly trailed the S&P 500, its large-cap food peers and its mid-cap food peers for virtually every period.


	Total Shareholder Returns⁴²

	8-Year			5-Year			3-Year

Heinz		(10.8	%)		2.0	%		15.7	%
S&P 500		28.2			1.7			59.2
Large-Cap Food Index		26.4			42.0			41.0
Mid-Cap Industry Avg.		54.6			46.1			33.8



•	“Consequently, we commenced a bold, transformational strategy to divest non-core operations around the globe, to simplify the remaining businesses and to sharpen our focus on the three core categories where we have competitive advantage and leadership positions…We were, in fact, among the first to anticipate the food industry’s current challenges in the wake of retailer consolidation and rising costs, and to recognize the opportunities in our own Company.”	•	Given Heinz’s poor relative share price performance, not to mention that EBITDA has decreased under current management’s reign despite significant capital investment, we believe that management’s assertion that the Company has implemented a “bold transformational strategy” and has been a leader in the industry is at best hyperbole and, worse, somewhat disingenuous.

		•	Further, management has a poor overall track record in divestiture and acquisition activity. In addition to the Weight Watchers and Hain deals referenced in the main text, we believe the current management team has both acquired and subsequently divested or written off a number of the investments it has made (e.g., College Inn, European frozen foods, Israel infant nutrition and HAK).

•	“The results of our strategic transformation have been dramatic and have established a much stronger foundation upon which Heinz can build consistent, sustainable growth… We are very pleased that the portfolio realignment portion of the plan is now virtually finished... we can now sharpen our focus on growing our three core categories, where the Company has already made some impressive gains... [Going forward], more than 90% of sales will now be in our three core categories and approximately 60% of sales will be generated by our top 10 brands, making Heinz one of the most focused companies in the packaged food industry.”	•	Virtually every time Heinz has undergone a restructuring in recent years, management has made similar statements touting the Company’s newly implemented focus and the successes that lie ahead. Yet management has continually over-promised and under-delivered, and we believe history will repeat itself unless real change is made. Examples of similar management rhetoric include:

		•	Project Millennia – 1997: “[Heinz] today announced its largest ever reorganization plan designed to strengthen the company’s six core businesses and improve Heinz’s profitability and global growth…Future growth initiatives focus on investing in Heinz’s big global brands, maximizing market share and extending successful products to new markets... By moving into higher profit businesses, we expect to increase our gross margin from 36% today to 40% by Fiscal 2001. Our asset turnover should increase from 1.0 to 1.3 times, a 30% improvement. And, we expect to generate free cash flow of more than $2 billion over five years.”

		•	Operation Excel – 1999: “Operation Excel makes possible the focus and scale that are essential to winning... ‘Focus and scale will be the key to future success…and our strategy will be to refocus on the growth potential of our six core food categories and six countries where we have superior scale to leverage the power of our brands. This 6x6 category and geographic core contributes 80 percent of our global revenue and 90 percent of our operating income…All of this will create the greatest transformation in the history of Heinz…We are confident that our strategy of focused scale – combined with the benefits of an aggressive restructuring and re-energized top-line growth – will deliver sustainable and superior value and earnings growth over the next four years, producing improved shareholder value.”

		•	Operation Excel Update – 1999: “We have made substantial progress in the first phase of Operation Excel, and we anticipate significant returns as a result… As we begin the new fiscal year, we are confident that the savings generated by restructuring and the marketing initiatives already underway will generate sustained volume growth and increased shareholder value. Heinz has the talent, the strategy, the scale, the brand power and the leadership to unlock new growth opportunities around the world and be the premier performer in the global food industry.”

		•	Del Monte spin-off – 2002: “This transformative transaction is a unique win-win proposition for both companies…Heinz will become a faster-growing, more focused, international food company, targeting consistent earnings per share increases of 8 to 10 percent per year and targeting 3 to 4 percent increases in annual sales following this transition year... As a stronger, more focused company, Heinz is better positioned to increase shareholder value by unlocking the potential of our powerful brands…We will now be focused on two attractive food segments, Meal Enhancers and Meals & Snacks.”


1	Defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is adjusted to add-back non-recurring expenses and restructuring charges. See Appendix B.
2	At the September 20, 2005 Analyst Day Presentation, Heinz management stated its belief that Hershey, Wrigley and Pepsi are the “most focused in our industry.”
3	Total Shareholder Returns reflect changes in share price plus dividends. All share prices used to calculate Total Shareholder Returns throughout this report are as of February 6, 2006. From February 6, 2006 through May 19, 2006, the Company’s share price rose 23%. During that time period, we believe nothing material has changed at the Company operationally or strategically. In addition, February 6, 2006 marked the beginning of a period during which the Company’s average daily trading volume rose significantly above historical levels and, on or about that time, rumors began to spread of activist involvement in the stock. Therefore, we do not believe that shareholder returns during that period are reflective of fundamental changes in the performance of the Company or actions of management.
4	As of April 30, 1998, when current management began its tenure.
5	Adjusted to reflect the value of Del Monte shares received by Heinz shareholders upon the completion of the transaction in December 2002.
6	Includes Conagra Foods Inc., Campbell Soup Co., General Mills Inc., Hershey Co., Kellogg Co., Sara Lee Corp., Wm. Wrigley Jr. Company, Unilever NV, Cadbury Schweppes PLC, Nestle NA, and Group Danone.
7	Includes Hain Celestial Group, The J.M. Smucker Company, Lance Inc., McCormick & Company Inc., NBTY Inc., Ralcorp Holdings Inc. and Tootsie Roll Industries Inc.
8	Defined as the net total of capital expenditures, acquisitions, divestitures (including the value of assets spun to Del Monte), restructuring charges and writedowns over the defined time period (“Net Capital Invested”). See Appendix B for more detail.
9	Defined as earnings before interest and taxes (“EBIT”).
10	Defined as earnings per share (“EPS”).
11	Defined as selling, general and administrative expense (“SG&A”).
12	Financial results are adjusted to add-back non-recurring expenses and restructuring charges.
13	Adjusted results for the fiscal year ended April 29, 1998 reflect Trian’s estimated impact of accounting standards adopted in fiscal 2002 that transferred a portion of trade spending previously classified as part of SG&A into trade spending that reduced net revenue. The Company restated its fiscal 2000, 2001 and 2002 financial statements for this accounting change but did not restate fiscal 1998. As such, we have used the magnitude of the adjustment to SG&A and net revenue in fiscal 2000 to estimate the potential impact in fiscal 1998. Note that there is no impact from the accounting change on EBITDA, EBIT or EPS, meaning that regardless of which accounting treatment is used for comparative purposes, EBITDA and EBIT declined between fiscal 1998 and pro forma fiscal 2006 and there was virtually no change in EPS. Financial results are adjusted to add-back non-recurring expenses and restructuring charges.
14	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
15	Includes the value of shares received from the Del Monte spin-off in December 2002.
16	Includes both cash and non-cash charges.
17	From February 6, 2006 through May 19, 2006, the Company’s share price rose 23% from $33.70 to $41.45. During that time period, virtually nothing changed at the Company operationally or strategically. In addition, February 6, 2006 marked the beginning of a period during which average daily trading volume rose significantly above historical levels and, on or about that time, rumors began to spread of activist involvement in the stock.
18	The Company stated in its September 20, 2005 Analyst Day Presentation that its long-term target dividend payout ratio is 45-50%. Subsequently, during Heinz’s third quarter earnings conference call in February 2006, the Company stated it is “committed to a long-term payout of around 50%.”
19	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
20	Wendy’s International Inc. press release dated April 27, 2006.
21	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
22	Revenue for the fiscal year ended May 3, 2000 reduced by $175.3 million to reflect the impact of Weight Watchers classroom business.
23	Hershey’s Annual Report of Form 10-K for the fiscal year ended December 31, 2005 mentions eight principal manufacturing properties and does not quantify “other properties used for manufacturing its products.” Numbers shown based on Wall Street research.
24	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
25	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
26	Peer average for trade spending based on Wall Street equity research and discussions with current and former industry executives.
27	Peer average for advertising based on Wall Street equity research and discussions with current and former industry executives.
28	As indicated by Heinz management during the September 2005 Analyst meeting.
29	Trian estimate of European sales based on constant currency from 2002 onwards. Based on detail in the Company’s Annual Reports on Form 10-K for the fiscal years ended April 28, 2004 and April 27, 2005 related to the impact of currency fluctuations on net revenue by segment.
30	Poland was recently added.
31	Asia / Pacific and ‘Rest of World Segments’ (“ROW”) comprised of “Asia / Pacific” and “Other Operating Entities” segments; Other Operating Segments comprised of “North American Consumer Products,” “U.S. Foodservice” and “Europe” segments.
32	Defined as segment EBITDA divided by average identifiable assets for various segments.



33	Includes all announced transactions since April 30, 1998.
34	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
35	As indicated by Heinz management during the September 2005 Analyst meeting.
36	Pro forma net debt target and implied cash balance as indicated by Heinz management during the September 2005 Analyst meeting.
37	Defined as EBITDA divided by net interest expense.
38	Note that we have not attempted to model the potential cash and non-cash restructuring charges associated with realizing our target cost savings. However, we believe these charges should be one-time in nature and their potential impact on recurring EPS will be minor (EPS would be slightly affected by the need to fund the cash portion of the restructuring with existing cash or additional borrowings) relative to the significant financial benefits of achieving our plan.
39	Assumes no tax leakage given lack of public information on tax basis, as well as our assumption that the Company would prefer to sell those businesses with the highest tax basis relative to market value.
40	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
41	Number four illustrates net impact of reduction in net income and shares from the repurchase initiative. Note, change in EPS cannot be calculated by dividing change in net income by change in fully diluted shares.
42	Total Shareholder Returns reflect changes in share price plus dividends. All share prices used to calculate Total Shareholder Returns throughout this report are as of February 6, 2006. From February 6, 2006 through May 19, 2006, the Company’s share price rose 23%. During that time period, we believe nothing material has changed at the Company operationally or strategically. In addition, February 6, 2006 marked the beginning of a period during which the Company’s average daily trading volume rose significantly above historical levels and, on or about that time, rumors began to spread of activist involvement in the stock. Therefore, we do not believe that shareholder returns during that period are reflective of fundamental changes in the performance of the Company or actions of management.
43	Adjusted results for the fiscal year ended April 29, 1998 reflect Trian’s estimated impact of accounting standards adopted in fiscal 2002 that transferred a portion of trade spending previously classified as part of SG&A into trade spending that reduced net revenue. The Company restated its fiscal 2000, 2001 and 2002 financial statements for this accounting change but did not restate fiscal 1998. As such, we have used the magnitude of the adjustment to SG&A and net revenue in fiscal 2000 to estimate the potential impact in fiscal 1998. Financial results are adjusted to add-back non-recurring expenses and restructuring charges.
44	Estimated results for the fiscal year ended May 3, 2006 are pro forma for our estimate of the full year impact of announced acquisitions and divestitures (including the divestiture of the European frozen business, which the Company has announced it is in discussions to sell to the Hain Celestial Group, Inc.), assumes seven million shares were repurchased in the fourth quarter of 2006 and a normalized cash balance of $200 million based on the Company’s September 20, 2005 Analyst Day Presentation (assumes remaining cash is used to pay down debt). Financial results are adjusted to add-back non-recurring expenses and restructuring charges. Source: Heinz Quarterly Report on Form 10-Q for the period ended January 25, 2006 and Heinz Annual Report on Form 10-K for the period ended April 27, 2005, Company press releases related to announced acquisitions and divestitures, Company Guidance, Wall Street research and Trian estimates.
45	Includes the value of shares received from the Del Monte spin-off in December 2002.
46	Includes both cash and non-cash charges.